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EXHIBIT 4(c)
FINAL
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LOAN AGREEMENT
between
CITY OF COHASSET, MINNESOTA
and
ALLETE, INC.
---------------------
Dated as of August 1, 2004
---------------------
Relating to
$111,000,000 Collateralized Pollution Control Refunding Revenue
Bonds
(ALLETE, Inc. Project), Series 2004
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<PAGE>
TABLE OF CONTENTS
This table of contents is not part of the
Loan Agreement, and is for convenience
only. The captions herein are of no legal
effect and do not vary the meaning or
legal effect of any part of the Loan
Agreement.
Page
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Parties........................................................................1
Recitals.......................................................................1
ARTICLE I DEFINITIONS; REFERENCES;
CERTIFICATES AND OPINIONS; GENERAL
PROVISIONS.....................................................................1
Section 1.01.
Definitions.............................................1
Section 1.02.
References..............................................5
Section 1.03.
Certificates and Opinions...............................5
Section 1.04.
Notices, etc. to Trustee, Issuer and Company............5
Section 1.05.
Successors and Assigns..................................6
Section 1.06.
Separability Clause.....................................6
Section 1.07.
Execution Counterparts..................................6
Section 1.08.
Construction............................................6
Section 1.09.
Benefit of Agreement....................................6
Section 1.10.
Limitation of Liability.................................6
ARTICLE II REPRESENTATIONS AND
WARRANTIES......................................7
Section 2.01.
Representations of the Issuer...........................7
Section 2.02.
Representations and Warranties of the Company...........8
ARTICLE III THE
LOAN..........................................................12
Section 3.01.
Amount and Source of Loan..............................12
Section 3.02.
Creation, Issuance, Delivery and Surrender of First
Mortgage Bonds.........................................12
Section 3.03.
Payments Assigned; Company's Obligations
Unconditional..........................................13
Section 3.04.
Payments Due on Non-Business Days......................14
Section 3.05.
Company's Remedies.....................................14
ARTICLE IV THE
FACILITIES.....................................................14
Section 4.01.
Completion and Location of the Facilities..............14
Section 4.02.
Maintenance of Facilities; Remodeling..................14
Section 4.03.
Insurance..............................................15
Section 4.04.
Condemnation...........................................15
Section 4.05.
Payment of Taxes; Discharge of Liens...................15
Section 4.06.
Use
of Facilities......................................16
Section 4.07.
Issuer's and Trustee's Access to Facilities............16
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ARTICLE V REDEMPTION OF
BONDS.................................................16
Section 5.01.
Prepayment of Loan.....................................16
Section 5.02.
Option To Prepay Loan and To Direct Redemption of
Bonds..................................................16
Section 5.03.
Obligation To Prepay Loan and Redeem Bonds Upon
Certain Events.........................................16
Section 5.04.
Option to Refinance Bonds without Prepayment of Loan...17
ARTICLE VI SPECIAL COVENANTS OF THE
COMPANY...................................17
Section 6.01.
Maintenance of Corporate Existence.....................17
Section 6.02.
Annual Statement.......................................17
Section 6.03.
Indemnification........................................17
Section 6.04.
Additional Payments....................................18
Section 6.05.
Assurance of Tax Exemption.............................19
Section 6.06.
Redemption of Refunded Bonds; Payment of Costs of
Issuance...............................................22
ARTICLE VII ASSIGNMENT, LEASING AND
SELLING...................................22
Section 7.01.
Conditions.............................................22
Section 7.02.
Instrument Furnished to Trustee........................23
Section 7.03.
Limitation.............................................23
ARTICLE VIII EVENTS OF DEFAULT AND
REMEDIES...................................23
Section 8.01.
Events of Default..................................23
Section 8.02.
Force Majeure......................................23
Section 8.03.
Remedies...........................................24
Section 8.04.
No
Remedy Exclusive................................24
Section 8.05.
Reimbursement of Attorneys' Fees...................24
Section 8.06.
Waiver of Breach; Exercise of Rights by Trustee....25
Section 8.07.
Trustee's Exercise of the Issuer's Remedies........25
ARTICLE IX
MISCELLANEOUS......................................................25
Section 9.01.
Termination............................................25
Section 9.02.
Assignment.............................................25
Section 9.03.
Amendments, Changes and Modifications..................25
Section 9.04.
Spin-off Shall Not Violate Terms of This Agreement.....25
Testimonium...................................................................36
Signatures and
Seals..........................................................36
Exhibit A-Description of the Refinanced
Pollution Control Facilities.........A-1
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LOAN AGREEMENT
THIS LOAN
AGREEMENT, dated as of August 1, 2004, between the CITY OF
COHASSET, a municipal corporation of the
State of Minnesota (as hereinafter
defined, the "Issuer"), and ALLETE, INC., a
Minnesota corporation (as
hereinafter defined, the "Company").
W I T N E S S E T H:
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WHEREAS, the
Issuer is authorized and empowered under Minnesota Statutes,
Sections 469.152 to 469.165, as amended
(the "Act"), to issue revenue bonds to
finance, in whole or in part, the cost of
the acquisition, construction,
reconstruction, improvement, betterment or
extension of, and to acquire,
construct and hold, properties, real or
personal, used or useful in the
abatement or control of air or water
pollution in connection with a
revenue-producing enterprise engaged in
business, and to refund revenue bonds
previously issued under the Act; and
WHEREAS, the
Issuer proposes to issue and sell its revenue bonds under the
Act to refund bonds previously issued by
the City of Bass Brook, Minnesota (the
predecessor to the Issuer), the proceeds of
which will be used to refinance a
portion of the costs of the acquisition,
construction and equipping of certain
air and water pollution control facilities
at units 1, 2 and 4 of the Clay
Boswell steam electric generating station
owned in part by the Company and
located in the City of Cohasset, Minnesota;
and
WHEREAS, the
Issuer is further authorized and empowered under the Act to
enter into a loan agreement providing for
payments to it sufficient to pay when
due the principal of, premium, if any, and
interest on its revenue bonds.
NOW, THEREFORE,
the parties hereto, intending to be legally bound hereby
and in consideration of the premises, DO
HEREBY AGREE as follows:
ARTICLE I
DEFINITIONS; REFERENCES; CERTIFICATES AND OPINIONS;
GENERAL PROVISIONS
Section 1.01.
DEFINITIONS. The terms
defined in this Article I shall for
all purposes of this Agreement have the
meaning herein specified, unless the
context clearly requires otherwise:
"Act" means
Minnesota Statutes, Sections 469.152 to 469.165, as amended,
and all acts supplemental thereto or
amendatory thereof.
"Additional
Bonds" means any Bonds issued under the Indenture, other than
the Series 2004 Bonds.
"Agreement"
means this Loan Agreement between the Issuer and the Company,
and any and all modifications, alterations,
amendments and supplements hereto
entered into in accordance with the
provisions hereof and of the Indenture.
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"Bond Counsel"
means any legal counsel selected by the Company and
reasonably acceptable to the Issuer and the
Trustee who shall be nationally
recognized as expert in matters pertaining
to the validity of obligations of
governmental issuers and the exemption from
federal income taxation of interest
on such obligations and experienced in the
financing of pollution control
facilities.
"Bond Year,"
when used with respect to a series of Bonds, shall have the
meaning given it in the Tax Compliance
Certificate.
"Bonds" means
the Series 2004 Bonds and any Additional Bonds.
"Code" means the
Internal Revenue Code of 1986, as amended, and, when
appropriate, any statutory predecessor or
successor thereto, and all applicable
regulations thereunder and any applicable
official rulings, announcements,
notices, procedures and judicial
determinations relating to the foregoing.
"Company" means
ALLETE, Inc., a Minnesota corporation, its successors and
assigns, and any surviving, resulting or
transferee corporation that may assume
its obligations in accordance with Section
6.01 hereof.
"Company
Representative" means the President, any Vice President or the
Treasurer of the Company and such other
person or persons at the time designated
to act on behalf of the Company in matters
relating to this Agreement and the
Indenture as evidenced by a written
certificate furnished to the Issuer and the
Trustee containing the specimen signature
of such person or persons and signed
on behalf of the Company by its President,
any Vice President or its Treasurer.
Such certificate may designate an alternate
or alternates each of whom shall be
entitled to perform all duties of the
Company Representative.
"Counsel" means
an attorney designated by or acceptable to the Trustee,
duly admitted to practice law before the
highest court of any state; an attorney
for the Company or the Issuer may be
eligible for appointment as Counsel.
"Determination
of Taxability," when used with respect to a series of Bonds,
means a final, nonappealable determination
by the Internal Revenue Service or by
a court of competent jurisdiction in the
United States that, as a result of
failure by the Company to observe or
perform any covenant, condition or
agreement on its part to be observed or
performed under this Agreement or as a
result of the inaccuracy of any
representation or agreement made by the Company
under this Agreement, the interest payable
on Bonds of the series is includable
for federal income tax purposes in the
gross income of the owners thereof (other
than an owner who is a "substantial user"
of the projects refinanced thereby or
a "related person" thereto within the
meaning of Section 103(b)(13) of the 1954
Code), which final determination follows
proceedings of which the Company has
been given written notice and in which the
Company, at its sole expense and to
the extent deemed sufficient by the
Company, has been given an opportunity to
participate, either directly or in the name
of the owners of Bonds of the
series.
"Facilities"
means the facilities refinanced, in whole or in part, with the
proceeds of the Refunded Bonds, which are
described generally in Exhibit A to
this Agreement.
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"First Mortgage"
means the Mortgage and Deed of Trust, dated as of
September 1, 1945, from the Company to The
Bank of New York and Douglas J.
MacInnes (successors to Irving Trust
Company and Richard H. West), as trustees,
as heretofore and hereafter amended and
supplemented.
"First Mortgage
Bonds" means the bonds issued and delivered under the First
Mortgage as required by Section 3.02
hereof.
"First Mortgage
Trustee" means the corporate trustee under the First
Mortgage, its successors in trust and their
assigns.
"Indenture"
means the Indenture of Trust, dated as of the date hereof,
between the Issuer and the Trustee, and any
and all modifications, alterations,
amendments and supplements thereto entered
into from time to time in accordance
with the provisions thereof.
"Issuer" means
the City of Cohasset, Minnesota (the successor in interest
to the City of Bass Brook, Minnesota), and
any successors to its functions
hereunder.
"Issuer
Representative" means the Mayor of the Issuer, and such other
person or persons at the time designated to
act on behalf of the Issuer in
matters relating to the Indenture and the
Loan Agreement as evidenced by a
written certificate furnished to the
Trustee containing the specimen signature
of such person or persons and signed on
behalf of the Issuer by its Mayor. Such
certificate may designate an alternate or
alternates, each of whom shall be
entitled to perform all duties of the
Issuer Representative.
"1954 Code"
means the Internal Revenue Code of 1954, as amended, and, when
appropriate, any statutory predecessor
thereto, and all applicable regulations
thereunder and any applicable official
rulings, announcements, notices,
procedures and judicial determinations
relating to the foregoing.
"Original
Purchasers" means, with respect to the Series 2004 Bonds, UBS
Financial Services Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
"Outstanding"
means with respect to Bonds, as of the date of determination,
all Bonds theretofore authenticated and
delivered under the Indenture, except:
(a) Bonds theretofore cancelled by the Trustee or delivered to
the
Trustee for
cancellation as provided in Section 209 of the Indenture;
(b) Bonds for whose payment or redemption money or Defeasance
Obligations in
the necessary amount have been deposited with the Trustee or
any Paying Agent
in trust for the owners of such Bonds as provided in
Section 501 of
the Indenture, provided that, if such Bonds are to be
redeemed, notice
of such redemption has been duly given pursuant to the
Indenture or
provision therefor satisfactory to the Trustee has been made;
(c) Bonds in exchange for or in lieu of which other Bonds have
been
authenticated
and delivered under the Indenture; and
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(d) Bonds alleged to have been destroyed, lost or stolen which
have
been paid as
provided in Section 208 of the Indenture;
provided, however, that, in determining
whether the Owners of the requisite
principal amount of Outstanding Bonds have
given any request, demand,
authorization, direction, notice, consent
or waiver under this Agreement, Bonds
owned by the Issuer or by the Company or
any Related Party thereto or Affiliate
thereof shall be disregarded and deemed not
to be Outstanding, except that, in
determining whether the Trustee shall be
protected in relying upon any such
request, demand, authorization, direction,
notice, consent or waiver, only Bonds
which the Trustee knows to be so owned
shall be disregarded.
"Owner" means,
in respect of a Bond, the Person or Persons in whose name
the Bond is registered on the bond
registration books maintained by the Trustee
pursuant to Section 206 of the
Indenture.
"Person" means
any natural person, firm, association, corporation,
partnership, limited liability company,
limited liability partnership, joint
stock company, joint venture, trust,
unincorporated organization or firm, or a
government or any agency or political
subdivision thereof or other public body.
"Plant" means
the Clay Boswell steam electric generating station located in
the City of Cohasset, Minnesota, and owned
in part by the Company.
"Prior Pollution
Control Bonds" means the Collateralized Pollution Control
Revenue Bonds, Series 1978 Series A
(Minnesota Power & Light Company Project)
issued by the Town of Bass Brook (the
predecessor political subdivision of the
City of Bass Brook, Minnesota, which, in
turn, is the predecessor in interest to
the Issuer) in the aggregate principal
amount of $111,000,000.
"Redemption
Date" means August 23, 2004.
"Rebate Amount"
has the meaning given such term in Section 6.05(b)(1)
hereof.
"Refinanced
Pollution Control Facilities" means the real and personal
properties which comprise the facilities
refinanced with proceeds of the Series
2004 Bonds as further described in Exhibit
A hereto.
"Refunded Bonds"
means the 6% Collateralized Pollution Control Refunding
Revenue Bonds (Minnesota Power & Light
Company Project), Series 1992 issued by
the City of Bass Brook, Minnesota (the
predecessor in interest to the Issuer) in
the original principal amount of
$111,000,000.
"Series 2004
Bonds" means any bond or bonds of the series of Collateralized
Pollution Control Refunding Revenue Bonds
(ALLETE, Inc. Project), Series 2004,
aggregating the principal amount of
$111,000,000, to be issued, authenticated
and delivered under and pursuant to the
Indenture.
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"Spin-off" means
the distribution by the Company to its shareholders of all
or any portion of its shares of common
stock of ADESA, Inc.
"State" means
the State of Minnesota.
"Tax
Certificate" means the Tax Certificate, dated August 19, 2004 of
the
Company.
"Tax Compliance
Certificate" means the Tax Compliance Certificate dated
August 19, 2004 of the Company.
"Trustee" means
U.S. Bank National Association, a national banking
association organized under the laws of the
United States, and its successors in
trust and assigns under the Indenture.
In addition to
the foregoing definitions, any terms not defined herein but
defined in the Indenture (including,
without limitation, in Section 101 thereof)
shall have the meanings herein unless the
context clearly requires otherwise.
Section 1.02.
REFERENCES. All references in this Agreement to designated
"Articles," "Sections" and other
subdivisions are to the designated Articles,
Sections and other subdivisions of this
Agreement as originally executed. The
words "herein," "hereof," and "hereunder,"
and other words of similar import,
refer to this Agreement as a whole and not
to any particular Article, Section or
other subdivision unless the context
clearly indicates otherwise. The Article
and Section headings herein and in the
Table of Contents are for convenience
only and shall not affect the construction
hereof. Unless the context hereof
clearly requires otherwise, the masculine
shall include the feminine and vice
versa and the singular shall include the
plural and vice versa.
Section 1.03.
CERTIFICATES AND OPINIONS. Any certificate or opinion of an
officer of the Company may be based,
insofar as it relates to legal matters,
upon a certificate or opinion of, or
representations by, Counsel or Bond
Counsel. Any opinion of Counsel or Bond
Counsel may be based, insofar as it
relates to factual matters, upon a
certificate or opinion of, or representations
by, an officer or officers of the Company
stating that the information with
respect to such factual matters is in the
possession of the Company.
Wherever in this
Agreement, in connection with any request, certificate or
report to the Issuer or the Trustee, it is
provided that the Company shall
deliver any document as a condition of the
granting of such request, or as
evidence of the Company's compliance with
any term hereof, it is intended that
the truth and accuracy at the time of the
granting of such request or at the
effective date of such certificate or
report, as the case may be, of the facts
and opinions stated in such document shall
in each case be conditions precedent
to the right of the Company to have such
request granted or to the sufficiency
of such certificate or report.
Section 1.04.
NOTICES, ETC. TO TRUSTEE, ISSUER AND COMPANY. Any request,
demand, authorization, direction, notice,
consent, waiver or other document
provided or permitted by this Agreement
shall be sufficient for every purpose
hereunder if in writing and mailed by
certified mail, postage prepaid, or
delivered by an express or overnight
delivery service (with a copy to
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<PAGE>
the other persons listed below), at the
following addresses (or such other
address as may be provided by any such
person by notice):
To the Issuer:
City of Cohasset
305 Northwest 1st Avenue
Cohasset, Minnesota
55721-9698
Attn: City
Clerk-Treasurer
To the Company:
ALLETE, Inc.
30 West Superior Street
Duluth, Minnesota
55802
Attn: Chief Financial
Officer
To the Trustee:
U.S. Bank National Association
Mail code
EP-MN-WS3C
60 Livingston Avenue
St. Paul, Minnesota 55107
Attention: Corporate
Trust
To the First
Mortgage Trustee: The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust
Section 1.05.
SUCCESSORS AND ASSIGNs. All covenants and agreements in this
Agreement by the Issuer or the Company
shall bind their successors and assigns,
whether so expressed or not.
Section 1.06.
SEPARABILITY CLAUSE. In case any provision in this Agreement
shall be invalid, illegal or unenforceable,
the validity, legality and
enforceability of the remaining provisions
shall not in any way be affected or
impaired thereby.
Section 1.07.
EXECUTION COUNTERPARTS. This Agreement may be executed in any
number of counterparts. All such
counterparts shall be deemed to be originals
and shall together constitute one and the
same instrument.
Section 1.08.
CONSTRUCTION. This Agreement shall be construed in accordance
with the laws of the State without giving
effect to the conflicts-of-law
principles thereof.
Section 1.09.
BENEFIT OF AGREEMENT. Nothing in this Agreement, express or
implied, shall give to any Person, other
than the parties hereto and the
Trustee, and their successors and assigns
hereunder, any benefit or other legal
or equitable right, remedy or claim under
this Agreement.
Section 1.10.
LIMITATION OF LIABILITY. This Agreement is entered into by
the Issuer pursuant to the Act, and,
notwithstanding any provisions hereof, the
Issuer's obligations hereunder are subject
in all respects to the limitations of
the Act. No agreements or provisions
contained in this Agreement nor any
agreement, covenant or undertaking by the
Issuer contained
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in any document executed by the Issuer in
connection with the Facilities shall
give rise to any pecuniary liability of the
Issuer or a charge against
their general credit or taxing powers, or
shall obligate the Issuer financially
in any way except with respect to the
application of revenues hereunder and the
proceeds of the Bonds. No failure of the
Issuer to comply with any term,
condition, covenant or agreement herein
shall subject the Issuer to liability
for any claim for damages, costs or other
financial or pecuniary charge except
to the extent that the same can be paid or
recovered from the revenues hereunder
or proceeds of the Bonds; and no execution
on any claim, demand, cause of action
or judgment shall be levied upon or
collected from the general credit, general
funds or taxing powers of the Issuer.
Nothing herein shall preclude a proper
party in interest from seeking and
obtaining specific performance against the
Issuer for any failure to comply with any
term, condition, covenant or agreement
herein; provided that no costs, expenses or
other monetary relief shall be
recoverable from the Issuer except as may
be payable from the revenues
hereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01.
REPRESENTATIONS OF THE ISSUER. The Issuer makes the following
representations as the basis for the
undertakings on the part of the Company
herein contained:
(a) The Issuer is a municipal corporation duly organized and
validly
existing under
the Constitution and laws of the State.
(b) In authorizing the issuance of the Bonds to refund the
Refunded
Bonds the
Issuer's purpose is, and in its judgment the effect thereof
will
be, to promote
the public welfare by: the retention, encouragement and
development of
economically sound industry and commerce so as to prevent
the emergence of
or rehabilitate, so far as possible, blighted and marginal
lands and areas
of chronic unemployment; the development of industry to use
the available
resources of the community, in order to retain the benefit of
the community's
existing investment in educational and public service
facilities; and
halting the movement of talented, educated personnel of
mature age to
other areas and thus preserving the economic and human
resources needed
as a base for providing governmental services and
facilities.
(c) The refunding of the Refunded Bonds, the issuance and sale of
the
Bonds, the
execution and delivery of this Agreement and the Indenture, and
the performance
of all covenants and agreements of the Issuer contained in
this Agreement
and the Indenture, and of all other acts and things required
under the
Constitution and laws of the State to make this Agreement and
the
Indenture valid
and binding special, limited obligations of the Issuer in
accordance with
their terms, are authorized by the Act and have been duly
authorized by
resolutions of the governing body of the Issuer adopted at
meetings thereof
duly called and held by the affirmative vote of not less
than a majority
of its members.
(d) To refund the Refunded Bonds, and in anticipation of the
collection of
the payments to be made by the Company pursuant to the First
Mortgage Bonds
and this Agreement, the Issuer has duly authorized the
Series 2004
Bonds in the aggregate
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<PAGE>
principal amount
of $111,000,000, to be issued upon the terms set forth in
the Indenture,
under the provisions of which certain of the Issuer's
interests in
this Agreement and the payments due hereunder are, as provided
by the Act,
pledged and a security interest therein granted to the Trustee
as security for
the payment of the principal of, premium, if any, and
interest on the
Bonds.
(e) The execution and delivery of this Agreement and the other
agreements
contemplated hereby to which the Issuer is a party, including
without
limitation the Indenture, and the consummation of the
transactions
contemplated
hereby and thereby, and the fulfillment of the terms hereof
and thereof, do
not and will not conflict with, or constitute on the part
of the Issuer a
breach of or a default under, any existing (i) law, or (ii)
other
legislative act, constitution or other proceeding establishing
or
relating to the
establishment of the Issuer or its affairs or its
resolutions, or
(iii) agreement, indenture, mortgage, lease or other
instrument to
which the Issuer is subject or is a party or by which it is
bound.
(f) No officer of the Issuer who is authorized to take part in
any
manner in making
this Agreement or the Indenture or any contract
contemplated
hereby or thereby has a personal financial interest in or has
personally and
financially benefited from this Agreement or the Indenture
or any such
contract.
(g) There is not pending or, to the best knowledge of the
Issuer,
threatened any
suit, action or proceeding against or affecting the Issuer
before or by any
court, arbitrator, administrative agency or other
governmental
authority which materially and adversely affects the validity,
as to the
Issuer, of this Agreement or the Indenture, any of its
obligations
hereunder or thereunder or any of the transactions contemplated
hereby or
thereby.
Section 2.02.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
makes the following representations and
warranties as the basis for the
undertakings on the part of the Issuer
herein contained:
(a) The Company is a corporation duly incorporated and in good
standing under
the laws of, and qualified to do business in, the State.
(b) The Company has the power to enter into this Agreement and
to
perform and
observe the agreements and covenants on its part contained
herein, and by
proper corporate action has duly authorized the execution
and delivery
hereof and thereof.
(c) No consent, approval, authorization or other order of any
regulatory body
or administrative agency or other governmental body is
legally required
for the Company's participation in the transactions
contemplated by
this Agreement and the First Mortgage, except such as (i)
have been
obtained or (ii) may be required under state securities laws.
(d) The execution and delivery of this Agreement by the Company
do
not, and
consummation of the transactions contemplated hereby and
thereby
and fulfillment
of the terms hereof and thereof, including, without
limitation, the
issuance and delivery of the
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First Mortgage
Bonds, will not, result in a breach of any of the material
terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed
of trust or other material agreement or instrument to which
the Company is a
party or by which it is now bound, or the Articles of
Incorporation or
Bylaws of the Company, or any present order, rule or
regulation
applicable to the Company of any court or of any regulatory
body
or
administrative agency or other governmental body having
jurisdiction
over the Company
or over any of its properties, or any statute of any
jurisdiction
applicable to the Company.
(e) There is not pending or, to the best knowledge of the
Company,
threatened any
suit, action or proceeding against or affecting the Company
before or by any
court, arbitrator, administrative agency or other
governmental
authority that materially and adversely affects the validity,
as to the
Company, of any of the transactions contemplated by this
Agreement or the
ability of the Company to perform its obligations
hereunder or as
contemplated hereby.
(f) The Company does not rely on any warranty of the Issuer,
either
express or
implied, as to the Facilities or the refunding of the Refunded
Bonds or the
adequacy of the loan made hereby for such refunding, and
recognizes that,
under the Act, the Issuer is not authorized to operate the
Facilities or to
expend any funds thereon, other than the revenues received
by it therefrom
or the proceeds of the Bonds, or other funds granted to it
for purposes
contemplated in the Act.
(g) The proceeds of the Series 2004 Bonds to be deposited in
the
Redemption Fund
in accordance with Section 403 of the Indenture will be
used to redeem
the Refunded Bonds on the Redemption Date.
(h) The First Mortgage has been duly authorized by appropriate
corporate
proceedings on the part of the Company, has been duly executed
and delivered
and constitutes a legal, valid and binding instrument
enforceable in
accordance with its terms, except as the same may be limited
by the laws of
the states where property covered thereby is located
affecting the
remedies for the enforcement of the security provided for in
the First
Mortgage (which laws do not make such remedies inadequate for
realization of
the benefits of such security) or except as the same may be
limited by
bankruptcy, insolvency or similar laws; and the First Mortgage
constitutes a
valid mortgage effective to create a lien for the security of
the First
Mortgage Bonds upon the property now owned by the Company
therein
specifically
described as subject to the lien thereof, except as otherwise
provided therein
with respect to specific property or classes of property.
(i) The First Mortgage Bonds will be duly authorized by the
Company,
will constitute
legal, valid and binding obligations of the Company, will
be secured by
and entitled to the benefits of the First Mortgage equally
and ratably,
subject to the provisions of the First Mortgage relating to
any sinking fund
or similar fund for the benefit of the bonds of any
particular
series thereof, with all other bonds of the Company duly issued
and outstanding
under the First Mortgage, and (subject to the qualification
expressed in the
paragraph above with respect to the enforceability of
certain of the
remedial provisions of the First Mortgage) are enforceable
in accordance
with their terms.
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<PAGE>
(j) Each element or unit of the Facilities, as described in Exhibit
A
hereto, was
designed to meet applicable federal, state and local
requirements for
the control of air and water pollution in effect at the
time of issuance
of the respective Prior Pollution Control Bonds, and the
Facilities are
being used to abate or control air or water pollution.
(k) The information and estimates heretofore furnished to the
Issuer
and Bond Counsel
by the Company with respect to the nature and use of the
Facilities and
the expenditure of the proceeds of the Refunded Bonds and
the Prior
Pollution Control Bonds are true and correct and do not omit
any
statement, the
omission of which would render any of the statements made
therein
misleading in the circumstances in which they are made.
(l) The facilities comprising the Facilities are used to abate
or
control water or
atmospheric pollution or contamination by removing,
altering,
disposing or storing pollutants, contaminants, wastes or heat.
Such facilities
are designed for no significant purpose other than the
control of
pollution and the expenditures with respect thereto would not
have been made
but for the purpose of controlling pollution. The Minnesota
Pollution
Control Agency, which is the agency exercising jurisdiction,
has
certified that
the Facilities, as designed, are in furtherance of the
purpose of
abating or controlling air or water pollution.
(m) At least 90% of the proceeds of the Prior Pollution Control
Bonds,
including any
investment earnings thereon, has been used for the payment of
costs of air or
water pollution control facilities within the meaning of
Section
103(b)(4)(F) of the 1954 Code.
(n) At least 90% of the proceeds of the Prior Pollution Control
Bonds,
including any
investment earnings thereon, has been used to provide either
land or property
of a character subject to the allowance for depreciation
under Section
167 of the Code and all amounts paid from the proceeds of the
Prior Pollution
Control Bonds were, for federal income tax purposes,
chargeable to
the capital account of the Company with respect to the
Facilities or
would have been so chargeable either with a proper election
by the Company
(for example, under Section 266 of the Code) or but for a
proper election
by the Company to deduct such amounts.
(o) The average maturity of the Series 2004 Bonds does not exceed
120%
of the average
reasonably expected economic life of the Facilities
determined as of
the date of issuance of the Series 2004 Bonds (all within
the meaning of
Section 147(b) of the Code).
(p) None of the proceeds of the Prior Pollution Control Bonds,
the
Refunded Bonds
or the Series 2004 Bonds has been or will be used to provide
any private or
commercial golf course, country club, massage parlor, tennis
club, skating
facility (including roller skating, skate board and ice
skating),
racquet sports facility (including any handball or racquetball
court), hot tub
facility, suntan facility or racetrack, airplane, skybox or
other private
luxury box, health club facility, store the principal
business of
which is the sale of alcoholic beverages for consumption off
premises or
facility the
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<PAGE>
primary purpose
of which is one of the following: retail food and beverage
services,
automobile sales or service, or the provision of recreation or
entertainment.
(q) No obligations which are private activity bonds under Section
141
of the Code but
bear interest which is excludable from gross income for
purposes of
federal income taxation, are sold at substantially the same
time as the
Series 2004 Bonds pursuant to the same plan of marketing which
are payable in
whole or in part by the Company or otherwise have with the
Series 2004
Bonds any common or pooled security for the payment of debt
service
thereon.
(r) None of the proceeds of the Prior Pollution Control Bonds or
the
Refunded Bonds
has been or will be used (directly or indirectly) to acquire
land (or an
interest therein) and none of the proceeds of the Prior
Pollution
Control Bonds or the Refunded Bonds has been or will be used
for
the acquisition
of any property (or an interest therein) unless the first
use of such
property was pursuant to such acquisition.
(s) The Refinanced Pollution Control Facilities do not include
any
property to be
sold or any property to be affixed to or consumed in the
production of
property for sale, or any housing facility to be rented or
used as a
permanent residence.
(t) No proceeds of the Prior Pollution Control Bonds have been or
will
be used to
finance any building or structure that is used primarily for
the
self storage of
goods, wares or merchandise for compensation.
(u) The Facilities have been acquired, constructed and installed,
and
(except as
described in clause (w) below) have been and will be used, by
the Company for
use in the Company's trade or business or for the
production of
income, within the meaning of Section 167 of the Code, and
not for the
purpose of resale.
(v) Except as described in clause (w) below, the Company was,
and
always has been,
the only "principal user" of the Facilities within the
meaning of
Section 144(a)(3) of the Code and Section 103(b) of the 1954
Code.
(w) In September 1990, the Company sold an undivided 20% interest
in
Unit 4 of the
Plant (including an undivided 20% interest in that portion of
the Facilities
associated with Unit 4) to Wisconsin Public Power, Inc.
("WPPI") and
entered into various agreements with WPPI relating to the
joint ownership,
operation and maintenance of Unit 4. (The proceeds of such
sale became
general corporate funds of the Company and have not been
pledged, nor are
they available, to pay debt service on the Prior Pollution
Control Bonds or
the Refunded Bonds.)
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<PAGE>
ARTICLE III
THE LOAN
Section 3.01.
AMOUNT AND SOURCE OF LOAN. The Issuer agrees to lend to the
Company, upon the terms and conditions
herein specified, the proceeds received
by the Issuer from the sale of the Bonds,
by causing such proceeds to be
transferred to the Trustee for disbursement
in accordance with the Indenture.
For this purpose, the proceeds of the Bonds
(and therefore the loan) shall be
deemed to include the underwriting
discount, if any, or other amount by which
the amount received by or on behalf of the
Issuer on the original sale of any
Bonds to the Original Purchasers is less
than the principal amount of such
Bonds. The obligation of the Issuer to lend
such
