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<SEC-DOCUMENT>0000066756-97-000034.txt : 19970329
<SEC-HEADER>0000066756-97-000034.hdr.sgml : 19970329
ACCESSION NUMBER: 0000066756-97-000034
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 17
CONFORMED PERIOD OF REPORT: 19961231
FILED AS OF DATE: 19970328
SROS: AMEX
SROS: NYSE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MINNESOTA POWER & LIGHT CO
CENTRAL INDEX KEY: 0000066756
STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931]
IRS NUMBER: 410418150
STATE OF INCORPORATION: MN
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-03548
FILM NUMBER: 97567570
BUSINESS ADDRESS:
STREET 1: 30 W SUPERIOR ST
CITY: DULUTH
STATE: MN
ZIP: 55802
BUSINESS PHONE: 2187222641
MAIL ADDRESS:
STREET 1: 30 W SUPERIOR STREET
CITY: DULUTH
STATE: MN
ZIP: 55802
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<TEXT>
<PAGE>
================================================================================
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the Fiscal Year Ended December 31, 1996
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from ________________ to _______________
Commission File No. 1-3548
Minnesota Power & Light Company
(Exact name of registrant as specified in its charter)
Minnesota 41-0418150
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
30 West Superior Street
Duluth, Minnesota 55802
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (218) 722-2641
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Stock
Title of Each Class Exchange on Which Registered
------------------- ----------------------------
Common Stock, without par value New York Stock Exchange
5% Cumulative Preferred Stock, par value
$100 per share American Stock Exchange
8.05% Cumulative Quarterly Income Preferred
Securities of MP&L Capital I, a subsidiary of
Minnesota Power & Light Company New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Preferred Stock, without par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of voting stock held by nonaffiliates on March
3, 1997, was $969,116,933.
As of March 3, 1997, there were 32,934,958 shares of Minnesota Power &
Light Company Common Stock, without par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Minnesota Power 1996 Annual Report are incorporated by reference
in Part II, Items 7 and 8, and portions of the Proxy Statement for the 1997
Annual Meeting of Shareholders are incorporated by reference in Part III.
================================================================================
<PAGE>
Index
Page
PART I
Item 1. Business 1
Electric Operations 2
Electric Sales 3
Purchased Power 5
Capacity Sales 5
Fuel 6
Regulatory Issues 6
Capital Expenditure Program 8
Competition 8
Franchises 9
Environmental Matters 10
Water Services 13
Regulatory Issues 13
Capital Expenditure Program 15
Competition 15
Franchises 15
Environmental Matters 15
Automotive Services 16
Capital Expenditure Program 16
Competition 17
Environmental Matters 17
Investments 18
Environmental Matters 18
Executive Officers of the Registrant 19
Item 2. Properties 21
Item 3. Legal Proceedings 23
Item 4. Submission of Matters to a Vote of Security Holders 23
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters 24
Item 6. Selected Financial Data 25
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 25
Item 8. Financial Statements and Supplementary Data 25
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 25
PART III
Item 10. Directors and Executive Officers of the Registrant 26
Item 11. Executive Compensation 26
Item 12. Security Ownership of Certain Beneficial Owners and Management 26
Item 13. Certain Relationships and Related Transactions 26
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 27
SIGNATURES 34
<PAGE>
Definitions
The following abbreviations or acronyms are used in the text.
Abbreviation or Acronyms Term
- -------------------------- ----------------------------------------
ADESA ADESA Corporation
AFC Automotive Finance Corporation
BNI Coal BNI Coal, Ltd.
Boise Boise Cascade Corp.
Boswell Boswell Energy Center
Capital Re Capital Re Corporation
CIP Conservation Improvement Program
CPI Consolidated Papers, Inc.
Company Minnesota Power & Light Company and its
Subsidiaries
DOJ United States Department of Justice
Duluth City of Duluth, Minnesota
Energy Policy Act National Energy Policy Act of 1992
EPA Environmental Protection Agency
FERC Federal Energy Regulatory Commission
FDEP Florida Department of Environmental
Protection
Florida Water Florida Water Services Corporation
FPSC Florida Public Service Commission
Heater Heater Utilities, Inc.
Hibbard M.L. Hibbard Station
ISI Instrumentation Services, Inc.
Laskin Laskin Energy Center
Lehigh Lehigh Acquisition Corporation
MAPP Mid-Continent Area Power Pool
MBtu Million British thermal units
Minnesota Power Minnesota Power & Light Company and its
Subsidiaries
Minnkota Power Minnkota Power Cooperative, Inc.
MPCA Minnesota Pollution Control Agency
MPUC Minnesota Public Utilities Commission
MW Megawatt(s)
MWh Megawatthour
NCUC North Carolina Utilities Commission
Note_ Note __ to the consolidated financial
statements in the Minnesota Power 1996
Annual Report
NPDES National Pollutant Discharge Elimination
System
PSCW Public Service Commission of Wisconsin
Rainy River Rainy River Energy Corporation
Reach All Reach All Partnership
SCPSC South Carolina Public Service Commission
Seabrook Heater of Seabrook, Inc.
Square Butte Square Butte Electric Cooperative
SWL&P Superior Water, Light and Power Company
Synertec Synertec, Incorporated
WPPI Wisconsin Public Power, Inc. SYSTEM
<PAGE>
SAFE HARBOR STATEMENT
UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), the Company is hereby filing
cautionary statements identifying important factors that could cause the
Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made by
or on behalf of the Company in this annual report on Form 10-K, in
presentations, in response to questions or otherwise. Any statements that
express, or involve discussions as to expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always, through the
use of words or phrases such as "anticipates", "estimates", "expects",
"intends", "plans", "predicts", "projects", "will likely result", "will
continue", or similar expressions) are not statements of historical facts and
may be forward-looking.
Forward-looking statements involve estimates, assumptions, and
uncertainties and are qualified in their entirety by reference to, and are
accompanied by, the following important factors, which are difficult to predict,
contain uncertainties, are beyond the control of the Company and may cause
actual results to differ materially from those contained in forward-looking
statements: (i) prevailing governmental policies and regulatory actions,
including those of the FERC, the MPUC, the FPSC, the NCUC, the SCPSC and the
PSCW, with respect to allowed rates of return, industry and rate structure,
acquisition and disposal of assets and facilities, operation, and construction
of plant facilities, recovery of purchased power, and present or prospective
wholesale and retail competition (including but not limited to retail wheeling
and transmission costs); (ii) economic and geographic factors including
political and economic risks; (iii) changes in and compliance with environmental
and safety laws and policies; (iv) weather conditions; (v) population growth
rates and demographic patterns; (vi) competition for retail and wholesale
customers; (vii) pricing and transportation of commodities; (viii) market
demand, including structural market changes; (ix) changes in tax rates or
policies or in rates of inflation; (x) changes in project costs; (xi)
unanticipated changes in operating expenses and capital expenditures; (xii)
capital market conditions; (xiii) competition for new energy development
opportunities; and (xiv) legal and administrative proceedings (whether civil or
criminal) and settlements that influence the business and profitability of the
Company.
Any forward-looking statements speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of any
such factor on the business or the extent to which any factor, or combination of
factors, may cause results to differ materially from those contained in any
forward-looking statement.
<PAGE>
PART I
Item 1. Business.
Minnesota Power is an operating public utility incorporated under the
laws of the State of Minnesota in 1906. Its principal executive office is at 30
West Superior Street, Duluth, Minnesota, 55802; and its telephone number is
(218) 722-2641. Minnesota Power has operations in four business segments: (1)
electric operations, which include electric and gas services, and coal mining;
(2) water services, which include water and wastewater services; (3) automotive
services, which include auctions, a finance company and an auto transport
company; and (4) investments, which include a securities portfolio, a 21 percent
equity investment in a financial guaranty reinsurance company and real estate
operations. As of December 31, 1996, the Company and its subsidiaries had
approximately 6,500 employees.
<TABLE>
<CAPTION>
Year Ended December 31,
Summary of Earnings Per Share <F1> 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consolidated Earnings Per Share
Continuing Operations $2.28 $2.06 $1.99
Discontinued Operations <F2> - .10 .07
----- ----- -----
Total $2.28 $2.16 $2.06
===== ===== =====
Percentage of Earnings by Business Segment
Continuing Operations
Electric Operations 58% 63% 66%
Water Services 8 (2) 23
Automotive Services 6 0 -
Investments 57 67 40
Corporate Charges and Other <F3> (29) (33) (33)
Discontinued Operations <F2> - 5 4
--- --- ---
100% 100% 100%
=== === ===
- -------------------------
<FN>
<F1> Financial statement information may not be comparable between periods due
to the purchase of 80 percent of ADESA on July 1, 1995, another 3 percent
on January 3, 1996, and the remaining 17 percent on August 21, 1996.
<F2> On June 30, 1995, the Company sold the interest in its paper and pulp
business to CPI for $118 million in cash, plus CPI's assumption of
certain debt and lease obligations. The Company is still committed to a
maximum guarantee of $95 million to ensure a portion of a $33.4 million
annual lease obligation for paper mill equipment under an operating lease
extending to 2012. CPI has agreed to indemnify the Company for any
payments the Company may make as a result of the Company's obligation
relating to this operating lease.
<F3> Includes the financial results for Reach All and general corporate
expenses not allocable to a specific business segment.
</FN>
</TABLE>
Since 1983 Minnesota Power has been diversifying to reduce its reliance
on electricity sales to Minnesota's taconite industry and to gain additional
earnings growth potential. Acquisitions have been a primary means of
diversification. During 1996 the Company purchased the remaining 20 percent
minority interest in ADESA, the third largest automobile auction business in the
United States, making ADESA a wholly owned subsidiary of the Company.
Additionally, the Company acquired five auction businesses to complement and
expand its automotive services segment. In April 1996 the Company acquired Palm
Coast real estate in Florida adding significantly to its inventory of commercial
and residential properties. Water services expanded during 1996 with the
acquisition of ISI, a predictive maintenance business that serves the water
industry. During 1997 the Company plans to complete the purchase of a small
water utility in North Carolina and continues to consider other acquisitions
that would complement its businesses, expand its services and contribute to
earnings growth.
For a detailed discussion of results of operations and trends, see
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Minnesota Power 1996 Annual Report. For business segment
information, see Note 1.
-1-
<PAGE>
The information contained or incorporated by reference in this annual
report on Form 10-K reflects a categorization of the Company's business which is
different from the categorization used in the annual report on Form 10-K for
1995. Financial data from prior years has been reclassified in this annual
report on Form 10-K to present comparable data in all periods.
Electric Operations
Electric operations generate, transmit, distribute and market
electricity. In addition, electric operations include coal mining, engineering,
construction and maintenance services, and economic development projects within
the Company's service area.
- Minnesota Power provides electricity in a 26,000 square mile electric
service territory located in northeastern Minnesota. As of December
31, 1996, Minnesota Power was supplying retail electric service to
121,000 customers in 153 cities, towns and communities, and outlying
rural areas. The largest city served is Duluth with a population of
85,000 based on the 1990 census. Wholesale electric service for resale
is supplied to 13 municipal distribution systems, one private utility
and SWL&P.
MPEX is an expansion of the Company's inter-utility marketing group
which has been a buyer and seller of capacity and energy for 25 years
in the wholesale power market. It was formally established in early
1996 as a new division of Minnesota Power. The customers of MPEX are
other power suppliers in the Midwest and Canada. MPEX contracts to
provide hourly energy scheduling and power trading services.
- Superior Water, Light and Power Company sells electricity and natural
gas, and provides water service in northwestern Wisconsin. As of
December 31, 1996, SWL&P served 14,000 electric customers, 11,000
natural gas customers and 10,000 water customers.
- Minnesota Power Enterprises, Inc., a subsidiary of Minnesota Power,
was created in 1996 to facilitate the development of the non-regulated
services of electric operations. Subsidiaries of Minnesota Power
Enterprises, Inc. include BNI Coal, Synertec, Rainy River, Upper
Minnesota Properties, Inc. and Minnesota Power Services Group, Inc.
- BNI Coal owns and operates a lignite mine in North Dakota. Two
electric generating cooperatives, Minnkota Power and Square Butte,
presently consume virtually all of BNI Coal's production of lignite
coal under coal supply agreements extending to 2027. Under an
agreement with Square Butte, Minnesota Power purchases 71 percent
of the output from the Square Butte unit which is capable of
generating up to 470 MW. Minnkota Power has an option to extend its
coal supply agreement to 2042. (See - Fuel and Note 17.)
- Synertec provides project development, planning, construction
management and operating services to new and expanding businesses.
- Rainy River provides engineering, and operating and maintenance
services to new and existing generating facilities.
- Upper Minnesota Properties, Inc. has invested in affordable housing
projects located in the electric operations' service territory. The
Company is also an active participant in a variety of economic
development projects throughout the electric operations' service
territory providing resources and expertise.
- Minnesota Power Services Group, Inc. includes the Electric Outlet,
Inc., a retail store that sells life-style changing electric
products, and also researches new products to be offered for sale
or distribution.
-2-
<PAGE>
Electric Sales
The two major industries in Minnesota Power's service territory are
taconite production, and paper and wood products manufacturing. These two
industries contributed about 43 percent of the Company's electric operating
revenue in 1996 and 47 percent in 1995 and 1994.
Over the last five years, 80 percent of the domestic ore consumed by
iron and steel plants in the United States has originated from plants within the
Company's Minnesota electric service territory. Taconite, an iron-bearing rock
of relatively low iron content which is abundantly available in Minnesota, is an
important domestic source of raw material for the steel industry. Taconite
processing plants use large quantities of electric power to grind the
ore-bearing rock and agglomerate and pelletize the iron particles into taconite
pellets. Annual taconite production in Minnesota was 46 million tons in 1996, 47
million tons in 1995 and 43 million tons in 1994. The Company estimates that
1997 Minnesota taconite production will be about 47 million tons. While taconite
production is expected to continue at annual levels over 40 million tons, the
long-term future of this cyclical industry is less certain. Production may
decline gradually some time after the year 2005.
<TABLE>
<CAPTION>
Year Ended December 31,
Summary of Electric Revenue and Income 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Electric Revenue and Income (000s) $529,190 $503,457 $458,356
Percentage of Total Electric Revenue and Income
Retail
Industrial
Taconite and Iron Mining <F1> 32% 35% 34%
Paper and Other Wood Products 11 12 13
Other Industrial 6 7 8
--- --- ---
Total Industrial 49 54 55
Residential 12 11 12
Commercial 11 12 12
Other Retail 3 3 3
Resale 13 9 8
Other Revenue and Income 12 11 10
--- --- ---
100% 100% 100%
=== === ===
- -----------------------
<FN>
<F1> Two of the Company's largest customers represented 11 percent and 8 percent, respectively, of total electric
revenue and income in 1996, 12 percent and 9 percent, respectively, in 1995 and 13 percent and 10 percent,
respectively, in 1994.
</FN>
</TABLE>
Large Power Customer Contracts
The Company has Large Power Customer contracts with five taconite
producers, four paper and wood products manufacturers and two pipeline companies
(Large Power Customers). Large Power Customer contracts require the Company to
have a certain amount of capacity available at all times (Firm Power). Each
contract requires 10 MW or more of power and payment of a minimum monthly demand
charge that covers some of the fixed costs associated with having capacity
available to serve the customer, including a return on common equity. Such
contracts minimize the impact on earnings that otherwise would result from
significant reductions in kilowatthour sales to such customers. These contracts,
which are subject to MPUC approval, have a minimum four-year cancellation notice
required for termination. The rates and corresponding revenue associated with
capacity and energy provided under these contracts are subject to change through
the same regulatory process governing all retail electric rates. (See Regulatory
Issues - Electric Rates.)
-3-
<PAGE>
As of March 14, 1997, the minimum annual revenue the Company would
collect under contracts with these Large Power Customers, assuming no electric
energy use by these customers, is estimated to be $101.0, $88.3, $79.4, $69.2
and $61.0 million during the years 1997, 1998, 1999, 2000 and 2001,
respectively. The Company believes revenue from these Large Power Customers will
be substantially in excess of the minimum contract amounts.
<TABLE>
Contract Status for Minnesota Power Large Power Customers
as of March 14, 1997
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Earliest
Plant and Location Operating Agent Ownership Termination Date
- ------------------ --------------- --------- ----------------
<S> <C> <C> <C>
EVTAC Mining EVTAC Mines L.L.C. 45% Rouge Steel Co. October 31, 1999
Eveleth, MN 40% AK Steel Co.
15% Stelco Inc.
Hibbing Taconite Co. Cliffs Mining Company 70.3% Bethlehem Steel Corp. December 31, 2001
Hibbing, MN 15% Cleveland-Cliffs Inc.
14.7% Stelco Inc.
Inland Steel Mining Co. Inland Steel Mining Co. Inland Steel Co. October 31, 2000
Virginia, MN
Minntac (USX) U.S. Steel Co. USX Corp. December 31, 2007
Mt. Iron, MN
National Steel Pellet Co. National Steel Corp. National Steel Corp. October 31, 2004
Keewatin, MN
Blandin Paper Co. Blandin Paper Co. Fletcher Challenge Canada Ltd. April 30, 2004
Grand Rapids, MN
Boise Cascade Corp. Boise Cascade Corp. Boise Cascade Corp. December 31, 2002
International Falls, MN
Lake Superior Paper Lake Superior Paper Consolidated Papers, Inc. December 31, 2005
Industries Industries
Duluth, MN
Potlatch Corp. Potlatch Corp. Potlatch Corp. December 31, 2002
Cloquet and
Brainerd, MN
Lakehead Pipe Line Lakehead Pipe Line Lakehead Pipe Line April 30, 2001
Deer River, MN Company Inc. Partners, L.P.
Floodwood, MN
Minnesota Pipeline Company Koch Pipeline Company L.P. Koch Pipeline Company L.P. September 30, 2002
Staples, MN
Little Falls, MN
Park Rapids, MN
</TABLE>
-4-
<PAGE>
Purchased Power
Minnesota Power has contracts to purchase capacity from various
entities. In addition to the contracts listed below, the Company has entered
into various smaller purchase power contracts for the purposes of meeting its
capacity needs or brokering power.
<TABLE>
Contract Status of Minnesota Power Purchased Power Contracts
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Entity Contract MW Contract Period
- ------ ----------- ---------------
Participation Power Purchases <F1>
- -----------------------------
<S> <C> <C>
Square Butte <F2> 333 May 6, 1977 through December 31, 2007
LTV Steel 210 May 1, 1995 though April 30, 2000
Silver Bay Power 78 November 1, 1995 through October 31, 2000
- -------------------------
<FN>
<F1> Participation power purchase contracts require the Company to pay the
demand charges for MW under contract and an energy charge for each MWh
purchased. The selling entity is obligated to provide energy as scheduled
by the Company from the generating unit specified in the contract as energy
is available from that unit.
<F2> Under an agreement extending through 2007 with Square Butte, Minnesota
Power purchases 71 percent of the output of a mine-mouth generating unit
capable of generating up to 470 MW. The Square Butte generating unit is
located near Center, North Dakota and is one of two lignite-fired units at
Minnkota Power's Milton R. Young Generating Station. Reductions to about 49
percent of the output are provided for in the contract and, at the option
of Square Butte, could begin after a five-year advance notice to the
Company. The cost of the power and energy purchased is a proportionate
share of Square Butte's fixed obligations and operating costs which are not
incurred unless production takes place. The Company is responsible for
paying all costs and expenses of Square Butte (including leasing, operating
and any debt service costs) if not paid by Square Butte when due. These
obligations and responsibilities of the Company are absolute and
unconditional, whether or not any power is actually delivered to the
Company. (See Note 17.)
</FN>
</TABLE>
Capacity Sales
Minnesota Power has contracts to sell capacity to nonaffiliated utility
companies. In addition to the contracts listed below, the Company has entered
into various smaller capacity sales contracts for the purposes of selling
surplus capacity or brokering power.
<TABLE>
Contract Status of Minnesota Power Capacity Sales Contracts
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Utility Contract MW Contract Period
- ------- ----------- ---------------
Participation Power Sales <F1>
- -------------------------
<S> <C> <C>
Interstate Power Company 55 May 1 through October 31 of each year from
1994 through 2000
20 November 1, 1997 through April 30, 1998
35 November 1, 1998 through April 30, 1999
50 November 1, 1999 through April 30, 2000
Firm Power Sales <F2>
- ----------------
Wisconsin Power & Light Company 30 November 1, 1993 through December 31, 1997
75 January 1, 1998 through December 31, 2007
Northern States Power Company 150 May 1 through October 31 of each year from
1997 through 2000
- ----------------------------
<FN>
<F1> Participation power sales contracts require the purchasing utility to pay
the demand charges for MW under contract and an energy charge for each MWh
purchased. The Company is obligated to provide energy as scheduled by the
purchasing utility from the generating unit specified in the contract as
energy is available from that unit.
<F2> Firm power sales contracts require the purchasing utility to pay the demand
charges for MW under contract and an energy charge for each MWh purchased.
The Company is obligated to provide energy as scheduled by the purchasing
utility.
</FN>
</TABLE>
-5-
<PAGE>
Fuel
The Company has experienced no difficulty in obtaining an adequate fuel
supply. The Company purchases low-sulfur, sub-bituminous coal from the Powder
River Basin coal field located in Montana and Wyoming to meet substantially all
of its coal supply requirements. Coal consumption for electric generation at the
Company's Minnesota coal-fired generating stations in 1996 was about 4.3 million
tons. As of December 31, 1996, the Company had a coal inventory of about 425,000
tons. During 1996, the Company obtained its coal through both long- and
short-term agreements. During 1996 the Company entered into two new coal supply
agreements. A long-term agreement with Big Sky Coal Company enables the Company
to purchase up to 2.5 million tons of coal on an annualized basis from the Big
Sky Mine. Additionally, the Company entered into a three year agreement with
Decker Coal Company to purchase up to 1.0 million tons of coal on an annualized
basis from the Decker Mine. The Company also has a long-term agreement with
Spring Creek Coal Company to purchase up to 4.0 million tons of coal on an
annualized basis from the Spring Creek Mine. The Company will obtain coal in
1997 under these long-term agreements and the spot market. This mix of coal
supply options allows the Company to reduce market risk and to take advantage of
favorable spot market prices. The Company is exploring future coal supply
options and believes that adequate supplies of low-sulfur, sub-bituminous coal
will continue to be available.
Burlington Northern Santa Fe Railroad transports the coal by unit train
from Montana or Wyoming to the Company's generating stations. The Company and
Burlington Northern Santa Fe Railroad have two long-term coal freight-rate
contracts that provide for coal deliveries through 2002 to Laskin and through
2003 to Boswell. The Company also has a contract with the Duluth Missabe & Iron
Range Railway which is the final destination short-hauler to Laskin. This
contract provides for deliveries through 2002. The delivered price of coal is
subject to periodic adjustments in freight rates.
Year Ended December 31,
Summary of Coal Delivered to Minnesota Power 1996 1995 1994
- -------------------------------------------------------------------------------
Average Price Per Ton $19.30 $19.19 $19.27
Average Price Per MBtu $1.06 $1.07 $1.08
The generating unit operated by Square Butte, which is capable of
generating up to 470 MW, burns North Dakota lignite that is being supplied by
BNI Coal, a wholly owned subsidiary of the Company, pursuant to the terms of a
contract expiring in 2027. Square Butte's cost of lignite burned in 1996 was
approximately 60 cents per MBtu. The lignite acreage that has been dedicated to
Square Butte by BNI Coal is located on lands essentially all of which are under
private control and presently leased by BNI Coal. This lignite supply is
sufficient to provide the fuel for the anticipated useful life of the generating
unit. Under the various agreements with Square Butte, the Company is
unconditionally obligated to pay all costs not paid by Square Butte when due.
These costs include the price of lignite purchased under a cost-plus contract
from BNI Coal. (See Item 2. Properties and Note 17.) BNI Coal has experienced no
difficulty in supplying all of Square Butte's lignite requirements.
Regulatory Issues
The Company and its subsidiaries are exempt from regulation under the
Public Utility Holding Company Act of 1935, except as to Section 9(a)(2) which
relates to acquisition of securities of public utility operations.
The Company and its subsidiaries are subject to the jurisdiction of
various regulatory authorities. The MPUC has regulatory authority over electric
operations' service area in Minnesota, retail rates, retail services, issuance
of securities and other matters. The FERC has jurisdiction over the licensing of
hydroelectric projects, the establishment of rates and charges for the sale of
electricity for resale and for transmission of electricity in interstate
commerce, and certain accounting and record keeping practices. The PSCW has
regulatory authority over the retail sales of electricity, water and gas by
SWL&P. The MPUC, FERC and PSCW had regulatory authority over 69 percent, 13
percent, and 8 percent, respectively, of the Company's 1996 electric operating
revenue and income.
-6-
<PAGE>
Electric Rates
The Company has historically designed its electric service rates based
on cost of service studies under which allocations are made to the various
classes of customers. Nearly all retail sales include billing adjustment clauses
which adjust electric service rates for changes in the cost of fuel and
purchased energy, and recovery of current and deferred CIP expenditures.
The Company's Firm Power rate schedules are designed to recover the
fixed costs of providing Firm Power to Large Power Customers, including a return
on common equity. A Large Power Customer's monthly demand charge obligation in
any particular month is determined based upon the firm demand amount. The rates
and corresponding revenue associated with capacity and energy provided under
these contracts are subject to change through the regulatory process governing
all retail electric rates. Contracts with ten of the eleven Large Power
Customers provide for deferral without interest or diminishment of one-half of
demand charge obligations incurred during the first three months of a strike or
illegal walkout at a customer's facilities, with repayment required over the
12-month period following resolution of the work stoppage. (See Electric Sales -
Large Power Customer Contracts.)
The Company also has contracts with large industrial and commercial
customers who have monthly demands of more than 2 MW but less than 10 MW of
capacity (Large Light and Power Customers). The terms of these contracts vary
depending upon the customers' demand for power and the cost of extending the
Company's facilities to provide electric service. Generally, the contracts for
less than 3 MW have one-year terms and the contracts ranging from 3 to 10 MW
have initial five-year terms. The Company's rate schedule for Large Light and
Power Customers is designed to minimize fluctuations in revenue and to recover a
significant portion of the fixed costs of providing service to such customers.
The Company requires that all large industrial and commercial customers
under contract specify the date when power is first required, and thereafter the
customer is billed for at least the minimum power for which it contracted. These
conditions are part of all contracts covering power to be supplied to new large
industrial and commercial customers and to current contract customers as their
contracts expire or are amended. All contracts provide that new rates which have
been approved by appropriate regulatory authorities will be substituted
immediately for obsolete rates, without regard to any unexpired term of the
existing contract. All rate schedules are subject to approval by appropriate
regulatory authorities.
Federal Energy Regulatory Commission
The FERC has jurisdiction over the Company's wholesale electric service
resale customers and transmission service (wheeling) customers. In a filing with
the FERC on December 22, 1995, the Company requested an overall rate decrease of
$138,000 or 0.4 percent with an effective date of January 1, 1996. All of the
customers affected by the rate change submitted written consents to the rate
change and effective date. Minor modifications to the rate request were made in
an amendment filed on January 16, 1996. On June 19, 1996, the FERC accepted the
proposed rates as filed.
The Company has contracts with 13 Minnesota municipalities receiving
full requirements resale service. One contract is for service through 2001 while
the other 12 are for service through at least 2007. The contracts limit rate
increases (including fuel costs) to about 2 percent per year on a cumulative
basis. In 1996 the 13 municipal customers purchased 463,394 MWh from the
Company.
Two municipalities whose requirements are only partially supplied by
the Company have contracts with the Company through 2000. These municipal
customers signed amendments under which the Company will provide exclusive
brokering service for the municipalities' purchases of economy energy and will
supply emergency, scheduled outage and firm energy as required through 2000. In
1996 these two municipalities purchased 154,873 MWh from the Company.
A contract between Minnesota Power and SWL&P provides for SWL&P to
purchase its power from the Company through at least 2010 and limits rate
increases (including fuel costs) to about 2 percent per year on a cumulative
basis. SWL&P purchased 562,969 MWh from the Company in 1996.
The Company also has a contract through 2004 to supply electricity to
Dahlberg Light and Power Company (Dahlberg), a private utility. Dahlberg
purchased 86,099 MWh from the Company in 1996.
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The Company's hydroelectric facilities which are located in Minnesota
are licensed by the FERC. In 1995 the FERC issued to the Company a 30-year
license for the St. Louis River hydroelectric project (87.6 MW generating
capability). In 1996 the FERC extended the license term from 30 to 40 years
because of certain mandates to mitigate environmental consequences of the
project. On May 11, 1995, a final application to relicense the Pillager
hydroelectric project (1.5 MW generating capability) was filed with the FERC.
The Company expects that the FERC will issue a new license in 1997. (See
Environmental Matters - Water.)
Minnesota Public Utilities Commission
In November 1994 the MPUC issued an order granting the Company an
overall increase in annual electric operating revenue of $19 million, or 6.4
percent, with an 11.6 percent return on equity. Effective June 1, 1995, rates
for large industrial customers increased less than 4 percent, while the rate for
small businesses increased 6.5 percent. The rate increases for residential
customers were approved to be phased in over three years: 13.5 percent began in
June 1995, 3.75 percent in January 1996, and another 3.75 percent in January
1997.
Minnesota requires electric utilities to spend a minimum of 1.5 percent
of gross annual retail electric revenue on conservation improvement programs
(CIP) each year. In 1996, 1995 and 1994, the Company spent $14.4, $14.2 and $8
million, respectively, on CIP and expects to spend a total of $8.2 million
during 1997. The MPUC allows such conservation expenditures in excess of amounts
recovered through current rates to be accumulated in a deferred account for
future recovery.
Since January 1994 the Company has been recovering ongoing CIP spending
and $8.2 million of CIP spending from previous years. Through a billing
adjustment and retail base rates approved by the MPUC, the Company is allowed to
recover current and deferred CIP expenditures and the lost margins associated
with power saved as a result of these programs. The Company collected CIP
related revenue of $10.8 million in 1996 and 1995, and $7.8 million in 1994.
Public Service Commission of Wisconsin
SWL&P anticipates receiving approval from the PSCW to expand its gas
service territory to serve one additional rural community adjacent to its
existing service territory. This $1.6 million expansion project is expected to
be completed by the end of 1997.
Capital Expenditure Program
Capital expenditures for electric operations totaled $38 million during
1996. Internally generated funds and long-term bank financing were used to fund
these capital expenditures.
The Company's electric generating stations have the capacity to meet
customer needs through 2002 without major capacity additions. Electric
operations capital expenditures are expected to be $33 million in 1997 and total
approximately $135 million during the period 1998 through 2001. The 1997 amount
is for electric system component replacement and upgrades. The Company's
estimates of such capital expenditures and the sources of financing are subject
to continuing review and adjustment.
Competition
The electric utility industry is changing at both the wholesale and
retail levels. The enactment of the Energy Policy Act of 1992 resulted in an
increase in the competitive forces that affect three of the four components of
the electric utility industry: generation, transmission and power marketing. The
fourth component, local distribution, is subject to state regulation. This
legislation has resulted in a more competitive market for electricity generally
and particularly in wholesale markets. Wholesale deregulation is underway, while
retail deregulation of the industry is being considered at both the federal and
state levels, and is affecting the way the Company strategically views the
future. With electric rates among the lowest in the U.S. and with long-term
wholesale and large power retail contracts in place, Minnesota Power believes it
is well positioned to address competitive pressures.
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Wholesale
During 1996 the Company completed functional unbundling of operations
under the requirements of FERC's Order No. 888 Open Access Transmission Rules.
Order No. 888 requires public utilities to take transmission service for their
own wholesale transactions under the same terms and conditions on which
transmission service is provided to third parties. The Company has filed its
open access transmission tariff with the FERC, and expects to receive final FERC
rate approval in 1997. The Company has also filed its "Code of Conduct" under
FERC's Order No. 889 Open Access Same Time Information System and Standards of
Conduct to formalize the functional separation of generation from transmission
within the organization. As a result, the transmission component of Minnesota
Power's electric utility business is well organized for, and has begun to
operate under, these new federal regulatory requirements.
Minnesota Power's newly formed MPEX division currently conducts the
power marketing function. FERC approval of Minnesota Power's wholesale market
based rates enabled MPEX to conduct a wholesale power and energy marketing
business in 1996. During 1996 Minnesota Power also completed compliance filings
under FERC's Open Access Transmission Rules to separately state the transmission
component of the Company's coordination sales agreements, and is awaiting final
FERC approvals. MPEX continues to review new strategic opportunities for its
wholesale marketing operations in light of the new Open Access Transmission
Rules enacted by FERC and of the new power and energy markets within MAPP. (See
Item 2. Properties - Electric Operations.)
Retail
In 1995 the MPUC initiated an investigation into structural and
regulatory issues in the electric utility industry. To make certain that
delivery of electric service continues to be efficient following any
restructuring, the MPUC adopted 15 principles to guide a deliberate and orderly
approach to developing reasonable restructuring alternatives that ensure the
fairness of a competitive market and protect the public interest. In January
1996 the MPUC established a competition working group in which company
representatives have participated in addressing issues related to wholesale and
retail competition. Minnesota Power has implemented a key account management
process and anticipates continuing negotiations with its large industrial and
commercial customers to explore contractual options to lower energy costs. These
customers continue to aggressively seek lower energy costs and consider
alternative suppliers in anticipation of deregulated retail markets.
Legislation
In 1997 Congress and the Minnesota legislature are expected to continue
to debate proposed legislation which, if enacted, would promote customer choice
and a more competitive electric market. The Company is actively participating in
the dialogue and debate on these issues in various forums, principally to
advocate fairness and parity for all power and energy competitors in any
deregulated markets that may be created by any new legislation. The Company
cannot predict the timing or substance of any legislation which might ultimately
be enacted. However, the Company continues taking steps to maintain its
competitive position as a low-cost supplier and maintain its long-term contracts
with large industrial customers. The Company is also advocating property tax
reform before the Minnesota legislature in order to eliminate the taxation of
personal property that results in an inequitable tax burden among current and
potential competitors in local markets. Finally, SWL&P is participating in the
electric restructuring investigation before the PSCW, which is advising the
Wisconsin legislature on recommended restructuring in Wisconsin.
Franchises
Minnesota Power holds franchises to construct and maintain an electric
distribution and transmission system in 86 cities and towns located within its
electric service territory. SWL&P holds franchises in 15 cities and towns within
its service territory. The remaining cities and towns served will not grant a
franchise or do not require a franchise to operate within their boundaries.
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Environmental Matters
The Company's electric operations are subject to regulation by various
federal, state and local authorities in the areas of air quality, water quality,
solid wastes, and other environmental matters. The Company considers its
electric operations to be in substantial compliance with those environmental
regulations currently applicable to its operations and believes all necessary
permits to conduct such operations have been obtained. The Company does not
currently anticipate that its potential capital expenditures for environmental
matters will be material. However, because environmental laws and regulations
are constantly evolving, the character, scope and ultimate costs of
environmental compliance cannot be estimated.
Air
The Federal Clean Air Act Amendments of 1990 (Clean Air Act) require
that specified fossil-fueled generating plants meet new sulfur dioxide and
nitrogen oxide emission standards beginning January 1, 1995 (Phase I) and that
virtually all generating plants meet more strict emission standards beginning
January 1, 2000 (Phase II). None of Minnesota Power's generating facilities are
covered by the Phase I requirements of the Clean Air Act. However, Phase II
requirements apply to the Company's Boswell, Laskin and Hibbard plants, as well
as Square Butte.
The Clean Air Act creates emission allowances for sulfur dioxide based
on formulas relating to the permitted 1985 emissions rate and a baseline of
average fossil fuel consumed in the years 1985, 1986 and 1987. Each allowance is
an authorization to emit one ton of sulfur dioxide, and each utility must have
sufficient allowances to cover its annual emissions. Minnesota Power's
generating facilities in Minnesota burn mainly low-sulfur western coal and
Square Butte, located in North Dakota, burns lignite coal. All of these
facilities are equipped with pollution control equipment such as scrubbers,
baghouses or electrostatic precipitators. Phase II sulfur dioxide emission
requirements are currently being met by Boswell Unit 4. Some moderate reductions
in emissions may be necessary for Boswell Units 1, 2 and 3, Laskin Units 1 and
2, and Square Butte to meet the Phase II sulfur dioxide emission requirements.
The Company believes it is in a good position to comply with the sulfur dioxide
standards without extensive modifications. Any required reductions at the
Minnesota generating facilities are expected to be achieved through the use of
lower sulfur coal. Square Butte anticipates meeting its sulfur dioxide
requirements through increased use of existing scrubbers or by purchasing
additional allowances.
The EPA, pursuant to the Clean Air Act, has established nitrogen oxide
limitations for Phase II generating units. To meet Phase II nitrogen oxide
limitations, the Company expects to install at its plants low-nitrogen oxide
burner technology by the year 2000. The total cost of installing the
low-nitrogen oxide burner technology and associated facilities for Boswell and
Laskin is currently estimated to be $6 million. Options for complying with the
nitrogen oxide limitations at Square Butte are being studied at this time and
include operational changes, capital expenditures and seeking regulatory relief.
The EPA decided not to promulgate nitrogen oxide limitations for the type of
boilers at Hibbard.
The Company is participating in a voluntary program (Climate Challenge)
with the U.S. Department of Energy to identify activities that the Company has
taken and additional measures that the Company may undertake on a voluntary
basis that will result in limitations, reductions or sequestrations of
greenhouse gas emissions by the year 2000. The Company has agreed to participate
in this voluntary program provided that such participation is consistent with
the Company's integrated resource planning process, does not have a material
adverse effect on the Company's competitive position with respect to rates and
costs, and continues to be acceptable to the Company's regulators. The costs to
Minnesota Power associated with Climate Challenge participation are minor,
reflecting program facilitation and voluntary reporting costs.
Water
The Federal Water Pollution Control Act of 1972 (FWPCA), as amended by
the Clean Water Act of 1977 and the Water Quality Act of 1987, established the
National Pollutant Discharge Elimination System (NPDES) permit program. The
FWPCA requires that NPDES permits be obtained from the EPA (or, when delegated,
from individual state pollution control agencies) for any wastewater discharged
into navigable waters. The Company has obtained all necessary NPDES permits,
including NPDES storm water permits for applicable facilities, to conduct its
electric operations.
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Summary of National Pollutant Discharge Elimination System Permits
- --------------------------------------------------------------------------------
Facility Issue Date Expiration Date
- -------- ---------- ---------------
Laskin December 22, 1993 October 31, 1998
Boswell February 4, 1993 December 31, 1997
Hibbard September 29, 1994 June 30, 1999
Arrowhead DC Terminal June 17, 1996 March 31, 2001
General Office Building/
Lake Superior Plaza May 1, 1995 December 31, 1997
Square Butte July 1, 1995 June 30, 2000
The Company holds from the FERC licenses authorizing the ownership and
operation of seven hydroelectric generating projects with a total generating
capacity of 121 MW. In 1991 the Company submitted applications for new licenses
for four of the projects. By orders issued in 1993, the FERC granted new
licenses with terms of 30 years each, expiring December 31, 2023, for the Little
Falls (4.7 MW), Sylvan (1.8 MW), and Prairie River (1.1 MW) projects.
On July 13, 1995, the FERC issued to the Company a 30-year license for
the St. Louis River hydroelectric project (87.6 MW), with an effective date of
July 1, 1995. The Company filed a request for rehearing of the FERC's order for
the purpose of challenging certain terms and conditions of the license which, if
accepted by the Company, would alter the Company's operation of the project. In
1996 the FERC issued a new license in response to the rehearing request and
extended the license term from 30 to 40 years because of the anticipated impact
of FERC's mandates to mitigate environmental consequences of the project. The
FERC also directed the Company to negotiate with the Fond du Lac Band of Lake
Superior Chippewa a reasonable annual charge for the use of tribal lands within
the project. In June 1996 the Company filed in the U.S. Court of Appeals for the
District of Columbia Circuit a petition for review of the 1996 license as issued
by the FERC. Separate petitions for review were also filed in June 1996 in the
same court by the U.S. Department of the Interior and the Fond du Lac Band of
Lake Superior Chippewa, two intervenors in the licensing proceedings. The issues
to be resolved concern the terms and conditions of the license which will govern
the Company's operation and maintenance of the project. In July 1996 the court
consolidated the three petitions for review. In October 1996 the Company filed
with the court an unopposed motion for a procedural schedule pursuant to which
the briefing of the issues would be completed in May 1997. The motion was
granted by the court; however, the briefing schedule has been suspended while
the Company and the Fond du Lac Band negotiate the reasonable fee for use of
tribal lands as mandated by the new license. Both parties have informed the
court that these negotiations may resolve other disputed issues, and they are
obligated to report to the court periodically the status of these discussions.
An application to relicense the Pillager project (1.5 MW) was filed
with the FERC on May 11, 1995. The FERC will perform an engineering,
environmental and economic analysis of that application in order to determine
whether to issue a new license for the project. The current license for the
project expires on May 11, 1997. FERC scoping meetings to discuss any
environmental and operational issues related to this project were held in
October 1996 with the resource agencies and the public. The FERC staff sought
input related to any water quality, fishery, terrestrial, cultural and
recreation issues that the agencies and public have prior to preparing the
environmental assessment for this project. To date, no substantive issues have
been raised by the resource agencies or the public in the license process. In
the event that the current license should expire prior to the issuance of a new
license, the FERC is required to issue an annual license to the Company under
the terms and conditions of the existing license until the new license is
issued.
The two remaining hydroelectric projects, Blanchard (18 MW) and Winton
(4 MW) have FERC licenses that expire in 2003. The Company is currently in the
planning stages for the relicensing of these two facilities.
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Solid Waste
The Resource Conservation and Recovery Act of 1976 regulates the
management and disposal of solid wastes. As a result of this legislation, the
EPA has promulgated various hazardous waste rules. The Company is required to
notify the EPA of hazardous waste activity and routinely submits the necessary
annual reports to the EPA.
In response to EPA Region V's request for utilities to participate in
their Great Lakes Initiative by voluntarily removing remaining polychlorinated
biphenyl (PCB) inventories, the Company is scheduling replacement of
PCB-contaminated oil from substation equipment by 1998 and removal of PCB
capacitors by 2004. The total cost is expected to be between $1.5 and $2 million
of which $300,000 was expended through December 31, 1996. The Company expects to
expend about $110,000 in 1997.
Mining Control and Reclamation
BNI Coal's mining operations are governed by the Federal Surface Mining
Control and Reclamation Act of 1977. This Act, together with the rules and
regulations adopted thereunder by the Department of the Interior, Office of
Surface Mining Reclamation and Enforcement (OSM), governs the approval or
disapproval of all mining permits on federally owned land and the actions of the
OSM in approving or disapproving state regulatory programs regulating mining
activities. The North Dakota Reclamation of Strip Mined Lands Act and rules and
regulations enacted thereunder in 1969, as subsequently amended by the North
Dakota Mining and Reclamation Act and rules and regulations enacted thereunder
in 1977, govern the reclamation of surface mined lands and are generally as
stringent or more stringent than the federal rules and regulations. Compliance
is monitored by the North Dakota Public Service Commission. The federal and
state laws and regulations require a wide range of procedures including water
management, topsoil and subsoil segregation, stockpiling and revegetation, and
the posting of performance bonds to assure compliance. In general, these laws
and regulations require the reclaiming of mined lands to a level of usefulness
equal to or greater than that available before active mining. The Company
considers BNI Coal to be in substantial compliance with those environmental
regulations currently applicable to its operations and believes all necessary
permits to conduct such operations have been obtained.
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Water Services
Water services include Florida Water, Heater and ISI, three wholly
owned subsidiaries of the Company. Water services have been upgrading existing
facilities, building new facilities, acquiring new systems and expanding
unregulated services.
- Florida Water, formerly Southern States Utilities, Inc., owns and
operates water and wastewater treatment facilities in Florida.
Florida Water is the largest investor owned water supplier in
Florida. As of December 31, 1996, Florida Water served 120,000
water customers and 54,000 wastewater treatment customers.
- Heater owns and operates three companies which provide water and
wastewater treatment services in North Carolina and South Carolina.
As of December 31, 1996, these companies served 22,000 water
customers and 1,000 wastewater treatment customers.
During 1996 Heater made a strategic decision to exit the South
Carolina water and wastewater utility business. In March 1996
Heater of Seabrook, Inc. (Seabrook), a wholly owned subsidiary of
Heater, sold all of its water and wastewater utility assets to the
Town of Seabrook Island, South Carolina for $5.9 million. This sale
was negotiated in anticipation of an eminent domain action by the
Town of Seabrook Island, South Carolina. In December 1996 Heater
sold its Columbia, South Carolina area water systems to South
Carolina Water and Sewer, L.L.C. One service area remains and the
pending sale is anticipated to be finalized in 1997. (See South
Carolina Public Service Commission.)
On December 31, 1996, Heater and the shareholders of LaGrange
Waterworks Corporation (LaGrange), a water utility serving 5,300
customers near Fayetteville, North Carolina, requested the NCUC to
approve the transfer of LaGrange to Heater in a stock transaction.
The NCUC held hearings on February 19 and March 13, 1997. An order
is expected in May 1997.
- Instrumentation Services, Inc. provides predictive maintenance
services to water utility companies and other industrial operations
in North Carolina, South Carolina, Florida, Georgia, Tennessee,
Virginia and Texas. The Company acquired ISI in 1996.
Regulatory Issues
Florida Public Service Commission
The following summarizes current rate proceedings in Florida.
1995 Rate Case
Florida Water requested an $18.1 million rate increase in June 1995. On
October 30, 1996, the FPSC issued its final order in the Florida Water rate
case. The final order established water and wastewater rates for all customers
of Florida Water regulated by the FPSC. The new rates, which became effective on
September 20, 1996, resulted in an annualized increase in revenue of
approximately $11.1 million. This increase included, and was not in addition to,
the $7.9 million increase in annualized revenue granted as interim rates
effective on January 23, 1996. The FPSC approved a new rate structure called
"capband," which replaces uniform rates. The new structure combines the concept
of a "cap" on monthly bills at a certain usage level for 85 of Florida Water's
facilities that are more expensive to operate, with a "banding," or grouping, of
rates paid by customers served by the 56 less expensive facilities. On November
1, 1996, Florida Water filed with the Florida First District Court of Appeals
(Court of Appeals) an appeal of the FPSC's final order seeking judicial review
of issues relating to the amount of investment in utility facilities recoverable
in rates from current customers. Motions for reconsideration of the FPSC's final
order were denied by the FPSC on March 19, 1997. The Company is unable to
predict the outcome of this matter. Florida law provides that the new rates be
implemented, subject to refund, while the order is under appeal.
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1991 Rate Case Refund Order
Responding to a Florida Supreme Court decision addressing the issue of
retroactive ratemaking with respect to another company, in March 1996 the FPSC
voted to reconsider an October 1995 order (Refund Order) which would have
required Florida Water to refund about $13 million, which includes interest, to
customers who paid more since October 1993 under uniform rates than they would
have paid under stand-alone rates. Under the Refund Order, the collection
through a surcharge of the $13 million from customers who paid less under
uniform rates would not be permitted. The Refund Order was in response to the
Court of Appeals reversal in April 1995 of the 1993 FPSC order which imposed
uniform rates for most of Florida Water's service areas in Florida. With
"uniform rates," all customers in the uniform rate areas pay the same rates for
water and wastewater services. Uniform rates are an alternative to "stand-alone"
rates which are calculated based on the cost of serving each service area. The
FPSC reconsidered the Refund Order, but upheld by a 3 to 2 vote its decision to
order refunds without surcharges in August 1996. Florida Water filed an appeal
of this decision with the Court of Appeals. A decision on the appeal is
anticipated by early 1998. The Company continues to believe that it would be
improper for the FPSC to order a refund to one group of customers without
permitting recovery of a similar amount from the remaining customers since the
Court of Appeals affirmed the Company's total revenue requirement for operations
in Florida. No provision for refund has been recorded. The Company is unable to
predict the outcome of this matter.
Florida Jurisdictional Issues
In June 1995 the FPSC issued an order assuming jurisdiction over
Florida Water facilities statewide following an investigation of all of Florida
Water's facilities. Several counties in Florida appealed this FPSC decision to
the Court of Appeals. In December 1996 the Court of Appeals issued an opinion
reversing the FPSC order. On December 26, 1996, the FPSC filed a motion for
clarification and for rehearing with the Court of Appeals. The Court of Appeals
denied this motion on January 22, 1997. On February 14, 1997, the FPSC issued an
order which requires Florida Water to charge rates to customers in Hernando
County based on a modified stand-alone rate structure. The imposition of this
rate structure would reduce Florida Water revenue by $1.6 million on a
prospective annual basis. On February 28, 1997, Florida Water filed a motion for
reconsideration of this order. The Company anticipates that a ruling against the
Company on this appeal may encourage other counties to exercise their right to
regulate the rates for water and wastewater facilities located in their
respective counties. In the event county regulation of water and wastewater
rates prevails, the Company anticipates that the regulatory process will become
significantly more complex and expensive.
South Carolina Public Service Commission
During 1994 and 1995 Heater was denied a rate increase from the SCPSC
for requests filed for Seabrook and Upstate Heater Utilities, Inc. (Upstate).
Heater filed appeals for both rate increases and began collecting the higher
rates for water and wastewater services at Seabrook under a surety bond in
February 1995. Rates under bond collected for Seabrook amounted to $359,350 at
December 31, 1996. In August 1996 the South Carolina Supreme Court upheld
Heater's appeal and remanded the case to the SCPSC. Heater continues to hold
these rates under bond pending a final decision from the SCPSC. On February 21,
1997, the SCPSC issued an order granting Seabrook a $66,480 annual revenue
increase. Heater filed a motion for reconsideration in March 1997.
The appeal for Upstate resulted in a remand from the South Carolina
Court of Common Pleas (Court of Common Pleas) and a revised order issued by the
SCPSC in September 1995. Heater filed another appeal with the Court of Common
Pleas, and began collecting the higher rates for water service at Upstate under
a surety bond in January 1996. Rates under bond collected for Upstate totaled
$65,861 at December 31, 1996. If this appeal is denied, Heater must refund the
difference between the amounts collected and the approved rates plus 12 percent
interest. On February 3, 1997, the Court of Common Pleas issued an order
vacating the September 1995 order and remanded the order to the SCPSC. A
decision by the SCPSC is expected in April 1997.
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Capital Expenditure Program
Capital expenditures for water services totaled $22 million during
1996. Expenditures were funded with the proceeds from long-term bonds issued by
Florida Water and internally generated funds. Capital expenditures for the
Company's water services are expected to be $21 million in 1997 to meet
environmental standards, expand water and wastewater treatment facilities to
accommodate customer growth, and for water conservation initiatives. Capital
expenditures are expected to total approximately $85 million during the period
1998 through 2001.
Competition
Water services provide water and wastewater services at regulated rates
within exclusive service territories granted by regulators.
Franchises
Florida Water provides water and wastewater treatment services in 22
counties regulated by the FPSC and holds franchises in three counties which have
retained authority to regulate such operations. (See Regulatory Issues - Florida
Public Service Commission.)
All of the water and wastewater services of Heater are under the
jurisdiction of the SCPSC and the NCUC. These commissions grant franchises for
Heater's service territory when the rates are authorized.
Environmental Matters
The Company's water services are subject to regulation by various
federal, state and local authorities in the areas of water quality, solid
wastes, and other environmental matters. The Company considers its water
services to generally be in compliance with those environmental regulations
currently applicable to its operations and have the permits necessary to conduct
such operations. Except as noted below, the Company does not currently
anticipate that its potential capital expenditures for environmental matters
will be material. However, because environmental laws and regulations are
constantly evolving, the character, scope and ultimate costs of environmental
compliance cannot be estimated.
In 1993 the EPA notified Florida Water of alleged exceedences of
effluent limitations in NPDES permit for Florida Water's facilities in the
University Shores service area in Orange County, Florida. During 1993 and 1994,
Florida Water periodically corresponded and met with the EPA concerning the
alleged exceedences of the permit. In February 1994 the University Shores
facility was modified such that effluent was no longer discharged to surface
waters. In 1992 the EPA notified Florida Water of alleged exceedences of
effluent limitations in the NPDES permit for Florida Water's Seaboard wastewater
treatment facility. Between 1992 and 1994, Florida Water periodically
corresponded and met with the EPA concerning alleged exceedences of the permit.
In March 1994 the facility was taken out of service and the collection system
was interconnected with the City of Tampa Utilities. In February 1997 Florida
Water was notified by the United States Department of Justice (DOJ) that unless
a settlement can be promptly achieved, the DOJ, at the request of the EPA, is
prepared to bring a federal court action against Florida Water seeking civil
penalties for alleged violations of effluent limitations in the NPDES permits
occurring at the University Shores and Seaboard wastewater facilities from
February 1992 through March 1994. For purposes of settlement discussions, the
DOJ proposed a penalty totaling $3.25 million. Florida Water submitted a counter
settlement offer of $141,000 to the DOJ on March 26, 1997. A meeting is
scheduled on April 4, 1997, with the DOJ to discuss settlement options. If the
DOJ pursues litigation, it is possible that the claim against Florida Water
could substantially exceed $3.25 million. If a reasonable resolution is not
reached, Florida Water intends to vigorously contest any action which is
initiated by the DOJ. The Company is currently unable to predict the outcome of
these matters.
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In September 1993 the EPA issued an Administrative Order to Florida
Water regarding operations of Florida Water's facilities in the Woodmere service
area in Duval County, Florida (Woodmere facilities). The EPA required Florida
Water to perform a Toxicity Reduction Evaluation (TRE) to determine the cause of
the toxicity problems with the wastewater effluent. In March 1996 the EPA closed
the Administrative Order and delegated enforcement authority to the Florida
Department of Environmental Protection.
In 1996 water services invested approximately $10.2 million of a $22
million annual capital expenditure budget (or approximately 46 percent) in
facilities necessary to comply with environmental requirements. In 1997 Florida
Water expects that approximately $7.5 million of the $21 million annual capital
expenditure budget (or approximately 36 percent) will be necessary to comply
with environmental requirements.
Automotive Services
Automotive services include ADESA's auction facilities, AFC, which is a
finance company, and an auto transport company. The Company acquired 80 percent
of ADESA on July 1, 1995. On January 31, 1996, the Company provided additional
capital in exchange for an additional 3 percent of ADESA. On August 21, 1996,
the Company acquired the remaining 17 percent interest of ADESA from the ADESA
management shareholders.
- ADESA is a wholly owned subsidiary of the Company and is the third
largest automobile auction business in the United States. ADESA,
headquartered in Indianapolis, Indiana, owns and operates 24
automobile auction facilities in the United States and Canada
through which used cars and other vehicles are sold to franchised
automobile dealers and licensed used car dealers. Sellers at
ADESA's auctions include domestic and foreign auto manufacturers,
car dealers, fleet/lease companies, banks and finance companies.
ADESA opened new auto auctions in Manville, New Jersey;
Jacksonville, Florida and Moncton, New Brunswick, Canada in 1996.
ADESA also acquired auction businesses in Houston, San Antonio and
Dallas, Texas; Portage, Wisconsin and Pittsburgh, Pennsylvania
during 1996.
- Automotive Finance Corporation provides inventory financing for
wholesale and retail automobile dealers who purchase vehicles from
ADESA auctions, independent auctions as well as auction chains. AFC
is headquartered in Indianapolis, Indiana, and has over 40 loan
production offices which are located at most ADESA auctions, as
well as several independently owned auto auctions. AFC expects to
expand in 1997.
- ADESA Auto Transport, Inc., a wholly owned subsidiary of ADESA, is
one of the nation's largest independent automobile transport
carriers with about 90 transport vehicles. ADESA Auto Transport,
Inc. offers customers pick up and delivery, four strategically
located transportation hubs and an on-site transportation
representative at every ADESA auction. It hauls vehicles for major
customers including GE Capital, Nissan, Ford Motor Credit and
General Motors Acceptance Corp. During 1996 over 100,000 cars were
transported within the United States by ADESA.
Capital Expenditure Program
Capital expenditures for automobile auction site relocation,
development and facility improvements were $41 million during 1996. Greenfield
projects at Manville, New Jersey; Jacksonville, Florida; and Moncton, New
Brunswick, Canada and relocation projects in Indianapolis, Indiana and
Cincinnati, Ohio began operations in 1996. In February 1997 ADESA consolidated a
small auction facility in Concord, Massachusetts with its Boston facility.
Capital expenditures for the automobile auction business are expected to be
$7 million in 1997 and to total approximately $40 million during the period 1998
through 2001. Capital expenditures in 1997 are for on-going improvements and new
information systems at existing automobile auction sites.
-16-
<PAGE>
Competition
Within the automobile auction industry, ADESA's competition includes
independently owned auctions as well as major chains and associations with
auctions in geographic proximity. ADESA competes with other auctions for a
supply of automobiles to be sold on consignment for automobile dealers,
financial institutions and other sellers. ADESA also competes for a supply of
rental repurchase vehicles from automobile manufacturers for auction at factory
sales. The automobile manufacturers often choose between auctions across
multi-state areas in distributing rental repurchase vehicles. ADESA competes for
these sellers of automobiles by attempting to attract a large number of dealers
to purchase vehicles, which ensures competitive prices and supports the volume
of vehicles auctioned, and by providing a full range of services including
reconditioning services which prepare automobiles for auction, transporting
automobiles and the prompt processing of sale transactions. Another factor
affecting the industry, the impact of which is yet to be determined, is the
entrance of the "superstore", large used car dealerships, that have emerged in
densely populated markets.
AFC is well positioned as a provider of floorplan financing services to
the used vehicle industry. AFC's competition includes other specialty lenders,
as well as banks and other financial institutions. AFC competes with other
floorplan providers and strives to distinguish itself based upon ease of use,
quality of service and price. A key component of AFC's program is on-site
personnel to assist automobile dealers with their financing needs.
Auto auction sales for the industry are expected to rise at a rate of 6
percent to 8 percent annually. With the increased popularity of leasing and the
high cost of new cars, the same cars may come to auction more than once.
Automotive services expect to participate in this industry's growth through
selective acquisitions and expanded services.
Environmental Matters
The Company's automotive services business is subject to regulation by
various federal, state and local authorities in the areas of air quality, water
quality, solid wastes, and other environmental matters. The Company considers
operations of this business to be in substantial compliance with those
environmental regulations currently applicable to its operations and believes
all necessary permits to conduct such operations have been obtained. The Company
does not currently anticipate that its potential capital expenditures for
environmental matters will be material. However, because environmental laws and
regulations are constantly evolving, the character, scope and ultimate costs of
environmental compliance cannot be estimated.
-17-
<PAGE>
Investments
The investments segment is comprised of real estate operations,
financial guaranty reinsurance and a portfolio of securities.
- Real Estate Operations. The Company owns 80 percent of Lehigh, a
Florida real estate company. Lehigh owns 4,000 acres of land and
approximately 8,000 home sites near Fort Myers, Florida, 1,100 home
sites in Citrus County, Florida, and 3,000 home sites and 13,000
acres of residential, commercial and industrial land at Palm Coast,
Florida. The Palm Coast properties and $18 million receivable
portfolio were purchased in April 1996. The real estate strategy is
to acquire large residential community properties at low cost, add
value, and sell them at going market prices.
- Reinsurance. Minnesota Power has a 21 percent equity investment in
Capital Re. Capital Re is a Delaware holding company engaged
primarily in financial and mortgage guaranty reinsurance through
its wholly owned subsidiaries, Capital Reinsurance Company and
Capital Mortgage Reinsurance Company. Capital Reinsurance Company
is a reinsurer of financial guarantees of municipal and
non-municipal debt obligations. Capital Mortgage Reinsurance
Company is a reinsurer of residential mortgage guaranty insurance.
The Company's equity investment in Capital Re at December 31, 1996,
was $102 million.
- Securities Portfolio. Minnesota Power manages a securities
portfolio which is intended to provide earnings and cash flow
contributions and is available for reinvestment in existing
businesses, acquisitions and other corporate purposes. The Company
plans to continue to concentrate in market neutral strategies that
are designed to provide stable and acceptable returns without
sacrificing needed liquidity. Returns will continue to be partially
dependent on general market conditions. As of December 31, 1996,
the Company had approximately $155 million invested in the
securities portfolio.
Environmental Matters
Certain businesses included in the Company's investments segment are
subject to regulation by various federal, state and local authorities in the
areas of air quality, water quality, solid wastes, and other environmental
matters. The Company considers these businesses to be in substantial compliance
with those environmental regulations currently applicable to its operations and
believes all necessary permits to conduct such operations have been obtained.
The Company does not currently anticipate that its potential capital
expenditures for environmental matters will be material. However, because
environmental laws and regulations are constantly evolving, the character, scope
and ultimate costs of environmental compliance cannot be estimated.
-18-
<PAGE>
Executive Officers of the Registrant
Initial
Executive Officers Effective Date
- ------------------ --------------
Edwin L. Russell, Age 52
Chairman, President and Chief Executive Officer May 14, 1996
President and Chief Executive Officer January 22, 1996
President May 9, 1995
Robert D. Edwards, Age 52
Executive Vice President and President - MP Electric July 26, 1995
Executive Vice President and Chief Operating Officer March 1, 1993
Group Vice President - Corporate Services and
Chief Financial Officer January 1, 1991
John A. Cirello, Age 53
Executive Vice President and President and
Chief Executive Officer - MP Water Resources July 24, 1995
James P. Hallett, Age 43
President and Chief Executive Officer - ADESA August 21, 1996
John E. Fuller, Age 53
President and
Chief Executive Officer - Automotive Finance
Corporation January 1, 1994
Donnie R. Crandell, Age 53
Senior Vice President and President - MP Real
Estate Holdings January 1, 1996
Senior Vice President - Corporate Development December 1, 1994
Retired February 28, 1994
Vice President - Corporate Development March 1, 1993
David G. Gartzke, Age 53
Senior Vice President - Finance and Chief Financial
Officer December 1, 1994
Vice President - Finance and Chief Financial Officer March 1, 1993
Vice President - Finance and Treasurer January 1, 1991
Laurence H. Fuller, 48
Vice President - Corporate Development February 10, 1997
Philip R. Halverson, Age 48
Vice President, General Counsel and Secretary January 1, 1996
General Counsel and Corporate Secretary March 1, 1993
General Counsel and Assistant Secretary January 23, 1991
James A. Roberts, Age 46
Vice President - Corporate Relations January 1, 1996
Mark A. Schober, Age 41
Controller March 1, 1993
James K. Vizanko, Age 43
Treasurer March 1, 1993
-19-
<PAGE>
All of the executive officers above, except Mr. Russell, Mr. Cirello,
Mr. Crandell, Mr. Hallet, Mr. John Fuller, and Mr. Laurence Fuller, had been
employed by the Company for more than five years in executive or management
positions. Mr. Russell was previously group vice president of J. M. Huber
Corporation, a $1.5 billion diversified manufacturing and natural resources
company; Mr. Cirello was president of Metcalf & Eddy Services, Inc. from 1992 to
1995, responsible for $64 million in water/wastewater operation services, and
before that was vice president - Eastern Region of Chemical Waste Management;
Mr. Crandell was director of business development of the Company, vice president
of Topeka and vice president of business development for Topeka prior to March
1, 1993; Mr. Hallet was previously executive vice president of ADESA and
president of ADESA's Canadian operations; Mr. John Fuller was previously
president and 50 percent owner of CITA, Inc., which he founded in 1987 (CITA was
renamed Automotive Finance Corporation in December 1993 and sold to ADESA
Corporation in January 1994); and Mr. Laurence Fuller was previously senior vice
president, new business development and strategic planning, for Diners Club
International, a subsidiary of CitiCorp, Inc. Prior to election to the positions
shown above, the following executive officers held other positions with the
Company after January 1, 1992: Mr. Roberts was director of corporate relations
and director of governmental relations; Mr. Schober was director of internal
audit; and Mr. Vizanko was director of investments and analysis, and manager of
financial planning and analysis. There are no family relationships between any
executive officers of the Company. All officers and directors are elected or
appointed annually.
The present term of office of the above executive officers extends to
the first meeting of the Company's Board of Directors after the next annual
meeting of shareholders. Both meetings are scheduled for May 13, 1997.
-20-
<PAGE>
Item 2. Properties.
Electric Operations
The Company had an annual and all-time record net peak load of 1,462 MW
on November 12, 1996. The Company's average 1996 load factor was 87 percent.
Information with respect to existing power supply sources is shown below.
<TABLE>
<CAPTION>
Unit Year Net Winter Net Electric
Power Supply No. Installed Capability Requirements
------------ --- --------- ---------- ------------
(MW) (MWh) (%)
<S> <C> <C> <C> <C> <C>
Steam
Coal-Fired
Boswell Energy Center
near Grand Rapids, MN 1 1958 69
2 1960 69
3 1973 350
4 1980 428
-----
916 5,980,330 43.1%
-----
Laskin Energy Center
Hoyt Lakes, MN 1 1953 55
2 1953 55
-----
110 418,261 3.0
-----
Coal-Wood Chip Fired
M. L. Hibbard
Duluth, MN 3 1949 33 28 -
----- ---------- -----
Total Steam 1,059 6,398,619 46.1
----- ---------- -----
Hydro
Group consisting of ten stations in MN Various 121 687,537 5.0
----- ---------- -----
Purchased Power
Square Butte burns lignite in Center, ND 333 2,392,514 17.2
All other - net - 4,393,680 31.7
----- ---------- -----
Total Purchased Power 333 6,786,194 48.9
----- ---------- -----
For the Year Ended December 31, 1996 1,513 13,872,350 100.0%
===== ========== =====
</TABLE>
The Company has electric transmission and distribution lines of 500
kilovolts (kV) (7.8 miles), 230 kV (606.4 miles), 161 kV (42.9 miles), 138 kV
(5.8 miles), 115 kV (1,257.3 miles) and less than 115 kV (6,114.1 miles). The
Company owns and operates 178 substations with a total capacity of 8,539.2
megavoltamperes. Some of the transmission and distribution lines interconnect
with other utilities.
The Company owns and has a substantial investment in offices and
service buildings, area headquarters, an energy control center, repair shops,
motor vehicles, construction equipment and tools, office furniture and
equipment, and leases offices and storerooms in various localities within the
Company's service territory. It also owns miscellaneous parcels of real estate
not presently used in electric operations.
Substantially all of the electric plant of the Company is subject to
the lien of its Mortgage and Deed of Trust which secures first mortgage bonds
issued by the Company. The Company's properties are held by it in fee and are
free from other encumbrances, subject to minor exceptions, none of which are of
such a nature as to substantially impair the usefulness to the Company of such
properties. Other property, including certain offices and equipment, is utilized
under leases. In general, some of the electric lines are located on land not
owned in fee, but are covered by necessary consents of various governmental
authorities or by appropriate rights obtained from owners of private property.
These consents and rights are deemed adequate for the purposes for which the
properties are being used. In September 1990 the Company sold a portion of
Boswell Unit 4 to WPPI. WPPI has the right to use the Company's transmission
line facilities to transport its share of generation.
-21-
<PAGE>
Substantially all of the plant of SWL&P is subject to the lien of its
Mortgage and Deed of Trust which secures first mortgage bonds issued by SWL&P.
Approximately one-half of BNI Coal's equipment is leased under a leveraged lease
agreement which expires in 2002. The remaining property and equipment are owned
by BNI Coal.
The Company is a member of the Mid-Continent Area Power Pool (MAPP).
The MAPP enhances electric service reliability, and provides the opportunity for
members to enter into various wholesale power transactions and coordinate
planning, installation and operation of new generation and transmission
facilities. The MAPP membership consists of various electric power suppliers
located in North Dakota, South Dakota, eastern Montana, Nebraska, Iowa,
Minnesota, Wisconsin, upper Michigan, Kansas, Manitoba and Saskatchewan and
marketers and brokers located throughout North America. The electric power
suppliers are investor-owned utilities including the Company, rural electric
generation and transmission cooperatives, public power districts, municipal
electric systems, municipal organizations, and the Western Area Power
Administration - Billings, Montana. MAPP operates pursuant to an agreement that
was approved by MAPP members on March 15, 1996, accepted by the FERC and became
effective on November 1, 1996.
Water Services
Florida Water is largest investor owned provider of water and
wastewater services in Florida, serving more than 170,000 customers over 120
communities. Florida Water maintains more than 150 water and wastewater
facilities throughout the state with plants ranging in size from 6 connections
to greater than 25,000 connections. Florida Water provides its customers with
12 billion gallons of water per year primarily from Florida's underground
aquifer. Substantially all of Florida Water's properties used in its water and
wastewater operations are encumbered by a mortgage.
Heater has water and wastewater systems located in subdivisions
surrounding Raleigh, North Carolina, Fayetteville, North Carolina and Anderson,
South Carolina. Water supply is primarily from ground water deep wells.
Community ground water systems vary in size from 25 connections to 6,000
connections. Some systems are supplied by purchased water. Heater has
approximately 180 systems and 375 wells serving 22,000 customers. Heater also
has six wastewater treatment plants, ranging in size from 35,000 gallons per day
(gpd) to 250,000 gpd, and 17 lift stations located in its wastewater collection
systems. These systems serve approximately 1,000 customers. Substantially all of
Heater's properties used in its water and wastewater operations are encumbered
by a mortgage.
Investments
Property within the Company's real estate operations consists of 4,000
acres of land and approximately 8,000 home sites near Fort Myers, Florida; 1,110
home sites in Citrus County, Florida; and 3,000 home sites and 13,000 acres of
residential, industrial and commercial land at Palm Coast, Florida.
-22-
<PAGE>
Automotive Services
The following table sets forth the auto auctions currently owned or leased
by ADESA. Each auction has a multi-lane, drive-through auction facility, as well
as additional buildings for reconditioning, registration, maintenance, body work
and other ancillary and administrative services. Each auction also has secure
parking areas in which it stores vehicles for auction. All automobile auction
property owned by ADESA is subject to liens securing various notes payable.
<TABLE>
<CAPTION>
Year No.
Operations Auction
ADESA Auctions Location Commenced Lanes
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States
ADESA Birmingham Moody, Alabama 1987 10
ADESA Sarasota/Bradenton Bradenton, Florida 1990 6
ADESA Jacksonville Jacksonville, Florida 1996 6
ADESA South Florida <F1><F2> Opa-Locka, Florida (near Miami) 1994 7
ADESA Indianapolis Plainfield, Indiana 1983 10
ADESA Lexington Lexington, Kentucky 1982 6
ADESA Boston <F2> Framingham, Massachusetts 1995 11
ADESA New Jersey Manville, New Jersey 1996 8
ADESA Buffalo Akron, New York 1992 10
ADESA Charlotte <F2> Charlotte, North Carolina 1994 8
ADESA Cincinnati-Dayton Franklin, Ohio 1986 8
ADESA Cleveland <F2> Northfield, Ohio 1994 8
ADESA Pittsburgh Pittsburgh, Pennsylvania 1971 7
ADESA Knoxville <F2> Lenoir City, Tennessee 1984 6
ADESA Memphis Memphis, Tennessee 1990 6
ADESA Austin <F2> Austin, Texas 1990 6
ADESA Dallas Dallas, Texas 1990 6
ADESA Houston Houston, Texas 1995 3
ADESA San Antonio San Antonio, Texas 1989 5
ADESA Wisconsin Portage, Wisconsin 1984 5
Canada
ADESA Moncton <F2> Moncton, New Brunswick 1996 2
ADESA Halifax <F2> Lr. Sackville, Nova Scotia 1993 2
ADESA Ottawa Vars, Ontario 1990 5
ADESA Montreal St. Eustache, Quebec 1974 8
- -------------------------------------------------------------------------------------------------------------------
<FN>
<F1> ADESA Corporation owns 51 percent of this auction facility.
<F2> Leased auction facilities.(See Note 12.)
</FN>
</TABLE>
Item 3. Legal Proceedings.
Material legal and regulatory proceedings are included in the discussion of
the Company's business in Item 1 and are incorporated by reference herein.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth
quarter of 1996.
-23-
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
The Company has paid dividends without interruption on its common stock
since 1948. A quarterly dividend of $.51 per share on the common stock was paid
on March 1, 1997, to the holders of record on February 14, 1997. The Company's
common stock is listed on the New York Stock Exchange. Dividends paid per share
and the high and low prices for the Company's common stock for the periods
indicated as reported by The Wall Street Journal, Midwest Edition, were as
follows:
Dividends
Price Range Paid Per Share
----------- --------------
Quarter High Low Quarterly Annual
------- ---- --- --------- ------
1996 - First $ 29 3/4 $ 26 1/8 $ .51
- Second 29 26 .51
- Third 28 3/4 26 .51
- Fourth 28 7/8 26 3/8 .51 $2.04
1995 - First $ 26 3/8 $ 24 1/4 $ .51
- Second 28 25 1/4 .51
- Third 28 1/8 26 3/8 .51
- Fourth 29 1/4 27 1/2 .51 $2.04
The amount and timing of dividends payable on the Company's common
stock are within the sole discretion of the Company's Board of Directors. In
1996 the Company paid out 90 percent of its per share earnings in dividends.
Over the longer term, the Company's goal is to reduce dividend payout to between
75 percent and 80 percent of per share earnings. This is expected to be
accomplished by increasing earnings rather than reducing dividends.
The Company's Articles of Incorporation and Mortgage and Deed of Trust
contain provisions which under certain circumstances would restrict the payment
of common stock dividends. As of December 31, 1996, no retained earnings were
restricted as a result of these provisions. At March 1, 1997, there were
approximately 24,000 common stock shareholders of record.
-24-
<PAGE>
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
In thousands except per share amounts
<S> <C> <C> <C> <C> <C>
Operating Revenue and Income $ 846,928 $ 672,917 $ 582,169 $ 582,495 $ 575,503
Income (Loss)
Continuing Operations $ 69,221 $ 61,857 $ 59,465 $64,374 $ 67,821
Discontinued Operations - 2,848 1,868 (1,753) 636
--------- --------- --------- --------- ---------
Before Extraordinary Item 69,221 64,705 61,333 62,621 68,457
Extraordinary Gain - - - - 4,831
--------- --------- --------- --------- ---------
Net Income $ 69,221 $ 64,705 $ 61,333 $62,621 $ 73,288
========= ========= ========= ========= =========
Earnings Per Share
Continuing Operations $2.28 $2.06 $1.99 $2.27 $2.29
Discontinued Operations - .10 .07 (.07) .02
----- ----- ----- ----- -----
Before Extraordinary Item 2.28 2.16 2.06 2.20 2.31
Extraordinary Item - - - - 0.16
----- ----- ----- ----- -----
Total $2.28<F1> $2.16<F2> $2.06<F3> $2.20<F4> $2.47<F5>
===== ===== ===== ===== =====
Dividends Per Share $2.04 $2.04 $2.02 $1.98 $1.94
Total Assets $2,146,049 $1,947,625 $1,807,798 $1,760,526 $1,625,504
Long-Term Debt $ 694,423 $ 639,548 $ 601,317 $ 611,144 $ 541,960
Redeemable Preferred Stock $ 20,000 $ 20,000 $ 20,000 $20,000 $ 21,000
Cumulative Quarterly Income
Preferred Securities $ 75,000 - - - -
- ---------------------------
<FN>
<F1> Includes 22 cents per share from the recognition of tax benefits
associated with real estate operations.
<F2> Includes 52 cents per share from the recognition of tax benefits
associated with real estate operations and a 14 cent per share reduction
associated with exiting the equipment manufacturing business.
<F3> Includes 42 cents per share from the sale of certain water plant assets,
13 cents per share from the recognition of escrow funds associated with
real estate operations, a 21 cent per share decrease from the write-off of
an investment and an 11 cent per share loss from the equipment
manufacturing business.
<F4> Includes a 6 cent per share increase as a result of the adoption of
Statement of Position No. 93-6 "Employers' Accounting for Employee Stock
Ownership Plans," issued by the American Institute of Certified Public
Accountants.
<F5> Includes an extraordinary gain of 16 cents per share from the early
extinguishment of debt.
</FN>
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The management's discussion and analysis of financial condition and
results of operations appearing on pages 13 through 22 of the Minnesota Power
1996 Annual Report are incorporated by reference in this Form 10-K Annual
Report.
Item 8. Financial Statements and Supplementary Data.
The financial statements, together with the report thereon of Price
Waterhouse LLP dated January 27, 1997, appearing on pages 23 through 40 of the
Minnesota Power 1996 Annual Report, are incorporated by reference in this Form
10-K Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
-25-
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required for this Item is incorporated by reference
herein from the "Election of Directors" section in the Company's Proxy Statement
for the 1997 Annual Meeting of Shareholders, except for information with respect
to executive officers which is set forth in Part I hereof.
Item 11. Executive Compensation.
The information required for this Item is incorporated by reference
herein from the "Compensation of Executive Officers" section in the Company's
Proxy Statement for the 1997 Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required for this Item is incorporated by reference
herein from the "Security Ownership of Certain Beneficial Owners and Management"
section in the Company's Proxy Statement for the 1997 Annual Meeting of
Shareholders.
Item 13. Certain Relationships and Related Transactions.
The information required for this Item is incorporated by reference
herein from the "Certain Relationships and Related Transactions" section in the
Company's Proxy Statement for the 1997 Annual Meeting of Shareholders.
-26-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Certain Documents Filed as Part of Form 10-K.
(1) Financial Statements
Pages in
Annual Report*
--------------
Minnesota Power
Report of Independent Accountants 23
Consolidated Balance Sheet at December 31, 1996
and 1995 24
For the three years ended December 31, 1996
Consolidated Statement of Income 25
Consolidated Statement of Retained Earnings 25
Consolidated Statement of Cash Flows 26
Notes to Consolidated Financial Statements 27-40
- ------------------
* Incorporated by reference herein from the Minnesota Power 1996 Annual
Report.
Page
----
(2) Financial Statement Schedules
Report of Independent Accountants on Financial
Statement Schedule 32
Minnesota Power and Subsidiaries Schedule:
II-Valuation and Qualifying Accounts and
Reserves 33
All other schedules have been omitted either because the information is
not required to be reported by the Company or because the information is
included in the consolidated financial statements or the notes thereto.
(3) Exhibits including those incorporated by reference
Exhibit
Number
- -------
*2 - Agreement and Plan of Merger by and among Minnesota Power & Light
Company, AC Acquisition Sub, Inc., ADESA Corporation and
Certain ADESA Management Shareholders dated February 23, 1995
(filed as Exhibit 2 to Form 8-K dated March 3, 1995, File
No. 1-3548).
*3(a)1 - Articles of Incorporation, restated as of July 27, 1988 (filed as
Exhibit 3(a), File No. 33-24936).
*3(a)2 - Certificate Fixing Terms of Serial Preferred Stock A, $7.125
Series (filed as Exhibit 3(a)2, File No. 33-50143).
*3(a)3 - Certificate Fixing Terms of Serial Preferred Stock A, $6.70
Series (filed as Exhibit 3(a)3, File No. 33-50143).
*3(b) - Bylaws as amended January 23, 1991 (filed as Exhibit 3(b), File
No. 33-45549).
-27-
<PAGE>
Exhibit
Number
- -------
*4(a)1 - Mortgage and Deed of Trust, dated as of September 1, 1945, between
the Company and Irving Trust Company (now The Bank of New York)
and Richard H. West (W.T. Cunningham, successor), Trustees (filed
as Exhibit 7(c), File No. 2-5865).
*4(a)2 - Supplemental Indentures to Mortgage and Deed of Trust:
Reference
Number Dated as of File Exhibit
------ ----------- --------- -------
First March 1, 1949 2-7826 7(b)
Second July 1, 1951 2-9036 7(c)
Third March 1, 1957 2-13075 2(c)
Fourth January 1, 1968 2-27794 2(c)
Fifth April 1, 1971 2-39537 2(c)
Sixth August 1, 1975 2-54116 2(c)
Seventh September 1, 1976 2-57014 2(c)
Eighth September 1, 1977 2-59690 2(c)
Ninth April 1, 1978 2-60866 2(c)
Tenth August 1, 1978 2-62852 2(d)2
Eleventh December 1, 1982 2-56649 4(a)3
Twelfth April 1, 1987 33-30224 4(a)3
Thirteenth March 1, 1992 33-47438 4(b)
Fourteenth June 1, 1992 33-55240 4(b)
Fifteenth July 1, 1992 33-55240 4(c)
Sixteenth July 1, 1992 33-55240 4(d)
Seventeenth February 1, 1993 33-50143 4(b)
Eighteenth July 1, 1993 33-50143 4(c)
4(a)3 - Nineteenth Supplemental Indenture, dated as of February 1,
1997, between the Company and The Bank of New York (formerly
Irving Trust Company) and W.T. Cunningham (successor to Richard H.
West), Trustees.
*4(b) - Mortgage and Deed of Trust, dated as of March 1, 1943, between
Superior Water, Light and Power Company and Chemical Bank & Trust
Company and Howard B. Smith, as Trustees, both succeeded by First
Bank N.A., as Trustee (filed as Exhibit 7(c), File No. 2-8668), as
supplemented and modified by First Supplemental Indenture thereto
dated as of March 1, 1951 (filed as Exhibit 2(d)(1), File No.
2-59690), Second Supplemental Indenture thereto dated as of March
1, 1962 (filed as Exhibit 2(d)1, File No. 2-27794), Third
Supplemental Indenture thereto dated July 1, 1976 (filed as
Exhibit 2(e)1, File No. 2-57478), Fourth Supplemental Indenture
thereto dated as of March 1, 1985 (filed as Exhibit 4(b), File No.
2-78641) and Fifth Supplemental Indenture thereto dated as of
December 1, 1992 (filed as Exhibit 4(b)1 to Form 10-K for the year
ended December 31, 1992, File No. 1-3548).
4(b)1 - Sixth Supplemental Indenture, dated as of March 24, 1994,
between Superior Water, Light and Power Company and Chemical Bank
(formerly Chemical Bank & Trust Company) and Peter Morse
(successor to Howard B. Smith), Trustees.
4(b)2 - Seventh Supplemental Indenture, dated as of November 1, 1994,
between Superior Water, Light and Power Company and Chemical Bank
(formerly Chemical Bank & Trust Company) and Peter Morse
(successor to Howard B. Smith), Trustees.
4(b)3 - Eighth Supplemental Indenture, dated as of January 1, 1997,
between Superior Water, Light and Power Company and First Bank
N.A. Trustee.
-28-
<PAGE>
Exhibit
Number
- -------
*4(c) - Indenture, dated as of March 1, 1993, between Southern States
Utilities, Inc. (now Florida Water Services Corporation) and
Nationsbank of Georgia, National Association (now SunTrust Bank,
Central Florida, N.A.), as Trustee (filed as Exhibit 4(d) to Form
10-K for the year ended December 31, 1992, File No. 1-3548).
4(c)1 - First Supplemental Indenture, dated as of March 1, 1993,
between Southern States Utilities, Inc. (now Florida Water
Services Corporation) and Nationsbank of Georgia, National
Association (now SunTrust Bank, Central Florida, N.A.), as
Trustee.
*4(d) - Amended and Restated Trust Agreement, dated as of March 1,
1996, relating to MP&L Capital I's 8.05% Cumulative Quarterly
Income Preferred Securities, between the Company, as Depositor,
and The Bank of New York, The Bank of New York (Delaware), Philip
R. Halverson, David G. Gartzke and James K. Vizanko, as Trustees
(filed as Exhibit 4(a) to Form 10-Q for the quarter ended March
31, 1996, File No. 1-3548).
*4(e) - Amendment No. 1, dated April 11, 1996, to Amended and Restated
Trust Agreement, dated as of March 1, 1996, relating to MP&L
Capital I's 8.05% Cumulative Quarterly Income Preferred Securities
(filed as Exhibit 4(b) to Form 10-Q for the quarter ended March
31, 1996, File No. 1-3548).
*4(f) - Indenture, dated as of March 1, 1996, relating to the Company's
8.05% Junior Subordinated Debentures, Series A, Due 2015, between
the Company and The Bank of New York, as Trustee (filed as Exhibit
4(c) to Form 10-Q for the quarter ended March 31, 1996, File No.
1-3548).
*4(g) - Guarantee Agreement, dated as of March 1, 1996, relating to MP&L
Capital I's 8.05% Cumulative Quarterly Income Preferred
Securities, between the Company, as Guarantor, and The Bank of New
York, as Trustee (filed as Exhibit 4(d) to Form 10-Q for the
quarter ended March 31, 1996, File No. 1-3548).
*4(h) - Agreement as to Expenses and Liabilities, dated as of March 20,
1996, relating to MP&L Capital I's 8.05% Cumulative Quarterly
Income Preferred Securities, between the Company and MP&L Capital
I (filed as Exhibit 4(e) to Form 10-Q for the quarter ended March
31, 1996, File No. 1-3548).
4(i) - Officer's Certificate, dated March 20, 1996, establishing
the terms of the 8.05% Junior Subordinated Debentures, Series A,
Due 2015 issued in connection with the 8.05% Cumulative Quarterly
Income Preferred Securities of MP&L Capital I.
*4(j) - Rights Agreement dated as of July 24, 1996, between Minnesota
Power & Light Company and the Corporate Secretary of Minnesota
Power & Light Company, as Rights Agent (filed as Exhibit 4 to Form
8-K dated August 2, 1996, File No. 1-3548).
4(k) - Indenture, dated as of May 15, 1996, relating to the ADESA
Corporation's 7.70% Senior Notes, Series A, Due 2006, between
ADESA Corporation and The Bank of New York, as Trustee.
4(l) - Guarantee of Minnesota Power & Light Company, dated as of May 30,
1996, relating to the ADESA Corporation's 7.70% Senior Notes,
Series A, Due 2006.
4(m) - ADESA Corporation Officer's Certificate 1-D-1, dated May 30,
1996, relating to the ADESA Corporation's 7.70% Senior Notes,
Series A, Due 2006.
-29-
<PAGE>
Exhibit
Number
- -------
*10(a) - Asset Holdings III, L.P. Note Purchase Agreement, dated as of
November 22, 1994 (filed as Exhibit 10(i) to Form 10-K for the
year ended December 31, 1995, File No. 1-3548).
*10(b) - Lease and Development Agreement, dated as of November 28, 1994
between Asset Holdings III, L.P., as Lessor and A.D.E. of
Knoxville, Inc., as Lessee (filed as Exhibit 10(j) to Form 10-K
for the year ended December 31, 1995, File No. 1-3548).
*10(c) - Lease and Development Agreement, dated as of November 28, 1994
between Asset Holdings III, L.P., as Lessor and ADESA-Charlotte,
Inc., as Lessee (filed as Exhibit 10(k) to Form 10-K for the year
ended December 31, 1995, File No. 1-3548).
*10(d) - Lease and Development Agreement, dated as of December 21, 1994
between Asset Holdings III, L.P., as Lessor and Auto Dealers
Exchange of Concord, Inc., as Lessee (filed as Exhibit 10(l) to
Form 10-K for the year ended December 31, 1995, File No. 1-3548).
*10(e) - Guaranty and Purchase Option Agreement between Asset Holdings III,
L.P. and ADESA Corporation, dated as of November 28, 1994 (filed
as Exhibit 10(m) to Form 10-K for the year ended December 31,
1995, File No. 1-3548).
10(f) - Receivables Purchase Agreement dated as of December 31, 1996,
among AFC Funding Corporation, as Seller, Automotive Finance
Corporation, as Servicer, Pooled Accounts Receivable Capital
Corporation, as Purchaser, and Nesbitt Burns Securities Inc., as
Agent.
10(g) - First Amendment to Receivables Purchase Agreement, dated as
of February 28, 1997, among AFC Funding Corporation, as Seller,
Automotive Finance Corporation, as Servicer, Pooled Accounts
Receivable Capital Corporation, as Purchaser, and Nesbitt Burns
Securities Inc., as Agent.
10(h) - Purchase and Sale Agreement dated as of December 31, 1996,
between AFC Funding Corporation and Automotive Finance
Corporation.
+*10(i) - Minnesota Power Executive Annual Incentive Plan, effective
January 1, 1996 (filed as Exhibit 10(a) to Form 10-K for the year
ended December 31, 1995, File No. 1-3548).
+*10(j) - Minnesota Power and Affiliated Companies Supplemental Executive
Retirement Plan, as amended and restated, effective August 1, 1994
(filed as Exhibit 10(b) to Form 10-K for the year ended December
31, 1995, File No. 1-3548).
+*10(k) - Executive Investment Plan-I, as amended and restated, effective
November 1, 1988 (filed as Exhibit 10(c) to Form 10-K for the year
ended December 31, 1988, File No. 1-3548).
+*10(l) - Executive Investment Plan-II, as amended and restated, effective
November 1, 1988 (filed as Exhibit 10(d) to Form 10-K for the year
ended December 31, 1988, File No. 1-3548).
+*10(m) - Deferred Compensation Trust Agreement, as amended and restated,
effective January 1, 1989 (filed as Exhibit 10(f) to Form 10-K for
the year ended December 31, 1988, File No. 1-3548).
+*10(n) - Executive Long-Term Incentive Plan, as amended and restated,
effective January 1, 1994 (filed as Exhibit 10(e) to Form 10-K for
the year ended December 31, 1994, File No. 1-3548).
+*10(o) - Minnesota Power Executive Long-Term Incentive Compensation Plan,
effective January 1, 1996 (filed as Exhibit 10(a) to Form 10-Q for
the quarter ended June 30, 1996, File No. 1-3548).
-30-
<PAGE>
Exhibit
Number
- -------
+*10(p) - Directors' Long-Term Incentive Plan, as amended and restated,
effective January 1, 1994 (filed as Exhibit 10(f) to Form 10-K for
the year ended December 31, 1994, File No. 1-3548).
+*10(q) - Minnesota Power Director Stock Plan, effective January 1,
1995 (filed as Exhibit 10 to Form 10-Q for the quarter ended March
31, 1995, File No. 1-3548).
+*10(r) - Minnesota Power Director Long-Term Stock Incentive Plan,
effective January 1, 1996 (filed as Exhibit 10(b) to Form 10-Q for
the quarter ended June 30, 1996, File No. 1-3548).
12 - Computation of Ratios of Earnings to Fixed Charges and
Supplemental Ratios of Earnings to Fixed Charges.
13 - Minnesota Power 1996 Annual Report - Management's Discussion and
Analysis of Financial Condition and Results of Operations, and the
Company's financial statements listed in Item 14 (a)(1) of this
report.
*21 - Subsidiaries of the Registrant (reference is made to the Company's
Form U-3A-2 for the year ended December 31, 1996, File No. 69-78).
23(a) - Consent of Independent Accountants.
23(b) - Consent of General Counsel.
*27 - Financial Data Schedule (filed as Exhibit 27 to Form 8-K dated
March 19, 1997, File No. 1-3548).
- --------------------------
* Incorporated herein by reference as indicated.
+ Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this report pursuant to Item 14(c) of Form 10-K.
(b) Reports on Form 8-K.
Report on Form 8-K dated and filed on March 19, 1997, with respect to Item
7. Financial Statements and Exhibits.
-31-
<PAGE>
Report of Independent Accountants
on Financial Statement Schedule
To the Board of Directors
of Minnesota Power
Our audits of the consolidated financial statements referred to in our
report dated January 27, 1997 appearing on page 23 of the 1996 Annual Report to
Shareholders of Minnesota Power (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item 14(a)
of this Form 10-K. In our opinion, the Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
Price Waterhouse LLP
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
January 27, 1997
-32-
<PAGE>
<TABLE>
Schedule II
Minnesota Power and Subsidiaries
Valuation and Qualifying Accounts and Reserves
For the Years Ended December 31, 1996, 1995 and 1994
In thousands
<CAPTION>
Additions
Balance at ----------------------- Deductions Balance at
Beginning Charged Other from End of
of Year to Income Changes Reserves <F1> Period
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reserve deducted from related assets
Provision for uncollectible accounts
1996 Trade accounts receivable $ 3,325 $ 4,697 $ 1,443 $ 2,897 $ 6,568
Other accounts receivable 1,152 188 180 42 1,478
1995 Trade accounts receivable 1,041 3,004 1,453 2,173 3,325
Other accounts receivable 2,773 186 - 1,807 1,152
1994 Trade accounts receivable 1,565 722 116 1,362 1,041
Other accounts receivable 1,135 1,845 - 207 2,773
Deferred asset valuation allowance
1996 Deferred tax assets <F2> 8,943 (8,200) - - 743
1995 Deferred tax assets <F2> 26,878 (17,935) - - 8,943
1994 Deferred tax assets 31,475 - (4,597) - 26,878
- ---------------------------------
<FN>
<F1> Provision for uncollectible accounts includes bad debts written off.
<F2> The deferred tax asset valuation allowance was reduced by $18.4 million
in 1995 and $8.2 million in 1996 based on a detailed analysis of the
projected future taxable income based on a new business strategy for real
estate operations. (See Note 14.)
</FN>
</TABLE>
-33-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MINNESOTA POWER & LIGHT COMPANY
(Registrant)
Dated: March 28, 1997 By EDWIN L. RUSSELL
-----------------------------------
Edwin L. Russell
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
EDWIN L. RUSSELL Chairman, President, March 28, 1997
- ------------------------
Edwin L. Russell Chief Executive Officer
and Director
D.G. GARTZKE Senior Vice President- March 28, 1997
- ------------------------
D.G. Gartzke Finance and
Chief Financial Officer
MARK A. SCHOBER Controller March 28, 1997
- ------------------------
Mark A. Schober
-34-
<PAGE>
Signature Title Date
--------- ----- ----
MERRILL K. CRAGUN Director March 28, 1997
- ------------------------
Merrill K. Cragun
DENNIS E. EVANS Director March 28, 1997
- ------------------------
Dennis E. Evans
PETER J. JOHNSON Director March 28, 1997
- ------------------------
Peter J. Johnson
GEORGE L. MAYER Director March 28, 1997
- ------------------------
George L. Mayer
PAULA F. MCQUEEN Director March 28, 1997
- ------------------------
Paula F. McQueen
ROBERT S. NICKOLOFF Director March 28, 1997
- ------------------------
Robert S. Nickoloff
JACK I. RAJALA Director March 28, 1997
- ------------------------
Jack I. Rajala
AREND J. SANDBULTE Director March 28, 1997
- ------------------------
Arend J. Sandbulte
NICK SMITH Director March 28, 1997
- ------------------------
Nick Smith
BRUCE W. STENDER Director March 28, 1997
- ------------------------
Bruce W. Stender
DONALD C. WEGMILLER Director March 28, 1997
- ------------------------
Donald C. Wegmiller
-35-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.A.3
<SEQUENCE>2
<DESCRIPTION>EXHIBIT 4(A)3
<TEXT>
<PAGE>
Exhibit 4(a)3
<PAGE>
---------------------------------------------------------------------
MINNESOTA POWER & LIGHT COMPANY
TO
THE BANK OF NEW YORK
(formerly Irving Trust Company)
AND
W.T. CUNNINGHAM
(successor to Richard H. West, J.A. Austin,
E.J. McCabe, D.W. May and J.A. Vaughan)
As Trustees under Minnesota Power &
Light Company's Mortgage and Deed of
Trust dated as of September 1, 1945
-------------------------
Nineteenth Supplemental Indenture
Providing among other things for
First Mortgage Bonds, 7% Series Due February 15, 2007
(Twenty-fifth Series)
Dated as of February 1, 1997
---------------------------------------------------------------------
<PAGE>
NINETEENTH SUPPLEMENTAL INDENTURE
THIS INDENTURE, dated as of February 1, 1997, by and between MINNESOTA
POWER & LIGHT COMPANY, a corporation of the State of Minnesota, whose post
office address is 30 West Superior Street, Duluth, Minnesota 55802 (hereinafter
sometimes called the "Company"), and THE BANK OF NEW YORK (formerly Irving Trust
Company), a corporation of the State of New York, whose post office address is
101 Barclay Street, New York, New York 10286 (hereinafter sometimes called the
"Corporate Trustee"), and W. T. CUNNINGHAM (successor to Richard H. West, J. A.
Austin, E. J. McCabe, D. W. May and J. A. Vaughan), whose post office address is
3 Arlington Drive, Denville, New Jersey 07834 (said W. T. Cunningham being
hereinafter sometimes called the "Co-Trustee" and the Corporate Trustee and the
Co-Trustee being hereinafter together sometimes called the "Trustees"), as
Trustees under the Mortgage and Deed of Trust, dated as of September 1, 1945,
between the Company and Irving Trust Company and Richard H. West, as Trustees,
securing bonds issued and to be issued as provided therein (hereinafter
sometimes called the "Mortgage"), reference to which mortgage is hereby made,
this indenture (hereinafter sometimes called the "Nineteenth Supplemental
Indenture") being supplemental thereto:
WHEREAS, the Mortgage was filed and recorded in various official
records in the State of Minnesota; and
WHEREAS, an instrument, dated as of October 16, 1957, was executed and
delivered under which J.A. Austin succeeded Richard H. West as Co-Trustee under
the Mortgage, and such instrument was filed and recorded in various official
records in the State of Minnesota; and
WHEREAS, an instrument, dated as of April 4, 1967, was executed and
delivered under which E. J. McCabe in turn succeeded J. A. Austin as Co-Trustee
under the Mortgage, and such instrument was filed and recorded in various
official records in the State of Minnesota; and
WHEREAS, under the Sixth Supplemental Indenture, dated as of August 1,
1975, to which reference is hereinafter made, D.W. May in turn succeeded E. J.
McCabe as Co-Trustee under the Mortgage; and
WHEREAS, an instrument, dated as of June 25, 1984, was executed and
delivered under which J. A. Vaughan in turn succeeded D. W. May as Co-Trustee
under the Mortgage, and such instrument was filed and recorded in various
official records in the State of Minnesota; and
WHEREAS, an instrument, dated as of July 27, 1988, was executed and
delivered under which W. T. Cunningham in turn succeeded J.A. Vaughan as
Co-Trustee under the Mortgage, and such instrument was filed and recorded in
various official records in the State of Minnesota; and
<PAGE>
-2-
WHEREAS, by the Mortgage the Company covenanted, among other things,
that it would execute and deliver such supplemental indenture or indentures and
such further instruments and do such further acts as might be necessary or
proper to carry out more effectually the purposes of the Mortgage and to make
subject to the lien of the Mortgage any property thereafter acquired and
intended to be subject to the lien thereof; and
WHEREAS, for said purposes, among others, the Company executed and
delivered the following indentures supplemental to the Mortgage:
Designation Dated as of
----------- -----------
First Supplemental Indenture . . . . . . . . . March 1, 1949
Second Supplemental Indenture . . . . . . . . . July 1, 1951
Third Supplemental Indenture . . . . . . . . . March 1, 1957
Fourth Supplemental Indenture . . . . . . . . . January 1, 1968
Fifth Supplemental Indenture . . . . . . . . . April 1, 1971
Sixth Supplemental Indenture . . . . . . . . . August 1, 1975
Seventh Supplemental Indenture . . . . . . . . September 1, 1976
Eighth Supplemental Indenture . . . . . . . . . September 1, 1977
Ninth Supplemental Indenture . . . . . . . . . April 1, 1978
Tenth Supplemental Indenture . . . . . . . . . August 1, 1978
Eleventh Supplemental Indenture . . . . . . . . December 1, 1982
Twelfth Supplemental Indenture . . . . . . . . April 1, 1987
Thirteenth Supplemental Indenture . . . . . . . March 1, 1992
Fourteenth Supplemental Indenture . . . . . . . June 1, 1992
Fifteenth Supplemental Indenture . . . . . . . July 1, 1992
Sixteenth Supplemental Indenture . . . . . . . July 1, 1992
Seventeenth Supplemental Indenture . . . . . . February 1, 1993
which supplemental indentures were filed and recorded in various official
records in the State of Minnesota; and
WHEREAS, for said purposes, among others, the Company also executed and
delivered a Eighteenth Supplemental Indenture, dated as of July 1, 1993, which
was filed and recorded in various official records in the State of Minnesota as
follows:
Registrar
County in Recorder of Titles
Minnesota Date Doc. No. Date Doc. No.
- --------- ---- -------- ---- -------
Aitkin............... 7/22/93 279192 --- ---
Benton............... 7/22/93 216475 --- ---
<PAGE>
-3-
Registrar
County in Recorder of Titles
Minnesota Date Doc. No. Date Doc. No.
- --------- ---- -------- ---- --------
Carlton.............. 7/26/93 290406 7/26/93 17009
Cass................. 7/22/93 349234 --- ---
Crow Wing............ 8/4/93 454463 8/4/93 107838
Hubbard.............. 7/22/93 217070 --- ---
Itasca............... 8/9/93 443960 8/9/93 32531
Koochiching.......... 7/22/93 203656 --- ---
Lake................. 7/26/93 124992 7/26/93 22877
Morrison............. 7/26/93 346958 7/26/93 2303
Otter Tail........... 7/22/93 747792 ---
Pine................. 7/23/93 335532 --- ---
St. Louis............ 7/29/93 578489 7/29/93 568173
Stearns.............. 7/22/93 750975 --- ---
Todd................. 7/22/93 353561 --- ---
Wadena............... 7/26/93 169695 --- ---
Office of Secretary of State of Minnesota; recorded July 27, 1993 as Document
No. 1604887; and
WHEREAS, the Company has heretofore issued, in accordance with the
provisions of the Mortgage, as heretofore supplemented, the following series of
First Mortgage Bonds:
Principal Principal
Amount Amount
Series Issued Outstanding
- ------ --------- -----------
3-1/8% Series due 1975 .............. $26,000,000 None
3-1/8% Series due 1979 .............. 4,000,000 None
3-5/8% Series due 1981 .............. 10,000,000 None
4-3/4% Series due 1987 .............. 12,000,000 None
6-1/2% Series due 1998 .............. 18,000,000 $18,000,000
8-1/8% Series due 2001 .............. 23,000,000 None
10-1/2% Series due 2005 ............. 35,000,000 None
8.70% Series due 2006 ............... 35,000,000 None
8.35% Series due 2007 ............... 50,000,000 None
9-1/4% Series due 2008 .............. 50,000,000 None
Pollution Control Series A .......... 111,000,000 None
<PAGE>
-4-
Principal Principal
Amount Amount
Series Issued Outstanding
- ------ ---------- -----------
Industrial Development Series A ..... $2,500,000 None
Industrial Development Series B ..... 1,800,000 None
Industrial Development Series C ..... 1,150,000 None
Pollution Control Series B .......... 13,500,000 None
Pollution Control Series C .......... 2,000,000 None
Pollution Control Series D .......... 3,600,000 $3,600,000
7-3/4% Series due 1994 .............. 55,000,000 None
7-3/8% Series due March 1, 1997 ..... 60,000,000 60,000,000
7-3/4% Series due June 1, 2007 ...... 55,000,000 55,000,000
7-1/2% Series due August 1, 2007 .... 35,000,000 35,000,000
Pollution Control Series E .......... 111,000,000 111,000,000
7% Series due March 1, 2008 ......... 50,000,000 50,000,000
6-1/4% Series due July 1, 2003 ...... 25,000,000 25,000,000
which bonds are also hereinafter sometimes called bonds of the First through
Twenty-fourth Series, respectively; and
WHEREAS, Section 8 of the Mortgage provides that the form of each
series of bonds (other than the First Series) issued thereunder and of coupons
to be attached to coupon bonds of such series shall be established by Resolution
of the Board of Directors of the Company and that the form of such series, as
established by said Board of Directors, shall specify the descriptive title of
the bonds and various other terms thereof, and may also contain such provisions
not inconsistent with the provisions of the Mortgage as the Board of Directors
may, in its discretion, cause to be inserted therein expressing or referring to
the terms and conditions upon which such bonds are to be issued and/or secured
under the Mortgage; and
WHEREAS, Section 120 of the Mortgage provides, among other things, that
any power, privilege or right expressly or impliedly reserved to or in any way
conferred upon the Company by any provision of the Mortgage, whether such power,
privilege or right is in any way restricted or is unrestricted, may (to the
extent permitted by law) be in whole or in part waived or surrendered or
subjected to any restriction if at the time unrestricted or to additional
restriction if already restricted, and the Company may enter into any further
covenants, limitations or restrictions for the benefit of any one or more series
of bonds issued thereunder, or the Company may cure any ambiguity contained
therein, or in any supplemental indenture, or may establish the terms and
provisions of any series of bonds (other than said First Series) by an
instrument in writing executed and acknowledged by the Company in such manner as
<PAGE>
-5-
would be necessary to entitle a conveyance of real estate to record in all of
the states in which any property at the time subject to the lien of the Mortgage
shall be situated; and
WHEREAS, the Company now desires to create a new series of bonds and
(pursuant to the provisions of Section 120 of the Mortgage) to add to its
covenants and agreements contained in the Mortgage, as heretofore supplemented,
certain other covenants and agreements to be observed by it and to alter and
amend in certain respects the covenants and provisions contained in the
Mortgage, as heretofore supplemented; and
WHEREAS, the execution and delivery by the Company of this Nineteenth
Supplemental Indenture, and the terms of the bonds of the Twenty-fifth Series,
hereinafter referred to, have been duly authorized by the Board of Directors of
the Company by appropriate resolutions of said Board of Directors;
Now, THEREFORE, THIS INDENTURE WITNESSETH:
That the Company, in consideration of the premises and of One Dollar to
it duly paid by the Trustees at or before the ensealing and delivery of these
presents, the receipt whereof is hereby acknowledged, and in further evidence of
assurance of the estate, title and rights of the Trustees and in order further
to secure the payment of both the principal of and interest and premium, if any,
on the bonds from time to time issued under the Mortgage, as heretofore
supplemented, according to their tenor and effect and the performance of all the
provisions of the Mortgage (including any instruments supplemental thereto and
any modification made as in the Mortgage provided) and of said bonds, hereby
grants, bargains, sells, releases, conveys, assigns, transfers, mortgages,
pledges, sets over and confirms (subject, however, to Excepted Encumbrances)
unto THE BANK OF NEW YORK and W. T. CUNNINGHAM, as Trustees under the Mortgage,
and to their successor or successors in said trust, and to said Trustees and
their successors and assigns forever, all property, real, personal and mixed, of
the kind or nature specifically mentioned in the Mortgage, as heretofore
supplemented, or of any other kind or nature acquired by the Company after the
date of the execution and delivery of the Mortgage, as heretofore supplemented
(except any herein or in the Mortgage, as heretofore supplemented, expressly
excepted), now owned or, subject to the provisions of subsection (I) of Section
87 of the Mortgage, hereafter acquired by the Company (by purchase,
consolidation, merger, donation, construction, erection or in any other way) and
wheresoever situated, including (without in anywise limiting or impairing by the
enumeration of the same the scope and intent of the foregoing or of any general
description contained in this Nineteenth Supplemental Indenture) all lands,
power sites, flowage rights, water rights, water locations, water
appropriations, ditches, flumes, reservoirs, reservoir sites, canals, raceways,
dams, dam sites, aqueducts, and all other rights or means for appropriating,
conveying, storing and supplying water; all rights of way and roads; all plants
for the generation of electricity by steam, water and/or other power; all power
houses, gas plants, street lighting systems, standards and other
<PAGE>
-6-
equipment incidental thereto, telephone, radio and television systems,
air-conditioning systems and equipment incidental thereto, water works, water
systems, steam heat and hot water plants, substations, lines, service and supply
systems, bridges, culverts, tracks, ice or refrigeration plants and equipment,
offices, buildings and other structures and the equipment thereof; all
machinery, engines, boilers, dynamos, electric, gas and other machines,
regulators, meters, transformers, generators, motors, electrical, gas and
mechanical appliances, conduits, cables, water, steam heat, gas or other pipes,
gas mains and pipes, service pipes, fittings, valves and connections, pole and
transmission lines, wires, cables, tools, implements, apparatus, furniture and
chattels; all municipal and other franchises, consents or permits; all lines for
the transmission and distribution of electric current, gas, steam heat or water
for any purpose including towers, poles, wires, cables, pipes, conduits, ducts
and all apparatus for use in connection therewith; all real estate, lands,
easements, servitudes, licenses, permits, franchises, privileges, rights of way
and other rights in or relating to real estate or the occupancy of the same and
(except as herein or in the Mortgage, as heretofore supplemented, expressly
excepted) all the right, title and interest of the Company in and to all other
property of any kind or nature appertaining to and/or used and/or occupied
and/or enjoyed in connection with any property hereinbefore or in the Mortgage,
as heretofore supplemented, described.
TOGETHER WITH all and singular the tenements, hereditaments,
prescriptions, servitudes and appurtenances belonging or in anywise appertaining
to the aforesaid property or any part thereof, with the reversion and
reversions, remainder and remainders and (subject to the provisions of Section
57 of the Mortgage) the tolls, rents, revenues, issues, earnings, income,
product and profits thereof, and all the estate, right, title and interest and
claim whatsoever, at law as well as in equity, which the Company now has or may
hereafter acquire in and to the aforesaid property and franchises and every part
and parcel thereof.
IT IS HEREBY AGREED by the Company that, subject to the provisions of
subsection (I) of Section 87 of the Mortgage, all the property, rights, and
franchises acquired by the Company (by purchase, consolidation, merger,
donation, construction, erection or in any other way) after the date hereof,
except any herein or in the Mortgage, as heretofore supplemented, expressly
excepted, shall be and are as fully granted and conveyed hereby and by the
Mortgage and as fully embraced within the lien hereof and the lien of the
Mortgage as if such property, rights and franchises were now owned by the
Company and were specifically described herein or in the Mortgage and conveyed
hereby or thereby.
PROVIDED that the following are not and are not intended to be now or
hereafter granted, bargained, sold, released, conveyed, assigned, transferred,
mortgaged, hypothecated, affected, pledged, set over or confirmed hereunder and
are hereby expressly excepted from the lien and operation of this Nineteenth
Supplemental Indenture and from the lien and operation of the Mortgage, namely:
(1) cash, shares of stock, bonds, notes and other obligations and other
securities not hereafter specifically pledged, paid, deposited, delivered or
held under the
<PAGE>
-7-
Mortgage or covenanted so to be; (2) merchandise, equipment, apparatus,
materials or supplies held for the purpose of sale or other disposition in the
usual course of business; fuel, oil and similar materials and supplies
consumable in the operation of any of the properties of the Company; all
aircraft, rolling stock, trolley coaches, buses, motor coaches, automobiles and
other vehicles and materials and supplies held for the purpose of repairing or
replacing (in whole or part) any of the same; all timber, minerals, mineral
rights and royalties; (3) bills, notes and accounts receivable, judgments,
demands and choses in action, and all contracts, leases and operating agreements
not specifically pledged under the Mortgage or covenanted so to be; the
Company's contractual rights or other interest in or with respect to tires not
owned by the Company; (4) the last day of the term of any lease or leasehold
which may hereafter become subject to the lien of the Mortgage; (5) electric
energy, gas, steam, ice, and other materials or products generated,
manufactured, produced or purchased by the Company for sale, distribution or use
in the ordinary course of its business; and (6) the Company's franchise to be a
corporation; provided, however, that the property and rights expressly excepted
from the lien and operation of this Nineteenth Supplemental Indenture and from
the lien and operation of the Mortgage in the above subdivisions (2) and (3)
shall (to the extent permitted by law) cease to be so excepted in the event and
as of the date that either or both of the Trustees or a receiver or trustee
shall enter upon and take possession of the Mortgaged and Pledged Property in
the manner provided in Article XIII of the Mortgage by reason of the occurrence
of a Default as defined in Section 65 thereof.
TO HAVE AND TO HOLD all such properties, real, personal and mixed,
granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged,
pledged, set over or confirmed by the Company as aforesaid, or intended so to
be, unto the Trustees and their successors and assigns forever.
IN TRUST NEVERTHELESS, for the same purposes and upon the same terms,
trusts and conditions and subject to and with the same provisos and covenants as
are set forth in the Mortgage, as supplemented, this Nineteenth Supplemental
Indenture being supplemental thereto.
AND IT IS HEREBY COVENANTED by the Company that all the terms,
conditions, provisos, covenants and provisions contained in the Mortgage, as
heretofore supplemented, shall affect and apply to the property hereinbefore
described and conveyed and to the estate, rights, obligations and duties of the
Company and Trustees and the beneficiaries of the trust with respect to said
property, and to the Trustees and their successors in the trust in the same
manner and with the same effect as if said property had been owned by the
Company at the time of the execution of the Mortgage, and had been specifically
and at length described in and conveyed to said Trustees by the Mortgage as a
part of the property therein stated to be conveyed.
<PAGE>
-8-
The Company further covenants and agrees to and with the Trustees
and their successors in said trust under the Mortgage as follows:
ARTICLE I
TWENTY-FIFTH SERIES OF BONDS
SECTION 1. There shall be a series of bonds designated "7% Series due
February 15, 2007" (herein sometimes referred to as the "Twenty-fifth Series"),
each of which shall also bear the descriptive title "First Mortgage Bond", and
the form thereof, which shall be established by Resolution of the Board of
Directors of the Company, shall contain suitable provisions with respect to the
matters hereinafter in this Section specified. Bonds of the Twenty-fifth Series
shall be dated as in Section 10 of the Mortgage provided, mature on February 15,
2007, be issued as fully registered bonds in denominations of One Thousand
Dollars and, at the option of the Company, in any multiple or multiples of One
Thousand Dollars (the exercise of such option to be evidenced by the execution
and delivery thereof) and bear interest at the rate of 7% per annum, payable
semi-annually on February 15 and August 15 of each year, commencing August 15,
1997, the principal of and interest on each said bond to be payable at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, in such coin or currency of the United States of America as at the time of
payment is legal tender for public and private debts.
(I) Bonds of the Twenty-fifth Series shall not be redeemable prior to
maturity.
(II) At the option of the registered owner, any bonds of the
Twenty-fifth Series, upon surrender thereof for cancellation at the office or
agency of the Company in the Borough of Manhattan, The City of New York,
together with a written instrument of transfer wherever required by the Company
duly executed by the registered owner or by his duly authorized attorney, shall
(subject to the provisions of Section 12 of the Mortgage) be exchangeable for a
like aggregate principal amount of bonds of the same series of other authorized
denominations.
Bonds of the Twenty-fifth Series shall be transferable (subject to the
provisions of Section 12 of the Mortgage) at the office or agency of the Company
in the Borough of Manhattan, The City of New York.
Upon any exchange or transfer of bonds of the Twenty-fifth Series, the
Company may make a charge therefor sufficient to reimburse it for any tax or
taxes or other governmental charge, as provided in Section 12 of the Mortgage,
but the Company hereby waives any right to make a charge in addition thereto for
any exchange or transfer of bonds of the Twenty-fifth Series.
<PAGE>
-9-
Upon the delivery of this Nineteenth Supplemental Indenture and upon
compliance with the applicable provisions of the Mortgage, there shall be an
initial issue of bonds of the Twenty-fifth Series for the aggregate principal
amount of $60,000,000.
ARTICLE II
DIVIDEND COVENANT
SECTION 2. The Company covenants and agrees that the provisions of
subdivision (III) of Section 39 of the Mortgage, which are to remain in effect
so long as any of the bonds of the First Series shall remain Outstanding, shall
remain in full force and effect so long as any bonds of the First through
Twenty-fifth Series shall remain Outstanding.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3. Section 126 of the Mortgage, as heretofore amended, is
hereby further amended by adding the words "and February 15, 2007" after the
words "July 1, 2003".
SECTION 4. Subject to the amendments provided for in this Nineteenth
Supplemental Indenture, the terms defined in the Mortgage, as heretofore
supplemented, shall, for all purposes of this Nineteenth Supplemental Indenture,
have the meanings specified in the Mortgage, as heretofore supplemented.
SECTION 5. The holders of bonds of the Twenty-fifth Series consent that
the Company may, but shall not be obligated to, fix a record date for the
purpose of determining the holders of bonds of the Twenty-fifth Series entitled
to consent to any amendment, supplement or waiver. If a record date is fixed,
those persons who were holders at such record date (or their duly designated
proxies), and only those persons, shall be entitled to consent to such
amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be holders after such record date. No
such consent shall be valid or effective for more than 90 days after such record
date.
SECTION 6. The Trustees hereby accept the trusts herein declared,
provided, created or supplemented and agree to perform the same upon the terms
and conditions herein and in the Mortgage set forth and upon the following terms
and conditions:
<PAGE>
-10-
The Trustees shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Nineteenth Supplemental Indenture
or for or in respect of the recitals contained herein, all of which recitals are
made by the Company solely. In general, each and every term and condition
contained in Article XVII of the Mortgage shall apply to and form part of this
Nineteenth Supplemental Indenture with the same force and effect as if the same
were herein set forth in full with such omissions, variations and insertions, if
any, as may be appropriate to make the same conform to the provisions of this
Nineteenth Supplemental Indenture.
SECTION 7. Whenever in this Nineteenth Supplemental Indenture any party
hereto is named or referred to, this shall, subject to the provisions of
Articles XVI and XVII of the Mortgage, as heretofore supplemented, be deemed to
include the successors or assigns of such party, and all the covenants and
agreements in this Nineteenth Supplemental Indenture contained by or on behalf
of the Company, or by or on behalf of the Trustees shall, subject as aforesaid,
bind and inure to the benefit of the respective successors and assigns of such
party whether so expressed or not.
SECTION 8. Nothing in this Nineteenth Supplemental Indenture, expressed
or implied, is intended, or shall be construed, to confer upon, or give to, any
person, firm or corporation, other than the parties hereto and the holders of
the bonds and coupons Outstanding under the Mortgage, any right, remedy, or
claim under or by reason of this Nineteenth Supplemental Indenture or any
covenant, condition, stipulation, promise or agreement hereof, and all the
covenants, conditions, stipulations, promises and agreements in this Nineteenth
Supplemental Indenture contained by and on behalf of the Company shall be for
the sole and exclusive benefit of the parties hereto, and of the holders of the
bonds and of the coupons Outstanding under the Mortgage.
SECTION 9. This Nineteenth Supplemental Indenture shall be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 10. The Company, the mortgagor named herein, by its execution
hereof acknowledges receipt of a full, true and complete copy of this Nineteenth
Supplemental Indenture.
<PAGE>
-11-
IN WITNESS WHEREOF, Minnesota Power & Light Company has caused its
corporate name to be hereunto affixed, and this instrument to be signed and
sealed by its President or one of its Vice Presidents, and its corporate seal to
be attested by its Secretary or one of its Assistant Secretaries for and in its
behalf, and The Bank of New York has caused its corporate name to be hereunto
affixed, and this instrument to be signed and sealed by one of its Vice
Presidents or one of its Assistant Vice Presidents and its corporate seal to be
attested by one of its Assistant Treasurers or one of its Assistant Vice
Presidents, and W. T. Cunningham has hereunto set his hand and affixed his seal,
all in The City of New York, as of the day and year first above written.
MINNESOTA POWER & LIGHT COMPANY
By David G. Gartzke
---------------------------------
David G. Gartzke
Senior Vice President - Finance
and Chief Financial Officer
Attest:
Philip R. Halverson
- --------------------------------
Philip R. Halverson
Vice President, General Counsel
and Corporate Secretary
Executed, sealed and delivered by
MINNESOTA POWER & LIGHT COMPANY
in the presence of:
Jan A. Berguson
- --------------------------------
Lorie Skudstad
- --------------------------------
<PAGE>
-12-
THE BANK OF NEW YORK
as Trustee
By Mary LaGumina
----------------------------
Mary LaGumina
Assistant Vice President
Attest:
B Merino
- ---------------------------
Byron Merino
Assistant Treasurer
W.T. Cunningham
-------------------------------
W.T. Cunningham
Executed, sealed and delivered by
THE BANK OF NEW YORK AND W. T. CUNNINGHAM
in the presence of:
/s/ Illegible
- ---------------------------
Jason G. Gregory
- ---------------------------
<PAGE>
-13-
STATE OF MINNESOTA )
) SS.:
COUNTY OF ST. LOUIS )
On this 18th day of February, 1997, before me, a Notary Public within
and for said County, personally appeared DAVID G. GARTZKE and PHILIP R.
HALVERSON, to me personally known, who, being each by me duly sworn, did say
that they are respectively the Senior Vice President - Finance and Chief
Financial Officer and the Vice President, General Counsel and Corporate
Secretary of MINNESOTA POWER & LIGHT COMPANY of the State of Minnesota, the
corporation named in the foregoing instrument; that the seal affixed to the
foregoing instrument is the corporate seal of said corporation; that said
instrument was signed and sealed in behalf of said corporation by authority of
its Board of Directors; and said DAVID G. GARTZKE and PHILIP R. HALVERSON
acknowledged said instrument to be the free act and deed of said corporation.
Personally came before me on this 18th day of February, 1997, DAVID G.
GARTZKE to me known to be the Senior Vice President - Finance and Chief
Financial Officer and PHILIP R. HALVERSON, to me known to be the Vice President,
General Counsel and Corporate Secretary, of the above named MINNESOTA POWER &
LIGHT COMPANY, the corporation described in and which executed the foregoing
instrument, and to me personally known to be the persons who as such officers
executed the foregoing instrument in the name and behalf of said corporation,
who, being by me duly sworn did depose and say and acknowledge that they are
respectively the Senior Vice President Finance and Chief Financial Officer and
the Vice President, General Counsel and Corporate Secretary of said corporation;
that the seal affixed to said instrument is the corporate seal of said
corporation; and that they signed, sealed and delivered said instrument in the
name and on behalf of said corporation by authority of its Board of Directors
and stockholders, and said DAVID G. GARTZKE and PHILIP R. HALVERSON then and
there acknowledged said instrument to be the free act and deed of said
corporation and that such corporation executed the same.
On the 18th day of February, 1997, before me personally came DAVID G.
GARTZKE and PHILIP R. HALVERSON, to me known, who, being by me duly sworn, did
depose and say that they respectively reside at 2609 East 5th Street, Duluth,
Minnesota, and 3364 West Tischer Road, Duluth, Minnesota; that they are
respectively the Senior Vice President - Finance and Chief Financial Officer and
the Vice President, General Counsel and Corporate Secretary of MINNESOTA POWER &
LIGHT COMPANY, one of the corporations described in and which executed the above
instrument; that they know the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of said corporation, and that they signed their names
thereto by like order.
GIVEN under my hand and notarial seal this 18th day of February, 1997.
Kristie J. Lindstrom
----------------------------
[SEAL] KRISTIE J. LINDSTROM
NOTARY PUBLIC-MINNESOTA
ST. LOUIS COUNTY
My Comm. Expires Jan.
31, 2000
<PAGE>
-14-
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this 18th day of February, 1997, before me, a Notary Public within
and for said County, personally appeared MARY LAGUMINA and BYRON MERINO, to me
personally known, who, being each by me duly sworn, did say that they are
respectively an Assistant Vice President and an Assistant Treasurer of THE BANK
OF NEW YORK of the State of New York, the corporation named in the foregoing
instrument; that the seal affixed to the foregoing instrument is the corporate
seal of said corporation; that said instrument was signed and sealed in behalf
of said corporation by authority of its Board of Directors; and said MARY
LAGUMINA and BYRON MERINO acknowledged said instrument to be the free act and
deed of said corporation.
Personally came before me on this 18th day of February, 1997, MARY
LAGUMINA, to me known to be an Assistant Vice President, and BYRON MERINO, known
to me to be an Assistant Treasurer, of the above named THE BANK OF NEW YORK, the
corporation described in and which executed the foregoing instrument, and to me
personally known to be the persons who as such officers executed the foregoing
instrument in the name and behalf of said corporation, who, being by me duly
sworn did depose and say and acknowledge that they are respectively an Assistant
Vice President and an Assistant Treasurer of said corporation; that the seal
affixed to said instrument is the corporate seal of said corporation; and that
they signed, sealed and delivered said instrument in the name and on behalf of
said corporation by authority of its Board of Directors, and said MARY LAGUMINA
and BYRON MERINO then and there acknowledged said instrument to be the free act
and deed of said corporation and that such corporation executed the same.
On the 18th day of February, 1997, before me personally came MARY
LAGUMINA and BYRON MERINO, to me known, who, being by me duly sworn, did depose
and say that they respectively reside at 214-12 40th Avenue, Bayside, New York,
and 30 Stuyvesant Avenue, Lyndhurst, New Jersey; that they are respectively an
Assistant Vice President and an Assistant Treasurer of THE BANK OF NEW YORK, one
of the corporations described in and which executed the above instrument; that
they know the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by order of the Board of
Directors of said corporation, and that they signed their names thereto by like
order.
GIVEN under my hand and notarial seal this 18th day of February, 1997.
William J. Cassels
------------------------------------
William J. Cassels
Notary Public, State of New York
No. 01CA5027729
Qualified in Bronx County
[SEAL] Certificate Filed in New York County
Commission Expires May 16, 1998
<PAGE>
-15-
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this 18th day of February, 1997, before me personally appeared W. T.
CUNNINGHAM, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
Personally came before me this 18th day of February, 1997, the above
named W. T. CUNNINGHAM, to me known to be the person who executed the foregoing
instrument, and acknowledged the same.
On the 18th day of February, 1997, before me personally came W. T.
CUNNINGHAM, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same.
GIVEN under my hand and notarial seal this 18th day of February, 1997.
William J. Cassels
------------------------------------
William J. Cassels
Notary Public, State of New York
No. 01CA5027729
Qualified in Bronx County
[SEAL] Certificate Filed in New York County
Commission Expires May 16, 1998
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.B.1
<SEQUENCE>3
<DESCRIPTION>EXHIBIT 4(B)1
<TEXT>
<PAGE>
Exhibit 4(b)1
<PAGE>
Executed in 6 Counterparts
of which this is
Counterpart No. 2
SUPERIOR WATER, LIGHT AND POWER COMPANY
TO
CHEMICAL BANK
and
PETER MORSE
As Trustees Under Superior Water, Light
and Power Company's Mortgage and Deed of Trust,
Dated as of March 1, 1943
----------------------------
SIXTH SUPPLEMENTAL INDENTURE
----------------------------
Dated as of March 24, 1994
<PAGE>
SIXTH SUPPLEMENTAL INDENTURE
INDENTURE, dated as of the 24th day of March, 1994, made and entered
into by and between SUPERIOR WATER, LIGHT AND POWER COMPANY, a corporation of
the State of Wisconsin, whose post office address is 1230 Tower Avenue,
Superior, Wisconsin 54880 (hereinafter sometimes called the Company), party of
the first part, and CHEMICAL BANK (successor to Chemical Bank & Trust Company),
a corporation of the State of New York, whose principal corporate trust office
at the date hereof is 450 West 33rd Street, New York, New York 10001
(hereinafter called the Corporate Trustee) , and PETER MORSE (successor to
Howard B. Smith, Russell H. Sherman, Richard G. Pintard, Steven F. Lasher, and
C. G. Martens), whose post office address is 84-26 115th Street, Richmond Hill,
New York 11418 (hereinafter sometimes called the Co-Trustee), parties of the
second part (the Corporate Trustee and the Co-Trustee being hereinafter together
sometimes called the Trustees), as Trustees under the Mortgage and Deed of Trust
dated as of March 1, 1943 (hereinafter called the Mortgage), which Mortgage was
executed and delivered by Superior Water, Light and Power Company to secure the
payment of bonds issued or to be issued under and in accordance with the
provisions of the Mortgage, reference to which Mortgage is hereby made, this
Indenture (hereinafter sometimes called the Sixth Supplemental Indenture) being
supplemental thereto;
WHEREAS, said Mortgage was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on May 3, 1943, in Volume 191 of
Mortgages at page 1, Document No. 362844; and
WHEREAS, an instrument dated as of September 15, 1949, was executed by
the Company appointing Russell H. Sherman as Co-Trustee in succession to said
Howard B. Smith, resigned, under said Mortgage and by Russell H. Sherman
accepting the appointment as Co-Trustee under said Mortgage in succession to the
said Howard B. Smith, which instrument was recorded in the office of the
Register of Deeds in and for Douglas County, Wisconsin, on October 8, 1949, in
Volume 196 of Mortgages at page 510, Document No. 398649; and
WHEREAS, by the Mortgage, the Company covenanted that it would execute
and deliver such supplemental indenture or indentures and such further
instruments and do such further acts as might be necessary or proper to carry
out more effectively the purposes of the Mortgage and to make subject to the
lien of the Mortgage any property acquired after the date of the execution of
the Mortgage and intended to be subject to the lien thereof; and
WHEREAS, the Company executed and delivered to the Trustees its First
Supplemental Indenture, dated as of March 1, 1951 (hereinafter called its First
Supplemental Indenture), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on March 30, 1951, in Volume 205 of
Mortgages at page 73, Document No. 405297; and
<PAGE>
WHEREAS, an instrument dated as of May 16, 1961, was executed by the
Company appointing Richard G. Pintard as Co-Trustee in succession to said
Russell H. Sherman, resigned, under said Mortgage and by Richard G. Pintard
accepting the appointment as Co-Trustee under said Mortgage in succession to
said Russell H. Sherman, which instrument was recorded in the office of the
Register of Deeds in and for Douglas County, Wisconsin, on May 31, 1961, in
Volume 256 of Mortgages at page 423, Document No. 453857; and
WHEREAS , the Company executed and delivered to the Trustees its Second
Supplemental Indenture, dated as of March 1, 1962 (hereinafter called its Second
Supplemental Indenture), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on March 26, 1962, in Volume 261 of
Mortgages at page 81, Document No. 457662; and
WHEREAS, an instrument dated as of June 23, 1976, was executed by the
Company appointing Steven F. Lasher as Co-Trustee in succession to said Richard
G. Pintard, resigned, under said Mortgage and by Steven F. Lasher accepting the
appointment as Co-Trustee under said Mortgage in succession to said Richard G.
Pintard, which instrument was recorded in the office of the Register of Deeds in
and for Douglas County, Wisconsin, on July 16, 1976, in Volume 353 of Records at
page 274, Document No. 532495; and
WHEREAS , the Company executed and delivered to the Trustees its Third
Supplemental Indenture, dated as of July 1, 1976 (hereinafter called its Third
Supplemental Indenture), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on October 1, 1976, in Volume 355 of
Records at page 683, Document No. 534332; and
WHEREAS, an instrument dated as of December 30, 1977, was executed by
the Company appointing C. G. Martens as Co-Trustee in succession to said Steven
F. Lasher, resigned, under said Mortgage and by C. G. Martens accepting the
appointment as Co-Trustee under said Mortgage in succession to said Steven F.
Lasher, which instrument was recorded in the office of the Register of Deeds in
and for Douglas County, Wisconsin, on February 13, 1985, in Volume 436 of
Records at page 264, Document No. 589308; and
WHEREAS, the Company executed and delivered to the Trustees its Fourth
Supplemental Indenture, dated as of March 1, 1985 (hereinafter called its Fourth
Supplemental Indenture), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on March 19, 1985, in Volume 436 of
Records at page 910, Document No. 589776; and
WHEREAS, an instrument dated as of October 26, 1992, was executed by
the Company appointing Peter Morse as Co-Trustee in
2
<PAGE>
succession to said C. G. Martens, resigned, under said Mortgage and by Peter
Morse accepting the appointment as Co-Trustee under said Mortgage in succession
to said C. G. Martens, which instrument was recorded in the office of the
Register of Deeds in and for Douglas County, Wisconsin, on November 13, 1992, in
Volume 539 of Records at page 9, Document No. 649056; and
WHEREAS, the Company executed and delivered to the Trustees its Fifth
Supplemental Indenture, dated as of December 1, 1992 (hereinafter called its
Fifth Supplemental Indenture), which was recorded in the office of the Register
of Deeds in and for Douglas County, Wisconsin, on December 28, 1992, in Volume
541 of Records at page 229, Document No. 650104; and
WHEREAS, in addition to the property described in the Mortgage, as
heretofore supplemented, the Company has acquired certain other property, rights
and interests in property; and
WHEREAS, the Company has heretofore issued, in accordance with the
provisions of the Mortgage, bonds of a series entitled and designated First
Mortgage Bonds, 3 3/8% Series due 1973 (hereinafter called the bonds of the
First Series), in the aggregate principal amount of Two Million Five Hundred
Thousand Dollars ($2,500,000), none of which bonds of the First Series are now
Outstanding; bonds of a series entitled and designated First Mortgage Bonds, 3
1/10% Series due 1981 (hereinafter called the bonds of the Second Series), in
the aggregate principal amount of Five Million Dollars ($5,000,000), none of
which bonds of the Second Series are now Outstanding; bonds of a series entitled
and designated First Mortgage Bonds, 5% Series due 1992 (hereinafter called the
bonds of the Third Series), in the aggregate principal amount of Two Million
Seven Hundred Thousand Dollars ($2,700,000), none of which bonds of the Third
Series are now Outstanding; bonds of a series entitled and designated First
Mortgage Bonds, 9 5/8% Series due 2001 (hereinafter called the bonds of the
Fourth Series), in the aggregate principal amount of Three Million Dollars
($3,000,000), of which One Million Two Hundred Thousand Dollars ($1,200,000)
aggregate principal amount is now Outstanding; bonds of a series entitled and
designated First Mortgage Bonds, 12 1/2% Series due 1992 (hereinafter called the
bonds of the Fifth Series), in the aggregate principal amount of Three Million
Five Hundred Thousand Dollars ($3,500,000), none of which bonds of the Fifth
Series are now Outstanding; and bonds of a series entitled and designated First
Mortgage Bonds, 7.91% Series due 2013 (hereinafter called the bonds of the Sixth
Series), in the aggregate principal amount of Five Million Dollars ($5,000,000),
of which Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000)
aggregate principal amount is now Outstanding; and
WHEREAS, Section 120 of the Mortgage provides, among other things, that
the Company may enter into any further covenants, limitations or restrictions
for the benefit of any one or more
3
<PAGE>
series of bonds issued thereunder by an instrument in writing executed and
acknowledged by the Company in such manner as would be necessary to entitle a
conveyance of real estate to be of record in all of the states in which any
property at the time subject to the lien of the Mortgage shall be situated; and
WHEREAS, the Company now desires to modify the Third Supplemental
Indenture and the terms of the bonds of the Fourth Series, issued under the
Third Supplemental Indenture, and to add to the covenants, limitations or
restrictions contained in the Mortgage certain other covenants, limitations or
restrictions to be observed by it and to amend the Mortgage; and
WHEREAS, the execution and delivery by the Company of this Sixth
Supplemental Indenture, and the modifications of the Third Supplemental
Indenture and the terms of the bonds of the Fourth Series hereinafter referred
to, have been duly authorized by the Board of Directors of the Company by
appropriate resolutions of said Board of Directors;
WHEREAS, the amendments to the Third Supplemental Indenture and the
terms of the bonds of the Fourth Series contained in this Sixth Supplemental
Indenture have been duly approved by the holders of one hundred per centum
(100%) in principal amount of the bonds outstanding and entitled to vote
thereon.
NOW, THEREFORE, THIS INDENTURE WITNESSETH: That Superior Water, Light
and Power Company, in consideration of the premises and of One Dollar ($1) to it
duly paid by the Trustees at or before the ensealing and delivery of these
presents, the receipt whereof is hereby acknowledged, and in further evidence of
assurance of the estate, title and rights of the Trustees and in order further
to secure the payment both of the principal of and interest and premium, if any,
on the bonds from time to time issued under the Mortgage, according to their
tenor and effect, and the performance of all the provisions of the Mortgage
(including any instruments supplemental thereto and any modification made as in
the Mortgage provided) and of said bonds, hereby grants, bargains, sells,
releases, conveys, assigns, transfers, mortgages, pledges, sets over and
confirms (subject, however, to Excepted Encumbrances as defined in Section 6 of
the Mortgage) unto Peter Morse and (to the extent of its legal capacity to hold
the same for the purposes hereof) to Chemical Bank, as Trustees under the
Mortgage, and to their successor or successors in said trust, and to said
Trustees and their successors and assigns forever, all and singular the permits,
franchises, rights, privileges, grants and property, real, personal and mixed,
now owned or which may be hereafter acquired by the Company (except any of the
character herein or in the Mortgage expressly excepted), including (but not
limited to) its electric light and power works, gas works, water works,
buildings, structures, machinery, equipment, mains, pipes, lines, poles, wires,
easements, rights of way, permits, franchises, rights,
4
<PAGE>
privileges, grants and all property of every kind and description, situated in
the City of Superior, Douglas County, Wisconsin, or elsewhere in Douglas County,
Wisconsin, in Washburn County, Wisconsin, or in any other place or places, now
owned by the Company, or that may be hereafter acquired by it, including, but
not limited to, the following described properties of the Company--that is to
say:
All Lands and Rights and Interests in Lands of the Company
(except any such property as may have been released from the
lien of the Mortgage), including, but not limited to, all
such property acquired by the Company under the following
deed, which is referred to for more particular descriptions
thereof, to wit:
Deed from Burlington Northern Railroad to the
Company, dated December 17, 1993 and recorded
in the office of the Register of Deeds of Douglas
County, Wisconsin, on January 25, 1994, in Volume
565 of Records at p. 510.
All other property, real, personal and mixed, acquired by the Company
after the date of the execution and delivery of the Mortgage (except any herein
or in the Mortgage, as heretofore supplemented, expressly excepted), now owned
or hereafter acquired by the Company and wheresoever situated, including
(without in any way limiting or impairing by the enumeration of the same the
scope and intent of the foregoing or of any general description contained in
this Sixth Supplemental Indenture) all lands, power sites, flowage rights, water
rights, water franchises, water locations, water appropriations, ditches,
flumes, reservoirs, reservoir sites, canals, raceways, dams, dam sites,
aqueducts, and all other rights or means for appropriating, conveying, storing
and supplying water; all rights of way and roads; all plants, works, reservoirs
and tanks for the pumping and purification of water; all water works; all plants
for the generation of electricity by water, steam and/or other power; all power
houses, gas plants, street lighting systems, standards and other equipment
incidental thereto, telephone, radio and television systems, air-conditioning
systems and equipment incidental thereto, water systems, steam heat and hot
water plants, substations, lines, service and supply systems, bridges, culverts,
tracks, street and interurban railway systems, offices, buildings and other
structures and the equipment thereof; all machinery, engines, boilers, dynamos,
water, electric, gas and other machines, regulators, meters, transformers,
generators, motors, water, electrical, gas and mechanical appliances, conduits,
cables, water, steam, heat, gas or other mains and pipes, service pipes,
fittings, valves and connections, pole and transmission lines, wires, cables,
tools, implements, apparatus, furniture, chattels and choses in action; all
municipal and other franchises, consents or permits; all lines for the
transmission and distribution of water, electric current, gas, steam heat or hot
water for any purpose, including
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<PAGE>
towers, poles, wires, cables, pipes, conduits, ducts and all apparatus for use
in connection therewith; all real estate, lands, easements, servitudes,
licenses, permits, franchises, privileges, rights of way and other rights in or
relating to real estate or the occupancy of the same and (except as herein or in
the Mortgage, as heretofore supplemented, expressly excepted) all the right,
title and interest of the Company in and to all other property of any kind or
nature appertaining to and/or used and/or occupied and/or enjoyed in connection
with any property herein before or in the Mortgage, as heretofore supplemented,
described.
Together with all and singular the tenements, hereditaments and
appurtenances belonging or in any way appertaining to the aforesaid property or
any part thereof, with the reversion and reversions, remainder and remainders
and (subject to the provisions of Section 57 of the Mortgage) the tolls, rents,
revenues, issues, earnings, income, product and profits thereof, and all the
estate, right, title and interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and to the
aforesaid property and franchises and every part and parcel thereof.
It is hereby agreed by the Company that all the property, rights and
franchises acquired by the Company after the date hereof (except any herein or
in the Mortgage, as heretofore supplemented, expressly excepted) shall be and
are as fully granted and conveyed hereby and as fully embraced within the lien
of the Mortgage as if such property, rights and franchises were now owned by the
Company and were specifically described herein and conveyed hereby.
Provided that the following are not and are not intended to be now or
hereafter granted, bargained, sold, released, conveyed, assigned, transferred,
mortgaged, pledged, set over or confirmed hereunder and are hereby expressly
excepted from the lien and operation of the Mortgage, via: (1) cash, shares of
stock, bonds, notes and other obligations and other securities not hereafter
specifically pledged, paid, deposited, delivered or held under the Mortgage or
covenanted so to be; (2) merchandise, equipment, materials or supplies held for
the purpose of sale in the usual course of business and fuel, oil and similar
materials and supplies consumable in the operation of any properties of the
Company; rolling stock, buses, motor coaches, automobiles and other vehicles;
(3) bills, notes and accounts receivable, and all contracts, leases and
operating agreements not specifically pledged under the Mortgage or covenanted
so to be; the last day of the term of any lease or leasehold which may
heretofore have or hereafter may become subject to the lien of the Mortgage; (4)
water, electric energy, gas, ice and other materials or products pumped, stored,
generated, manufactured, produced or purchased by the Company for sale,
distribution or use in the ordinary course of its business; (5) the Company's
franchise to be a corporation; and (6) all permits, franchises, rights,
privileges, grants and property in the
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<PAGE>
state of Minnesota now owned or hereafter acquired unless such permits,
franchises, rights, privileges, grants and property in the state of Minnesota
shall have been subjected to the lien of the Mortgage by an indenture or
indentures supplemental to the Mortgage, pursuant to authorization of the Board
of Directors of the Company, whereupon all the permits, franchises, rights,
privileges, grants and property then owned or thereafter acquired by the Company
in the state of Minnesota (except property of the character expressly excepted
from the lien of the Mortgage in clauses (1) to (5) above, inclusive), shall
become and be subject to the lien of the Mortgage as part of the Mortgaged and
Pledged Property and may be released, funded and otherwise dealt with on the
same terms and subject to the same conditions and restrictions as though not
theretofore excepted from the lien of the Mortgage; provided, however, that the
property and rights expressly excepted from the lien and operation of the
Mortgage in the above subdivisions (2) and (3) shall (to the extent permitted by
law) cease to be so excepted in the event and as of the date that either or both
of the Trustees or a receiver or trustee shall enter upon and take possession of
the Mortgaged and Pledged Property in the manner provided in Article XIII of the
Mortgage by reason of the occurrence of a Default as defined in Section 65 of
the Mortgage.
To have and to hold all such properties, real, personal and mixed,
granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged,
pledged, set over or confirmed by the Company as aforesaid, or intended so to
be, unto Peter Morse and (to the extent of its legal capacity to hold the same
for the purposes hereof) to Chemical Bank, as Trustees, and their successors and
assigns forever.
In trust nevertheless, for the same purposes and upon the same terms,
trusts and conditions and subject to and with the same provisos and covenants as
are set forth in the Mortgage, as heretofore supplemented, this Sixth
Supplemental Indenture being supplemental thereto.
And it is hereby covenanted by the Company that all the terms,
conditions, provisos, covenants and provisions contained in the Mortgage, as
heretofore supplemented, shall affect and apply to the property herein before
described and conveyed and to the estate, rights, obligations and duties of the
Company and the Trustees and the beneficiaries of the trust with respect to said
property, and to the Trustees and their successors as Trustees of said property,
in the same manner and with the same effect as if said property had been owned
by the Company at the time of the execution of the Mortgage, and had been
specifically and at length described in and conveyed to the Trustees by the
Mortgage as part of the property therein stated to be conveyed.
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<PAGE>
The Company further covenants and agrees to and with the Trustees and
their successors in said trust under the Mortgage as follows:
ARTICLE I.
Amendment to the Third Supplemental Indenture and
Terms of the Fourth Series of Bonds.
SECTION 1. Effective upon the date of this Sixth Supplemental
Indenture, the Third Supplemental Indenture and the terms of the Bonds of the
Fourth Series shall be amended as follows:
(a) The Bonds of the Fourth Series shall bear interest (computed on the
basis of a 360 day year--30-day month) at the rate of (a) six and ten hundredths
per centum (6.10%) per annum at any time other than during the continuance of a
Payment Default and (b) eight and ten hundredths per centum (8.10%) per annum
during the continuance of any Payment Default, payable semi-annually on January
1 and July 1 of each year, commencing July 1, 1994, except that any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
any premium and to the extent that payment of such interest is enforceable under
applicable law, any overdue installment of interest shall bear interest
(computed on the basis of a 360-day year--30-day month), payable semiannually as
aforesaid (or, at the option of the holder of the Bonds, on demand), at a rate
per annum from time to time equal to the greater of (i) eight and ten hundredths
per centum (8.10%) or (ii) the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York City as its
prime rate. The rate of interest to be borne by the Bonds of the Fourth Series
prior to the date of this Sixth Supplemental Indenture shall be the rate
provided by Section 1 of Article I of the Third Supplemental Indenture prior to
the amendments thereto made by this Sixth Supplemental Indenture. The principal
of, and the premium, if any, and the interest on, the Bonds of the Fourth Series
shall be payable in such coin or currency of the United States of America as at
the time of payment shall be legal tender for public and private debts, at the
office or agency of the Company in the Borough of Manhattan, City of New York,
or the office of the Company in Superior, Wisconsin.
(b) The Bonds of the Fourth Series may be redeemed prior to maturity,
in whole at any time or in part (in multiples of $500,000) from time to time, at
the option of the Company, or by the application (either at the option of the
Company or pursuant to the requirements of the Mortgage) of cash delivered to or
deposited with the Corporate Trustee pursuant to the provisions of Section 39,
Section 61, Section 64 or Section 118 of the Mortgage or with the Proceeds of
Released Property, in any such case at 100% of the principal amount of the bonds
being redeemed plus interest accrued
8
<PAGE>
thereon to the date of redemption, together with a premium equal to the Yield
Maintenance Amount, if any, with respect to the bonds being redeemed. Any Bond
of the Fourth Series redeemed pursuant to this paragraph may not be delivered to
the Corporate Trustee in full or partial satisfaction of the sinking fund
requirement contained in Section 2 of the Third Supplemental Indenture and shall
not reduce the amount of the Bonds of the Fourth Series to be redeemed pursuant
to such Section 2.
Notice of any redemption of the Bonds of the Fourth Series shall be
given by mail, postage prepaid, at least 30 days prior to the date of
redemption, to the registered owners of all Bonds to be so redeemed at their
respective addresses appearing on the books maintained by the Company pursuant
to Section 13 of the Mortgage. Any notice which is mailed as herein provided
shall be conclusively presumed to have been properly and sufficiently given on
the date of such mailing, whether or not the registered owner receives the
notice. In any case, failure to give notice by mail, or any defect in such
notice, to the registered owner of any Bond of the Fourth Series designated for
redemption in whole or in part shall not affect the validity of the proceedings
for the redemption of any other Bond of the Fourth Series.
The provisions of this clause (b) shall apply in lieu of the provisions
of subdivision (I) of Section 1 of Article I of the Third Supplemental
Indenture, which subdivision (I) is hereby deleted in its entirety, and in lieu
of the provisions of subdivision (II) of Section 1 of Article I of the Third
Supplemental Indenture insofar as such provisions of such subdivision (II)
relate to any redemption of the Bonds of the Fourth Series by application of
cash delivered to or deposited with the Corporate Trustee pursuant to the
provisions of Section 39 or Section 64 of the Mortgage, which provisions of such
subdivision (II) are hereby deleted in their entirety.
(c) Subdivision (II) of Section 1 of Article I of the Third
Supplemental Indenture is hereby further amended by amending the first proviso
thereof, in lines nine through sixteen thereof, in its entirety to read as
follows:
"provided, however, that in the case of application of cash
delivered to the Corporate Trustee pursuant to the provisions
of Section 2 hereof, If the date fixed for such redemption
shall be prior to January 1 of the calendar year in which
such delivery of cash shall become due under the provisions
of Section 2 hereof, they shall be redeemed in accordance
with the provisions of clause (b) of the Sixth Supplemental
Indenture at a price equal to 100% of the principal amount of
the bonds being redeemed plus interest accrued thereon to the
date of redemption together with a premium equal to the
Yield-
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<PAGE>
Maintenance Amount, if any, with respect to the bonds being
redeemed."
(d) All partial redemptions of Bonds of the Fourth Series shall be made
ratably among all registered owners thereof in the proportions which the
principal amount of the Bonds held by each registered owner bears to the
aggregate principal amount of all Bonds of the Fourth Series then outstanding,
computed to the nearest $1,000 principal amount of the Bonds.
(e) In the event that the principal amount of the Bonds of the Fourth
Series is declared due and payable upon the occurrence of a Default or becomes
due and payable pursuant to Section 73 of the Mortgage, there shall then become
due and payable, together with the principal amount of the Bonds of the Fourth
Series and interest accrued thereon, a premium equal to the amount of the Yield
Maintenance Amount which would have been payable with respect to such Bonds of
the Fourth Series, if they had been redeemed at the option of the Company
pursuant to Section 1 in this Sixth Supplemental Indenture on the date on which
the Bonds of the Fourth Series became due and payable; provided that such
premium, if any, with respect to the Bonds of the Fourth Series shall become due
and payable only if such Default is, or such sale is made following a Default,
other than one specified in any of clauses (ix), (x) and (xi) of the definition
of the term "Event of Default" contained in this Sixth Supplemental Indenture or
subsections (e) or (f) of Section 65 of the Mortgage.
SECTION 2. Except to the extent expressly set forth in this Sixth
Supplemental Indenture, the Third Supplemental Indenture and the terms of the
Bonds, as provided in the Third Supplementa1 Indenture, remain unchanged.
ARTICLE II.
Covenants and Restrictions.
The following covenants and restrictions are added to the Third
Supplemental Indenture effective upon the date of this Sixth Supplemental
Indenture:
SECTION 3. The Company covenants that, so long as any Bonds of the
Fourth Series are outstanding, it will not merge or consolidate with any other
Person or sell, lease or transfer or otherwise dispose of all or a Substantial
Part of its assets, or assets which shall have contributed a Substantial Part of
net income of the Company for any of the three fiscal years then most recently
ended, to any Person; provided, however, that the Company may merge or
consolidate with, or sell or transfer all or substantially all of its assets to,
Minnesota Power, but only if (a) in the event that Minnesota Power is the
continuing or surviving corporation or the acquiring corporation, Minnesota
Power shall be a solvent
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<PAGE>
corporation and shall expressly assume in writing all of the obligations of the
Company under the Mortgage, the Third Supplementa1 Indenture, as amended by this
Sixth Supplemental Indenture, the Bonds of the Fourth Series and the Bond
Purchase Agreement, including all covenants therein and herein contained, and
Minnesota Power shall succeed to and be substituted for the Company with the
same effect as if it had been named herein as a party hereto, and (b) the
Company as the continuing or surviving corporation or Minnesota Power as the
continuing or surviving corporation or acquiring corporation, as the case may
be, shall not, immediately after such merger or consolidation, or such sale or
other disposition, be in default under any of such obligations.
SECTION 4. The Company covenants that, so long as any Bonds of the
Fourth Series shall remain outstanding, the Company will not issue, sell or
otherwise dispose of any of its shares of capital stock to any Person other than
Minnesota Power.
SECTION 5. The Company covenants that, so long as any of the Bonds of
the Fourth Series are outstanding, the Company shall not have any Subsidiaries.
SECTION 6. A default by the Company in the observance of any covenant
or agreement contained in Sections 3 through 5, inclusive, of this Sixth
Supplemental Indenture or the occurrence of an Event of Default (as defined
herein) shall be deemed to constitute an additional and independent Default
under, and defined in, Section 65 of the Mortgage; provided that the Trustees
shall not be charged with knowledge of any such default or Event of Default
unless a Responsible Officer assigned to its Corporate Trustee Administration
Department shall have actual knowledge thereof or shall have received written
notice thereof from a registered owner of any Bond of the Fourth Series or from
the Company. None of the additional Defaults provided for pursuant to this
Section 6 are intended or shall be deemed to limit any of the Defaults currently
expressed in the Mortgage and none of the Defaults currently expressed in the
Mortgage are intended or shall be deemed to limit any of the additional Defaults
provided for pursuant to this Section 6.
ARTICLE III.
Miscellaneous Provisions.
SECTION 7. For purposes of the Third Supplemental Indenture and this
Sixth Supplemental Indenture, the following terms shall have the meanings
indicated below:
"Bond Purchase Agreement" shall mean the Bond Purchase Agreement dated
as of September 22, 1976, between the Company, Bankers Life Company and Lutheran
Mutual Life Insurance Company, as amended by the Amendment to Purchase
Agreement, dated the date of
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this Sixth Supplemental Indenture, between the Company and the Purchaser.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City are required or authorized to be
closed.
"Called Principal" shall mean, with respect to any Bond, the principal
of such Bond that is to be redeemed.
"Capitalized Lease Obligation" shall mean with respect to any Person
any rental obligation which, under generally accepted accounting principles,
would be required to be capitalized on the books of such Person, taken at the
amount thereof accounted for as indebtedness (net of interest expense in
accordance with such principles).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Discounted Value" shall mean, with respect to the Called Principal of
any Bond, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Bonds is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the following events which shall
occur and be continuing for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation of
law or otherwise):
(i) the Company defaults in the payment of any
principal of or premium, if any, or sinking fund payment
payable with respect to any Bond of the Fourth Series when
the same shall become due, either by the terms thereof or
otherwise as provided in the Mortgage, the Third Supplemental
Indenture, as amended by this Sixth Supplemental Indenture,
or the Bond Purchase Agreement; or
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(ii) the Company defaults in the payment of any
interest on any Bond of the Fourth Series for more than 5
days after the due date; or
(iii) the Company, Minnesota Power or any
Significant Subsidiary defaults (whether as primary obligor
or as guarantor or other surety) in any payment of principal
of or interest on any other obligation for money borrowed (or
any Capitalized Lease Obligation, any obligation under a
conditional sale or other title retention agreement, any
obligation issued or assumed as full or partial payment for
property whether or not secured by a purchase money mortgage
or any obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of grace
provided with respect thereto, or the Company, Minnesota
Power or any Significant Subsidiary fails to perform or
observe any other agreement, term or condition contained in
any agreement under which any such obligation is created (or
if any other event thereunder or under any such agreement
shall occur and be continuing) and the effect of such failure
or other event is to cause, or to permit the holder or
holders of such obligation (or a trustee on behalf of such
holder or holders) to cause, such obligation to become due
(or to be repurchased by the Company, Minnesota Power or any
Significant Subsidiary) prior to any stated maturity; or
(iv) any representation or warranty made by the
Company in the Third Supplemental Indenture, this Sixth
Supplemental Indenture or the Bond Purchase Agreement or by
the Company or any of its officers in any writing furnished
in connection with or pursuant to this Sixth Supplemental
Indenture or the Bond Purchase Agreement shall be false in
any material respect on the date as of which made; or
(v) any representation or warranty made by Minnesota
Power in the Guaranty or by Minnesota Power or any of its
officers in any writing furnished in connection with or
pursuant to the Guaranty shall be false in any material
respect on the date as of which made; or
(vi) the Company fails to perform or observe any
agreement, term or condition contained in the Mortgage, the
Third Supplemental Indenture, as amended by the Sixth
Supplemental Indenture, or the Bond Purchase Agreement; or
(vii) Minnesota Power fails to perform or observe
any agreement, term or condition contained in the Guaranty or
the Guaranty shall cease to be in full force
13
<PAGE>
and effect or otherwise shall not be enforceable in
accordance with its terms or a proceeding shall be commenced
by any governmental agency or authority having jurisdiction
over Minnesota Power seeking to establish the invalidity or
unenforceability of the Guaranty or Minnesota Power shall
deny that it has any other liability or obligation under the
Guaranty; or
(viii) the Company, Minnesota Power or any
Significant Subsidiary makes an assignment for the benefit of
creditors or is generally not paying its debts as such debts
become due; or
(ix) any decree or order for relief in respect of
the Company, Minnesota Power or any Significant Subsidiary is
entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law, whether now or hereafter in
effect (herein called the Bankruptcy Law), of any
jurisdiction; or
(x) the Company, Minnesota Power or any Significant
Subsidiary petitions or applies to any tribunal for, or
consents to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official
of the Company, Minnesota Power or any Significant
Subsidiary, or of any Substantial Part of the assets of the
Company, Minnesota Power or any Significant Subsidiary, or
commences a voluntary case under the Bankruptcy Law of the
United States or any proceedings (other than proceedings for
the voluntary liquidation and dissolution of a Significant
Subsidiary) relating to the Company, Minnesota Power or any
Significant Subsidiary under the Bankruptcy Law of any other
jurisdiction; or
(xi) any such petition or application is filed, or
any such proceedings are commenced, against the Company,
Minnesota Power or any Significant Subsidiary and the
Company, Minnesota Power or such Significant Subsidiary by
any act indicates its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in
any such proceedings; or
(xii) any order, judgment or decree is entered in
any proceedings against the Company or Minnesota Power
decreeing the dissolution of the Company or Minnesota Power
and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
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<PAGE>
(xiii) any order, judgment or decree is entered in
any proceedings against the Company decreeing a split-up of
the Company which requires the divestiture of assets
representing a Substantial Part of the assets of the Company
or which requires the divestiture of assets which shall have
contributed a Substantial Part of the net income of the
Company for any of the three fiscal years then most recently
ended, and such order, judgment or decree remains unstayed
and in effect for more than 60 days; or
(xiv) any order, judgment or decree is entered in
any proceedings against Minnesota Power or any Significant
Subsidiary decreeing a split-up of Minnesota Power or such
Significant Subsidiary which requires the divestiture of
assets representing a Substantial Part, or the divestiture of
the stock of a MP-Subsidiary whose assets represent a
Substantial Part of the consolidated assets of Minnesota
Power and its MP-Subsidiaries (determined in accordance with
generally accepted accounting principles) or which requires
the divestiture of assets, or stock of a MP-Subsidiary, which
shall have contributed a Substantial Part of the consolidated
net income of Minnesota Power and its MP-Subsidiaries
(determined in accordance with generally accepted accounting
principles) for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains
unstayed and in effect for more than 60 days; or
(xv) a final judgment in an amount in excess of
$100,000 is rendered against the Company or a final judgment
in an amount in excess of $5,000,000 is rendered against
Minnesota Power or any Significant Subsidiary and, within 60
days after entry thereof, such judgment is not discharged or
execution thereof stayed pending appeal, or within 60 days
after the expiration of any such stay, such judgment is not
discharged; or
(xvi) the Company or any ERISA Affiliate, in its
capacity as an employer under a Multiemployer Plan, makes a
complete or partial withdrawal from such Multiemployer Plan
resulting in the incurrence by such withdrawing employer of a
withdrawal liability in an amount exceeding $100,000;
(xvii) Minnesota Power shall cease to own of record
and beneficially 100% of the outstanding shares of capital
stock of the Company.
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<PAGE>
"Guaranty" shall mean that certain Guarantee Agreement dated as of
October 8, 1976, made by Minnesota Power in favor of the holders of the Bonds of
the Fourth Series.
"MP-Subsidiary" shall mean any corporation at least 51% of the total
combined voting power of all classes of Voting Stock of which shall, at the time
as of which any determination is being made, be owned by Minnesota Power either
directly or through MP-Subsidiaries.
"Minnesota Power" means Minnesota Power & Light Company, a Minnesota
corporation.
"Multiemployer Plan" shall mean any Plan which is a "multi employer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Payment Default" shall mean any default in the payment of any
principal, interest, premium or sinking fund payment with respect to any Bond of
the Fourth Series when the same shall become due.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Plan" shall mean any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made by the Company or any ERISA
Affiliate.
"Proceeds of Released Property" shall mean the aggregate of the cash
deposited with or received by the Corporate Trustee pursuant to the provisions
of Section 59, Section 60, Section 61 (except such cash as is to be paid over to
the Company under the provisions of Section 61), or Section 62 of the Mortgage.
"Purchaser" means Principal Mutual Life Insurance Company, successor to
Bankers Life Company, and Century Life of America by Century Investment
Management Company, successor to Lutheran Mutual Life Insurance Company.
"Reinvestment Yield" shall mean, with respect to the Called Principal
of any Bond, the yield to maturity implied by (i) the yields reported, as of
10:00 a.m. (New York City time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Telerate Service (or such other display as may replace Page
678 on the Telerate Service) for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date, or if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant
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Maturity Series yields reported, for the latest day for which such yields shall
have been so reported as of the Business Day next preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release H.
15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
shall be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields reported for various
maturities.
"Remaining Average Life" shall mean, with respect to the Called
Principal of any Bond, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Bond, all redemption payments of such Called Principal and
interest thereon that would be due on or after the Settlement Date from the
sinking fund established pursuant to the Third Supplemental Indenture with
respect to such Called Principal if no such redemption payment of such Called
Principal were made prior to its scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Bond, the date on which such Called Principal is to be redeemed.
"Significant Subsidiary" shall mean any MP-Subsidiary (other than the
Company) with consolidated revenues for its most recently ended fiscal year, as
shown on its statement of income, which are greater than 15% of consolidated
revenues of Minnesota Power and its MP-Subsidiaries for such fiscal year.
"Subsidiary" shall mean any corporation at least 51% of the total
combined voting power of all classes of Voting Stock of which shall, at the time
as of which any determination is being made, be owned by the Company either
directly or through Subsidiaries.
"Substantial Part" shall mean when used with respect to assets or net
income 10% or more of such assets or net income, respectively.
"Voting Stock" shall mean, with respect to any corporation, any shares
of stock of such corporation whose holders are entitled
17
<PAGE>
under ordinary circumstances to vote for the election of directors of such
corporation (irrespective of whether at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).
"Yield Maintenance Amount" shall mean, in connection with any of the
Bonds of the Fourth Series, an amount equal to the excess, if any, of the
Discounted Value of the Called Principal of such Bond over the sum of (i) such
Called Principal plus (ii) interest accrued thereon as of (including interest
due on) the Settlement Date with respect to such Called Principal. The Yield
Maintenance Amount shall in no event be less than zero.
SECTION 8. Unless otherwise defined herein, the terms defined in the
Mortgage, as heretofore supplemented, shall for all purposes of this Sixth
Supplemental Indenture have the meanings specified in the Mortgage, as
heretofore supplemented.
SECTION 9. The Trustees hereby accept the trust herein declared,
provided and created and agree to perform the same upon the terms and conditions
herein and in the Mortgage, as heretofore supplemented, set forth and upon the
following terms and conditions.
The Trustees shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Sixth Supplemental Indenture
or for or in respect of the recitals contained herein, all of which recitals are
made by the Company solely. In general, each and every term and condition
contained in Article XVII of the Mortgage shall apply to and form part of this
Sixth Supplemental Indenture with the same force and effect as if the same were
herein set forth in full, with such omissions, variations and insertions, if
any, as may be appropriate to make the same conform to the provisions of this
Sixth Supplemental Indenture.
SECTION 10. Subject to the provisions of Article XVI and Article XVII
of the Mortgage and Section 3 of this Sixth Supplemental Indenture, whenever in
this Sixth Supplemental Indenture any of the parties hereto is named or referred
to, this shall be deemed to include the successors or assigns of such party, and
all the covenants and agreements in this Sixth Supplemental Indenture contained
by or on behalf of the Company or by or on behalf of the Trustees shall bind and
inure to the benefit of the respective successors and assigns of such parties
whether so expressed or not.
SECTION 11. Nothing in this Sixth Supplemental Indenture, express or
implied, is intended, or shall be construed, to confer upon, or to give to, any
person, firm or corporation, other than the parties hereto and the holders of
the bonds Outstanding under the Mortgage, any right, remedy or claim under or by
reason of this
18
<PAGE>
Sixth Supplemental Indenture or any covenant, condition, stipulation, promise or
agreement hereof, and all the covenants, conditions, stipulations, promises and
agreements of this Sixth Supplemental Indenture contained by or on behalf of the
Company shall be for the sole and exclusive benefit of the parties hereto, and
of the holders of the bonds and of the coupons Outstanding under the Mortgage.
SECTION 12. This Sixth Supplemental Indenture may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, Superior Water, Light and Power Company, party
hereto of the first part, has caused its corporate name to be hereunto affixed,
and this instrument to be signed and sealed by its President or one of its Vice
Presidents, and its corporate seal to be attested by its Secretary or one of its
Assistant Secretaries for and on its behalf, and Chemical Bank, one of the
parties hereto of the second part, has caused its corporate name to be hereunto
affixed, and this instrument to be signed and sealed by one of its Vice
Presidents and its corporate seal to be attested by one of its Trust Officers,
and Peter Morse, one of the parties hereto of the second part, has hereunto set
his hand and affixed his seal, all as of the day and year first written above.
SUPERIOR WATER, LIGHT AND POWER COMPANY
By: E.G. McGillis
------------------------------------
E.G. McGillis, President
Attest:
G.A. Hoffman
- --------------------------
Gary A. Hoffman, Secretary
[SEAL]
Executed, sealed and delivered by
Superior Water, Light, and Power
Company in the presence of:
Janet A. Blake
- --------------------------
- --------------------------
19
<PAGE>
Chemical Bank, as Trustee
By: P.J. Gilkeson
-------------------------------
P.J. GILKESON, Vice President
[SEAL]
Attest:
M. B. Johnston
- ------------------------------
M. B. Johnston, Trust Officer
Executed, sealed and delivered by
Chemical Bank in the presence of:
Gregory P. Shea
- ------------------------------
- ------------------------------
Peter Morse
-------------------------------
Peter Morse, as Trustee
Executed, sealed and delivered by
Peter Morse in the presence of:
Gregory P. Shea
- ------------------------------
- ------------------------------
20
<PAGE>
STATE OF WISCONSIN )
) SS.
COUNTY OF DOUGLAS )
Personally came before me this 21st day of Mar, 1994, E. G. McGILLIS,
to me known to me the President, and GARY A. HOFFMAN, to me known to be the
Secretary of the above-named SUPERIOR WATER, LIGHT AND POWER COMPANY, the
corporation described in and which executed the foregoing instrument, and to me
personally known to be the persons who as such officers executed the foregoing
instrument in the name and behalf of said corporation, who, being by me duly
sworn, did depose and say and acknowledge that they are respectively the
President and Secretary of said corporation, that the seal affixed to said
instrument is the corporate seal of said corporation, and that they signed,
sealed and delivered said instrument in the name and on behalf of said
corporation by authority of its Board of Directors, and said E. G. McGILLIS and
GARY A. HOFFMAN, then and there acknowledged said instrument to be the free act
and deed of said corporation and that such corporation executed the same.
Given under my hand and notarial seal this 21st day of Mar, 1994.
Janet A. Blake
---------------------------------
Notary Public, State of Wisconsin
My Commission: 2/16/97
[SEAL]
21
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
Personally came before me this 23 day of March 1994, P. J. GILKESON, to
me known to be a Vice President, and M. B. Johnston, to me known to be a Trust
Officer, of the above-named Chemical Bank, the corporation described in and
which executed the foregoing instrument, and to me personally known to be the
persons who as such officers executed the foregoing instrument in the name
and behalf of said corporation, who, being by me duly sworn, did depose and
say and acknowledge that they are respectively a Vice President and a
Trust Officer of said corporation, that the seal affixed to said instrument
is the corporate seal of said corporation, and that they signed, sealed and
delivered said instrument in the name and on behalf of said corporation by
authority of its Board of Directors, and said Vice President and Trust Officer
then and there acknowledged said instrument to be the free act and deed of said
corporation and that such corporation executed the same.
Given under my hand and notarial seal this 23 day of March, 1994.
Annabelle DeLuca
---------------------------------
Notary Public, State of New York
My Commission:
ANNABELLE DeLUCA
Notary Public, State of New York
NO. 01DE5013759
Qualified in Kings County
Certificate Filed in New York County
Commission Expires July 15, 1995
[SEAL]
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
Personally came before me this 23 day of March, 1994 the above-named
Peter Morse, to me known to be the person who executed the foregoing instrument,
and acknowledged the same.
Annabelle DeLuca
---------------------------------
Notary Public, State of New York
My Commission:
ANNABELLE DeLUCA
Notary Public, State of New York
NO. 01DE5013759
Qualified in Kings County
Certificate Filed in New York County
Commission Expires July 15, 1995
[SEAL]
THIS INSTRUMENT DRAFTED BY:
- ---------------------------
Attorney William C. Williams
Bell, Metzner, Gierhart & Moore, S. C.
44 East Mifflin Street
P. O. Box 1807
Madison, WI 53701-1807
(608) 257-3764
22
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.B.2
<SEQUENCE>4
<DESCRIPTION>EXHIBIT 4(B)2
<TEXT>
<PAGE>
Exhibit 4(b)2
<PAGE>
Executed in 7 Counterparts
of which this is
Counterpart No. 3
SUPERIOR WATER, LIGHT AND POWER COMPANY
TO
CHEMICAL BANK
and
PETER MORSE
As Trustees Under Superior Water, Light
and Power Company's Mortgage and Deed of Trust,
Dated as of March 1, 1943
----------------------------
SEVENTH SUPPLEMENTAL INDENTURE
----------------------------
Dated as of November 1, 1994
<PAGE>
SEVENTH SUPPLEMENTAL INDENTURE
INDENTURE, dated as of the 1st day of November, 1994, made and entered
into by and between SUPERIOR WATER, LIGHT AND POWER COMPANY, a corporation of
the State of Wisconsin, whose post office address is 1230 Tower Avenue,
Superior, Wisconsin 54880 (hereinafter sometimes called the Company), party of
the first part, and CHEMICAL BANK (successor to Chemical Bank & Trust Company),
a corporation of the State of New York, whose principal corporate trust office
at the date hereof is 450 West 33rd Street, New York, New York 10001
(hereinafter called the Corporate Trustee) , and PETER MORSE (successor to
Howard B. Smith, Russell H. Sherman, Richard G. Pintard, Steven F. Lasher, and
C. G. Martens), whose post office address is 84-26 115th Street, Richmond Hill,
New York 11418 (hereinafter sometimes called the Co-Trustee), parties of the
second part (the Corporate Trustee and the Co-Trustee being hereinafter together
sometimes called the Trustees) , as Trustees under the Mortgage and Deed of
Trust dated as of March 1, 1943 (hereinafter called the Mortgage), which
Mortgage was executed and delivered by Superior Water, Light and Power Company
to secure the payment of bonds issued or to be issued under and in accordance
with the provisions of the Mortgage, reference to which Mortgage is hereby made,
this Indenture (hereinafter sometimes called the Seventh Supplemental Indenture)
being supplemental thereto;
WHEREAS, said Mortgage was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on May 3, 1943, in Volume 191 of
Mortgages at page 1, Document No. 362844; and
WHEREAS, an instrument dated as of September 15, 1949, was executed by
the Company appointing Russell H. Sherman as Co-Trustee in succession to said
Howard B. Smith, resigned, under said Mortgage and by Russell H. Sherman
accepting the appointment as Co-Trustee under said Mortgage in succession to the
said Howard B. Smith, which instrument was recorded in the office of the
Register of Deeds in and for Douglas County, Wisconsin, on October 8, 1949, in
Volume 196 of Mortgages at page 510, Document No. 398649; and
WHEREAS, by the Mortgage, the Company covenanted that it would execute
and deliver such supplemental indenture or indentures and such further
instruments and do such further acts as might be necessary or proper to carry
out more effectively the purposes of the Mortgage and to make subject to the
lien of the Mortgage any property acquired after the date of the execution of
the Mortgage and intended to be subject to the lien thereof; and
WHEREAS, the Company executed and delivered to the Trustees its First
Supplemental Indenture, dated as of March 1, 1951 (hereinafter called its First
Supplemental Indenture), which was recorded in the office of the Register of
Deeds in and for Douglas
<PAGE>
County, Wisconsin, on March 30, 1951, in Volume 205 of Mortgages at page 73,
Document No. 405297; and
WHEREAS, an instrument dated as of May 16, 1961, was executed by the
Company appointing Richard G. Pintard as Co-Trustee in succession to said
Russell H. Sherman, resigned, under said Mortgage and by Richard G. Pintard
accepting the appointment as Co-Trustee under said Mortgage in succession to
said Russell H. Sherman, which instrument was recorded in the office of the
Register of Deeds in and for Douglas County, Wisconsin, on May 31, 1961, in
Volume 256 of Mortgages at page 423, Document No. 453857; and
WHEREAS, the Company executed and delivered to the Trustees its Second
Supplemental Indenture, dated as of March 1, 1962 (hereinafter called its Second
Supplemental Indenture), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on March 26, 1962, in Volume 261 of
Mortgages at page 81, Document No. 457662; and
WHEREAS, an instrument dated as of June 23, 1976, was executed by the
Company appointing Steven F. Lasher as Co-Trustee in succession to said Richard
G. Pintard, resigned, under said Mortgage and by Steven F. Lasher accepting the
appointment as Co-Trustee under said Mortgage in succession to said Richard G.
Pintard, which instrument was recorded in the office of the Register of Deeds in
and for Douglas County, Wisconsin, on July 16, 1976, in Volume 353 of Records at
page 274, Document No. 532495; and
WHEREAS, the Company executed and delivered to the Trustees its Third
Supplemental Indenture, dated as of July 1, 1976 (hereinafter called its Third
Supplemental Indenture), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on October 1, 1976, in Volume 355 of
Records at page 683, Document No. 534332; and
WHEREAS, an instrument dated as of December 30, 1977, was executed by
the Company appointing C. G. Martens as Co-Trustee in succession to said Steven
F. Lasher, resigned, under said Mortgage and by C. G. Martens accepting the
appointment as Co-Trustee under said Mortgage in succession to said Steven F.
Lasher, which instrument was recorded in the office of the Register of Deeds in
and for Douglas County, Wisconsin, on February 13, 1985, in Volume 436 of
Records at page 264, Document No. 589308; and
WHEREAS, the Company executed and delivered to the Trustees its Fourth
Supplemental Indenture, dated as of March 1, 1985 (hereinafter called its Fourth
Supplemental Indenture), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on March 19, 1985, in Volume 436 of
Records at page 910, Document No. 589776; and
-2-
<PAGE>
WHEREAS, an instrument dated as of October 26, 1992, was executed by
the Company appointing Peter Morse as Co-Trustee in succession to said C. G.
Martens, resigned, under said Mortgage and by Peter Morse accepting the
appointment as Co-Trustee under said mortgage in succession to said C. G.
Martens, which instrument was recorded in the office of the Register of Deeds in
and for Douglas County, Wisconsin, on November 13, 1992, in Volume 539 of
Records at page 9, Document No. 649056; and
WHEREAS, the Company executed and delivered to the Trustees its Fifth
Supplemental Indenture, dated as of December 1, 1992 (hereinafter called its
Fifth Supplemental Indenture) , which was recorded in the office of the Register
of Deeds in and for Douglas County, Wisconsin, on December 28, 1992, in Volume
541 of Records at page 229, Document No. 650104; and
WHEREAS, the Company executed and delivered to the Trustees its Sixth
Supplemental Indenture, dated as of March 24, 1994 (hereinafter called its Sixth
Supplemental Indenture), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on March 29, 1994, in Volume 568 of
Records at page 757, Document No. 662228; and
WHEREAS, in addition to the property described in the Mortgage, as
heretofore supplemented, the Company has acquired certain other property, rights
and interests in property; and
WHEREAS, the Company has heretofore issued, in accordance with the
provisions of the Mortgage, bonds of a series entitled and designated First
Mortgage Bonds, 3 3/8% Series due 1973 (hereinafter called the bonds of the
First Series), in the aggregate principal amount of Two Million Five Hundred
Thousand Dollars ($2,500,000), none of which bonds of the First Series are now
Outstanding; bonds of a series entitled and designated First Mortgage Bonds, 3
1/10% Series due 1981 (hereinafter called the bonds of the Second Series), in
the aggregate principal amount of Five Million Dollars ($5,000,000), none of
which bonds of the Second Series are now Outstanding; bonds of a series entitled
and designated First Mortgage Bonds, 5% Series due 1992 (hereinafter called the
bonds of the Third Series), in the aggregate principal amount of Two Million
Seven Hundred Thousand Dollars ($2,700,000), none of which bonds of the Third
Series are now Outstanding; bonds of a series entitled and designated First
Mortgage Bonds, 9 5/8% Series due 2001 (hereinafter called the bonds of the
Fourth Series) , the interest rate of which bonds were modified to 6.10% by the
Sixth Supplemental Indenture, in the aggregate principal amount of Three Million
Dollars ($3,000,000), of which One Million, Fifty Thousand Dollars ($1,050,000)
aggregate principal amount is now Outstanding; bonds of a series entitled and
designated First Mortgage Bonds, 12 1/2% Series due 1992 (hereinafter called the
bonds of the Fifth Series), in the aggregate principal amount of Three Million
Five Hundred Thousand Dollars ($3,500,000), none of
-3-
<PAGE>
which bonds of the Fifth Series are now Outstanding; and bonds of a series
entitled and designated First Mortgage Bonds, 7.91% Series due 2013 (hereinafter
called the bonds of the Sixth Series) , in the aggregate principal amount of
Five Million Dollars ($5, 000, 000) , of which Four Million, Seven Hundred Fifty
Thousand Dollars ($4,750,000) aggregate principal amount is now Outstanding; and
WHEREAS, Sections 101 and 102 of the Mortgage provide, among other
things, that the holders of a majority in principal amount of the bonds then
Outstanding may remove and replace any Trustee, and such bondholders, at the
request of the Company, wish to replace the Trustees with a Trustee with its
principal office and place of business located outside of the borough of
Manhattan in the city of New York; and
WHEREAS, Section 35 of the Mortgage provides, among other things, that
the Corporate Trustee shall have its principal office and place of business
located within the borough of Manhattan in the city of New York; and
WHEREAS, the Company now desires to modify the Mortgage to remove the
restrictions on the location of the principal office of the Corporate Trustee,
and to modify other provisions of the Mortgage related to the location of the
Trustee's principal office; and
WHEREAS, the execution and delivery by the Company of this Seventh
Supplemental Indenture, and the modifications of the Mortgage hereinafter
referred to, have been duly authorized by the Board of Directors of the Company
by appropriate resolutions of said Board of Directors;
WHEREAS, the amendments to the Mortgage contained in this Seventh
Supplemental Indenture have been duly approved by the holders of one hundred per
centum (100%) in principal amount of the bonds outstanding and entitled to vote
thereon.
NOW, THEREFORE, THIS INDENTURE WITNESSETH: That Superior Water, Light
and Power Company, in consideration of the premises and of One Dollar ($l) to it
duly paid by the Trustees at or before the ensealing and delivery of these
presents, the receipt whereof is hereby acknowledged, and in further evidence of
assurance of the estate, title and rights of the Trustees and in order further
to secure the payment both of the principal of and interest and premium, if any,
on the bonds from time to time issued under the Mortgage, according to their
tenor and effect, and the performance of all the provisions of the Mortgage
(including any instruments supplemental thereto and any modification made as in
the Mortgage provided) and of said bonds, hereby grants, bargains, sells,
releases, conveys, assigns, transfers, mortgages, pledges, sets over and
confirms (subject, however, to Excepted Encumbrances as defined in Section 6 of
the Mortgage) unto Peter Morse and (to the
-4-
<PAGE>
extent of its legal capacity to hold the same for the Purposes ,hereof) to
Chemical Bank, as Trustees under the Mortgage, and to their successor or
successors in said trust, and to said Trustees and their successors and assigns
forever, all and singular the permits, franchises, rights, privileges, grants
and property, real, personal and mixed, now owned or which may be hereafter
acquired by the Company (except any of the character herein or in the Mortgage
expressly excepted), including (but not limited to) its electric light and power
works, gas works, water works, buildings, structures, machinery, equipment,
mains, pipes, lines, poles, wires, easements, rights of way, permits,
franchises, rights, privileges, grants and all property of every kind and
description, situated in the City of Superior, Douglas County, Wisconsin, or
elsewhere in Douglas County, Wisconsin, in Washburn County, Wisconsin, or in any
other place or places, now owned by the Company, or that may be hereafter
acquired by it, including, but not limited to, the following described
properties of the Company--that is to say:
All property, real, personal and mixed, acquired by the Company after
the date of the execution and delivery of the Mortgage (except any herein or in
the Mortgage, as heretofore supplemented, expressly excepted) , now owned or
hereafter acquired by the Company and wheresoever situated, including (without
in any way limiting or impairing by the enumeration of the same the scope and
intent of the foregoing or of any general description contained in this Seventh
Supplemental Indenture) all lands, power sites, flowage rights, water rights,
water franchises, water locations, water appropriations, ditches, flumes,
reservoirs, reservoir sites, canals, raceways, dams, dam sites, aqueducts, and
all other rights or means for appropriating, conveying, storing and supplying
water; all rights of way and roads; all plants, works, reservoirs and tanks for
the pumping and purification of water; all water works; all plants for the
generation of electricity by water, steam and/or other power; all power houses,
gas plants, street lighting systems, standards and other equipment incidental
thereto, telephone, radio and television systems, air-conditioning systems and
equipment incidental thereto, water systems, steam heat and hot water plants,
substations, lines, service and supply systems, bridges, culverts, tracks,
street and interurban railway systems, offices, buildings and other structures
and the equipment thereof; all machinery, engines, boilers, dynamos, water,
electric, gas and other machines, regulators, meters, transformers, generators,
motors, water, electrical, gas and mechanical appliances, conduits, cables,
water, steam, heat, gas or other mains and pipes, service pipes, fittings,
valves and connections, pole and transmission lines, wires, cables, tools,
implements, apparatus, furniture, chattels and choses in action; all municipal
and other franchises, consents or permits; all lines for the transmission and
distribution of water, electric current, gas, steam heat or hot water for any
purpose, including towers, poles, wires, cables, pipes, conduits, ducts and all
apparatus for use in connection therewith; all real estate, lands,
-5-
<PAGE>
easements, servitudes, licenses, permits, franchises, privileges, rights of way
and other rights in or relating to real estate or the occupancy of the same and
(except as herein or in the Mortgage, as heretofore supplemented, expressly
excepted) all the right, title and interest of the Company in and to all other
property of any kind or nature appertaining to and/or used and/or occupied
and/or enjoyed in connection with any property herein before or in the Mortgage,
as heretofore supplemented, described.
Together with all and singular the tenements, hereditaments and
appurtenances belonging or in any way appertaining to the aforesaid property or
any part thereof, with the reversion and reversions, remainder and remainders
and (subject to the provisions of Section 57 of the Mortgage) the tolls, rents,
revenues, issues, earnings, income, product and profits thereof, and all the
estate, right, title and interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and to the
aforesaid property and franchises and every part and parcel thereof.
It is hereby agreed by the Company that all the property, rights and
franchises acquired by the Company after the date hereof (except any herein or
in the Mortgage, as heretofore supplemented, expressly excepted) shall be and
are as fully granted and conveyed hereby and as fully embraced within the lien
of the Mortgage as if such property, rights and franchises were now owned by the
Company and were specifically described herein and conveyed hereby.
Provided that the following are not and are not intended to be now or
hereafter granted, bargained, sold, released, conveyed, assigned, transferred,
mortgaged, pledged, set over or confirmed hereunder and are hereby expressly
excepted from the lien and operation of the Mortgage, via: (1) cash, shares of
stock, bonds, notes and other obligations and other securities not hereafter
specifically pledged, paid, deposited, delivered or held under the Mortgage or
covenanted so to be; (2) merchandise, equipment, materials or supplies held for
the purpose of sale in the usual course of business and fuel, oil and similar
materials and supplies consumable in the operation of any properties of the
Company; rolling stock, buses, motor coaches, automobiles and other vehicles;
(3) bills, notes and accounts receivable, and all contracts, leases and
operating agreements not specifically pledged under the Mortgage or covenanted
so to be; the last day of the term of any lease or leasehold which may
heretofore have or hereafter may become subject to the lien of the Mortgage; (4)
water, electric energy, gas, ice and other materials or products pumped, stored,
generated, manufactured, produced or purchased by the Company for sale,
distribution or use in the ordinary course of its business; (5) the Company's
franchise to be a corporation; and (6) all permits, franchises, rights,
privileges, grants and property in the state of Minnesota now owned or hereafter
acquired unless such permits, franchises, rights, privileges, grants and
property in the
-6-
<PAGE>
state of Minnesota shall have been subjected to the lien of the Mortgage by an
indenture or indentures supplemental to the Mortgage, pursuant to authorization
of the Board of Directors of the Company, whereupon all the permits, franchises,
rights, privileges, grants and property then owned or thereafter acquired the
Company in the state of Minnesota (except property of the character expressly
excepted from the lien of the Mortgage in clauses (1) to (5) above, inclusive),
shall become and be subject to the lien of the Mortgage as part of the Mortgaged
and Pledged property and may be released, funded and otherwise dealt with on the
same terms and subject to the same conditions and restrictions as though not
theretofore excepted from the lien of the Mortgage; provided, however, that the
property and rights expressly excepted from the lien and operation of the
Mortgage in the above subdivisions (2) and (3) shall (to the extent permitted by
law) cease to be so excepted in the event and as of the date that either or both
of the Trustees or a receiver or trustee shall enter upon and take possession of
the Mortgaged and Pledged Property in the manner provided in Article XIII of the
Mortgage by reason of the occurrence of a Default as defined in Section 65 of
the Mortgage.
To have and to hold all such properties, real, personal and mixed,
granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged,
pledged, set over or confirmed by the Company as aforesaid, or intended so to
be, unto Peter Morse and (to the extent of its legal capacity to hold the same
for the purposes hereof) to Chemical Bank, as Trustees, and their successors and
assigns forever.
In trust nevertheless, for the same purposes and upon the same terms,
trusts and conditions and subject to and with the same provisos and covenants as
are set forth in the Mortgage, as heretofore supplemented, this Seventh
Supplemental Indenture being supplemental thereto.
And it is hereby covenanted by the Company that all the terms,
conditions, provisos, covenants and provisions contained in the Mortgage, as
heretofore supplemented, shall affect and apply to the property herein before
described and conveyed and to the estate, rights, obligations and duties of the
Company and the Trustees and the beneficiaries of the trust with respect to said
property, and to the Trustees and their successors as Trustees of said property,
in the same manner and with the same effect as if said property had been owned
by the Company at the time of the execution of the Mortgage, and had been
specifically and at length described in and conveyed to the Trustees by the
Mortgage as part of the property therein stated to be conveyed.
The Company further covenants and agrees to and with the Trustees and
their successors in said trust under the Mortgage as follows:
-7-
<PAGE>
ARTICLE I.
Amendments to the Mortgage.
SECTION 1. Effective upon the date of this Seventh Supplemental
Indenture, the Mortgage shall be amended as follows:
(A) subdivision (a) of Section 35 of Article VIII of the Mortgage is
amended to read as follows--
(a) That, whenever necessary to avoid or fill a vacancy
in the office of the Corporate Trustee, the Company will in
the manner provided in Section 102 hereof appoint a Corporate
Trustee so that there shall at all times be a Corporate
Trustee hereunder which shall at all times be a corporation
organized and doing business under the laws of the United
States or of any State or Territory or the District of
Columbia, with its principal office and place of business
within the United States, and with a combined capital and
surplus of at least One Hundred Million Dollars
($100,000,000) (unless such trustee is First Bank (N.A.),
with its principal office and place of business in Milwaukee,
Wisconsin, in which case such trustee shall have a combined
capital and surplus of at least Thirty Million Dollars
($30,000,000)), and authorized under such laws to exercise
corporate trust powers and subject to supervision or
examination by Federal, State, Territorial or District of
Columbia authority.
(B) wherever the Mortgage refers to providing notice in a Daily
Newspaper, printed in the English language, and of general circulation in the
Borough of Manhattan, The City of New York, such reference is amended to refer
to a Daily Newspaper, printed in the English language, and of general
circulation in the City of Milwaukee, Wisconsin.
(C) subdivision (a) of Section 82 of Article XIV and Section 110 of
Article XIX of the Mortgage are amended by replacing the references therein to
"New York" with "Wisconsin".
(D) Section 108 of Article XIX of the Mortgage is amended by replacing
the references therein to "the Borough of Manhattan, The City of New York" with
"the City of Milwaukee, Wisconsin".
SECTION 2. Except to the extent expressly set forth in this Seventh
Supplemental Indenture, the Mortgage remains unchanged.
-8-
<PAGE>
ARTICLE II.
Amendments to the Third, Fifth and Sixth Supplemental
Indentures and the Terms of the Bonds of the Fourth
and Sixth Series.
SECTION 3. Effective upon the date of this Seventh Supplemental
Indenture, the Third Supplemental Indenture, as amended by the Sixth
Supplemental Indenture, and the terms of the Bonds of the Fourth Series shall be
amended by replacing the references therein to the "office or agency of the
Company in the Borough of Manhattan, The City of New York" with the "Office or
agency of the Company at the principal office of the Corporate Trustee".
SECTION 4. Effective upon the date of this Seventh Supplemental
Indenture, the Fifth Supplemental Indenture and the terms of the Bonds of the
Sixth Series shall be amended by replacing the references therein to the "office
or agency of the Company in the Borough of Manhattan, The City of New York" with
the "office or agency of the Company at the principal office of the Corporate
Trustee".
SECTION 5. Effective upon the date of this Seventh Supplemental
Indenture, the definition of "Business Day" in the Fifth Supplemental Indenture
and the Sixth Supplemental Indenture shall be amended by replacing the
references therein to "New York City" with "the state of Wisconsin".
SECTION 6. Except to the extent expressly set forth in this Seventh
Supplemental Indenture, the Third Supplemental Indenture, as amended by the
Sixth Supplemental Indenture, the Fifth Supplemental Indenture, and the Sixth
Supplemental Indenture, and the terms of the Bonds of the Fourth and Sixth
Series, remain unchanged.
ARTICLE III.
Miscellaneous Provisions.
SECTION 7. Unless otherwise defined herein, the terms defined in the
Mortgage, as heretofore supplemented, shall for all purposes of this Seventh
Supplemental Indenture have the meanings specified in the Mortgage, as
heretofore supplemented.
SECTION 8. The Trustees hereby accept the trust herein declared,
provided and created and agree to perform the same upon the terms and conditions
herein and in the Mortgage, as heretofore supplemented, set forth and upon the
following terms and conditions.
The Trustees shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Seventh Supplemental Indenture
or for or in respect of the recitals contained herein, all of which recitals are
made by the Company
-9-
<PAGE>
solely. In general, each and every term and condition contained in
Article XVII of the Mortgage shall apply to and form part of this
Seventh Supplemental Indenture with the same force and effect as if the
same were herein set forth in full, with such omissions, variations
and insertions, if any, as may be appropriate to make the same conform
to the provisions of this Seventh Supplemental Indenture.
SECTION 9. Subject to the provisions of Article XVI and Article XVII of
the Mortgage, whenever in this Seventh Supplemental Indenture any of the parties
hereto is named or referred to, this shall be deemed to include the successors
or assigns of such party, and all the covenants and agreements in this Seventh
Supplemental Indenture contained by or on behalf of the Company or by or on
behalf of the Trustees shall bind and inure to the benefit of the respective
successors and assigns of such parties whether so expressed or not.
SECTION 10. Nothing in this Seventh Supplemental Indenture, express or
implied, is intended, or shall be construed, to confer upon, or to give to, any
person, firm or corporation, other than the parties hereto and the holders of
the bonds Outstanding under the Mortgage, any right, remedy or claim under or by
reason of this Seventh Supplemental Indenture or any covenant, condition,
stipulation, promise or agreement hereof, and all the covenants, conditions,
stipulations, promises and agreements of this Seventh Supplemental Indenture
contained by or on behalf of the Company shall be for the sole and exclusive
benefit of the parties hereto, and of the holders of the bonds and of the
coupons Outstanding under the Mortgage.
SECTION 11. This Seventh Supplemental Indenture may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, Superior Water, Light and Power Company, party
hereto of the first part, has caused its corporate name to be hereunto affixed,
and this instrument to be signed and sealed by its President or one of its Vice
Presidents, and its corporate seal to be attested by its Secretary or one of its
Assistant Secretaries for and on its behalf, and Chemical Bank, one of the
parties hereto of the second part, has caused its corporate name to be hereunto
affixed, and this instrument to be signed and sealed by one of its Vice
Presidents and its corporate seal to be attested by one of its ___________,
and Peter Morse, one of the parties hereto of the second part, has hereunto
set his hand and affixed his seal, all as
-10-
<PAGE>
of the day and year first written above.
SUPERIOR WATER, LIGHT AND POWER COMPANY
By: E.G. McGillis
------------------------------------
E.G. McGillis, President
Attest:
G.A. Hoffman
- --------------------------------
Gary A. Hoffman, Secretary
Executed, sealed and delivered by
Superior Water, Light and Power
Company in the presence of:
Janet A. Blake
- --------------------------------
Brenda L. Jahr
- --------------------------------
Chemical Bank, as Trustee
By: P.J. Gilkeson
------------------------------------
P.J. GILKESON, Vice President
Attest:
L. O'Brien
- --------------------------------
L. O'Brien, Assistant Secretary
- ---------- --------------------
Executed, sealed and delivered by
Chemical Bank in the presence of:
Gregory P. Shea
- --------------------------------
P. Morabito
- --------------------------------
Peter Morse
------------------------------------
Peter Morse, as Trustee
Executed, and delivered by
Peter Morse in the presence of:
/s/ Illegible
- --------------------------------
/s/ Illegible
- --------------------------------
-11-
<PAGE>
STATE OF WISCONSIN )
) SS.
COUNTY OF DOUGLAS )
Personally came before me this 15th day of November 1994, E. G.
McGILLIS, to me known to be the President, and GARY A. HOFFMAN, to me known to
be the Secretary of the above-named SUPERIOR WATER, LIGHT AND POWER COMPANY, the
corporation described in and which executed the foregoing instrument, and to me
personally known to be the persons who as such officers executed the foregoing
instrument in the name and behalf of said corporation, who, being by me duly
sworn, did depose and say and acknowledge that they are respectively the
President and Secretary of said corporation, that the seal affixed to said
instrument is the corporate seal of said corporation, and that they signed,
sealed and delivered said instrument in the name and on behalf of said
corporation by authority of its Board of Directors, and said E. G. MCGILLIS and
GARY A. HOFFMAN, then and there acknowledged said instrument to be the free act
and deed of said corporation and that such corporation executed the same.
Given under my hand and notarial seal this 15th day of November, 1994.
Janet A. Blake
---------------------------------
Notary Public, State of Wisconsin
My Commission expires 2/16/97
-12-
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
Personally came before me this 6th day of January, 1995, P. J.
Gilkeson, to me known to be a Vice President, and L. O'Brien, to me known to be
a Assistant Secretary, of the above-named Chemical Bank, the corporation
described in and which executed the foregoing instrument, and to me personally
known to be the persons who as such officers executed the foregoing instrument
in the name and behalf of said corporation, who, being by me duly sworn, did
depose and say and acknowledge that they are respectively a Vice President and a
Assistant Secretary of said corporation, that the seal affixed to said
instrument is the corporate seal of said corporation, and that they signed,
sealed and delivered said instrument in the name and on behalf of said
corporation by authority of its Board of Directors, and said Vice President and
Assistant Secretary then and there acknowledged said instrument to be the free
act and deed of said corporation and that such corporation executed the same.
Given under my hand and notarial seal this 6th day of January, 1995.
Annabelle DeLuca
---------------------------------
Notary Public, State of New York
My Commission:
ANNABELLE DeLUCA
Notary Public, State of New York
NO. 01DE5013759
Qualified in Kings County
Certificate Filed in New York County
Commission Expires July 15, 1995
-13-
<PAGE>
AUTHENTICATION OF EXECUTION BY PETER MORSE
THIS INSTRUMENT DRAFTED BY:
- ---------------------------
Attorney William C. Williams
Bell, Metzner, Gierhart & Moore, S. C.
44 East Mifflin Street
P. O. Box 1807
Madison, WI 53701-1807
(608) 257-3764
-14-
<PAGE>
UNITED KINGDOM OF GREAT BRITIAN )
CITY OF LONDON ENGLAND ) SS.
On this ninth day of December One thousand nine hundred and
ninety-four, personally came before me PETER MORSE, to me known to be the person
described in and who executed the foregoing Instrument, and acknowledged that he
executed the same.
Richard Graham Rosser
RICHARD GRAHAM ROSSER
NOTARY PUBLIC, LONDON
My commission expires with life
[SEAL] [SEAL]
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.B.3
<SEQUENCE>5
<DESCRIPTION>EXHIBIT 4(B)3
<TEXT>
<PAGE>
Exhibit 4(b)3
<PAGE>
================================================================================
SUPERIOR WATER, LIGHT AND POWER COMPANY
1230 Tower Avenue, Superior, WI 54880
To
FIRST BANK (N.A.)
As Corporate Trustee Under Superior Water, Light
and Power Company's Mortgage and Deed of Trust,
Dated as of March 1, 1943
-----------------------------------------
EIGHTH SUPPLEMENTAL INDENTURE
-----------------------------------------
Dated as of January 1, 1997
================================================================================
This instrument drafted by
James E. Jenz
CHAPMAN AND CUTLER
Chicago, Illinois
<PAGE>
TABLE OF CONTENTS
Section Heading Page
Parties.......................................................................1
Recitals......................................................................1
ARTICLE I BONDS OF THE SEVENTH SERIES........................7
Section 1.1................................................................7
ARTICLE II COVENANTS AND RESTRICTIONS........................10
Section 2.1.........................................................10
Section 2.2.........................................................10
Section 2.3.........................................................10
Section 2.4.........................................................10
ARTICLE III MISCELLANEOUS PROVISIONS..........................10
Section 3.1.........................................................10
Section 3.2.........................................................14
Section 3.3.........................................................14
Section 3.4.........................................................14
Section 3.5.........................................................14
Section 3.6.........................................................15
Signature Page...............................................................16
ATTACHMENTS TO SUPPLEMENTAL INDENTURE:
EXHIBIT A - Form of Bond of the Seventh Series
EXHIBIT B - Assignment and Irrevocable Bond Power
-i-
<PAGE>
EIGHTH SUPPLEMENTAL INDENTURE
INDENTURE, dated as of the 1st day of January 1997, made and entered
into by and between SUPERIOR WATER, LIGHT AND POWER COMPANY, a corporation of
the State of Wisconsin, whose address is 1230 Tower Avenue, Superior, Wisconsin
54880 (the "Company") and FIRST BANK (N.A.) (successor to Chemical Bank, as
Corporate Trustee, and Peter Morse, as Co-Trustee), a national banking
association, whose principal trust office at the date hereof is 201 West
Wisconsin Avenue, Milwaukee, Wisconsin 53259 (the "Corporate Trustee"), as
Corporate Trustee under the Mortgage and Deed of Trust dated as of March 1, 1943
(hereinafter called the "Mortgage"), which Mortgage was executed and delivered
by the Company to secure the payment of bonds issued or to be issued under and
in accordance with the provisions of the Mortgage, reference to which Mortgage
is hereby made, this Eighth Supplemental Indenture (the "Eighth Supplemental
Indenture") being supplemental thereto;
WHEREAS, said Mortgage was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on May 3, 1943, in Volume 191 of
Mortgages at page 1, Document No. 362844; and
WHEREAS, an instrument dated as of September 15, 1949, was executed by
the Company appointing Russell H. Sherman as Co-Trustee in succession to said
Howard B. Smith, resigned, under said Mortgage, and by Russell H. Sherman
accepting the appointment as Co-Trustee under said Mortgage in succession to the
said Howard B. Smith, which instrument was recorded in the office of the
Register of Deeds in and for Douglas County, Wisconsin, on October 8, 1949, in
Volume 196 of Mortgages at page 510, Document No. 398649; and
WHEREAS, by the Mortgage, the Company covenanted that it would execute
and deliver such supplemental indenture or indentures and such further
instruments and do such further acts as might be necessary or proper to carry
out more effectively the purposes of the Mortgage and to make subject to the
lien of the Mortgage any property acquired after the date of the execution of
the Mortgage and intended to be subject to the lien thereof; and
WHEREAS, the Company executed and delivered its First Supplemental
Indenture, dated as of March 1, 1951 (hereinafter called its "First Supplemental
Indenture"), which was recorded in the office of the Register of Deeds in and
for Douglas County, Wisconsin, on March 30, 1951, in Volume 205 of Mortgages at
page 73, Document No. 405297; and
WHEREAS, an instrument dated as of May 16, 1961, was executed by the
Company appointing Richard G. Pintard as Co-Trustee in succession to said
Russell H. Sherman, resigned, under said Mortgage and by Richard G. Pintard
accepting the appointment as Co-Trustee under said Mortgage in succession to
said Russell H. Sherman, which instrument was recorded in the office of the
Register of Deeds in and for Douglas County, Wisconsin, on May 31, 1961, in
Volume 256 of Mortgages at page 423, Document No. 453857; and
<PAGE>
WHEREAS, the Company executed and delivered its Second Supplemental
Indenture, dated as of March 1, 1962 (hereinafter called its "Second
Supplemental Indenture"), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on March 26, 1962, in Volume 261 of
Mortgages at page 81, Document No. 457662; and
WHEREAS, an instrument dated as of June 23, 1976, was executed by the
Company appointing Steven F. Lasher as Co-Trustee in succession to said Richard
G. Pintard, resigned, under said Mortgage and by Steven F. Lasher accepting the
appointment as Co-Trustee under said Mortgage in succession to said Richard G.
Pintard, which instrument was recorded in the office of the Register of Deeds in
and for Douglas County, Wisconsin, on July 16, 1976, in Volume 353 of Records at
page 274, Document No. 532495; and
WHEREAS, the Company executed and delivered its Third Supplemental
Indenture, dated as of July 1, 1976 (hereinafter called its "Third Supplemental
Indenture"), which was recorded in the office of the Register of Deeds in and
for Douglas County, Wisconsin, on October 1, 1976, in Volume 355 of Records at
page 683, Document No. 534332; and
WHEREAS, an instrument dated as of December 30, 1977, was executed by
the Company appointing C. G. Martens as Co-Trustee in succession to said Steven
F. Lasher, resigned, under said Mortgage and by C. G. Martens accepting the
appointment as Co-Trustee under said Mortgage in succession to said Steven F.
Lasher, which instrument was recorded in the office of the Register of Deeds in
and for Douglas County, Wisconsin, on February 13, 1985, in Volume 436 of
Records at page 264, Document No. 589308; and
WHEREAS, the Company executed and delivered its Fourth Supplemental
Indenture, dated as of March 1, 1985 (hereinafter called its "Fourth
Supplemental Indenture"), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on March 19, 1985, in Volume 436 of
Records at page 910, Document No. 589776; and
WHEREAS, an instrument dated as of October 26, 1992, was executed by
the Company appointing Peter Morse as Co-Trustee in succession to said C. G.
Martens, resigned, under said Mortgage and by Peter Morse accepting the
appointment as Co-Trustee under said Mortgage in succession to said C. G.
Martens, which instrument was recorded in the office of the Register of Deeds in
and for Douglas County, Wisconsin, on November 13, 1992, in Volume 539 of
Records at page 9, Document No. 649056; and
WHEREAS, the Company executed and delivered its Fifth Supplemental
Indenture, dated as of December 1, 1992, (hereinafter called its "Fifth
Supplemental Indenture"), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on December 28, 1992, in Volume 541
of Records at page 229, Document No. 650104; and
WHEREAS, the Company executed and delivered its Sixth Supplemental
Indenture, dated as of March 24, 1994 (hereinafter called its "Sixth
Supplemental Indenture"), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on March 29, 1994, in Volume 568 of
Records at page 757, Document No. 662228; and
-2-
<PAGE>
WHEREAS, the Company executed and delivered its Seventh Supplemental
Indenture, dated as of November 1, 1994 (hereinafter called its "Seventh
Supplemental Indenture"), which was recorded in the office of the Register of
Deeds in and for Douglas County, Wisconsin, on January 18, 1995, in Volume 583
of Records at page 242, Document No. 669350; and
WHEREAS, an instrument dated as of January 20, 1995, was executed by
The Prudential Insurance Company pursuant to Section 102 of the Mortgage
appointing First Bank (N.A.) as Corporate Trustee in succession to Chemical Bank
as Corporate Trustee and Peter Morse as Co-Trustee under said Mortgage and by
First Bank (N.A.), accepting the appointment as Corporate Trustee under such
Mortgage in succession to said Chemical Bank and said Peter Morse, which
instrument was recorded in the Office of the Register of Deeds in and for
Douglas County, Wisconsin on April 6, 1995 in Volume 585 of Records at page 953,
Document No. 670717; and
WHEREAS, in addition to the property described in the Mortgage, as
heretofore supplemented, the Company has acquired certain other property, rights
and interests in property; and
WHEREAS, the Company has heretofore issued, in accordance with the
provisions of the Mortgage, bonds of a series entitled and designated First
Mortgage Bonds, 3 3/8% Series due 1973 (the "Bonds of the First Series"), in the
aggregate principal amount of Two Million Five Hundred Thousand Dollars
($2,500,000), none of which Bonds of the First Series are now Outstanding; bonds
of a series entitled and designated First Mortgage Bonds, 3 1/10% Series due
1981 (the "Bonds of the Second Series"), in the aggregate principal amount of
Five Million Dollars ($5,000,000), none of which Bonds of the Second Series are
now Outstanding; bonds of a series entitled and designated First Mortgage Bonds,
5% Series due 1992 (the "Bonds of the Third Series"), in the aggregate principal
amount of Two Million Seven Hundred Thousand Dollars ($2,700,000), none of which
Bonds of the Third Series are now outstanding; bonds of a series entitled and
designated First Mortgage Bonds, 9 5/8% Series due 2001 (the "Bonds of the
Fourth Series"), the interest rate for which bonds was modified to 6.10% by the
Sixth Supplemental Indenture, in the aggregate principal amount of Three Million
Dollars ($3,000,000), of which $750,000 aggregate principal amount is now
outstanding; bonds of a series entitled and designated First Mortgage Bonds, 12
1/2% Series due 1992 (the "Bonds of the Fifth Series"), in the aggregate
principal amount of Three Million Five Hundred Thousand Dollars ($3,500,000),
none of which Bonds of the Fifth Series are now outstanding; and Bonds of a
series entitled and designated First Mortgage Bonds, 7.91% Series due 2013 (the
"Bonds of the Sixth Series"), in the aggregate principal amount of Five Million
Dollars ($5,000,000) of which $4,250,000 aggregate principal amount is now
outstanding; and
WHEREAS, Section 8 of the Mortgage provides that the form of each
series of bonds (other than the First Series) issued thereunder shall be
established by Resolution of the Board of Directors of the Company and that the
form of such series, as established by said Board of Directors, shall specify
the descriptive title of the bonds and various other terms
-3-
<PAGE>
thereof, and may also contain such provisions not inconsistent with the
provisions of the Mortgage as the Board of Directors may, in its discretion,
cause to be inserted therein; and
WHEREAS, Section 120 of the Mortgage provides, among other things, that
the Company may enter into any further covenants, limitations or restrictions
for the benefit of any one or more series of bonds issued thereunder, or the
Company may establish the terms and provisions of any series of bonds other than
said First Series, by an instrument in writing executed and acknowledged by the
Company in such manner as would be necessary to entitle a conveyance of real
estate to be of record in all of the states in which any property at the time
subject to the lien of the Mortgage shall be situated; and
WHEREAS, the Company now desires to create a new series of bonds and to
add to the covenants, limitations or restrictions contained in the Mortgage
certain other covenants, limitations or restrictions to be observed by it and to
amend the Mortgage; and
WHEREAS, the execution and delivery by the Company of this Eighth
Supplemental Indenture, and the terms of the Bonds of the Seventh Series
hereinafter referred to, have been duly authorized by the Board of Directors of
the Company by appropriate resolutions of said Board of Directors.
Now, THEREFORE, THIS INDENTURE WITNESSETH: That Superior Water, Light
and Power Company, in consideration of the premises and of One Dollar ($1) to it
duly paid by the Corporate Trustee at or before the ensealing and delivery of
these presents, the receipt whereof is hereby acknowledged, and in further
evidence of assurance of the estate, title and rights of the Corporate Trustee
and in order further to secure the payment both of the principal of and interest
and premium, if any, on the bonds from time to time issued under the Mortgage,
according to their tenor and effect, and the performance of all the provisions
of the Mortgage (including any instruments supplemental thereto and any
modification made as in the Mortgage provided) and of said bonds, hereby grants,
bargains, sells, releases, conveys, assigns, transfers, mortgages, pledges, sets
over and confirms (subject, however, to Excepted Encumbrances as defined in
Section 6 of the Mortgage) unto First Bank (N.A.), as Corporate Trustee under
the Mortgage, and to its successor or successors in said trust, and to said
Corporate Trustee and its successors and assigns forever, all and singular the
permits, franchises, rights, privileges, grants and property, real, personal and
mixed, now owned or which may be hereafter acquired by the Company (except any
of the character herein or in the Mortgage expressly excepted), including (but
not limited to) its electric light and power works, gas works, water works,
buildings, structures, machinery, equipment, mains, pipes, lines, poles, wires,
easements, rights of way, permits, franchises, rights, privileges, grants and
all property of every kind and description, situated in the City of Superior,
Douglas County, Wisconsin, or elsewhere in Douglas County, Wisconsin, in
Washburn County, Wisconsin, or in any other place or places now owned by the
Company, or that may be hereafter acquired by it, including, but not limited to,
the following described properties of the Company--that is to say:
All property, real, personal and mixed, acquired by the Company after
the date of the execution and delivery of the Mortgage (except any herein or in
the Mortgage, as heretofore
-4-
<PAGE>
supplemented, expressly excepted), now owned or hereafter acquired by the
Company and wheresoever situated, including (without in any wise limiting or
impairing by the enumeration of the same the scope and intent of the foregoing
or of any general description contained in this Eighth Supplemental Indenture)
all lands, power sites, flowage rights, water rights, water franchises, water
locations, water appropriations, ditches, flumes, reservoirs, reservoir sites,
canals, raceways, dams, dam sites, aqueducts, and all other rights or means for
appropriating, conveying, storing and supplying water; all rights of way and
roads; all plants, works, reservoirs and tanks for the pumping and purification
of water; all water works; all plants for the generation of electricity by
water, steam and/or other power; all power houses, gas plants, street lighting
systems, standards and other equipment incidental thereto, telephone, radio and
television systems, air-conditioning systems and equipment incidental thereto,
water systems, steam heat and hot water plants, substations, lines, service and
supply systems, bridges, culverts, tracks, street and interurban railway
systems, offices, buildings and other structures and the equipment thereof; all
machinery, engines, boilers, dynamos, water, electric, gas and other machines,
regulators, meters, transformers, generators, motors, water, electrical, gas and
mechanical appliances, conduits, cables, water, steam, heat, gas or other mains
and pipes, service pipes, fittings, valves and connections, pole and
transmission lines, wires, cables, tools, implements, apparatus, furniture,
chattels and choses in action; all municipal and other franchises, consents or
permits; all lines for the transmission and distribution of water, electric
current, gas, steam heat or hot water for any purpose, including towers, poles,
wires, cables, pipes, conduits, ducts and all apparatus for use in connection
therewith; all real estate, lands, easements, servitudes, licenses, permits,
franchises, privileges, rights of way and other rights in or relating to real
estate or the occupancy of the same and (except as herein or in the Mortgage, as
heretofore supplemented, expressly excepted) all the right, title and interest
of the Company in and to all other property of any kind or nature appertaining
to and/or used and/or occupied and/or enjoyed in connection with any property
hereinbefore or in the Mortgage, as heretofore supplemented, described.
Together with all and singular the tenements, hereditaments and
appurtenances belonging or in any wise appertaining to the aforesaid property or
any part thereof, with the reversion and reversions, remainder and remainders
and (subject to the provisions of Section 57 of the Mortgage) the tolls, rents,
revenues, issues, earnings, income, product and profits thereof, and all the
estate, right, title and interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and to the
aforesaid property and franchises and every part and parcel thereof.
It is hereby agreed by the Company that all the property, rights and
franchises acquired by the Company after the date hereof (except any herein or
in the Mortgage, as heretofore supplemented, expressly excepted) shall be and
are as fully granted and conveyed hereby and as fully embraced within the lien
of the Mortgage as if such property, rights and franchises were now owned by the
Company and were specifically described herein and conveyed hereby.
Provided that the following are not and are not intended to be now or
hereafter granted, bargained, sold, released, conveyed, assigned, transferred,
mortgaged, pledged, set
-5-
<PAGE>
over or confirmed hereunder and are hereby expressly excepted from the lien and
operation of the Mortgage, viz: (1) cash, shares of' stock, bonds, notes and
other obligations and other securities not hereafter specifically pledged, paid,
deposited, delivered or held under the Mortgage or covenanted so to be; (2)
merchandise, equipment, materials or supplies held for the purpose of sale in
the usual course of business and fuel, oil and similar materials and supplies
consumable in the operation of any properties of the Company; rolling stock,
buses, motor coaches, automobiles and other vehicles; (3) bills, notes and
accounts receivable, and all contracts, leases and operating agreements not
specifically pledged under the Mortgage or covenanted so to be; the last day of
the term of any lease or leasehold which may heretofore have or hereafter may
become subject to the lien of the Mortgage; (4) water, electric energy, gas, ice
and other materials or products pumped, stored, generated, manufactured,
produced or purchased by the Company for sale, distribution or use in the
ordinary course of its business; (5) the Company's franchise to be a
corporation; and (6) all permits, franchises, rights, privileges, grants and
property in the state of Minnesota now owned or hereafter acquired unless such
permits, franchises, rights, privileges, grants and property in the state of
Minnesota shall have been subjected to the lien of the Mortgage by an indenture
or indentures supplemental to the Mortgage, pursuant to authorization of the
Board of Directors of the Company, whereupon all the permits, franchises,
rights, privileges, grants and property then owned or thereafter acquired by the
Company in the state of Minnesota (except property of the character expressly
excepted from the lien of the Mortgage in clauses (1) to (5) above, inclusive),
shall become and be subject to the lien of the Mortgage as part of the Mortgaged
and Pledged Property and may be released, funded and otherwise dealt with on the
same terms and subject to the same conditions and restrictions as though not
theretofore excepted from the lien of the Mortgage; provided, however, that the
property and rights expressly excepted from the lien and operation of the
Mortgage in the above subdivisions (2) and (3) shall (to the extent permitted by
law) cease to be so excepted in the event and as of the date that the Corporate
Trustee or a receiver or trustee shall enter upon and take possession of the
Mortgaged and Pledged Property in the manner provided in Article XIII of the
Mortgage by reason of the occurrence of a Default as defined in Section 65 of
the Mortgage.
To have and to hold all such properties, real, personal and mixed,
granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged
pledged, set over or confirmed by the Company as aforesaid, or intended so to
be, unto First Bank (N.A.) as Corporate Trustee, and its successors and assigns
forever.
In trust nevertheless, for the same purposes and upon the same terms,
trusts and conditions and subject to and with the same provisos and covenants as
are set forth in the Mortgage, as heretofore supplemented, this Eighth
Supplemental Indenture being supplemental thereto.
And it is hereby covenanted by the Company that all the terms,
conditions, provisos, covenants and provisions contained in the Mortgage, as
heretofore supplemented, shall affect and apply to the property hereinbefore
described and conveyed and to the estate, rights, obligations and duties of the
Company and the Corporate Trustee and the beneficiaries of the trust with
respect to said property, and to the Corporate Trustee and its successors as
-6-
<PAGE>
Corporate Trustee of said property, in the same manner and with the same effect
as if said property had been owned by the Company at the time of the execution
of the Mortgage, and had been specifically and at length described in and
conveyed to the Corporate Trustee by the Mortgage as part of the property
therein stated to be conveyed.
The Company further covenants and agrees to and with the Corporate
Trustee and its successors in said trust under the Mortgage as follows:
ARTICLE I
BONDS OF THE SEVENTH SERIES
Section 1.1. There shall be a seventh series of bonds designated "First
Mortgage Bonds, 7.27% Series due December 15, 2008" (the "Bonds of the Seventh
Series"), which shall be limited to $6,000,000 aggregate principal amount, shall
mature on December 15, 2008, and shall be issued as fully registered bonds
without coupons in the denominations of $1,000 or any multiple thereof. The
Bonds of the Seventh Series shall bear interest (computed on the basis of a
360-day year of twelve 30-day months) at the rate of seven and twenty-seven
hundredths percent (7.27%) per annum, payable semi-annually on June 15 and
December 15 of each year, commencing June 15, 1997 and at the rate of nine and
twenty-seven hundredths percent (9.27%) per annum on any overdue payment of
principal or premium, if any, and, to the extent enforceable under applicable
law, on any overdue payment of interest. The Bonds of the Seventh Series shall
be numbered R-1 and upward and otherwise shall be substantially in the form
attached hereto as Exhibit A. Except as hereinafter provided, the principal of,
and the premium, if any, and the interest on, the Bonds of the Seventh Series
shall be payable in such coin or currency of the United States of America as at
the time of payment shall be legal tender for public and private debts, at the
office or agency of the Company in the City of Milwaukee, Wisconsin or the
office of the Company in Superior, Wisconsin.
Notwithstanding any provision to the contrary in the Mortgage or the
Bonds of the Seventh Series, the first paragraph of Section 9 of the Bond
Purchase Agreement shall govern the method of payment of principal, premium, if
any, and interest on the Bonds of the Seventh Series to the holders thereof;
provided, however, that the Corporate Trustee shall have no obligation to comply
with the provisions of Section 9 with respect to any transferee of the Purchaser
or any other holder of the Bonds of the Seventh Series until such transferee or
holder shall have made the agreement described in Section 9. Subject to such
proviso, the Corporate Trustee hereby consents to the method of payment
described in Section 9. The Corporate Trustee shall not be liable or responsible
to any holder of Bonds of the Seventh Series entitled to the benefits of Section
9 or to any transferee thereof or to the Company for any act or omission to act
on the part of the Company or any such holder of Bonds of the Seventh Series in
connection with Section 9. The Company hereby indemnifies the Corporate Trustee
against all liabilities, if any, resulting from acts or omissions on its part or
on the part of the Company in connection with Section 9.
The Bonds of the Seventh Series shall be dated as of the date of
authentication thereof by the Corporate Trustee (except that if any Bond of the
Seventh Series shall be
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<PAGE>
authenticated on an interest payment date for the Bonds of the Seventh Series to
which interest has been paid, such Bond shall be dated as of the day following)
and shall bear interest from the fifteenth day of June or December, as the case
may be, next preceding the date of such Bond to which interest has been paid;
provided, however, that if any such Bond shall be authenticated before June 15,
1997, such Bond shall bear interest from the date of the original issue of the
Bonds of the Seventh Series; and provided further that if the Company shall at
the time of the authentication of any Bond of the Seventh Series be in default
in the payment of interest upon the Bonds of the Seventh Series, such Bond shall
be dated as of, and shall bear interest from, the date of the beginning of the
period for which such interest is so in default.
Upon notice as provided in the following paragraph, the Bonds of the
Seventh Series may be redeemed prior to maturity, in whole at any time or in
part (in multiples of $500,000) from time to time, at the option of the Company,
or by the application (either at the option of the Company or pursuant to the
requirements of the Mortgage) of cash delivered to or deposited with the
Corporate Trustee pursuant to the provisions of Section 39, Section 55, Section
61, Section 64 or Section 118 of the Mortgage or with the Proceeds of Released
Property, in any such case at 100% of the principal amount of the Bonds being
redeemed plus interest accrued thereon to the date of redemption, together with
a premium equal to the Make-Whole Amount, if any, with respect to the Bonds of
the Seventh Series being redeemed determined five Business Days prior to the
date of such redemption.
Notice of any redemption of the Bonds of the Seventh Series shall be
given by mail, postage prepaid, at least 30 but not more than 60 days prior to
the date of redemption, to the registered owners of all Bonds of the Seventh
Series to be so redeemed at their respective addresses appearing on the books
maintained by the Company pursuant to Section 13 of the Mortgage. Any notice
which is mailed as herein provided shall be conclusively presumed to have been
properly and sufficiently given on the date of such mailing, whether or not the
registered owner receives the notice. In any case, failure to give notice by
mail, or any defect in such notice, to the registered owner of any Bond of the
Seventh Series designated for redemption in whole or in part shall not affect
the validity of the proceedings for the redemption of any other Bond of the
Seventh Series. Two Business Days prior to the redemption date specified in such
notice, the Company shall provide each registered owner of Bonds of the Seventh
Series to be redeemed with written notice of the premium, if any, payable with
respect thereto and a reasonably detailed computation of the Make-Whole Amount.
All partial redemptions of Bonds of the Seventh Series shall be made
ratably among all registered owners thereof in the proportion which the
principal amount of the Bonds held by each registered owner bears to the
aggregate principal amount of all Bonds of the Seventh Series then outstanding,
computed to the nearest $1,000 principal amount of the Bonds of the Seventh
Series.
In the event that the principal amount of the Bonds of the Seventh
Series is declared due and payable upon the occurrence of a Default or becomes
due and payable pursuant to Section 73 of the Mortgage, there shall then become
due and payable, together with the
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<PAGE>
principal amount of the Bonds of the Seventh Series and interest accrued
thereon, a premium equal to the amount of the Make-Whole Amount which would have
been payable with respect to such Bonds of the Seventh Series, if they had been
redeemed at the option of the Company pursuant to Section 1.1 in this Eighth
Supplemental Indenture on the date on which the Bonds of the Seventh Series
became due and Payable; provided that such premium, if any, with respect to the
Bonds of the Seventh Series shall become due and payable only of such Default
is, or such sale is made following a Default, other than one specified in
subsections (e) or (f) of Section 65 of the Mortgage.
Any Bond of the Seventh Series shall be transferable by the registered
owner thereof in person, or by its attorney duly authorized in writing, at the
office or agency of the company in the City of Milwaukee, Wisconsin, or at its
office in Superior, Wisconsin, upon surrender thereof for cancellation, together
with a written instrument of transfer in form approved by the Company duly
executed by such registered owner or by its duly authorized attorney. Upon any
such transfer, a new Bond or Bonds of the Seventh Series for the same aggregate
principal amount will be issued to the transferee in exchange therefor. Any Bond
of the Seventh Series may, at the option of the registered owner thereof and
upon surrender thereof for cancellation at such office or agency, be exchanged
as prescribed in the Mortgage for another Bond or Bonds of the Seventh Series of
other authorized denominations having the same aggregate principal amount. In
the event any written instrument of transfer is required in connection with any
transfer or exchange of any Bond of the Seventh Series, an instrument in the
form attached hereto as Exhibit B is hereby approved by the Company for the
purposes of Section 12 of the Mortgage.
Notwithstanding any provision of Section 12 or Section 16 of the
Mortgage, (a) no charge will be made by the Company for any transfer or exchange
of any Bond or the Seventh Series or, in the case of any lost, destroyed or
mutilated Bond, the issuance, authentication and delivery of a new Bond of the
Seventh Series in substitution thereof, whether for any stamp tax or other
governmental charge, if any applicable thereto or otherwise, and the Company
shall reimburse the Corporate Trustee for all expenses incurred in connection
therewith and (b) in the event of any loss, destruction or mutilation of any
Bond of the Seventh Series, and a request by the holder for issuance of a new
Bond of the Seventh Series in substitution therefor, the holder's unsecured
indemnity agreement shall be deemed to be satisfactory to the Company and the
Corporate Trustee for purposes of Section 16 of the Mortgage.
Notwithstanding any provision of Section 15 of the Mortgage, Bonds of
the Seventh Series shall be authenticated, issued and delivered only as
definitive bonds. Bonds of the Seventh Series so authenticated, issued and
delivered may be in the form of fully engraved bonds, bonds printed or
lithographed on engraved borders, bonds printed or bonds typewritten.
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<PAGE>
ARTICLE II
COVENANTS AND RESTRICTIONS
Section 2.1. The Company covenants that, so long as any Bonds of the
Seventh Series are outstanding, it will not merge or consolidate with any other
Person or sell, lease or transfer or otherwise dispose of all or a Substantial
Part of its assets, or assets which shall have contributed a Substantial Part of
net income of the Company for any of the three fiscal years then most recently
ended, to any Person; provided, however, that the Company may merge or
consolidate with, or sell or transfer all or substantially all of its assets to,
Minnesota Power, but only if (a) in the event that Minnesota Power is the
continuing or surviving corporation or the acquiring corporation, Minnesota
Power shall be a solvent corporation and shall expressly assume in writing all
of the obligations of the Company under the Mortgage, this Eighth Supplemental
Indenture, the Bonds of the Seventh Series and the Bond Purchase Agreement,
including all covenants therein and herein contained, and Minnesota Power shall
succeed to and be substituted for the Company with the same effect as if it had
been named herein as a party hereto, and (b) the Company as the continuing or
surviving corporation or Minnesota Power as the continuing or surviving
corporation or acquiring corporation, as the case may be, shall not, immediately
after such merger or consolidation, or such sale or other disposition, be in
default under any of such obligations.
Section 2.2. The Company covenants that, so long as any Bonds of the
Seventh Series shall remain outstanding, the Company will not issue, sell or
otherwise dispose of any of its shares of capital stock to any Person other than
Minnesota Power.
Section 2.3. The Company covenants that, so long as any of the Bonds of
the Seventh Series are outstanding, the Company shall not have any subsidiaries.
Section 2.4. A default by the Company in the observance of any covenant
or agreement contained in Sections 2.1 through 2.3, inclusive, of this Eighth
Supplemental Indenture or the occurrence of an Event of Default (as defined
herein) shall be deemed to constitute an additional and independent Default
under, and defined in, Section 65 of the Mortgage. None of the additional
Defaults provided for pursuant to this Section 2.4 are intended or shall be
deemed to limit any of the Defaults currently expressed in the Mortgage and none
of the Defaults currently expressed in the Mortgage are intended or shall be
deemed to limit any of the additional Defaults provided for pursuant to this
Section 2.4.
ARTICLE III
MISCELLANEOUS PROVISIONS
Section 3.1. For purposes of this Eighth Supplemental Indenture, the
following terms have the following meanings indicated below:
"Bond Purchase Agreement" shall mean the Bond Purchase Agreement dated
as of January 1, 1997, between the Company and the Purchaser.
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<PAGE>
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in Chicago, Illinois, or Milwaukee, Wisconsin, are
required or authorized to be closed.
"Capitalized Lease Obligation" shall mean with respect to any Person
any rental obligation which, under generally accepted accounting principles,
would be required to be capitalized on the books of such Person, taken at the
amount thereof accounted for as indebtedness (net of interest expense) in
accordance with such principles.
"Event of Default" shall mean any of the following events which shall
occur and be continuing for any reason whatsoever at any time when any of the
Bonds of the Seventh Series shall be outstanding (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation of
law or otherwise):
(i) the Company defaults in the payment of any principal or
premium, if any, payable with respect to any Bond of the Seventh Series
when the same shall become due, either by the terms thereof or
otherwise as provided in the Mortgage, this Eighth Supplemental
Indenture or the Bond Purchase Agreement; or
(ii) the Company defaults in the payment of any interest on
any Bond of the Seventh Series for more than 5 days after the due date;
or
(iii) the Company defaults (whether as primary obligor or as
guarantor or other surety) in any payment of principal of or interest
on any other obligation for money borrowed (or any Capitalized Lease
Obligation, any obligation under a conditional sale or other title
retention agreement, any obligation issued or assumed as full or
partial payment for property whether or not secured by a purchase money
mortgage or any obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of grace provided
with respect thereto and as a result, the aggregate principal amount of
all such defaulted obligations exceeds $100,000 or the Company fails to
perform or observe any other agreement, term or condition contained in
any agreement under which any such obligations are created (or if any
other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause,
or to permit the holder or holders of such obligations (or a trustee on
behalf of such holder or holders) to cause, such obligations in the
aggregate principal amount in excess of $100,000 to become due (or to
be repurchased by the Company) prior to any stated maturity; or
(iv) any representation or warranty made by the Company in
this Eighth Supplemental Indenture or the Bond Purchase Agreement or by
the Company or any of its officers in any writing furnished in
connection with or pursuant to this Eighth Supplemental Indenture or
the Bond Purchase Agreement shall be false in any material respect on
the date as of which made; or
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<PAGE>
(v) the Company fails to perform or observe any agreement, term
or condition contained in the Mortgage, this Eighth Supplemental
Indenture or the Bond Purchase Agreement; or
(vi) the Company makes an assignment for the benefit of creditors
or is generally not paying its debts as such debts become due; or
(vii) any decree or order for relief in respect of the Company
is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law, whether now or hereafter in effect (herein
called the Bankruptcy Law), of any jurisdiction; or
(viii) the Company petitions or applies to any tribunal for, or
consents to, the appointment of, or taking possession by, a trustee,
receiver, custodian, liquidator or similar official of the Company or
of any Substantial Part of the assets of the Company or commences a
voluntary case under the Bankruptcy Law of the United States or any
proceedings relating to the Company under the Bankruptcy Law of any
other jurisdiction; or
(ix) any such petition or application is filed, or any such
proceedings are commenced, against the Company, and the Company by any
act indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any such
trustee, receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings; or
(x) any order, judgment or decree is entered in any proceeding
against the Company decreeing the dissolution of the Company and such
order, judgment or decree remains unstayed and in effect for more than
60 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing a split-up of the Company
which requires the divestiture of assets representing a Substantial
Part of the assets of the Company or which requires the divestiture of
assets which shall have contributed a Substantial Part of the net
income of the Company for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains unstayed and
in effect for more than 60 days; or
(xii) a final judgment in an amount in excess of $100,000 is
rendered against the Company and, within 60 days after entry thereof,
such judgment is not discharged or execution thereof stayed pending
appeal, or within 60 days after the expiration of any such stay, such
judgment is not discharged; or
(xiii) Minnesota Power shall cease to own of record and
beneficially 100% of the outstanding shares of capital stock of the
Company.
"Make-Whole Amount" shall mean, in connection with any redemption, the
excess, if any, of (i) the aggregate present value as of the date of such
redemption of each dollar of
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<PAGE>
principal being redeemed and the amount of interest (exclusive of interest
accrued to the date of redemption) that would have been payable in respect of
such dollar if such redemption had not been made, determined by discounting such
amounts at the Reinvestment Rate from the respective dates on which they would
have been payable, over (ii) 100% of the principal amount of the outstanding
Bonds of the Seventh Series being redeemed. If the Reinvestment Rate is equal to
or higher than the rate of interest borne by the Bonds of the Seventh Series,
the Make-Whole Amount shall be zero.
"Minnesota Power" means Minnesota Power & Light Company, a Minnesota
corporation.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Proceeds of Released Property" shall mean the aggregate of the cash
deposited with or received by the Corporate Trustee pursuant to the provisions
of Section 59, Section 60, Section 61 (except such cash as is to be paid over to
the Company under the provisions of Section 61), or Section 62 of the Mortgage.
"Purchaser" means Modern Woodmen of America.
"Reinvestment Rate" shall mean (A) the yield reported on the Bloomberg
Financial Markets Services Screen (or, if not available, any other nationally
recognized trading screen reporting on-line intraday trading in U.S. Government
Securities) at 10:00 A.M. (New York, New York time) for the U.S. Government
Securities having a maturity (rounded to the nearest month) corresponding to the
Remaining Life to Maturity of the principal being redeemed or (B) in the event
that no nationally recognized trading screen reporting on-line intraday trading
in U.S. Government Securities is available, Reinvestment Rate shall mean the
arithmetic mean of the yields for the two columns under the heading "Week
Ending" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the Remaining Life to Maturity of the principal being redeemed.
If no maturity exactly corresponds to such Remaining Life to Maturity, yields
for the two published maturities most closely corresponding to such Remaining
Life to Maturity shall be calculated pursuant to the immediately preceding
sentence and the Reinvestment Rate shall be interpolated or extrapolated from
such yields on a straight-line basis, rounding to four decimals. For the
purposes of calculating the Reinvestment Rate, the most recent Statistical
Release published prior to the date of determination of the Make-Whole Amount
hereunder shall be used.
"Remaining Life to Maturity" of the principal amount of Bonds of the
Seventh Series being redeemed shall mean, as of the time of any determination
thereof, the number of years (calculated to the nearest one-twelfth) which will
elapse between the date of determination and the maturity date of the Bonds of
the Seventh Series.
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<PAGE>
"Statistical Release" shall mean the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded U.S.
Government Securities adjusted to constant maturities or, if such statistical
release is not published at the time of any determination hereunder, then such
other reasonably comparable index which shall be designated by the holders of
sixty-six and two-thirds per cent (66-2/3%) in aggregate principal amount of the
outstanding Bonds of the Seventh Series.
"Substantial Part" shall mean when used with respect to assets or net
income 10% or more of such assets or net income, respectively.
Section 3.2. The terms defined in the Mortgage, as heretofore
supplemented, shall for all purposes of this Eighth Supplemental Indenture have
the meanings specified in the Mortgage, as heretofore supplemented.
Section 3.3. The Corporate Trustee hereby accepts the trust herein
declared, provided and created and agrees to perform the same upon the terms and
conditions herein and in the Mortgage, as heretofore supplemented, set forth and
upon the following terms and conditions.
The Corporate Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Eighth Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made by the Company solely. In general, each and every term and
condition contained in Article XVII of the Mortgage shall apply to and form part
of this Eighth Supplemental Indenture with the same force and effect as if the
same were herein set forth in full, with such omissions, variations and
insertions, if any, as may be appropriate to make the same conform to the
provisions of this Eighth Supplemental Indenture.
Section 3.4. Subject to the provisions of Article XVI and Article XVII
of the Mortgage, whenever in this Eighth Supplemental Indenture any of the
parties hereto is named or referred to, this shall be deemed to include the
successors or assigns of such party, and all the covenants and agreements in
this Eighth Supplemental Indenture contained by or on behalf of the Company or
by or on behalf of the Corporate Trustee shall bind and inure to the benefit of
the respective successors and assigns of such parties whether so expressed or
not.
Section 3.5. Nothing in this Eighth Supplemental Indenture, express or
implied, is intended, or shall be construed, to confer upon, or to give to, any
person, firm or corporation, other than the parties hereto and the holders of
the bonds Outstanding under the Mortgage, any right, remedy or claim under or by
reason of this Eighth Supplemental Indenture or any covenant, condition,
stipulation, promise or agreement hereof, and all the covenants, conditions,
stipulations, promises and agreements of this Eighth Supplemental Indenture
contained by or on behalf of the Company shall be for the sole and exclusive
benefit of the parties hereto, and of the holders of the bonds and of the
coupons Outstanding under the Mortgage.
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<PAGE>
Section 3.6. This Eighth Supplemental Indenture may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
-15-
<PAGE>
IN WITNESS WHEREOF, Superior Water, Light and Power Company has caused
its corporate name to be hereunto affixed, and this instrument to be signed and
sealed by its President or one of its Vice Presidents, and its corporate seal to
be attested by its Secretary or one of its Assistant Secretaries for and in its
behalf, and First Bank (N.A.) has caused its corporate name to be hereunto
affixed, and this instrument to be signed and sealed by its President and its
corporate seal to be attested by its Secretary, all as of the 1st day of
January, 1997.
SUPERIOR WATER, LIGHT AND POWER
COMPANY
By: Roger P. Engle
------------------------------
Roger P. Engle, President
ATTEST:
Susan M. Buxton
- ---------------------------
Susan M. Buxton, Secretary
Executed, sealed and delivered by
Superior Water, Light and Power
Company in the presence of:
Gary A. Hoffman
- ---------------------------
Paul M. Holt
- ---------------------------
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<PAGE>
FIRST BANK (N.A.) as Corporate Trustee
By Eve D. Kaplan
----------------------------------
Its Vice President
----------------------------------
ATTEST:
K. Barrett
- ---------------------------
Assistant Secretary
Executed, sealed and delivered by
First Bank (N.A.) in the presence of:
D. Garsteig
- ---------------------------
B. Schwintek
- ---------------------------
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<PAGE>
STATE OF WISCONSIN )
) SS.
COUNTY OF DOUGLAS )
Personally came before me this 2 day of January, 1997, Roger P. Engle,
to me known to be the President, and Susan M. Buxton, to me known to be the
Secretary of the above-named SUPERIOR WATER, LIGHT AND POWER COMPANY, the
corporation described in and which executed the foregoing instrument, and to me
personally known to be the persons who as such officers executed the foregoing
instrument in the name and behalf of said corporation, who, being by me duly
sworn, did depose and say and acknowledge that they are respectively the
President and Secretary of said corporation, that the seal affixed to said
instrument is the corporate seal of said corporation, and that they signed,
sealed and delivered said instrument in the name and on behalf of said
corporation by authority of its Board of Directors, and said Roger P. Engle and
Susan M. Buxton, then and there acknowledged said instrument to be the free act
and deed of said corporation and that such corporation executed the same.
Given under my hand and notarial seal this 2 day of January, 1997.
Patricia L. Smith
------------------------------
Notary Public, State of Wisconsin
My Commission 7/2/2000
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<PAGE>
STATE OF MINNESOTA )
) SS.
COUNTY OF RAMSEY )
Personally came before me this 3rd day of January, 1997, EVE D. KAPLAN,
to me known to be the VICE PRESIDENT, and KATHE BARRETT, of the above-named
FIRST BANK (N.A.), the corporation described in and which executed the foregoing
instrument, and to me personally known to be the persons who as such officers
executed the foregoing instrument in the name and behalf of said corporation,
who, being by me duly sworn, did depose and say and acknowledge that they are
respectively the VICE PRESIDENT and Assistant Secretary of said corporation,
that the seal affixed to said instrument is the corporate seal of said
corporation, and that they signed, sealed and delivered said instrument in the
name and on behalf of said corporation by authority of its Board of Directors,
and said EVE D. KAPLAN and KATHE BARRETT, then and there acknowledged said
instrument to be the free act and deed of said corporation and that such
corporation executed the same.
Given under my hand and notarial seal this 3rd day of January, 1997.
Rick Prokosch
------------------------------
Richard Prokosch
Notary Public, State of Minnesota
My Commission 1-31-2000
[SEAL]
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<PAGE>
[FORM OF BOND OF THE SEVENTH SERIES]
SUPERIOR WATER, LIGHT AND POWER COMPANY
FIRST MORTGAGE BOND
7.27% Series due December 15, 2008
No. R- $
--- -----------
SUPERIOR WATER, LIGHT AND POWER COMPANY, a corporation of the State of
Wisconsin (hereinafter called the "Company"), for value received, hereby
promises to pay to ____________, or registered assigns, on December 15, 2008,
_______________ DOLLARS ($____________) in such coin or currency of the United
States of America as at the time of payment is legal tender for public and
private debts, and to pay to the registered owner hereof interest thereon in
like coin or currency (computed on the basis of a 360-day year of twelve 30-day
months) at the rate of seven and twenty-seven hundredths percent (7.27%) per
annum semiannually on June 15 and December 15 of each year commencing June 15,
1997 until the principal thereof shall have become due and payable and at the
rate of nine and twenty-seven hundredths percent (9.27%) per annum on any
overdue payment of principal or premium, if any, and, to the extent enforceable
under applicable law, on any overdue payment of interest. The principal hereof
(and premium, if any) and interest hereon shall be paid at the office or agency
of the Company in the City of Milwaukee, Wisconsin or the office of the Company
in Superior, Wisconsin or as shall be otherwise agreed to pursuant to the
provisions of the Eighth Supplemental Indenture hereinafter referred to.
This bond is one of an issue of bonds of the Company issuable in series
and is one of a series designated the First Mortgage Bonds, 7.27% Series due
December 15, 2008 (the "Bonds of the Seventh Series ") created by the Eighth
Supplemental Indenture dated as of January 1, 1997 executed by the Company to
First Bank (N.A.) (successor Corporate Trustee to Chemical Bank & Trust
Company), as Corporate Trustee, all bonds of all series being issued and to be
issued under and equally secured by a Mortgage and Deed of Trust (herein,
together with any indentures supplemental thereto, called the "Mortgage"), dated
as of March 1, 1943, executed by the Company to Chemical Bank & Trust Company
(First Bank (N.A.), successor Corporate Trustee) and Howard B. Smith, as
Trustees. Reference is made to the Mortgage for a description of the property
mortgaged and pledged, the nature and extent of the security, the rights of the
holders of the bonds and of the Corporate Trustee in respect thereof, the duties
and immunities of the Corporate Trustee and terms and conditions upon which the
bonds are and are to be secured and the circumstances under which additional
bonds may be issued.
With the consent of the Company and to the extent permitted by and as
provided in the Mortgage, the rights and obligations of the Company and/or the
rights of the holders of the bonds and/or coupons and/or the terms and
provisions of the Mortgage may be modified or altered by affirmative vote of the
holders of at least seventy per centum (70%) in principal
EXHIBIT A
(to Eighth Supplemental Indenture)
<PAGE>
amount of the bonds then outstanding under the Mortgage and, if the rights of
the holders of one or more, but less than all, series of bonds then outstanding
are to be affected, then also by affirmative vote of the holders of at least
seventy per centum (70%) in principal amount of the bonds then outstanding of
each series of bonds so to be affected (excluding in any case bonds disqualified
from voting by reason of the Company's interest therein as provided in the
Mortgage); provided that, without the consent of the holder hereof, no such
modification or alteration shall, among other things, impair or affect the right
of the holder to receive payment of the principal of (and premium, if any) and
interest on this bond, on or after the respective due dates and at the places
and in the respective amounts expressed herein, or permit the creation of any
lien equal or prior to the lien of the Mortgage or deprive the holder of the
benefit of a lien on the mortgaged and pledged property, or give any bond or
bonds secured by the Mortgage any preference over any other bond or bonds so
secured, or reduce the percentage in principal amount of the bonds required to
authorize or consent to any such modification or alteration of the Mortgage.
The Bonds of the Seventh Series may be redeemed prior to maturity, in
whole at any time or in part (in multiples of $500,000) from time to time, at
the option of the Company, or by the application (either at the option of the
Company or pursuant to the requirements of the Mortgage) of cash delivered to or
deposited with the Corporate Trustee pursuant to the provisions of Section 39,
Section 55, Section 61, Section 64 or Section 118 of the Mortgage or with the
Proceeds of Released Property (as defined in said Eighth Supplemental
Indenture), in any such case at 100% of the principal amount to be so redeemed,
plus accrued interest thereon to the redemption date together with a premium
equal to the Make-Whole Amount (as defined in said Eighth Supplemental
Indenture), if any, with respect to the Bonds of the Seventh Series, being
redeemed.
Notice of any redemption of the Bonds of the Seventh Series shall be
given by mail at least 30 days prior to the redemption date, all as more fully
provided in said Eighth Supplemental Indenture and the Mortgage. Notice of
redemption having been duly given, the Bonds of the Seventh Series called for
redemption shall become due and payable upon the redemption date, and if the
redemption price shall have been deposited with the Corporate Trustee, interest
thereon shall cease to accrue on and after the redemption date (unless such
bonds shall have been properly presented for payment on, or within one year
after, the redemption date and shall not have been paid) and on the redemption
date or whenever thereafter the redemption price thereof shall have been
deposited with the Corporate Trustee such bonds shall no longer be entitled to
the lien of the Mortgage.
The principal hereof may be declared or may become due prior to the
maturity date hereinbefore named on the conditions, in the manner and at the
time set forth in the Mortgage, upon the occurrence of a default as in the
Mortgage provided.
This bond is transferable as prescribed in the Mortgage by the
registered owner hereof in person, or by its duly authorized attorney, at the
office or agency of the Company in the City of Milwaukee, Wisconsin or the
office of the Company in Superior, Wisconsin upon surrender hereof for
cancellation, together with a written instrument of transfer in form approved by
the Company duly executed by the registered owner hereof or by its duly
A-2
<PAGE>
authorized attorney, and thereupon a new fully registered bond or bonds of the
same series for a like principal amount will be issued to the transferee in
exchange herefor as provided in the Mortgage. This bond may, at the option of
the registered owner hereof and upon surrender hereof for cancellation at such
office or agency, be exchanged as prescribed in the Mortgage for other
registered bonds of the same series of other authorized denominations having a
like aggregate principal amount. No charge will be made by the Company for any
transfer or exchange of this bond or, in case this bond shall be lost, destroyed
or mutilated, the issuance, authentication and delivery of a new bond in
substitution hereof. The Company and the Corporate Trustee may deem and treat
the person in whose name this bond is registered as the absolute owner hereof
for the purpose of receiving payment and for all other purposes and neither the
Company nor the corporate Trustee shall be affected by any notice to the
contrary.
As provided in the Mortgage, the Company shall not be required to make
transfers or exchanges of bonds of any series for a period of ten (10) days next
preceding any interest payment date for bonds of said series, or next preceding
any designation of bonds of said series to be redeemed, and the Company shall
not be required to make transfers or exchanges of any bonds designated in whole
or in part for redemption.
This bond shall not become obligatory until First Bank (N.A.), the
Corporate Trustee under the Mortgage, or its successor thereunder, shall have
signed the form of authentication certificate endorsed hereon.
A-3
<PAGE>
IN WITNESS WHEREOF, SUPERIOR WATER, LIGHT AND POWER COMPANY has caused
this bond to be signed in its corporate name by its President or one of its
Vice-Presidents and its Treasurer and its corporate seal to be impressed or
imprinted hereon and attested by its Secretary or one of its Assistant
Secretaries on
------------, ------------.
SUPERIOR WATER, LIGHT AND POWER
COMPANY
By:
-----------------------------------
Roger P. Engle
President
By:
-----------------------------------
Gary A. Hoffman
Treasurer
ATTEST:
- ---------------------------
Susan M. Buxton, Secretary
[FORM OF CORPORATE TRUSTEE'S AUTHENTICATION CERTIFICATE]
This bond is one of the bonds, of the series herein designated,
described or provided for in the within-mentioned Mortgage.
FIRST BANK (N.A.), as Corporate Trustee
By:
------------------------------------
Authorized Officer
A-4
<PAGE>
ASSIGNMENT AND IRREVOCABLE BOND POWER
FOR
SUPERIOR WATER, LIGHT AND POWER COMPANY
FIRST MORTGAGE BOND
7.27% SERIES DUE DECEMBER 15, 2008
FOR VALUE RECEIVED, __________________________________________________
do ____ hereby sell, assign and transfer unto ________________________________
_______________________________________________________________________________
one First Mortgage Bond, 7.27% Series due December 15, 2008, of Superior Water,
Light and Power Company (the "Company") for ___________________________________
($____________), No. ______________, standing in _____________________________
name __________________ on the books of the Company and do __________________
hereby irrevocably constitute and appoint ____________________________________
_______________________________________________________________________________
attorney to transfer the said bond on the books of the Company, with full power
of substitution in the premises.
IN WITNESS WHEREOF, _________________________________________ have
hereunto set ________ hand ____________________ [and seal ______________] at
________________ this ______ day of ________________, 19__.
Signed, [Sealed] and Delivered in the Presence of
[(SEAL)]
- ----------------------------------- ---------------------------------
[(SEAL)]
- ----------------------------------- ---------------------------------
STATE OF )
----------------------
) SS.
COUNTY OF )
---------------------
I, ____________________, a notary public in and for said County, in the
State aforesaid, do hereby certify, that _______________________________________
________________________________________________________________________________
who ________ personally known to me to be the same person ____________ whose
name _____ subscribed to the foregoing instrument, appeared before me this
day in person and acknowledged that __________________________ signed, sealed
and delivered the said instrument as _________________ free and voluntary act
for the uses and purposes therein set forth.
Given under my hand and official seal this ___day of ________, A.D.___.
-------------------------------
Notary Public
My Commission Expires
---------
EXHIBIT B
(to Eighth Supplemental Indenture)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.C.1
<SEQUENCE>6
<DESCRIPTION>EXHIBIT 4(C)1
<TEXT>
<PAGE>
Exhibit 4(c)1
<PAGE>
This Instrument was prepared by:
Karla Olson Teasley, Esq.
SOUTHERN STATES UTILITIES, INC.
1000 COLOR PLACE, APOPKA, FLORIDA 32703
- --------------------------------------------------------------------------------
SOUTHERN STATES UTILITIES, INC.
to
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION,
As Trustee under Southern States Utilities, Inc.
Indenture dated as of March 1, 1993
------------------------
First Supplemental Indenture
Relating to up to $45,000,000 Principal Amount
of First Mortgage Bonds, Variable Rate Series, due
December 31, 1993 and up to $45,000,000 Principal Amount of
First Mortgage Bonds, 8.73% Series due January 31, 2013
------------------------
Dated as of March 1, 1993
- --------------------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE dated as of March 1, 1993 between
SOUTHERN STATES UTILITIES, INC., a Florida corporation (hereinafter called the
"Company"), and NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, a national banking
association (hereinafter called the "Trustee"), as Trustee under the Indenture,
dated as of March 1, 1993 (hereinafter called the "Original Indenture"), which
Original Indenture was executed and delivered by the Company to secure the
payment of Securities issued or to be issued under and in accordance with the
provisions thereof, this Supplemental Indenture (hereinafter sometimes called
the "First Supplemental Indenture") being supplemental thereto (the Original
Indenture, as supplemented by this First Supplemental Indenture, and as it may
hereafter be supplemented, being herein called the "Indenture");
WHEREAS, Section 1701 of the Original Indenture provides that
the Company and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental to the Original Indenture, for various
purposes including to add one or more covenants of the Company and to establish
the terms of Securities of any series as contemplated by Section 201 of the
Original Indenture;
WHEREAS, the Company now desires to create two series of
Securities and to add to its covenants contained in the Original Indenture
certain other covenants to be observed by it;
WHEREAS, the execution and delivery by the Company of this
First Supplemental Indenture, and the terms of the two series of Securities,
have been duly authorized by the Company as provided in the Original Indenture;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH,
that, in consideration of the premises and of Ten Dollars ($10) to it duly paid
by the Trustee at or before the ensealing and delivery of this First
Supplemental Indenture, the receipt whereof is hereby acknowledged, and to
secure the payment of the principal of (and premium, if any) and interest on the
Securities and the performance of the covenants therein and herein contained and
in consideration of the premises and of the purchase of the Securities by the
Holders thereof, the Company by these presents does grant, bargain, sell, alien,
remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set
over and confirm to the Trustee, and grant a security interest in, all of the
Trust Estate;
TO HAVE AND TO HOLD all said Trust Estate unto the Trustee and
its successors and assigns forever.
SUBJECT, HOWEVER, to Permitted Liens and, to the extent
permitted by Section 704 of the Indenture, as to property hereafter acquired,
Prior Liens existing on the date of acquisition or purchase money mortgages.
BUT IN TRUST, NEVERTHELESS, for the same purposes and upon the
same terms, trusts and conditions and subject to and with the same provisos and
covenants as are set forth in the Indenture, this First Supplemental Indenture
being supplemental thereto.
<PAGE>
-2-
AND IT IS HEREBY COVENANTED by the Company that all terms,
conditions, provisos, covenants and provisions contained in the Original
Indenture shall affect and apply to the Trust Estate and to the estate, rights,
obligations and duties of the Company and the Trustee and the beneficiaries of
the trust with respect to said property, and to the Trustee and its successors
as Trustee of said property in the same manner and with the same effect as if
said property had been owned by the Company at the time of the execution of the
Indenture, and had been specifically and at length described in and conveyed to
said Trustee, by the Indenture as a part of the property therein stated to be
conveyed.
The Company further covenants and agrees to and with the
Trustee, and its successors in said trust under the Indenture, as follows:
ARTICLE FIRST
Securities of the First Series
SECTION 1.01. Description of Series.
There shall be a series of Securities designated "Variable
Rate Series, due December 31, 1993" (herein sometimes referred to as the "First
Series"), each of which shall also bear the descriptive title "First Mortgage
Bond," and the form thereof, which shall be established in an Officer's
Certificate as provided in the Indenture, shall contain suitable provisions with
respect to the matters hereinafter in this Article specified. The aggregate
principal amount of Securities of the First Series which may be authenticated
and delivered is limited to $45,000,000, except as provided in Sections 205 and
206 of the Indenture. Securities of the First Series shall mature on December
31, 1993 and shall be issued as fully registered Securities in denominations of
One Thousand Dollars and, at the option of the Company, in any integral multiple
or multiples thereof (the exercise of such option to be evidenced by the
execution and delivery thereof). At the option of the Company, Securities of the
First Series may, from time to time, be grouped into one or more Tranches each
having an aggregate principal amount of no less than $10,000,000. The period of
time each such Tranche remains Outstanding shall be divided into one or more
Interest Rate Periods, determined as provided below. Each such Tranche shall
bear interest during each applicable Interest Rate Period at an annual interest
rate equal to the LIBOR rate for such period plus 1.25 per centum (1.25%), or
such other rate as may from time to time be agreed upon in writing by the
Company and the Holders of the Securities of such Tranche with notice to the
Trustee, payable on the last day of the applicable Interest Rate Period; the
principal, premium, if any, and interest on each said Security to be payable at
the office or agency of the Company in Apopka, Florida, in such coin or currency
of the United States of America as at the time of payment is legal tender for
public and private debts. Securities of the First Series shall be dated as in
the Indenture provided. Interest on the Securities of the First Series shall be
computed for each Interest Rate Period on the actual number of days elapsed on
the basis of a year consisting of 360 days.
If the Company shall default in the payment of the principal
of, or premium or interest on, any Security of the First Series, then the
Company shall pay to the Holder of such Security such overdue principal, premium
or interest, together with interest on such overdue principal and (to the extent
permitted by law) on such overdue premium or interest at the at a default rate
equal to the LIBOR rate for each Interest Rate Period, determined as provided in
this paragraph, plus 1.25 per centum (1.25%) plus two per centum (2%) per annum.
For purposes of calculating such default rate,
<PAGE>
-3-
there shall be deemed to exist successive Interest Rate Periods, each for the
term of one month (as defined in paragraph (2) below), the first such Interest
Rate Period beginning on the day on which such default occurs and each
subsequent Interest Rate Period beginning on the last day of the preceding
Interest Rate Period. The Holders of such Securities shall notify the Trustee of
the default rate promptly after the beginning of each such Interest Rate Period
after default.
For purposes of this Section 1.01:
(1) "LIBOR rate" shall mean the rate indicated by Reuters
(screen LIBO) as having been quoted by Bankers Trust Company at 11:00 a.m.
London time on the first day of the applicable Interest Rate Period for the
offering of U.S. dollar deposits in the London interbank market for the Interest
Rate Period. The LIBOR rate for any Interest Rate Period with which a LIBOR
period does not coincide will be interpolated between the next shortest and the
next longest maturity LIBOR rates as quoted by Reuters.
(2) "Interest Rate Period" shall mean, with respect to any
Tranche of Securities of the First Series, any period of one month, two months,
three months, six months, nine months and a final period of any number of days
no longer than ten months determined by the Company and specified in a notice to
the Holders of such Tranche and the Trustee delivered on or before either the
date of first authentication of the Securities of the First Series or the first
day of an Interest Rate Period; provided that no Interest Rate Period shall
extend beyond December 31, 1993. If upon the expiration of an Interest Rate
Period for a particular Tranche the Company has not determined a subsequent
Interest Rate Period, then such subsequent Interest Rate Period shall be for the
term of the lesser of one month or the days remaining to Maturity. For purposes
of this paragraph (2), the term "month" or "months" shall mean a period
consisting of 30 days or integral multiples thereof; provided, however, that in
the event any Interest Rate Period expires on a day which is not a Business Day,
such period shall be extended to the next Business Day. Promptly after the
determination of any Interest Rate Period, the Company and the Holders of the
Securities affected by such Interest Rate Period shall agree upon the applicable
Original Estimated Cost of Funds, calculated as provided in Section 1.02 hereof,
and the applicable annual interest rate for such Interest Rate Period; the
Company shall promptly thereafter notify the Trustee of such Original Estimated
Cost of Funds and annual interest rate.
The Regular Record Date referred to in Section 207 of the
Indenture for the payment of the interest on the Securities of the First Series
payable on any Interest Payment Date shall be the first Business Day next
preceding such Interest Payment Date.
The Company shall be exempt from filing the Cash Flow
Certificate provided in Section 301(d) of the Indenture with respect to the
issuance of Securities of the First Series.
SECTION 1.02. Optional Redemption of Securities of the First Series.
(I) Securities of the First Series shall be redeemable on any
Business Day, at the option of the Company, in whole or in part in accordance
with Section 903 of the Indenture from time to time, prior to maturity, upon
notice delivered to each Holder at its last address appearing on the Security
Register not less than one Business Day prior to the date fixed for redemption,
at a Redemption Price ("First Series General Redemption Price") (expressed as a
percentage of the principal amount of the Securities to be redeemed) equal to
the sum of (i) one hundred per centum (100%) plus (ii) a "First Series
Prepayment Surcharge" calculated as hereinafter provided, in each case together
with accrued
<PAGE>
-4-
interest to the date fixed for redemption. For purposes of calculating the First
Series General Redemption Price, the First Series Prepayment Surcharge shall be
calculated as follows:
(A) Determine the difference between: (1) Original Estimated
Cost of Funds minus (2) the Discount Rate, as hereinafter defined, as
of the Redemption Date.
(B) Add one half (1/2) of one per centum (1%) to such
difference (such that the minimum result shall at all times be 1/2 of
1%).
(C) Multiply the amount described in (B) above by the portion
of the principal amount redeemed.
(D) Multiply the amount described in (C) above by the number of
days between the Redemption Date and the end of the current Interest
Rate Period for the applicable Tranche of such Securities and divide by
360.
(E) Determine the present value of the calculation made under
(D) above based upon the end of the current Interest Rate Period for
the applicable Tranche of such Securities and the Discount Rate as of
the Redemption Date.
(F) Add an amount equal to a Second Series Prepayment
Surcharge, as it would be calculated pursuant to Section 2.02 hereof,
for a principal amount of Securities of the Second Series equal to the
principal amount of Securities of the First Series then being redeemed,
as if such Securities of the Second Series were being redeemed as of
December 31, 1993 for purposes of calculating such Prepayment Surcharge
except for establishing the Discount Rate with respect thereto. The
Discount Rate, for purposes of such calculation, shall be determined by
reference to the yields and interest rates in effect on the Business
Day immediately prior to the Redemption Date for such Securities of the
First Series. The result shall be the First Series Prepayment
Surcharge.
(II) A notice containing the calculation of the First Series
General Redemption Price shall be prepared by the Company and delivered to the
Trustee and the Holders of the Securities of the First Series to be redeemed on
the Business Day next preceding the Redemption Date. The calculation set forth
in such notice shall be final unless the Holders of the Securities so redeemed
notify the Company and the Trustee of an error in such calculation within thirty
days after notice of such calculation. If it is determined that the Company has
made an error in such calculation and the Company pays the difference to such
Holders promptly after such determination, then the Company shall not be deemed
to be in default under the Indenture by reason of late payment of such
difference.
(III) As pertains to Securities of the First Series, the
"Discount Rate" shall mean an interest rate equal to the yield to maturity of
Farm Credit discount notes having a weighted average life equal to the
applicable Interest Rate Period for the Securities to be redeemed plus the
estimated dealer concession for placing Farm Credit discount notes, obtained by
a polling of Farm Credit Funding Corporation dealers on the Business Day prior
to the Redemption Date. The yield of Farm Credit discount notes shall be
determined by a polling of Farm Credit Funding Corporation dealers on the
Business Day prior to the Redemption Date. This yield will then be converted to
a semi-annual bond equivalent yield basis for purposes of any calculations
hereunder.
<PAGE>
-5-
(IV) As pertains to Securities of the First Series, the
"Original Estimated Cost of Funds" shall mean an interest rate equal to the
yield to maturity of Farm Credit discount notes having a weighted average life
equal to the applicable Interest Rate Period for the Securities to be redeemed
plus the estimated dealer concession for placing Farm Credit discount notes,
obtained by a polling of Farm Credit Funding Corporation dealers on the date the
interest rate for a particular Interest Rate Period is determined. The yield of
Farm Credit discount notes shall be determined by a polling of Farm Credit
Funding Corporation dealers on the same day that the interest rate for a
particular Interest Rate Period is determined. This yield will then be converted
to a semi-annual bond equivalent yield basis for purposes of any calculations
hereunder.
ARTICLE SECOND
Securities of the Second Series
SECTION 2.01. Description of Series.
There shall be a series of Securities designated "8.73% Series
due January 31, 2013" (herein sometimes referred to as the "Second Series"),
each of which shall also bear the descriptive title "First Mortgage Bond", and
the form thereof, which shall be established in an Officer's Certificate as
provided in the Indenture, shall contain suitable provisions with respect to the
matters hereinafter in this Article specified. The aggregate principal amount of
Securities of the Second Series which may be authenticated and delivered is
limited to $45,000,000, except as provided in Sections 205 and 206 of the
Indenture. Securities of the Second Series shall mature on January 31, 2013 and
shall be issued as fully registered Securities in denominations of One Thousand
Dollars and, at the option of the Company, in any integral multiple or multiples
thereof (the exercise of such option to be evidenced by the execution and
delivery thereof); they shall bear interest at the rate of 8.73% per annum,
payable on July 31, 1994 for the period from December 31, 1993 to July 31, 1994
and semi-annually on January 31 and July 31 of each year thereafter until
Maturity; the principal of, premium, if any, and interest on each said Security
to be payable at the office or agency of the Company in Apopka, Florida, in such
coin or currency of the United States of America as at the time of payment is
legal tender for public and private debts. Securities of the Second Series shall
be dated as in the Indenture provided. Interest on the Securities of the Second
Series shall be computed on the actual number of days elapsed on the basis of a
year consisting of 360 days. If the Company shall default in the payment of the
principal of, or premium or interest on, any Security of the Second Series, then
the Company shall pay to the Holder of such Security such overdue principal,
premium or interest, together with interest on such overdue principal and (to
the extent permitted by law) on such overdue premium or interest at the rate
borne by such Security immediately prior to such default plus two per centum
(2%) per annum.
The Regular Record Date referred to in Section 207 of the
Indenture for the payment of the interest on the Securities of the Second Series
payable on any Interest Payment Date shall be the first Business Day next
preceding such Interest Payment Date.
The Company shall be exempt from filing the Cash Flow
Certificate provided in section 301(d) of the Indenture with respect to the
issuance of Securities of the Second Series.
<PAGE>
-6-
SECTION 2.02. Optional Redemption of Securities of the Second Series.
(I) Securities of the Second Series shall be redeemable on any
Business Day, at the option of the Company, in whole or in part in accordance
with Section 903 of the Indenture from time to time, prior to maturity, upon
notice delivered to each Holder at its last address appearing on the Security
Register not less than one Business Day prior to the date fixed for redemption,
at a Redemption Price ("Second Series General Redemption Price") (expressed as a
percentage of the principal amount of the Securities to be redeemed) equal to
the sum of (i) one hundred per centum (100%) plus (ii) a "Second Series
Prepayment Surcharge" calculated as hereinafter provided, in each case together
with accrued interest to the date fixed for redemption. For purposes of
calculating the Second Series General Redemption Price, the Second Series
Prepayment Surcharge shall be calculated as follows:
(A) Determine the difference between: (1) seven and 32/100 per
centum (7.32%) minus (2) the Discount Rate, as hereinafter defined, as
of the Redemption Date.
(B) Add one half (1/2) of one per centum (1%) to such
difference (such that the minimum result shall at all times be 1/2 of
1% if the redemption occurs prior to March 31, 1996; thereafter, no
amount shall be added in this step (B) provided that, in any event, the
minimum result shall be at least zero).
(C) Divide the result determined in (B) above by 2.
(D) For each semi-annual period or portion thereof during which
the principal amount redeemed was scheduled to have been Outstanding,
multiply the amount described in (C) above by the portion of the
principal amount redeemed that was scheduled to have been Outstanding
on the last day of such semi-annual period (such that there is a
calculation for each semi-annual period during which the principal
amount redeemed was scheduled to have been Outstanding).
(E) Determine the present value of each semi-annual calculation
made under (D) above based upon the scheduled time that interest on the
principal amount redeemed would have been payable and the Discount Rate
as of the Redemption Date.
(F) Add all of the calculations made under (E) above. The
result shall be the Second Series Prepayment Surcharge.
Unless otherwise agreed with a majority of the Holders of the Securities of the
Second Series to be Outstanding after a redemption under this Section, the
Securities redeemed under this Section may not be used as a credit for the
redemption of Securities provided for in Section 2.03 of this First Supplemental
Indenture.
(II) A notice containing the calculation of the Second Series
General Redemption Price shall be prepared by the Company and delivered to the
Trustee and the Holders of the Securities of the Second Series to be redeemed on
the Business Day next preceding the Redemption Date. The calculation set forth
in such notice shall be final unless the Holders of the Securities so redeemed
notify the Company and the Trustee of an error in such calculations within
thirty days after notice of such calculation. If it is determined that the
Company has made an error in such calculation and the Company pays the
difference to such Holders promptly after such determination, then the Company
shall not be deemed to be in default under the Indenture by reason of late
payment of such difference.
<PAGE>
-7-
(III) As pertains to Securities of the Second Series, the
"Discount Rate" shall mean an interest rate determined by adding to the yield on
treasury bonds having maturities equal to the weighted average life to maturity
of the Securities to be redeemed, determined as necessary by interpolation of
treasury bonds having the next longer and next shorter maturities ("Treasury
Yield"), as reported on the "MMKS" Reuters monitor screen for the Business Day
prior to the Redemption Date for such Securities, the following:
(A) the estimated spread of Farm Credit Securities over the
Treasury Yield for such day, as reported in a Farm Credit Funding
Corporation Interest Rate Summary report, and
(B) the estimated dealer concession, obtained by a polling of
Farm Credit Funding Corporation dealers on the Business Day next
preceding the Redemption Date, for issuing Farm Credit Securities
having a weighted average life equal to the number of days between the
Redemption Date and Maturity for Securities of the Second Series to be
redeemed.
In the event any fact required for such calculation is not available, the
computation of Discount Rate shall be made on the basis of a reasonably
equivalent method of determination.
SECTION 2.03. Sinking Fund for Securities of the Second Series.
So long as any Securities of the Second Series shall remain
Outstanding, the Company shall redeem One Million Six Hundred Sixty-Seven
Thousand Dollars ($1,667,000) aggregate principal amount of Securities of the
Second Series on or before January 31, 2000 and semi-annually on or before each
July 31 and January 31 thereafter to and including July 31, 2012 at a Redemption
Price equal to par plus interest accrued to the Redemption Date.
ARTICLE THIRD
Additional Covenants for First and Second Series
SECTION 3.01. Asset Sale Restrictions for the First and Second Series.
(A) So long as any Securities of the First or Second Series
remain Outstanding, if the Company requests the release of Property Additions
pursuant to Section 1003 or 1004 of the Indenture (other than for purposes of
sales of property pursuant to or under threat, reasonably believed by the
Company to be genuine, of the exercise of a power of eminent domain or for tax
exempt financing pursuant to Section 1009 of the Indenture), the Officer's
Certificate filed in connection with such release shall identify the Property
Additions that are to be so released.
(B) So long as any Securities of the First or Second Series
remain Outstanding, if the aggregate amount of Property Additions released upon
such basis during any calendar year shall exceed ten per centum (10%) of the
amount of Net Property Additions shown in the most recent Property Additions
Certificate filed with the Trustee, then the Company shall promptly notify the
Trustee and, if there is only one Holder of Securities of such Series, such
Holder; and the Company shall within forty-five days thereafter redeem or have
otherwise retired (other than pursuant to Section 2.03 of this First
<PAGE>
-8-
Supplemental Indenture), except to the extent waived, an aggregate principal
amount of Securities of such Series equal to the amount of such excess.
(C) So long as any Securities of the First or Second Series
remain Outstanding, if the aggregate amount of Property Additions released upon
such basis shall exceed twenty five per centum (25%) of the amount of Net
Property Additions shown in the most recent Property Additions Certificate filed
with the Trustee, then the Company shall promptly notify the Trustee and, if
there is only one Holder of Securities of such Series, such Holder; and the
Company shall within forty-five days thereafter redeem or have otherwise retired
(other than pursuant to Section 2.03 of this First Supplemental Indenture),
except to the extent waived, an aggregate principal amount of Securities of such
Series equal to the amount of such excess.
(D) With respect to the redemptions described in paragraphs
(B) and (C) above, the Company shall receive a credit for any Securities
(excluding Securities redeemed pursuant to Section 2.03 of this First
Supplemental Indenture) of the First or Second Series retired prior to the
respective Redemption Date. With respect to the redemptions described in
paragraphs (B) and (C) above, the Redemption Price shall be the First or Second
Series General Redemption Price, respectively, plus interest accrued to the
Redemption Date. Such redemption shall be prorated among Holders of Securities
of the First or Second Series except to the extent waived; any Holder may waive
its right to such redemption by delivering a written waiver to the Trustee, in
such form as the Trustee shall deem acceptable, with a copy to the Company,
within ten days after the date of such notice of redemption.
(E) Unless otherwise agreed with a majority of the Holders of
the Securities of the First or Second Series to be Outstanding after a
redemption under this Section, the Securities redeemed under this Section may
not be used as a credit for the redemption of Securities provided for in Section
2.03 of this First Supplemental Indenture.
SECTION 3.02. Ownership by Minnesota Power & Light Company.
So long as any Securities of the First or Second Series remain
Outstanding, if the Company's entire common stock shall cease to be owned,
directly or indirectly, by Minnesota Power & Light Company, then the Company
shall promptly notify the Trustee and, if there is only one Holder of Securities
of such Series, such Holder; and the Company shall redeem, within ninety days
thereafter and upon at least thirty days' notice, all of the Securities of such
Series then Outstanding at the First or Second Series General Redemption Price,
respectively, plus interest accrued to the Redemption Date. Any Holder of such
Series may waive its right to such redemption by delivering a written waiver to
the Trustee, in such form as the Trustee shall deem acceptable, with a copy to
the Company, within ten days after the date of such notice of redemption.
SECTION 3.03. Additional Debt Covenants.
(A) So long as any Securities of the First or Second Series
shall remain Outstanding, the Company shall file a Cash Flow Certificate with
the Trustee on or before March 31 of each calendar year after 1993 for the
period of twelve consecutive calendar months ending January 31 of such calendar
year and stating the ratio of its Total Debt divided by its Cash Flow,
determined in accordance with generally accepted accounting principles existing
as of the date of this First Supplemental Indenture, as shown by such
certificate ("Annual Total Debt/Cash Flow Ratio"). If the Annual Total Debt/Cash
Flow Ratio shall exceed the maximums specified below for the corresponding
period:
<PAGE>
-9-
Twelve Month
Period Ending Maximum Total Debt/
January 31, Cash Flow Ratio
------------- -------------------
1994 25:1
1995 18:1
1996 and thereafter 15:1
then the Company shall promptly notify the Trustee and, if there is only one
Holder of Securities of such Series, such Holder; and the Company shall redeem,
within ninety days thereafter and upon at least thirty days' notice, a principal
amount of the Securities of such Series then Outstanding sufficient to cause the
Annual Total Debt/Cash Flow Ratio, determined in accordance with generally
accepted accounting principles existing as of the date of this First
Supplemental Indenture, to equal the appropriate maximum. The Redemption Price
shall be the First or Second Series General Redemption Price, respectively, plus
interest accrued to the Redemption Date. The Holders of a majority of the
Securities of such Series then Outstanding may waive such redemption by
delivering a written waiver to the Trustee, in such form as the Trustee shall
deem acceptable, with a copy to the Company, within ten days after the date of
such notice of redemption.
(B) So long as any Securities of the First or Second Series
shall remain Outstanding, the Company shall file with the Trustee, on or before
March 31 of each calendar year, an Accountant's Certificate showing as of
January 31 of such calendar year (1) the aggregate principal amount of
Securities then Outstanding and (2) the net book value of property, plant and
equipment, determined in accordance with generally accepted accounting
principles existing as of the date of this First Supplemental Indenture, which
constitute Property Additions. If such aggregate principal amount of Securities
then Outstanding exceeds sixty per centum (60%) of the net book value of such
property, plant and equipment then the Company shall promptly notify the Trustee
and, if there is only one Holder of Securities of the First or Second Series,
such Holder; and the Company shall redeem, within ninety days thereafter and
upon at least thirty days' notice, a principal amount of the Securities of such
Series then Outstanding sufficient to cause the aggregate principal amount of
Securities then Outstanding to equal sixty per centum (60%) of the net book
value of such property, plant and equipment. The Redemption Price shall be
the First or Second Series General Redemption Price, respectively, plus
interest accrued to the Redemption Date. The Holders of a majority of the
Securities of such Series then Outstanding may waive such redemption by
delivering a written waiver to the Trustee, in such form as the Trustee shall
deem acceptable, with a copy to the Company, within ten days after the date
of such notice of redemption.
(C) So long as any Securities of the First or Second Series
shall remain Outstanding, the Company shall file with the Trustee, on or before
March 31 of each calendar year, an Accountant's Certificate showing as of
January 31 of such calendar year (1) the Total Debt of the Company, and (2) the
Company's Capitalization, determined in accordance with generally accepted
accounting principles existing as of the date of this First Supplemental
Indenture. If such Total Debt exceeds sixty-five per centum (65%) of
Capitalization, then the Company shall promptly notify the Trustee and, if there
is only one Holder of Securities of such Series, such Holder; and the Company
shall redeem, within ninety days thereafter and upon at least thirty days'
notice, a principal amount of the Securities of such Series then Outstanding
sufficient to cause Total Debt to equal not more than sixty-five per centum
(65%) of Capitalization, determined in accordance with generally accepted
accounting principles existing as of the date of this First Supplemental
Indenture. The Redemption Price shall be the First or Second Series
<PAGE>
-10-
General Redemption Price, respectively, plus interest accrued to the Redemption
Date. The Holders of a majority of the Securities of such Series then
Outstanding may waive such redemption by delivering a written waiver to the
Trustee, in such form as the Trustee shall deem acceptable, with a copy to the
Company, within ten days after the date of such notice of redemption.
(D) So long as any Securities of the First or Second Series
shall remain Outstanding, the Holders of a majority of the Securities of such
Series then Outstanding may, from time to time but not more than once during any
calendar year, upon thirty days notice, request that the Company file with the
Trustee, as of the end of any calendar month other than December, within sixty
days after the end of such month, the Cash Flow Certificate provided in Section
3.03(A) and the Accountant's Certificates provided in Section 3.03(B) and
3.03(C) of this First Supplemental Indenture. The same redemption provisions
shall apply as if such Cash Flow Certificate and Accountant's Certificates had
been delivered pursuant to such Section 3.03(A), 3.03(B) or 3.03(C) of this
First Supplemental Indenture, using with respect to Section 3.03(A) the maximum
for the period ending on the January 31 next preceding such calendar month, or
if such calendar month is before January 31, 1994, then the maximum for the
period ending January 31, 1994.
(E) Unless otherwise agreed by a majority of the Holders of
the Securities of the First or Second Series to be Outstanding after a
redemption under this Section, the Securities redeemed under this Section may
not be used as a credit for the redemption of Securities provided for in Section
2.03 of this First Supplemental Indenture.
SECTION 3.04. Restricted Payments.
So long as any Securities of the First or Second Series shall
remain Outstanding, the Company shall not declare or pay any Restricted Payments
unless the Company files an Accountant's Certificate with the Trustee and, if
there is only one Holder of Securities of such Series, sends a copy to such
Holder, within thirty days prior to such declaration or payment stating that (A)
the amount of such payment shall not exceed cumulative net additions to or
deductions from Surplus, determined in accordance with generally accepted
accounting principles existing as of the date of this First Supplemental
Indenture, made after December 31, 1992 (excluding any gains on sale of Property
Additions during the immediately preceding 12 months in excess of twenty per
centum (20%) of the net additions to Surplus made during such 12 month period);
and (B) that after such payment Capital plus Surplus shall equal at least
thirty-five per centum (35%) of Capitalization, determined in accordance with
generally accepted accounting principles existing as of the date of this First
Supplemental Indenture.
SECTION 3.05. Redemption Upon Taking of Property by Eminent Domain, etc.
So long as any Securities of the First or Second Series shall
remain Outstanding, any Officer's Certificate provided under Section 1006 of the
Indenture shall also state the net book value of the Mortgaged Property
described therein as taken or sold, and shall also state the net book value of
such Mortgaged Property that does not constitute Property Additions.
Notwithstanding anything to the contrary contained in Section 1006 of the
Indenture, should the aggregate net book value of Mortgaged Property taken by
the exercise of the power of eminent domain or sold to an entity possessing the
power of eminent domain, or to its designee, under a threat, reasonably believed
by the Company to be genuine, to exercise the same, be in excess of Fifteen
Million Dollars ($15,000,000), the Company, shall redeem, within ninety days of
such taking or sale and upon at least thirty days notice, or have otherwise
retired, except to the extent waived, a pro-rata amount of Securities of such
Series then Outstanding at the
<PAGE>
-11-
Redemption Price of par plus interest accrued to the Redemption Date. Such
pro-rata amount shall be calculated by dividing (1) the aggregate amount of
Property Additions so taken or sold plus the aggregate net book value of all
Mortgaged Property so taken or sold which are not Property Additions by (2) the
amount of Net Property Additions shown on the most recent Property Additions
Certificate filed with the Trustee and multiplying such ratio by the aggregate
principal amount of Securities of such Series then Outstanding. Such redemption
shall be prorated among Holders of Securities of such Series except to the
extent waived; any Holder may waive its right to such redemption by delivering a
written waiver to the Trustee, in such form as the Trustee shall deem
acceptable, with a copy to the Company, within ten days after the date of such
notice of redemption; such waiver shall not cause a recalculation of the
proration.
SECTION 3.06. Maintenance of Business.
So long as any Securities of the First or Second Series remain
Outstanding, if the Company ceases to continue substantially in the business of
providing water and waste water utility service in the State of Florida, then
the Company shall promptly notify the Trustee and, if there is only one Holder
of Securities of such Series, such Holder; and the Company shall redeem, within
ninety days and upon at least thirty days notice, all of the Securities of such
Series then Outstanding at the First or Second Series General Redemption Price,
respectively, plus interest accrued to the Redemption Date. Any Holder may waive
its right to such redemption by delivering a written waiver to the Trustee, in
such form as the Trustee shall deem acceptable, with a copy to the Company,
within ten days after the date of such notice of redemption.
SECTION 3.07. Return of Redemption Moneys upon Waiver.
Upon receipt of any waiver of redemption by any Holder, the
Trustee shall return to the Company the redemption money, if any, held by the
Trustee for the redemption of such Holder's Securities.
SECTION 3.08. Special Merger Provisions.
(A) So long as any Securities of the First or Second Series
remain Outstanding, the Company shall not merge or consolidate with another
entity unless the Company shall have filed with the Trustee, and, if there is
only one Holder of Securities of such Series, such Holder, an Officer's
Certificate stating that (1) the Company or an entity directly or indirectly
owned one hundred per centum (100%) by Minnesota Power & Light Company shall be
the continuing and surviving corporation and, (2) after such merger or
consolidation, there shall exist no Event of Default or event which, with the
lapse of time or giving of notice, or both, would constitute an Event of
Default, and the Company shall be able to issue at least One Dollar ($1) of
Securities under the provisions of Section 401 or 501 of the Indenture, in each
case, using a Cash Flow Certificate stating an Annual Total Debt/Cash Flow Ratio
not to exceed the maximums specified in Section 3.03(A) hereof (using the
maximum for the period ending on the January 31 next preceding such merger, or
if such merger is before January 31, 1994, then the maximum for the period
ending January 31, 1994) rather than the Cash Flow Certificate provided in
Section 301(d) of the Indenture.
(B) Notwithstanding the foregoing, the Company may consolidate
or merge with Lehigh Utilities, Inc. So long as any Securities of the First or
Second Series remain Outstanding, if the Company shall not have merged or
consolidated with Lehigh Utilities, Inc. by April 30, 1993, then the Company
<PAGE>
-12-
shall cause, within ninety days thereafter, all of the outstanding common stock
of Lehigh Utilities, Inc. to be subjected to the Lien of the Indenture. When all
such Securities cease to be Outstanding or upon such merger or consolidation,
the Trustee shall release such stock upon receipt of a Company Order requesting
such release and stating the basis therefor.
SECTION 3.09. Additional Property.
(A) So long as any Securities of the First or Second Series
remain Outstanding, the Deltona System Assets shall be released from the Lien of
the Mortgage and Deed of Trust described in paragraph J of the Excepted Property
Clause of the Original Indenture, on or before December 31, 1994; and the
Company and the Trustee, upon the request of the Company, shall, as soon as
practicable, by supplemental indenture, delete such paragraph J and subject such
property, other than Excepted Property, to the Lien of the Indenture.
(B) So long as any Securities of the First or Second Series
remain Outstanding, when the Marco Island System Assets shall be released from
the Lien of the Mortgage and Security Agreements described in paragraph K of the
Excepted Property Clause of the Original Indenture, the Company and the Trustee,
upon the request of the Company, shall, as soon as practicable, by supplemental
indenture, delete such paragraph K and subject such property, other than
Excepted Property, to the Lien of the Indenture.
(C) So long as any Securities of the First or Second Series
remain Outstanding, when the Lehigh Assets shall be released from the Lien of
the Mortgage, Security Agreement and Assignment of Rents described in
paragraph L of the Excepted Property Clause of the Original Indenture, and the
Company, upon the request of the Company, shall have consolidated or merged with
Lehigh Utilities, Inc., the Company and the Trustee shall, as soon as
practicable, by supplemental indenture, delete such paragraph L and subject such
property, other than Excepted Property, to the Lien of the Indenture.
SECTION 3.10. Refinancing of the Deltona Debt.
The Company shall be exempt from filing the Cash Flow
Certificate provided in Section 301(d) of the Indenture with respect to
Securities issued to refinance Fifteen Million Dollars ($15,000,000) in debt due
December 1, 1994 pursuant to the Mortgage and Deed of Trust dated as of December
1, 1984 from Deltona Utilities, Inc. (Southern States Utilities, Inc., successor
in interest) to Southeast Bank, N.A. (First Union National Bank of Florida,
successor in interest) as trustee. The Company shall instead file with the
Trustee an Officer's Certificate stating that the proceeds of the Securities to
be authenticated and delivered will be used to refinance the debt secured by
such Mortgage and Deed of Trust and that the Deltona System Assets, other than
Excepted Property, will be subjected to the Lien of the Indenture reasonably
contemporaneously with the delivery of such Securities.
SECTION 3.11. Bond Purchase Agreement.
So long as National Bank for Cooperatives ("CoBank") shall be
the sole owner of all Securities of the First or Second Series then Outstanding,
the Company shall redeem, within ten days, an aggregate principal amount of
Securities of such Series, the redemption of which is demanded, in a
certificate, signed by the President, any Vice President or any Assistant Vice
President of CoBank, stating that CoBank is entitled to such redemption under
the Bond Purchase Agreement dated March 31, 1993 between CoBank and the Company,
describing the event giving CoBank such right of redemption, and
<PAGE>
-13-
stating that such redemption is required by terms of such Bond Purchase
Agreement. The Redemption Price shall be the First or Second Series General
Redemption Price, respectively, plus interest accrued to the Redemption Date.
SECTION 3.12. Property Additions Certificates.
So long as any Securities of the First or Second Series shall
remain Outstanding, the Company shall file a Property Additions Certificate with
the Trustee at least once during each calendar year.
SECTION 3.13. Amendment to Indenture: Acceleration.
So long as the aggregate principal amount of Securities of the
First or Second Series then Outstanding exceeds twenty-five per centum (25%) of
the aggregate principal amount of Securities of all series then Outstanding, the
words "twenty-five per centum (25%)" shall be substituted for the words
"thirty-three and one-third per centum (33 1/3%)" in Section 1102 of the
Original Indenture. In case any Securities of the First or Second Series are
paid by reason of a declaration of acceleration pursuant to Section 1102 of the
Original Indenture, the Company shall pay to the Holders of such Securities a
premium equal to the Prepayment Surcharge, calculated as provided in Section
1.02 of this First Supplemental Indenture with respect to the First Series and
Section 2.02 of this First Supplemental Indenture with respect to the Second
Series, multiplied by the aggregate principal amount of such Securities so
accelerated, provided that the payment of such premium does not render the
Company insolvent. If the aggregate principal amount of Securities of the First
or Second Series then Outstanding exceeds twenty-five per centum (25%) of the
aggregate principal amount of Securities of all series then Outstanding and an
Event of Default shall exist, then the Holders of the Securities of the First or
Second Series may demand the redemption of such Securities of the First or
Second Series held by them upon ten days written notice to the Company and the
Trustee. The Redemption Price shall be the First or Second Series General
Redemption Price, respectively, plus interest accrued to the Redemption Date.
SECTION 3.14. Amendment to Indenture; Gains from the Sale of Property.
The Company may include gains from the sale or other
disposition of property, in an amount not to exceed twenty per centum (20%) of
its net income after tax, in calculating Cash Flow under the Indenture.
SECTION 3.15. Redemptions on a Business Day
In the event any Redemption Date for a redemption required by
Section 2.03 hereof shall not be a Business Day, interest on the principal
amount then due shall accrue to and be paid on the next Business Day; provided
that the Company may, at its option, upon ten (10) days prior notice to the
Trustee and the Holders, satisfy a redemption required by Section 2.03 on the
Business Day prior to the applicable Redemption Date at a Redemption Price equal
to par plus interest accrued to such prior Business Day. Any other Redemption
Date for Securities of the First Series or the Second Series shall be on a
Business Day.
<PAGE>
-14-
SECTION 3.16. Amendment or Waiver of Covenants.
The provisions of this Article Third may be waived or amended,
at the request of the Company, with the written consent of the Holders of at
least a majority of the aggregate principal amount of the Securities of the
First or Second Series then Outstanding. So long as the aggregate principal
amount of Securities of the First or Second Series then Outstanding exceeds
twenty-five per centum (25%) of the aggregate principal amount of Securities of
all series then Outstanding, the provisions of this Article Third may not be
waived nor amended without the written consent of the Holders of at least a
majority of the aggregate principal amount of Securities of the First or Second
Series then Outstanding, except as otherwise specifically provided herein.
SECTION 3.17. Clarification of Permitted Liens.
The Permitted Liens described in Clause (1) of the definition
of Permitted Liens in the Original Indenture shall not include any Liens
securing indebtedness for borrowed money, whether or not set forth or referred
to in the descriptions of the property specifically described in Granting Clause
First.
Clause (18) of the definition of Permitted Liens in the
Original Indenture is hereby amended to read as follows:
"(18) Liens which have been bonded for the full
amount of such Liens or for the payment of which the
Company has deposited with the Trustee or with an
escrow agent cash or other property with a value
equal to the full amount of such Liens;"
ARTICLE FOURTH
Miscellaneous
SECTION 4.01. Definitions.
Subject to the amendments provided for in this First
Supplemental Indenture, the terms defined in the Original Indenture shall, for
all purposes of this First Supplemental Indenture, have the meanings specified
in the Original Indenture.
SECTION 4.02. Acceptance of Trust.
The Trustee hereby accepts the trust herein created and agrees
to perform the same upon the terms and conditions herein and in the Indenture
set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever
for or in respect to the validity or sufficiency of this First
Supplemental Indenture or for or in respect of the recitals contained
herein, all of which recitals are made by the Company alone. In
general each and every term and condition contained in Article
Sixteen of the Indenture shall apply to and form part of this First
Supplemental Indenture with the same force and effect as if the same
were
<PAGE>
-15-
herein set forth in full with such omissions, variations and
insertions, if any, as may be appropriate to make the same conform to
the provisions of this First Supplemental Indenture.
SECTION 4.03. Successors and Assigns.
Whenever in this First Supplemental Indenture either of the
parties hereto is named or referred to, this shall, subject to the provisions of
Articles Fifteen and Sixteen the Indenture, be deemed to include the successors
and assigns of such party, and all the covenants and agreements in this First
Supplemental Indenture contained by or on behalf of the Company, or by or on
behalf of the Trustee, or either of them, shall, subject as aforesaid, bind and
inure to the respective benefits of the respective successors and assigns of
such parties, whether so expressed or not.
SECTION 4.04. Benefit of the Parties.
Nothing in this First Supplemental Indenture, expressed or
implied, is intended, or shall be construed, to confer upon, or to give to, any
person, firm or corporation, other than the parties hereto and the Holders of
the Securities Outstanding under the Indenture, any right, remedy or claim under
or by reason of this First Supplemental Indenture or any covenant, condition,
stipulation, promise or agreement hereof, and all the covenants, conditions,
stipulations, promises and agreements in this First Supplemental Indenture
contained by or on behalf of the Company shall be for the sole and exclusive
benefit of the parties hereto and of the Holders of the Securities Outstanding
under the Indenture.
SECTION 4.05. Counterparts.
This First Supplemental Indenture shall be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
<PAGE>
-16-
IN WITNESS WHEREOF, Southern States Utilities, Inc. has
caused this Supplemental Indenture to be executed in its corporate name by its
President or one of its Vice Presidents and its corporate seal to be hereunto
affixed and to be attested by its Secretary or one of its Assistant Secretaries,
and NationsBank of Georgia, National Association, to evidence its acceptance
hereof, has caused this Supplemental Indenture to be executed in its corporate
name by its President or one of its Vice Presidents or Assistant Vice
Presidents and its corporate seal to be hereunto affixed and to be attested by
one of its Vice Presidents, its Secretary or one of its Assistant Secretaries,
in several counterparts, all as of the day and year first above written.
SOUTHERN STATES UTILITIES, INC.
By: Scott W. Vierima
--------------------------------
Scott W. Vierima, Vice President
Attest:
Karla Olson Teasley
- --------------------------------
Karla Olson Teasley, Secretary
In the presence of:
Richard P. Ausman
- --------------------------------
Richard P. Ausman
Alan C. Roline
- --------------------------------
Alan C. Roline
<PAGE>
-17-
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, as Trustee
By: Sandra Carreker
-------------------------------
Vice President
Sandra Carreker
Attest:
Harry Evans
- --------------------------------
Vice President
Harry Evans
In the presence of:
Sabrina Fuller
- --------------------------------
Sabrina Fuller
Kathy E. Knapp
- --------------------------------
Kathy E. Knapp
<PAGE>
-18-
STATE OF GEORGIA )
) SS.:
COUNTY OF FULTON )
The foregoing instrument was acknowledged before me this 29th
day of March, 1993, by SANDRA G. CARREKER as Vice President and HARRY G. EVANS
as Vice President of NationsBank of Georgia, National Association, a national
banking association, on behalf of the company. They are both personally known to
me and each did take an oath.
Jeannette S. Belt
-------------------------------------
Jeannette S. Belt
Notary Public, DeKalb County, Georgia
My Commission Expires March 26, 1994
<PAGE>
-19-
STATE OF FLORIDA )
) SS.:
COUNTY OF ORANGE )
The foregoing instrument was acknowledged before me this 31
day of March, 1993, by SCOTT W. VIERIMA as Vice President and KARLA OLSON
TEASLEY as Secretary of Southern States Utilities, Inc., a Florida corporation,
on behalf of the company. They are both personally known to me and each did take
an oath.
Lisa Freeman Schutz
-----------------------------------------
Lisa Freeman Schutz
Notary Public, State of Florida at Large
Commission Number CC123276
My Commission Expires July 22, 1995
[SEAL] LISA FREEMAN SCHUTZ
MY COMMISSION EXPIRES
JULY 22, 1995
BONDED THRU TROY FAIN INSURANCE, INC.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.I
<SEQUENCE>7
<DESCRIPTION>EXHIBIT 4(I)
<TEXT>
<PAGE>
Exhibit 4(i)
<PAGE>
Minnesota Power & Light Company
OFFICER'S CERTIFICATE
James K. Vizanko, the Treasurer of Minnesota Power & Light Company (the
"Company"), pursuant to the authority granted in the Board Resolutions of the
Company dated March 20, 1996, and Sections 201 and 301 of the Indenture defined
herein, does hereby certify to The Bank of New York (the "Trustee"), as Trustee
under the Indenture of the Company (For Unsecured Subordinated Debt Securities
relating to Trust Securities) dated as of March 1, 1996 (the "Indenture") that:
1. The securities of the first series to be issued under the
Indenture shall be designated "8.05% Junior Subordinated
Debentures, Series A, Due 2015" (the "Debentures of the First
Series"). The Debentures of the First Series are to be issued
to MP&L Capital I, a Delaware statutory business trust (the
"Trust"). All capitalized terms used in this certificate which
are not defined herein but are defined in the Indenture shall
have the meanings set forth in the Indenture;
2. The Debentures of the First Series shall be limited in
aggregate principal amount to $77,500,000 at any time
Outstanding, except as contemplated in Section 301(b) of the
Indenture;
3. The Debentures of the First Series shall mature and the
principal shall be due and payable together with all accrued
and unpaid interest thereon on December 31, 2015;
4. The Debentures of the First Series shall bear interest from,
and including, the date of original issuance, at the rate of
8.05% per annum payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year (each, an
"Interest Payment Date") commencing March 31, 1996. The amount
of interest payable for any such period will be computed on
the basis of a 360-day year of twelve 30-day months and for
any period shorter than a full month, on the basis of the
actual number of days elapsed in such period. Interest on the
Debentures of the First Series will accrue from, and
including, the date of original issuance and will accrue to,
and including, the first Interest Payment Date, and thereafter
will accrue from, and excluding, the last Interest Payment
Date through which interest has been paid or duly provided
for. In the event that any Interest Payment Date is not a
Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of
such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same
force and effect as if made on such Interest Payment Date;
5. Each installment of interest on a Debenture of the First
Series shall be payable to the Person in whose name such
Debenture of the First Series is registered at the close of
business on the Business Day 15 days preceding the
corresponding Interest Payment
<PAGE>
Date (the "Regular Record Date") for the Debentures of the
First Series; provided, however, that if the Debentures of the
First Series are held neither by the Trust nor by a securities
depositary, the Company shall have the right to change the
Regular Record Date by one or more Officer's Certificates. Any
installment of interest on the Debentures of the First Series
not punctually paid or duly provided for shall forthwith cease
to be payable to the Holders of such Debentures of the First
Series on such Regular Record Date, and may be paid to the
Persons in whose name the Debentures of the First Series are
registered at the close of business on a Special Record Date
to be fixed by the Trustee for the payment of such Defaulted
Interest. Notice of such Defaulted Interest and Special Record
Date shall be given to the Holders of the Debentures of the
First Series not less than 10 days prior to such Special
Record Date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any
securities exchange on which the Debentures of the First
Series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture;
6. The principal and each installment of interest on the
Debentures of the First Series shall be payable at, and
registration and registration of transfers and exchanges in
respect of the Debentures of the First Series may be effected
at, the office or agency of the Company in The City of New
York; provided that payment of interest may be made at the
option of the Company by check mailed to the address of the
persons entitled thereto under the Indenture. Notices, demands
to or upon the Company in respect of the Debentures of the
First Series may be served at the office or agency of the
Company in The City of New York. The Trustee will initially be
the agency of the Company for such service of notices and
demands; provided, however, that the Company reserves the
right to change, by one or more Officer's Certificates any
such office or agency. The Company will be the Security
Registrar and the Paying Agent for the Debentures of
the First Series;
7. The Debentures of the First Series will be redeemable on or
after March 20, 2001 at the option of the Company, at any time
and from time to time, in whole or in part, at a redemption
price equal to 100% of the principal amount of the Debentures
of the First Series being redeemed, together with any accrued
interest, including Additional Interest, if any, to the
redemption date, upon not less than 30 nor more than 60 days'
notice given as provided in the Indenture. The Company,
however, may not redeem less than all Outstanding Debentures
of the First Series unless the conditions specified in the
last paragraph of this item are met;
The Debentures of the First Series will also be redeemable at
any time at the option of the Company upon the occurrence and
during the continuation of a Tax Event or an Investment
Company Event in whole but not in part, at a redemption price
equal to 100% of the principal amount of the Debentures of the
First Series then Outstanding plus any accrued and unpaid
interest, including Additional Interest, if any, to the
redemption date, upon not less than 30 nor more than 60 days'
notice given as provided in the Indenture. "Tax Event" means
the receipt by the Trust of an opinion of counsel (which may
be counsel to the Company or an affiliate but not an employee
thereof and which must be acceptable to the Property Trustee
under the Trust
-2-
<PAGE>
Agreement) experienced in such matters to the effect that, as
a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision
or taxing authority thereof or therein affecting taxation, or
as a result of any official administrative or judicial
decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement
or decision is announced on or after the date of original
issuance of the 8.05% Cumulative Quarterly Income Preferred
Securities of the Trust (the "Preferred Securities"), there is
more than an insubstantial risk that (i) the Trust is, or will
be within 90 days of the date thereof, subject to United
States federal income tax with respect to income received or
accrued on the Debentures of the First Series, (ii) interest
payable by the Company on the Debentures of the First Series,
is not, or within 90 days of the date thereof will not be,
deductible, in whole or in part, for United States federal
income tax purposes, or (iii) the Trust is, or will be within
90 days of the date thereof, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Investment Company Event" means the occurrence of a change in
law or regulation or a change in interpretation or application
of law or regulation by any legislative body, court,
governmental agency or regulatory authority to the effect that
the Trust is or will be considered an "investment company"
that is required to be registered under the Investment Company
Act of 1940, as amended, which change in law becomes effective
on or after the date of original issuance of the Preferred
Securities.
The Debentures of the First Series will also be redeemable, in
whole but not in part, at the option of the Company upon the
termination and liquidation of the Trust pursuant to an order
for the dissolution, termination or liquidation of the Trust
entered by a court of competent jurisdiction at a redemption
price equal to 100% of the principal amount of the Debentures
of the First Series then Outstanding plus any accrued and
unpaid interest, including Additional Interest, if any, to the
redemption date, upon not less than 30 nor more than 60 days'
notice given as provided in the Indenture.
The Company may not redeem less than all the Debentures of the
First Series Outstanding unless all accrued and unpaid
interest (including any Additional Interest) has been paid in
full on all Debentures of the First Series Outstanding under
the Indenture for all quarterly interest periods terminating
on or prior to the date of redemption or if a partial
redemption of the Preferred Securities would result in a
delisting of such securities by any national securities
exchange on which they are then listed;
8. So long as any Debentures of the First Series are Outstanding,
the failure of the Company to pay interest on any Debentures
of the First Series within 30 days after the same becomes due
and payable (whether or not payment is prohibited by the
provisions of Article Fifteen of the Indenture) shall
constitute an Event of Default; provided, however, that a
valid extension of the interest payment period by the Company
as contemplated in Section 311 of the Indenture and paragraph
(9) of this Certificate shall not constitute a failure to pay
interest for this purpose;
-3-
<PAGE>
9. Pursuant to Section 311 of the Indenture, the Company shall
have the right, at any time and from time to time during the
term of the Debentures of the First Series, to extend the
interest payment period to a period not exceeding 20
consecutive quarters (an "Extension Period") during which
period interest will be compounded quarterly. At the end of
the Extension Period, the Company shall pay all interest
accrued and unpaid (together with interest thereon at the rate
specified for the Debentures of the First Series, compounded
quarterly, to the extent permitted by applicable law).
However, during any such Extension Period, the Company shall
not declare or pay any dividend or distribution (other than a
dividend or distribution in common stock of the Company) on,
or redeem, purchase, acquire or make a liquidation payment
with respect to, any of its capital stock, or make any payment
of principal, interest or premium , if any, on or repay,
repurchase or redeem any indebtedness that is pari passu with
the Debentures of the First Series (including other Securities
issued under the Indenture), or make any guarantee payments
with respect to the foregoing. Prior to the termination of any
such Extension Period, the Company may further extend the
interest payment period, provided that such Extension Period
together with all such previous and further extensions thereof
shall not exceed 20 consecutive quarters at any one time or
extend beyond the maturity date of the Debentures of the First
Series. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Company may select a
new Extension Period, subject to the above requirements. No
interest shall be due and payable during an Extension Period,
except at the end thereof. The Company will give the Trust or
other Holders and the Trustee notice of its election of an
Extension Period prior to the earlier of (i) one Business Day
prior to the record date for the distribution which would
occur but for such election or (ii) the date the Company is
required to give notice to the New York Stock Exchange or
other applicable self-regulatory organization of the record
date;
10. In the event that, at any time subsequent to the initial
authentication and delivery of the Debentures of the First
Series, the Debentures of the First Series are to be held by a
securities depositary, the Company may at such time establish
the matters contemplated in clause (r) in the second paragraph
of Section 301 of the Indenture in an Officer's Certificate
supplemental to this Certificate;
11. No service charge shall be made for the registration of
transfer or exchange of the Debentures of the First Series;
provided, however, that the Company may require payment of a
sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with the exchange or
transfer;
12. The Debentures of the First Series shall have such other terms
and provisions as are provided in the form set forth in
Exhibit A hereto, and shall be issued in substantially such
form;
13. In the event that the Debentures of the First Series are
distributed to holders of the Preferred Securities as a result
of the occurrence of (i) a Tax Event or (ii) an Investment
Company Event or (iii) at any time during which the Trust is
not or will not be taxed as a grantor trust but a Tax Event
has not occurred, the Company will
-4-
<PAGE>
use its best efforts to list the Debentures of the First
Series on the New York Stock Exchange or on such other
exchange as the Preferred Securities are then listed;
14. The undersigned has read all of the covenants and conditions
contained in the Indenture relating to the issuance of the
Debentures of the First Series and the definitions in the
Indenture relating thereto and in respect of which this
certificate is made;
15. The statements contained in this certificate are based upon
the familiarity of the undersigned with the Indenture, the
documents accompanying this certificate, and upon discussions
by the undersigned with officers and employees of the Company
familiar with the matters set forth herein;
16. In the opinion of the undersigned, he has made such
examination or investigation as is necessary to express an
informed opinion whether or not such covenants and conditions
have been complied with; and
17. In the opinion of the undersigned, such conditions and
covenants and conditions precedent, if any (including any
covenants compliance with which constitutes a condition
precedent) to the authentication and delivery of the
Debentures of the First Series requested in the accompanying
Company Order have been complied with.
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Officer's
Certificate this 20th day of March, 1996.
James K. Vizanko
------------------------
James K. Vizanko
Treasurer
-6-
<PAGE>
No. R-1
EXHIBIT A
MINNESOTA POWER & LIGHT COMPANY
8.05% JUNIOR SUBORDINATED DEBENTURES, SERIES A,
DUE 2015
MINNESOTA POWER & LIGHT COMPANY, a corporation duly organized and
existing under the laws of the State Minnesota (herein referred to as the
"Company", which term includes any successor Person under the Indenture), for
value received, hereby promises to pay to ____________________, or registered
assigns, the principal sum of _________________ Dollars on December 31, 2015,
and to pay interest on said principal sum, from and including, March 20, 1996 or
from, and excluding, the most recent Interest Payment Date through which
interest has been paid or duly provided for, quarterly on March 31, June 30,
September 30 and December 31 of each year, commencing March 31, 1996 at the rate
of 8.05% per annum until the principal hereof is paid or made available for
payment. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year of twelve 30-day months. Interest on the
Securities of this series will accrue from, and including, March 20, 1996
through the first Interest Payment Date, and thereafter will accrue, from, and
excluding, the last Interest Payment Date through which interest has been paid
or duly provided for. In the event that any Interest Payment Date is not a
Business Day, then payment of interest payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of such delay), except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the Interest Payment Date. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the Business Day 15 days preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture referred to on the reverse hereof.
Payment of the principal of and premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in The City of New York, the State of New York in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts, provided, however, that, at the
<PAGE>
option of the Company, interest on this Security may be paid by check mailed to
the address of the person entitled thereto, as such address shall appear on the
Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
MINNESOTA POWER & LIGHT COMPANY
By:
----------------------------------
ATTEST:
- ----------------------------
CERTIFICATE OF AUTHENTICATION
Dated: March 20, 1996
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
----------------------------------
Authorized Signatory
-2-
<PAGE>
REVERSE OF JUNIOR SUBORDINATED DEBENTURE
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of March 1, 1996 (herein, together
with any amendments thereto, called the "Indenture", which term shall have the
meaning assigned to it in such instrument), between the Company and The Bank of
New York, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture, including the Board Resolutions and Officer's Certificate filed with
the Trustee on March 20, 1996 creating the series designated on the face hereof,
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $77,500,000.
The Securities of this series are subject to redemption upon
not less than 30 nor more than 60 days' notice by mail, at any time on or after
March 20, 2001 as a whole or in part, at the election of the Company, at a
Redemption Price equal to 100% of the principal amount, together in the case of
any such redemption with accrued interest to, but not including, the Redemption
Date, but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holder of such Security, or one or more
Predecessor Securities, of record at the close of business on the related
Regular Record Date referred to on the face hereof, all as provided in the
Indenture.
The Securities of this series will also be redeemable at the
option of the Company if a Tax Event or an Investment Company Event shall occur
and be continuing, in whole but not in part, at a redemption price equal to 100%
of the principal amount of the Securities of this series then Outstanding plus
any accrued and unpaid interest, including Additional Interest, if any, to the
redemption date, upon not less than 30 nor more than 60 days' notice given as
provided in the Indenture. "Tax Event" means the receipt by MP&L Capital I, a
Delaware statutory business trust (the "Trust") of an opinion of counsel (which
may be counsel to the Company or an affiliate but not an employee thereof and
which must be acceptable to the Property Trustee under the Trust Agreement)
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or as a result of any
official administrative or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date of original issuance of the 8.05%
Cumulative Quarterly Income Preferred Securities of the Trust (the "Preferred
Securities"), there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date thereof, subject to United States federal
income tax with respect to income received or accrued on the Securities, (ii)
interest payable by the Company on the Securities, is not, or within 90 days of
the date thereof will not be, deductible, in whole or in part, for United States
federal income tax purposes, or (iii) the Trust is, or will be within 90 days of
the date thereof, subject to more than a de minimis amount of other taxes,
duties or other governmental charges. "Investment Company Event" means the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority to the effect that the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940, as amended, which change in law becomes
effective on or after the date of original issuance of the Preferred Securities.
-3-
<PAGE>
The Securities of this series will also be redeemable, in
whole but not in part, at the option of the Company upon the termination and
liquidation of the Trust pursuant to an order for the dissolution, termination
or liquidation of the Trust entered by a court of competent jurisdiction at a
redemption price equal to 100% of the principal amount of the Securities of this
series then Outstanding plus any accrued and unpaid interest, including
Additional Interest, if any, to the redemption date, upon not less than 30 nor
more than 60 days' notice given as provided in the Indenture.
In the event of redemption of this Security in part only, a
new Security or Securities of this series and of like tenor for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such Holder upon
said provisions.
The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Security upon compliance with certain
conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in principal amount of
the Securities at the time Outstanding of all series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than a majority in aggregate
principal amount of the Securities of all series at the time Outstanding in
respect of which an Event of Default shall have occurred and be continuing shall
have made written request to the Trustee to institute proceedings in
-4-
<PAGE>
respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity, and the Trustee shall not have received from the Holders of a
majority in aggregate principal amount of Securities of all series at the time
Outstanding in respect of which an Event of Default shall have occurred and be
continuing a direction inconsistent with such request, and shall have failed to
institute any such proceeding, for 60 days after receipt of such notice, request
and offer of indemnity. The foregoing shall not apply to any suit instituted by
the Holder of this Security for the enforcement of any payment of principal
hereof or any premium or interest hereon on or after the respective due dates
expressed herein.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
The Company has the right at any time and from time to time
during the term of the Securities of this series to extend the interest payment
period to a period not exceeding 20 consecutive quarters (an "Extended Interest
Payment Period"), and at the end of such Extended Interest Payment Period, the
Company shall pay all interest then accrued and unpaid (together with interest
thereon at the same rate as specified for the Securities of this series,
compounded quarterly, to the extent permitted by applicable law); provided,
however, that during such Extended Interest Payment Period the Company shall not
declare or pay any dividend or distribution (other than a dividend or
distribution in common stock of the Company) on, or redeem, purchase, acquire or
make a liquidation payment with respect to, any of its capital stock, or make
any payment of principal on, interest or premium if any, on or repay, repurchase
or redeem any indebtedness that is pari passu with the Securities of this series
(including other Securities issued under the Indenture), or make any guarantee
payments with respect to the foregoing. Prior to the termination of any such
Extended Interest Payment Period, the Company may further extend the interest
payment period, provided that such Extended Interest Payment Period, together
with all such previous and further extensions thereof, may not exceed 20
consecutive quarters or extend beyond the Stated Maturity of the Securities of
this series. Upon the termination of any such Extended Interest Payment Period
and the payment of all amounts then due, the Company may select a new Extended
Interest Payment Period, subject to the above requirements. No interest during
the Extended Interest Payment Period, except at the end thereof, shall be due
and payable. The Company shall give the Holder of this Security notice of its
selection of such Extended Interest Payment Period as provided in or pursuant to
the Indenture.
The Securities of this series are issuable only in registered
form without coupons in denominations of $25 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor and of authorized
denominations, as requested by the Holder surrendering the same.
As provided in the Indenture, the Company shall not be
required to make transfers or exchanges of Securities of this series for a
period of 15 days immediately preceding the date of the mailing of any notice of
redemption of such Securities and the Company shall not be required to make
transfers or exchanges of any Securities of this series so selected for
redemption in whole or in part (except the unredeemed portion of thereof).
-5-
<PAGE>
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as the
absolute owner hereof for all purposes, whether or not this Security be overdue,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
-6-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.K
<SEQUENCE>8
<DESCRIPTION>EXHIBIT 4(K)
<TEXT>
<PAGE>
Exhibit 4(k)
<PAGE>
------------------------------------------
ADESA Corporation
TO
THE BANK OF NEW YORK,
Trustee
---------
Indenture
(For Unsecured Debt Securities)
Dated as of May 15, 1996
------------------------------------------
<PAGE>
TABLE OF CONTENTS
PARTIES...................................................................... 1
RECITAL OF THE COMPANY....................................................... 1
ARTICLE ONE.................................................................. 1
Definitions and Other Provisions of General Application...................... 1
SECTION 101. Definitions........................................... 1
Act........................................................ 2
Affiliate.................................................. 2
Authenticating Agent....................................... 2
Authorized Officer......................................... 2
Board of Directors......................................... 2
Board Resolution........................................... 2
Business Day............................................... 2
Commission................................................. 2
Company.................................................... 3
Company Request............................................ 3
Company Order.............................................. 3
Corporate Trust Office..................................... 3
corporation................................................ 3
Defaulted Interest......................................... 3
Dollar..................................................... 3
$.......................................................... 3
Event of Default........................................... 3
Governmental Authority..................................... 3
Government Obligations..................................... 3
Holder..................................................... 3
Indenture.................................................. 4
Interest Payment Date...................................... 4
Maturity................................................... 4
Officer's Certificate...................................... 4
Opinion of Counsel......................................... 4
Outstanding................................................ 4
Paying Agent............................................... 5
Person..................................................... 5
Place of Payment........................................... 5
Predecessor Security....................................... 5
Redemption Date............................................ 5
Redemption Price........................................... 5
Regular Record Date........................................ 5
Responsible Officer........................................ 5
Securities................................................. 5
Security Register.......................................... 5
Security Registrar......................................... 5
Special Record Date........................................ 6
Note: This table of contents shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
ii
Stated Maturity............................................ 6
Trust Indenture Act........................................ 6
Trustee.................................................... 6
United States.............................................. 6
SECTION 102. Compliance Certificates and Opinions.................. 6
SECTION 103. Form of Documents Delivered to Trustee................ 7
SECTION 104. Acts of Holders....................................... 8
SECTION 105. Notices, etc. to Trustee and Company.................. 9
SECTION 106. Notice to Holders of Securities; Waiver............... 10
SECTION 107. Conflict with Trust Indenture Act..................... 11
SECTION 108. Effect of Headings and Table of Contents.............. 11
SECTION 109. Successors and Assigns................................ 11
SECTION 110. Separability Clause................................... 11
SECTION 111. Benefits of Indenture................................. 11
SECTION 112. Governing Law......................................... 11
SECTION 113. Legal Holidays........................................ 11
ARTICLE TWO.................................................................. 12
Security Forms............................................................... 12
SECTION 201. Forms Generally....................................... 12
SECTION 202. Form of Trustee's Certificate of Authentication....... 12
ARTICLE THREE................................................................ 13
The Securities............................................................... 13
SECTION 301. Amount Unlimited; Issuable in Series.................. 13
SECTION 302. Denominations......................................... 16
SECTION 303. Execution, Authentication, Delivery and Dating........ 16
SECTION 304. Temporary Securities.................................. 18
SECTION 305. Registration, Registration of Transfer and Exchange... 18
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities...... 19
SECTION 307. Payment of Interest; Interest Rights Preserved........ 20
SECTION 308. Persons Deemed Owners................................. 21
SECTION 309. Cancellation by Security Registrar.................... 21
SECTION 310. Computation of Interest............................... 22
ARTICLE FOUR................................................................. 22
Redemption of Securities..................................................... 22
SECTION 401. Applicability of Article.............................. 22
SECTION 402. Election to Redeem; Notice to Trustee................. 22
SECTION 403. Selection of Securities to Be Redeemed................ 23
SECTION 404. Notice of Redemption.................................. 23
SECTION 405. Securities Payable on Redemption Date................. 24
SECTION 406. Securities Redeemed in Part........................... 25
Note: This table of contents shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
iii
ARTICLE FIVE................................................................. 25
Sinking Funds................................................................ 25
SECTION 501. Applicability of Article.............................. 25
SECTION 502. Satisfaction of Sinking Fund Payments with Securities. 25
SECTION 503. Redemption of Securities for Sinking Fund............. 26
ARTICLE SIX.................................................................. 26
Covenants.................................................................... 26
SECTION 601. Payment of Principal, Premium and Interest............ 26
SECTION 602. Maintenance of Office or Agency....................... 27
SECTION 603. Money for Securities Payments to Be Held in Trust..... 27
SECTION 604. Corporate Existence................................... 29
SECTION 605. Maintenance of Properties............................. 29
SECTION 606. Annual Officer's Certificate as to Compliance......... 29
SECTION 607. Waiver of Certain Covenants........................... 29
ARTICLE SEVEN................................................................ 30
Satisfaction and Discharge................................................... 30
SECTION 701. Defeasance............................................ 30
SECTION 702. Satisfaction and Discharge of Indenture............... 32
SECTION 703. Application of Trust Money............................ 33
ARTICLE EIGHT................................................................ 33
Events of Default; Remedies.................................................. 33
SECTION 801. Events of Default..................................... 33
SECTION 802. Acceleration of Maturity; Rescission and Annulment.... 35
SECTION 803. Collection of Indebtedness and Suits for Enforcement
by Trustee............................................ 36
SECTION 804. Trustee May File Proofs of Claim...................... 36
SECTION 805. Trustee May Enforce Claims Without Possession of
Securities............................................ 37
SECTION 806. Application of Money Collected........................ 37
SECTION 807. Limitation on Suits................................... 38
SECTION 808. Unconditional Right of Holders to Receive Principal,
Premium and Interest......................................................... 38
SECTION 809. Restoration of Rights and Remedies.................... 39
SECTION 810. Rights and Remedies Cumulative........................ 39
SECTION 811. Delay or Omission Not Waiver.......................... 39
SECTION 812. Control by Holders of Securities...................... 39
SECTION 813. Waiver of Past Defaults............................... 40
SECTION 814. Undertaking for Costs................................. 40
SECTION 815. Waiver of Stay or Extension Laws...................... 40
ARTICLE NINE................................................................. 41
Note: This table of contents shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
iv
The Trustee.................................................................. 41
SECTION 901. Certain Duties and Responsibilities................... 41
SECTION 902. Notice of Defaults.................................... 41
SECTION 903. Certain Rights of Trustee............................. 41
SECTION 904. Not Responsible for Recitals or Issuance of
Securities............................................ 43
SECTION 905. May Hold Securities................................... 43
SECTION 906. Money Held in Trust................................... 43
SECTION 907. Compensation and Reimbursement........................ 43
SECTION 908. Disqualification; Conflicting Interests............... 44
SECTION 909. Corporate Trustee Required; Eligibility............... 44
SECTION 910. Resignation and Removal; Appointment of Successor..... 45
SECTION 911. Acceptance of Appointment by Successor................ 47
SECTION 912. Merger, Conversion, Consolidation or Succession
to Business........................................... 48
SECTION 913. Preferential Collection of Claims Against Company..... 48
SECTION 914. Co-trustees and Separate Trustees..................... 49
SECTION 915. Appointment of Authenticating Agent................... 50
ARTICLE TEN.................................................................. 52
Holders' Lists and Reports by Trustee and Company............................ 52
SECTION 1001. Lists of Holders..................................... 52
SECTION 1002. Reports by Trustee and Company....................... 52
ARTICLE ELEVEN............................................................... 53
Consolidation, Merger, Conveyance or Other Transfer ......................... 53
SECTION 1101. Company May Consolidate, etc., Only on Certain
Terms................................................ 53
SECTION 1102. Successor Corporation Substituted.................... 53
ARTICLE TWELVE............................................................... 54
Supplemental Indentures...................................................... 54
SECTION 1201. Supplemental Indentures Without Consent of
Holders.............................................. 54
SECTION 1202. Supplemental Indentures With Consent of
Holders.............................................. 55
SECTION 1203. Execution of Supplemental Indentures................. 57
SECTION 1204. Effect of Supplemental Indentures.................... 57
SECTION 1205. Conformity With Trust Indenture Act.................. 57
SECTION 1206. Reference in Securities to Supplemental
Indentures........................................... 57
SECTION 1207. Modification Without Supplemental Indenture.......... 58
ARTICLE THIRTEEN............................................................. 58
Meetings of Holders; Action Without Meeting.................................. 58
SECTION 1301. Purposes for Which Meetings May Be Called............ 58
SECTION 1302. Call, Notice and Place of Meetings................... 58
SECTION 1303. Persons Entitled to Vote at Meetings................. 59
SECTION 1304. Quorum; Action....................................... 59
Note: This table of contents shall not, for any purpose, be deemed to be
part of the Indenture.
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v
SECTION 1305. Attendance at Meetings; Determination of Voting
Rights; Conduct and Adjournment of Meetings.................................. 60
SECTION 1306. Counting Votes and Recording Action of Meetings...... 61
SECTION 1307. Action Without Meeting............................... 61
ARTICLE FOURTEEN............................................................. 62
Immunity of Incorporators, Stockholders, Officers and Directors.............. 62
SECTION 1401. Liability Solely Corporate........................... 62
ARTICLE FIFTEEN.............................................................. 62
Securities of the First Series............................................... 62
SECTION 1501. Designation of Securities of the First Series........ 62
Testimonium.................................................................. 63
Signatures and Seals......................................................... 63
Acknowledgements............................................................. 65
Note: This table of contents shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
INDENTURE, dated as of May 15, 1996, between ADESA
Corporation, a corporation duly organized and existing under the laws of the
State of Indiana (herein called the "Company"), having its principal office at
1919 S. Post Road, Indianapolis, Indiana 46239, and THE BANK OF NEW YORK, a
corporation of the State of New York, having its principal corporate trust
office at 101 Barclay Street, New York, New York 10286, as Trustee (herein
called the "Trustee").
RECITAL OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), in an unlimited aggregate principal amount to be issued in one or
more series as contemplated herein; and all acts necessary to make this
Indenture a valid agreement of the Company have been performed.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires, capitalized terms
used herein shall have the meanings assigned to them in Article One of this
Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of any
series thereof, as follows:
ARTICLE ONE
Definitions and Other Provisions of General Application
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(b) all terms used herein without definition which are defined in
the Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United States at
the date of such computation or, at the election of the Company from time
to time, at the date of the execution and delivery of this Indenture;
provided, however, that in determining generally accepted
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accounting principles applicable to the Company, the Company shall, to the
extent required, conform to any order, rule or regulation of any
administrative agency, regulatory authority or other governmental body
having jurisdiction over the Company; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Nine, are defined in
that Article.
"Act", when used with respect to any Holder of a Security, has
the meaning specified in Section 104.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or through one or
more intermediaries, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Authenticating Agent" means any Person (other than the Company
or an Affiliate of the Company) authorized by the Trustee pursuant to Section
915 to act on behalf of the Trustee to authenticate one or more series of
Securities.
"Authorized Officer" means the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer, or any
other officer or agent of the Company duly authorized by the Board of Directors
to act in respect of matters relating to this Indenture.
"Board of Directors" means either the board of directors of the
Company or any committee thereof duly authorized to act in respect of matters
relating to this Indenture.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to a Place of Payment or
any other particular location specified in the Securities or this Indenture,
means any day, other than a Saturday or Sunday, which is not a day on which
banking institutions or trust companies in such Place of Payment or other
location are generally authorized or required by law, regulation or executive
order to remain closed, except as may be otherwise specified as contemplated by
Section 301.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, as amended, or, if at any time after the date of execution and delivery of
this Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body, if any, performing
such duties at such time.
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"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by an Authorized Officer and delivered
to the Trustee.
"Corporate Trust Office" means the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered, which office at the date of execution and delivery of this
Indenture is located at 101 Barclay Street, New York, New York 10286.
"corporation" means a corporation, association, company, limited
liability company, joint stock company or business trust.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollar" or "$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"Event of Default" has the meaning specified in Section 801.
"Governmental Authority" means the government of the United
States or of any State or Territory thereof or of the District of Columbia or of
any county, municipality or other political subdivision of any of the foregoing,
or any department, agency, authority or other instrumentality of any of the
foregoing.
"Goverment Obligations" means:
(a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the
United States and entitled to the benefit of the full faith and
credit thereof; and
(b) certificates, depositary receipts or other
instruments which evidence a direct ownership interest in
obligations described in clause (a) above or in any specific
interest or principal payments due in respect thereof; provided,
however, that the custodian of such obligations or specific
interest or principal payments shall be a bank or trust company
(which may include the Trustee or any Paying Agent) subject to
Federal or state supervision or examination with a combined
capital and surplus of at least $50,000,000; and provided,
further, that except as may be otherwise required by law, such
custodian shall be obligated to pay to the holders of such
certificates, depositary receipts or other instruments the full
amount received by such custodian in respect of such obligations
or specific payments and shall not be permitted to make any
deduction therefrom.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
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"Indenture" means this instrument as originally executed and
delivered and as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and shall include the terms of a particular series of
Securities established as contemplated by Section 301.
"Interest Payment Date", when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as provided in such Security or in this Indenture,
whether at the Stated Maturity, by declaration of acceleration, upon call for
redemption or otherwise.
"Officer's Certificate" means a certificate signed by an
Authorized Officer and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company, or other counsel acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities deemed to have been paid in accordance with
Section 701; and
(c) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other
than any such Securities in respect of which there shall have
been presented to the Trustee proof satisfactory to it and the
Company that such Securities are held by a bona fide purchaser or
purchasers in whose hands such Securities are valid obligations
of the Company;
provided, however, that in determining whether or not the Holders of the
requisite principal amount of the Securities Outstanding under this Indenture,
or the Outstanding Securities of any series, have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or whether or not
a quorum is present at a meeting of Holders of Securities, Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor (unless the Company, such Affiliate or such
obligor owns all Securities Outstanding under this Indenture, or all Outstanding
Securities of each such series, as the case may be, determined without regard to
this provision) 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 or
upon any such
<PAGE>
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determination as to the presence of a quorum, only Securities which the Trustee
knows to be so owned shall be so disregarded; provided, however, that Securities
so owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the Company
or of such other obligor; and provided, further, that, in the case of any
Security the principal of which is payable from time to time without presentment
or surrender, the principal amount of such Security that shall be deemed to be
Outstanding at any time for all purposes of this Indenture shall be the original
principal amount thereof less the aggregate amount of principal thereof
theretofore paid.
"Paying Agent" means any Person, including the Company,
authorized by the Company to pay the principal of, and premium, if any, or
interest, if any, on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, trust or unincorporated organization or any Governmental Authority.
"Place of Payment", when used with respect to the Securities of
any series, means the place or places, specified as contemplated by Section 301,
at which, subject to Section 602, principal of and premium, if any, and
interest, if any, on the Securities of such series are payable.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed (to the
extent lawful) to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee,
means any officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any securities authenticated and delivered
under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
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"Special Record Date" for the payment of any Defaulted Interest
on the Securities of any series means a date fixed by the Trustee pursuant to
Section 307.
"Stated Maturity", when used with respect to any obligation or
any installment of principal thereof or interest thereon, means the date on
which the principal of such obligation or such installment of principal or
interest is stated to be due and payable (without regard to any provisions for
redemption, prepayment, acceleration, purchase or extension).
"Trust Indenture Act" means, as of any time, the Trust Indenture
Act of 1939, or any successor statute, as in effect at such time.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, and if at any time there is more
than one such Person, "Trustee" as used with respect to the Securities of any
series shall mean the Trustee with respect to Securities of that series.
"United States" means the United States of America, its
Territories, its possessions and other areas subject to its political
jurisdiction.
SECTION 102. Compliance Certificates and Opinions.
Except as otherwise expressly provided in this Indenture, upon
any application or request by the Company to the Trustee to take any action
under any provision of this Indenture, the Company shall, if requested by the
Trustee, furnish to the Trustee an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action (including any covenants compliance with which constitutes a
condition precedent) have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each Person signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such Person, such
Person has made such examination or investigation as is necessary to
enable such Person to
<PAGE>
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express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
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, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such Officer's Certificate or opinion are
based are erroneous. Any such certificate or Opinion of 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, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever, subsequent to the receipt by the Trustee of any Board
Resolution, Officer's Certificate, Opinion of Counsel or other document or
instrument, a clerical, typographical or other inadvertent or unintentional
error or omission shall be discovered therein, a new document or instrument may
be substituted therefor in corrected form with the same force and effect as if
originally filed in the corrected form and, irrespective of the date or dates of
the actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the date
or dates required with respect to the document or instrument for which it is
substituted. Anything in this Indenture to the contrary notwithstanding, if any
such corrective document or instrument indicates that action has been taken by
or at the request of the Company which could not have been taken had the
original document or instrument not contained such error or omission, the action
so taken shall not be invalidated or otherwise rendered ineffective but shall be
and remain in full force and effect, except to the extent that such action was a
result of willful misconduct or bad faith. Without limiting the generality of
the foregoing, any Securities issued under the authority of such defective
document or instrument shall nevertheless be the valid obligations of the
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Company entitled to the benefits of this Indenture equally and ratably with all
other Outstanding Securities, except as aforesaid.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, election, waiver or other action provided by this Indenture to
be made, given or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing or,
alternatively, may be embodied in and evidenced by the record of
Holders voting in favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders duly called and held in
accordance with the provisions of Article Thirteen, or a combination of
such instruments and any such record. Except as herein otherwise
expressly provided, such action shall become effective when such
instrument or instruments or record or both are delivered to the
Trustee and, where it is hereby expressly required, to the Company.
Such instrument or instruments and any such record (and the action
embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments
and so voting at any such meeting. Proof of execution of any such
instrument or of a writing appointing any such agent, or of the holding
by any Person of a Security, shall be sufficient for any purpose of
this Indenture and (subject to Section 901) conclusive in favor of the
Trustee and the Company, if made in the manner provided in this
Section. The record of any meeting of Holders shall be proved in the
manner provided in Section 1306.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof or may be proved in any other manner which the
Trustee and the Company deem sufficient. Where such execution is by a
signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) The principal amount and serial numbers of Securities held by
any Person, and the date of holding the same, shall be proved by the
Security Register.
(d) Any request, demand, authorization, direction, notice,
consent, election, waiver or other Act of a Holder shall bind every
future Holder of the same Security and the Holder of every Security
issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
(e) Until such time as written instruments shall have been
delivered to the Trustee with respect to the requisite percentage of
principal amount of Securities
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for the action contemplated by such instruments, any such instrument
executed and delivered by or on behalf of a Holder may be revoked with
respect to any or all of such Securities by written notice by such
Holder or any subsequent Holder, proven in the manner in which such
instrument was proven.
(f) Securities of any series authenticated and delivered after
any Act of Holders may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any action taken by such
Act of Holders. If the Company shall so determine, new Securities of
any series so modified as to conform, in the opinion of the Trustee and
the Company, to such action may be prepared and executed by the Company
and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
(g) If the Company shall solicit from Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, fix in advance a record date for the
determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but
only the Holders of record at the close of business on the record date
shall be deemed to be Holders for the purposes of determining whether
Holders of the requisite proportion of the Outstanding Securities have
authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of the
record date.
SECTION 105. Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
election, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with, the
Trustee by any Holder or by the Company, or the Company by the Trustee or by any
Holder, shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and delivered personally to an officer or
other responsible employee of the addressee, or transmitted by facsimile
transmission or other direct written electronic means to such telephone number
or other electronic communications address as the parties hereto shall from time
to time designate, or transmitted by certified or registered mail, charges
prepaid, to the applicable
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address set opposite such party's name below or to such other address as either
party hereto may from time to time designate:
If to the Trustee, to:
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Vice President, Corporate Trust Administration
Telephone: (212) 815-5291
Telecopy: (212) 815-5915
If to the Company, to:
ADESA Corporation
1919 S. Post Road
Indianapolis, Indiana 46239
Attention: Chief Financial Officer
Telephone: (317)862-7220
Telecopy: (317)862-7307
Any communication contemplated herein shall be deemed to have
been made, given, furnished and filed if personally delivered, on the date of
delivery, if transmitted by facsimile transmission or other direct written
electronic means, on the date of transmission, and if transmitted by registered
mail, on the date of receipt.
SECTION 106. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided herein, where this
Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given, and shall be deemed given, to Holders if in writing and
mailed, first-class postage prepaid, to each Holder affected by such event, at
the address of such Holder as it appears in the Security Register, not later
than the latest date, if any, and not earlier than the earliest date, if any,
prescribed for the giving of such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice to
Holders by mail, then such notification as shall be made with the approval of
the Trustee shall constitute a sufficient notification for every purpose
hereunder. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders.
Any notice required by this Indenture may be waived in writing by
the Person entitled to receive such notice, either before or after the event
otherwise to be specified therein, and such waiver shall be the equivalent of
such notice. Waivers of
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notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
SECTION 107. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies or conflicts
with another provision hereof which is required or deemed to be included in this
Indenture by, or is otherwise governed by, any of the provisions of the Trust
Indenture Act, such other provision shall control; and if any provision hereof
otherwise conflicts with the Trust Indenture Act, the Trust Indenture Act shall
control, if applicable to this Indenture.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings in this Indenture and the Table
of Contents are for convenience only and shall not affect the construction
hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company and
Trustee shall bind their respective successors and assigns, whether so expressed
or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or the Securities 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 111. Benefits of Indenture.
Nothing in this Indenture or the Securities, express or implied,
shall give to any Person, other than the parties hereto, their successors
hereunder, and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the internal laws of the State of New York, except
to the extent that the law of any other jurisdiction shall be mandatorily
applicable.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities other than a provision in Securities of any series, or in the Board
Resolution or Officer's Certificate which establishes the terms of the
Securities of such series, which specifically states that such provision shall
apply in lieu of this Section) payment of interest or principal and premium, if
any, need not be made at such Place of Payment on such date, but may be
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made on the next succeeding Business Day at such Place of Payment, in each case
with the same force and effect, and in the same amount, as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity, as the case
may be, and, if such payment is made or duly provided for on such Business Day,
no interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be, to such Business Day.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
The definitive Securities of each series shall be in
substantially the form or forms thereof established in the indenture
supplemental hereto establishing such series or in a Board Resolution
establishing such series, or in an Officer's Certificate pursuant to such
supplemental indenture or Board Resolution, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. If the form or forms of
Securities of any series are established in a Board Resolution or in an
Officer's Certificate pursuant to a Board Resolution, such Board Resolution and
Officer's Certificate, if any, shall be delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities.
Unless otherwise specified as contemplated by Section 301, the
Securities of each series shall be issuable in registered form without coupons.
The definiti