FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(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
OR
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period _____ to _____
Commission File Number 1-8180
TECO ENERGY, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2052286
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
TECO Plaza
702 N. Franklin Street
Tampa, Florida 33602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 228-4111
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $1.00 par value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
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 amendments to this Form 10-K. X
The aggregate market value of the voting stock held by nonaffiliates
of the registrant as of February 28, 1997 was $2,866,541,608.
Number of shares of the registrant's common stock outstanding as of
February 28, 1997 was 117,601,707.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Definitive Proxy Statement relating to the 1997 Annual
Meeting of Shareholders of the registrant are incorporated by
reference into Part III.<PAGE>
PART I
Item 1. BUSINESS.
TECO ENERGY
TECO Energy, Inc. (TECO Energy) was incorporated in Florida in
1981, as part of a restructuring in which it became the parent
corporation of Tampa Electric Company (Tampa Electric).
TECO Energy currently owns no operating assets but holds all of
the common stock of Tampa Electric and the other subsidiaries listed
below. TECO Energy is a public utility holding company exempt from
registration under the Public Utility Holding Company Act of 1935.
TECO Energy has eight directly owned subsidiaries:
Tampa Electric, a Florida corporation and TECO Energy's
largest subsidiary, is an electric utility that serves more than
513,000 retail customers in west central Florida with a net system
generating capability of 3,650 megawatts (MWs).
T E CO Diversified, Inc. (TECO Diversified), a Florida
corporation formed in 1987, has four subsidiaries that conduct a
substantial portion of the diversified activities of TECO Energy: TECO
Coal Corporation (TECO Coal), TECO Coalbed Methane, Inc. (TECO Coalbed
Methane), TECO Properties Corporation (TECO Properties) and TECO
Transport & Trade Corporation (TECO Transport).
TECO Power Services Corporation (TECO Power Services), a
Florida corporation formed in 1987, has subsidiaries that own and
operate independent power projects in Florida and in Guatemala. TECO
Power Services also seeks other opportunities principally in the
southeastern United States and Latin America to develop independent
power and cogeneration projects.
T E CO Investments, Inc. (TECO Investments), a Florida
corporation formed in 1987, invests capital in short- and long-term
securities and financial instruments. TECO Energy does not expect to
expand this business.
TECO Finance, Inc. (TECO Finance), a Florida corporation
formed in 1987, is a source of debt capital primarily for the
diversified activities of TECO Energy.
TeCom Inc. (TeCom), a Florida corporation formed in 1994, is
marketing advanced energy management, automation and control systems.
TECO Oil & Gas, Inc. (TECO Oil & Gas), formerly named TECO
Gas & Oil, Inc., a Florida corporation formed in 1995, is involved in
the exploration and development of oil and gas in the shallow gulf
waters off Texas and Louisiana, and on-shore in the Permian Basin area
of west Texas.
- B o sek, Gibson and Associates, Inc. (BGA), a Florida
corporation acquired in 1996, provides engineering and energy services
to customers primarily in Florida and California.
For financial information regarding TECO Energy's significant
business segments see Note J on pages 59 and 60.
TECO Energy and its subsidiaries had 4,358 employees as of Dec.
31, 1996.
TAMPA ELECTRIC
2<PAGE>
Tampa Electric was incorporated in Florida in 1899 and was
reincorporated in 1949. Tampa Electric is a public utility operating
within the state of Florida and is engaged in the generation,
purchase, transmission, distribution and sale of electric energy. The
retail territory served comprises an area of about 2,000 square miles
in west central Florida, including substantially all of Hillsborough
County and parts of Polk, Pasco and Pinellas Counties, and has an
estimated population of over one million. The principal communities
served are Tampa, Winter Haven, Plant City and Dade City. In addition,
the utility engages in wholesale sales to other utilities. Tampa
Electric has three electric generating stations in or near Tampa, one
electric generating station in southwestern Polk County, Florida and
two electric generating stations located near Sebring, a city located
in Highlands County in south central Florida.
Tampa Electric had 2,798 employees as of Dec. 31, 1996, of which
1,142 were represented by the International Brotherhood of Electrical
Workers (IBEW) and 292 by the Office and Professional Employees
International Union.
In 1996, approximately 48 percent of Tampa Electric's total
operating revenue was derived from residential sales, 29 percent from
commercial sales, 9 percent from industrial sales and 14 percent from
other sales including bulk power sales for resale.
The sources of operating revenue for the years indicated were as
follows:
(millions) 1996 1995 1994
Residential $ 539.7 $ 523.3 $ 505.5
Commercial 321.3 316.1 316.8
Industrial-Phosphate 59.6 61.7 58.3
Industrial-Other 43.3 45.0 50.0
Other retail sales
of electricity 83.5 82.0 80.7
Sales for resale 93.3 80.0 70.4
Deferred revenues (34.2) (50.8) --
Other 6.4 35.0 13.2
$1,112.9 $1,092.3 $1,094.9
No significant part of Tampa Electric's business is dependent
upon a single customer or a few customers, the loss of any one or more
of whom would have a significantly adverse effect on Tampa Electric,
except for IMC-Agrico, a large phosphate producer representing four
percent of Tampa Electric's 1996 operating revenues.
In May 1996, IMC-Agrico issued a request for proposals (RFP) for
electric power to serve load currently served by Tampa Electric and
others. Tampa Electric has made load-retention proposals that it
believes are competitively priced and attractive because of the
flexibility offered. Tampa Electric continues to have discussions with
IMC-Agrico. While it is unclear how this process will develop, the
ultimate impact on Tampa Electric is not expected to be significant.
See further discussion on page 23.
Tampa Electric's business is not a seasonal one, but winter peak
loads are experienced due to fewer daylight hours and colder
temperatures, and summer peak loads are experienced due to use of air
conditioning and other cooling equipment.
3<PAGE>
Regulation
The retail operations of Tampa Electric are regulated by the
Florida Public Service Commission (FPSC), which has jurisdiction over
retail rates, the quality of service, issuances of securities,
planning, siting and construction of facilities, accounting and
depreciation practices and other matters.
Tampa Electric is also subject to regulation by the Federal
Energy Regulatory Commission (FERC) in various respects including
wholesale power sales, certain wholesale power purchases, transmission
services and accounting and depreciation practices.
Federal, state and local environmental laws and regulations cover
air quality, water quality, land use, power plant, substation and
transmission line siting, noise and aesthetics, solid waste and other
environmental matters. See Environmental Matters on pages 7 and 8.
TECO Transport, TECO Coal and TECO Power Services subsidiaries
sell transportation services, coal, and generating capacity and
energy, respectively, to Tampa Electric and to third parties. The
transactions between Tampa Electric and these affiliates and the
prices paid by Tampa Electric are subject to regulation by the FPSC
and FERC, and any charges deemed to be imprudently incurred may not be
allowed to be recovered from Tampa Electric's customers. See Utility
Regulation on pages 33 through 36. Except for transportation services
performed by TECO Transport under the U.S. bulk cargo preference
p r ogram, the prices charged by TECO Transport and TECO Coal
subsidiaries to third-party customers are not subject to regulatory
oversight. See also TECO Power Services on pages 11 and 12.
Competition
Tampa Electric s retail business is substantially free from
direct competition with other electric utilities, municipalities and
p u blic agencies. At the present time, the principal form of
competition at the retail level consists of natural gas for residences
and businesses and the self-generation option available to larger
users of electric energy. Such users may seek to expand their options
through legislative and/or regulatory initiatives that would permit
competition at the retail level. Tampa Electric intends to take all
appropriate actions to retain and expand its retail business,
including managing costs and providing high quality service to retail
customers. Such action could, with the approval of the FPSC, include
the use of load retention and/or economic development service
contracts and tariffs to reduce the loss of existing load and/or
acquire additional load. Tampa Electric does not expect the effect of
such actions to have a significant affect on its operations. See the
description of the IMC-Agrico request for proposals on page 23.
There is presently active competition in the wholesale power
markets in Florida, and this is increasing largely as a result of the
Energy Policy Act of 1992 and related federal initiatives. This act
removed certain regulatory barriers to independent power producers,
and required utilities to transmit power from such producers,
utilities and others to wholesale customers as more fully described
below. Tampa Electric s wholesale business is largely dependent on
access to transmission systems owned by others and it has generally
supported the regulatory efforts described below to implement open
access to transmission. Tampa Electric is also continuing its efforts
to reduce costs, again with the view of increasing its wholesale
business in an increasingly competitive market.
In April 1996 the Federal Energy Regulatory Commission (FERC)
issued its Final Rule on Open Access Non-discriminatory Transmission
Stranded Costs, Open Access Same-time Information System (OASIS) and
Standards of Conduct. These rules work together to open access for
wholesale power flows on transmission systems. Utilities owning
transmission facilities (including Tampa Electric) are required to
4<PAGE>
provide services to wholesale transmission customers comparable to
those they provide to themselves on comparable terms and conditions
including price. Among other things, the rules require transmission
services to be unbundled from power sales and owners of transmission
systems must take transmission service under their own transmission
tariffs.
Transmission system owners are also required to implement an
OASIS system providing, via the Internet, access to transmission
service information (including price and availability), and to rely
exclusively on their own OASIS system for such information for
purposes of their own wholesale power transactions. To facilitate
compliance, owners must implement Standards of Conduct to ensure that
personnel involved in marketing of wholesale power are functionally
separated from personnel involved in transmission services and
reliability functions. Tampa Electric, together with other utilities,
has implemented an OASIS system and believes it is in compliance with
the Standards of Conduct.
Retail Pricing
In general, the FPSC's pricing objective is to set rates at a
level that allows the utility to collect total revenues equal to its
cost of providing service, including a reasonable return on invested
capital.
The costs of owning, operating and maintaining the utility
system, other than fuel, purchased power, conservation and certain
environmental costs, are recovered through base rates. The costs
intended to be covered by base rates include operation and maintenance
expenses, depreciation and taxes, as well as a return on Tampa
Electric's investment in assets used and useful in providing electric
service (rate base). The rate of return on rate base, which is
intended to approximate Tampa Electric's weighted cost of capital,
includes its costs for debt and preferred stock, deferred income taxes
at a zero cost rate and an allowed return on common equity. Base
prices are determined in FPSC price setting hearings which occur at
irregular intervals at the initiative of Tampa Electric, the FPSC or
other parties. See the discussion of the FPSC-approved agreements
covering 1995 through 1999 on pages 33 through 35.
Fuel, conservation, certain environmental and certain purchased
p o w e r costs are recovered through levelized monthly charges
established pursuant to the FPSC's fuel adjustment and cost recovery
clauses. These charges, which are reset semi-annually in an FPSC
hearing, are based on estimated costs of fuel, environmental
compliance, conservation programs and purchased power and estimated
customer usage for a specific recovery period, with a true-up
adjustment to reflect the variance of actual costs from the projected
charges.
The FPSC may disallow recovery of any costs that it considers
imprudently incurred.
Fuel
About 98 percent of Tampa Electric's generation for 1996 was from
its coal-fired units. About the same level is anticipated for 1997.
Tampa Electric's average fuel cost per million BTU and average
cost per ton of coal burned have been as follows:
5<PAGE>
Average cost
per million BTU: 1996 1995 1994 1993 1992
Coal $ 2.01 $ 2.15 $ 2.22 $ 2.26 $ 2.23
Oil $ 3.68 $ 2.76 $ 2.49 $ 2.69 $ 2.76
Gas -- -- -- $ 3.52 $ 2.43
Composite $ 2.05 $ 2.16 $ 2.22 $ 2.27 $ 2.24
Average cost per ton
of coal burned $46.71 $50.97 $53.39 $54.55 $53.65
Tampa Electric's generating stations burn fuels as follows:
Gannon Station burns low-sulfur coal; Big Bend Station burns coal of a
somewhat higher sulfur content; Polk Power Station burns high-sulfur
coal which is gasified; Hookers Point Station burns low-sulfur oil;
Phillips Station burns oil of a somewhat higher sulfur content; and
Dinner Lake Station, which was placed on long-term reserve standby in
March 1994, burned natural gas and oil.
Coal. Tampa Electric burned approximately 8.0 million tons of
coal during 1996 and estimates that its coal consumption will be
7.9 million tons for 1997. During 1996, Tampa Electric purchased
approximately 58 percent of its coal under long-term contracts with
six suppliers, including TECO Coal, and 42 percent of its coal in the
spot market or under intermediate-term purchase agreements. About 16
percent of Tampa Electric's 1996 coal requirements were supplied by
TECO Coal. During December 1996, the average delivered cost of coal
(including transportation) was $42.59 per ton, or $1.87 per million
BTU. Tampa Electric expects to obtain approximately 60 percent of its
c o al requirements in 1997 under long-term contracts with six
suppliers, including TECO Coal, and the remaining 40 percent in the
spot market. Tampa Electric's long-term coal contracts provide for
revisions in the base price to reflect changes in a wide range of cost
factors and for suspension or reduction of deliveries if environmental
regulations should prevent Tampa Electric from burning the coal
supplied, provided that a good faith effort has been made to continue
burning such coal. Tampa Electric estimates that about 12 percent of
its 1997 coal requirements will be supplied by TECO Coal. For
information concerning transportation services and sales of coal by
affiliated companies to Tampa Electric, see TECO Coal on pages 8 and 9
and TECO Transport on page 10.
In 1996, about 64 percent of Tampa Electric's coal supply was
deep-mined, approximately 33 percent was surface-mined and three
percent was a processed oil by-product known as petroleum coke.
Federal surface-mining laws and regulations have not had any material
adverse impact on Tampa Electric's coal supply or results of its
operations. Tampa Electric, however, cannot predict the effect on the
market price of coal of any future mining laws and regulations.
Although there are reserves of surface-mineable coal dedicated by
suppliers to Tampa Electric's account, high-quality coal reserves in
Kentucky that can be economically surface-mined are being depleted and
in the future more coal will be deep-mined. This trend is not expected
to result in any significant additional costs to Tampa Electric.
Oil. Tampa Electric had supply agreements through Dec. 31, 1996
for No. 2 fuel oil and No. 6 fuel oil for its four combustion turbine
units, Polk Station, Hookers Point Station and Phillips Station at
prices based on Gulf Coast Cargo spot prices. Contracts for the supply
of No. 2 and No. 6 fuel oil through Dec. 31, 1997 are expected to be
finalized in early 1997. The price for No. 2 fuel oil deliveries taken
in December 1996 was $31.90 per barrel, or $5.50 per million BTU. The
price for No. 6 fuel oil deliveries taken in December 1996 was $21.98
per barrel, or $3.48 per million BTU.
6<PAGE>
Franchises
Tampa Electric holds franchises and other rights that, together
with its charter powers, give it the right to carry on its retail
business in the localities it serves. The franchises are irrevocable
and are not subject to amendment without the consent of Tampa
Electric, although, in certain events, they are subject to forfeiture.
Florida municipalities are prohibited from granting any franchise
for a term exceeding 30 years. If a franchise is not renewed by a
municipality, the franchisee has the statutory right to require the
municipality to purchase any and all property used in connection with
the franchise at a valuation to be fixed by arbitration. In addition,
all of the municipalities except for the cities of Tampa and Winter
Haven have reserved the right to purchase Tampa Electric's property
used in the exercise of its franchise, if the franchise is not
renewed.
Tampa Electric has franchise agreements with 13 incorporated
municipalities within its retail service area. These agreements have
various expiration dates ranging from December 2005 to September 2021,
including the agreement with the city of Tampa, which expires in
August 2006. Tampa Electric has no reason to believe that any of these
franchises will not be renewed.
F r a nchise fees payable by Tampa Electric, which totaled
$20.1 million in 1996, are calculated using a formula based primarily
on electric revenues.
Utility operations in Hillsborough, Pasco, Pinellas and Polk
Counties outside of incorporated municipalities are conducted in each
case under one or more permits to use county rights-of-way granted by
the county commissioners of such counties. There is no law limiting
the time for which such permits may be granted by counties. There are
no fixed expiration dates for the Hillsborough County and Pinellas
County agreements. The agreements covering electric operations in
Pasco and Polk counties expire in September 2010 and March 2004,
respectively.
Environmental Matters
Tampa Electric's operations are subject to county, state and
f e deral environmental regulations. The Hillsborough County
Environmental Protection Commission and the Florida Environmental
Regulation Commission are responsible for promulgating environmental
regulations and coordinating most of the environmental regulation
functions performed by the various departments of state government.
T h e Florida Department of Environmental Protection (FDEP) is
responsible for the administration and enforcement of the state
regulations. The U.S. Environmental Protection Agency (EPA) is the
primary federal agency with environmental responsibility.
Tampa Electric has all required environmental permits. In
addition, monitoring programs are in place to assure compliance with
permit conditions. Tampa Electric has been identified as one of
numerous potentially responsible parties (PRP) with respect to seven
Superfund Sites. While the total costs of remediation at these sites
may be significant, Tampa Electric shares potential liability with
other PRPs, many of which have substantial assets. Accordingly, Tampa
Electric expects that its liability in connection with these sites
will not be significant.
Expenditures. During the five years ended Dec. 31, 1996, Tampa
E l e c tric spent $159.3 million on capital additions to meet
environmental requirements, including $102.7 million for the Polk
Power Station project. Environmental expenditures are estimated at $6
million for 1997 and $8 million in total for 1998 through 2001. These
totals exclude amounts required to comply with the 1990 amendments to
the Clean Air Act.
7<PAGE>
Tampa Electric is complying with the Phase I emission limitations
imposed by the Clean Air Act Amendments which became effective Jan. 1,
1995 by using blends of lower-sulfur coal, controlling stack emissions
and using emission allowances.
In 1995 Tampa Electric successfully integrated Big Bend Unit
Three into the existing scrubber on Big Bend Unit Four. This resulted
in an additional scrubbed unit at a fraction of the cost of a new
scrubber. Also as part of its Phase I compliance plan, Tampa Electric
has a long-term contract for the purchase of low-sulfur coal.
Tampa Electric is currently evaluating options to comply with
Phase II sulfur dioxide emission standards imposed by the Clean Air
Act Amendments set for the year 2000. The options include potentially
having to scrub additional capacity. The company is evaluating
equipment and technologies to accomplish compliance in the most cost
effective manner. Tampa Electric is also evaluating options to comply
with Phase II of the Clean Air Act Amendments for nitrogen oxide
reductions. These options include combustion modifications and
retrofit control technology. While Tampa Electric s capital
expenditure estimates for the 1997-2001 period, discussed on page 32,
include $30 million for compliance with Phase II of the Clean Air Act
Amendments, the actual level of required expenditures is uncertain at
this time. The cost of compliance with Phase II is expected to have
little impact on Tampa Electric's prices.
In addition to recovering certain prudently incurred
environmental costs through base rates, Tampa Electric may petition
the FPSC for recovery of certain other environmental compliance costs
on a current basis pursuant to a statutory environmental cost recovery
procedure.
TECO DIVERSIFIED
TECO Diversified owns all of the common stock of TECO Coal, TECO
Coalbed Methane, TECO Properties and TECO Transport. It is a holding
company that owns no operating assets. TECO Diversified and its
subsidiaries had 1,349 employees as of Dec. 31, 1996.
TECO Coal
TECO Coal, a Kentucky corporation, owns no operating assets but
holds all of the common stock of Gatliff Coal Company (Gatliff), Rich
Mountain Coal Company (Rich Mountain), Clintwood Elkhorn Mining
Company (Clintwood), Pike-Letcher Land Company (Pike-Letcher) and
Premier Elkhorn Coal Company (Premier). TECO Coal's subsidiaries own
and/or operate surface and underground mines and coal processing and
loading facilities in Kentucky and Tennessee.
In 1996, TECO Coal subsidiaries sold 5.9 million tons of coal,
with approximately 80 percent sold to third parties and 20 percent
sold to Tampa Electric. Rich Mountain has no reserves; it mines coal
reserves owned by Gatliff. About 62 percent of Gatliff's production
and third-party purchases were sold to Tampa Electric. This specialty
coal has low-ash fusion temperature and low-sulfur characteristics
specifically suited for Tampa Electric's Gannon Station units. The
majority of production from Clintwood and Premier is sold to third
parties.
Tampa Electric is reducing its coal purchases from TECO Coal as a
result of its efforts to reduce costs and its successful fluxing of
conventional steam coal from other sources. TECO Coal's objective is
to more than offset the effects of this reduction by increasing the
amount of coal sold to third parties, principally from the reserves
being developed by Premier.
Primary competitors of TECO Coal's subsidiaries are other coal
suppliers, many of which are located in Central Appalachia.
The operations of underground mines, including all related
8<PAGE>
surface facilities, are subject to the Federal Coal Mine Safety and
Health Act of 1977. TECO Coal's subsidiaries are also subject to
various Kentucky and Tennessee mining laws that require approval of
roof control, ventilation, dust control and other facets of the coal
mining business. Federal and state inspectors inspect the mines to
ensure compliance with these laws. TECO Coal's subsidiaries are in
compliance with the standards of the various enforcement agencies. It
is unaware of any mining laws or regulations having a prospective
effective date that would materially affect the market price of coal
sold by its subsidiaries.
TECO Coal's subsidiaries have not experienced difficulty in
complying with federal, state and local air and water pollution
standards in their mining operations. In 1996 approximately $1.6
m i llion was spent on environmental protection and reclamation
programs. TECO Coal expects to spend about $1.5 million in 1997 on
these programs.
The coal mining operations are also subject to the Surface Mining
Control and Reclamation Act of 1977 which places a charge of $.15 and
$.35 on every net ton mined of underground and surface coal,
respectively, to create a fund for reclaiming land and water adversely
affected by past coal mining. Other provisions establish standards for
the control of environmental effects and reclamation of surface coal
mining and the surface effects of underground coal mining, and
requirements for federal and state inspections.
TECO Coalbed Methane
TECO Coalbed Methane, an Alabama corporation, participates in the
production of natural gas from coalbeds located in Alabama's Black
Warrior Basin. TECO Coalbed Methane has invested $207 million as the
principal investor in three ventures that control, in the aggregate,
approximately 100,000 acres of lease holdings. At the end of 1996,
TECO Coalbed Methane had interests in 749 wells that were operational
and producing gas for sale. These wells are operated by Taurus
Exploration, a unit of Energen Corporation, and, to a much lesser
extent, by other third-party operators.
A non-conventional fuel tax credit is available on all production
through the year 2002. The tax credit, a major economic factor,
escalates with inflation and could be limited by domestic oil prices.
In 1996, domestic oil prices would have had to exceed $46 per barrel
for this limitation to have been effective.
All production from these wells is committed for the life of the
reserves based on spot prices which are tied to the price of on-shore
Louisiana gas.
TECO Coalbed Methane s operations are subject to federal, state
and local regulations for air emissions and water and waste disposal.
Its operations are in substantial compliance with all applicable
environmental laws and regulations.
TECO Properties
TECO Properties, a Florida corporation, has $35.7 million
invested in six projects, by itself or as a limited partner, and in
undeveloped land in the Tampa area. TECO Properties plans to continue
a conservative investment approach.
TECO Transport
TECO Transport, a Florida corporation, owns all of the common
stock of four subsidiaries that transport, store and transfer coal and
other dry bulk commodities. TECO Transport currently owns no operating
assets.
All of TECO Transport's subsidiaries perform substantial services
9<PAGE>
for Tampa Electric. In 1996, approximately 49 percent of TECO
Transport's revenues were from third-party customers and 51 percent
were from Tampa Electric. The pricing for services performed by TECO
Transport's operating companies for Tampa Electric is based on a fixed
price per ton, adjusted quarterly for changes in certain fuel and
price indices. Most of the third-party utilization of the ocean-going
b a r ges is for domestic phosphate movements and domestic and
international movements of other dry bulk commodities. Both the
terminal and river transport operations handle a variety of dry bulk
commodities for third-party customers.
A substantial portion of TECO Transport's business is dependent
upon Tampa Electric, industrial phosphate customers, export coal and
grain customers, and participation in the U.S. cargo preference
program.
Primary competitors of TECO Transport's barge subsidiaries,
Gulfcoast Transit Company (Gulfcoast), which transports products in
the Gulf of Mexico and worldwide, and Mid-South Towing Company
(Mid-South), which operates on the Mississippi, Ohio and Illinois
rivers, are other barge and shipping lines and railroads. There are a
number of companies offering transportation services on the waterways
served by TECO Transport's subsidiaries. To date, physical and
technological improvements have allowed barge operators to maintain
competitive rate structures with alternate methods of transporting
bulk commodities when the origin and destination of such shipments are
contiguous to navigable waterways.
Electro-Coal Transfer Corporation (Electro-Coal) operates a major
transfer and storage terminal on the Mississippi River south of New
Orleans. Demand for the use of such terminals is dependent upon
customers' use of water transportation versus alternate means of
moving bulk commodities and the demand for these commodities.
Competition consists primarily of mid-stream operators and another
land-based terminal located nearby.
The business of TECO Transport's subsidiaries, taken as a whole,
is not subject to significant seasonal fluctuation.
The Interstate Commerce Act, as amended in December 1973, exempts
from regulation water transportation of dry bulk commodities that were
transported in bulk as of June 1, 1939. In 1996, all transportation
services provided by TECO Transport's subsidiaries were within this
exemption.
TECO Transport's subsidiaries are also subject to the provisions
of the Clean Water Act of 1977 that authorize the Coast Guard and the
EPA to assess penalties for oil and hazardous substance discharges.
Under this Act, these agencies are also empowered to assess clean-up
costs for such discharges. Compliance with this Act has had no
material effect on TECO Transport's capital expenditures, earnings or
competitive position, and no such effect is anticipated. In 1996, TECO
Transport spent $.7 million for environmental control. Environmental
expenditures are estimated at $.7 million in 1997, primarily for work
on solid waste disposal and storm water drainage at the Electro-Coal
facility in Louisiana and for expenses related to oil and bilge water
disposal at its river-barge repair facility in Illinois.
TECO POWER SERVICES
TECO Power Services, a Florida corporation, has subsidiaries that
own and operate independent power projects in Florida and in
Guatemala. TECO Power Services also seeks opportunities to develop
other independent power and cogeneration projects. It had 53 employees
as of Dec. 31, 1996.
Hardee Power Partners Limited (Hardee Power), a Florida limited
partnership whose general and limited partners are wholly owned
subsidiaries of TECO Power Services, owns the Hardee Power Station, a
295-MW combined cycle electric generating facility located in Hardee
10<PAGE>
County, Florida, which began commercial operation on Jan. 1, 1993.
Hardee Power has 20-year power supply agreements, for all of the
capacity and energy of the Hardee Power Station, with Seminole
E l e c tric Cooperative (Seminole Electric), a Florida electric
cooperative that provides wholesale power to 11 electric distribution
cooperatives, and with Tampa Electric. Under the Seminole Electric
agreement, Hardee Power has agreed to supply Seminole Electric with an
additional 145 MWs of capacity during the first 10 years of the
contract, which it is purchasing from Tampa Electric's coal-fired Big
Bend Unit Four for resale to Seminole Electric, and at the option of
Seminole Electric, to expand the Hardee Power Station's capacity by
145 MWs for the second 10 years of the contract. Tampa Electric also
has the right under its agreement to require the expansion of the
Hardee Power Station, subordinate to Seminole Electric's expansion
option.
The Hardee Power Station is fueled by natural gas or No. 2 fuel
oil and has contracted for the supply and transportation of natural
gas through June 30, 1997. It is currently in the process of obtaining
a new contract for periods beyond that date. About 96 percent of the
Hardee Power Station's generation for 1996 was from natural gas.
Hardee Power's average fuel cost per million BTU has been as
follows:
Average cost
per million BTU: 1996 1995 1994 1993
Oil $ 4.61 $ 4.64 $ 3.68 $4.86
Gas $ 3.60 $ 2.70 $ 2.02 $2.51
Composite $ 3.65 $ 2.71 $ 2.40 $2.74
The price for natural gas deliveries taken in December 1996 was
$5.08 per thousand cubic feet, or $4.84 per million BTU. The price for
fuel oil deliveries taken in March 1996 was $25.55 per barrel, or
$4.39 per million BTU. There were no fuel oil deliveries taken in 1996
subsequent to that date.
Through its ownership and operation of a wholesale generating
facility in the U.S., TECO Power Services is subject to regulation by
the FERC in various respects. Depending upon the nature of the
project, FERC may regulate, among other things, the rates, terms and
conditions for the sale of electric capacity and energy.
Like Tampa Electric, the U.S. operations of TECO Power Services
are subject to federal, state and local environmental laws and
regulations covering air quality, water quality, land use, power
plant, substation and transmission line siting, noise and aesthetics,
solid waste and other environmental matters.
Tampa Centro Americana de Electricidad, Ltd. (TCAE), an entity
98.15-percent owned by TPS Guatemala One, Inc. (TPS Guatemala One), a
subsidiary of TECO Power Services, has a U.S. dollar-denominated power
sales agreement to provide 78 MWs of capacity to an electric utility
in Guatemala for a 15-year period ending in 2010. The project (the
Alborada Power Station) consists of two combustion turbines with a
total cost of approximately $50 million. TECO Power Services has
obtained political risk insurance from the Overseas Private Investment
Corporation (OPIC), an agency of the U.S. government, for currency
inconvertibility, expropriation and political violence covering up to
90 percent of its equity investment and economic returns.
TCAE began commercial operation of the Alborada Power Station on
Sept. 14, 1995. The power sales agreement between TCAE and the power
purchaser, Empresa Electrica de Guatemala, S.A. (EEGSA), provides for
a capacity charge and operations and maintenance expense payments. The
capacity charge is subject to adjustment due to output, heat rate and
availability. EEGSA is responsible for providing the fuel for the
11<PAGE>
plant with TECO Power Services providing assistance in fuel
administration.
EEGSA, a private distribution and generation company formed in
1894, serves more than 400,000 customers. Approximately 92 percent of
this company is owned by the Guatemalan central government through the
Ministry of Finance, with the remaining 8 percent owned by private
Guatemalan investors. EEGSA s service territory includes Guatemala
City.
12<PAGE>
In January 1997, TECO Power Services secured $29 million of non-
recourse financing for the Alborada Power Station from OPIC.
In 1996, Central Generadora Electrica San Jose (CGESJ), an entity
in which TECO Power Services has a 46 percent ownership interest,
signed a U.S.-dollar denominated power sales agreement with EEGSA to
provide 120 MWs of capacity for 15 years beginning in 1999. The
project consists of a single unit pulverized coal baseload facility
(San Jose Power Station) including port modifications to accommodate
the importation of coal, as well as the construction of approximately
30 miles of transmission line to connect the San Jose Power Station to
the Alborada substation. The total cost of the project approximates
$175 million. At Dec. 31, 1996 46 percent of CGESJ was owned by
another U.S. independent power producer (a subsidiary of The Coastal
Corporation) and 8 percent was owned by the same Guatemalan business
group that TECO Power Services partnered with for the Alborada Power
Station project. The U.S. partners have obtained a commitment for
political risk insurance from OPIC for inconvertibility, expropriation
and political violence covering up to 90 percent of the equity
investment and economic returns.
TECO INVESTMENTS
T E CO Investments' assets consist of short- and long-term
financial investments. The portfolio includes a continuing investment
in leveraged leases of $63 million. At Dec. 31, 1996, the net
leveraged lease investment had essentially a zero balance. TECO Energy
does not expect to expand this business.
TECO FINANCE
TECO Finance raises short- and long-term debt capital primarily
for the diversified activities of TECO Energy. It has its own credit
ratings, based on a guarantee by TECO Energy. TECO Finance owns no
operating assets.
TECO OIL & GAS
TECO Oil & Gas was formed in 1995 to enter into joint ventures
with several partners to explore for oil and gas in the shallow gulf
waters off Texas and Louisiana. The joint ventures have successfully
bid for a number of offshore lease blocks at federal auctions and have
negotiated drilling rights on other blocks. Making extensive use of 3-
D seismic imaging technology, the joint ventures successfully
completed six of the nine exploratory wells drilled as of Dec. 31,
1996. Three wells began producing in 1996, but one has since been
abandoned. In early 1997, the other three successful exploratory wells
b e g a n producing and two additional wells were drilled, one
successfully. TECO Oil & Gas s share of 1996 production was two Bcf.
The company expects to invest $25 to $30 million per year for the next
few years for exploration and production. Sales of gas are at spot
prices.
In 1997, TECO Oil & Gas began an on-shore exploration program in
the Permian Basin area of west Texas using 3-D seismic imaging
technology. In this venture, TECO Oil & Gas will hold a 65-percent
working interest and be the operator.
TeCom
TeCom, formed in 1994, is marketing advanced energy management,
a u tomation and control systems for residential and commercial
applications, called the InterLane system. TeCom had 31 employees as
o f Dec. 31, 1996. Several utilities are engaged in projects
demonstrating and testing the InterLane product.
13<PAGE>
Because of a continued high level of product enhancement
activity, TeCom capitalized $4.9 million pretax of product development
costs in 1996. The product development costs capitalized in 1996 and
those to be capitalized in 1997 are expected to be amortized starting
in 1998 when TeCom anticipates its products will be available for
general distribution.
Bosek, Gibson and Associates
I n November 1996 TECO Energy acquired Bosek, Gibson and
Associates, Inc. (BGA), an engineering energy services company, for
about $3 million in common stock in a merger accounted for as a
purchase transaction. BGA, headquartered in Tampa, has seven offices
in Florida and two in California, and had 93 employees as of Dec. 31,
1996.
It provides design, engineering and construction services to more
than 300 customers, including public schools, universities, health
care facilities and other governmental facilities throughout Florida
and California.
Merger of TECO Energy and Lykes Energy, Inc.
In November 1996, TECO Energy announced an agreement with Lykes
Energy, Inc. (Lykes Energy) to merge that company into TECO Energy in
a tax-free, stock-for-stock transaction with an equity value of $300
million. The number of TECO Energy shares to be issued will depend on
the average market price during a specified period prior to the
closing, subject to a collar. Based on TECO Energy s common stock
closing price of $24.375 on Feb. 28, 1997, approximately 12.3 million
shares would be issued, representing about a 10 percent increase in
shares outstanding.
This merger, to be accounted for as a pooling of interests, was
approved by both companies boards of directors and in December by the
Lykes Energy shareholders. Approval by TECO Energy s shareholders is
not required.
The principal subsidiary of Lykes Energy is Peoples Gas System
(PGS), a regulated retail natural gas distributor in Florida. PGS is
Florida s largest natural gas distribution company with retail
operations in all of the state s major metropolitan communities and
over 200,000 customers. It recorded annual sales of 86 Bcf of natural
gas in fiscal 1996. It will be merged into Tampa Electric but will be
operated as a separate business unit.
Also continuing operations as separate businesses will be Peoples
Gas Company, a propane business, and another unit involved in natural
gas marketing.
TECO Energy expects some cost savings and efficiencies as a
result of the merger. Savings are mainly expected to be derived from
the elimination of duplicative overhead and administrative activities,
improved operating efficiencies and lower interest costs. In addition,
TECO Energy expects to benefit from expanding energy demand in areas
already served by these businesses and from opportunities to secure
new customers in other areas.
The merger is subject to certain closing conditions with closing
expected by mid-year 1997.
Item 2. PROPERTIES.
TECO Energy believes that the physical properties of its
operating companies are adequate to carry on their businesses as
currently conducted. The properties of Tampa Electric and the
subsidiaries of TECO Power Services are generally subject to liens
securing long-term debt.
14<PAGE>
TAMPA ELECTRIC
At Dec. 31, 1996, Tampa Electric had five electric generating
plants and four combustion turbine units in service with a total net
winter generating capability of 3,650 MWs, including Big Bend (1,745-
MW capability from four coal units), Gannon (1,205-MW capability from
six coal units), Hookers Point (212-MW capability from five oil
units), Phillips (34-MW capability from two diesel units), Polk (250-
MW capability from one integrated gasification combined cycle unit
(IGCC)) and four combustion turbine units located at the Big Bend and
Gannon stations (204 MWs). The capability indicated represents the
demonstrable dependable load carrying abilities of the generating
units during winter peak periods as proven under actual operating
conditions. Units at Hookers Point went into service from 1948 to
1955, at Gannon from 1957 to 1967, and at Big Bend from 1970 to 1985.
The Polk IGCC unit began commercial operation in September 1996. In
1991, Tampa Electric purchased two power plants (Dinner Lake and
Phillips) from the Sebring Utilities Commission (Sebring). Dinner Lake
(11-MW capability from one natural gas unit) and Phillips were placed
in service by Sebring in 1966 and 1983, respectively. In March 1994,
Dinner Lake Station was placed on long-term reserve standby.
T a m pa Electric owns 180 substations having an aggregate
transformer capacity of 16,235,857 KVA. The transmission system
c o n s ists of approximately 1,208 pole miles of high voltage
transmission lines, and the distribution system consists of 6,866 pole
miles of overhead lines and 2,538 trench miles of underground lines.
As of Dec. 31, 1996, there were 513,117 meters in service. All of this
property is located in Florida.
All plants and important fixed assets are held in fee except that
title to some of the properties are subject to easements, leases,
contracts, covenants and similar encumbrances and minor defects, of a
nature common to properties of the size and character of those of
Tampa Electric.
Tampa Electric has easements for rights-of-way adequate for the
m a i ntenance and operation of its electrical transmission and
distribution lines that are not constructed upon public highways,
roads and streets. It has the power of eminent domain under Florida
law for the acquisition of any such rights-of-way for the operation of
transmission and distribution lines. Transmission and distribution
lines located in public ways are maintained under franchises or
permits.
Tampa Electric has a long-term lease for its office building in
downtown Tampa that serves as headquarters for TECO Energy, Tampa
Electric and certain other TECO Energy subsidiaries.
TECO COAL
TECO Coal, through its subsidiaries, controls over 100,000 acres
of coal reserves and mining property in Kentucky and Tennessee.
Pike-Letcher controls in excess of 43,000 acres in Pike and
Letcher Counties, Kentucky. These properties contain estimated proven
and probable reserves in excess of 110 million tons.
Premier owns and operates a preparation plant and unit-train
loadout facility in Pike County, Kentucky and conducts surface and
deep mining operations of reserves which are leased from Pike-Letcher.
Premier does not own any coal reserves.
Clintwood has 25,000 acres of coal reserves held under long-term
leases in Pike County, Kentucky. These properties contain estimated
proven and probable reserves of 30 million tons. Clintwood owns and
operates a rail tipple and a coal preparation plant near the mines.
Gatliff has 65,000 acres of coal reserves and mining property in
Knox and Whitley Counties, Kentucky and Campbell County, Tennessee.
Gatliff owns 9,300 acres in fee and leases 55,700 acres under
15<PAGE>
long-term leases. These properties contain estimated proven and
probable coal reserves of 15 million tons. This coal, which combines
low-sulfur and low-ash fusion temperature characteristics, is found in
both deep and surface mines. Gatliff owns and operates a rapid-loading
rail tipple and a coal preparation plant near its deep mines. In 1996,
TECO Coal closed certain of its older Gatliff mines.
Rich Mountain operates a surface mine for Gatliff in Campbell
County, Tennessee, and does not own any coal reserves.
TECO COALBED METHANE
TECO Coalbed Methane's interest in proven gas reserves at Dec.
31, 1996 was independently estimated to be 190.5 billion cubic feet
for 657 wells.
TECO Coalbed Methane's share of gas production for 1996 was
19.8 billion cubic feet.
TECO TRANSPORT
Electro-Coal's storage and transfer terminal is on a 1,070-acre
site fronting on the Mississippi River, approximately 40 miles south
of New Orleans. Electro-Coal owns 342 of these acres in fee, with the
remainder held under long-term leases.
Mid-South operates a fleet of 15 towboats and 578 river barges,
nearly all of which it owns, on the Mississippi, Ohio and Illinois
rivers. Mid-South owns 15 acres of land fronting on the Ohio River at
Metropolis, Illinois on which its operating offices, warehouse and
repair facilities are located. Fleeting and repair services for its
barges and those of other barge lines are performed at this location
and on the upper Mississippi River near the mouth of the Kaskaskia
River.
At Dec. 31, 1996, Gulfcoast owned and operated a fleet of 11
ocean-going tug/barge units and a 30,000 ton ocean-going ship, with a
combined cargo capacity of over 372,000 tons. An additional tug/barge
unit was chartered in early 1997.
TECO POWER SERVICES
Hardee Power has a 22-year lease for approximately 1,300 acres of
land in Hardee and Polk Counties, Florida on which the Hardee Power
Station is located.
In addition, a TECO Power Services' subsidiary had a 98.15-
percent ownership interest in a project entity, TCAE, which owns 7
acres in Guatemala on which the Alborada Power Station is located.
TECO OIL & GAS
TECO Oil & Gas had 37 federal off-shore leases at Dec. 31, 1996
and, in early 1997, was the successful bidder for five additional off-
shore leases. It has six successful off-shore wells. Net proven
reserves at Dec. 31, 1996 were 11.0 billion cubic feet from two wells.
TeCom
In 1996, TeCom was issued its first patent covering the system
design concept for the InterLane products; other patent applications
are pending.
16<PAGE>
Item 3. LEGAL PROCEEDINGS.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted during the fourth quarter of 1996 to a
vote of TECO Energy's security holders, through the solicitation of
proxies or otherwise.
17<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the current executive officers of TECO Energy
is as follows:
Current Positions and Principal
Name Age Occupations During Last Five Years
Timothy L. Guzzle 60 Chairman of the Board and Chief
Executive Officer, July 1994 to
date; and prior thereto, Chairman
of the Board, President and Chief
Executive Officer.
Girard F. Anderson 65 President and Chief Operating
Officer, July 1994 to date; and
prior thereto, Executive Vice
President-Utility Operations and
P r esident and Chief Operating
Officer of Tampa Electric Company.
Keith S. Surgenor 49 President and Chief Operating
Officer of Tampa Electric Company,
July 1995 to date; Vice President-
Human Resources, and President and
Chief Operating Officer of Tampa
Electric Company, July 1994 to
July 1995; and prior thereto, Vice
President-Human Resources.
Roger H. Kessel 60 Senior Vice President-General
Counsel and Secretary, April 1995
to date; and prior thereto, Vice
President-General Counsel and
Secretary.
Alan D. Oak 50 Senior Vice President-Finance and
Chief Financial Officer, April
1995 to date; and prior thereto,
Senior Vice President-Finance,
T r easurer and Chief Financial
Officer.
Roger A. Dunn 54 Vice President-Human Resources,
July 1995 to date; and prior
thereto, Senior Vice President-
H u man Resources and Corporate
Affairs of LTV Corporation (steel
manufacturer), Cleveland, Ohio.
__________________________
There is no family relationship between any of the persons named
above. The term of office of each officer extends to the meeting of
t h e Board of Directors following the next annual meeting of
shareholders, scheduled to be held on April 16, 1997, and until his
successor is elected and qualified.
18<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The following table shows the composite high, low and closing
sale prices for shares of TECO Energy common stock, which is listed on
the New York Stock Exchange, and dividends paid per share, per
quarter.
1st 2nd 3rd 4th
1996
High $27 $25 1/4 $25 1/4 $25 3/8
Low $23 3/4 $23 $23 $23 1/4
Close $24 7/8 $25 1/4 $23 3/4 $24 1/8
Dividend $.265 $.28 $.28 $.28
1995
High $22 1/8 $22 3/4 $23 1/2 $25 3/4
Low $20 $20 1/2 $21 1/4 $23 1/8
Close $21 $22 $23 1/2 $25 5/8
Dividend $.2525 $.265 $.265 $.265
___________________
The approximate number of shareholders of record of common stock
of TECO Energy as of Feb. 28, 1997 was 30,047.
TECO Energy's primary source of funds is dividends from its
operating companies. Tampa Electric's Restated Articles of
Incorporation and certain of the supplemental indentures relating to
different series of its First Mortgage Bonds contain restrictions as
to the payment of dividends on the common stock of Tampa Electric and
as to the purchase or retirement of capital stock of Tampa Electric.
Substantially all of Tampa Electric's retained earnings were available
for dividends throughout 1996.
Recent Sales of Unregistered Securities
On Nov. 27, 1996, TECO Energy issued 119,231 shares of its common
stock (the Shares) in connection with its acquisition of Bosek, Gibson
and Associates, Inc. (BGA) pursuant to the Agreement and Plan of
Merger dated as of Nov. 27, 1996 (the Merger Agreement) among TECO
Energy, a wholly owned subsidiary of TECO Energy, BGA and the
shareholders of BGA. Under the Merger Agreement, TECO Energy s wholly
owned subsidiary merged into BGA and as a result all of the
outstanding capital stock of BGA was exchanged for the Shares. The BGA
stock was held by eleven individuals, each of whom was active in the
business of BGA.
The Shares were issued without registration under the Securities
Act of 1933, as amended, in reliance upon the exemption provided in
Section 4(2) thereof. Reliance upon this exemption was based upon the
nature of the transaction, the number of shareholders of BGA, their
relationship to BGA and investment representations made by each.
19<PAGE>
Item 6. SELECTED FINANCIAL DATA.(6)
Year ended Dec. 31, 1996 1995 1994 1993 1992
Revenues(1)(2) $1,473.0 $1,392.3 $ 1,350.9 $1,283.9 $ 1,183.2
Income before
cumulative effect of change in
accounting
principle(1) $ 200.7 $ 186.1 $ 153.2(5) $ 150.3 $ 149.0
Cumulative effect
of change in
accounting
principle(1) -- -- -- 11.2 --
Net income(1) $ 200.7 $ 186.1 $ 153.2(5) $ 161.5 $ 149.0
Earnings per averageshare outstanding:
Before cumulative
effect of change
in accounting
principle(3) $ 1.71 $ 1.60 $ 1.32(5) $ 1.30 $ 1.30
Cumulative effect
of change in
accounting
principle(3) -- -- -- .10 --
Earnings per average
common share
outstanding(3) $ 1.71 $ 1.60 $ 1.32(5) $ 1.40 $ 1.30
Common dividends
paid per share(3) $ 1.105 $ 1.0475 $ .9975 $ .9475 $ .8975
Total assets (1)(4) $3,560.7 $3,473.4 $3,312.2 $3,123.3 $3,020.6
Long-term debt(1)(4) $ 996.3 $ 994.9 $1,023.9 $1,038.8 $1,044.9
_________________
(1) Millions of dollars.
(2) Amounts shown in 1996 and 1995 are after deferred revenues of $34.2
million and $50.8 million, respectively, in accordance with the FPSC-
approved plans described in the Utility Regulation section on pages 33
through 35.
(3) Restated to reflect a two-for-one stock split on Aug. 30, 1993.
(4) The total asset and long-term debt balances for 1993 and 1992 have
been restated to reflect the current year presentation.
(5) Includes the effect of a corporate restructuring charge which reduced
net income by $15 million and earnings per share by $.13. See Note H
on page 57.
(6) See the discussion of the pending merger between TECO Energy and Lykes
Energy, Inc. on pages 30 and 31.
20<PAGE>
Item 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
This Management s Discussion and Analysis contains forward-looking
statements. These forward-looking statements are subject to the
inherent uncertainties in predicting future results and conditions.
Certain factors that could cause actual results to differ materially
from those projected in these forward-looking statements are set forth
below in the Investment Considerations section.
EARNINGS SUMMARY
TECO Energy achieved earnings of $1.71 per share in 1996 compared
to $1.60 in 1995, a 6.9 percent increase. These 1996 results were
achieved after the deferral of $34.2 million of revenues at Tampa
Electric under agreements approved by the Florida Public Service
Commission (FPSC) described in the Utility Regulation section. Results
in 1995 reflect the deferral of $50.8 million of revenues at Tampa
Electric under the 1995 agreement approved by the FPSC described in
the Utility Regulation section. Earnings in 1994 were $1.32 after a
13-cent charge for corporate restructuring which included a reduction
in staffing levels and other cost reductions, primarily at Tampa
Electric.
Earnings growth in 1996 and 1995 was driven by strong performance
at the diversified companies as well as continued growth in energy
sales, lower operations and maintenance expenses, and higher levels of
capitalized financing costs (AFUDC), primarily associated with the
investment in the Polk Power Station at Tampa Electric.
Earnings Per Share 1996 Change 1995 Change 1994
Earnings per share $ 1.71 6.9% $ 1.60 21.2% $ 1.32
Restructuring charge - - - - .13
Earnings per share before
restructuring charge $ 1.71 6.9% $ 1.60 10.3% $ 1.45(1)
Earnings per share:
Tampa Electric $ 1.19 6.3% $ 1.12 8.7% $ 1.03(1)
Diversified companies
and other .52 8.3% .48 14.3% .42(1)
Total earnings per share $ 1.71 6.9% $ 1.60 10.3% $ 1.45(1)
Net Income $200.7 7.8% $186.1 21.5% $153.2
Net income before
restructuring charge
(millions) $200.7 7.8% $186.1 10.4% $168.6(1)
Average common
shares outstanding
(millions) 117.2 .6% 116.5 .5% 115.9
Return on average
common equity 15.6% 15.5% 14.8%(1)
(1) Excludes the effect of the corporate restructuring charge.
21<PAGE>
OPERATING RESULTS
TECO Energy's Operating Results
Operating income growth in 1996 reflected strong performance by
the diversified companies, particularly TECO Coalbed Methane and TECO
Power Services, and continued growth at Tampa Electric. Consolidated
operating income rose in 1996 despite the deferral of $34.2 million of
revenues at Tampa Electric under agreements approved by the FPSC
described in the Utility Regulation section. Higher consolidated
operating income in 1995 was the result of the strong performance of
the diversified companies, particularly TECO Transport & Trade, and
growth at Tampa Electric. The improved 1995 results were achieved even
after the deferral of $50.8 million of revenues at Tampa Electric
under the agreement approved by the FPSC described in the Utility
Regulation section.
The following table identifies the unconsolidated revenues and
operating income of the significant operating groups.
Contributions by operating group (unconsolidated)
Revenues 1996 Change 1995 Change 1994
(millions)
Tampa Electric $1,112.9(1) 1.9% $1,092.3(1) -.2% $1,094.9
Diversified
companies $ 562.5 11.2% $ 505.7 7.4% $ 470.9
Operating income
(millions)
Tampa Electric $ 244.0 6.3% $ 229.5 1.6% $ 225.8(3)
Diversified(2)
companies $ 106.5 12.5% $ 94.7 33.2% $ 71.1(3)
(1) 1996 and 1995 Tampa Electric revenues were net of $34.2 and $50.8
million of revenues, respectively, deferred under agreements described
in the Utility Regulation section.
(2) Operating income includes items which are reclassified for
consolidated financial statement purposes. The principal items are the
n o n -conventional fuels tax credit related to coalbed methane
production and interest expense on the non-recourse debt related to
the independent power operations. In the Consolidated Statements of
Income, the tax credit is part of the provision for income taxes and
the interest is part of interest expense. Certain 1995 amounts have
been restated to conform to current year presentation.
(3) Excludes the effects of a 1994 corporate restructuring which
reduced operating income $ 21.3 million at Tampa Electric and $2.5
million at the diversified companies.
Tampa Electric's Operating Results
Tampa Electric's 1996 operating income increased more than six
percent after the deferral of $34.2 million of revenues under the
agreements described in the Utility Regulation section. Two-percent
customer growth and colder than normal weather early in the year
contributed to five percent higher total energy sales. Non-fuel
operations and maintenance expenses were one percent below 1995
levels, despite a full quarter of operations of the Polk Power
Station, reflecting the continued focus on aggressive cost management
throughout the company. Tampa Electric s operating income also
increased because of the inclusion of the Polk Power Station in rate
base for earnings purposes upon commencement of commercial operation
late in the third quarter.
22<PAGE>
In 1996 Tampa Electric successfully completed the construction of
the 250-megawatt, state-of-the-art, clean-coal technology Polk Power
Station. The addition of this facility will cause an increase in Tampa
Electric s 1997 operating expenses. However, during the first two
years of operations the U. S. Department of Energy (DOE) will provide
funding that will offset a portion of the non-fuel operations and
maintenance expenses associated with the facility. Agreements approved
by the FPSC allowing full recovery of capital costs and operations and
maintenance expenses associated with the plant described in the
Utility Regulation section, are in place.
Tampa Electric's 1995 operating income increased two percent over
1994 s. Higher base revenues from retail customer growth, favorable
weather and an improved economy together with lower operating expenses
contributed to the improved results after the deferral of $50.8
million of revenues.
Tampa Electric Results 1996 Change 1995 Change 1994
(millions)
Revenues $1,112.9(1) 1.9% $1,092.3(1) -.2% $1,094.9
Operating expenses 868.9 .7% 862.8 -3.1% 890.4
Operating income 244.0 6.3% 229.5 12.2% 204.5
Restructuring charge
(included in operating
expenses above) -- -- -- -- 21.3
Operating income before
restructuring charge $ 244.0 6.3% $ 229.5 1.6% $ 225.8
(1) 1996 and 1995 Tampa Electric revenues are net of $34.2 million and
$50.8 million, respectively, of revenues deferred under agreements as
described in the Utility Regulation section.
Tampa Electric's Operating Revenues
Tampa Electric s 1996 revenues increased almost two percent to $1.1
billion, after the deferral of $34.2 million of revenues, reflecting
customer growth of more than two percent and increased retail energy
usage. Tampa Electric's 1995 revenues decreased slightly as the
deferral of $50.8 million of revenues offset increased energy sales.
The economy in Tampa Electric's service area continued to grow in
1996 due to increased employment from corporate relocations and
expansions. Combined residential and commercial energy sales grew by
more than three percent in 1996. Non-phosphate industrial sales
declined in 1996 due to the closure of a brewery at the end of 1995.
Sales to the phosphate industry decreased in 1996 reflecting the
closure of some depleted phosphate mines and reduced production at
several processing plants. Energy sales to the phosphate industry are
expected to increase in 1997 over 1996 levels from increased
production to meet continued strong domestic and international demand
for phosphate products. After 1997 sales are expected to decline
slowly as mining activity migrates out of Tampa Electric's service
area. In 1996 sales to the phosphate customer group represented about
five percent of total operating revenues.
23<PAGE>
In May IMC-Agrico, a large phosphate producer representing four
percent of 1996 revenues, issued a request for proposals (RFP) for
electric power to serve load currently served by Tampa Electric and
others. Some portions of the services identified in the RFP are not
permitted under current Florida laws and utility regulation. Tampa
Electric has made load-retention proposals that it believes to be
competitively priced and attractive because of the flexibility
offered, and continues to have discussions with IMC-Agrico. While it
is unclear how this process will develop, the ultimate impact on Tampa
Electric is not expected to be material. For a general description of
competition see the Utility Competition section.
Tampa Electric s and independent forecasts indicate that in 1997
the Tampa Electric service area economy is expected to grow moderately
at rates higher than the country as a whole. The local economy
continues to benefit from a good labor market, available land, good
access through airport and port facilities and aggressive economic
development activities by the communities served by Tampa Electric.
Based on the expected continued growth of the local economy with
both population and business activity increases, Tampa Electric
projects retail energy sales growth of more than two percent annually
for the next five years. This forecast includes combined energy sales
growth in the residential and commercial sectors of almost three
percent annually as the Tampa Electric service area economy becomes
more service oriented. Growth in energy sales to non-phosphate
industrial customers is expected in 1997 after the 1996 decline.
Non-fuel revenues from sales to other utilities were $36 million in
1996, $34 million in 1995 and $33 million in 1994. Energy sold to
other utilities increased in 1996 due to weather-related demand and
lower Tampa Electric fuel costs. A shift from broker system economy
sales to longer-term, higher-margin wholesale power sales resulted in
a seven percent increase in revenues in 1996. In 1995 energy sold to
o t h e r utilities increased because of higher generating unit
availability and lower fuel costs at Tampa Electric.
Signing additional longer-term wholesale power sales agreements
remains a priority at Tampa Electric, where in recent years 11 bulk
power sales contracts of varying size and duration have been added.
Competitive pricing of coal-fired generation has allowed Tampa
Electric to market available capacity successfully.
Tampa Electric Megawatt-Hour Sales:
1996 Change 1995 Change 1994
(thousands)
Residential 6,607 4.0% 6,352 6.8% 5,947
Commercial 4,815 2.2% 4,710 2.8% 4,583
Industrial 2,304 -2.4% 2,362 3.7% 2,278
Other 1,203 2.3% 1,176 4.6% 1,124
Total retail 14,929 2.3% 14,600 4.8% 13,932
Sales for resale 3,241 19.8% 2,706 28.7% 2,102
Total energy sold 18,170 5.0% 17,306 7.9% 16,034
Retail customers 506.0 2.2% 495.2 2.0% 485.7
(average)
24<PAGE>
Tampa Electric's Operating Expenses
Effective cost management and improved efficiency continue to be
principal objectives at Tampa Electric. Non-fuel operations and
maintenance expenses declined in 1996 from the continuing focus on
managing costs in all areas of the company and the restructuring
actions taken in 1994.
Operating Expenses:
1996 Change 1995 Change 1994
(millions)
Other operating expenses $164.1 .5% $163.3 -4.8% $171.6
Maintenance 65.5 -5.9% 69.6 -4.5% 72.9
Depreciation 120.2 6.1% 113.3 -1.6% 115.1
Taxes, other than income 87.0 -1.0% 87.9 1.3% 86.8
Operating expenses 436.8 .6% 434.1 -2.8% 446.4
Restructuring charge - - -. - 21.3
Fuel 383.1 -.3% 384.3 -1.3% 389.3
Purchased power 49.0 10.4% 44.4 32.9% 33.4
Total fuel cost 432.1 .8% 428.7 1.4% 422.7
Total operating expenses $868.9 .7% $862.8 -3.1% $890.4
A g g ressive cost management reduced non-fuel operations and
maintenance expenses more than one percent in 1996, despite the
additional expenses related to the operation of the Polk Power
Station. In 1995 non-fuel operations and maintenance expenses declined
almost five percent from 1994 levels before the restructuring charge.
The $11.6-million reduction in 1995 was primarily from lower payroll
and employee-related expenses as a result of 217 fewer positions than
in 1994.
In both 1996 and 1995 Tampa Electric achieved lower costs from
equipment redesign and enhancements, work redesign efforts including
the streamlining of maintenance programs, the sharing of manpower
r e sources in power generation facilities and the use of new
technologies throughout the company.
In 1996 the savings realized from these efforts more than offset
increased operations and maintenance expenses from the Polk Power
Station. Over the next several years, non-fuel operations and
maintenance expenses are expected to remain at 1996 levels.
During the first two years of operations, when specified domestic
coals will be evaluated for use in the gasifier, Tampa Electric will
receive up to a total of $20 million from DOE for operations and
maintenance expenses of the Polk Power Station. Based on current
forecasts this funding is expected to offset a significant portion of
the non-fuel operating costs of the new plant during this period.
Total operating expenses in 1994 included the $21.3 million
restructuring charge discussed in the Earnings Summary section and the
first annual $4.0-million charge to a transmission and distribution
property storm-damage reserve in accordance with regulatory directives
described in the Utility Regulation section.
Depreciation expense increased $6.9 million in 1996 from normal
plant additions and the completion of the Polk Power Station.
Depreciation expense in 1995 decreased as certain shorter-lived assets
were fully amortized. This decrease more than offset the impact of
normal additions to plant and equipment. Tampa Electric s efforts to
reduce capital investment in recent years have limited additions to
all asset classes. Depreciation expense is projected to increase again
in 1997 as a result of a full year of depreciation of the Polk Power
Station.
Changes in taxes other than those on income reflected increased
state gross receipts taxes and franchise fees associated with higher
25<PAGE>
energy sales, changes in property values and decreases in payroll
related taxes as a result of the 1994 restructuring. Taxes other than
those on income are expected to increase in 1997 as a result of the
property taxes associated with the Polk Power Station.
Total system fuel cost in 1996 was less than one percent higher
than in 1995 despite a five-percent increase in total energy sales.
The success in controlling fuel cost is a result of Tampa Electric's
use of lower-priced coals and the mix in operating generating units.
Average coal costs, on a cents-per-million BTU basis, declined more
than six percent in 1996 after a three-percent decrease in 1995. Fuel
and purchased power cost rose one percent in 1995 despite a five-
percent rise in retail energy sales.
Tampa Electric purchased more power in both 1996 and 1995 primarily
to meet weather-related demand. Substantially all fuel and purchased
power expenses were recovered through the fuel adjustment clause.
Nearly all of Tampa Electric's generation in the last three years
has been from coal, and the fuel mix will continue to be substantially
coal. External forecasts indicate relatively stable coal prices during
the next few years compared to oil or gas prices. Tampa Electric
continues to work to reduce its fuel cost through effective contract
management, use of non-traditional fuels such as petroleum coke and
tire-derived fuel, and increased purchases of coal in the lower-cost
spot market.
Diversified Companies' Operating Results
The diversified companies achieved operating income of $106.5
million in 1996 compared with $94.7 million in 1995 and $71.1 million
in 1994 before the restructuring charge.
The improved results in 1996 were driven by higher gas prices
throughout the year at TECO Coalbed Methane as well as TECO Power
Services full year of operations at the Alborada Power Station in
Guatemala. The increase in 1995 was the result of strong performances
at all of the diversified companies, led by TECO Transport & Trade.
Increased third-party sales at TECO Coal and TECO Power Services
Guatemalan power project were other important contributors.
Diversified Companies Results (unconsolidated)
1996 Change 1995(2) Change 1994
(millions)
Revenues $562.5 11.2% $505.7 7.4% $470.9
Operating expenses 456.0 10.9% 411.0 2.2% 402.3
Operating income (1) 106.5 12.5% 94.7 38.0% 68.6
Restructuring charge
(included in operating
expenses above) - - - - 2.5
Operating income before
restructuring charge(1) $106.5 12.5% $ 94.7 33.2% $ 71.1
26<PAGE>
(1) Operating income includes items which are reclassified for
consolidated financial statement purposes. The principal items are the
n o n -conventional fuels tax credit related to coalbed methane
production and interest expense on the non-recourse debt related to
independent power operations, both of which are included in operating
income for the diversified companies. In the Consolidated Statements
of Income the tax credit is part of the provision for income taxes and
the interest is part of interest expense.
(2) Certain 1995 amounts have been restated to conform to the current
year presentation.
TECO Coalbed Methane's 1996 operating income increased as a result
of average gas prices almost 60 percent higher than 1995 levels. Gas
prices rose in 1996 on extreme winter weather and lower than normal
levels of natural gas inventories at the end of the 1995/1996 heating
season. Production declined slightly to 19.8 billion cubic feet (Bcf)
from 20.3 Bcf in 1995.
TECO Coalbed Methane has an active program of reworking and
enhancing existing wells to increase production, extend the life of
the wells, and add to reserves. These efforts have reduced the decline
in production to about three percent per year, half of the originally
estimated rate of decline. At year-end 1996 proven reserves were
estimated to be 190 Bcf.
In 1995 operating income increased, despite gas prices that were
significantly lower than in 1994, as production rose to 20.3 Bcf, up
from 19.5 Bcf in 1994. Lower 1995 gas prices were more than offset by
a five-percent increase in production, a 10-percent reduction in
operating costs, and a $4.4-million pretax settlement related to the
termination of a gas sales contract and related agreements.
In both 1994 and 1995 TECO Coalbed Methane acquired interests in
additional reserves in Alabama s Black Warrior Basin through the
purchase of royalty interests in wells located on or near TECO Coalbed
Methane's existing holdings. The company continually seeks additional
investment opportunities to add to its holdings, but no acquisitions
were made in 1996.
Production from TECO Coalbed Methane s reserves are eligible for
non-conventional fuels tax credits under Section 29 of the Internal
Revenue Code through the year 2002. The credit, which grows with
inflation, was estimated at $1.02 per thousand cubic feet (Mcf) in
1996.
All gas produced is sold under contract at spot market prices for
the life of the reserves. Natural gas prices have been subject to
significant volatility since late 1994, but have generally trended
upward. The Section 29 tax credits provide some degree of stability to
TECO Coalbed Methane s operating results. To date, financial market
instruments have not been used to manage exposure to gas price
volatility.
TECO Power Services achieved higher operating income in 1996 from a
full year of operation of the Alborada Power Station in Guatemala. The
Station commenced commercial operation and began contributing to
earnings in September 1995.
The station supplies 78 megawatts of power to a local distribution
utility under a 15-year power sales agreement. Early in 1996 TECO
Power Service increased its percentage of ownership from 87 percent to
98 percent. The $29-million non-recourse project debt financing for
the project was completed in January 1997.
27<PAGE>
In 1996 TECO Power Services formed a partnership with the same
Guatemalan business interest it partnered with for the Alborada Power
Station and with Coastal Corporation to build, own and operate a 120-
megawatt pulverized coal-fired power plant, the San Jose Power Station
in Guatemala. The partnership signed a 15-year power supply agreement
with the same Guatemalan distribution utility.
Design and engineering for the $175 million plant are underway and
construction is scheduled to be completed by mid-1999.
TECO Power Services domestic project, the Hardee Power Station in
west central Florida, continues to operate reliably, supplying power
to Seminole Electric Cooperative and Tampa Electric.
TECO Transport & Trade achieved higher operating income in 1996 in
both the ocean-going business and at the transfer terminal. The river
business benefited from strong demand and increased northbound
business, but higher fuel prices more than offset the higher revenues.
The addition of 48 new barges increased the fleet size to almost 600
barges.
The ocean-shipping business increased its capacity, adding a 30,000
ton ship in mid-year. It moved higher volumes of coal to Tampa
Electric and phosphate. The effects of this growth were partially
offset by higher costs from severe weather delays and fuel. The
transfer terminal handled slightly lower quantities of export coal as
a result of changes in shipping rates for international coal shipments
between the Far East and Europe. This impact was more than offset by
improved pricing on the coal moved for export and increased tonnage of
coal transferred for Tampa Electric.
The ocean-shipping business expects to benefit from the continued
strong demand for phosphate products world-wide, and from further
diversification into new markets and cargoes in 1997. The significant
factors which could influence results are weather, commodity grain
prices and economic activity both domestically and overseas.
The conditions affecting favorable pricing and strong demand at the
river company in 1995 returned to normal in late 1996 as a result of
lower grain inventories and reduced grain shipments, partially offset
by new demand created by the steel industry. The pricing and demand
conditions experienced on the Mississippi River in late 1996 are
expected to continue in 1997. Transfers of export coal are expected to
i n crease in 1997 from increased shipments of U. S. coal to
international markets.
TECO Transport & Trade s operating income increased significantly
in 1995 reflecting improved results in all of its businesses. The
river business in particular had an excellent year as a result of
higher volumes and prices. Improved fleet utilization and increased
levels of northbound shipments contributed to increased volumes. A
strong demand for northbound movements and a record 1994 grain harvest
together with a better balance in the supply and demand for barges
caused stronger prices throughout the industry. The transfer facility
at the mouth of the Mississippi River handled more coal tonnage for
Tampa Electric and third-party export business. The ocean shipping
business benefited from increased shipments of phosphate and higher
shipments of coal to Tampa Electric in 1995.
TECO Coal s 1996 operating income was lower primarily due to a
$5.2-million pretax gain from a road condemnation settlement in 1995.
In 1996 the effects of strong growth in third-party sales and some
improvement in prices for coal from the newer Premier mines were more
than offset by higher production costs, lower shipments to Tampa
Electric and $1.5 million of pretax expenses related to closing
certain older Gatliff mines.
Success in burning more conventional and lower-cost steam coals has
enabled Tampa Electric to adopt a competitive strategy of phasing down
coal shipments from TECO Coal for the last several years. Shipments to
Tampa Electric declined by about 20 percent in both 1995 and 1996.
Because of this decrease and high production costs, Gatliff closed
28<PAGE>
several mines in 1996. Shipments to Tampa Electric are expected to
decline by 17 percent in 1997.
Shipments to other customers continued to increase in 1996 with
total tonnage up more than 11 percent to 5.9 million tons, compared to
5.3 million tons in 1995 and 4.9 million tons in 1994. Growth from
sales of steam coal to other utilities and metallurgical and stoker
coal to industrial customers, more than offset reduced tonnage to
Tampa Electric.
I n September 1996 TECO Coal acquired 25 million tons of
metallurgical grade coal reserves contiguous to its existing Clintwood
operations, and began construction of a new preparation plant. This
facility will support an additional 1 million tons of annual
production when it goes in service in mid-1997. Metallurgical coal has
unique characteristics and is sold primarily to the steel industry
both domestically and internationally. TECO Coal expects to use the
additional production to increase its share in this market segment.
TECO Coal expects sales to third parties to increase again in 1997
as eastern utilities meet increasing demand for electric power with
existing coal-fired generating capacity and use low-sulfur coal to
comply with the Clean Air Act Amendments.
Substantially all of the production from the Premier mines is
committed through 1997. Shipments from the Premier mines and the
Clintwood expansion are expected to more than offset the impact of
reduced tonnage to Tampa Electric in 1997.
TECO Oil & Gas was formed in 1995 to participate in joint ventures
in the exploration and development of oil and gas in the shallow gulf
waters off Texas and Louisiana. TECO Oil & Gas made significant
progress in 1996 and operated at almost break-even in its first full
year of operation. TECO Oil & Gas accounts for its operations on the
successful efforts basis, expensing unsuccessful exploratory wells
currently.
Making extensive use of 3-D seismic imaging technology the joint
ventures successfully completed six of nine exploratory wells in 1996.
Three wells began producing in 1996, but one has since been abandoned.
The other three successful exploratory wells began producing early in
1997. Also in early 1997, two additional wells were drilled, one
successfully. TECO Oil & Gas s share of 1996 production was two Bcf
and its net proven reserves at Dec. 31, 1996 were 11 Bcf from two
wells. Based on current production rates and test results, TECO Oil &
Gas s share of 1997 production is expected to exceed 10 Bcf. TECO Oil
& Gas had 37 federal off-shore leases as of Dec. 31, 1996 and, in
early 1997, was the successful bidder for five additional federal
leases.
The joint ventures expect to expand the offshore exploration
activities in 1997; a new on-shore exploration program has been
launched in the Permian Basin area of west Texas. In this venture TECO
Oil & Gas will hold an increased interest and will be the operator.
The company expects to commit $20 million to $30 million per year
during the next few years for further exploration and development.
TeCom, a subsidiary organized in 1995, is marketing an advanced
energy management, automation and control systems for residential and
commercial applications, called the InterLane system.
Several utilities are engaged in projects demonstrating the
InterLane product. In 1996 TeCom was issued its first patent covering
the system design concept for the InterLane products; other patent
applications are pending.
Because of a continued high level of product enhancement activity,
TeCom capitalized $4.9 million pretax of product development costs in
1996. In accordance with accepted accounting practices, product
development costs capitalized in 1996 and those to be capitalized in
1997 are expected to be amortized starting in 1998 when TeCom
anticipates its products will be available for general distribution.
General distribution of the product will depend on a number of factors
29<PAGE>
including market acceptance.
Diversified Companies' Operating Revenues
In 1996 the diversified companies achieved an 11 percent increase
in revenues. The largest increases occurred at TECO Coal from higher
sales to third parties, at TECO Coalbed Methane from higher gas
prices, and at TECO Power Services from a full year of operations at
the Alborada Power Station in Guatemala.
Diversified companies 1995 revenues also increased significantly
reflecting improved performance at all of the companies. Revenues in
1995 also included $5.8 million at TECO Coal from the sale of land and
mineral rights under a condemnation settlement with the state of
K e ntucky, and $4.4 million at TECO Coalbed Methane from the
termination of a gas sales contract.
Diversified Companies' Operating Expenses
Diversified companies operating expenses increased almost 11
percent in 1996. Difficult underground mining conditions at TECO
Coal s Gatliff mines increased costs and led to the closing of several
mines. Higher fuel prices at TECO Transport & Trade, and a full year
of operations at TECO Oil & Gas and TECO Power Services Alborada
Power Station also contributed to increased operating expenses.
Diversified companies operating expenses increased two percent in
1995. TECO Power Services incurred higher expenses because of
increased power generation at the Hardee Power Station and the new
Alborada Power Station in Guatemala.
The diversified companies recorded a charge of $2.5 million for
corporate restructuring in 1994 related to reductions in staffing
levels and other costs.
NON-OPERATING ITEMS
Other Income (Expense)
Other income consisted mostly of allowance for other funds used
during construction (AFUDC) of $16.5 million in 1996, $13.7 million in
1995, and $3.5 million in 1994. With the construction of Tampa
Electric's Polk Unit One now complete, AFUDC will decline to minimal
levels for the next several years.
Interest Charges
Interest charges were $86.9 million in 1996, up four percent from
1995 primarily due to the expiration of an interest rate swap
agreement. Interest charges in 1995 were $83.2 million, up eight
percent from 1994 due to higher short-term debt balances and rates.
Income Taxes
Income tax expense increased in 1996 and 1995 primarily from
increases in pretax income. Income tax expense as a percent of income
before taxes was 26 percent in 1996, 24 percent in 1995 and 23 percent
in 1994. Pretax income in 1994 was affected by the restructuring
charge.
Total income tax expense was reduced by the federal tax credit
related to the production of coalbed methane. These tax credits
totaled $19.6 million in 1996, $20.6 million in 1995 and $19.6 million
in 1994. The tax credit rate was estimated at $1.02 per Mcf in 1996,
up from $1.01 in 1995 and $1.00 in 1994. This rate escalates with
inflation and could be limited by domestic oil prices. In 1996
domestic oil prices would have had to exceed $46 per barrel for this
limitation to have been effective. The federal tax credit on
production of coalbed methane is available through the year 2002.
MERGER AND ACQUISITION ACTIVITIES
30<PAGE>
Lykes Energy Inc.:
In November TECO Energy announced an agreement with Lykes Energy
t o merge it into TECO Energy in a tax-free, stock-for-stock
transaction with an equity value of $300 million. The number of TECO
Energy shares to be issued will depend on the average market price
during a specified period prior to the closing, subject to a collar.
Based on TECO Energy s common stock closing price of $24.375 on Feb.
28, 1997, approximately 12.3 million shares would be issued,
representing about a 10 percent increase in shares outstanding.
This merger, to be accounted for as a pooling of interests, was
approved by both companies boards of directors and in December by the
Lykes Energy shareholders. Approval by TECO Energy s shareholders is
not required.
The principal subsidiary of Lykes Energy is Peoples Gas System, a
regulated retail natural gas distributor in Florida. Peoples Gas
System is Florida s largest natural gas distribution company with
retail operations in all of the state s major metropolitan communities
and over 200,000 customers. It recorded annual sales of 86 Bcf of
natural gas in fiscal 1996. It will be merged into Tampa Electric but
operated as a separate business unit.
Also continuing operations as a separate business will be Peoples
Gas Company, a propane business, and another unit involved in natural
gas marketing.
TECO Energy expects some cost savings and efficiencies as a result
of the merger. Savings are mainly expected to be derived from the
elimination of duplicative overhead and administrative activities, as
well as improved operating efficiencies and lower interest costs. In
addition, TECO Energy expects to benefit from expanding energy demand
in areas already served by these businesses and from opportunities to
secure new customers in other areas.
The merger is subject to certain closing conditions with closing
expected by mid-year 1997.
Effects of the Merger
TECO Energy anticipates that the merger with Lykes Energy will
initially be slightly dilutive to earnings with favorable future
growth prospects. The merger will further TECO Energy's strategy of
p u rsuing growth in energy-related businesses. It will provide
opportunities for growth in new energy markets by adding natural gas
and propane distribution and commodity sales to the company s existing
w h o l esale and retail electric operations and gas production
activities. Additional growth opportunities will arise from geographic
expansion beyond Tampa Electric s 2,000 square mile service area
through participation in the gas energy markets in all major
metropolitan areas of Florida. TECO Energy expects to take advantage
of possible growth opportunities by supporting a larger capital
construction program for Peoples Gas System.
The merger will also permit the company to better meet its
customers' needs through a broader range of energy services. In
particular, it will allow full service with either gas or electric
energy to wholesale customers in peninsular Florida and to retail
customers in the limited area served by both Tampa Electric and
Peoples Gas System, as well as facilitate energy services offerings
and expanded power marketing activities.
Below are certain financial highlights of Lykes Energy for its past
three fiscal years ended September 30.
31<PAGE>
Lykes Energy Financial Highlights
(Thousands) 1996 1995 1994
Revenues $299,585 $254,001 $267,071
Net Income $ 15,950 $ 12,754 $ 11,779
Total Assets $327,839 $312,172 $300,803
Equity $106,634 $ 95,244 $ 86,766
Natural gas sold &
transported - therms 859,799 980,992 819,634
Retail customers (average) 201 196 191
Bosek, Gibson and Associates, Inc.:
In November 1996 TECO Energy acquired Bosek, Gibson and Associates,
Inc. (BGA), an energy services company, for about $3 million in stock
in a purchase transaction. BGA is headquartered in Tampa and has seven
offices in Florida and two in California.
It provides design, engineering and construction services to more
than 300 customers, including public schools, universities, health
care facilities and other governmental facilities throughout Florida
and California.
TECO Energy s 1996 results only include the results of BGA
subsequent to the acquisition.
ACCOUNTING STANDARDS
Stock Options
In 1995 the Financial Accounting Standards Board issued FAS 123,
Accounting for Stock Options, effective for fiscal years beginning
after Dec. 15, 1995. FAS 123 encourages, but does not require,
companies to recognize compensation expense based on fair value of
grants of stock, stock options and other equity instruments to
employees. Although expense recognition for employee stock-based
compensation is not mandatory, FAS 123 requires non-adopting companies
to disclose pro forma net income and earnings per share. TECO Energy
has continued to apply the prior accounting rules, and the pro forma
adjustments to net income and earnings per share are shown in Note B
on page 51 of the Notes to Consolidated Financial Statements.
FAS 121
FAS 121, Accounting for Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of (FAS 121), effective for years
beginning after Dec. 15, 1995, requires that long-lived assets and
certain intangibles to be held and used by the company be reviewed for
impairment. The company periodically assesses whether there has been a
permanent impairment of its long-lived assets, in accordance with FAS
121. No write-down of assets due to impairment was required in 1996.
CAPITAL EXPENDITURES
TECO Energy's 1996 capital expenditures of $268 million consisted
of $203 million for Tampa Electric, which included $23 million of
AFUDC, and $65 million for the diversified companies.
Tampa Electric spent $75 million in 1996 on construction of the
Polk Power Station, a 250-megawatt coal-gasification plant which
entered commercial service late in the third quarter. The capital cost
of the plant to Tampa Electric including AFUDC was $508 million, which
is net of the construction funding from the Department of Energy under
its Clean Coal Technology Program.
Tampa Electric spent an additional $105 million in 1996 for
equipment and facilities to meet its growing customer base and for
generating equipment improvements.
32<PAGE>
TECO Transport & Trade invested $34 million in 1996 for the
purchase of a 30,000 ton ship, 48 jumbo river barges, a program of
b a rge enlargement and refurbishment, and for normal equipment
replacement. TECO Coalbed Methane invested $4 million in 1996 for well
enhancements and normal equipment replacement. TECO Coal spent $13
million for an expansion of its Clintwood operations and new mining
equipment. TECO Power Services spent $4 million to increase its
ownership interest in the Alborada Power Station in Guatemala from 87
percent to 98 percent and for initial design work for the San Jose
Power Station in Guatemala. TECO Oil & Gas invested $13 million for
natural gas exploration and development.
TECO Energy estimates total capital expenditures for ongoing
operations to be $185 million for 1997 and $763 million during the
1998- 2001 period. Of these amounts, Tampa Electric expects to spend
$116 million in 1997 and $470 million during the 1998-2001 period,
mainly for distribution facilities to meet customer growth and
generation reliability programs. At the end of 1996, Tampa Electric
had outstanding commitments of about $7 million for capital programs.
Tampa Electric s capital expenditure projections include about $30
million over the 1997-2000 period to comply with Phase II of the Clean
Air Act as described in the Environmental Compliance section. The
level of capital expenditures which will actually be required for
compliance is uncertain at this time.
The diversified companies expect capital expenditures of about $69
million in 1997 and $293 million during the 1998-2001 period for: a
new coal preparation plant at Clintwood, other coal mining equipment
and mine development; exploration and production of oil and gas;
acquisition of river barges and ocean transportation equipment, and
normal asset replacement. At the end of 1996, $9 million had been
committed.
Included in these estimates is $34 million at TECO Power Services
for the construction of the San Jose Power Station in Guatemala over
the next three years. TECO Power Services is seeking debt financing
for the remainder of its share of the construction costs.
Capital requirements for Peoples Gas System and Peoples Gas Company
are not reflected in the above projections. In recent years, the
capital invested by these companies was about $25 million annually.
Capital expenditures are expected to be above historical levels as
opportunities to grow these business are identified. However, since
the capital investment plans for these companies are still being
developed, the actual level of investment is uncertain.
ENVIRONMENTAL COMPLIANCE
TECO Energy and its subsidiaries are subject to various
environmental regulations. TECO Energy believes that all subsidiaries
are substantially in compliance with the currently applicable
standards of the respective environmental enforcement agencies and
that potential environmental liabilities are not material.
Tampa Electric is complying with the Phase I emission limitations
imposed by the Clean Air Act Amendments which became effective Jan.
1, 1995 by using blends of lower-sulfur coal, controlling stack
emissions and owning emission allowances.
In 1995 Tampa Electric successfully integrated Big Bend Unit Three
into the existing scrubber on Big Bend Unit Four. This resulted in an
additional scrubbed unit at a fraction of the cost of a new scrubber.
Tampa Electric is currently evaluating options to comply with Phase
II sulfur dioxide emission standards set for the year 2000. The
o p tions include scrubbing additional capacity. The company is
evaluating equipment and technologies to accomplish compliance in the
most cost effective manner. Tampa Electric is also evaluating options
to comply with Phase II of the Clean Air Act Amendments for nitrogen
oxide reductions. These options include combustion modifications and
r e trofit control technology. While Tampa Electric s estimates
33<PAGE>
reflected in the Capital Expenditure section include up to $30 million
for compliance with Phase II of the Clean Air Act Amendments, the
actual level of required expenditures is uncertain at this time. The
cost of compliance with Phase II is expected to have little impact on
Tampa Electric's prices.
UTILITY REGULATION
Return on Equity (ROE) and Other Regulatory Agreements:
1994
In March 1994 the FPSC issued an order which changed Tampa
Electric's authorized ROE to an 11.35-percent midpoint with a range of
10.35 percent to 12.35 percent, while leaving in effect the rates it
had previously established. The FPSC also ordered a $4.0-million
annual accrual to establish an unfunded storm damage reserve for
transmission and distribution property.
In July 1994 the FPSC issued an order approving an agreement
between its staff and Tampa Electric to cap the utility s authorized
regulatory ROE at 12.45 percent for calendar year 1994 with any
earnings above that amount to be used to increase the storm damage
reserve. Tampa Electric did not exceed the 12.45-percent cap in 1994
and therefore accrued only $4.0 million to the storm damage reserve.
Rate Stabilization Strategy
Building on the 1994 approach, Tampa Electric s objective has been
to place the Polk Power Station in service without increasing the
total price for electric service while securing the opportunity to
earn a fair return. A number of actions, discussed in the Tampa
Electric Operating Expenses section, were taken to manage costs.
Another key component of the strategy to accomplish this objective has
been the deferral of certain revenues. With the agreements approved by
the FPSC in 1995 and 1996, the objectives of stabilizing prices
through 1999 and securing fair earnings opportunities during this
period were accomplished.
1995
In 1995 the FPSC approved a plan submitted by Tampa Electric to
defer certain revenues for 1995. Under this plan Tampa Electric s
allowed ROE increased to an 11.75-percent midpoint with a range of
10.75 percent to 12.75 percent. For 1995 an initial $15 million of
revenues were deferred as well as 50 percent of actual revenues in
excess of a ROE of 11.75 percent up to a net earned ROE of 12.75
percent and all actual revenues above a ROE of 12.75 percent. In 1995
Tampa Electric deferred $50.8 million of revenues under this plan. The
deferred revenues accrue interest at the 30-day commercial paper rate
specified in the Florida Administrative Code.
Also as part of this plan Tampa Electric s oil backout tariff was
eliminated Jan. 1, 1996, an annual revenue reduction of about $12
million.
1996 - 1999
In May 1996 the FPSC issued an order approving an agreement among
Tampa Electric, the Florida Office of Public Counsel (OPC) and the
Florida Industrial Power Users Group (FIPUG) on a multi-year base rate
freeze and refund plan. Under this plan, base rates were frozen
through 1998 and Tampa Electric s customers began receiving a $25-
million refund starting in October 1996 over a 12-month period. The
refund consists of $10 million of revenues deferred from 1995 and $15
million of 1996 revenues.
In addition, the agreement set forth a multi-year plan for
allocating revenues based on Tampa Electric s ROE. For the years 1996
through 1998 Tampa Electric retains all revenues contributing to a ROE
34<PAGE>
up to 11.75 percent. Any additional revenues will be allocated
according to a formula.
In 1996, 40 percent of any actual revenues contributing to a ROE in
excess of 11.75 percent were included in 1996 revenues. The remaining
60 percent were deferred for use in 1997 and 1998. Under this
allocation $34.2 million of 1996 revenues were deferred. About $65
million of revenues deferred from 1996 and 1995, after the effect of
the $25-million refund are available for use in 1997 and 1998. It is
expected that Tampa Electric will recognize $30 million to $35 million
of previously deferred revenues in 1997.
In 1997 40 percent of any revenues that contribute to a ROE in
excess of 11.75 percent up to 12.75 percent will be included in 1997
revenues. The remaining 60 percent will be deferred for use in 1998 as
will any revenues contributing to a ROE in excess of 12.75 percent.
The same 40 percent allocation will be made in 1998 after taking into
account any deferred revenues not used in previous years. The
remaining 60 percent, as well as any revenues contributing to a ROE in
excess of 12.75 percent will be refunded to customers in 1999.
In October 1996 the FPSC unanimously approved an agreement among
Tampa Electric, OPC and FIPUG that resolved all pending regulatory
issues associated with the Polk Power Station.
The agreement allows the full recovery of all of the expected
capital costs, and operations and maintenance expenses associated with
the Polk Power Station. The agreement also calls for an extension of
the base rate freeze established in the May agreement through 1999.
Tampa Electric has the option of filing an application with the FPSC
on or after July 1, 1999 for authorization to adjust base rates after
Jan. 1, 2000.
Under the October agreement, the $25-million refund established in
the May agreement remains intact and, in addition, customers will
receive a $25-million temporary base rate reduction to be reflected as
a credit on customer bills over a 15-month period beginning Oct. 1,
1997. This temporary base rate reduction will be netted against any
refunds that otherwise might have been made in 1999 under the May
agreement.
The October agreement closely parallels the ROE formula in the May
agreement. In 1999, 60 percent of the revenues contributing to a ROE
in excess of 12.0 percent will be refunded to customers in 2000 along
with any 1999 revenues which contribute to a ROE above 12.75 percent.
Tampa Electric agreed to remove from rate base the $5-million
investment made in land at Port Manatee. This land has value for uses
other than as a power plant site, and will continue to be recorded as
an asset of Tampa Electric. A citizens task force recommended using
previously mined land in Polk County over the Manatee site as the
preferred location for the Polk Power Station.
Environmental Cost Recovery Clause
In August the FPSC approved the recovery of $3.0 million of Tampa
Electric s environmental compliance costs through the environmental
cost recovery clause. These are new costs incurred by Tampa Electric
to comply with environmental regulations enacted subsequent to its
most recent full regulatory price setting proceeding but not included
in current rates. Tampa Electric plans to seek continuing recovery of
these types of costs through this clause until the next full
regulatory price setting proceeding. Under the October 1996 agreement
the earliest any such new prices could be in effect is in the year
2000.
Utility Competition:
Tampa Electric s retail business is substantially free from direct
competition with other electric utilities, municipalities and public
agencies. At the present time, the principal form of competition at
the retail level consists of natural gas for residences and businesses
35<PAGE>
and the self-generation option available to larger users of electric
e n ergy. Such users may seek to expand their options through
l e g i s lative and/or regulatory initiatives that would permit
competition at the retail level. Tampa Electric intends to take all
appropriate actions to retain and expand its retail business,
including managing costs, and providing high quality service to retail
customers. Such action could, with the approval of the FPSC, include
the use of load retention and/or economic development service
contracts and tariffs to reduce the loss of existing load and/or
acquire additional load. See the description of the IMC-Agrico request
for proposals in Tampa Electric s Operating Revenues section.
There is presently active competition in the wholesale power
markets in Florida, and this is increasing largely as a result of the
Energy Policy Act of 1992 and related federal initiatives. This Act
removed certain regulatory barriers to independent power producers and
required utilities to transmit power from such producers, utilities
and others to wholesale customers as more fully described below. Tampa
Electric continues its cost reduction efforts to increase its
wholesale business, which is dependent on access to transmission
systems owned by others.
In April 1996 the Federal Energy Regulatory Commission (FERC)
issued its Final Rule on Open Access Non-discriminatory Transmission,
Stranded Costs, Open Access Same-time Information System (OASIS) and
Standards of Conduct. These rules work together to open access for
wholesale power flows on transmission systems. Utilities owning
transmission facilities (including Tampa Electric) are required to
provide services to wholesale transmission customers comparable to
those they provide to themselves on comparable terms and conditions
including price. Among other things, the rules require transmission
services to be unbundled from power sales and owners of transmission
systems must take transmission service under their own transmission
tariffs.
Transmission system owners are also required to implement an OASIS
system providing, via the Internet, access to transmission service
i n f o rmation (including price and availability), and to rely
exclusively on their own OASIS system for such information for
purposes of their own wholesale power transactions. To facilitate
compliance, owners must implement Standards of Conduct to ensure that
personnel involved in marketing of wholesale power are functionally
separated from personnel involved in transmission services and
reliability functions. Tampa Electric, together with other utilities,
has implemented an OASIS system and believes it is in compliance with
the Standards of Conduct.
FERC Proceedings:
In July 1996 FERC s final rule on open access mandated that all
public utilities file transmission service tariffs with terms and
conditions that conform with FERC s pro forma tariffs. Tampa
Electric received interventions and protests from various parties to
the implementing tariffs it filed. On Jan. 29, 1997, FERC ordered
minor revisions in the terms and conditions of these tariffs. The
rates proposed by Tampa Electric had previously become effective on
July 10, 1996, subject to refund.
Tampa Electric has intervened and protested the rates filed by
Florida Power and Light Company and Florida Power Corporation.
INVESTMENT ACTIVITY
At Dec. 31, 1996 TECO Energy had $12.2 million in cash, cash
equivalents and short-term investments versus $42.5 million at year
end 1995, reflecting the liquidation of the investment in a hedged-
equity utility portfolio, and the use of the proceeds to reduce short-
term debt balances.
The company also has a continuing investment in leveraged leases of
36<PAGE>
$63.2 million. At Dec. 31, 1996 the net leveraged lease investment had
essentially a zero balance and all leases were performing on a current
basis. The company has made no investment in leveraged leases since
1989.
FINANCING ACTIVITY
TECO Energy's 1996 year-end capital structure, excluding the effect
of unearned compensation, was 50 percent debt, 49 percent common
equity and one percent preferred equity. The company's objective is to
maintain a capital structure over time that will support its current
credit ratings.
Credit Ratings/Senior Debt
Duff & Phelps Moody's Standard & Poor s
Tampa Electric AA+ Aa2 AA
TECO Finance/TECO Energy AA- A1 AA-
In December 1996 the Polk County Industrial Development Authority
issued $75 million of Solid Waste Disposal Facility Revenue Bonds for
the benefit of Tampa Electric. The bonds were issued at a tax-exempt
rate of 5.85% and will mature on Dec. 1, 2030. The proceeds of the
issue were used to repay short-term debt incurred during the
construction of the Polk Power Station.
TECO Energy raised $9.2 million of common equity in 1996, $9.4
million in 1995 and $10.6 million in 1994 from the sale of common
stock through its Dividend Reinvestment and Common Stock Purchase Plan
(DRP). In 1997 the DRP will purchase shares of TECO Energy stock on
the open market for plan participants in lieu of issuing new shares.
In April 1996 Tampa Electric retired $35 million aggregate par
value 8.0% Series E and 7.44% Series F preferred stock at redemption
prices of $102.00 and $101.00, respectively.
As a part of its risk management program, during 1995 TECO Energy
entered into an interest rate exchange agreement to moderate its
e x posure to short-term interest rate changes. This three-year
agreement effectively converted the interest rate on $100 million of
short-term debt from a floating rate to a fixed rate. TECO Finance
pays a fixed rate of 5.8% and receives a floating rate based on a 30-
day commercial paper index. The benefits of this agreement are at risk
only in the event of non-performance by the other party to the
agreement, which the company does not anticipate. The costs of this
agreement did not have a significant impact on interest in 1996 or
1995. The company has no other derivative instruments.
LIQUIDITY, CAPITAL RESOURCES
TECO Energy and its operating companies met cash needs during 1996
largely with internally generated funds with the balance from the sale
of long- and short-term debt, short-term investments and from equity
raised through the DRP.
At Dec. 31, 1996 TECO Energy had bank credit lines of $370 million,
of which $367 million in credit was available.
TECO Energy anticipates meeting its capital requirements for
o n going operations in the 1997-2001 period substantially from
internally generated funds. In early 1997 TECO Power Services secured
$29 million of non-recourse financing for the Alborada Power Station
in Guatemala. TECO Power Services expects to finance the San Jose
Power Station with non-recourse project financing upon completion of
construction.
Based upon anticipated revenue growth and effective cost management
in all of its businesses, dividend payout levels and identified
capital expenditures, TECO Energy expects to generate between $400
million and $500 million of free cash flow through the year 2000. This
would be available to further grow the business and strengthen the
balance sheet.
37<PAGE>
INVESTMENT CONSIDERATIONS
The following are certain of the factors which could affect TECO
Energy s future results. They should be considered in connection with
evaluating forward-looking statements contained in this Management s
Discussion and Analysis and elsewhere in this Report and otherwise
made by or on the behalf of TECO Energy since these factors, among
others, could cause actual results and conditions to differ materially
from those projected in these forward-looking statements.
General Economic Conditions. The company s businesses are dependent
on general economic conditions. In particular, the projected growth in
Tampa Electric s service area is important to the realization of Tampa
Electric s forecasts for annual energy sales growth for 1997 and
beyond. An unanticipated downturn in the area s economy could
adversely affect Tampa Electric s performance through time.
The activities of the diversified businesses, particularly TECO
Transport & Trade and TECO Coal, are also affected by general economic
conditions in the respective industries and geographic areas they
serve both nationally and internationally.
Weather Variations. Most of TECO Energy s businesses are affected
by variations in general weather conditions and unusually severe
weather. Tampa Electric s energy sales are particularly sensitive to
variations in weather conditions. It forecasts energy sales on the
basis of normal weather, which represents a long-term historical
average. Significant variations from normal weather could have a
material impact on energy sales. Unusual weather, such as hurricanes,
could also have an effect on operating costs as well as sales.
Variations in weather conditions also affect the demand and prices
for the commodities sold by TECO Coalbed Methane, TECO Oil & Gas and
TECO Coal. TECO Transport & Trade is also impacted by weather because
of its effects on the supply of and demand for the products
transported. Severe weather conditions that could interrupt or slow
service and increase operating costs also affects each of these
businesses.
Potential Competitive Changes. The electric industry has been
undergoing certain restructuring. Competition in wholesale power sales
has been introduced on a national level. Some states have mandated or
encouraged competition at the retail level. While there is active
wholesale competition in Florida, the retail electric business has
remained substantially free from direct competition. Changes in the
competitive environment occasioned by legislation, regulation or
market conditions, however, particularly with respect to retail
competition, could adversely affect Tampa Electric s business and its
performance.
Regulatory Actions. Tampa Electric operates in a highly regulated
industry. Its retail operations, including the prices it charges, are
regulated by the FPSC, and its wholesale power sales and transmission
services are subject to regulation by FERC. Changes in regulatory
requirements or adverse regulatory actions could have an adverse
affect on Tampa Electric s performance.
Commodity Price Changes. Most of TECO Energy s businesses are
sensitive to changes in certain commodity prices. Such changes could
affect the prices they charge, their operating costs and the
competitive position of their products and services.
In the case of Tampa Electric, fuel costs used for generation are
mostly affected by the cost of coal. Tampa Electric is able to pass
the cost of fuel through to retail customers, but increases in fuel
costs affect electric prices and therefore the competitive position of
electricity against other energy sources. On the wholesale side, the
ability to make sales and the margins on power sales are affected by
the cost of coal to Tampa Electric, particularly as it relates to the
cost of gas and oil to other power producers.
At the diversified companies, changes in gas and coal prices
38<PAGE>
directly affect the margins at TECO Oil & Gas, TECO Coalbed Methane
and TECO Coal.
Environmental Matters. TECO Energy s businesses are subject to
regulation by various governmental authorities dealing with air, water
and other environmental matters. Changes in and compliance with these
regulations may impose additional costs on the company, or result in
the curtailment of certain activities.
39<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
No.
Report of Independent Accountants 40
Consolidated Balance Sheets, Dec. 31, 1996 and 1995 41
Consolidated Statements of Income for the years ended
Dec. 31, 1996, 1995 and 1994 42
Consolidated Statements of Cash Flows for the years
ended Dec. 31, 1996, 1995 and 1994 43
Consolidated Statements of Common Equity for the years
ended Dec. 31, 1996, 1995 and 1994 44
Notes to Consolidated Financial Statements 45-61
Financial Statement Schedules have been omitted since they are not
required, are inapplicable or the required information is presented in
the financial statements or notes thereto.
40<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of TECO Energy, Inc.,
We have audited the consolidated balance sheets of TECO Energy,
Inc. and subsidiaries as of Dec. 31, 1996 and 1995, and the related
consolidated statements of income, common equity and cash flows for
each of the three years in the period ended Dec. 31, 1996. These
f i n ancial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
s t atement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of TECO Energy, Inc. and subsidiaries as of Dec. 31, 1996 and 1995,
and the consolidated results of their operations and their cash flows
for each of the three years in the period ended Dec. 31, 1996, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Certified Public Accountants
Tampa, Florida
Jan. 15, 1997
41<PAGE>
CONSOLIDATED BALANCE SHEETS
(millions)
Assets
Dec. 31, 1996 1995
Current Assets
Cash and cash equivalents $ 12.2 $ 10.3
Short-term investments -- 32.2
Receivables, less allowance for uncollectibles 190.1 163.5
Inventories, at average cost
Fuel 62.2 76.7
Materials and supplies 55.9 49.0
Prepayments 8.9 9.6
329.3 341.3
Property, Plant and Equipment, at Original Cost
Utility plant in service 3,784.7 3,174.5
Construction work in progress 45.4 479.6
Other property 891.5 836.4
4,721.6 4,490.5
Less accumulated depreciation (1,765.0) (1,616.2)
2,956.6 2,874.3
Other Assets
Other investments 86.4 86.3
Deferred income taxes 76.7 65.9
Deferred charges and other assets 111.7 105.6
274.8 257.8
$3,560.7 $3,473.4
Liabilities and Capital
Current Liabilities
Long-term debt due within one year $ 76.7 $ 31.3
Notes payable 305.7 361.4
Accounts payable 150.3 146.3
Customer deposits 52.9 51.3
Interest accrued 16.2 13.3
Taxes accrued 9.8 11.7
611.6 615.3
Other Liabilities
Deferred income taxes 426.7 396.6
Investment tax credits 56.2 61.3
Regulatory liability-tax related 35.7 47.5
Other deferred credits 152.1 136.1
Long-term debt, less amount due within one year 996.3 994.9
Preferred Stock of Tampa Electric 20.0 55.0
Capital
Common equity 1,332.8 1,240.9
Unearned compensation related to ESOP (70.7) (74.2)
$3,560.7 $3,473.4
The accompanying notes are an integral part of the consolidated financial
statements.
42<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(millions)
Year ended Dec. 31, 1995 1995 1994
Revenues $ 1,473.0 $ 1,392.3 $ 1,350.9
Expenses
Operation 737.4 684.6 670.8
Maintenance 92.2 101.3 101.1
Restructuring charge and
other cost reductions -- -- 25.0
Depreciation 185.2 174.7 174.0
Taxes, other than income 115.3 114.0 110.2
1,130.1 1,074.6 1,081.1
Income from Operations 342.9 317.7 269.8(1)
Other Income (Expense)
Allowance for other funds used
during construction 16.5 13.7 3.5
Other income (expense), net 1.4 .6 6.4
Preferred dividend requirements of
Tampa Electric (1.8) (3.6) (3.6)
16.1 10.7 6.3
Income Before Interest and
Income Taxes 359.0 328.4 276.1
Interest Charges
Interest expense 93.3 88.8 79.3
Allowance for borrowed funds
used during construction (6.4) (5.6) (2.2)
86.9 83.2 77.1
Income Before Provision for
Income Taxes 272.1 245.2 199.0
Provision for income taxes 71.4 59.1 45.8
Net Income $ 200.7 $ 186.1 $ 153.2(1)
Average common shares
outstanding during year 117.2 116.5 115.9
Earnings per Average Common Share
Outstanding:
Earnings per average common share
outstanding $ 1.71 $ 1.60 $ 1.32 (1)
The accompanying notes are an integral part of the consolidated financial
statements.
(1) Includes the effect of a corporate restructuring charge which reduced
operating income by $25 million, net income by $15 million and earnings per
share by $0.13. See Note H.
43<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
Year ended Dec. 31, 1996 1995 1994
Cash Flows from Operating Activities
Net income $200.7 $186.1 $153.2
Adjustments to reconcile net
income to net cash
Depreciation 185.2 174.7 174.0
Deferred income taxes 7.5 (17.3) (12.1)
Restructuring charge and other
cost reductions -- -- 25.0
Investment tax credits, net (5.1) (5.3) (6.8)
Allowance for funds used
during construction (22.9) (19.3) (5.7)
Amortization of unearned
compensation related to ESOP 5.4 4.9 5.7
Deferred revenue 34.2 50.8 --
Deferred recovery clause 4.0 (12.4) 19.9
Fuel cost settlement -- -- --
Refund to customers (6.0) -- (2.4)
Coal contract buyout and amortization 2.7 2.0 (25.5)
Receivables, less allowance for
uncollectibles (24.5) (18.9) (10.5)
Inventories 7.6 25.8 (23.7)
Taxes accrued (2.0) 11.5 (1.0)
Interest accrued 2.9 (2.1) .6
Accounts payable (15.2) 1.0 30.0
Other (2.0) 25.7 17.5
372.5 407.2 338.2
Cash Flows from Investing Activities
Capital expenditures (267.7) (432.7) (309.1)
Allowance for funds used
during construction 22.9 19.3 5.7
Investment in short-term investments 32.3 68.4 12.5
Other non-current investments 2.8 17.5 (6.0)
(209.7) (327.5) (296.9)
Cash Flows from Financing Activities
Common stock 13.9 11.1 11.1
Proceeds from long-term debt 78.1 .6 .7
Repayment of long-term debt (32.1) (6.5) (19.0)
Net increase in short-term debt (55.8) 11.5 84.1
Redemption of preferred stock (35.5) -- --
Dividends (129.5) (121.9) (115.6)
(160.9) (105.2) (38.7)
Net increase (decrease) in
cash and cash equivalents 1.9 (25.5) 2.6
Cash and cash equivalents at
beginning of year 10.3 35.8 33.2
Cash and cash equivalents at end of year $ 12.2 $ 10.3 $ 35.8
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Interest (net of amounts capitalized) $ 82.2 $ 86.8 $ 85.1
Income taxes $ 79.6 $ 66.5 $ 69.2
The accompanying notes are an integral part of the consolidated financial
statements.
44<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF COMMON EQUITY
(millions)
<CAPTION>
Additional Total
Common Paid-in Retained Unearned Common
Shares(1) Stock(1) Capital(1) Earnings Compensation Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, Dec. 31, 1993 115.6 $ 115.6 $ 321.0 $ 675.8 $ (84.8) $1,027.6
Net income for 1994 153.2 153.2
Common stock issued .6 .6 10.5 11.1
Cash dividends declared
($.9975 per share) (115.6) (115.6)
Amortization of unearned
compensation related
to ESOP 5.7 5.7
Tax benefits-ESOP dividends 2.2 2.2
Balance, Dec. 31, 1994 116.2 116.2 331.5 715.6 (79.1) 1,084.2
Net income for 1995 186.1 186.1
Common stock issued .5 .5 10.6 11.1
Cash dividends declared
($1.0475 per share) (121.9) (121.9)
Amortization of unearned
compensation related
to ESOP 4.9 4.9
Tax benefits-ESOP dividends
and stock options .1 2.2 2.3
Balance, Dec. 31, 1995 116.7 116.7 342.2 782.0 (74.2) 1,166.7
Net income for 1996 200.7 200.7
Common stock issued .9 .9 17.8 (1.9) 16.8
Cash dividends declared
($1.105 per share) (129.5) (129.5)
Amortization of unearned
compensation 5.4 5.4
Premium on redemption of
preferred stock (.5) (.5)
Tax benefits-ESOP dividends
and stock options .3 2.2 2.5
Balance, Dec. 31, 1996 117.6 $ 117.6 $ 360.3 $ 854.9 $ (70.7) $1,262.1
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
(1)TECO Energy had 400 million shares of $1 par value common stock authorized
in 1996, 1995 and 1994.
45<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Principles of Consolidation
The significant accounting policies for both utility and diversified
operations are as follows:
The consolidated financial statements include the accounts of TECO
Energy, Inc. (TECO Energy) and its wholly owned subsidiaries.
The equity method of accounting is used to account for investments in
partnership arrangements in which TECO Energy or its subsidiary companies
do not have majority ownership or exercise control.
The proportional share of expenses, revenues and assets reflecting
TECO Coalbed Methane's and TECO Oil & Gas s undivided interest in joint
venture property is included in the consolidated financial statements.
All significant intercompany balances and intercompany transactions
have been eliminated in consolidation.
Basis of Accounting
Tampa Electric maintains its accounts in accordance with recognized
policies prescribed or permitted by the Florida Public Service Commission
(FPSC) and the Federal Energy Regulatory Commission (FERC). These policies
conform with generally accepted accounting principles in all material
respects.
The impact of Financial Accounting Standard (FAS) No. 71, Accounting
for the Effects of Certain Types of Regulation, has been minimal in Tampa
Electric's experience, but when cost recovery is ordered over a period
longer than a fiscal year, costs are recognized in the period that the
regulatory agency recognizes them in accordance with FAS 71. Also as
provided in FAS 71, Tampa Electric has deferred revenues in accordance
with various regulatory agreements approved by the FPSC in 1995 and 1996.
In the future, these revenues will be recognized as allowed under the
terms of the agreements.
Tampa Electric's retail and wholesale businesses are regulated by the
FPSC and the FERC, respectively. Prices allowed by both agencies are
generally based on recovery of prudent costs incurred plus a reasonable
return on invested capital.
The use of estimates is inherent in the preparation of financial
statements in accordance with generally accepted accounting principles.
Revenues and Fuel Costs
Revenues include amounts resulting from cost recovery clauses which
provide for monthly billing charges to reflect increases or decreases in
fuel, purchased capacity, oil backout, conservation and environmental
costs. These adjustment factors are based on costs projected by Tampa
Electric for a specific recovery period. Any over-recovery or under-
recovery of costs plus an interest factor are taken into account in the
process of setting adjustment factors for subsequent recovery periods.
Over-recoveries of costs are recorded as deferred credits and under-
recoveries of costs are recorded as deferred debits.
In August 1996, the FPSC approved Tampa Electric's petition for
r e c o v ery of certain environmental compliance costs through the
environmental cost recovery clause.
On May 10, 1995, the FPSC approved the termination of the oil backout
clause effective Jan. 1, 1996. Any oil backout project costs incurred
beginning Jan 1, 1996 were no longer recovered through the cost recovery
clause.
In December 1994, Tampa Electric bought out a long-term coal supply
contract which would have expired in 2004 for a lump sum payment of $25.5
million and entered into two new contracts with the supplier. The coal
supplied under the new contracts is competitive in price with coals of
comparable quality. As a result of this buyout, Tampa Electric customers
will benefit from anticipated net fuel savings of more than $40 million
through the year 2004. In February 1995, the FPSC authorized the recovery
of the $25.5 million buy-out amount plus carrying costs through the Fuel
and Purchased Power Cost Recovery Clause over the ten-year period
46<PAGE>
beginning April 1, 1995. In 1996 and 1995, $2.7 million and $2 million,
respectively, of buy-out costs were amortized to expense.
Certain other costs incurred by Tampa Electric are allowed to be
recovered from customers through prices approved in the regulatory
process. These costs are recognized as the associated revenues are billed.
Tampa Electric accrues base revenues for services rendered but
unbilled to provide a closer matching of revenues and expenses.
In May 1996, the FPSC issued an order approving an agreement among
Tampa Electric, the Office of Public Counsel (OPC) and the Florida
Industrial Power Users Group (FIPUG) regarding 1996 earnings. This
agreement provides for a $25-million revenue refund to customers to be
made over the 12-month period beginning Oct. 1, 1996. This refund consists
of $15 million of revenues deferred from 1996 and $10 million of revenues
deferred from 1995, plus accrued interest.
In October 1996, the FPSC approved an agreement among Tampa Electric,
OPC and FIPUG that resolved all pending regulatory issues associated with
the Polk Power Station. The agreement allows the full recovery of all of
the expected capital costs and operations and maintenance expenses
associated with the Polk Power Station, and calls for an extension of the
base rate freeze established in the May agreement through 1999. Under the
October agreement, the $25-million refund established in the May agreement
remains intact and customers will receive a $25-million temporary base
rate reduction to be reflected as a credit on customer bills over a 15-
month period beginning Oct. 1, 1997.
Depreciation
TECO Energy provides for depreciation primarily by the straight-line
method at annual rates that amortize the original cost, less net salvage,
of depreciable property over its estimated service life. The provision for
utility plant in service, expressed as a percentage of the original cost
of depreciable property, was 3.9% for 1996 and 1995, and 4.2% for 1994.
The original cost of utility plant retired or otherwise disposed of
and the cost of removal less salvage are charged to accumulated
depreciation.
Asset Impairment
FAS 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets Disposed Of (FAS 121), effective for years beginning
after Dec. 15, 1995, requires that long-lived assets and certain
intangibles to be held and used by the company be reviewed for impairment.
The company periodically assess whether there has been a permanent
impairment of its long-lived assets, in accordance with FAS 121. No write-
down of assets due to impairment was required in 1996.
Foreign operations
The functional currency of TPS Guatemala One, Inc. s partnership in
Guatemala is the U.S. dollar. Transactions conducted in Guatemala in the
local currency, the quetzal, are remeasured to the U.S. dollar for
financial reporting purposes with aggregate transaction gains or losses
included in net income. The aggregate transaction losses included in net
income in 1996 and 1995 were not significant.
The partnership is protected from any significant currency gains or
losses by the terms of the power sales agreement in which payments are
defined in U.S. dollars.
Deferred Income Taxes
TECO Energy utilizes the liability method in the measurement of
d e ferred income taxes. Under the liability method, the temporary
differences between the financial statement and tax bases of assets and
liabilities are reported as deferred taxes measured at current tax rates.
Tampa Electric is a regulated enterprise, and its books and records
reflect approved regulatory treatment, including certain adjustments to
accumulated deferred income taxes and the establishment of a corresponding
regulatory tax liability reflecting the amount payable to customers
through future rates.
47<PAGE>
Investment Tax Credits
Investment tax credits have been recorded as deferred credits and are
being amortized to income tax expense over the service lives of the
related property.
Allowance for Funds Used During Construction (AFUDC)
AFUDC is a non-cash credit to income with a corresponding charge to
utility plant which represents the cost of borrowed funds and a reasonable
return on other funds used for construction. The rate used to calculate
AFUDC is revised periodically to reflect significant changes in Tampa
Electric's cost of capital. The rate was 7.79% for 1996 and 1995, and
7 . 28% for 1994. The base on which AFUDC is calculated excludes
construction work in progress which has been included in rate base.
Capitalized Development Costs
TeCom, a subsidiary of TECO Energy, is developing for market an
advanced energy management and home automation system for residential and
commercial applications. In 1996, TeCom capitalized $4.9 million of
product development costs. The costs capitalized in 1996 and those
anticipated to be capitalized during the product enhancement period are
expected to be amortized over the life of the product, estimated to be
three years, starting in 1998 when TeCom anticipates its products will be
available for general distribution.
Interest Capitalized
Interest costs for the construction of TECO Coal's preparation plant
and loadout facility, and TECO Power Services Alborada Power Station were
capitalized and will be depreciated over the service lives of the related
property. Such interest costs capitalized in 1995 and 1994 were not
significant.
Short-Term Investments
Short-term investments at Dec. 31, 1995 included $32.2 million of
trading securities, which had a cost basis of $31.4 million. These
investments were liquidated in 1996. The estimated fair market value for
1995 was based on quoted market prices. Trading securities consist of a
hedged equity investment in a utility portfolio. Realized gains and losses
were determined on the specific identification cost basis. The change in
net unrealized gains and losses on trading securities included in earnings
in 1996 and 1995 was not significant.
Other Investments
Other investments include longer-term passive investments, primarily
leveraged leases.
Coalbed Seam Gas Properties
TECO Coalbed Methane, a subsidiary of TECO Energy, has developed
jointly the natural gas potential in a portion of Alabama's Black Warrior
Basin.
TECO Coalbed Methane utilizes the successful efforts method to
account for its gas operations. Under this method, expenditures for
unsuccessful exploration activities are expensed currently.
Capitalized costs are amortized on the unit-of-production method
using estimates of proven reserves. Investments in unproven properties and
major development projects are not amortized until proven reserves
associated with the projects can be determined or until impairment occurs.
Aggregate capitalized costs related to wells producing and under
development at Dec. 31, 1996 and 1995 were $207.1 million and $203.3
million, respectively. Net proven reserves at Dec. 31, 1996 and 1995 were
as follows:
48<PAGE>
Net Proven Reserves - Coalbed Methane Gas
(billion cubic feet) 1996 1995
Proven reserves,
beginning of year 184.0 172.7
Production (19.8) (20.3)
Purchases of minerals in place -- 5.0
Revisions of previous estimates 26.3 26.6
Proven reserves, end of year 190.5 184.0
Number of wells 657 556
Conventional Oil and gas Properties
TECO Oil & Gas, a subsidiary of TECO Energy, has entered into joint
ventures with several partners to explore for oil and gas in the shallow
gulf waters off Texas and Louisiana.
TECO Oil & Gas utilizes the successful efforts method to account for
its oil and gas operations. Under this method, expenditures for
unsuccessful exploration activities are expensed currently.
At Dec. 31, 1996 aggregate capitalized costs were $19.5 million. Net
proven reserves at Dec. 31, 1996 were 11.0 billion cubic feet from two
wells.
Reclassifications and Restatements
Certain 1995 and 1994 amounts were reclassified or restated to
conform with current year presentation.
B. Common Equity
Stock-based Compensation
In April 1996, the shareholders approved the 1996 Equity Incentive
Plan (the "1996 Plan"). The 1996 Plan superseded the 1990 Equity Incentive
Plan (the "1990 Plan") which superseded the 1980 Stock Option and
Appreciation Rights Plan (the "1980 Plan") and no additional grants will
be made under the superseded Plans. The rights of holders of outstanding
options under the 1990 Plan and the 1980 Plan were not affected. The
purpose of the 1996 Plan is to attract and retain key employees of the
company, to provide an incentive for them to achieve long-range
performance goals and to enable them to participate in the long-term
growth of the company. The 1996 Plan amended the 1990 Plan to increase the
number of shares of common stock subject to grants by 3,750,000 shares,
expand the types of awards available to be granted and specify a limit on
the maximum number of shares with respect to which stock options and stock
appreciation rights may be made to any participant under the Plan. Under
the 1996 Plan, the Compensation Committee of the Board of Directors may
award stock grants, stock options and/or stock equivalents to officers and
key employees of TECO Energy and its subsidiaries. The Compensation
Committee has discretion to determine the terms and conditions of each
a w ard, which may be subject to conditions relating to continued
employment, restrictions on transfer or performance criteria.
In April 1996, under the 1996 Plan, 293,100 stock options were
granted, each with a weighted average option price of $23.69 and a maximum
term of 10 years. In addition, 79,600 shares of restricted stock were
awarded, each with a weighted average fair value of $23.69. Compensation
expense recognized in 1996 for stock grants awarded under the 1996 Plan
was $.5 million. In general, the stock grants are restricted subject to
continued employment; vesting occurs at normal retirement age.
Stock option transactions during the last three years under the 1996
Plan, the 1990 Plan and the 1980 Plan (collectively referred to as the
"Equity Plans"), are summarized as follows:
Stock Options - Equity Plans
Option Weighted Avg.
Shares Option
(thousands) Price
1996
Outstanding, beginning of year 2,263 $18.99
Granted 293 $23.69
Exercised 268 $17.42
Canceled 2 $23.56
Outstanding, end of year 2,286 $19.77
Exercisable, end of year 2,286 $19.77
Available for grant 5,314
1995
Outstanding, beginning of year 1,913 $18.48
Granted 488 $20.78
Exercised 100 $16.47
Canceled 38 $23.11
Outstanding, end of year 2,263 $18.99
Exercisable, end of year 2,263 $18.99
Available for grant 1,936
1994
Outstanding, beginning of year 1,567 $17.88
Granted 401 $19.45
Exercised 55 $14.37
Canceled -- --
Outstanding, end of year 1,913 $18.48
Exercisable, end of year 1,505 $17.10
Available for grant 2,386
As of Dec. 31, 1996, the 2.3 million options outstanding and
currently exercisable under the Equity Plans are summarized in the
following table:
Stock Options Outstanding at Dec. 31, 1996
Weighted
Weighted Avg.
Option Avg. Remaining
Shares Range of Option Contractual
(thousands) Option Prices Price Life
318 $11.5 -$14.5625 $13.11 3 Years
1,968 $17.375-$23.6875 $20.85 7 Years
The 1991 Director Stock Option Plan (the 1991 Plan ) provides grants
of stock options to non-employee directors on the first trading day
following each annual meeting of shareholders. This plan provides for an
initial grant of options for 10,000 shares to each new director, and an
annual grant of options for 2,000 shares thereafter, with an exercise
price equal to the fair market value on the date of grant and a maximum
term of 10 years. In April 1996, 40,000 options were granted, each with a
weighted average option price of $23.63. Transaction during the last three
years under the Director Stock Option Plan are summarized as follows:
50<PAGE>
Director Stock Option Plan
Option Weighted Avg.
Shares Option
(thousands) Price
1996
Outstanding, beginning of year 175 $19.13
Granted 40 $23.63
Exercised -- --
Canceled -- --
Outstanding, end of year 215 $19.96
Exercisable, end of year 215 $19.96
Available for grant 246
1995
Outstanding, beginning of year 171 $18.86
Granted 20 $21.13
Exercised 14 $18.13
Canceled 2 $23.40
Outstanding, end of year 175 $19.13
Exercisable, end of year 175 $19.13
Available for grant 286
1994
Outstanding, beginning of year 149 $18.72
Granted 22 $19.81
Exercised -- --
Outstanding, end of year 171 $18.86
Exercisable, end of year 149 $18.19
Available for grant 304
As of Dec. 31, 1996, the 215,000 options outstanding and currently
exercisable under the 1991 Plan with option prices of $17.7188-$23.625,
had a weighted average option price of $19.96 and a weighted average
remaining contractual life of 6 years.
In January 1997, the Board of Directors adopted the 1997 Director
Equity Plan (the "1997 Plan"), subject to shareholder approval, as an
amendment and restatement of the 1991 Plan. Upon such approval the 1997
Plan would supersede the 1991 Plan and no additional grants will made
under the 1991 Plan. The rights of the holders of outstanding options
under the 1991 Plan would not be affected. The purpose of the 1997 Plan is
to attract and retain highly qualified non-employee directors of the
company and to encourage them to own shares of TECO Energy common stock.
The 1997 Plan would be administered by the Board of Directors. The 1997
Plan would amend the 1991 Plan to increase the number of shares of common
stock subject to grants by 250,000 shares, expand the types of awards
available to be granted and replace the current fixed formula grant by
giving the Board discretionary authority to determine the amount and
timing of awards under the Plan.
51<PAGE>
TECO Energy has adopted the disclosure-only provisions of FAS 123,
Accounting for Stock-Based Compensation (FAS 123), but applies Accounting
Principles Board Opinion No. 25 and related interpretations in accounting
for its plans. Therefore, no compensation expense has been recognized for
stock options granted under the 1996 Plan and the 1991 Plan. If the
company had elected to recognize compensation expense for stock options
based on the fair value at grant date, consistent with the method
prescribed by FAS 123, net income and earnings per share would have been
reduced to the pro forma amounts shown below:
1996 1995
Net Income As reported $200.7 $186.1
(millions) Pro forma $200.0 $185.2
EPS As reported $ 1.71 $ 1.60
Pro forma $ 1.71 $ 1.59
These pro forma amounts were determined using the Black-Scholes
valuation model with the following key assumptions: (a) a discount rate of
6.42% for 1996 and 7.05% for 1995; (b) a volatility factor based upon the
average trading price for the 36-month periods ending Dec. 31, 1996 and
1995; (c) a dividend yield based upon the rate in effect for the 36-month
periods ending Dec. 31, 1996 and 1995; and (d) an average expected option
life of 6 years.
Dividend Reinvestment Plan
In 1992, TECO Energy implemented a Dividend Reinvestment and Common
Stock Purchase Plan (DRP). TECO Energy raised common equity of $9.2
million, $9.4 million and $10.6 million from this plan in 1996, 1995 and
1994, respectively. In 1997, the DRP will purchase shares of TECO Energy
common stock on the open market for plan participants.
Shareholder Rights Plan
In 1989, TECO Energy declared a distribution of Rights to purchase
one additional share of the company's common stock at a price of $40 per
share for each share outstanding. The Rights expire in May 1999. The
Rights will become exercisable 10 days after a person acquires 20 percent
or more of the company's outstanding common stock or commences a tender
offer that would result in such person owning 30 percent or more of such
stock or at the time the Board of Directors declares a person who acquired
10 percent or more of such stock to be an "adverse person." If any person
acquires 20 percent or more of the outstanding common stock or the Board
declares that a person is an adverse person, the rights of holders, other
than such acquiring person or adverse person, become rights to buy shares
of common stock of the company (or of the acquiring company if the company
is involved in a merger or other business combination and is not the
surviving corporation) having a market value of twice the exercise price
of each right.
The company may redeem the Rights at a price of $.005 per Right until
10 days after a person acquires 20 percent or more of the outstanding
common stock but not after the Board has declared a person to be an
adverse person.
52<PAGE>
Employee Stock Ownership Plan
Effective Jan. 1, 1990, TECO Energy amended the TECO Energy Group
Retirement Savings Plan, a tax-qualified benefit plan available to
substantially all employees, to include an employee stock ownership plan
(ESOP). During 1990, the ESOP purchased 7 million shares of TECO Energy
common stock on the open market for $100 million. The share purchase was
financed through a loan from TECO Energy to the ESOP. This loan is at a
fixed interest rate of 9.3% and will be repaid from dividends on ESOP
shares and from TECO Energy's contributions to the ESOP.
TECO Energy's contributions to the ESOP were $3.6 million, $4.8
million and $7.6 million in 1996, 1995 and 1994, respectively. TECO
Energy's annual contribution equals the interest accrued on the loan
during the year plus additional principal payments needed to meet the
matching allocation requirements under the plan, less dividends received
on the ESOP shares. The components of net ESOP expense recognized for the
past three years are as follows:
(millions) 1996 1995 1994
Interest expense $8.0 $8.3 $8.8
Compensation expense 4.9 4.9 5.7
Dividends (7.5) (7.1) (6.9)
Net ESOP expense $5.4 $6.1 $7.6
Compensation expense was determined by the shares allocated method.
At Dec. 31, 1996, the ESOP had 1.8 million allocated shares, .1
million committed-to-be-released shares, and 4.8 million unallocated
shares. Shares are released to provide employees with the company match in
accordance with the terms of the TECO Energy Group Retirement Savings Plan
and in lieu of dividends on allocated ESOP shares. The dividends received
by the ESOP are used to pay debt service.
For financial statement purposes, the unallocated shares of TECO
Energy stock are reflected as a reduction of common equity, classified as
unearned compensation. Dividends on all ESOP shares are recorded as a
reduction of retained earnings, as are dividends on all TECO Energy common
stock. The tax benefit related to the dividends paid to the ESOP for
allocated shares is a reduction of income tax expense and for unallocated
shares is an increase in retained earnings. All ESOP shares are considered
outstanding for earnings per share computations.
C. Preferred Stock
Preferred Stock of TECO Energy - $1 Par
10 million shares authorized, none outstanding.
Preferred Stock of Tampa Electric - No Par
2.5 million shares authorized, none outstanding.
Preference Stock of Tampa Electric - No Par
2.5 million shares authorized, none outstanding.
53<PAGE>
Preferred Stock of Tampa Electric - $100 Par Value
1.5 million shares authorized
Outstanding Cash Dividends
Dec.31, 1996 Paid in 1996(1)
Current
Redemption Per
Price Shares Amount(2) Share Amount(2)
4.32% Cumulative,
Series A $103.75 49,600 $ 5.0 $4.32 $ .2
4.16% Cumulative,
Series B $102.875 50,000 5.0 $4.16 .2
4.58% Cumulative,
Series D $101.00 100,000 10.0 $4.58 .5
8.00% Cumulative,
Series E -- -- -- -- .5 (3)
7.44% Cumulative,
Series F -- -- -- -- .7 (3)
199,600 $20.0 $2.1
(1) Quarterly dividends paid on Feb. 15, May 15, Aug. 15 and Nov. 15.
(2) Millions.
(3) Amounts paid in 1996 for Series E and F reflect dividends paid
through April 29, 1996, the date that these series were redeemed.
In April 1996, Tampa Electric retired $35 million aggregate par value
of 8.00% Series E and 7.44% Series F preferred stock at redemption prices
of $102.00 and $101.00 per share, respectively.
At Dec. 31, 1996, preferred stock had a carrying amount of $20.0
million and an estimated fair market value of $12.6 million. The estimated
fair market value of preferred stock was based on quoted market prices.
D. Short-term Debt
Notes payable consisted primarily of commercial paper with weighted
average interest rates of 5.43% and 5.76% at Dec. 31, 1996 and Dec. 31,
1995, respectively. The carrying amount of notes payable approximated fair
market value because of the short maturity of these instruments.
Consolidated unused lines of credit at Dec. 31, 1996 were $367 million.
Certain lines of credit require commitment fees ranging from .05% to
.1875% on the unused balances.
During 1995, TECO Finance entered into an interest rate exchange
agreement to moderate its exposure to interest rate changes. This three-
year agreement effectively converted the interest rate on $100 million of
short-term debt from a floating rate to a fixed rate. TECO Finance will
pay a fixed rate of 5.8% and will receive a floating rate based on a 30-
day commercial paper index. There would not have been a significant gain
or loss to terminate this agreement at Dec. 31, 1996. The benefits of this
agreement are at risk only in the event of non-performance by the other
party to the agreement, which the company does not anticipate. The costs
of this agreement did not have a significant impact on interest expense in
1996 or 1995.
54<PAGE>
E. Long-term Debt
Dec. 31,
(millions) Due 1996 1995
TECO Energy
Medium-term notes payable: 9.28% for
1996 and 1995(1) 1997-2000 $ 100.0 $ 100.0
Tampa Electric
First mortgage bonds (issuable in series):
5 1/2% 1996 -- 25.0
7 3/4% 2022 75.0 75.0
5 3/4% 2000 80.0 80.0
6 1/8% 2003 75.0 75.0
Installment contracts payable(2)
5 3/4% 2007 24.1 24.4
7 7/8% Refunding bonds(3) 2021 25.0 25.0
8% Refunding bonds(3) 2022 100.0 100.0
6 1/4% Refunding bonds(4) 2034 86.0 86.0
5.85% 2030 75.0 --
Variable rate: 3.56% for 1996 and
3.81% for 1995(1) 2025 51.6 51.6
Variable rate: 3.43% for 1996 and
3.72% for 1995(1) 2018 54.2 54.2
Variable rate: 3.67% for 1996 and
3.90% for 1995(1)(5) 2020 20.0 16.9
665.9 613.1
Diversified Companies
Dock and wharf bonds, variable rate:
3.56% for 1996 and 3.74% for 1995(1)(2) 2007 110.6 110.6
Mortgage notes payable: 7.6% 1997-2003 1.7 3.3
Non-recourse secured facility notes,
Series A: 7.8% 1997-2012 148.5 153.2
260.8 267.1
TECO Finance
Medium-term notes payable, various rates:
7.04% for 1996 and 1995(1) 1997-2002 50.0 50.0
Unamortized debt premium (discount), net (3.7) (4.0)
1,073.0 1,026.2
Less amount due within one year(6) 76.7 31.3
Total long-term debt $ 996.3 $ 994.9
(1) Composite year-end interest rate.
(2) Tax-exempt securities.
(3) Proceeds of these bonds were used to refund bonds with interest rates
of 11 5/8% - 12 5/8%. For accounting purposes, interest expense has
been recorded using blended rates of 8.28%-8.66% on the original and
refunding bonds, consistent with regulatory treatment.
(4) Proceeds of these bonds were used to refund bonds with an interest
rate of 9.9% in February 1995. For accounting purposes, interest
expense has been recorded using a blended rate of 6.52% on the
original and refunding bonds, consistent with regulatory treatment.
(5) This amount is recorded net of $3.1 million on deposit with trustee
at Dec. 31, 1995.
(6) Of the amount due in 1997, $.8 million may be satisfied by the
substitution of property in lieu of cash payments.
Substantially all of the property, plant and equipment of Tampa
Electric is pledged as collateral.
Maturities and annual sinking fund requirements of long-term
debt for the years 1998, 1999, 2000 and 2001 are $7.2 million, $28.6
million, $137.5 million, and $8.1 million, respectively. Of these
amounts $.8 million per year for 1998 through 2001 may be satisfied
55<PAGE>
by the substitution of property in lieu of cash payments.
At Dec. 31, 1996, total long-term debt had a carrying amount of
$996.3 million and an estimated fair market value of $1,047.1
million. The estimated fair market value of long-term debt was based
on quoted market prices for the same or similar issues, on the
current rates offered for debt of the same remaining maturities, or
for long-term debt issues with variable rates that approximate market
rates, at carrying amounts. The carrying amount of long-term debt due
within one year approximated fair market value because of the short
maturity of these instruments.
Tampa Electric had an interest rate exchange agreement, which
expired Jan. 11, 1996, to reduce the cost of $100 million of fixed
rate long-term debt. The agreement reduced interest expense by $2.3
million per year in 1995 and 1994.
F. Retirement Plan
TECO Energy has a non-contributory defined benefit retirement
plan which covers substantially all employees. Benefits are based on
employees' years of service and average final earnings.
The company's policy is to fund the plan within the guidelines
set by ERISA for the minimum annual contribution and the maximum
allowable as a tax deduction by the IRS. About 67 percent of plan
assets were invested in common stocks and 33 percent in fixed income
investments at Dec. 31, 1996.
Components of Net Pension Expense
(millions)
1996 1995 1994
Service cost
(benefits earned during the period) $ 8.5 $ 7.2 $ 8.8
Interest cost on projected
benefit obligations 18.8 17.3 15.8
Less: Return on plan assets
Actual 43.4 66.4 (3.7)
Less net amortization of unrecognized
transition asset and deferred return 18.6 43.3 (25.8)
Net return on assets 24.8 23.1 22.1
Net pension expense 2.5 1.4 2.5
Effect of restructuring charge -- -- 13.3
Net pension expense recognized
in the Consolidated Statements
of Income $ 2.5 $ 1.4 $15.8
56<PAGE>
Reconciliation of the Funded Status of the Retirement Plan and the
Accrued Pension Prepayment/(Liability)
(millions)
Dec. 31, Dec. 31,
1996 1995
Fair market value of plan assets $ 320.5 $ 286.7
Projected benefit obligation (262.2) (260.2)
Excess of plan assets over projected
benefit obligation 58.3 26.5
Less unrecognized net gain from past
experience different from that assumed 65.9 33.4
Less unrecognized prior service cost (11.7) (7.1)
Less unrecognized net transition asset
(being amortized over 19.5 years) 8.5 9.5
Accrued pension prepayment/(liability) $ (4.4) $ (9.3)
Accumulated benefit obligation
(including vested benefits of
$196.7 for 1996 and $193.2 for 1995) $ 220.0 $ 215.2
Assumptions Used in Determining Actuarial Valuations
1996 1995
Discount rate to determine projected
benefit obligation 7.75% 7.3%
Rates of increase in compensation levels 3.3-5.3% 3.3-5.3%
Plan asset growth rate through time 9% 9%
G. Postretirement Benefit Plan
TECO Energy and its subsidiaries currently provide certain
postretirement health care benefits for substantially all employees
retiring after age 55 meeting certain service requirements. The
company contribution toward health care coverage for most employees
retiring after Jan. 1, 1990 is limited to a defined dollar benefit
based on years of service. Postretirement benefit levels are
substantially unrelated to salary. The company reserves the right to
terminate or modify the plans in whole or in part at any time.
Components of Postretirement Benefit Cost
(millions)
1996 1995 1994
Service cost (benefits earned
during the period) $ 2.2 $ 1.9 $ 2.2
Interest cost on projected
benefit obligations 5.9 6.3 5.3
Amortization of transition obligation
(straight line over 20 years) 2.5 2.7 2.8
Amortization of actuarial (gain)/loss .4 .2 .2
Net periodic postretirement
benefit expense 11.0 11.1 10.5
Effect of restructuring charge -- -- 2.7
Net periodic postretirement
benefit expense recognized in the
Consolidated Statements of Income $11.0 $11.1 $13.2
57<PAGE>
Reconciliation of the Funded Status of the Postretirement Benefit
Plan and the Accrued Liability (millions)
Dec. 31, Dec. 31,
1996 1995
Accumulated postretirement benefit obligation
Active employees eligible to retire $ (4.9) $(4.8)
Active employees not eligible to retire (26.0) (30.9)
Retirees and surviving spouses (49.2) (51.9)
(80.1) (87.6)
Less unrecognized net gain/(loss)
from past experience (12.0) (19.2)
Less unrecognized transition obligation (39.7) (46.2)
Liability for accrued postretirement benefit $(28.4) $(22.2)
Assumptions Used in Determining Actuarial Valuations
1996 1995
Discount rate to determine projected
benefit obligation 7.75% 7.3%
The assumed health care cost trend rate for medical costs prior
to age 65 was 10.25% in 1996 and decreases to 5.75% in 2002 and
thereafter. The assumed health care cost trend rate for medical costs
after age 65 was 7.25% in 1996 and decreases to 5.75% in 2002 and
thereafter.
A 1 percent change in the medical trend rates would produce an 7
percent ($.6 million) change in the aggregate service and interest
cost for 1996 and an 8 percent ($6.3 million) change in the
accumulated postretirement benefit obligation as of Dec. 31, 1996.
H. Restructuring Charge
In 1994, TECO Energy implemented a corporate restructuring program
which resulted in a $25-million charge ($15 million after tax) and
reduced earnings per share by $.13. The cost of this restructuring
program reflects charges for 241 early retirements, the elimination
of other positions and other cost control initiatives. Approximately
$1.7 million of this charge was paid in 1994 and $6.3 million in
1995. No amount remained payable at the end of 1996. The impact on
pension cost resulting from the restructuring as determined under the
provisions of FAS 88, Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits, was
approximately $13.3 million. The impact on postretirement benefits as
determined under FAS 106, Accounting for Postretirement Benefits
Other Than Pensions, was approximately $2.7 million. These amounts
are included as part of the total 1994 charge of $25 million. See
Note F and Note G.
58<PAGE>
I. Income Tax Expense
Income tax expense consists of the following components:
(millions) Federal State Total
1996
Currently payable $ 57.8 $ 11.2 $ 69.0
Deferred 7.5 -- 7.5
Amortization of investment tax credits (5.1) -- (5.1)
Total income tax expense $ 60.2 $ 11.2 $ 71.4
1995
Currently payable $ 68.4 $ 13.3 $ 81.7
Deferred (16.6) (.7) (17.3)
Amortization of investment tax credits (5.3) -- (5.3)
Total income tax expense $ 46.5 $ 12.6 $ 59.1
1994
Currently payable $ 54.7 $ 10.0 $ 64.7
Deferred (8.3) (3.8) (12.1)
Investment tax credits (1.3) -- (1.3)
Amortization of investment tax credits (5.5) -- (5.5)
Total income tax expense $ 39.6 $ 6.2 $ 45.8
D e ferred taxes result from temporary differences in the
recognition of certain liabilities or assets for tax and financial
reporting purposes. The principal components of the company's
deferred tax assets and liabilities recognized in the balance sheet
are as follows:
(millions) Dec. 31, Dec. 31,
1996 1995
Deferred income tax assets(1)
Property related $ 54.3 $ 43.7
Other 22.4 22.2
Total deferred income tax assets 76.7 65.9
Deferred income tax liabilities(1)
Property related (465.0) (423.6)
Basis difference in oil and gas
producing properties (23.6) (22.8)
Revenue deferral plan (2) 23.1 19.6
Alternative minimum tax
credit carryforward 22.2 23.8
Other 16.6 6.4
Total deferred income
tax liabilities (426.7) (396.6)
Accumulated deferred income taxes $(350.0) $(330.7)
(1) Certain property related assets and liabilities have been netted.
(2) In 1997 an estimated $12.4 million of deferred taxes related to
deferred revenue is expected to currently reverse.
59<PAGE>
The total income tax provisions differ from amounts computed by
applying the federal statutory tax rate to income before income taxes
for the following reasons:
(millions) 1996 1995 1994
Net income $200.7 $186.1 $153.2
Total income tax provision 71.4 59.1 45.8
Preferred dividend requirements 1.8 3.6 3.6
Income before income taxes and
preferred dividend requirements $273.9 $248.8 $202.6
Income taxes on above at federal
statutory rate of 35% $ 95.8 $ 87.1 $ 70.9
Increase (Decrease) due to:
State income tax, net of
federal income tax 7.3 8.2 4.0
Amortization of investment
tax credits (5.1) (5.3) (5.5)
Non-conventional fuels tax credit (19.6) (20.6) (19.6)
Equity portion of AFUDC (5.8) (4.9) (1.4)
Other (1.2) (5.4) (2.6)
Total income tax provision $ 71.4 $ 59.1 $ 45.8
Provision for income taxes as a percent
of income before income taxes 26.1% 23.8% 22.6%
J. Segment Information
TECO Energy's principal business segment is Energy Services.
This segment has been separated into two components: Regulated
Electric Utility Services and Other Energy Services which includes
the transportation, coal mining, coalbed methane gas and oil and gas
production, independent power generation, energy management and
energy services subsidiaries. All other activities of TECO Energy
have been included in Other.
60<PAGE>
<TABLE>
Identifiable assets are those assets used directly in a segment's operations and are
presented net of depreciation.
<CAPTION>
Income Identifiable Capital
From Assets Expenditures
(millions) Revenues Operations Depreciation at Dec. 31, for the Year
<S> <C> <C> <C> <C> <C>
1996
Regulated electric
utility services $1,112.9 (1) $244.0 $120.2 $2,645.8 $203.3
Other energy services 556.2 103.9 (2) 64.4 879.3 68.9
Eliminations (202.0) (7.6)(2) -- (83.3) --
Energy services segment 1,467.1 340.3 184.6 3,441.8 272.2
Other and eliminations 5.9 2.6 .6 118.9 (4.5)
TECO Energy
consolidated $1,473.0 $342.9 $185.2 $3,560.7 $267.7
1995
Regulated electric
utility services $1,092.3 (1) $229.5 $113.3 $2,566.7 $334.5
Other energy services 500.4 93.5 (2) 61.1 838.3 95.8
Eliminations (205.3) (8.2)(2) -- (86.1) --
Energy services segment 1,387.4 314.8 174.4 3,318.9 430.3
Other and eliminations 4.9 2.9 .3 154.5 2.4
TECO Energy
consolidated $1,392.3 $317.7 $174.7 $3,473.4 $432.7
61<PAGE>
1994
Regulated electric
utility services $1,094.9 $204.5 $115.1 $2,348.7 $230.8
Other energy services 465.7 67.3 (2) 58.6 803.2 78.0
Eliminations (214.5) (6.9)(2) -- (19.8) --
Energy services segment 1,346.1 264.9 173.7 3,132.1 308.8
Other and eliminations 4.8 4.9 .3 180.1 .3
TECO Energy
consolidated $1,350.9 $269.8(3) $174.0 $3,312.2 $309.1
</TABLE>
(1) Revenues shown in 1996 and 1995 are after the revenue deferral at
Tampa Electric of $34.2 million and $50.8 million, respectively.
(2) Income from operations includes non-conventional fuels tax credit
of $19.6 million, $20.6 million and $19.6 million in 1996, 1995
and 1994, respectively, and interest cost on the non-recourse
debt related to independent power operations of $12.0 million,
$12.4 million and $12.7 million in 1996, 1995 and 1994,
respectively. In the Consolidated Statements of Income, the tax
credit is part of the provision for income taxes and the interest
is part of interest expense.
(3) Income from operations in 1994 includes the effect of a corporate
restructuring charge of $25 million. See Note H.
62<PAGE>
K. Pending Merger
TECO Energy and Lykes Energy have agreed to merge in a stock-
for-stock transaction with an equity value of $300 million. The
number of TECO Energy shares to be issued will depend on the average
market price during a specified period prior to the closing, subject
to certain limitations. The principal subsidiary of Lykes Energy is
Peoples Gas System, a regulated, retail gas distributor in Florida.
This merger, to be accounted for as a pooling of interest, has been
approved by both companies' boards of directors and the shareholders
of Lykes Energy. The merger is subject to certain closing conditions
with closing expected by mid-year 1997.
L. Commitments and Contingencies
TECO Energy has made certain commitments in connection with its
continuing capital improvements program. TECO Energy estimates that
capital expenditures for ongoing businesses during 1997 will be about
$185 million and approximately $763 million for the years 1998
through 2001.
Tampa Electric's capital expenditures are estimated to be $116
million for 1997 and $470 million for 1998 through 2001 for equipment
and facilities to meet customer growth. This includes commitments of
approximately $7 million at the end of 1996.
At the diversified companies, capital expenditures are estimated
at $69 million for 1997 and $293 million for the years 1998 through
2001, primarily for asset replacement and refurbishment at TECO
Transport & Trade and TECO Coal and development of TECO Oil & Gas.
This includes commitments of about $9 million at the end of 1996.
Capital requirements for Peoples Gas System and Peoples Gas
Company, both wholly owned subsidiaries of Lykes Energy, are not
reflected in the above projections. Capital investment plans for
these companies are still being developed.
63<PAGE>
L. Quarterly Data (unaudited)
Financial data by quarter is as follows (unaudited):
Quarter ended
March 31 June 30 Sept. 30 Dec. 31
1996
Revenues(1) $ 341.1 $ 361.5 $ 400.9 $ 369.5
Income from operations(1) $ 68.1 $ 80.6 $ 106.4 $ 87.8
Net income(1) $ 41.5 $ 48.3 $ 65.4 $ 45.5
Earnings per average
common share $ .36 $ .41 $ .56 $ .38
Dividends paid per common
share $ .265 $ .28 $ .28 $ .28
Stock price per common
share(2)
High $ 27 $ 25 1/4 $ 25 1/4 $ 25 3/8
Low $ 23 3/4 $ 23 $ 23 $ 23 1/4
Close $ 24 7/8 $ 25 1/4 $ 23 3/4 $ 24 1/8
1995
Revenues(1) $ 319.1 $ 349.7 $ 389.1 $ 334.4
Income from operations(1) $ 66.0 $ 80.7 $ 107.1 $ 63.9
Net income(1) $ 36.5 $ 46.4 $ 63.2 $ 40.0
Earnings per average
common share $ .31 $ .40 $ .55 $ .34
Dividends paid per common
share $ .2525 $ .265 $ .265 $ .265
Stock price per common
share(2)
High $ 22 1/8 $ 22 3/4 $ 23 1/2 $ 25 3/4
Low $ 20 $ 20 1/2 $ 21 1/4 $ 23 1/8
Close $ 21 $ 22 $ 23 1/2 $ 25 5/8
(1) Millions.
(2) Trading prices for common shares.
64<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
During the period Jan. 1, 1995 to the date of this report, TECO
Energy has not had and has not filed with the Commission a report as
to any changes in or disagreements with accountants on accounting
principles or practices, financial statement disclosure, or auditing
scope or procedure.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) The information required by Item 10 with respect to the directors
of the registrant is included under the caption "Election of
Directors" on pages 1 through 4 of TECO Energy's definitive proxy
statement, dated March 3, 1997, for its Annual Meeting of
Shareholders to be held on April 16, 1997 (Proxy Statement) and is
incorporated herein by reference.
(b) The information required by Item 10 concerning executive officers
of the registrant is included under the caption "Executive Officers
of the Registrant" on page 17 of this report.
Item 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is included in the Proxy
Statement beginning on page 9 and ending just before the caption
"Approval of the 1997 Director Equity Plan" on page 11 and under the
caption "Compensation of Directors" on page 4, and is incorporated
herein by reference.
Item 12. S E CURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information required by Item 12 is included under the
caption "Share Ownership" on pages 4 through 5 of the Proxy Statement
and is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by Item 13 is included under the caption
"Election of Directors" on page 3 of the Proxy Statement and is
incorporated herein by reference.
65<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) 1. Financial Statements - See index on page 39.
2. Financial Statement Schedules - See index on page 39.
3. Exhibits
*2.1 Conformed copy of Agreement and Plan of Merger dated as
of Nov. 21, 1996, between TECO Energy, Inc. and Lykes
Energy, Inc. (Exhibit 2.1 to TECO Energy, Inc.'s
Registration Statement on S-4 filed on Nov. 22, 1996,
File No. 333-16683).
*2.2 Conformed copy of Stock Option Agreement dated as of
Nov. 21, 1996, between Lykes Energy, Inc. and TECO
E n ergy, Inc.(Exhibit 2.2 to TECO Energy, Inc.'s
Registration Statement on S-4 filed on Nov. 22, 1996,
File No. 333-16683).
*3.1 Articles of Incorporation, as amended on April 20, 1993
(Exhibit 3, Form 10-Q for the quarter ended March 31,
1993 of TECO Energy, Inc.).
*3.2 Bylaws, as amended effective July 18, 1995 (Exhibit 3,
Form 10-Q for the quarter ended June 30, 1995 of TECO
Energy, Inc.).
*4.1 Indenture of Mortgage among Tampa Electric Company,
State Street Trust Company and First Savings & Trust
Company of Tampa, dated as of Aug. 1, 1946 (Exhibit 7-A
to Registration Statement No. 2-6693).
*4.2 Thirteenth Supplemental Indenture dated as of Jan. 1,
1974, to Exhibit 4.1 (Exhibit 2-g-1, Registration
Statement No. 2-51204).
*4.3 Sixteenth Supplemental Indenture, dated as of Oct. 30,
1992, to Exhibit 4.1 (Exhibit 4.1, Form 10-Q for the
quarter ended Sept. 30, 1992 of TECO Energy, Inc.).
*4.4 Eighteenth Supplemental Indenture, dated as of May 1,
1993, to Exhibit 4.1 (Exhibit 4.1, Form 10-Q for the
quarter ended June 30, 1993 of TECO Energy, Inc.).
*4.5 Installment Purchase and Security Contract between the
Hillsborough County Industrial Development Authority and
Tampa Electric Company, dated as of March 1, 1972
(Exhibit 4.9, Form 10-K for 1986 of TECO Energy, Inc.).
*4.6 First Supplemental Installment Purchase and Security
Contract, dated as of Dec. 1, 1974 (Exhibit 4.10, Form
10-K for 1986 of TECO Energy, Inc.).
*4.7 Third Supplemental Installment Purchase Contract, dated
as of May 1, 1976 (Exhibit 4.12, Form 10-K for 1986 of
TECO Energy, Inc.).
*4.8 Installment Purchase Contract between the Hillsborough
County Industrial Development Authority and Tampa
Electric Company, dated as of Aug. 1, 1981 (Exhibit
4.13, Form 10-K for 1986 of TECO Energy, Inc.).
*4.9 Amendment to Exhibit A of Installment Purchase Contract,
dated April 7, 1983 (Exhibit 4.14, Form 10-K for 1989
of TECO Energy, Inc.).
*4.10 Second Supplemental Installment Purchase Contract, dated
as of June 1, 1983 (Exhibit 4.11, Form 10-K for 1994 of
TECO Energy, Inc.).
*4.11 Third Supplemental Installment Purchase Contract, dated
as of Aug. 1, 1989 (Exhibit 4.16, Form 10-K for 1989 of
TECO Energy, Inc.).
*4.12 Installment Purchase Contract between the Hillsborough
C o unty Industrial Development Authority and Tampa
Electric Company, dated as of Jan. 31, 1984 (Exhibit
4.13, Form 10-K for 1993 of TECO Energy, Inc.).
*4.13 First Supplemental Installment Purchase Contract, dated
as of Aug. 2, 1984 (Exhibit 4.14, Form 10-K for 1994 of
66<PAGE>
TECO Energy, Inc.).
*4.14 Second Supplemental Installment Purchase Contract, dated
as of July 1, 1993 (Exhibit 4.3, Form 10-Q for the
quarter ended June 30, 1993 of TECO Energy, Inc.).
*4.15 Loan and Trust Agreement among the Hillsborough County
Industrial Development Authority, Tampa Electric Company
and NCNB National Bank of Florida, as trustee, dated as
of Sept. 24, 1990 (Exhibit 4.1, Form 10-Q for the
quarter ended Sept. 30, 1990 for TECO Energy, Inc.).
*4.16 Loan and Trust Agreement, dated as of Oct. 26, 1992
among the Hillsborough County Industrial Development
Authority, Tampa Electric Company and NationsBank of
Florida, N.A., as trustee (Exhibit 4.2, Form 10-Q for
the quarter ended Sept. 30, 1992 of TECO Energy, Inc.).
*4.17 Loan and Trust Agreement, dated as of June 23, 1993,
among the Hillsborough County Industrial Development
Authority, Tampa Electric Company and NationsBank of
Florida, N.A., as trustee (Exhibit 4.2, Form 10-Q for
the quarter ended June 30, 1993 of TECO Energy, Inc.).
*4.18 Installment Sales Agreement between the Plaquemines
Port, Harbor and Terminal District (Louisiana) and
Electro-Coal Transfer Corporation, dated as of Sept. 1,
1985 (Exhibit 4.19, Form 10-K for 1986 of TECO Energy,
Inc.).
*4.19 Reimbursement Agreement between TECO Energy, Inc. and
Electro-Coal Transfer Corporation, dated as of March 22,
1989 (Exhibit 4.19, Form 10-K for 1988 of TECO Energy,
Inc.).
*4.20 Rights Agreement between TECO Energy, Inc. and The First
National Bank of Boston, as Rights Agent, dated as of
April 27, 1989 (Exhibit 4, Form 8-K, dated as of May 2,
1989 of TECO Energy, Inc.).
*4.21 Amendment No. 1 to Rights Agreement dated as of July 20,
1993 between TECO Energy, Inc. and The First National
Bank of Boston, as Rights Agent (Exhibit 1.2, Form 8-
A/A, dated as of July 27, 1993 of TECO Energy, Inc.).
4.22 Loan and Trust Agreement, dated as of Dec. 1, 1996,
among the Polk County Industrial Development Authority,
Tampa Electric Company and the Bank of New York, as
trustee.
*10.1 1980 Stock Option and Appreciation Rights Plan, as
amended on July 18, 1989 (Exhibit 28.1, Form 10-Q for
quarter ended June 30, 1989 of TECO Energy, Inc.).
*10.2 Directors' Retirement Plan, as amended effective July 1,
1995 (Exhibit 10.1, Form 10-Q for quarter ended June 30,
1995 of TECO Energy, Inc.).
*10.3 S u pplemental Executive Retirement Plan for H. L.
Culbreath, as amended on April 27, 1989 (Exhibit 10.14,
Form 10-K for 1989 of TECO Energy, Inc.).
10.4 Supplemental Executive Retirement Plan for T. L. Guzzle,
as amended and restated as of Oct. 16, 1996.
10.5 Supplemental Executive Retirement Plan for R. H. Kessel,
as amended and restated as of Jan. 15, 1997.
10.6 TECO Energy Group Supplemental Executive Retirement
Plan, as amended and restated as of Oct. 16, 1996.
10.7 TECO Energy Group Supplemental Retirement Benefits Trust
Agreement as amended and restated as of Jan. 15, 1997.
*10.8 Annual Incentive Compensation Plan for TECO Energy and
subsidiaries, as revised January 1993 (Exhibit 10.2,
Form 10-Q for quarter ended March 31, 1994 of TECO
Energy, Inc.).
*10.9 TECO Energy Group Supplemental Disability Income Plan,
dated as of March 20, 1989 (Exhibit 10.22, Form 10-K for
1988 of TECO Energy, Inc.).
*10.10 Forms of Severance Agreement between TECO Energy, Inc.
and certain senior executives, as amended and restated
67<PAGE>
as of March 20, 1996.
*10.11 Severance Agreement between TECO Energy, Inc. and H.L.
Culbreath, dated as of April 28, 1989 (Exhibit 10.24,
Form 10-K for 1989 of TECO Energy, Inc.).
*10.12 Loan and Stock Purchase Agreement between TECO Energy,
Inc. and Barnett Banks Trust Company, N.A., as trustee
of the TECO Energy Group Savings Plan Trust Agreement
(Exhibit 10.3, Form 10-Q for the quarter ended March 31,
1990 for TECO Energy, Inc.).
*10.13 TECO Energy, Inc. 1991 Director Stock Option Plan as
amended on Jan. 21, 1992 (Exhibit 10.26, Form 10-K for
1991 of TECO Energy, Inc.).
10.14 Supplemental Executive Retirement Plan for A.D. Oak, as
amended and restated as of Oct. 16, 1996.
10.15 Supplemental Executive Retirement Plan for K. S.
Surgenor, as amended and restated as of Oct. 16, 1996.
*10.16 Terms of T.L. Guzzle's employment, dated as of July 20,
1993 (Exhibit 10, Form 10-Q for the quarter ended June
30, 1993 of TECO Energy, Inc.).
10.17 Supplemental Executive Retirement Plan for G. F.
Anderson, as amended and restated as of Oct. 16, 1996.
*10.18 TECO Energy Directors' Deferred Compensation Plan, as
amended and restated effective April 1, 1994 (Exhibit
10.1, Form 10-Q for the quarter ended March 31, 1994 for
TECO Energy, Inc.).
*10.19 TECO Energy Group Retirement Savings Excess Benefit
Plan, as amended and restated effective Aug. 1, 1994
(Exhibit 10.21, Form 10-K for 1994 of TECO Energy,
Inc.).
10.20 Supplemental Executive Retirement Plan for R. A. Dunn,
as amended and restated as of Jan. 15, 1997.
*10.21 TECO Energy, Inc. 1996 Equity Incentive Plan (Exhibit
10.1, Form 10-Q for the quarter ended March 31, 1996 of
TECO Energy, Inc.).
*10.22 Form of Nonstatutory Stock Option under the TECO Energy,
Inc. 1996 Equity Incentive Plan (Exhibit 10.1, Form 10-Q
for the quarter ended June 30, 1996 of TECO Energy,
Inc.).
*10.23 Form of Restricted Stock Agreement between TECO Energy,
Inc. and certain senior executives under the TECO
Energy, Inc. 1996 Equity Incentive Plan (Exhibit 10.2,
Form 10-Q for the quarter ended June 30, 1996 of TECO
Energy, Inc.).
*10.24 Form of Restricted Stock Agreement between TECO Energy,
Inc. and G. F. Anderson under the TECO Energy, Inc. 1996
Equity Incentive Plan (Exhibit 10.3, Form 10-Q for the
quarter ended June 30, 1996 of TECO Energy, Inc.).
11. Computation of earnings per common share.
21. Subsidiaries of the Registrant.
23. Consent of Independent Accountants.
24.1 Power of Attorney.
24.2 Certified copy of resolution authorizing Power of
Attorney.
27. Financial Data Schedule (EDGAR filing only).
_____________
* Indicates exhibit previously filed with the Securities and
Exchange Commission and incorporated herein by reference.
Exhibits filed with periodic reports of TECO Energy, Inc. were
filed under Commission File No. 1-8180.
68<PAGE>
Executive Compensation Plans and Arrangements
Exhibits 10.1 through 10.11 and 10.13 through 10.24 above are
management contracts or compensatory plans or arrangements in which
executive officers or directors of TECO Energy, Inc. participate.
Certain instruments defining the rights of holders of long-term
debt of TECO Energy, Inc. and its consolidated subsidiaries
authorizing in each case a total amount of securities not exceeding
10 percent of total assets on a consolidated basis are not filed
herewith. TECO Energy, Inc. will furnish copies of such instruments
to the Securities and Exchange Commission upon request.
(b) TECO Energy, Inc. filed the following reports on Form 8-K during
the last quarter of 1996.
The registrant filed a Current Report on Form 8-K dated Oct. 9, 1996
reporting under Item 5. Other Events announcing the Florida Public
Service Commission s vote to approve the agreement among Tampa
Electric Company, the Office of Public Counsel and the Florida
Industrial Power Users Group which resolves all regulatory issues
related to a prudence review of Tampa Electric Company s Polk Power
Station, extends the current base rate freeze through 1999 and
provides for a temporary reduction in base rates.
The registrant filed a Current Report on Form 8-K dated Nov. 21, 1996
reporting under Item 5. Other Events that the registrant and Lykes
Energy, Inc. ( LEI ) entered into an Agreement and Plan of Merger
pursuant to which the registrant will acquire LEI through the merger
of LEI with and into the registrant or, subject to certain
conditions, with a wholly owned subsidiary of the registrant.
The registrant filed a Current Report on Form 8-K dated Dec. 5, 1996
reporting under "Item 5. Other Events" announcing approval by the
shareholders of LEI of the previously announced merger of LEI with
the registrant.
69<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 on the 26th day of March, 1997.
TECO ENERGY, INC.
By T. L. GUZZLE*
T. L. GUZZLE, Chairman of the Board,
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf
of the registrant and in the capacities indicated on March 26, 1997:
Signature Title
T. L. GUZZLE* Chairman of the Board,
T. L. GUZZLE Director and Chief Executive
Officer
(Principal Executive Officer)
/s/ A. D. OAK Senior Vice President-
A. D. OAK Finance and Chief Financial Officer
(Principal Financial
and Accounting Officer)
G. F. ANDERSON* President, Director
G. F. ANDERSON and Chief Operating
Officer
C. D. AUSLEY* Director
C. D. AUSLEY
S. L. BALDWIN* Director
S. L. BALDWIN
H. L. CULBREATH* Director
H. L. CULBREATH
J. L. FERMAN, JR.* Director
J. L. FERMAN, JR.
E. L. FLOM* Director
E. L. FLOM
H. R. GUILD, JR.* Director
H. R. GUILD, JR.
D. R. HENDRIX* Director
D. R. HENDRIX
R. L. RYAN* Director
R. L. RYAN
W. P. SOVEY* Director
W. P. SOVEY
70<PAGE>
J. T. TOUCHTON* Director
J. T. TOUCHTON
J. A. URQUHART* Director
J. A. URQUHART
J. O. WELCH, JR.* Director
J. O. WELCH, JR.
*By: /s/ A. D. OAK
A. D. OAK, Attorney-in-fact
71<PAGE>
INDEX TO EXHIBITS
Exhibit Page
No. Description No.
2.1 Conformed copy of Agreement and Plan of Merger *
dated as of Nov. 21, 1996, between TECO Energy,
Inc. And Lykes Energy, Inc. (Exhibit 2.1 to
TECO Energy, Inc. s Registration Statement on
S-4 filed on Nov. 22, 1996, File No. 333-16683).
2.2 Conformed copy of Stock Option Agreement *
dated as of Nov. 21, 1996, between Lykes Energy, Inc.
and TECO Energy, Inc.(Exhibit 2.2 to TECO Energy,
Inc. s Registration Statement on S-4 filed on Nov. 22,
1996, File No. 333-16683).
3.1 Articles of Incorporation, as amended on *
April 20, 1993 (Exhibit 3, Form 10-Q for the
quarter ended March 31, 1993 of TECO Energy,
Inc.).
3.2 Bylaws, as amended effective *
July 18, 1995 (Exhibit 3, Form 10-Q for the
quarter ended June 30, 1995 of TECO Energy, Inc.).
4.1 Indenture of Mortgage among Tampa Electric *
Company, State Street Trust Company and First
Savings & Trust Company of Tampa, dated as of
Aug. 1, 1946 (Exhibit 7-A to Registration
Statement No. 2-6693).
4.2 Thirteenth Supplemental Indenture dated as *
of Jan. 1, 1974, to Exhibit 4.1 (Exhibit 2-g-1,
Registration Statement No. 2-51204).
4.3 Sixteenth Supplemental Indenture, dated as *
of Oct. 30, 1992, to Exhibit 4.1 (Exhibit 4.1,
Form 10-Q for the quarter ended Sept. 30, 1992 of
TECO Energy, Inc.).
4.4 Eighteenth Supplemental Indenture, dated as *
of May 1, 1993, to Exhibit 4.1 (Exhibit 4.1, Form
10-Q for the quarter ended June 30, 1993 of TECO
Energy, Inc.).
4.5 Installment Purchase and Security Contract *
between the Hillsborough County Industrial
Development Authority and Tampa Electric Company,
dated as of March 1, 1972 (Exhibit 4.9, Form 10-K
for 1986 of TECO Energy, Inc.).
4.6 First Supplemental Installment Purchase and *
Security Contract, dated as of Dec. 1, 1974
(Exhibit 4.10, Form 10-K for 1986 of TECO Energy,
Inc.).
4.7 Third Supplemental Installment Purchase *
Contract, dated as of May 1, 1976 (Exhibit 4.12,
Form 10-K for 1986 of TECO Energy, Inc.).
4.8 Installment Purchase Contract between the *
Hillsborough County Industrial Development
Authority and Tampa Electric Company, dated as of
Aug. 1, 1981 (Exhibit 4.13, Form 10-K for 1986 of
TECO Energy, Inc.).
4.9 Amendment to Exhibit A of Installment *
Purchase Contract, dated April 7, 1983 (Exhibit
72<PAGE>
4.14, Form 10-K for 1989 of TECO Energy, Inc.).
4.10 Second Supplemental Installment Purchase *
Contract, dated as of June 1, 1983 (Exhibit 4.11,
Form 10-K for 1994 of TECO Energy, Inc.).
4.11 Third Supplemental Installment Purchase *
Contract, dated as of Aug. 1, 1989 (Exhibit 4.16,
Form 10-K for 1989 of TECO Energy, Inc.).
4.12 Installment Purchase Contract between the *
Hillsborough County Industrial Development
Authority and Tampa Electric Company, dated as of
Jan. 31, 1984 (Exhibit 4.13, Form 10-K for 1993
of TECO Energy, Inc.).
4.13 First Supplemental Installment Purchase *
Contract, dated as of Aug. 2, 1984 (Exhibit 4.14,
Form 10-K for 1994 of TECO Energy, Inc.).
4.14 Second Supplemental Installment Purchase Contract, *
dated as of July 1, 1993 (Exhibit 4.3, Form 10-Q
for the quarter ended June 30, 1993 of TECO
Energy, Inc.).
4.15 Loan and Trust Agreement among the Hillsborough *
County Industrial Development Authority, Tampa
Electric Company and NCNB National Bank of
Florida, as trustee, dated as of Sept. 24, 1990
(Exhibit 4.1, Form 10-Q for the quarter ended
Sept. 30, 1990 for TECO Energy, Inc.).
4.16 Loan and Trust Agreement, dated as of Oct. 26, *
1992 among the Hillsborough County Industrial
Development Authority, Tampa Electric Company and
NationsBank of Florida, N.A., as trustee (Exhibit
4.2, Form 10-Q for the quarter ended Sept. 30,
1992 of TECO Energy, Inc.).
4.17 Loan and Trust Agreement, dated as of *
June 23, 1993, among the Hillsborough County
Industrial Development Authority, Tampa Electric
Company and NationsBank of Florida, N.A., as
trustee (Exhibit 4.2, Form 10-Q for the quarter
ended June 30, 1993 of TECO Energy, Inc.).
4.18 Installment Sales Agreement between the *
Plaquemines Port, Harbor and Terminal District
(Louisiana) and Electro-Coal Transfer
Corporation, dated as of Sept. 1, 1985 (Exhibit
4.19, Form 10-K for 1986 of TECO Energy, Inc.).
4.19 Reimbursement Agreement between TECO Energy, *
Inc. and Electro-Coal Transfer Corporation, dated
as of March 22, 1989 (Exhibit 4.19, Form 10-K for
1988 of TECO Energy, Inc.).
4.20 Rights Agreement between TECO Energy, Inc. *
and The First National Bank of Boston, as Rights
Agent, dated as of April 27, 1989 (Exhibit 4,
Form 8-K, dated as of May 2, 1989 of TECO Energy,
Inc.).
4.21 Amendment No. 1 to Rights Agreement dated as *
of July 20, 1993 between TECO Energy, Inc. and
The First National Bank of Boston, as Rights
Agent (Exhibit 1.2, Form 8-A/A, dated as of July
27, 1993 of TECO Energy, Inc.).
4.22 Loan and Trust Agreement, dated as of Dec. 1, 1996, 74
73<PAGE>
among the Polk County Industrial Development
Authority, Tampa Electric Company and the Bank of
New York, as trustee.
10.1 1980 Stock Option and Appreciation Rights *
Plan, as amended on July 18, 1989 (Exhibit 28.1,
Form 10-Q for quarter ended June 30, 1989 of TECO
Energy, Inc.).
10.2 Directors' Retirement Plan, as amended *
effective July 1, 1995 (Exhibit 10.1, Form 10-Q
for quarter ended June 30, 1995 of TECO Energy,
Inc.).
10.3 Supplemental Executive Retirement Plan for *
H. L. Culbreath, as amended on April 27, 1989
(Exhibit 10.14, Form 10-K for 1989 of TECO
Energy, Inc.).
10.4 Supplemental Executive Retirement Plan 168
for T. L. Guzzle, as amended and restated as of
Oct. 16, 1996.
10.5 Supplemental Executive Retirement Plan for 175
R. H. Kessel, as amended and restated as of Jan.
15, 1997.
10.6 TECO Energy Group Supplemental Executive Retirement 183
Plan, as amended and restated as of Oct. 16, 1996
10.7 TECO Energy Group Supplemental Retirement Benefits 194
Trust Agreement, as amended and restated as of
Jan. 15, 1997.
10.8 Annual Incentive Compensation Plan for *
TECO Energy and subsidiaries, as revised January
1993 (Exhibit 10.2, Form 10-Q for quarter ended
March 31, 1994 of TECO Energy, Inc.).
10.9 TECO Energy Group Supplemental Disability *
Income Plan, dated as of March 20, 1989 (Exhibit
10.22, Form 10-K for 1988 of TECO Energy, Inc.).
10.10 Forms of Severance Agreement between TECO *
Energy, Inc. and certain senior executives, as
amended and restated as of March 20, 1996.
10.11 Severance Agreement between TECO Energy, Inc. *
and H.L. Culbreath, dated as of April 28, 1989
(Exhibit 10.24, Form 10-K for 1989 of TECO
Energy, Inc.).
10.12 Loan and Stock Purchase Agreement between *
TECO Energy, Inc. and Barnett Banks Trust
Company, N.A., as trustee of the TECO Energy
Group Savings Plan Trust Agreement (Exhibit 10.3,
Form 10-Q for the quarter ended March 31, 1990
for TECO Energy, Inc.).
10.13 TECO Energy, Inc. 1991 Director Stock *
Option Plan as amended on Jan. 21, 1992 (Exhibit
10.26, Form 10-K for 1991 of TECO Energy, Inc.).
10.14 Supplemental Executive Retirement Plan 208
for A. D. Oak, as amended and restated as of Oct.
16, 1996.
10.15 Supplemental Executive Retirement Plan 215
for K. S. Surgenor, as amended and restated as of
Oct. 16, 1996.
10.16 Terms of T.L. Guzzle's employment, dated *
as of July 20, 1993 (Exhibit 10, Form 10-Q for
74<PAGE>
the quarter ended June 30, 1993 of TECO Energy,
Inc.).
10.17 Supplemental Executive Retirement Plan 222
for G. F. Anderson, as amended and restated as of
Oct. 16, 1996.
10.18 TECO Energy Directors' Deferred Compensation Plan, *
as amended and restated effective April 1, 1994
(Exhibit 10.1, Form 10-Q for the quarter ended
March 31, 1994 for TECO Energy, Inc.).
10.19 TECO Energy Group Retirement Savings Excess Benefit *
Plan, as amended and restated effective Aug. 1, 1994
(Exhibit 10.21, Form 10-K for 1994 of TECO Energy, Inc.).
10.20 Supplemental Executive Retirement Plan for R. A. Dunn, 228
as amended and restated as of Jan. 15, 1997.
10.21 TECO Energy, Inc. 1996 Equity Incentive Plan (Exhibit *
10.1, Form 10-Q for the quarter ended March 31, 1996
of TECO Energy, Inc.).
10.22 Form of Nonstatutory Stock Option under the TECO *
Energy, Inc. 1996 Equity Incentive Plan (Exhibit 10.1,
Form 10-Q for the quarter ended June 30, 1996 of TECO
Energy, Inc.).
10.23 Form of Restricted Stock Agreement between TECO *
Energy, Inc. and certain senior executives under
the TECO Energy, Inc. 1996 Equity Incentive Plan
(Exhibit 10.2, Form 10-Q for the quarter ended June
30, 1996 of TECO Energy, Inc.).
10.24 Form of Restricted Stock Agreement between TECO *
Energy, Inc. and G. F. Anderson under the TECO Energy,
Inc. 1996 Equity Incentive Plan (Exhibit 10.3, Form
10-Q for the quarter ended June 30, 1996 of TECO Energy,
Inc.).
75<PAGE>
11. Computation of earnings per common share. 235
21. Subsidiaries of the Registrant. 236
23. Consent of Independent Accountants. 237
24.1 Power of Attorney. 238
24.2 Certified copy of resolution authorizing Power of
Attorney. 240
27. Financial Data Schedule (EDGAR filing only).
_____________
* Indicates exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference. Exhibits filed with
periodic reports of TECO Energy, Inc. were filed under Commission
File No. 1-8180.
76<PAGE>
Exhibit 4.22
Execution Copy
LOAN AND TRUST AGREEMENT
among
POLK COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
TAMPA ELECTRIC COMPANY
and
THE BANK OF NEW YORK, as Trustee
Dated as of December 1, 1996
And Providing for the Issue of
$75,000,000
Polk County Industrial Development Authority
Solid Waste Disposal Facility Revenue Bonds
(Tampa Electric Company Project),
Series 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I: INTRODUCTION AND DEFINITIONS . . . . . . . . . . . . 1
Section 101. Description of the Agreement and the Parties 1
Section 102. Definitions . . . . . . . . . . . . . . . . 1
ARTICLE II: THE ASSIGNMENT AND PLEDGE. . . . . . . . . . . . . . . . 8
Section 201. The Assignment and Pledge of Revenues and
Fund 8
Section 202. Creation of Subordinated Security Interest 8
Section 203. Pledge of First Mortgage Bonds . . . . . . 9
Section 204. Further Assurances. . . . . . . . . . . . 9
Section 205. Defeasance . . . . . . . . . . . . . . . . 9
Section 206. Termination of Subordinated Security
Interest 10
Section 207. Release of First Mortgage Bonds . . . . . . 10
ARTICLE III: THE BORROWING . . . . . . . . . . . . . . . . . . . . . 11
Section 301. The Bonds . . . . . . . . . . . . . . . . . 11
(a) Details of the Bonds . . . . . . . . . 11
(b) Form of Bonds . . . . . . . . . . . . . 12
(c) Registration of Bonds in the Book-Entry
Only System . . 12
(d) Interest on the Bonds . . . . . . . . . 15
(e) Daily Interest Rate . . . . . . . . . . 15
(i) Determination of Daily
Interest Rate . . . . . . 15
(ii) Adjustment to Daily Interest
Rate . . . . . . . . 16
(iii) Notice of Adjustment to
Daily Interest Rate 16
(f) Weekly Interest Rate . . . . . . . . . 17
(i) Determination of Weekly
Interest 17
(ii) Adjustment to Weekly
Interest Rate . . . . . . .18
(iii) Notice of Adjustment to
Weekly Interest Rate Period 18
(g) Short-Term Interest Rate . . . . . . . 19
(i) Determination of Short-Term
Segments and Short-Term \
Interest Rates 19
(ii) Adjustment to Short-Term
Interest Rates . . . . . 20
(iii) Notice of Adjustment to
Short-Term Interest Rate
Period . 20
(iv) Adjustment from Short-Term
Interest Rate Period . 21
(h) Long-Term Interest Rate . . . . . . . . 22
(i) Determination of Long-Term
Interest Rate . . . . . 22
(ii) Adjustment to or
Continuation of Long-Term
Interest Rate . . . . . . . 22
(iii) Notice of Adjustment to or
Continuation of Long-Term
Interest Rate Period . 23
(i) (Reserved) . . . . . . . . . . . . 24
(j) Determinations of Remarketing Agent
Binding . . . . . . 24
(k) Failure to Adjust Interest Rate 24
Section 302. Purchase of Bonds . . . . . . . . . 25
(a) Daily Interest Rate Period . . 25
(b) Weekly Interest Rate Period . . 25
(c) On Day Next Succeeding the Last
Day of Each Short-Term Segment or
Long-Term Interest Rate Period . . . 26
i<PAGE>
(d) On Day Next Succeeding Last Day of Each
Short-Term Interest Rate Period 26
(e) Irrevocable Notice or Failure to
Give Notice Deemed to be Tender of Bond 27
(f) Purchase of Bonds Delivered to
Remarketing Agent . . . 27
(g) Purchase of Bonds Delivered to the
Tender Agent . . . . 27
(h) Duty of Paying Agent to Hold Purchase
Price for Bondowner . 28
(i) Duty of Remarketing Agent to Hold
Purchase Price for Bondowner . 28
(j) Delivery of Purchased Bonds . 28
Section 303. Redemption of the Bonds . . . . . 29
(a) Optional Redemption . . . . . 29
(i) During a Daily or Weekly
Interest Rate Period . . 29
(ii) During a Short-Term
Interest Rate Period 29
(iii)During a Long-Term
Interest Rate Period 29
(b) Mandatory Redemption on First Day of
Certain Interest Rate Periods 30
(c) Mandatory Redemption of Bonds Not
in Authorized Denominations . 30
(d) Redemption Price with Respect to
Certain Redemptions . 31
(e) Special Mandatory Redemption Upon
Taxability . . . . . 31
(f) Extraordinary Optional Redemption . . 31
(g) Payment of Redemption Price and Accrued
Interest . . . 33
(h) Waiver of Redemption by Bondowner . . . 33
(i) Notice of Redemption . . . . . . . 33
(j) Partial Redemption of Bonds . . . . 34
(k) Purchase by Company In Lieu of
Redemption . . . . . . . 34
(l) Selection of Bonds for Redemption . . . 35
Section 304. Application of Bond Proceeds . . . . . . . 36
Section 305. Reserved . . . . . . . . . . . . . . . . . 36
Section 306. Debt Service Fund . . . . . . . . . . . . . 36
Section 307. Reserved. . . . . . . . . . . . . . . . . . 37
Section 308. First Mortgage Bond Fund . . . . . . . . . 37
Section 309. Expenses of Issue . . . . . . . . . . . . . 37
Section 310. Application of Moneys . . . . . . . . . . . 37
Section 311. Payments by the Company . . . . . . . . . . 38
(a) Debt Service . . . . . . . . . . . . . 38
(b) Additional Payments . . . . . . . . . . 39
(c) Company's Purchase of Bonds . . . . . . 39
Section 312. Unconditional Obligation . . . . . . . . . 39
Section 313. Remarketing of Bonds Tendered . . . . . . . 39
(a) Notice of Tendered Bonds . . . . . . . 39
(b) Remarketing of Bonds by the
Remarketing Agent . . . 40
(c) Procedure and Sources of Payment 40
(d) No Sales After Events of Default 41
Section 314. Mutilated, Destroyed, Lost or Stolen Bonds 41
Section 315. Temporary Bonds . . . . . . . . . . . . . . 42
Section 316. Cancellation and Destruction of Bonds . . 42
Section 317. Refunding Bonds . . . . . . . . . . . . . . 42
ARTICLE IV: THE PROJECT . . . . . . . . . . . . . . . . . . . . . . 42
Section 401. Construction Fund . . . . . . . . . . . . . 42
Section 402. Payments From Construction Fund . . . . . . 43
Section 403. Items of Cost . . . . . . . . . . . . . . . 43
ii<PAGE>
Section 404. Disbursements . . . . . . . . . . . . . 44
Section 405. Reliance on Requisitions . . . . . . . . . 45
Section 406. Completion of the Project . . . . . . . . . 45
Section 407. Transfer of Money from Fund on Repurchase or
Redemption of Bonds . . . . . . . . . . 46
Section 408. Rebate . . . . . . . . . . . . . . . . . . 47
Section 409. Maintenance and Modifications of Project
by Company . 48
Section 410. Removal of Portions of the Project . . 48
Section 411. Assignment, Leasing and Sale by the Company 48
ARTICLE V: THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . 49
Section 501. Representations by the Company . . . . 49
Section 502. Access to the Project . . . . . . . . 50
Section 503. Company To Maintain Its Corporate Existence;
Conditions Under Which Exceptions Permitted . . . . . . . . 50
Section 504. Indemnification Covenants . . . . . . 50
Section 505. Consent to Assignment of Contract Rights by
the Authority . . . . . . . . . . . . . . . 51
Section 506. Obligations of Company Hereunder
Unconditional. . . . 51
Section 507. Tax Status of Bonds . . . .. . . . 52
Section 508. Continuing Disclosure . . .. . . . . . 52
ARTICLE VI: THE AUTHORITY. . . . . . . . . . . . . 53
Section 601. Representations by the Authority 53
Section 602. No Warranty of Condition or Suitability by the
Authority . . . . . . . . . . . . . . . . . 53
Section 603. Payment of Principal, Premium and Interest 53
Section 604. Authority To Use Best Efforts To Require
Company To Make Payments . . . . . . . . . 53
Section 605. Take Further Action . . . . . . . . . . . . 54
Section 606. No Disposition of Revenues. . . . . . . . . 54
Section 607. No Extensions . . . . . . . . . . . . . . . 54
Section 608. Covenant To Perform Further Acts. . . . . . 54
Section 609. Faithful Performance . . . . . . . . . . . 55
ARTICLE VII: THE TRUSTEE AND PAYING AGENTS;
REMARKETING AGENT; TENDER AGENT; REGISTRAR. . . . . . . . . . . . . . . . 55
Section 701. Conditions of Trust . . . . . . . . . . . . 55
Section 702. Reimbursement of Administrative Expenses . 58
Section 703. Trustee To Give Notice to Bondowners in
Event of Default . . . . . . . . . . . . . 58
Section 704. Trustee's Right To Intervene; First
Mortgage Bonds . 58
Section 705. Successor Trustee Upon Merger, Etc. . . 59
Section 706. Resignation of Trustee. . . . . . . . . 59
Section 707. Removal of Trustee . . . . . . . . . . 60
Section 708. Appointments of Successor Trustee . . . 60
Section 709. Acceptance by Successor Trustee . . . . 61
Section 710. Reliance Upon Instruments . . . . . . . 61
Section 711. Former Trustee No Longer Custodian or
Paying Agent . 61
Section 712. Directions From Company; Company May
Perform . . . . 61
Section 713. Trading in Bonds by Trustee, Tender
Agent, Paying Agent, Registrar or
Remarketing Agent . . . . . . . . . 62
Section 714. Appointment and Duties of Paying Agent 62
Section 715. Qualification of Paying Agent . . . . . 63
Section 716. Appointment and Duties of Tender Agent 64
iii<PAGE>
Section 717. Qualification of Tender Agent . . . 65
Section 718. Appointment and Duties of Remarketing Agent 66
Section 719. Qualifications of Remarketing Agent . . . . 67
Section 720. Appointment and Duties of Registrar . . . 67
Section 721. Qualifications for Registrar . . . . . . 68
Section 722. Entities Serving in More Than One Capacity 69
ARTICLE VIII: SECURITY FOR AND INVESTMENT OF MONEY. . . . . . . . 69
Section 801. All Money Held In Trust . . . . . . . . . 69
Section 802. Permitted Investments . . . . . . . . . . 69
Section 803. Balance After Bonds Have Been Paid . . . 70
ARTICLE IX: DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . 70
Section 901. Events of Default . . . . . . . . . . . . 70
(a) Debt Service on Bonds; Required
Purchase . . . . . . . 70
(b) First Mortgage Bonds . . . . . . . . 70
(c) Other Obligations . . . . . . . . . . 70
(d) Appointment of Receiver . . . . . . . 71
(e) Voluntary Bankruptcy . . . . . . . . 71
(f) Involuntary Bankruptcy . . . . . . . 71
Section 902. Trustee May Institute Suits . . . . . . . 72
Section 903. Remedies on Events of Default . . . . . . 73
Section 904. Bondowners To Direct Trustee . . . . . . 74
Section 905. Receiver for the Revenues of the Authority
From the Project . . . . . . . . . . . . . 74
Section 906. Application of Moneys . . . . . . . . . . . 74
Section 907. Trustee as Representative of the Bondowners 76
Section 908. Enforcement by Bondowners . . . . . . . . . 76
Section 909. Rights To Continue . . . . . . . . . . . . 77
Section 910. Waivers of Default . . . . . . . . . . . . 77
Section 911. Agreement To Pay Attorneys' Fees and
Expenses . 77
Section 912. Remedies in Article IX in Addition to
Remedies in the First Mortgage . . . . . . 78
ARTICLE X: THE BONDOWNERS . . . . . . . . . . . . . . . . . . . . . 78
Section 1001. Action by Bondowners . . . . . . . . . . . 78
Section 1002. Ownership of Bonds . . . . . . . . . . . . 79
ARTICLE XI: SUPPLEMENTAL AGREEMENTS. . . . . . . . . . . . . . . . . 79
Section 1101. Supplemental Agreements Without Consent or
Notice to Bondowners . . . . . . . . . . . 79
Section 1102. Supplemental Agreements With Consent of
Majority of Bondowners . . . . . . . . . 80
Section 1103. Consents by Trustee, Tender Agent, Etc. . 81
Section 1104. Notice of Amendments to Rating Agencies . 81
ARTICLE XII: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 81
Section 1201. Notices . . . . . . . . . . . . . . . . . 81
Section 1202. Successors and Assigns . . . . . . . . . . 82
Section 1203. Agreement Not for the Benefit of Other
Parties . . . 82
Section 1204. No Recourse Against Authority 82
Section 1205. Payments Due, Conversion Dates or
Notices on Nonbusiness Days . . . . . . 82
Section 1206. Severability . . . . . . . . . . . . . . 83
Section 1207. Counterparts . . . . . . . . . . . . . . 83
iv<PAGE>
Section 1208. Captions . . . . . . . . . . . . . . . 83
Section 1209. Florida Law to Govern . . . . . . . . 83
Section 1210. Time . . . . . . . . . . . . . . . . . . 83
Exhibit A Description of the Project . . . . . . . . . . . . . . 87
Exhibit B Form of Bond . . . . . . . . . . . . . . . . . . . . B-1
v<PAGE>
ARTICLE I: INTRODUCTION AND DEFINITIONS.
Section 101. Description of the Agreement and the Parties. This LOAN
AND TRUST AGREEMENT (the "Agreement") is entered into as of December 1, 1996,
by the POLK COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a public body corporate
and politic and a public instrumentality created pursuant to the laws of the
State of Florida (the "Authority"), TAMPA ELECTRIC COMPANY, a Florida
corporation (the "Company") and THE BANK OF NEW YORK, as trustee, a New York
corporation duly organized and existing under the laws of the State of New
York and having its designated corporate trust office in the City of
Jacksonville, Florida, which is authorized under such laws to exercise
corporate trust powers and is subject to examination by federal authorities
(said banking association and any bank or trust company becoming successor
trustee under this Agreement, the "Trustee").
This Agreement provides for the following transactions:
(a) the Authority's issue of the Bonds;
(b) the Authority's loan of the proceeds of the Bonds to the
Company for the purpose of financing the Project;
(c) the Company's repayment of the loan of Bond proceeds from
the Authority through payment to the Trustee or the Paying Agent of all
amounts necessary to pay principal, premium, if any, and interest on the Bonds
issued by the Authority;
(d) the Company's grant of a subordinated security interest in
the Project to secure its obligations under this Agreement; and
(e) the Authority's assignment to the Trustee in trust for the
benefit and security of the Bondowners of the Revenues to be received
hereunder and the rights to receive the same and the security therefor.
In consideration of the mutual agreements contained in this Agreement
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Authority, the Company and the Trustee agree as set forth
herein for their own benefit and for the benefit of the Bondowners.
Section 102. Definitions. In addition to terms defined elsewhere
herein, the following terms have the following meanings in this Agreement,
unless the context otherwise requires:
"Act" means the Constitution of the State of Florida, Chapter 69-1510,
Laws of Florida, as amended, the Florida Industrial Development Financing Act,
Parts II and III of Chapter 159, Florida Statutes, and other applicable
provisions of law.
"Administrative Expenses" means the direct, out-of-pocket expenses
incurred by the Authority pursuant to this Agreement and reasonable in amount
and the compensation of the Trustee, the Paying Agent, the Registrar, the
Remarketing Agent and the Tender Agent and the direct, out-of-pocket expenses
of the Trustee, including fees and disbursements of its counsel, incurred by
the Trustee and reasonable in amount.
1<PAGE>
"Authorized Denominations" means with respect to any Long-Term Interest
Rate Period, $5,000 or any multiple thereof; with respect to any Daily
Interest Rate Period or Weekly Interest Rate Period, $100,000 or any multiple
thereof; and, with respect to any Short-Term Interest Rate Period, $100,000 or
any multiple of $5,000 in excess of $100,000.
"Authorized Officer" means: (i) in the case of the Authority, the
Chairman or the Secretary, and when used with reference to an act or document
of the Authority also means any other person authorized to perform the act or
execute the document; and (ii) in the case of the Company, the President, any
Vice President, the Treasurer, any Assistant Treasurer or the Secretary and
any other person designated by one of the foregoing officers.
"Bond Counsel" means any nationally recognized bond counsel selected by
the Company and satisfactory to the Trustee and the Authority.
"Bondowners" means the registered owners of the Bonds from time to time
as shown in the books kept by the Registrar as transfer agent.
Any reference to a majority or a particular percentage or proportion of
the Bondowners shall mean the holders at the particular time of a majority or
of the specified percentage or proportion in aggregate principal amount of all
Bonds then outstanding under this Agreement, exclusive of any such Bonds held
by the Remarketing Agent or the Tender Agent (to the extent that they are
holding Bonds in their respective capacities as such), the Company or the
Authority or any agent or affiliate of said parties; provided, however, that
for the purpose of determining whether the Trustee shall be protected in
relying upon any direction or consent given or action taken by Bondowners,
only the Bonds which such Trustee knows are so held shall be so excluded.
"Bond Resolution" means the resolution adopted by the Authority on
November 21, 1996 authorizing the issuance of the Bonds.
"Bonds" means the $75,000,000 Polk County Industrial Development
Authority Solid Waste Disposal Facility Revenue Bonds (Tampa Electric Company
Project), Series 1996 and any Bond or Bonds duly issued in exchange or
replacement therefor.
"Business Day" means a day on which banks in each of the cities in which
the designated offices of the Trustee, the Paying Agent and, if applicable,
the Tender Agent and Remarketing Agent are located are not required or
authorized to remain closed and on which the New York Stock Exchange is not
closed.
"Chairman" means the person at the time occupying the office of Chairman
or Vice Chairman of the Authority or any successor to the principal functions
thereof.
"Certified Resolution" means a copy of a resolution or resolutions
certified by the Secretary of the Authority, under its seal, to have been duly
adopted by the Authority and to be in full force and effect on the date of
such certification.
"Construction Fund" means the fund established with the Trustee pursuant
to Section 401.
2<PAGE>
"Continuing Disclosure Agreement" shall mean that certain Continuing
Disclosure Agreement between the Company and the Trustee dated the date of
issuance and delivery of the Bonds, as originally executed and as it may be
amended from time to time in accordance with the terms thereof.
"Counsel" means an attorney at law (who may be of counsel to the
Authority or the Company) satisfactory to the Trustee.
"County" means Polk County, Florida.
"Daily Interest Rate" has the meaning assigned in Section 301.
"Daily Interest Rate Period" means each period during which Bonds bear
interest at Daily Interest Rates.
"Debt Service Fund" means the fund established with the Trustee or the
Paying Agent pursuant to Section 306.
"Duff & Phelps" means Duff & Phelps Credit Rating Co. a corporation
organized and existing under the laws of the State of Illinois, its successors
and assigns, and if such corporation shall be dissolved or liquidated or shall
no longer perform the functions of a securities rating agency, "Duff & Phelps"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Company, with notice to the Trustee and the
Authority.
"Federal Tax Statement" means the Statement as to Tax-Exempt Status of
the Bonds executed by the Company in connection with the original issuance of
the Bonds and delivered to the Authority and the Trustee.
"First Mortgage" means the Indenture of Mortgage, dated as of August 1,
1946, as heretofore and hereafter supplemented and amended, currently by and
between the Company and State Street Bank and Trust Company as trustee.
"First Mortgage Bond Fund" means the fund established with the Trustee
pursuant to Section 308.
"First Mortgage Bonds" means the first mortgage bonds to be created by a
supplemental indenture to the First Mortgage and, at the option of the
Company, delivered to the Trustee pursuant to Section 203 as security for the
Company's obligation to pay the principal of, premium, if any, and interest on
the Bonds.
"Government or Equivalent Obligations" means (i) obligations issued or
guaranteed by the United States of America; and (ii) certificates evidencing
ownership of the right to the payment of the principal of and interest on
obligations described in clause (i), provided that such obligations are held
in the custody of a bank or trust company satisfactory to the Trustee or the
Authority, as the case may be, in a special account separate from the general
assets of such custodian.
"Interest Payment Date" means (i) with respect to any Daily Interest
Rate Period, the first Business Day of each calendar month, (ii) with respect
to any Weekly Interest Rate Period, the first Wednesday of each calendar
month, or if such Wednesday shall not be a Business Day, the next succeeding
3<PAGE>
Business Day, (iii) with respect to any Long-Term Interest Rate Period, the
first day of the sixth calendar month following the effective date of such
Long-Term Interest Rate Period, and the first day of each successive sixth
calendar month, if any, of such Long-Term Interest Rate Period, (iv) with
respect to any Short-Term Segment, the Business Day next succeeding the last
day thereof and (v) with respect to each Interest Rate Period, in addition to
the other dates described above, the day next succeeding the last day of each
Interest Rate Period. Interest shall be payable through each Interest Payment
Date on the basis of a year of 365 or 366 days and actual days elapsed in
Short-Term, Daily and Weekly Interest Rate Periods and a 360-day year
consisting of twelve 30-day months in Long-Term Interest Rate Periods.
"Interest Rate Period" means any Daily Interest Rate Period, Weekly
Interest Rate Period, Short-Term Interest Rate Period and Long-Term Interest
Rate Period.
"IRC" means the Internal Revenue Code of 1986, as it may be amended from
time to time.
"Long-Term Interest Rate" has the meaning assigned in Section 301.
"Long-Term Interest Rate Period" means each period during which a Long-
Term Interest Rate is in effect, which shall be a period of more than 270 days
as determined by the Company.
"Maturity Date" means December 1, 2030.
"Moody's" means Moody's Investors Service, Inc., a corporation organized
and existing under the laws of the State of Delaware, its successors and
assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, "Moody's" shall be
deemed to refer to any other nationally recognized securities rating agency
designated by the Company, with notice to the Trustee and the Authority.
"Officer's Certificate" means a certificate signed by the Chairman of
the Authority.
"Outstanding" when used to modify Bonds, refers to Bonds issued under
this Agreement, excluding: (i) Bonds which have been exchanged, replaced or
delivered to the Trustee for credit against a principal payment; (ii) Bonds
which have been paid; (iii) Bonds which have become due and for the payment of
which moneys have been duly provided to the Trustee or the Paying Agent; and
(iv) Bonds for which there have been irrevocably set aside sufficient funds,
or Government or Equivalent Obligations bearing interest at such rates, and
with such maturities as will provide sufficient funds, without reinvestment,
to pay or redeem them, provided, however, that if any such Bonds are to be
redeemed prior to maturity, the Company shall have taken all action necessary
to redeem such Bonds and notice of such redemption shall have been duly mailed
in accordance with this Agreement or irrevocable instructions so to mail shall
have been given to the Trustee.
"Paying Agent" means the Paying Agent designated from time to time
pursuant to Section 714. "Principal Office" of the Paying Agent means the
office thereof designated as such in writing to the Authority, the Trustee,
the Remarketing Agent and the Company.
4<PAGE>
"Permitted Investments" means (a) Government or Equivalent Obligations,
(b) certificates of deposit or other interest-bearing obligations of any bank
or trust company (including the Trustee and the trustee under the First
Mortgage) authorized to engage in the banking business which shall have a
combined capital, surplus and undivided profits aggregating not less than ten
million dollars ($10,000,000), (c) bonds and other obligations issued by or by
authority of any state of the United States, any territory or possession of
the United States, including the Commonwealth of Puerto Rico and agencies
thereof, or any political subdivision of any of the foregoing, (d) commercial
paper and other corporate debt securities rated, on the date of purchase, in
one of the highest two categories by Moody's or S&P, (e) repurchase agreements
with respect to any of the foregoing obligations or securities with any
banking or financial institution (which may include the Trustee and the
trustee under the First Mortgage) which has a combined capital, surplus and
undivided profits of not less than ten million dollars ($10,000,000),
(f) auction-rate preferred stock rated, on the date of purchase, in the
highest category by Moody's or S&P, (g) participation in 28-day auction-rate
tax-exempt funds rated, on the date of purchase, in the highest category by
Moody's or S&P, or (h) money market funds rated at least AAm or AAm-G by S&P.
"Project" means, collectively, certain solid waste disposal facilities
of the Unit including any structures, machinery, fixtures, improvements and
equipment, all as described in Exhibit A attached hereto, as the same may be
amended from time to time, together with all additions thereto and
substitutions therefor, less any deletions therefrom, as they may at any time
exist.
"Rebate Year" means the year ending December 31.
"Record Date" means with respect to any Interest Payment Date in respect
of a Daily Interest Rate Period, a Weekly Interest Rate Period or a Short-Term
Segment, the Business Day next preceding such Interest Payment Date and, with
respect to any Interest Payment Date in respect of a Long-Term Interest Rate
Period, the fifteenth day next preceding such Interest Payment Date.
"Registered Owner" means the person or persons in whose name or names a
particular Bond shall be registered on the books of the Authority kept for
that purpose in accordance with the terms of this Agreement.
"Registrar" means the registrar appointed in accordance with Section
720. "Principal Office" of the Registrar shall mean the office thereof
designated as such in writing to the Authority, the Trustee, the Remarketing
Agent and the Company.
"Remarketing Agent" means the corporation, association, partnership or
firm acting as Remarketing Agent as provided herein, which may be the Company
and any successor Remarketing Agent appointed from time to time pursuant to
Section 718. "Principal Office" of the Remarketing Agent means the office
designated as such in writing to the Authority, the Trustee, the Paying Agent
and the Company.
"Revenues" means and includes all payments by or on behalf of the
Company to or for the account of the Authority under this Agreement and all
other revenues derived by the Authority from or in connection with this
Agreement, including the income thereon and the investment thereof, if any,
5<PAGE>
and any moneys received on the First Mortgage Bonds but not including payments
with respect to the indemnification or reimbursement of certain expenses of
the Authority under Sections 311(b)(i), 504 and 911 of this Agreement or under
any other guaranty or indemnification agreement.
"S&P" means Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., its successors and their assigns, and, if such entity shall no longer
perform the functions of a securities rating agency, "S&P" shall be deemed to
refer to any other nationally recognized securities rating agency designated
by the Company, with notice to the Trustee and the Authority.
"Secretary" means the person at the time occupying the office of the
Secretary or Assistant Secretary of the Authority or any successor to the
principal functions thereof.
"Short-Term Interest Rate Period" means each period, comprised of one or
more Short-Term Segments, during which Bonds bear interest at Short-Term
Interest Rates.
"Short-Term Segment" means a period from one to 270 days within a Short-
Term Interest Rate Period during which a Short-Term Interest Rate is in
effect.
"State" means the State of Florida.
"Tender Agent" means the tender agent appointed in accordance with
Section 716. "Principal Office" of the Tender Agent shall mean the office
thereof designated in writing to the Authority, the Trustee, the Remarketing
Agent and the Company.
"Treasury Rate" means the interest rate applicable to 13-week United
States Treasury bills determined by the Indexing Agent on the basis of the
average per annum discount rate at which such 13-week Treasury bills shall
have been sold at the most recent Treasury auction.
"Trustee" means The Bank of New York the designated corporate trust
office of which is located in the City of Jacksonville, Florida, and its
successor or successors as Trustee hereunder.
"UCC" means the Florida Uniform Commercial Code.
"Unit" means the integrated coal gasification combined cycle power plant
owned by the Company and located in southwest Polk County, and related support
facilities, as they may at any time exist.
"Weekly Interest Rate Period" means each period during which Bonds bear
interest at Weekly Interest Rates.
Words importing persons include firms, associations and corporations,
and the singular and plural form of words shall be deemed interchangeable
wherever appropriate.
6<PAGE>
ARTICLE II: THE ASSIGNMENT AND PLEDGE.
Section 201. The Assignment and Pledge of Revenues and Funds. The
Authority assigns and pledges to the Trustee in trust upon the terms hereof
(a) all Revenues to be received from the Company or derived from any security
provided hereunder, including the subordinated security interest granted by
the Company herein in the Project, and (b) all rights to receive such Revenues
and the proceeds of such rights. This assignment and pledge does not include
the rights of the Authority pursuant to Sections 311(b)(i), 504 and 911.
Section 202. Creation of Subordinated Security Interest. As security
for the performance by the Company of its obligations under this Agreement,
the Company hereby grants to the Authority a subordinated security interest in
the Project and in each component thereof. It is agreed that the security
interest hereby granted (including the Authority's rights of possession or
repossession of the Project or any rights conferred upon the Authority under
the UCC or otherwise) is hereby made, and shall at all times be, subject to
(i) the rights of the holders of the first mortgage bonds of the Company,
including the First Mortgage Bonds, issued and outstanding or to be issued
under the lien of the First Mortgage and (ii) any future security interest or
lien created to secure any indebtedness or other obligations of the Company
now existing or hereinafter issued or incurred under any indenture or other
instrument which expressly provides that any such security interest or lien
securing such indebtedness or obligations shall be superior to the security
interest hereby granted; provided that nothing in said First Mortgage or in
such other instrument or indenture or in this section shall affect or diminish
the obligations of the Company under this Agreement.
Section 203. Pledge of First Mortgage Bonds.
(a) In order to provide collateral security for the Company's obligations to
make payments of principal, premium, if any, and interest on the Bonds, as
required under this Agreement, the Company may elect to issue and deliver to
the Trustee a series of First Mortgage Bonds (i) registered in the name of the
Trustee, (ii) which shall have the same stated rate or rates of interest prior
to maturity, payable at the same times, and (iii) which shall become due in
the same principal amount or amounts, either by redemption, through operation
of a sinking fund or by maturity, on the same date or dates, as the Bonds.
The First Mortgage Bonds shall be held subject to the terms and provisions of
this Agreement and the First Mortgage.
(b) To exercise the election described in Subsection 203(a), the
Company shall, not less than 14 days prior to the proposed date of delivery of
the First Mortgage Bonds (i) give to the Authority and the Trustee and Moody's
written notice that shall designate the date on which such series of First
Mortgage Bonds shall be delivered and (ii) deliver to the Trustee and the
Authority a written opinion of Bond Counsel to the effect that such election
and the delivery of such series of First Mortgage Bonds will not cause the
interest on the Bonds to become includable in gross income for federal income
tax purposes.
Section 204. Further Assurances. The Company, the Authority and the
Trustee shall from time to time execute, deliver and register, record and file
such instruments as the Authority or the Trustee may reasonably require to
7<PAGE>
confirm, perfect or maintain the security created or intended to be created
hereby.
Section 205. Defeasance. When there are in the Debt Service Fund
sufficient funds, or Government or Equivalent Obligations in such principal
amounts, bearing interest at such rates and with such maturities as will
provide sufficient funds to pay or redeem the Bonds in full, and when all the
rights hereunder of the Authority, the Trustee, the Remarketing Agent, the
Tender Agent and the Paying Agent have been provided for, upon written notice
from the Company to the Authority and the Trustee, the Bondowners shall cease
to be entitled to any benefit or security under this Agreement except the
right to receive payment of the funds deposited and held for payment and other
rights which by their nature cannot be satisfied prior to or simultaneously
with termination of the lien hereof, the security interests created by this
Agreement (except in such funds and investments) shall terminate, and the
Authority and the Trustee shall execute and deliver such instruments as may be
necessary to discharge the lien and security interests created hereunder;
provided, however, that if any such Bonds are to be redeemed prior to the
maturity thereof, the Trustee shall have taken all action necessary to redeem
such Bonds and notice of such redemption shall have been duly mailed in
accordance with this Agreement or irrevocable instructions so to mail shall
have been given to the Trustee and the Paying Agent. Upon such defeasance,
the funds and investments required to pay or redeem the Bonds in full shall be
irrevocably set aside for that purpose, subject, however, to Section 803, and
moneys held for defeasance shall be invested only as provided above in this
section. Any funds or property held by the Trustee or the Paying Agent and
not required for payment or redemption of the Bonds in full shall be
distributed to the Company as provided in Section 803.
Section 206. Termination of Subordinated Security Interest. Upon
satisfaction by the Company of all its obligations under this Agreement, or
upon the satisfaction of the conditions as provided in Section 205, the
Trustee shall cause the execution and delivery to the Company of such
documents as shall be necessary to effect or to evidence the termination of
the subordinated security interest, provided, however, that the subordinated
security interest shall, upon the written request of the Company, be released
with respect to any part of the Project which has been released from the lien
of the First Mortgage pursuant to the provisions thereof or from the lien of
any future security interest or lien superior to the security interest hereby
granted. Upon written request of the Company, accompanied by evidence of the
release of the lien of the First Mortgage or other prior security interest or
lien on any part of the Project, the Trustee shall execute and deliver to the
Company releases or confirmatory certificates that such property is free of
such subordinated security interest.
Section 207. Release of First Mortgage Bonds. To the extent that (a)
Bonds have been paid or become due and sufficient moneys are held by the
Trustee in trust for the payment thereof, (b) Bonds are deemed to have been
paid in accordance with Section 205 and (c) Bonds (other than Bonds which have
been redeemed or called for redemption) have been delivered to, or have been
acquired by, the Trustee and canceled and other Bonds of the same series shall
not be issuable in lieu thereof, in substitution therefor, in exchange
therefor or upon registration of transfer thereof, the obligation of the
Company to make payments with respect to the principal, premium, if any, and
interest on the First Mortgage Bonds, if issued, shall be satisfied and
8<PAGE>
discharged and the Trustee shall release and surrender to the Company First
Mortgage Bonds in an aggregate principal amount equal to the aggregate
principal amount of such Bonds, bearing the same rate or rates of interest as
such Bonds and becoming due, either by redemption through operation of a
sinking fund or by maturity, on the same date or dates as such Bonds.
ARTICLE III: THE BORROWING.
Section 301. The Bonds.
(a) Details of the Bonds. (i) The Bonds shall be issued upon the
Authority's written request in fully registered form and shall be numbered
from 1 upwards in the order of their issuance, or in any other manner deemed
appropriate by the Paying Agent and the Authority. The Bonds shall be
issuable as fully registered bonds without coupons in Authorized
Denominations.
(ii) Each Bond shall be dated December 1, 1996 and shall
mature, subject to prior redemption, upon the terms and conditions hereinafter
set forth, on the Maturity Date. Each Bond shall bear interest from the
Interest Payment Date to which interest has been paid or duly provided for
next preceding its date of authentication, unless (A) such date shall be prior
to the first Interest Payment Date, in which case such Bond shall bear
interest from December 1, 1996 or (B) such date of authentication shall be an
Interest Payment Date to which interest on the Bonds has been paid in full or
duly provided for, in which case such Bond shall bear interest from such date
of authentication; provided, however, that if, as shown by the records of the
Trustee, interest on the Bonds shall be in default, Bonds issued in exchange
for Bonds surrendered for transfer or exchange shall bear interest from the
last date to which interest has been paid in full or duly provided for on the
Bonds or, if no interest has been paid or duly provided for on the Bonds, from
December 1, 1996. Each Bond shall bear interest on overdue principal.
(iii) The Bonds shall be signed on behalf of the Authority
by the manual or facsimile signature of the Chairman and the Secretary and the
corporate seal of the Authority or a facsimile thereof shall be engraved or
otherwise reproduced thereon. The authenticating certificate of the Paying
Agent shall be manually signed on behalf of the Paying Agent as authenticating
agent.
(iv) In case any officer whose manual or facsimile
signature shall appear on any Bond shall cease to be such officer before the
delivery thereof, such manual or facsimile signature shall nevertheless be
valid and sufficient for all purposes as if he or she had remained in office
until after such delivery.
(v) Subject to Subsection 301(c), the principal of,
premium, if any, and interest on the Bonds shall be payable in any coin or
currency of the United States of America which, at the respective dates of
payment thereof, is legal tender for the payment of public and private debts,
and such principal and premium, if any, shall be payable at the Principal
Office of the Paying Agent, or its successor in trust. Payment of interest on
any Interest Payment Date on any Bond shall be made to the Bondowner thereof
9<PAGE>
as of the close of business on the Record Date immediately prior thereto and
shall be made (A) by check or draft mailed on the Interest Payment Date to
such Bondowner at his address as it appears on the registration books of the
Authority or at such other address as is furnished the Registrar in writing by
such Bondowner not later than the close of business on the Record Date
immediately prior to an Interest Payment Date, or (B) except for interest in
respect of a Long-Term Interest Rate Period, transmitted by wire transfer to
the accounts with commercial banks located within the United States of America
of those Bondowners which shall have provided wire transfer instructions to
the Paying Agent prior to the close of business on such Record Date, but, in
the case of interest payable in respect of a Short-Term Segment, only upon
presentation of such Bond for exchange or transfer in accordance with the
provisions hereof, except, in each case, that, if and to the extent that there
shall be a default in the payment of the interest due on such Interest Payment
Date, such defaulted interest shall be paid to the Bondowners in whose names
any such Bonds are registered at the close of business on the fifth (5th)
Business Day next preceding the date of payment of such defaulted interest.
(b) Form of Bonds. The Bonds shall be issued in substantially
the form set forth in Exhibit B attached hereto with appropriate modifications
to reflect the Interest Rate Period of the Bonds in effect from time to time.
(c) Registration of Bonds in the Book-Entry Only System. (i)
The provisions of this Subsection 301(c) shall apply with respect to any Bond
registered to CEDE & CO. or any other nominee of The Depository Trust Company
("DTC") while the Book-Entry Only System (meaning the system of registration
described in paragraph (ii) of this Subsection 301(c)) is in effect. The
Book-Entry Only System shall be in effect for any Interest Rate Period if so
specified by the Company prior to conversion to that Interest Rate Period,
subject to the provisions below concerning termination of the Book-Entry Only
System. Until it revokes such specification in its discretion, the Company
hereby specifies that the Book-Entry Only System shall be in effect while the
Bonds are in Daily, Weekly, Short-Term, or Long-Term Interest Periods.
(ii) The Bonds shall be issued in the form of separate
single authenticated fully registered Bonds in substantially the form provided
for in Subsection 301(b) and in the amount of each separate stated maturity of
such Bonds. On the date of original delivery thereof or date of conversion of
the Bonds to an Interest Rate Period in which the Book-Entry Only System is in
effect, as applicable, the Bonds shall be registered in the registry books of
the Registrar in the name of CEDE & CO., as nominee of The Depository Trust
Company as agent for the Authority in maintaining the Book-Entry Only System.
With respect to Bonds registered in the registry books kept by the Registrar
in the name of CEDE & CO., as nominee of DTC, the Authority, the Paying Agent,
the Company and the Trustee shall have no responsibility or obligation to any
Participant (which means securities brokers and dealers, banks, trust
companies, clearing corporations and various other entities, some of whom or
their representatives own DTC) or to any Beneficial Owner (which means, when
used with reference to the Book-Entry Only System, the person who is
considered the beneficial owner of the Bonds pursuant to the arrangements for
book entry determination of ownership applicable to DTC) with respect to the
following: (A) the accuracy of the records of DTC, CEDE & CO. or any
Participant with respect to any ownership interest in the Bonds, (B) the
delivery to any Participant, any Beneficial Owner or any other person, other
than DTC, of any notice with respect to the Bonds, including any notice of
10<PAGE>
redemption, or (C) the payment to any Participant, any Beneficial Owner or any
other person, other than DTC, of any amount with respect to the principal or
premium, if any, or interest on the Bonds. The Paying Agent shall pay all
principal and premium, if any, and interest on the Bonds only to or upon the
order of DTC, and all such payments shall be valid and effective fully to
satisfy and discharge the Authority's obligations with respect to the
principal of and premium, if any, and interest on Bonds to the extent of the
sum or sums so paid. No person other than DTC shall receive an authenticated
Bond evidencing the obligation of the Authority to make payments of principal
and premium, if any, and interest pursuant to this Agreement. Upon delivery
by DTC to the Trustee of written notice to the effect that DTC has determined
to substitute a new nominee in place of CEDE & CO., the words "CEDE & CO." in
this Agreement shall refer to such new nominee of DTC.
(iii) Upon receipt by the Trustee or the Paying Agent of
written notice from DTC to the effect that DTC is unable or unwilling to
discharge its responsibilities, the Paying Agent shall issue, transfer and
exchange Bonds as requested by DTC in appropriate amounts, and whenever DTC
requests the Authority, the Paying Agent and the Trustee to do so, the
Trustee, the Paying Agent and the Authority will, at the expense of the
Company, cooperate with DTC in taking appropriate action after reasonable
notice (A) to arrange for a substitute bond depository willing and able upon
reasonable and customary terms to maintain custody of the Bonds or (B) to make
available Bonds registered in whatever name or names the Bondowners
transferring or exchanging Bonds shall designate.
(iv) In the event the Company determines that the
Beneficial Owners should be able to obtain Bond certificates, the Company may
so notify DTC, the Authority, the Paying Agent and the Trustee, whereupon DTC
will notify the Participants of the availability through DTC of Bond
certificates. In such event, the Paying Agent shall issue, transfer and
exchange Bond certificates as requested by DTC in appropriate amounts and in
authorized denominations. Whenever DTC requests the Paying Agent to do so,
the Paying Agent will cooperate with DTC in taking appropriate action after
reasonable notice to make available Bonds registered in whatever name or names
the Beneficial Owners transferring or exchanging Bonds shall designate.
(v) Notwithstanding any other provision of this Agreement
to the contrary, so long as any Bond is registered in the name of CEDE & CO.,
as nominee of DTC, all payments with respect to the principal of and premium,
if any, and interest on such Bond and all notices with respect to such Bond
shall be made and given, respectively, to DTC as provided in the Letter of
Representation (the "Representation Letter"), as from time to time in effect.
The form of such Representation Letter may be modified in a manner consistent
with the provisions of this Agreement upon conversion or reconversion of the
Bonds to an Interest Rate Period in which the Book-Entry Only System is in
effect.
(vi) Notwithstanding any provision in Section 303 to the
contrary, so long as all of the Bonds Outstanding are held in the Book-Entry
Only System, if less than all of such Bonds of any one maturity are to be
redeemed upon any redemption of Bonds hereunder, the particular Bonds or
portions of Bonds of such maturity to be redeemed shall be selected by DTC in
such manner as DTC may determine.
11<PAGE>
(vii) So long as the Book-Entry Only System is in effect, a
Beneficial Owner shall elect to have its Bonds purchased or tendered through
its Participant to the Tender Agent and shall effect delivery by causing the
Participant to transfer the Participant's interest in the Bonds on DTC's books
to the Tender Agent. The requirement for physical delivery of Bonds in
connection with a demand for purchase or a mandatory purchase will be deemed
satisfied when the ownership rights in the Bonds are transferred by
Participants on DTC's records.
(d) Interest on the Bonds. (i) The Bonds shall bear interest
from and including the Date of the Bonds as shown on Exhibit B until payment
of the principal or redemption price thereof shall have been made or provided
for in accordance with the provisions hereof, whether at maturity, upon
redemption or otherwise. Interest on the Bonds shall be paid on each Interest
Payment Date. During any Interest Rate Period other than a Long-Term Interest
Rate Period, interest on the Bonds shall be computed upon the basis of a 365
or 366-day year, as applicable, for the number of days actually elapsed.
During any Long-Term Interest Rate Period, interest on the Bonds shall be
computed upon the basis of a 360-day year, consisting of twelve (12) thirty
(30) day months.
(ii) In the manner hereinafter provided, the term of the
Bonds will be divided into consecutive Interest Rate Periods during which the
Bonds shall bear interest at the Daily Interest Rate, the Weekly Interest
Rate, the Short-Term Interest Rate or the Long-Term Interest Rate. The first
Interest Rate Period shall commence on the date of initial authentication and
delivery of the Bonds hereunder and shall be an Interest Rate Period elected
by the Company. The Bonds shall initially bear interest at the rate or rates
per annum established in accordance with such election by the Company and the
provisions of this Agreement, except that the notice requirements of this
Section 301 shall not be applicable.
(e) Daily Interest Rate. (i) Determination of Daily
Interest Rate. During each Daily Interest Rate Period, the Bonds shall bear
interest at the Daily Interest Rate, which shall be determined by the
Remarketing Agent either on each Business Day for such Business Day or on the
next preceding Business Day for the Business Day next succeeding such date of
determination and may be determined by the Remarketing Agent for any day that
is not a Business Day on any such day during which there shall be active
trading in tax-exempt obligations comparable to the Bonds for such day. The
Daily Interest Rate shall be the interest rate determined by the Remarketing
Agent to be the lowest interest rate which in its judgment, on the basis of
prevailing financial market conditions, would permit the sale of Bonds during
the Daily Interest Rate Period at a price (without regard to accrued interest)
equal, as nearly as practicable, to the principal amount thereof; provided,
however, that (A) with respect to any day that is not a Business Day, if the
Remarketing Agent shall not have determined a Daily Interest Rate for such
day, the Daily Interest Rate shall be the same as the Daily Interest Rate for
the immediately preceding day, (B) if, for any reason, a Daily Interest Rate
so determined for any day shall be held to be invalid or unenforceable by a
court of law or if the Remarketing Agent shall not have determined a Daily
Interest Rate, the Daily Interest Rate for such day shall be the same as the
Daily Interest Rate for the immediately preceding Daily Interest Rate Period;
and (C) in no event shall the Daily Interest Rate exceed 14% per annum. The
Remarketing Agent shall provide the Company, the Trustee and Paying Agent with
12<PAGE>
immediate telephonic notice of each Daily Interest Rate, as determined, which
notice shall be promptly confirmed in writing.
(ii) Adjustment to Daily Interest Rate. At any time, the
Company, by written direction to the Authority, the Paying Agent, the Trustee
and the Remarketing Agent, may elect that the Bonds shall bear interest at a
Daily Interest Rate. Such direction (A) shall specify the effective date of
such adjustment to a Daily Interest Rate (which shall be (1) a Business Day
not earlier than the 15th day following the fifth Business Day after the date
of receipt by the Paying Agent and the Trustee of such direction, (2) in the
case of an adjustment from a Long-Term Interest Rate Period, the day
immediately following the last day of the then current Long-Term Interest Rate
Period or a day on which the Bonds would be redeemable pursuant to Section
303(a)(iii) if such adjustment should not occur and (3) in the case of an
adjustment from a Short-Term Interest Rate Period, either (a) the day
immediately following the last day of the then current Short-Term Interest
Rate Period as determined in accordance with Section 301(g)(iv)(I) or (b) for
each Bond, the day immediately following the last day of the last Short-Term
Segment for such Bond in the then current Short-Term Interest Rate Period as
determined in accordance with Section 301(g)(iv)(II)); and (B) if given during
a Long-Term Interest Rate Period, may specify a date or dates prior to such
effective date on or prior to which Bondowners of the Bonds may deliver,
pursuant to Section 302(c), (1) notice regarding the purchase of such Bonds
and (2) such Bonds. During each Daily Interest Rate Period commencing on a
date so specified or determined and ending on the day immediately preceding
the effective date of the next succeeding Interest Rate Period, the interest
rate borne by the Bonds shall be a Daily Interest Rate.
(iii) Notice of Adjustment to Daily Interest Rate Period.
The Paying Agent shall give notice of an adjustment to a Daily Interest Rate
Period to Bondowners not less than 15 days prior to the effective date (or
each effective date in the case of an adjustment from a Short-Term Interest
Rate Period in accordance with the alternative set forth in clause II of
Section 301(g)(iv)) of such Daily Interest Rate Period. Such notice shall
state (1) that the interest rate on the Bonds will be adjusted to a Daily
Interest Rate, (2) the effective date of such Daily Interest Rate Period, (3)
the method by which the Daily Interest Rate shall be determined, (4) the
Interest Payment Dates after such effective date, (5) that Bondowners will
have the right to have their Bonds purchased on such effective date, (6) the
procedures of such purchase, (7) that, subsequent to such effective date,
Bondowners will have the right to require the purchase of Bonds on any
Business Day, (8) the procedures of such purchase, and (9) the redemption
provisions set forth in Section 303 which will apply during such Daily
Interest Rate Period. The Paying Agent shall give notice of any mandatory
redemptions of the Bonds which will apply on such effective date in accordance
with the provisions of Section 303.
(f) Weekly Interest Rate. (i) Determination of Weekly
Interest Rate. During each Weekly Interest Rate Period, the Bonds shall bear
interest at the Weekly Interest Rate, which shall be determined by the
Remarketing Agent no later than 9:30 a.m. on the first day of each new Weekly
Interest Rate Period and thereafter no later than 9:30 a.m. on the Business
Day next preceding Wednesday of each week during such period. The Weekly
Interest Rate shall be the interest rate determined by the Remarketing Agent
to be the lowest interest rate which in its judgment, on the basis of
13<PAGE>
prevailing financial market conditions, would permit the sale of Bonds during
the Weekly Interest Rate Period at a price (without regard to accrued
interest) equal, as nearly as practicable, to the principal amount thereof;
provided, however, that (A) if the Remarketing Agent shall not have determined
a Weekly Interest Rate for any period or if, for any reason, a Weekly Interest
Rate so determined for any period shall be held to be invalid or unenforceable
by a court of law, the Weekly Interest Rate for such period shall be the same
as the Weekly Interest Rate for the immediately preceding period, and (B) in
no event shall the Weekly Interest Rate exceed 14% per annum. The first
Weekly Interest Rate determined for each Weekly Interest Rate Period shall
apply to the period commencing on the first day of such period and ending on
the next succeeding Tuesday. Thereafter, each Weekly Interest Rate shall
apply to the period commencing on Wednesday and ending on the next succeeding
Tuesday; provided, however, if any such Tuesday shall be the day next
preceding the first Wednesday of a month which shall not be a Business Day,
then the Weekly Interest Rate for such period shall not end on such Tuesday,
but shall continue to the day next preceding the first Business Day next
succeeding such Wednesday and the Weekly Interest Rate for the next succeeding
period shall apply to the period commencing on such first Business Day and
provided, further, if a Weekly Interest Rate Period shall end on a day other
than Tuesday, the last Weekly Interest Rate for such Weekly Interest Rate
Period shall apply to the period commencing on the Wednesday preceding the
last day of such Weekly Interest Rate Period and ending on such last day. The
Remarketing Agent shall provide the Company, the Trustee and the Paying Agent
with immediate telephonic notice of each Weekly Interest Rate, as determined,
which notice shall be promptly confirmed in writing.
(ii) Adjustment to Weekly Interest Rate. At any time, the
Company, by written direction to the Authority, the Paying Agent, the Trustee
and the Remarketing Agent, may elect that the Bonds shall bear interest at a
Weekly Interest Rate. Such direction (A) shall specify the effective date of
such adjustment to a Weekly Interest Rate (which shall be (1) a Business Day
not earlier than the 15th day following the fifth Business Day after the date
of receipt by the Paying Agent and the Trustee of such direction, (2) in the
case of an adjustment from a Long-Term Interest Rate Period, the day
immediately following the last day of the then current Long-Term Interest Rate
Period or a day on which the Bonds would be redeemable pursuant to
Section 303(a)(iii) if such adjustment should not occur and (3) in the case of
an adjustment from a Short-Term Interest Rate Period, either (a) the day
immediately following the last day of the then current Short-Term Interest
Rate Period as determined in accordance with Section 301(g)(iv)(I) or (b) for
each Bond, the day immediately following the last day of the last Short-Term
Segment for such Bond in the then current Short-Term Interest Rate Period as
determined in accordance with Section 301(g)(iv)(II); and (B) if given during
a Long-Term Interest Rate Period, may specify a date or dates prior to such
effective date on or prior to which Bondowners of the Bonds may deliver,
pursuant to Section 302(c), (1) notice regarding the purchase of such Bonds
and (2) such Bonds. During each Weekly Interest Rate Period commencing on a
date so specified or determined and ending on the day immediately preceding
the effective date of the next succeeding Interest Rate Period, the interest
rate borne by the Bonds shall be a Weekly Interest Rate.
(iii) Notice of Adjustment to Weekly Interest Rate Period.
The Paying Agent shall give notice of an adjustment to a Weekly Interest Rate
Period to Bondowners not less than 15 days prior to the effective date (or
14<PAGE>
each effective date in the case of an adjustment from a Short-Term Interest
Rate Period in accordance with the alternative set forth in clause II of
Section 301(g)(iv)) of such Weekly Interest Rate Period. Such notice shall
state (1) that the interest rate on the Bonds will be adjusted to a Weekly
Interest Rate, (2) the effective date of such Weekly Interest Rate Period, (3)
the method by which the Weekly Interest Rate shall be determined, (4) the
Interest Payment Dates after such effective date, (5) that Bondowners will
have the right to have their Bonds purchased on such effective date, (6) the
procedures of such purchase, (7) that, subsequent to such effective date,
Bondowners will have the right to require the purchase of Bonds on any
Business Day upon not less than seven days' notice, (8) the procedures of such
purchase, and (9) the redemption provisions set forth in Section 303 which
will apply during such Weekly Interest Rate Period. The Paying Agent shall
give notice of any mandatory redemption of the Bonds which will apply on such
effective date in accordance with the provisions of Section 303.
(g) Short-Term Interest Rate. (i) Determination of Short-
Term Segments and Short-Term Interest Rates. (A) During each Short-Term
Interest Rate Period, each Bond shall bear interest during each Short-Term
Segment for such Bond at the Short-Term Interest Rate for such Bond. The
Short-Term Segment and Short-Term Interest Rate for each Bond shall be
determined by the Remarketing Agent on the first day of each Short-Term
Segment or on a Business Day selected by the Remarketing Agent not more than
five Business Days prior to the first day of such Short-Term Segment. Each
Short-Term Segment shall be a period of not more than 270 days, as determined
by the Company and reported to the Remarketing Agent, or if the Company does
not so report its determination, as determined by the Remarketing Agent based
on its judgment of prevailing financial market conditions to be the period
which, together with all other Short-Term Segments for all Bonds then
Outstanding, will most likely result in the lowest overall interest expense on
the Bonds over the next succeeding 270 days; provided, however, that any such
Bond purchased on behalf of the Company and remaining unsold in the hands of
the Remarketing Agent as of the close of business on the effective date of the
Short-Term Segment for such Bond shall have a Short-Term Segment of one day
or, if such Short-Term Segment would not end on a day immediately preceding a
Business Day, a Short-Term Segment of more than one day ending on the day
immediately preceding the next Business Day; provided, further, however, that
(x) each Short-Term Segment shall end on either a day which immediately
precedes a Business Day or on the day prior to the Maturity Date, and (y) if
for any reason a Short-Term Segment for any Bond so determined shall be held
to be invalid or unenforceable by a court of law, or if the Remarketing Agent
fails to determine a Short-Term Segment such Short-Term Segment shall be one
day in length.
(B) The Short-Term Interest Rate for each Short-Term Segment for
each Bond shall be the rate of interest determined by the Remarketing Agent to
be the lowest interest rate which in its judgment, on the basis of prevailing
financial market conditions, would permit the sale of such Bond for such
Short-Term Segment at a price (without regard to accrued interest) equal, as
nearly as practicable, to the principal amount thereof; provided, however,
that (x) if for any reason a Short-Term Interest Rate so determined for any
Short-Term Segment shall be held to be invalid or unenforceable by a court of
law or if the Remarketing Agent fails to determine the Short-Term Interest
Rate, the Short-Term Segment shall automatically convert to a period of one
day and the Short-Term Interest Rate shall be equal to 100% of the Prime
15<PAGE>
Commercial Paper A-1/P-1 (30 day) rate shown in the table captioned "Short-
Term Tax-Exempt Yields" in the edition of The Bond Buyer published on the day
on which such rate is determined or, if such rate is not published on that
day, the most recent publication of such rate; and (y) in no event shall any
Short-Term Interest Rate be greater than 14% per annum.
(C) The Remarketing Agent shall provide the Company, the Trustee
and the Paying Agent with immediate telephonic notice of each Short-Term
Segment and Short-Term Interest Rate, as determined, which notice shall be
promptly confirmed in writing.
(ii) Adjustment to Short-Term Interest Rates. At any time,
the Company, by written direction to the Authority, the Paying Agent, the
Trustee and the Remarketing Agent, may elect that the Bonds shall bear
interest at Short-Term Interest Rates. Such direction (A) shall specify the
effective date of the Short-Term Interest Rate Period during which the Bonds
shall bear interest at Short-Term Interest Rates (which shall be (1) a
Business Day not earlier than the 15th day following the fifth Business Day
after the date of receipt by the Paying Agent and the Trustee of such
direction, and (2) in the case of an adjustment from a Long-Term Interest Rate
Period, the day immediately following the last day of the then current Long-
Term Interest Rate Period or a day on which the Bonds would be redeemable
pursuant to Section 303(a)(iii) if such adjustment should not occur; provided,
however, that, if prior to the Company making such election any Bonds shall
have been called for redemption and such redemption shall not have theretofore
been effected, the effective date of such Short-Term Interest Rate Period
shall not precede such redemption date); and (B) if given during a Long-Term
Interest Rate Period, may specify the date prior to such effective date on or
prior to which Bondowners of the Bonds may deliver, pursuant to Section 302,
(1) notice regarding the election to have their Bonds purchased and (2) such
Bonds. During each Short-Term Interest Rate Period commencing on the date so
specified and ending, with respect to each Bond, on the day immediately
preceding the effective date of the next succeeding Interest Rate Period with
respect to such Bond, each Bond shall bear interest at a Short-Term Interest
Rate during each Short-Term Segment for such Bond.
(iii) Notice of Adjustment to Short-Term Interest Rate
Period. The Paying Agent shall give notice of an adjustment to a Short-Term
Interest Rate Period to Bondowners not less than 15 days prior to the
effective date of such Short-Term Interest Rate Period. Such notice shall
state (1) that during such Short-Term Interest Rate Period, each Bond will
have consecutive Short-Term Segments during each of which such Bond will bear
a Short-Term Interest Rate, (2) the effective date of such Short-Term Interest
Rate Period, (3) that Bondowners will have the right to have their Bonds
purchased on such effective date, (4) the procedures of such purchase, (5)
that, for each Bond, a Short-Term Segment and a Short-Term Interest Rate
therefor will be determined not later than the first day of each such Short
Term Segment, (6) how such Short-Term Segments and Short-Term Interest Rates
may be obtained from the Remarketing Agent, (7) that interest on each Bond
will be paid on the day next succeeding each Short-Term Segment but only upon
presentation of such Bond, (8) that, subsequent to such effective date, each
Bond shall be purchased on the day following the last day of each Short-Term
Segment with respect thereto unless the Bondowner of such Bond shall elect to
retain such Bond, (9) the procedures of such election, and (10) the redemption
provisions set forth in Section 303 that will apply to the Bonds during such
16<PAGE>
Short-Term Interest Rate Period. The Paying Agent shall give notice of any
mandatory redemptions of the Bonds which will apply on such effective date in
accordance with the provisions of Section 303.
(iv) Adjustment from Short-Term Interest Rate Period. As a
condition precedent to the election during a Short-Term Interest Rate Period
to adjust to a different Interest Rate Period for the Bonds pursuant to
Section 301(e)(ii), (f)(ii) or (h)(ii), the Company shall select, which
selection shall be contained in the Company's notice given pursuant to Section
301(e)(ii), (f)(ii) or (h)(ii), as the case may be, an alternative from the
immediately succeeding clauses (I) and (II) and, in accordance with such
selection, the Remarketing Agent shall effect one of such alternatives: (I)
determine Short-Term Segments of such duration that, as soon as possible, all
Short-Term Segments shall end on the same date, not less than the 15th day
following the fifth Business Day after the receipt by the Paying Agent and the
Trustee of the direction of the Company effecting such election; or (II)
determine Short-Term Segments, that will, in the judgment of the Remarketing
Agent, best promote an orderly transition to the next succeeding Interest Rate
Period. If the alternative in clause (I) above shall be selected, the date on
which all Short-Term Segments so determined shall end shall be the last day of
the then current Short-Term Interest Rate Period and the day next succeeding
such date shall be the effective date of the Daily Interest Rate Period, the
Weekly Interest Rate Period or the Long-Term Interest Rate Period elected by
the Company. If the alternative in clause (II) above shall be selected,
beginning not less than the 15th day following the fifth Business Day after
the receipt by the Paying Agent and the Trustee of the direction of the
Company effecting such election, the day next succeeding the last day of the
then current Short-Term Segment with respect to each Bond shall be, with
respect to such Bond, the effective date of the Daily Interest Rate Period,
the Weekly Interest Rate Period or the Long-Term Interest Rate Period elected
by the Company. The Remarketing Agent, promptly upon the determination
thereof, shall give written notice of such last day and such effective dates
to the Authority, the Company, the Paying Agent and the Trustee.
(v) During any period with respect to the transition of
the Bonds from a Short-Term Interest Rate Period to the next succeeding
Interest Rate Period in accordance with the alternative set forth in clause
(II) of Section 301(g)(iv), Bonds bearing interest at a Short-Term Interest
Rate shall be governed by the provisions of this Agreement applicable to
Short-Term Interest Rate Periods and Bonds bearing interest at the Daily
Interest Rate, Weekly Interest Rate or Long-Term Interest Rate, as the case
may be, shall be governed by the provisions of this Agreement applicable to
such Interest Rate Periods.
(h) Long-Term Interest Rate. (i) Determination of Long-Term
Interest Rate. During each Long-Term Interest Rate Period, the Bonds shall
bear interest at the Long-Term Interest Rate determined by the Remarketing
Agent on a Business Day selected by it, not more than 15 days prior to the
first day of such Long-Term Interest Rate Period. The Long-Term Interest Rate
shall be the rate determined by the Remarketing Agent on such date and filed
on such date with the Paying Agent, the Trustee and the Company, by written
notice or by telephone promptly confirmed by telecopy or other writing, as
being the lowest interest rate which, in the judgment of the Remarketing
Agent, on the basis of prevailing financial market conditions, would permit
the sale of the Bonds on such Business Day at a price (without regard to
17<PAGE>
accrued interest) equal, as nearly as practicable, to the principal amount
thereof, and in no event shall the Long-Term Interest Rate exceed 14% per
annum.
(ii) Adjustment to or Continuation of Long-Term Interest
Rate. At any time, the Company, by written direction to the Authority, the
Paying Agent, the Trustee and the Remarketing Agent, may elect that the Bonds
shall bear, or continue to bear, interest at a Long-Term Interest Rate, and if
it shall so elect, shall determine the duration of the Long-Term Interest Rate
Period during which the Bonds shall bear interest at such Long-Term Interest
Rate. As a part of such election, the Company also may determine that the
initial Long-Term Interest Rate Period shall be followed by successive Long-
Term Interest Rate Periods and, if the Company so elects, shall specify the
duration of each such successive Long-Term Interest Rate Period as provided in
this paragraph (ii). Such direction shall (A) specify the effective date of
each Long-Term Interest Rate Period (which shall be (1) a Business Day not
earlier than the 15th day following the fifth Business Day after the date of
receipt by the Paying Agent and the Trustee of such direction, (2) in the case
of an adjustment from a Short-Term Interest Rate Period, either (a) the day
immediately following the last day of the then current Short-Term Interest
Rate Period as determined in accordance with Section 301(g)(iv)(I) or (b) for
each Bond, the day immediately following the last day of the last Short-Term
Segment for such Bond in the then current Short-Term Interest Rate Period as
determined in accordance with Section 301(g)(iv)(II) and (3) in the case of an
adjustment from a Long-Term Interest Rate Period, the day immediately
following the last day of the then current Long-Term Interest Rate Period or a
day on which the Bonds would be redeemable pursuant to Section 303(a)(iii) if
such adjustment should not occur; provided, however, that if prior to the
Company's making such election, any Bonds shall have been called for
redemption and such redemption shall not have theretofore been effected, the
effective date of such Long-Term Interest Rate Period shall not precede such
redemption date); (B) shall specify the last day of such Long-Term Interest
Rate Period, or, if successive Long-Term Interest Rate Periods shall have been
designated, the last day of each such Long-Term Interest Rate Period (which
shall be either the day prior to the Maturity Date, or a day which both
immediately precedes a Business Day and is more than 270 days after the
effective date thereof); and (C) if given during a Long-Term Interest Rate
Period, may specify a date or dates prior to such effective date on or prior
to which Bondowners may deliver, pursuant to Section 302(c), (1) notice
regarding the purchase of such Bonds and (2) such Bonds. If the Company shall
designate successive Long-Term Interest Rate Periods, but shall not, with
respect to the second or any subsequent Long-Term Interest Rate Period,
specify any of the information described in clauses (A), (B) or (C) above, the
Company, by written direction to the Authority, the Paying Agent, the Trustee
and the Remarketing Agent, given not later than the fifth Business Day
preceding the 16th day prior to the first day of such successive Long-Term
Interest Rate Period, shall specify any of such information not previously
specified with respect to such Long-Term Interest Rate Period. During the
Long-Term Interest Rate Period commencing and ending on the dates so
determined and during each successive Long-Term Interest Rate Period, if any,
the interest rate borne by the Bonds shall be a Long-Term Interest Rate. If,
by the fifth Business Day preceding the 15th day prior to the last day of any
Long-Term Interest Rate Period, the Paying Agent and the Trustee shall not
have received notice of the Company's election that, during the next
succeeding Interest Rate Period, the Bonds shall bear interest at a Daily
18<PAGE>
Interest Rate, a Weekly Interest Rate, a Short-Term Interest Rate or a Long-
Term Interest Rate, the next succeeding Interest Rate Period shall be a Short-
Term Interest Rate Period with a Short-Term Segment that has a duration of one
day.
(iii) Notice of Adjustment to or Continuation of Long-Term
Interest Rate Period. The Paying Agent shall give notice of an adjustment to
a (or the continuation of another) Long-Term Interest Rate Period to
Bondowners not less than 15 days prior to the effective date (or each
effective date in the case of an adjustment from a Short-Term Interest Rate
Period in accordance with the alternative set forth in clause II of Section
301(g)(iv)) of such Long-Term Interest Rate Period. Such notice shall state
(1) that the interest rate on the Bonds will be adjusted to or continue to be,
a Long-Term Interest Rate, (2) the effective date and the last day of such
Long-Term Interest Rate Period, (3) that the Long-Term Interest Rate for such
Long-Term Interest Rate Period will be determined on or prior to the effective
date thereof, (4) how such Long-Term Interest Rate may be obtained from the
Remarketing Agent, (5) the Interest Payment Dates after such effective date,
(6) that Bondowners will have the right to have their Bonds purchased on such
effective date, (7) the procedures of such purchase, (8) that, during such
Long-Term Interest Rate Period, Bondowners will not have the right to require
the purchase of Bonds, except on the day following the last day of such Long-
Term Interest Rate Period, and (9) the redemption provisions set forth in
Section 303 which will apply during such Long-Term Interest Rate Period. The
Trustee shall give notice of any mandatory redemptions of the Bonds which will
apply on such effective date in accordance with the provisions of Section 303.
(i) (Reserved).
(j) Determinations of Remarketing Agent Binding. The
establishment and determination of each Daily Interest Rate, Weekly Interest
Rate, Long-Term Interest Rate and Short-Term Interest Rate by the Remarketing
Agent, shall be conclusive and binding upon the Remarketing Agent, the Paying
Agent, the Trustee, the Authority, the Company and the Bondowners.
(k) Failure to Adjust Interest Rate. (i) In the event that an
attempted adjustment from the Weekly Interest Rate Period or the Daily
Interest Rate Period to another Interest Rate Period as herein provided does
not become effective, the Weekly Interest Rate Period or the Daily Interest
Rate Period then in effect, as the case may be, shall continue in effect.
(ii) In the event that an attempted adjustment from the Short-Term
Interest Rate Period does not become effective, the affected Bonds shall
remain in the Short-Term Interest Rate Period, and automatically convert to a
Short-Term Segment of one day.
(iii) In the event that an attempted adjustment from the Long-Term
Interest Rate Period to another Interest Rate Period or the continuation of
the Long-Term Interest Rate Period as herein provided does not become
effective for any reason, including the failure to determine a Long-Term
Interest Rate, the affected Bonds shall automatically be subject to purchase
by the Company in lieu of redemption as provided in Subsection 303(k) and
thereafter, unless otherwise directed by the Company, shall automatically
convert to the Short-Term Interest Rate Period with a Short-Term Segment of
one day. In such event, the Remarketing Agent shall immediately notify the
19<PAGE>
Company, the Tender Agent, the Trustee and the Paying Agent of the failure to
adjust from the Long-Term Interest Rate.
(iv) Notwithstanding any direction in this Subsection 301(k) to the
contrary, any purchases of Bonds or mandatory redemptions of Bonds (and
purchases in lieu of certain mandatory redemptions) which would have taken
place on the proposed effective date of such adjustment shall take place as if
such attempted adjustment were in fact effective.
Section 302. Purchase of Bonds.
(a) Daily Interest Rate Period. During any Daily Interest Rate Period and
on the day (which must be a Business Day) next succeeding the last day of each
Daily Interest Rate Period, any Bond shall be purchased from its Bondowner by
the Tender Agent or the Remarketing Agent on any Business Day at a purchase
price equal to the principal amount thereof plus accrued interest, if any, to
the date of purchase, upon (i) delivery by the Bondowner to the Tender Agent
at its Principal Office or the Remarketing Agent at its Principal Office, by
no later than 11:00 a.m., on such Business Day, of an irrevocable written
notice or an irrevocable telephonic notice, which states the principal amount
and number of such Bond, and (ii) delivery of such Bond to the Tender Agent
(if such notice was delivered to the Tender Agent) at its Principal Office or
the Remarketing Agent (if such notice was delivered to the Remarketing Agent)
at its Principal Office, accompanied by an instrument of transfer thereof, in
form satisfactory to the Tender Agent or the Remarketing Agent, as the case
may be, executed in blank by the Bondowner thereof with the signature of such
Bondowner guaranteed by a bank, trust company or member firm of the New York
Stock Exchange, at or prior to 12:00 noon, on such Business Day.
(b) Weekly Interest Rate Period. During any Weekly Interest
Rate Period and on the day (which must be a Business Day) next succeeding the
last day of each Weekly Interest Rate Period, any Bond shall be purchased from
its Bondowner by the Tender Agent on any Business Day at a purchase price
equal to the principal amount thereof plus accrued interest, if any, to the
date of purchase, upon (i) delivery by the Bondowner to the Tender Agent at
its Principal Office of an irrevocable written notice or an irrevocable
telephonic notice, promptly confirmed by telecopy or other writing, which
states the principal amount and number of such Bond and the date on which the
same shall be purchased, which date shall be a Business Day not prior to the
seventh day next succeeding the date of the delivery of such notice to the
Tender Agent, and (ii) delivery of such Bond to the Tender Agent at its
Principal Office, accompanied by an instrument of transfer thereof, in form
satisfactory to the Tender Agent, executed in blank by the Bondowner thereof
with the signature of such Bondowner guaranteed by a bank, trust company or
member firm of the New York Stock Exchange, at or prior to 10:00 a.m., on the
date specified in such notice.
(c) On Day Next Succeeding the Last Day of Each Short-Term
Segment or Long-Term Interest Rate Period. On the day next succeeding the
last day of each Short-Term Segment or Long-Term Interest Rate Period, any
Bond shall be purchased from its Bondowner by the Tender Agent, at a purchase
price equal to the principal amount thereof plus accrued interest, if any, to
the date of purchase upon (i) delivery by the Bondowner of such Bond to the
Tender Agent at its Principal Office on or prior to the date specified for
20<PAGE>
such delivery in the notice of the adjustment of such Interest Rate Period
delivered pursuant to Section 301(e)(iii), (f)(iii), (g)(iii), or (h)(iii),
or, if no such date shall have been so specified, (A), in the case of a Short-
Term Segment, 3:00 p.m., on the second Business Day (or if a Short-Term
Segment has a term of only one day, then not later than 3:00 p.m., on the
Business Day) prior to such day or (B), in the case of a Long-Term Interest
Rate Period, on or prior to the seventh day preceding the first day of the
next succeeding Interest Rate Period, of an irrevocable written notice or an
irrevocable telephonic notice promptly confirmed by telecopy or other writing,
which states the principal amount and number of such Bond, and (ii) delivery
of such Bond to the Tender Agent at its Principal Office, accompanied by an
instrument of transfer thereof, in form satisfactory to the Tender Agent,
executed in blank by the Bondowner thereof with the signature of such
Bondowner guaranteed by a bank, trust company or member firm of the New York
Stock Exchange, at or prior to 10:00 a.m., on the date specified for such
delivery in the notice of the adjustment of such Interest Rate Period
delivered pursuant to Section 301(e)(iii), (f)(iii), (g)(iii) or (h)(iii), or,
if no such date shall have been so specified, on the first day of the next
succeeding Interest Rate Period.
(d) On Day Next Succeeding Last Day of Each Short-Term Interest
Rate Period. On the day next succeeding the last day of each Short-Term
Interest Rate Period for a Bond, such Bond shall be purchased from its
Bondowner by the Tender Agent, at a purchase price equal to the principal
amount thereof plus accrued interest, if any, to the date of purchase unless
such Bondowner shall deliver to the Tender Agent at its Principal Office not
later than 3:00 p.m., on the second Business Day (or if a Short-Term Segment
has a term of only one day, then not later than 3:00 p.m., on the Business
Day) prior to such day, such Bond together with written notice which states
the principal amount and number of such Bond and that such Bond shall not be
so purchased. The purchase price of any Bond so purchased shall be payable
only upon surrender of such Bond to the Tender Agent at its Principal Office,
accompanied by an instrument of transfer thereof, in form satisfactory to the
Tender Agent, executed in blank by the Bondowner thereof with the signature of
such Bondowner guaranteed by a bank, trust company or member firm of the New
York Stock Exchange.
(e) Irrevocable Notice or Failure to Give Notice Deemed to be
Tender of Bond. The giving of notice as provided in Section 302(a), (b) or
(c) or the failure to give notice as provided in Section 302(d) shall
constitute the irrevocable tender for purchase of each Bond with respect to
which such notice shall have been given or not given, as the case may be,
irrespective of whether such Bond shall be delivered as provided in such
sections. Upon the purchase as provided in such sections by the Tender Agent
or the Remarketing Agent, as the case may be, of each Bond so deemed to be
tendered, such Bond shall cease to bear interest payable to the former
Bondowner thereof, who thereafter shall have no rights with respect thereto,
other than the right to receive the purchase price thereof upon surrender of
such Bond to the Tender Agent or the Remarketing Agent, as the case may be,
and such Bond shall be no longer outstanding.
(f) Purchase of Bonds Delivered to Remarketing Agent. On the
date Bonds are to be purchased pursuant to Section 302(a) by the Remarketing
Agent, the Remarketing Agent shall purchase, but only from the funds specified
in the next sentence, such Bonds from the Bondowners thereof at a purchase
21<PAGE>
price equal to the principal amount thereof plus accrued interest, if any, to
the date of purchase. Funds for the payment of such purchase price shall be
derived first from the proceeds of the sale of such Bonds pursuant to
Section 313, and second from moneys furnished by the Company to the
Remarketing Agent pursuant to Section 311 of this Agreement. If sufficient
funds are not available to the Remarketing Agent for the purchase of all Bonds
tendered, no purchase shall be consummated.
(g) Purchase of Bonds Delivered to the Tender Agent. On the
date Bonds are to be purchased pursuant to Section 302 by the Tender Agent,
the Tender Agent shall purchase, but only from the funds specified in the next
sentence, such Bonds from the Bondowners thereof at a purchase price equal to
the principal amount thereof plus accrued interest, if any, to the date of
purchase. Funds for the payment of such purchase price shall be derived first
from proceeds of the sale of such Bonds pursuant to Section 313, and second
from moneys furnished by the Company to the Paying Agent pursuant to
Section 311. If sufficient funds are not available to the Tender Agent for
the purchase of all Bonds tendered, no purchase shall be consummated.
(h) Duty of Paying Agent to Hold Purchase Price for Bondowner.
It shall be the duty of the Paying Agent to hold in a separate trust account
the moneys for the purchase price of any Bond required to be delivered to the
Tender Agent in accordance with this Section 302 or Section 303(k) and not so
delivered, without liability for interest thereon, for the benefit of the
former Bondowner, who shall thereafter be restricted exclusively to such
moneys, for any claim of whatever nature on his part under this Agreement or
on, or with respect to, such Bond. Any moneys so deposited with and held by
the Paying Agent not so applied to the purchase of Bonds within one year after
the date of purchase shall be paid by the Paying Agent to the Company upon the
written direction of an Authorized Officer of the Company and thereafter the
former Bondowners shall be entitled to look only to the Company for payment of
such purchase price, and then only to the extent of the amount so repaid, and
the Company shall not be liable for any interest thereon and shall not be
regarded as a trustee of such moneys and the Paying Agent shall have no
further responsibility with respect to such moneys.
(i) Duty of Remarketing Agent to Hold Purchase Price for
Bondowner. It shall be the duty of the Remarketing Agent to hold in a
separate trust account the moneys for the purchase price of any Bond required
to be delivered to the Remarketing Agent in accordance with Section 302(a) and
not so delivered, without liability for interest thereon, for the benefit of
the former Bondowner, who shall thereafter be restricted exclusively to such
moneys, for any claim of whatever nature on his part under this Agreement or
on, or with respect to, such Bond. Any moneys so deposited with and held by
the Remarketing Agent not so applied to the purchase of Bonds within one year
after the date of purchase shall be paid by the Remarketing Agent to the
Company upon the written direction of an Authorized Officer of the Company and
thereafter the former Bondowners shall be entitled to look only to the Company
for payment of such purchase price, and then only to the extent of the amount
so repaid, and the Company shall not be liable for any interest thereon and
shall not be regarded as a trustee of such moneys and the Remarketing Agent
shall have no further responsibility with respect to such moneys.
(j) Delivery of Purchased Bonds. (i) Bonds sold by the
Remarketing Agent pursuant to Section 313 shall be delivered to the purchasers
22<PAGE>
thereof. Bonds purchased by the Remarketing Agent with moneys from the
Company (and not from the proceeds of remarketed Bonds) shall, at the
direction of the Company, be (A) delivered to the Remarketing Agent for
remarketing, (B) canceled or (C) delivered to the Company.
(ii) Bonds purchased by the Tender Agent with moneys from
the Company (and not from the proceeds of remarketed Bonds) shall, at the
direction of the Company, be (A) delivered to the Remarketing Agent for
remarketing, (B) canceled or (C) delivered to the Company.
Section 303. Redemption of the Bonds.
(a) Optional Redemption. (i) During a Daily or Weekly Interest Rate
Period. On any Business Day during a Daily Interest Rate Period or a Weekly
Interest Rate Period, and on the day next succeeding the last day of each such
Interest Rate Period, the Bonds shall be subject to optional redemption by the
Authority, at the written direction of the Company, in whole or in part, at
100% of their principal amount, plus accrued interest, if any, to the
redemption date.
(ii) During a Short-Term Interest Rate Period. On the day
next succeeding the last day of any Short-Term Segment with respect to any
Bond, such Bond shall be subject to optional redemption by the Authority, at
the written direction of the Company, in whole or in part, at 100% of its
principal amount plus accrued interest, if any, to the redemption date.
(iii) During a Long-Term Interest Rate Period. During any
Long-Term Interest Rate Period, and on the day next succeeding the last day of
each Long-Term Interest Rate Period, the Bonds shall be subject to optional
redemption by the Authority, at the written direction of the Company, during
the periods specified below, in whole at any time or in part from time to
time, at the redemption prices (expressed as percentages of principal amount)
hereinafter indicated plus accrued interest, if any, to redemption date:
Length of Long-Term
Interest Rate Period
(expressed in years) Redemption Prices
greater than 15 after 10 years at 102%, declining by
1% on each succeeding anniversary to
100% and thereafter at 100%
less than or equal to 15 after 8 years at 102%, declining by
and greater than 12 1% on each succeeding anniversary to
100% and thereafter at 100%
less than or equal to 12 after 6 years at 101%, declining by
and greater than 9 1% on the next anniversary to 100%
and thereafter at 100%
less than or equal to 9 and after 4 years at 100-1/2%, declining
greater than 6 by 1/2 of 1% on the next anniversary
to 100% and thereafter at 100%
23<PAGE>
less than or equal to 6 and after 2 years at 100-1/2%, declining
greater than 3 by 1/2 of 1% on the next anniversary
to 100% and thereafter at 100%
less than or equal to 3 and
greater than 1 after 1 year at 100%
1 year or less only on day next succeeding last day
of period at 100%
(b) Mandatory Redemption on First Day of Certain Interest Rate
Periods. The Bonds shall be subject to mandatory redemption by the Authority
at the redemption prices specified in Section 303(d) as follows: (i) on the
first day of each Long-Term Interest Rate Period which follows a Daily
Interest Rate Period, a Weekly Interest Rate Period or a Long-Term Interest
Rate Period (other than a Long-Term Interest Rate Period immediately
succeeding a Long-Term Interest Rate Period of more than one year in duration,
both of which shall be equal in length, as nearly as possible taking into
account the requirements of Section 301(h)(ii)); (ii) on the first day of each
Daily Interest Rate Period and Weekly Interest Rate Period which follows a
Long-Term Interest Rate Period; and (iii) on the first day of each Short-Term
Interest Rate Period; provided, that there shall not be so redeemed (A) Bonds
which shall have been purchased in accordance with Section 302 on such
redemption date or on any day during the 10-day period preceding such
redemption date, (B) Bonds or portions of principal amount thereof which will
be in Authorized Denominations on such redemption date with respect to which
the Tender Agent shall have received directions not to so redeem the same from
the owners thereof in accordance with Section 303(h), (C) Bonds issued in
exchange for or upon the registration of transfer of Bonds and such portions
of principal amount referred to in clauses (A) and (B) above, and (D) Bonds or
such portions of principal amount thereof purchased by the Company in
accordance with Section 303(k).
(c) Mandatory Redemption of Bonds Not in Authorized
Denominations. That portion of any Bond which causes such Bond to be not then
in an Authorized Denomination shall be subject to mandatory redemption by the
Authority at the redemption prices specified in Section 303(d) on the first
day of each Daily Interest Rate Period, Weekly Interest Rate Period,
Short-Term Interest Rate Period and Long-Term Interest Rate Period.
(d) Redemption Price with Respect to Certain Redemptions. Any
redemption pursuant to Section 303(b) or (c) shall be at the redemption price
of 100% of the principal amount of the Bonds or, in the case of a redemption
on the first day of an Interest Rate Period which shall be preceded by a
Long-Term Interest Rate Period and which shall commence prior to the day
originally established as the last day of such preceding Long-Term Interest
Rate Period, at a redemption price equal to the redemption price set forth in
Section 303(a)(iii) which would have been applicable to the Bonds on such
redemption date if such preceding Long-Term Interest Rate Period had continued
to the day originally established as its last day.
(e) Special Mandatory Redemption Upon Taxability. If, as a
result of the failure of the Company to observe any covenant, agreement or
representation in this Agreement, a court of competent jurisdiction or any
administrative agency finally determines (such determination not to be
24<PAGE>
considered final unless the Company has been given written notice and, if it
so desires, has been afforded an opportunity, at the Company's expense, to
contest, either directly or in the name of any Bondowner, any such
determination or until the conclusion of any appellate review if sought by the
Company) that the interest payable on any Bond is includable for federal
income tax purposes in the gross income, as defined in Section 61 of the IRC,
of any Bondowner (other than a "substantial user" of the Project or a "related
person," as defined in the IRC), the Bonds shall be subject to special
mandatory redemption prior to maturity, as a whole, or in part if such partial
redemption will preserve the exclusion from gross income for federal income
tax purposes of interest on the remaining Bonds outstanding (and if in part,
to be selected by the Paying Agent or by DTC, as applicable, by lot or in any
other customary manner as determined by the Paying Agent or by DTC, as
applicable) at a redemption price equal to the principal amount thereof, plus
interest accrued to the redemption date, without premium. The Company will
give notice to the Authority, the Trustee and the Paying Agent in writing of
the amount of Bonds to be redeemed and of the date selected for such
redemption not later than 90 days after the date of such final determination,
such redemption date to be not more than 90 days after the date of such
written notice.
(f) Extraordinary Optional Redemption. The Bonds are subject to
redemption prior to maturity at the option of the Company, by notice to the
Trustee, the Paying Agent and the Authority, in whole, at any time, at a
redemption price equal to the principal amount of the outstanding Bonds, plus
accrued interest thereon to the date of redemption, without premium, on any
date selected by the Company, but not less than 45 days after nor more than
180 days after the Company shall have given notice of its exercise of the
right to make such prepayment. The Company may exercise its right to cause
the Bonds to be redeemed at its option, if
(i) in the opinion of the Company, the continued operation
by the Company of the Unit is impracticable, uneconomical or undesirable due
to (A) the imposition of taxes or other liabilities or burdens not being
imposed as of the date of the Bonds, (B) changes in technology or in the
economic availability of raw materials or operating supplies or equipment or
(C) destruction of or damage to all or a substantial portion of the Unit;
provided, however, that the Company may not exercise its right to redeem the
Bonds for reasons described in this clause (i) if any portion of the
redemption price is to be paid from the proceeds of tax-exempt Bonds; or
(ii) all or substantially all of the Unit shall have been
condemned or taken by eminent domain; or
(iii) the operation by the Company of the Unit shall have
been prevented from carrying on normal operations at such Unit for a period of
six months or more; or
(iv) in the event the First Mortgage Bonds have been
issued, all or substantially all the mortgaged and pledged property
constituting bondable property (as defined in the First Mortgage) which at the
time shall be subject to the lien of the First Mortgage as a first lien shall
be released from the lien of the First Mortgage pursuant to the provisions
thereof, and available moneys in the hands of the trustee or trustees at the
time serving as such under the First Mortgage, including any moneys deposited
25<PAGE>
by the Company available for the purpose, are sufficient to redeem all the
first mortgage bonds of all series issued pursuant to the First Mortgage at
the redemption prices (together with accrued interest to the date of
redemption) specified therein applicable to the redemption thereof upon the
happening of such event.
For purposes of clause (i) of this Subsection 303(f), the "opinion of
the Company" shall be expressed to the Authority and the Trustee by delivery
of a certified copy of a resolution of the Board of Directors of the Company
or the Executive Committee thereof stating that it is the opinion of said
Board of Directors or Executive Committee that the circumstances, situations
or conditions described in subclause (A), (B) or (C) of such clause (i) exist
to the extent required for the Company to exercise the option provided.
(g) Payment of Redemption Price and Accrued Interest. Whenever
Bonds are called for redemption, the accrued interest thereon shall become due
on the redemption date and shall be paid from the Debt Service Fund to the
extent available therein. To the extent not otherwise provided, the Company
shall deposit with the Paying Agent prior to the redemption date a sufficient
sum to pay the redemption price of and accrued interest on the Bonds.
(h) Waiver of Redemption by Bondowner. Any Bondowner may direct
the Tender Agent not to redeem its Bonds (or portions of principal amount
thereof in Authorized Denominations) pursuant to Section 303(b) by delivering
to the Tender Agent at its Principal Office on or prior to the date on which
the notice specified in Section 302 is required to be delivered for Bonds to
be purchased (or in the case of any Bond bearing interest at a Short-Term
Interest Rate, not to be purchased) on the date for such redemption, a written
instrument which (1) states that such person is the Bondowner and specifies
the number and denomination of such Bond, (2) states that such Bondowner has
knowledge of the Interest Rate Period to commence on such redemption date, (3)
if applicable, that the redemption price will be at a premium, and (4) directs
the Authority not to redeem such Bond or portion of principal amount thereof
specified therein. Any instrument delivered to the Tender Agent in accordance
with this section shall be irrevocable with respect to the redemption for
which such instrument was delivered and shall be binding upon subsequent
owners of such Bond or portion of principal amount thereof, including Bonds
issued in exchange therefor or upon the registration of transfer thereof; but
such instrument shall have no effect upon any subsequent redemption of Bonds.
(i) Notice of Redemption. (i) Notice of the call for any
redemption of Bonds or any portion thereof (which shall be in Authorized
Denominations, except as provided in Section 303(c)) pursuant to this Section
303 identifying the Bonds or portions thereof to be redeemed, specifying the
redemption date, the redemption price, the place and manner of payment and
that from the redemption date interest will cease to accrue, shall be given by
the Paying Agent by mailing a copy of the redemption notice by first-class
mail to the owner of each Bond to be redeemed in whole or in part at the
address shown on the registration books. In the case of a redemption pursuant
to Section 303(b) or (c), such notice shall be given as a part of the notice
given pursuant to Section 301(e)(iii), (f)(iii), (g)(iii) or (h)(iii), and, in
the case of any other redemption hereunder, such notice shall be given at
least 15 days prior to the date fixed for redemption to the owners of Bonds to
be redeemed; provided, however, that failure to duly give such notice, or any
defect therein, shall not affect the validity of any proceedings for the
26<PAGE>
redemption of Bonds with respect to which no such failure or defect occurred.
Upon presentation and surrender of Bonds so called for redemption in whole or
in part at the place or places of payment, such Bonds or portions thereof
shall be redeemed.
(ii) With respect to any notice of redemption of Bonds in
accordance with Section 303(b), such notice, in addition, shall state (A) the
Interest Rate Period to commence on such redemption date, (B) that Bondowners
may direct the Paying Agent not to so redeem Bonds and the procedures for
doing so, and (C) that all Bonds so called for redemption shall be redeemed,
except (1) Bonds which shall have been purchased in accordance with Section
302 on such redemption date or on any day during the 10-day period preceding
such redemption date, (2) Bonds or portions of principal amount thereof which
will be in Authorized Denominations on such redemption date with respect to
which the Tender Agent shall have received direction not to so redeem the same
from the owners thereof in accordance with Section 303(h), (3) Bonds issued in
exchange for or upon the registration of transfer of Bonds referred to in
clauses (1) and (2) above, and (4) Bonds or such portions of principal amount
thereof purchased by the Company in accordance with Section 303(k).
(iii) Any notice mailed as provided in this section shall be
conclusively presumed to have been duly given, whether or not the Bondowner
receives the notice.
(j) Partial Redemption of Bonds. (i) In case a Bond is of a
denomination larger than the minimum Authorized Denomination, all or a portion
of such Bond may be redeemed provided the principal amount not being redeemed
is in an Authorized Denomination.
(ii) Upon surrender of any Bond for redemption in part
only, the Paying Agent shall authenticate and deliver to the owner thereof,
without cost to the Bondowner, a new Bond or Bonds of Authorized Denominations
in aggregate principal amount equal to the unredeemed portion of the Bond
surrendered.
(k) Purchase by Company In Lieu of Redemption. (i) Bonds or
portions thereof called for and subject to redemption pursuant to Section
303(b) shall be purchased by the Company on the date upon which such Bonds or
portions of Bonds were to have been redeemed at a purchase price equal to the
price at which such Bonds or portions of Bonds were to have been redeemed, if
the Company shall give written notice to the Trustee, the Paying Agent, the
Tender Agent and the Remarketing Agent before such date specifying the
principal amount of Bonds or portions of Bonds to be so purchased.
(ii) Bonds or portions thereof called for and subject to
purchase by the Company pursuant to Section 301(k)(iii) shall be purchased by
the Company on the date of the failure to convert from or determine the Long-
Term Interest Rate at a purchase price equal to the principal amount thereof.
(iii) The Tender Agent shall pay the purchase price of Bonds
or portions thereof to be so purchased by the Company from moneys deposited
with the Tender Agent by the Company (which moneys must be deposited with the
Tender Agent by the Company on or prior to such purchase date). If sufficient
funds are not available for the purchase of all Bonds tendered on any delivery
date on which Bonds are to be purchased, no purchase shall be consummated.
27<PAGE>
(iv) Bonds or portions thereof purchased by the Tender
Agent pursuant to this Section 303(k) shall be delivered by the Tender Agent
to or for the account of the Company within five (5) Business Days thereafter.
(v) Any other provisions of this Agreement to the contrary
notwithstanding, Bonds or portions thereof purchased by the Company pursuant
to this Section 303(k) shall not be remarketed or delivered by the Paying
Agent to the purchasers thereof except in Authorized Denominations (which may
be accomplished by exchanging, by or at the direction of the Company, Bonds or
portions thereof which are not in such Authorized Denominations for a Bond or
Bonds which are in Authorized Denominations in accordance with the provisions
of this Agreement).
(vi) Bonds or portions of Bonds to be purchased by the
Company which are not delivered to the Tender Agent on the date on which such
Bonds or portions of Bonds were to have been redeemed shall be deemed to have
been purchased by the Company, and the Company shall be the owner of such
Bonds or portions of Bonds for all purposes under this Agreement, but subject
to the provisions of this Agreement, whereupon interest accruing after such
date on such Bonds or portions of Bonds shall no longer be payable to the
former owners thereof but shall be paid to the Company. Subject to and in
accordance with the provisions of this Agreement, the Paying Agent shall
authenticate a new Bond or Bonds in an aggregate principal amount equal to the
principal amount of Bonds or portions of Bonds purchased in accordance with
this Section 303(k), whether or not the Bonds or portions of Bonds so
purchased are presented by the owners thereof, bearing a number or numbers not
contemporaneously outstanding. The Paying Agent shall maintain a record of
the serial numbers of the Bonds or portions of Bonds deemed to have been
purchased by the Company, together with the names and addresses of the former
owners thereof.
(l) Selection of Bonds for Redemption. Subject to the provisions of
Section 301(c)(vi) if less than all of the Bonds are called for redemption,
the Paying Agent shall select the Bonds or portions thereof to be redeemed, in
such manner as in the Paying Agent's sole discretion it shall deem appropriate
and fair. The Paying Agent shall promptly notify the Authority and the
Company in writing of the Bonds or portions thereof selected for redemption;
provided, however, that in connection with any redemption of Bonds the Paying
Agent shall first select for redemption any Bonds held by the Tender Agent or
the Remarketing Agent, if any for the account of the Company or held of record
by the Company. If it is determined that one or more, but not all, of the
portions of principal amount represented by any such Bond is to be called for
redemption, then, upon notice of intention to redeem such portion or portions,
the owner of such Bond shall forthwith surrender such Bond to the Paying Agent
for (a) payment to such Bondowner of the redemption price of the portion or
portions of principal amount called for redemption, and (b) delivery to such
Bondowner of a new Bond or Bonds in the aggregate principal amount of the
unredeemed balance of the principal amount of the Bond. New Bonds
representing the unredeemed balance of the principal amount of such Bonds
shall be issued to the owner thereof, without charge therefor. If the owner
of any such Bond shall fail to present such Bond to the Paying Agent for
payment and exchange as aforesaid, such Bond shall, nevertheless, become due
and payable on the date fixed for redemption to the extent of the portion or
portions of principal amount called for redemption (and to that extent only).
28<PAGE>
Section 304. Application of Bond Proceeds. Upon the receipt of the
proceeds of the initial sale of the Bonds, including accrued interest, if any,
the Authority shall make payments from such proceeds as follows: (a) a sum
equal to the accrued interest, if any, on the Bonds shall be deposited in the
Debt Service Fund; and (b) the balance shall be deposited in the Construction
Fund.
Section 305. Reserved.
Section 306. Debt Service Fund.
(a) A Debt Service Fund is hereby established and maintained by the Trustee
if the Trustee also serves as the Paying Agent, and otherwise the Debt Service
Fund shall be established and maintained by the Paying Agent, and moneys shall
be deposited therein as provided in this Agreement. Accrued interest, if any,
received upon the sale of Bonds shall be deposited in the Debt Service Fund.
The moneys in the Debt Service Fund and any investments held as part of such
Fund shall be held in trust and, except as otherwise provided, shall be
applied solely to the payment of the principal, redemption premium, if any,
and interest on the Bonds. If at any time the amount deposited by the Company
in the Debt Service Fund with respect to payments currently due pursuant to
Section 311 is in excess of the amount required to be so deposited, the
Trustee or the Paying Agent, as appropriate, shall, upon the request of the
Company, transfer such excess to the Company unless there is then an Event of
Default known to the Trustee or the Paying Agent, as appropriate, with respect
to payments to the Debt Service Fund or to the Trustee, the Paying Agent or
the Authority, in which case the excess shall be applied to such payments.
(b) The Company shall deposit moneys into the Debt Service Fund
for the payment of Bonds in immediately available funds at the opening of
business on the date on which the payment is required to be made hereunder.
Section 307. Reserved.
Section 308. First Mortgage Bond Fund. A First Mortgage Bond Fund is
hereby established with the Trustee. There shall be deposited to the credit
of the First Mortgage Bond Fund all payments, if any, made on the First
Mortgage Bonds, if any. The moneys in the First Mortgage Bond Fund shall be
held by the Trustee in trust in the Debt Service Fund and applied first to the
amounts which the Company may be required to pay to the Trustee or the Paying
Agent, as appropriate, and the balance, if any, shall be applied to the
redemption of Bonds and, pending such application, shall be subject to a lien
and charge in favor of the Bondowners.
Section 309. Expenses of Issue. The Company shall pay from its own
funds all expenses of issue of the Bonds, including underwriting charges as
may be agreed, in excess of the expenses permitted to be paid from the
proceeds of the Bonds. No more than 2% of the proceeds of the Bonds shall be
used to pay such expenses.
Section 310. Application of Moneys. If available moneys in the Debt
Service Fund are not sufficient on any day to pay all principal, redemption
premium, if any, and interest on the Outstanding Bonds then due or overdue,
such moneys (other than any sum in the Debt Service Fund irrevocably set aside
29<PAGE>
for the redemption of particular Bonds or required to purchase Bonds under
outstanding purchase contracts) shall, after payment of all charges and
disbursements of the Trustee and Paying Agent in accordance with this
Agreement, be applied first to the payment of interest, including interest on
overdue principal, in the order in which the same became due (pro rata with
respect to interest which became due at the same time) and second to the
payment of principal and redemption premiums, if any, without regard to the
order in which the same became due (in proportion to the amounts due). For
this purpose interest on overdue principal shall be treated as coming due on
the first day of each month. Whenever moneys are to be applied pursuant to
this section, such moneys shall be applied by the Trustee or the Paying Agent
from time to time, having due regard to the amount of such moneys available
for application and the likelihood of additional moneys becoming available for
such application in the future. Whenever the Trustee or the Paying Agent
shall apply such moneys pursuant to this section, it shall fix the date (which
shall be the first of a month unless the Trustee or the Paying Agent shall
deem another date more suitable) upon which such application is to be made,
and upon such date interest on the amounts of principal paid on such date
shall cease to accrue. The Trustee or the Paying Agent shall give such notice
as it may deem appropriate of the fixing of any such date. When interest or a
portion of the principal is to be paid on an overdue Bond, the Paying Agent
may require presentation of the Bond for endorsement of the payment.
Section 311. Payments by the Company.
(a) Debt Service. (i) Not later than the opening of business on the
Business Day on which a payment of principal or interest is due, the Company
shall pay or cause to be paid to the Trustee or the Paying Agent, as
appropriate, for deposit in the Debt Service Fund an amount available on such
payment date equal to such payment less the amount, if any, in the Debt
Service Fund and available therefor.
(ii) The payments to be made under the foregoing subsection
shall be appropriately adjusted to reflect the date of issue of Bonds, accrued
interest deposited in the Debt Service Fund, if any, and any purchase or
redemption of Bonds so that there will be available on each payment date in
the Debt Service Fund the amount necessary to pay the interest and principal
and premium, if any, due or coming due on the Bonds and so that accrued
interest will be applied to the installments of interest to which it is
applicable.
(iii) At any time when any principal of the Bonds is
overdue, the Company shall also have a continuing obligation to pay to the
Trustee or the Paying Agent, as appropriate, for deposit in the Debt Service
Fund an amount equal to interest on the overdue principal but the installment
payments required under this section shall not otherwise bear interest.
Redemption premiums shall not bear interest.
(iv) Payments by the Company to the Trustee or the Paying
Agent, as appropriate, for deposit in the Debt Service Fund under this
Agreement shall discharge the obligation of the Company to the extent of such
payments; provided, that if any moneys are invested in accordance with this
Agreement and a loss results therefrom so that there are insufficient funds to
30<PAGE>
pay principal and interest on the Bonds when due, the Company shall supply the
deficiency.
(b) Additional Payments. (i) Within thirty (30) days after
notice from the Authority, the Company shall pay to the Authority all
expenditures (except general administrative expenses or overhead) reasonably
incurred by the Authority by reason of this Agreement.
(ii) Within thirty (30) days after notice from the Trustee,
the Company shall pay to the Trustee its reasonable fees and expenses as set
forth in Section 702 of this Agreement.
(iii) Within thirty (30) days after notice from the Paying
Agent, the Company shall pay to the Paying Agent its reasonable fees and
expenses, as set forth in Section 702 of this Agreement.
(c) Company's Purchase of Bonds. If the amount received by the
Paying Agent or the Remarketing Agent for the purchase of Bonds tendered
pursuant to Section 302 is not sufficient to pay the purchase price of such
Bonds on the date when due, the Company shall pay the amount of such
deficiency to the Paying Agent or the Remarketing Agent, as the case may be,
in accordance with Section 313(c). Bond certificates shall not be issued,
transferred or exchanged with respect to Bonds the purchase price of which has
been paid by the Company ("Borrower Bonds") until transferred pursuant to the
following sentence. Borrower Bonds shall, upon written instructions of the
Company to the Paying Agent, be canceled or transferred to the Remarketing
Agent for delivery to or at the direction of any purchaser of such Bonds from
the Company. Any Borrower Bond shall not be subject to purchase under Section
302.
Section 312. Unconditional Obligation. To the extent permitted by law,
the obligation of the Company to make payments to the Authority, the Paying
Agent and the Trustee under this Agreement shall be absolute and
unconditional, shall be binding and enforceable in all circumstances
whatsoever, shall not be subject to setoff, recoupment or counterclaim and
shall be a general obligation of the Company to which the full faith and
credit of the Company are pledged.
Section 313. Remarketing of Bonds Tendered.
(a) Notice of Tendered Bonds. By 11:00 a.m., on the date the Tender Agent
receives notice by any Bondowner in accordance with Section 302(a) and
promptly but in no event later than the Business Day following the day on
which the Tender Agent receives notice from any Bondowner of its demand to
have the Tender Agent purchase Bonds pursuant to Section 302(b) or (c) and
promptly after the Tender Agent receives notice from any Bondowner under
Section 302(d) of its election not to have a Bond purchased, the Tender Agent
shall give telegraphic, telecopy or telephonic notice to the Remarketing Agent
and the Company specifying the principal amount of Bonds which such Bondowner
has demanded to have purchased or not to have purchased, as the case may be,
and shall promptly deliver a copy of such written notice from the Bondowner to
the extent received to each of such parties. Not later than 12:00 noon, on
the date on which Bonds are to be purchased pursuant to Section 302(a), and
not later than 3:00 p.m., on the Business Day next preceding the date on which
Bonds are to be purchased under Section 302(b), (c) or (d), the Remarketing
Agent shall give telegraphic or telephonic notice, promptly confirmed in
31<PAGE>
writing, to the Paying Agent, the Trustee and the Company specifying the
names, addresses, and taxpayer identification numbers of the purchasers of,
and the principal amount and denominations of, such Bonds, if any, to be sold
by it pursuant to subsection (b) of this section, the purchase price at which
the Bonds are to be sold, and their date of sale.
(b) Remarketing of Bonds by the Remarketing Agent. Upon the
giving of notice to the Remarketing Agent by any Bondowner in accordance with
Section 302(a), the Remarketing Agent shall offer for sale and use its best
efforts to sell at the best available price the Bonds referred to in such
notice on the date on which such Bonds are to be purchased as provided in
Section 302(a). Upon the giving of notice to the Tender Agent by any
Bondowner in accordance with Section 302(a), (b) or (c) and the giving of
notice to the Remarketing Agent as provided in Section 313(a) with respect to
such notices, and upon each date upon which Bonds are to be purchased in
accordance with Section 302(d) unless the Tender Agent gives notice to the
Remarketing Agent as provided in Section 313(a) that a Bondowner has elected
not to have a Bond purchased under Section 302(d), the Remarketing Agent shall
offer for sale and use its best efforts to sell at the best available price
such Bonds on the date such Bonds are to be purchased in accordance with
Section 302.
(c) Procedure and Sources of Payment. Not later than 12:00
noon, on the date of purchase of Bonds tendered pursuant to Section 302, the
Remarketing Agent shall give notice to the Company, the Paying Agent, the
Tender Agent and the Trustee, promptly confirmed in writing to the Company, of
the aggregate amount which the Remarketing Agent has received for the purchase
of such Bonds. If the Paying Agent has not received such notice from the
Remarketing Agent by 1:00 P.M., on the purchase date for the purchase of Bonds
tendered to the Tender Agent, the Paying Agent will arrange to obtain an
amount from the Company, at the time and in the manner described in the
following sentence, which is sufficient to purchase all Bonds tendered to the
Tender Agent pursuant to Section 302. Not later than 2:00 P.M., on the
purchase date, the Company shall pay to the Paying Agent in immediately
available funds the amount necessary to purchase the Bonds tendered to the
Tender Agent pursuant to Section 302, for which the Remarketing Agent has not
received the purchase price, and the Company shall pay to the Remarketing
Agent in immediately available funds the amounts necessary to purchase the
Bonds tendered to the Remarketing Agent pursuant to Section 302(a) for which
the Remarketing Agent has not received the purchase price. The Remarketing
Agent shall transfer to the Paying Agent all amounts received by the
Remarketing Agent for the purchase of Bonds tendered to the Tender Agent in
immediately available funds by 3:00 P.M., on the purchase date, provided,
however, that in the event that any Bond is sold by the Remarketing Agent at a
price in excess of the purchase price thereof, such excess shall be paid to
the Company.
(d) No Sales After Events of Default. Anything in this
Agreement to the contrary notwithstanding, if there shall have occurred and be
continuing an Event of Default described in the first paragraph of Section
901, there shall be no sales of Bonds pursuant to this section.
Section 314. Mutilated, Destroyed, Lost or Stolen Bonds. In the event
any Bond or temporary Bond is mutilated, lost, stolen or destroyed, the Paying
Agent may authenticate a new Bond duly executed by the Authority of like date
32<PAGE>
and denomination as that mutilated, lost, stolen or destroyed; provided that,
in the case of any mutilated Bond, such mutilated Bond shall first be
surrendered to the Paying Agent, and in the case of any lost, stolen or
destroyed Bond, there shall be first furnished to the Paying Agent evidence of
such loss, theft or destruction satisfactory to the Paying Agent, together
with indemnity to the Authority and the Paying Agent satisfactory to them. In
the event any such Bond shall have matured, instead of issuing a duplicate
Bond, the Paying Agent on behalf of the Authority may pay the same without
surrender thereof. The Authority and the Paying Agent may charge the
Bondowner with their reasonable fees and expenses in this connection. The
Authority shall cooperate with the Paying Agent in connection with the issue
of replacement Bonds, but nothing in this section shall be construed in
derogation of any rights which the Authority, the Company or the Paying Agent
may have to receive indemnification against liability, or payment or
reimbursement of expenses, in connection with the issue of a replacement Bond.
All Bonds shall be held and owned upon the express condition that the
foregoing provisions are, to the extent permitted by law, exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Bonds, and shall preclude any and all other rights or remedies.
Section 315. Temporary Bonds. Pending preparation of definitive Bonds,
or by agreement with the purchasers of all Bonds, the Authority may issue and,
upon its request, the Paying Agent shall authenticate, in lieu of definitive
Bonds, one or more temporary printed or typewritten Bonds in Authorized
Denominations of substantially the tenor recited above. Upon request of the
Authority, the Paying Agent shall authenticate definitive Bonds in exchange
for any temporary Bonds upon surrender of an equal principal amount of
temporary Bonds. Until so exchanged, temporary Bonds shall have the same
rights, remedies and security hereunder as definitive Bonds.
Section 316. Cancellation and Destruction of Bonds. All Bonds paid or
redeemed, either at or before maturity shall be delivered to the Paying Agent
when such payment or redemption is made, and such Bonds, together with all
Bonds purchased by the Paying Agent and all Bonds surrendered in any exchanges
or transfers, shall thereupon be promptly canceled. Bonds so canceled may at
any time be cremated or otherwise destroyed by the Paying Agent, which shall
execute a certificate of cremation or destruction in duplicate by the
signature of one of its authorized officers describing the Bonds so cremated
or otherwise destroyed, and one executed certificate shall be filed with the
Company and the other executed certificate shall be retained by the Paying
Agent.
Section 317. Refunding Bonds. The Authority may issue, and expressly
reserves the right to issue, to the extent permitted by law, refunding bonds
under another indenture to refund all or any principal amount of the Bonds;
provided, however, that the net proceeds of any such bonds used to refund all
or any principal amount of the Bonds shall be paid directly to the Trustee for
the Bondowners and shall not come into the possession or control of the
Company.
33<PAGE>
ARTICLE IV: THE PROJECT.
Section 401. Construction Fund. A Construction Fund is hereby
established and maintained by the Trustee and moneys shall be deposited
therein as provided by this Agreement.
The moneys in the Construction Fund shall be held by the Trustee in
trust and, subject to the provisions of Sections 403 and 404 of this
Agreement, shall be applied to the payment of the cost of the Project and,
pending such application, shall be subject to a lien and charge in favor of
the holders of the Bonds issued and outstanding under this Agreement and for
the further security of such holders until paid out or transferred as herein
provided.
Section 402. Payments From Construction Fund. Payment of the cost of
the Project shall be made from the Construction Fund. All payments from the
Construction Fund shall be subject to the provisions and restrictions set
forth in this Article.
Section 403. Items of Cost. For the purposes of this Agreement, the
cost of the Project shall embrace all the costs, but only the costs, permitted
by the Act of acquiring, constructing and installing the Project and, without
intending thereby to limit or restrict any proper definition of such cost
under the Act, shall include:
(a) Payment to the Company of such amounts, if any, as shall be
necessary to reimburse the Company in full for all advances and payments
made by it or for its account at any time prior to or after the delivery
of the Bonds for expenditures in connection with the acquisition of any
property required for the Project, including payment of any short-term,
temporary or other borrowings, bonds, notes or other evidences of
indebtedness (including any unpaid fees, charges or costs in connection
therewith), the proceeds of which have been applied to the payment of
items of the cost of the Project, the preparation of plans and
specifications for the Project (including any preliminary study or
planning of the Project or any aspect thereof and any reports or
analyses concerning the Project), the acquisition, construction and
installation of the Project including reimbursement to the Company for
allowance for interest paid on indebtedness incurred for the Project
during construction prior to the date of the Bonds, interest on the
Bonds during construction which shall mean a period beginning with the
date of delivery of the Bonds and ending on the date the acquisition,
construction and installation for the Project shall have been completed,
except if the Project shall consist of facilities which will be placed
in service at different times, the date of which interest may be paid
from Bond proceeds will be the date upon which the facilities financed
from Bond proceeds will be placed in service and all real or personal
property deemed necessary in connection with the Project, or any one or
more of said expenditures (including architectural, engineering and
supervisory services).
(b) Payment for labor, services, materials and supplies used or
furnished in site improvement and in the acquisition, construction and
installation of the Project, all as provided in the plans and
specifications therefor, payment for the cost of the acquisition,
34<PAGE>
construction and installation of utility services or other facilities,
and all real and personal property deemed necessary in connection with
the Project and payment for the miscellaneous expenses incidental to any
of the foregoing items.
(c) To the extent not paid by a contractor in connection with
any part of the Project, payment of the premiums on all insurance
required to be taken out and maintained until the completion date, or
reimbursement thereof, if paid by the Company.
(d) Payment of the taxes, assessments and other charges, if any,
that may become payable until the completion date, or reimbursement
thereof, if paid by the Company.
(e) Payment of expenses incurred with approval of the Company in
seeking to enforce any remedy against any contractor or subcontractor in
respect of any default under a contract relating to the Project.
(f) Payment, as they become due, of the fees and expenses of the
Paying Agent properly incurred under this Agreement that may become due
until the Completion Date.
(g) Payment of any other costs and expenses relating to the
acquisition, construction and installation of the Project (including
testing).
(h) Payment of costs of issuing the Bonds, but only in an amount
not in excess of 2% of the sale proceeds of the Bonds.
Section 404. Disbursements. Payments from the Construction Fund shall
be made by the Trustee to or upon the order of the Company in accordance with
the provisions of this Section, but no such payment shall be made unless and
until the Trustee shall receive a requisition, prepared and signed by an
Authorized Officer of the Company, stating:
(a) the item number of each such payment;
(b) the name of the person, firm or corporation to whom each
such payment is due;
(c) the respective amounts to be paid;
(d) the purpose by general classification for which each
obligation to be paid was incurred;
(e) that obligations in the stated amounts have been incurred
and are presently due and payable and that each item thereof is a proper
charge against the Construction Fund and has not been the subject of a
previous withdrawal from the Construction Fund;
(f) that to the best of his knowledge, there has not been filed
with or served upon the Company notice of any lien, right or attachment
upon, or claim affecting the right of any such persons, firms or
corporations to receive payment of, the respective amounts stated in
35<PAGE>
such requisition which has not been released or will not be released
simultaneously with the payment of such obligation;
(g) that, after giving effect to such requisition, not less than
95% of the proceeds of the Bonds and any investment earnings thereon
will have been used to provide "solid waste disposal facilities" within
the meaning of Section 142(a)(6) of the IRC; and
(h) that after giving effect to the payment of the requisition,
the use of all proceeds of the Bonds and any investment earnings thereon
complies with the limitations contained in the Federal Tax Statement.
Upon receipt of any such requisition, the Trustee shall pay such
obligation from the Construction Fund. If prior to payment of any items in a
requisition the Company should for any reason desire not to pay such item, the
Company shall give written notice of such decision to the Trustee (and the
Trustee may conclusively rely upon such written notice). In making any
disbursement the Trustee shall pay each such obligation directly to the
Company or to any payee designated by an Authorized Officer of the Company, as
set forth in such requisition.
Section 405. Reliance on Requisitions. All requisitions received by
the Trustee, as required in this Article as conditions of payment from the
Construction Fund, may be conclusively relied upon by the Trustee, and shall
be retained by the Trustee, subject at all reasonable times to examination by
the Company, the Issuer and the agents and representatives thereof.
Section 406. Completion of the Project.
(a) Upon the receipt by the Trustee of a certificate of an
Authorized Officer of the Company to the effect that the Project has
been completed, any balance remaining in the Construction Fund (other
than amounts retained by the Trustee to pay costs not then due and
payable or for which the liability for payment is in dispute) shall be
(i) applied to the redemption of Bonds at the earliest date permitted by
this Agreement or (ii) applied to such other purposes as shall, in the
opinion of Bond Counsel, not be inconsistent with the provisions of the
Act as it shall then be in effect and not cause the interest on any of
the Bonds to become subject to federal income taxes then in effect,
which opinion shall be in writing and filed by the Company with the
Authority and the Trustee prior to the application of any such amount.
From time to time as the proper disposition of the amounts retained in
the Construction Fund shall be determined, to the extent that such
amounts are not to be paid out by the Trustee pursuant to Section 404
hereof, upon notification by the Company, the Trustee shall deposit such
amounts in the Debt Service Fund to be applied as aforesaid. Until such
time as the proceeds remaining in the Construction Fund are applied as
set forth above, such proceeds shall not be invested at a yield which
exceeds the yield on the Bonds, except to the extent approved in an
opinion of Bond Counsel.
(b) In the event that the Company exercises an option under this
Agreement to effect the redemption of all the Bonds then outstanding,
the Trustee shall, upon the written direction of the Company, deposit in
36<PAGE>
the Debt Service Fund, on the date the prepayment is made, any balance
remaining in the Construction Fund.
(c) If the principal of all outstanding Bonds shall have become
due and payable in accordance with Section 901 of this Agreement, the
Trustee shall forthwith deposit in the Debt Service Fund any balance
remaining in the Construction Fund.
(d) If any acceleration shall be rescinded in accordance with
Section 902 hereof, the Trustee shall transfer from the Debt Service
Fund to the Construction Fund an amount, not to exceed the balance then
to the credit of the Debt Service Fund, equal to the amount previously
transferred pursuant to clause (c) of this Section 406 from the
Construction Fund to the Debt Service Fund.
Section 407. Transfer of Money from Fund on Repurchase or Redemption of
Bonds. Whenever the Company shall exercise its option or shall be required
under Section 203 of this Agreement to deposit with the Trustee money or
Government or Equivalent Obligations in an amount sufficient to discharge this
Agreement, any amounts remaining in the Construction Fund shall be paid over
to the Debt Service Fund to be held by the Trustee in order to provide for the
proper and timely redemption of the Bonds in accordance with this Agreement,
such payment to the Trustee to be made immediately prior to the deposit by the
Company of such money or Government or Equivalent Obligations.
Section 408. Rebate.
(a) Payment of Rebate to the United States. (i) No later than
sixty (60) days after the close of the fifth Rebate Year following the date of
issue of the Bonds (or any earlier date that may be required) and the close of
each fifth Rebate Year thereafter, the Company shall pay to the United States
on behalf of the Authority the full amount then required to be paid under IRC
section 148(f) and the regulations thereunder (the "Rebate Provision"). Within
sixty (60) days after the Bonds of a series have been paid in full, the Company
shall pay to the United States on behalf of the Authority the full amount then
required to be paid under the Rebate Provision. Each such payment shall be
made to the Internal Revenue Service Center, Philadelphia, Pennsylvania, 19255
or any successor location specified by the Internal Revenue Service,
accompanied by a Form 8038-T (or other similar information reporting form)
prepared by the Institution.
(ii) No later than fifteen (15) days prior to each date on
which a payment could become due under Paragraph (a)(i) (a "Rebate Payment
Date"), the Company shall deliver to the Authority and the Trustee a
certificate either summarizing the determination that no amount is required to
be paid or specifying the amount then required to be paid pursuant to
Paragraph (a)(i). If the certificate specifies an amount to be paid, (A) such
certificate shall be accompanied by a completed Form 8038-T, which is to be
signed by an officer of the Authority, and shall include a certification
stating that the Form 8038-T is accurate and complete, and (B) no later than
ten (10) days after the Rebate Payment Date the Company shall furnish to the
Authority and the Trustee a certificate stating that such amount has been
timely paid.
37<PAGE>
(b) Records. The Company, the Trustee and the Authority shall
keep such records as will enable them to fulfill their responsibilities under
this section and the Rebate Provision.
(c) Interpretation of this Section. The purpose of this Section
408 is to satisfy the requirements of the Rebate Provision. Accordingly, this
section shall be construed so as to meet such requirements. The Company
covenants that all action taken under this section shall be taken in a manner
that complies with the Rebate Provision and that it shall neither take any
action nor omit to take any action that would cause the Bonds to be arbitrage
bonds by reason of the failure to comply with the Rebate Provision. To the
extent any payment of rebatable arbitrage or penalty in lieu of rebate is not
timely made to the United States, the Company shall pay to the United States
on behalf of the Authority any correction amount, interest, penalty, or other
amount necessary to prevent any series of Bonds from becoming arbitrage bonds
within the meaning of IRC Section 148. The Company covenants that to the
extent necessary it shall obtain the advice and assistance of experts to aid
it in complying with the Rebate Provision.
Section 409. Maintenance and Modifications of Project by Company.
Subject to the provisions of Section 410, the Company agrees that so long as
any Bonds are outstanding it will at its own expense maintain, repair and
operate the Project. The Company may make modifications to completed
components of the Project.
Section 410. Removal of Portions of the Project.
(a) The Company shall not be under any obligation to renew, repair or replace
any inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary
portion of the Project. In any instance where the Company determines that any
portion of the Project has become inadequate, obsolete, worn-out, unsuitable,
undesirable or unnecessary, the Company may remove such portion from the
Project and sell, trade in, exchange or otherwise dispose of such removed
portion of the Project without any responsibility or accountability to the
Authority, the Trustee or the holders of the Bonds.
(b) The removal of any portion of the Project pursuant to the
provisions of this Section shall not entitle the Company to any abatement or
diminution of the amounts required to be paid with respect to the Bonds.
Section 411. Assignment, Leasing and Sale by the Company. This
Agreement may be assigned, and the Project may be leased or sold as a whole or
in part, by the Company without the necessity of obtaining the consent of
either the Authority or the Trustee, subject, however, except as provided in
Section 503, to each of the following conditions:
(a) no assignment, lease or sale shall relieve the Company from liability
for any of its obligations hereunder, and, in the event of any such
assignment, lease or sale, the Company shall continue to remain primarily
liable for the payments required to be made pursuant to this Agreement and for
the performance and observance of the other agreements on its part herein
contained;
38<PAGE>
(b) the assignee, lessee or buyer shall assume the obligations
of the Company hereunder to the extent of the interest assigned, leased or
sold, and may assume the Company's obligations under Article III;
(c) the Company shall, not later than 10 days prior to the
delivery thereof, furnish or cause to be furnished to the Authority and to the
Trustee a true and complete copy of the form of each such proposed assignment,
lease or conveyance, as the case may be; and
(d) the Company shall, not later than the effective date of such
sale, assignment or lease, furnish or cause to be furnished to the Authority
and the Trustee a written opinion of Bond Counsel that such sale, assignment
or lease will not cause the interest on the Bonds to become includable in
gross income for federal income tax purposes.
ARTICLE V: THE COMPANY.
Section 501. Representations by the Company. The Company makes the
following representations as of the date of delivery of this Agreement:
(a) The Company is a corporation organized and existing under
the laws of the State of Florida and has power to enter into this Agreement;
(b) By proper corporate action, the officers of the Company
executing and attesting this Agreement have been duly authorized to execute
and deliver this Agreement;
(c) Neither the execution or delivery of this Agreement or the
consummation of the transactions contemplated herein (including, without
limitation, execution and delivery of the First Mortgage Bonds, if any, nor
the fulfillment of or compliance with the terms hereof) will conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, the Company's Restated Articles of Incorporation, its bylaws or
any indenture, mortgage, deed of trust or other agreement or instrument to
which the Company is now a party or by which it is bound;
(d) The facilities comprising the Project constitute a "project"
within the meaning of Section 159.27(5), Florida Statutes.
(e) The Company has caused and will cause the acquisition,
construction and installation of the Project at the Unit, pursuant to the
terms and conditions expressed herein, all for the purpose of promoting
effective and efficient solid waste disposal throughout the State;
(f) Not less than 95% of the proceeds of the Bonds and any
investment earnings thereon will be used to pay costs of "solid waste disposal
facilities" within the meaning of Section 142(a)(6) of the IRC; and
(g) All necessary authorizations, approval, consents and other
orders of any governmental authority or agency for the execution and delivery
by the Company of this Agreement have been obtained and are in full force and
effect.
39<PAGE>
Section 502. Access to the Project. The Authority and its duly
authorized agents shall have such rights of access to the Project and the Unit
as may be reasonably necessary to inspect the Project.
Section 503. Company To Maintain Its Corporate Existence; Conditions
Under Which Exceptions Permitted. The Company agrees that, so long as any
Bonds are Outstanding, it will maintain its corporate existence, will not
dissolve or otherwise dispose of all or substantially all of its assets and
will not consolidate with or merge into another corporation or permit one or
more other corporations to consolidate with or merge into it; provided that
the Company may, without violating its agreement contained in this section,
consolidate with or merge into another corporation, or permit one or more
other corporations to consolidate with or merge into it, or sell or otherwise
transfer to another corporation all or substantially all of its assets as an
entirety and thereafter dissolve, provided the surviving, resulting or
transferee corporation, as the case may be (if other than the Company), is a
corporation organized and existing under the laws of one of the states of the
United States and assumes in writing all of the obligations of the Company
herein and, if not a Florida corporation, is qualified to do business in the
State.
Section 504. Indemnification Covenants.
(a) The Company hereby agrees to indemnify the Authority, the
Paying Agent, the Registrar, the Tender Agent, the Remarketing Agent and the
Trustee against claims arising out of the construction or operation of the
Project and to pay or bond and discharge and indemnify and hold harmless the
Authority from and against (i) any lien or charge upon payments by the Company
to or for the account of the Authority hereunder and (ii) any taxes,
assessments, impositions and other charges of any federal, state or municipal
government or political body in respect of the Project. If any such claim is
asserted, or any such lien or charge upon payments, or charges are sought to
be imposed, the Authority, the Paying Agent, the Tender Agent, the Remarketing
Agent or the Trustee, as the case may be, shall give prompt notice to the
Company, and the Company shall pay the same or bond and assume the defense
thereof (and if bonded, with a bonding company and in an amount reasonably
satisfactory to the Authority), with full power to contest, litigate,
compromise or settle the same in its sole discretion.
(b) The Company shall at all times protect and hold the
Authority, its members, officers and employees, its agents and attorneys, the
Trustee, the Paying Agent, the Registrar, the Tender Agent and the Remarketing
Agent harmless against any claim or liability arising from this Agreement, the
Bond Resolution, the issuance of the Bonds and all transactions pertaining
thereto, including but not limited to any loss or damage to property or any
injury to or death of any person that may be occasioned by any cause
whatsoever pertaining to the Project or to the use thereof, in excess of any
insurance proceeds available to the Authority in connection therewith, such
indemnification to include reasonable expenses and attorney's fees incurred by
the Authority, its members, officers and employees, and its agents and
attorneys, the Trustee, the Paying Agent, the Registrar, the Tender Agent and
the Remarketing Agent in connection therewith. Nothing contained herein shall
require the Company to indemnify the Authority for any claim or liability
resulting from the willfully wrongful acts or gross negligence of the
Authority, its members, officers, employees, agents or attorneys or of the
40<PAGE>
officers, employees, agents or attorneys for the Trustee, the Paying Agent,
the Registrar, the Tender Agent or the Remarketing Agent.
Section 505. Consent to Assignment of Contract Rights by the Authority.
The Company hereby consents to the pledge and assignment by the Authority to
the Trustee of (i) all of its rights under this Agreement (except its rights
under Sections 311(b)(i) and 911 to payment of certain costs and expenses and
under Section 504 to indemnification) to the Trustee for the benefit of the
holders from time to time of the Bonds as security for payment of the
principal of and premium, if any, and interest on the Bonds, (ii) its
subordinated security interest in the Project and (iii) any interest it may
have in the First Mortgage Bonds, if any, as additional security for the
payment of the principal of and premium, if any, and interest on the Bonds.
The Company hereby agrees that by virtue of such pledge and assignment the
Trustee may enjoy and enforce all such rights of the Authority hereunder.
Section 506. Obligations of Company Hereunder Unconditional.
(a) Until such time as the principal of and premium, if any, and
interest on the Bonds shall have been fully paid or deemed to have been paid
as provided pursuant to Section 205 of this Agreement, the Company's
obligations under this Agreement shall be absolute and unconditional, and the
Company (i) will not suspend or discontinue payment of any amounts required to
be paid by it hereunder, (ii) will perform and observe all of its other
agreements contained in this Agreement, and (iii) except as permitted by this
Agreement, will not terminate this Agreement for any cause, including, without
limiting the generality of the foregoing, the occurrence of any act or
circumstance that may constitute failure of consideration, destruction of or
damage to the Project, commercial frustration of purpose, any change in the
tax or other laws of the United States of America or of the State or any
political subdivision of either of them, any failure of the Authority or the
Trustee to perform or observe any agreement, whether express or implied, or
any duty, liability or obligation arising out of or connected with this
Agreement, or arising out of any indebtedness or liability at any time owing
to the Company by the Authority or the Trustee.
(b) Nothing contained in this section will be construed to
release the Authority from the performance of any of the agreements on its
part herein contained; and in the event the Authority should fail to perform
any such agreement on its part, the Company may institute such action against
the Authority as the Company may deem necessary to compel performance of the
Authority hereunder so long as such action shall not violate the agreements on
the part of the Company contained in Subsection 504(a) or diminish the amounts
required to be paid by the Company under this Agreement. The Company may
also, at its own cost and expense and in its own name or in the name of the
Authority, prosecute or defend any action or proceeding or take any other
action involving third persons which the Company deems reasonably necessary in
order to secure or protect its right of possession, occupancy and use
hereunder, and in such event the Authority hereby agrees to cooperate fully
with the Company and, at the Company's expense, to take all action necessary
to effect the substitution of the Company for the Authority in any action or
proceeding if the Company shall so request.
Section 507. Tax Status of Bonds. The Company will perform its
obligations and agreements contained in the Federal Tax Statement as if they
41<PAGE>
were set forth herein. Any covenants, agreements or representations made by
the Company in the Federal Tax Statement shall be performed and treated as if
set forth herein. The Authority will, at the expense of the Company,
cooperate with the Bondowners and the Company to the extent deemed necessary
or permitted by law in the opinion of Bond Counsel in order to preserve the
exclusion of interest on the Bonds from the gross income of the owners thereof
for federal income tax purposes.
Section 508. Continuing Disclosure. The Company and the Trustee hereby
covenant and agree that each will comply with and carry out all of the
provisions of the Continuing Disclosure Agreement applicable to it and this
Section 508 of this Agreement. The Authority shall have no liability to the
owners of the Bonds or any other person with respect to such disclosure
matters. Notwithstanding any other provision of this Agreement, failure of
the Company or the Trustee to comply with the Continuing Disclosure Agreement
shall not be considered an Event of the Default; however, the Trustee may
(and, at the request of the owners of at least 25% aggregate principal amount
of Outstanding Bonds, shall) or any owner (including a beneficial owner) of
Bonds may seek specific performance of the Company's or the Trustee's
obligations to comply with the Continuing Disclosure Agreement or this Section
508 and not for money damages in any amount.
ARTICLE VI: THE AUTHORITY.
Section 601. Representations by the Authority. The Authority makes the
following representations as of the date of delivery of this Agreement:
(a) The Authority covenants that it is duly authorized under the
laws of the State, including particularly and without limitation the Act, to
issue the Bonds authorized hereby and to execute this Agreement, to assign the
payments and amounts hereby assigned in the manner and to the extent herein
set forth and to undertake the transactions contemplated by this Agreement and
to carry out its obligations hereunder, and that all action on its part for
the issuance of the Bonds and the execution and delivery of this Agreement has
been duly and effectively taken; and
(b) By proper action of the Authority, the officers of the
Authority executing and attesting this Agreement have been duly authorized to
execute and deliver this Agreement.
Section 602. No Warranty of Condition or Suitability by the Authority.
THE AUTHORITY MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE
CONDITION OF THE PROJECT OR ITS SUITABILITY FOR THE COMPANY'S PURPOSES OR
NEEDS.
Section 603. Payment of Principal, Premium and Interest. The Authority
covenants that it will promptly pay the principal of, premium, if any, and
interest on every Bond issued under this Agreement but only from the Revenues
and any accrued interest on the Bonds deposited in the Debt Service Fund as
provided herein at the place, on the dates, from the funds and in the manner
provided herein and in said Bonds according to the true intent and meaning
thereof.
42<PAGE>
Section 604. Authority To Use Best Efforts To Require Company To Make
Payments. The Authority shall use its best efforts, acting through the
Trustee, to require the Company to pay all of the payments and other costs and
charges payable by the Company under this Agreement.
Section 605. Take Further Action. The Authority covenants that it
shall from time to time execute and deliver such further instruments and take
such further action as may be reasonable and as may be required to carry out
the purposes of this Agreement; provided, however that no such instruments or
actions shall pledge the credit of the Authority.
Section 606. No Disposition of Revenues. The Authority agrees that,
except for its pledge and assignment to the Trustee hereunder, the Authority
will not pledge, assign, mortgage, encumber, convey or otherwise transfer any
of its interest or rights to the Revenues or otherwise under this Agreement;
provided, however, that if the laws of the State at the time shall so permit,
nothing contained in this section shall prevent the consolidation of the
Authority with, or merger of the Authority into, any public corporation the
property and income of which are not subject to taxation; and provided,
further, that upon any such consolidation, merger or transfer, the due and
punctual payment of the principal of, premium, if any, and interest on the
Bonds according to their tenor, and the due and punctual performance and
observance of all the agreements and conditions of this Agreement to be kept
and performed by the Authority, shall be expressly assumed in writing by the
entity resulting from such consolidation or surviving such merger.
Section 607. No Extensions. In order to prevent any accumulation of
claims for interest after maturity, the Authority will not directly or
indirectly extend or assent to the extension of the time of payment of claims
of interest on any of the Bonds and will not directly or indirectly be a party
to or approve any such arrangement by purchasing or funding such claims for
interest or in any other manner. In case any such claim for interest shall be
extended or funded in violation hereof, such claim for interest shall not be
entitled, in case of any default hereunder, to the benefit or security of this
Agreement except subject to the prior payment in full of the principal of and
premium, if any, on all Bonds issued and outstanding hereunder, and all claims
for interest which shall not have been so extended or funded.
Section 608. Covenant To Perform Further Acts. The Authority covenants
that it will, at the expense of the Company, do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, such
supplements and amendments to this Agreement and such further acts,
instruments and transfers as the Trustee may reasonably require in order to
fully preserve, protect and perfect the rights and security of the Bondowners
and the rights of the Trustee under this Agreement. The Authority further
covenants to file such information reports as may be required by federal or
State law which reports shall be prepared by the Company and submitted to the
Authority for execution.
Section 609. Faithful Performance. The Authority covenants that it
will faithfully perform at all times any and all covenants, undertakings,
stipulations and provisions required to be performed by it and contained in
this Agreement, in any and every Bond executed and delivered hereunder and in
all of its proceedings pertaining hereto.
43<PAGE>
ARTICLE VII: THE TRUSTEE AND PAYING AGENTS;
REMARKETING AGENT; TENDER AGENT; REGISTRAR.
Section 701. Conditions of Trust. The Trustee (which term shall be
deemed to include for purposes of this Section 701 the Paying Agent, Registrar
and Tender Agent, unless the context otherwise requires) hereby accepts the
trusts imposed upon it by this Agreement, and agrees to perform said trusts,
but only upon and subject to the following express terms and conditions:
(a) The Trustee may execute any of the obligations or powers
hereof and perform any of its duties either directly or by or through
attorneys, agents, receivers or employees and the Trustee shall not be
responsible for any misconduct or negligence on the part of any attorney,
agent, receiver or employee appointed with due care by it hereunder.
(b) The Trustee may consult with counsel concerning all matters
of trust hereof and duties hereunder, and the written advice of such counsel
or any opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Trustee shall not be responsible for, nor have any
liability with respect to, any recital herein or in the Bonds (except in
respect of the certificate of the Trustee endorsed on the Bonds), the validity
of this Agreement or of any supplements hereto or instruments of further
assurance, the maintenance, validity or sufficiency of the security for the
Bonds issued hereunder or intended to be secured hereby, or any lien or
property to be created hereby, but the Trustee may require of the Authority or
the Company full information and advice as to the performance of the
covenants, conditions and agreements aforesaid.
(d) The Trustee shall not be accountable for, or have any
liability with respect to, the use of any Bonds authenticated or delivered
hereunder after such Bonds shall have been delivered in accordance with
instructions of the Authority. The Trustee may become the owner of Bonds
secured hereby with the same rights which it would have if it were not the
Trustee.
(e) The Trustee shall be fully protected in acting upon any
notice, request, consent, certificate, order, affidavit, letter, telegram or
other paper or document believed in good faith to be genuine and correct and
to have been signed or sent by the proper person or persons. Any action taken
by the Trustee pursuant to this Agreement upon the request or authority or
consent of any person who at the time of making such request or giving such
authority or consent is the owner of any Bond shall be conclusive and binding
upon all future owners of the same Bond or portions thereof and upon Bonds
issued in exchange therefor or for portions thereof or in place thereof.
(f) As to the existence or nonexistence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon a certificate of the Authority signed by (i)
the Chairman or the Secretary of the Authority, or (ii) any other duly
authorized person (such authority to be conclusively evidenced by an
appropriate Certified Resolution of the Authority) or any certificate signed
by an Authorized Officer of the Company as sufficient evidence of the facts
44<PAGE>
therein contained, and prior to the occurrence of a default of which the
Trustee has been notified as provided in subsection (h) of this section, or of
which by said subsection it is deemed to have notice, the Trustee shall also
be at liberty to accept a similar certificate to the effect that any
particular dealing, transaction or action is necessary or expedient, but may
at its discretion secure such further evidence deemed necessary or advisable,
but shall in no case be bound to secure the same. The Trustee may accept a
certificate of the Secretary of the Authority under its seal to the effect
that a resolution has been duly adopted, and is in full force and effect.
(g) The permissive right of the Trustee to do things enumerated
in this Agreement shall not be construed as a duty, and the Trustee shall not
be answerable for other than its gross negligence or willful misconduct. In
the exercise of such of the rights and powers vested in it by this Agreement,
the Trustee shall use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(h) The Trustee shall not be required to take notice or be
deemed to have notice of any default hereunder except (i) failure by the
Authority to cause to be made any of the payments to the Trustee required to
be made by Article III hereof and (ii) default of which the Trustee has actual
knowledge, unless the Trustee shall be specifically notified in writing of
such default by the Authority or by the holders of at least 25% in aggregate
principal amount of Bonds then Outstanding; and all notices or other
instruments required by this Agreement to be delivered at the designated
corporate trust office of the Trustee in Jacksonville, Florida must, in order
to be effective, be delivered at the principal office of the Trustee, and in
the absence of such notice so delivered the Trustee may conclusively assume
there is no default except as aforesaid. For the purposes hereof, the Trustee
shall not be deemed to have actual knowledge of any default or Event of
Default unless a trust officer, assistant trust officer or other person
charged with the administration of the obligations of the Trustee hereunder
shall during the course of his duties have actual knowledge thereof.
(i) The Trustee shall not be personally liable for any debts
contracted or for damages to persons or to personal property injured or
damaged or for salaries or nonfulfillment of contracts during any period in
which it may be in the possession of or managing the real and tangible
personal property as in this Agreement provided.
(j) The Trustee shall not be required to give any bond or surety
in respect of the execution of the said trusts and powers or otherwise in
respect of the premises.
(k) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers.
(l) All money received by the Trustee or any paying agent shall,
until used or applied or invested as herein provided, be held in trust for the
purposes for which it was received but need not be segregated from other funds
except to the extent required by this Agreement or by law.
45<PAGE>
(m) The Trustee shall not be bound to make an investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties, but the Trustee, in
its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine during
normal business hours and upon reasonable notice the books, records and
premises of the Authority, personally or by agent or by attorney.
Section 702. Reimbursement of Administrative Expenses.
(a) The Trustee, the Tender Agent, the Registrar, any paying
agent and the Remarketing Agent shall be entitled to payment and/or
reimbursement for Administrative Expenses, including reasonable fees for their
services rendered hereunder and all advances, counsel fees and other expenses
reasonably and necessarily made or incurred by them in connection with such
services under this Agreement. The Trustee and any paying agent shall be
entitled to payment and reimbursement for their reasonable fees and charges as
paying agents for the Bonds as hereinabove provided. Upon the occurrence of
an Event of Default, but only upon an Event of Default, the Trustee and any
paying agent shall have a first lien with right of payment prior to payment on
account of interest or principal of any Bond for the foregoing advances, fees,
costs and expenses incurred by them, respectively, or any indemnification due,
on moneys held by the Trustee hereunder, other than moneys held for the
payment of Bonds which are deemed to have been purchased or paid (including
payment upon acceleration of maturity) under the terms of this Agreement.
(b) All fees, charges and other compensation to which the
Trustee, the Tender Agent, the Registrar, any paying agent and the Remarketing
Agent may be entitled under the provisions of this Agreement are required to
be paid by the Company, and, accordingly, the Authority shall not be liable in
any respect to indemnify such entities for fees, charges and other
compensation to which they may be entitled and, by acceptance of the trusts
hereunder, each entity shall be deemed to have agreed to the foregoing.
Section 703. Trustee To Give Notice to Bondowners in Event of Default.
If a default or Event of Default occurs of which the Trustee is by reason of
subsection (h) of Section 701 required to take notice or if notice of default
be given as provided in said subsection (h), and such Event of Default shall
have continued for two (2) days after the Trustee acquired actual notice
thereof (unless such default shall have been cured or waived), then the
Trustee shall give notice thereof by mailing written notice thereof to all
registered holders of Bonds (as the names and addresses of such holders appear
upon the books for registration and transfer of Bonds as kept by the
Registrar), the Paying Agent, the Tender Agent and the Remarketing Agent.
Section 704. Trustee's Right To Intervene; First Mortgage Bonds.
(a) In any judicial proceedings to which the Authority is a
party and which in the opinion of the Trustee and its counsel has a
substantial bearing on the interests of the Bondowners, the Trustee may
intervene on behalf of Bondowners and shall do so if requested in writing by
the holders of at least 25% of the aggregate principal amount of Bonds then
46<PAGE>
outstanding. The rights and obligations of the Trustee under this section are
subject to the approval of a court of competent jurisdiction.
(b) Except as required to effect an assignment to a successor
Trustee or as required in Section 207 hereof, the Trustee shall not sell,
assign or transfer any First Mortgage Bond, if any, and the Trustee is
authorized to enter into an agreement with the Company to such effect,
including a consent to the issuance of stop transfer instructions to the First
Mortgage Trustee.
(c) If First Mortgage Bonds shall have been delivered in
connection with the Bonds, the Trustee, as a holder of such First Mortgage
Bonds, shall attend any meeting of first mortgage bondholders under the First
Mortgage as to which it receives due notice. Either at such meeting, or
otherwise where consent of holders of First Mortgage Bonds of the Company is
sought without a meeting, the Trustee shall vote pursuant to the direction of
the Bondowners as provided in Section 904.
Notwithstanding the foregoing, the Trustee shall not vote as such holder
in favor of, or give its consent to, any action which, in the Trustee's
opinion, would materially adversely affect the interests of the Bondowners,
except upon notification by the Trustee to the Bondowners of such proposal and
consent thereto of the holders of at least two-thirds (2/3) in aggregate
principal amount of the Bonds then outstanding or, if such proposal would so
affect the rights of some but less than all the outstanding Bonds, the consent
thereto of the holders of at least two-thirds (2/3) in aggregate principal
amount of all Bonds so affected voting as a class.
Section 705. Successor Trustee Upon Merger, Etc. Any corporation or
association into which the Trustee may be converted or merged, or with which
it may be consolidated, or to which it may sell or transfer its corporate
trust business and assets as a whole or substantially as a whole, or any
corporation or association resulting from any such conversion, sale, merger,
consolidation or transfer to which it is a party, ipso facto, shall be and
become successor Trustee hereunder and vested with all the trusts, powers,
discretions, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any further
acts, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 706. Resignation of Trustee. A Trustee and any successor
Trustee may resign by giving 60 days' written notice by first class mail to
the Authority, the Company, the Remarketing Agent, the Paying Agent, the
Tender Agent and to each Registered Bondowner then outstanding as shown on the
Bond Register, prior to the date specified in such notice when such
resignation shall take effect. Such resignation shall take effect only upon
the appointment of a successor or temporary Trustee by the Bondowners or by
the Authority as hereinafter provided. Such notice to the Authority, the
Company, the Remarketing Agent and the Paying Agent may be served personally
or sent by registered mail or telegram.
Section 707. Removal of Trustee. The Trustee may be removed at any
time by an instrument or concurrent instruments in writing delivered to the
Trustee, the Authority, the Company, the Remarketing Agent, the Tender Agent
47<PAGE>
and the Paying Agent and signed by the owners of a majority in aggregate
principal amount of Bonds then outstanding.
Section 708. Appointments of Successor Trustee. In case the Trustee
hereunder shall resign or be removed, or be dissolved, or shall be in the
course of dissolution or liquidation, or otherwise become incapable of acting
hereunder, or in the case it shall be taken under control of any public
officer or officers, or of a receiver appointed by a court, a successor may be
appointed by the owners of a majority in aggregate principal amount of Bonds
then outstanding, by an instrument or concurrent instruments in writing signed
by such owners, or by their attorneys in fact, duly authorized; provided,
however, that in case of such vacancy the Company shall forthwith appoint a
temporary successor Trustee to fill such vacancy until a successor Trustee
shall be appointed by the Bondowners in the manner above provided, and any
such temporary successor Trustee as appointed by the Company shall immediately
and without further act be superseded by the successor Trustee so appointed by
such Bondowners. If no appointment of a successor is made within sixty (60)
days after the giving of written notice in accordance with Section 706 or
after the occurrence of any other event requiring or authorizing such
appointment, the outgoing Trustee or any Bondowner may apply to any court of
competent jurisdiction for the appointment of such a successor, and such court
may thereupon, after such notice, if any, as such court may deem proper,
appoint such successor. Every such successor Trustee and temporary successor
Trustee appointed pursuant to the provisions of this section shall be a
corporation organized and doing business under the laws of the United States
of America or of any state, authorized under such laws to exercise corporate
trust powers having a reported capital and surplus of not less than
$25,000,000, subject to supervision or examination by federal or state
authority, if there be such an institution willing, qualified and able to
accept the trust upon reasonable or customary terms.
Section 709. Acceptance by Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and also to the Authority, the Company, the Remarketing Agent, the Tender
Agent and the Paying Agent an instrument in writing accepting such appointment
hereunder, and thereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties,
rights, powers, trusts, duties and obligations of its predecessors; but such
predecessor Trustee shall nevertheless, on the written request of the Company,
or of its successor, execute and deliver an instrument transferring to such
successor Trustee all the estate, properties, rights, powers and trusts,
duties and obligations of such predecessor hereunder, and every predecessor
Trustee shall deliver all securities and money held by it as Trustee hereunder
to its successor. Should any instrument in writing from the Company be
required by a successor Trustee for more fully and certainly vesting in such
successor the estate, rights, powers and duties hereby vested or intended to
be vested in the predecessor, any and all such instruments in writing shall,
on request, be executed, acknowledged and delivered by the Company.
Section 710. Reliance Upon Instruments. The resolutions, opinions,
certificates and other instruments provided for in this Agreement may be
accepted by the Trustee as conclusive evidence of the facts and conclusions
stated therein and shall be full protection and authority to the Trustee for
the withdrawal of cash hereunder, and the taking or omitting to take of any
other action under this Agreement.
48<PAGE>
Section 711. Former Trustee No Longer Custodian or Paying Agent. Any
Trustee which has resigned or been removed shall cease to be custodian of the
funds and, if it has been so appointed, Paying Agent or Co-Paying Agent, and
the successor Trustee shall become such custodian, and a successor Paying
Agent shall be appointed under Section 715.
Section 712. Directions From Company; Company May Perform.
(a) Whenever after a reasonable request by the Company the
Authority shall fail, refuse or neglect to give any direction to the Trustee
or to require the Trustee to take any other action which the Authority is
required to have the Trustee take pursuant to the provisions of this
Agreement, the Company instead of the Authority may give any such direction to
the Trustee or require the Trustee to take any such action, and the Trustee,
upon receipt of proof of delivery of the request to the Authority and unless
otherwise instructed by the Authority, is hereby irrevocably empowered and
directed to accept such direction from the Company as sufficient for all
purposes of this Agreement. The Company shall have the right to cause the
Trustee to comply with any of the Trustee's obligations under this Agreement
to the same extent that the Authority is empowered so to do.
(b) The Authority and the Trustee acknowledge that certain
actions or failures to act by the Authority under this Agreement may create or
result in a default hereunder. The Authority hereby agrees that the Company
may perform any and all acts or take such action as may be necessary for and
on behalf of the Authority to prevent or correct said default, and the Trustee
agrees that it shall take or accept such performance by the Company as
performance by the Authority in such event.
Section 713. Trading in Bonds by Trustee, Tender Agent, Paying Agent,
Registrar or Remarketing Agent. The Trustee, the Tender Agent, any paying
agent, the Registrar or the Remarketing Agent, in its individual capacity, may
in good faith buy, sell, own, hold and deal in any of the Bonds issued
hereunder, and may join in any action which any Bondowners may be entitled to
take with like effect as if it did not act in any capacity hereunder. The
Trustee, the Tender Agent, the Authenticating Agent, any paying agent, the
Registrar or the Remarketing Agent, in its individual capacity, either as
principal or agent, may also engage in or be interested in any financial or
other transaction with the Authority or the Company, and may act as
depositary, trustee, or agent for any committee or body of Bondowners secured
hereby or other obligation of the Authority as freely as if it did not act in
any capacity hereunder.
Section 714. Appointment and Duties of Paying Agent.
(a) The Company shall appoint the Paying Agent for the Bonds and
may at any time or from time to time appoint one or more Co-Paying Agents for
the Bonds, subject to the conditions set forth in Section 715. The Paying
Agent and each Co-Paying Agent shall designate its Principal Office and
signify its acceptance of the duties and obligations imposed upon it hereunder
by a written instrument of acceptance delivered to the Company, the Authority,
the Trustee and the Remarketing Agent under which such Paying Agent or Co-
Paying Agent will agree, particularly:
49<PAGE>
(i) to hold all sums held by it for the payment of the
principal of and premium, if any, or interest on Bonds in trust for the
benefit of the Bondowners until such sums shall be paid to such Bondowners or
otherwise disposed of as herein provided;
(ii) to notify the Trustee promptly in the event the
Company has failed to make a timely payment to the Debt Service Fund for the
payment of interest, premium, if any, or principal due on any of the Bonds;
(iii) to keep such books and records as shall be consistent
with prudent industry practice, to make such books and records available for
inspection by the Authority, the Trustee and the Company at all reasonable
times, and, in the case of a Co-Paying Agent, to promptly furnish copies of
such books and records to the Paying Agent; and
(iv) in the case of a Co-Paying agent, upon the request of
the Paying Agent, to forthwith deliver to the Paying Agent all sums so held in
trust by such Co-Paying Agent.
(b) The Authority shall, at the expense of the Company,
cooperate with the Trustee and the Company to cause the necessary arrangements
to be made and to be thereafter continued whereby funds will be made available
for the payment when due of the Bonds as presented at the Principal Offices of
the Paying Agent and the Co-Paying Agents.
(c) The Paying Agent and Tender Agent shall always be the same
corporation.
Section 715. Qualification of Paying Agent.
(a) The Paying Agent and any Co-Paying Agent shall be a
corporation duly organized under the laws of the United States of America or
any state or territory thereof, having a combined capital stock, surplus and
undivided profits of at least $30,000,000 and authorized by law to perform all
the duties imposed upon it by this Agreement. As long as the Bonds are rated
by Moody's, any successor Paying Agent or Co-Paying Agent shall be a bank or
trust company or other person whose debt obligations shall be rated Baa3/P3 or
higher by Moody's or be otherwise acceptable to Moody's. The Paying Agent and
any Co-Paying Agent may at any time resign and be discharged of the duties and
obligations created by this Agreement by giving at least sixty (60) days'
notice to the Authority, the Company, the Remarketing Agent and the Trustee.
The Paying Agent and Co-Paying Agent may be removed at any time, at the
direction of the Company, by an instrument signed by an Authorized Officer of
the Company, filed with the Paying Agent or such Co-Paying Agent, as the case
may be, and with the Authority, the Trustee and the Remarketing Agent.
(b) In the event of the resignation or removal of the Paying
Agent or any Co-Paying Agent, the Paying Agent or such Co-Paying Agent, as the
case may be, shall pay over, assign and deliver any moneys held by it in such
capacity to its successor or, if there be no successor, to the Trustee.
(c) In the event that the Company shall fail to appoint a Paying
Agent hereunder, or in the event that the Paying Agent shall resign or be
removed, or be dissolved, or if the property or affairs of the Paying Agent
shall be taken under the control of any state or federal court or
50<PAGE>
administrative body because of bankruptcy or insolvency, or for any other
reason, and the Company shall not have appointed its successor as Paying
Agent, the Trustee shall ipso facto be deemed to be the Paying Agent for all
purposes of this Agreement until the appointment by the Company of the Paying
Agent or successor Paying Agent, as the case may be.
Section 716. Appointment and Duties of Tender Agent.
(a) Prior to the first remarketing of the Bonds pursuant to this
Agreement the Company shall appoint the Tender Agent for the Bonds, subject to
the conditions set forth in Section 717. The Tender Agent shall be the same
corporation as the Paying Agent. The Tender Agent shall designate its
Principal Office and signify its acceptance of the duties and obligations
imposed upon it hereunder by a written instrument of acceptance delivered to
the Authority, the Trustee, the Remarketing Agent and the Company under which
the Tender Agent will agree, particularly:
(i) to deliver to the Company and the Remarketing Agent a
copy of each notice delivered to it in accordance with Section 302;
(ii) to hold all Bonds delivered to it for purchase
hereunder by the Tender Agent as agent and bailee of, and in escrow for the
benefit of, the respective Bondowners which shall have so delivered such Bonds
until moneys representing the purchase price of such Bonds shall have been
delivered to or for the account of or to the order of such Bondowners;
(iii) to hold all moneys, other than moneys delivered to it
hereunder by the Company for the purchase of Bonds, delivered to it hereunder
for the purchase of Bonds as agent and bailee of, and in escrow for the
benefit of the person or entity which shall have so delivered such moneys
until Bonds purchased with such moneys shall have been delivered to or for the
account of such person or entity;
(iv) to hold all moneys delivered to it hereunder by the
Company for the purchase of Bonds as agent and bailee of, and in escrow for
the benefit of, the Bondowners who shall deliver Bonds to it for purchase
until the Bonds purchased with such moneys shall have been delivered to or for
the account of the Company; provided, however, that if the Bonds shall at any
time become due and payable and written notice thereof be furnished by the
Paying Agent to the Tender Agent, the Tender Agent shall deliver such moneys
other than amounts held for the benefit of Bondowners whose Bonds have been
deemed purchased to the Trustee or the Paying Agent, as the case may be, for
deposit into the Debt Service Fund; and
(v) to keep such books and records as shall be consistent
with prudent industry practice and to make such books and records available
for inspection by the Authority, the Trustee, the Remarketing Agent and the
Company.
(b) The Company shall cooperate with the Trustee, the Registrar,
the Tender Agent, the Remarketing Agent and the Authority to cause the
necessary arrangements to be made and to be thereafter continued whereby funds
from the sources specified herein will be made available for the purchase of
Bonds presented at the Principal Office of the Tender Agent, and otherwise to
enable the Tender Agent to carry out its duties hereunder.
51<PAGE>
Section 717. Qualification of Tender Agent.
(a) The Tender Agent shall be a corporation duly organized under
the laws of the United States of America or any state or territory thereof,
having a combined capital stock, surplus and undivided profits of at least
$30,000,000 and authorized by law to perform all the duties imposed upon it by
this Agreement. As long as the Bonds are rated by Moody's any successor
Tender Agent shall be a bank or trust company or other person whose debt
obligations shall be rated Baa3/P3 or higher by Moody's or be otherwise
acceptable to Moody's. The Tender Agent may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving
at least sixty (60) days' notice to the Authority, the Trustee, the
Remarketing Agent, and the Company, provided that such resignation shall not
take effect until the appointment of a successor by the Company. The Tender
Agent may be removed at any time by the Company, by an instrument, signed by
an Authorized Officer of the Company, filed with the Tender Agent, the
Authority, the Trustee and the Remarketing Agreement.
(b) In the event of the resignation or removal of the Tender
Agent, the Tender Agent shall deliver any Bonds and moneys held by it in such
capacity to its successor. Upon any such resignation, the Company shall
promptly appoint a successor Tender Agent.
(c) In the event that the Company shall fail to appoint a Tender
Agent hereunder, or in the event that the Tender Agent shall resign or be
removed, or be dissolved, or if the property or affairs of the Tender Agent
shall be taken under the control of any state or federal court or
administrative body because of bankruptcy or insolvency, or for any other
reason, and the Company shall not have appointed a successor as Tender Agent,
the Trustee shall ipso facto be deemed to be the Tender Agent for all purposes
of this Agreement until the appointment by the Company of the Tender Agent or
successor Tender Agent, as the case may be.
Section 718. Appointment and Duties of Remarketing Agent.
(a) Prior to the first remarketing of the Bonds pursuant to this
Agreement the Company shall appoint the Remarketing Agent for the Bonds,
subject to the conditions set forth in Section 719. The Remarketing Agent
shall designate its Principal Office and signify its acceptance of the duties
and obligations imposed upon it hereunder by a written instrument of
acceptance delivered to the Authority, the Trustee, the Paying Agent, the
Tender Agent and the Company under which the Remarketing Agent will agree,
particularly:
(i) to hold all Bonds delivered to it for purchase
pursuant to Section 302(a) as agent and bailee of, and in escrow for the
benefit of the person or entity which shall have so delivered such Bonds until
moneys representing the purchase price of such Bonds shall have been delivered
to or for the account of or to the order of such person or entity;
(ii) to hold all moneys, other than moneys delivered to it
by the Company for the purchase of Bonds, delivered to it hereunder for the
purchase of Bonds as agent and bailee of, and in escrow for the benefit of,
the person or entity which shall have so delivered such moneys until the Bonds
52<PAGE>
purchased with such moneys shall have been delivered to or for the account of
such person or entity;
(iii) to hold all moneys delivered to it hereunder by the
Company for the purchase of Bonds as agent and bailee of, and in escrow for
the benefit of, the Bondowners who shall deliver Bonds to it for purchase
until the Bonds purchased with such moneys shall have been delivered to or for
the account of the Company; provided, however, that if the Bonds shall at any
time become due and payable, the Remarketing Agent shall cause such moneys to
be deposited into the Bond Payment Fund; and
(iv) to keep such books and records as shall be consistent
with prudent industry practice and to make such books and records available
for inspection by the Authority, the Trustee, the Tender Agent and the Company
at all reasonable times.
(b) The Authority, at the expense of the Company, and the
Company shall cooperate with the Trustee, the Registrar, the Paying Agent, and
the Remarketing Agent to cause the necessary arrangements to be made and to be
thereafter continued whereby Bonds, executed by the Authority and
authenticated by the Paying Agent, shall be made available to the Remarketing
Agent to the extent necessary for delivery pursuant to Section 314, and to
otherwise enable the Remarketing Agent to carry out its duties hereunder.
Section 719. Qualifications of Remarketing Agent.
(a) The Remarketing Agent shall be a member of the National
Association of Securities Dealers, Inc., having a capitalization of at least
$30,000,000 and authorized by law to perform all the duties imposed upon it by
this Agreement. The Remarketing Agent may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving
at least sixty (60) days' notice to the Authority, the Trustee, the Paying
Agent, the Tender Agent and the Company. The Remarketing Agent may be removed
at any time by the Company, by an instrument, signed by an Authorized Officer
of the Company, filed with the Remarketing Agent, the Authority, the Trustee,
the Tender Agent and the Paying Agent.
(b) In the event of the resignation or removal of the
Remarketing Agent, the Remarketing Agent shall pay over, assign and deliver
any moneys and Bonds held by it in such capacity to its successor or, if there
be no successor, to the Paying Agent.
(c) In the event that the Company shall fail to appoint a
Remarketing Agent hereunder, or in the event that the Remarketing Agent shall
resign or be removed, or be dissolved, or if the property or affairs of the
Remarketing Agent shall be taken under the control of any state or federal
court or administrative body because of bankruptcy or insolvency, or for any
other reason, and the Company shall not have appointed its successor as
Remarketing Agent, the Paying Agent, notwithstanding the provisions of
Subsection 719(a), shall ipso facto be deemed to be the Remarketing Agent for
all purposes of this Agreement until the appointment by the Company of the
Remarketing Agent or successor Remarketing Agent, as the case may be;
provided, however, that the Paying Agent, in its capacity as Remarketing
Agent, shall not be required to remarket Bonds pursuant to Section 314 or
determine the interest rate on the Bonds pursuant to Section 301.
53<PAGE>
Section 720. Appointment and Duties of Registrar.
(a) The Company shall appoint the Registrar for the Bonds,
subject to the conditions set forth in Section 721. The Registrar shall
designate its Principal Office and signify its acceptance of the duties
imposed upon it hereunder by a written instrument of acceptance delivered to
the Company, the Authority, the Trustee and the Remarketing Agent under which
such Registrar will agree, particularly, to keep such books and records as
shall be consistent with prudent industry practice and to make such books and
records available for inspection by the Authority, the Trustee, the Paying
Agent, the Remarketing Agent and the Company at all reasonable times.
(b) The Authority, at the expense of the Company, and the
Company shall cooperate with the Trustee and the Paying Agent to cause the
necessary arrangements to be made and to be thereafter continued whereby
Bonds, executed by the Authority and authenticated by the Paying Agent, shall
be made available for exchange, registration and registration of transfer at
the Principal Office of the Registrar. The Authority, at the expense of the
Company, and the Company shall cooperate with the Trustee, the Paying Agent,
the Registrar and the Remarketing Agent to cause the necessary arrangements to
be made and thereafter continued whereby the Paying Agent, any Co-Paying Agent
and the Remarketing Agent shall be furnished such records and other
information at such times, as shall be required to enable the Paying Agent,
such Co-Paying Agent and the Remarketing Agent to perform the duties and
obligations imposed upon them hereunder.
Section 721. Qualifications for Registrar.
(a) The Registrar shall be a corporation duly organized under
the laws of the United States of America or any state or territory thereof,
having a combined capital stock, surplus and undivided profits of at least
$30,000,000 and authorized by law to perform all the duties imposed upon it by
this Agreement. The Registrar may at any time resign and be discharged of the
duties and obligations created by this Agreement by giving at least sixty (60)
days' notice to the Authority, the Trustee and the Company. The Registrar may
be removed at any time by the Company, by an instrument signed by an
Authorized Officer of the Company, filed with the Authority, the Registrar,
the Paying Agent, the Remarketing Agent and the Trustee.
(b) In the event of the resignation or removal of the Registrar,
the Registrar shall deliver any bonds held by it in such capacity to its
successor or, if there be no successor, to the Trustee.
(c) In the event that the Company shall fail to appoint a
Registrar hereunder, or in the event that the Registrar shall resign or be
removed, or be dissolved, or if the property or affairs of the Registrar shall
be taken under the control of any state or federal court or administrative
body because of bankruptcy or insolvency, or for any other reason, and the
Company shall not have appointed its successor as Registrar, the Trustee shall
ipso facto be deemed to be the Registrar for all purposes of this Agreement
until the appointment by the Company of the Registrar or successor Registrar,
as the case may be.
Section 722. Entities Serving in More Than One Capacity. Anything in
this Agreement to the contrary notwithstanding, the same entity may serve
54<PAGE>
hereunder as the Trustee, the Paying Agent or a Co-Paying Agent, the
Registrar, the Tender Agent and the Remarketing Agent and in any other
combination of such capacities, to the extent permitted by law.
ARTICLE VIII: SECURITY FOR AND INVESTMENT OF MONEY.
Section 801. All Money Held In Trust. All money from time to time
received by the Trustee or the Paying Agent and held any fund created under
this Agreement, or otherwise, shall be held in trust by the Trustee and the
Paying Agent, as the case may be, for the benefit of the holders from time to
time of the Bonds entitled to be paid therefrom, subject to the provisions of
Section 303.
Section 802. Permitted Investments.
(a) Money on deposit to the credit of the Construction Fund or
the Debt Service Fund may be retained uninvested and on deposit in fully
secured demand deposit accounts as trust funds, but upon written direction (or
telephonic direction promptly confirmed in writing) of an Authorized Officer
of the Company, or a designee thereof, or if the Company is in default under
this Agreement, an Officer's Certificate, from time to time so directing, such
money shall be invested in Permitted Investments, maturing or marketable prior
to the maturities thereof, at such time or times as to enable disbursements to
be made from the Construction Fund or the Debt Service Fund.
(b) For the purpose of determining the amount of money in each
Fund, the securities therein shall be valued at their cost or market,
whichever is lower. The interest, including realized discount, if any, on
securities purchased, received on all such securities (after deduction for
accrued interest and premium paid from such Fund at the time of purchase)
shall be deposited to the Fund of which such securities are a part. Neither
the Trustee nor the Paying Agent shall be liable or responsible for any loss
resulting from any such investment as herein authorized. If at any time it
shall become necessary that some or all of the securities purchased with the
money in such Fund be redeemed or sold in order to raise money necessary to
comply with the provisions of this Agreement, the Trustee or the Paying Agent,
as the case may be, shall, without further authorization than is hereby
contained, effect such redemption or sale, employing, in the case of a sale,
any commercially reasonable method of effecting the same.
Section 803. Balance After Bonds Have Been Paid. Any balance in any of
the Funds created under this Agreement or otherwise held by the Trustee or the
Paying Agent after all the Bonds issued hereunder and secured hereby have been
paid in full, or provision for payment in full thereof have been made, and all
amounts due to the Trustee and the Paying Agent, the Remarketing Agent, the
Tender Agent and the Authority have been paid, shall be paid over to the
Company upon such indemnification, if any, as the Authority, the Paying Agent,
the Remarketing Agent, the Tender Agent or the Trustee may reasonably require.
Should the holders of any Bonds fail or neglect to present their Bonds for
payment within one year from the date such Bonds become due and payable,
whether by redemption or at maturity, the Trustee or the Paying Agent, as the
case may be, shall, at the end of such period, remit to the Company in trust
for the holders of the Bonds the money then held for such Bonds; and the
55<PAGE>
holders of such Bonds shall thereafter have recourse only to the Company for
payment therefor.
ARTICLE IX: DEFAULT AND REMEDIES.
Section 901. Events of Default. An "Event of Default" in this
Agreement means any one of the events set forth below and "default" means any
Event of Default without regard to any lapse of time or notice.
(a) Debt Service on Bonds; Required Purchase. Any principal of,
premium, if any, or interest on any Bond shall not be paid when due, whether
at maturity, by acceleration, upon redemption or otherwise or any purchase
price for Bonds shall not be paid, as provided in Sections 301, 303, 311 or
313.
(b) First Mortgage Bonds. First Mortgage Bonds shall have been
delivered in connection with the Bonds and a "default" as defined in Section
12.01 of the First Mortgage shall have occurred and be continuing.
(c) Other Obligations. The Company or the Authority shall fail
to observe and perform any covenant, condition, agreement or provisions (other
than as specified in clause (a) of this Section 901) contained in the Bonds or
in this Agreement on the part of the Company or the Authority to be observed
or performed, which failure shall continue for a period of ninety (90) days
after written notice, specifying such failure and requesting that it be
remedied, shall have been given to the Company and the Authority by the
Trustee, which may give such notice in its discretion and shall give such
notice at the written request of Bondowners of not less than 25% in principal
amount of the Bonds then outstanding, unless the Trustee and Bondowners of a
principal amount of Bonds not less than the principal amount of the Bonds the
Bondowners of which requested such notice, as the case may be, shall agree in
writing to an extension of such period prior to its expiration; provided
however, that the Trustee and the Bondowners of such principal amount of
Bonds, as the case may be, shall be deemed to have agreed to an extension of
such period if corrective action is initiated by the Authority or the Company
on behalf of the Authority within such period and is being diligently pursued.
(d) Appointment of Receiver. A trustee, receiver, custodian or
similar official or agent shall be appointed for the Company or for any
substantial part of its property and such trustee or receiver shall not be
discharged within sixty (60) days.
(e) Voluntary Bankruptcy. The Company shall commence a
voluntary case under the federal bankruptcy laws, or shall make an assignment
for the benefit of creditors, or shall apply for, consent to or acquiesce in
the appointment of, or taking possession by, a trustee, receiver, custodian or
similar official or agent for itself or any substantial part of its property.
(f) Involuntary Bankruptcy. The Company shall have an order or
decree for relief in an involuntary case under the federal bankruptcy laws
entered against it, or a petition seeking reorganization, readjustment,
arrangement, composition, or other similar relief as to it under the federal
bankruptcy laws or any similar law for the relief of debtors shall be brought
56<PAGE>
against it and shall be consented to by it or shall remain undismissed for
sixty (60) days.
Upon the occurrence and continuance of any Event of Default described in
clauses (a), (b), (c) or (d) of the preceding paragraph and further upon the
condition that if any First Mortgage Bonds shall have been delivered, and all
First Mortgage Bonds outstanding under the First Mortgage shall have become
immediately due and payable in accordance with the terms of the First
Mortgage, the Trustee may, and at the written request of Bondowners of not
less than 25% in principal amount of Bonds then outstanding shall, by written
notice to the Authority and to the Company declare the Bonds to be immediately
due and payable, whereupon, and upon the occurrence of an Event of Default as
specified in clauses (e) and (f) of the preceding paragraph without any
further notice or action by the Trustee or the Authority, the Bonds shall,
without further action, become and be immediately due and payable, anything in
this Agreement or the Bonds to the contrary notwithstanding, and the Trustee
shall give notice of acceleration to the Authority, the Paying Agent, the
Tender Agent and the Remarketing Agent, and shall give notice thereof by mail
to the Bondowners.
The provisions of the preceding paragraph, however, are subject to the
condition that if, after the principal of the Bonds shall have been so
declared to be due and payable, and before any judgment or decree for the
payment of moneys due shall have been obtained or entered as hereinafter
provided, the Company or the Authority shall cause to be deposited with the
Trustee a sum sufficient to pay all matured installments of interest upon all
Bonds and the principal of any and all Bonds which shall have become due
otherwise than by reason of such declaration (with interest upon such
principal at the rate per annum specified herein) and such amounts as shall be
sufficient to cover reasonable compensation and reimbursement of expenses
payable to the Trustee and the Paying Agent, and all Events of Default
hereunder other than nonpayment of the principal of Bonds which shall have
become due by said declaration shall have been remedied, then, in every such
case, such Event of Default shall be deemed waived and such declaration and
its consequences rescinded and annulled, and the Trustee shall promptly give
written notice of such waiver, rescission or annulment to the Authority, the
Company, the Paying Agent, the Tender Agent and the Remarketing Agent, and
shall give notice thereof to the Bondowners; but no such waiver, rescission
and annulment shall extend to or affect any subsequent Event of Default or
impair any right or remedy consequent thereon; provided however that if any
First Mortgage Bonds shall have been delivered in connection with the Bonds,
any waiver of a "default" under the First Mortgage and a rescission and
annulment of its consequences shall constitute a waiver of the corresponding
Event of Default under this Agreement and a rescission and annulment of the
consequences thereof, and the Trustee shall promptly give written notice of
such waiver, rescission and annulment to the Authority and the Company, and
notice to the Bondowners in the same manner as a notice of redemption under
Section 303; but no such waiver, rescission and annulment shall extend to or
affect any subsequent default or Event of Default or impair any right or
remedy consequent thereon.
Section 902. Trustee May Institute Suits. Upon the happening of any
Event of Default, the Trustee shall have the power to, but unless requested in
writing by the holders of 25% in aggregate principal amount of the Bonds then
outstanding and furnished with satisfactory security and indemnity shall be
57<PAGE>
under no obligation to, institute and maintain such suits and proceedings as
it may be advised by Counsel shall be necessary or expedient to prevent any
impairment of the security under this Agreement and such suits and proceedings
as the Trustee may be advised by Counsel shall be necessary or expedient to
preserve or protect its interests and the interests of the Bondowners.
Section 903. Remedies on Events of Default.
(a) Upon the occurrence of an Event of Default and the giving of
satisfactory indemnification under Section 701, the Trustee may proceed to
pursue any available remedy to enforce the payment of the principal of,
premium, if any, and interest on the Bonds then outstanding, including,
without limitation, mandamus and as the holder of First Mortgage Bonds, if
any.
(b) Upon the happening and continuance of any Event of Default,
then and in every case the Trustee may proceed, and upon the written request
of the holders of not less than 25% in aggregate principal amount of the Bonds
then outstanding and the giving of satisfactory indemnification under Section
701 shall proceed, to protect and enforce its rights, and by suits, actions or
special proceedings in equity or at law, or by proceedings in the office of
any board or officer having jurisdiction, whether for the specific performance
of any covenant or agreement contained in this Agreement or in aid of the
execution of any power granted herein or for the enforcement of any legal or
equitable right or remedy as the Trustee, being advised by Counsel, shall deem
most effectual to protect and enforce such rights or to perform any of its
duties under this Agreement.
(c) If an Event of Default shall have occurred, and if requested
to do so by the holders of not less than 25% in aggregate principal amount of
the Bonds then outstanding and satisfactorily indemnified, the Trustee shall
be obligated to exercise such one or more of the rights and powers conferred
by this section and by Section 902 and 905 as the Trustee, being advised by
Counsel, shall deem most expedient in the interest of the Bondowners.
(d) No remedy by the terms of this Agreement conferred upon or
reserved to the Trustee (or to the Bondowners) is intended to be exclusive of
any other remedy, but each and every remedy shall be cumulative and shall be
in addition to any other remedy given to the Trustee or to the Bondowners
hereunder or now or hereafter existing by law.
(e) No delay or omission to exercise any right or power accruing
upon any default or Event of Default shall impair any such right or power or
shall be construed to be a waiver of any such default or Event of Default or
acquiescence therein; and every such right and power may be exercised from
time to time and as often as may be deemed expedient.
(f) No waiver of any default or Event of Default hereunder,
whether by the Trustee or by the Bondowners, shall extend to or shall affect
any subsequent default or Event of Default or shall impair any rights or
remedies consequent thereon.
Section 904. Bondowners To Direct Trustee. Anything in this Agreement
to the contrary notwithstanding, the holders of a majority in aggregate
principal amount of Bonds then outstanding shall have the right, at any time,
58<PAGE>
by an instrument or instruments in writing executed and delivered to the
Trustee, to direct the method and place of conducting all proceedings to be
taken in connection with the enforcement of the terms and conditions of this
Agreement or for the appointment of a receiver or any other proceedings
hereunder; provided, however, that such direction shall not be otherwise than
in accordance with the provisions of law or of this Agreement and shall not,
in the opinion of the Trustee, unduly prejudice the rights of Bondowners who
are not in such majority. The Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the holders of a majority in aggregate principal amount of the
Bonds.
Section 905. Receiver for the Revenues of the Authority From the
Project. Upon the occurrence of an Event of Default, and upon the filing of a
suit or other commencement of judicial proceedings to enforce the rights of
the Trustee and of the Bondowners, the Trustee shall be entitled, as a matter
of right, to the appointment of a receiver or receivers of the Revenues of the
Authority from the Project, pending such proceedings, with such powers as the
court making such appointment shall confer, to the extent permitted by law.
Section 906. Application of Moneys. All money received by the Trustee
pursuant to any right given or action taken under the provisions of this
Article shall be applied first to the payment of the costs and expenses of the
proceedings resulting in the collection of such money and of the
Administrative Expenses, liabilities and advances incurred or made by the
Trustee, the Paying Agent, the Registrar or the Authority hereunder except as
a result of its gross negligence or willful misconduct. The balance of such
money, after providing for the foregoing, shall be deposited by the Trustee in
the Debt Service Fund and all money in the Debt Service Fund shall be applied
as follows:
(a) Unless the principal of all the Bonds shall have become or
shall have been declared due and payable, all such money shall be applied:
FIRST: To the payment to the persons entitled thereto of all
installments of interest then due on the Bonds, in the order of maturity
of the installments of such interest and, if the amount available shall
not be sufficient to pay in full any particular installment, then to the
payment ratably, according to the amounts due on such installment, to
the persons entitled thereto, without any discrimination or privilege;
and
SECOND: To the payment to the persons entitled thereto of the
unpaid principal of and premium, if any, on any of the Bonds which shall
have become due (other than Bonds called for redemption for the payment
of which money is held pursuant to the provisions of this Agreement), in
the order of their due dates, with interest on such Bonds at the rate
provided in Section 910 from the respective dates upon which they become
due, and if the amount available shall not be sufficient to pay in full
Bonds due on any particular date, together with such interest, then to
the payment, ratably, according to the amount of principal of, and
premium, if any, due on such date, to the persons entitled thereto
without any discrimination or privilege.
59<PAGE>
(b) If the principal of all the Bonds shall have become due or
shall have been declared due and payable, all such money shall be applied to
the payment of the principal, premium, if any, and interest then due and
unpaid upon the Bonds, without preference or priority of principal over
interest or of interest over principal, or of any installment of interest over
any other installment of interest, or of any Bond over any other Bond,
ratably, according to the amounts due respectively for principal, premium, if
any, and interest to the persons entitled thereto without discrimination or
privilege.
(c) If the principal of all the Bonds shall have been declared
due and payable, and if such declaration shall thereafter have been rescinded
and annulled under the provisions of Section 910, then subject to the
provisions of paragraph (b) of this Section in the event that the principal of
all the Bonds shall later become due or be declared due and payable, the money
shall be applied in accordance with the provisions of paragraph (a) of this
Section.
(d) Whenever money is to be applied pursuant to the provisions
of this section, such moneys shall be applied at such times, and from time to
time, as the Trustee shall determine, having due regard to the amount of such
money available for application and the likelihood of additional money
becoming available for such application in the future. Whenever the Trustee
shall apply such funds, it shall fix the date (which shall be an interest
payment date unless it shall deem another date more suitable) upon which such
application is to be made, and upon such date interest on the amounts of
principal to be paid on such date shall cease to accrue. The Trustee shall
give such notice as it may deem appropriate of the deposit with it of any such
money and of the fixing of any such date, and shall not be required to make
payment to the holder of any Bond until such Bond shall be presented to the
Trustee for appropriate endorsement or for cancellation if fully paid.
(e) Whenever all the Bonds and interest thereon have been paid
under the provisions of this Section 906 and all expenses and charges of the
Trustee and the Authority have been paid, any balance remaining in the Debt
Service Fund shall be paid as provided in Section 803.
Section 907. Trustee as Representative of the Bondowners. All rights
of action (including the right to file proofs of claim under this Agreement or
under any of the Bonds) may be enforced by the Trustee without the possession
of any of the Bonds or the production thereof in any trial or other
proceedings relating thereto, and any such suit or proceedings instituted by
the Trustee shall be brought in its name as Trustee without the necessity of
joining as plaintiffs or defendants any Bondowners. Any recovery of judgment
shall be for the equal and ratable benefit of the Bondowners.
Section 908. Enforcement by Bondowners.
(a) No Bondowners shall have any right to institute any suit,
action or proceeding for the enforcement of any covenant or provisions of this
Agreement or for the appointment of a receiver or any other remedy thereunder,
unless (i) a default has occurred of which the Trustee has been notified as
provided in subsection (h) of Section 701, or of which by said subsection it
is deemed to have notice; (ii) such default shall have become an Event of
Default; (iii) the holders of not less than 25% in aggregate principal amount
60<PAGE>
of Bonds then outstanding shall have made written request to the Trustee and
shall have offered reasonable opportunity either to proceed to exercise the
powers hereinbefore granted or to institute such action, suit or proceeding in
the Trustee's name and shall have offered to the Trustee security or indemnity
as provided in Section 701; and (iv) the Trustee shall thereafter fail or
refuse to exercise the powers hereinbefore granted or to institute such
action, suit or proceeding in its own name. Such notification, request and
offer of security or indemnity are hereby declared in every case at the option
of the Trustee to be conditions precedent to the execution of the powers and
trusts of this Agreement, and to any action or cause of action for the
enforcement of this Agreement, or for the appointment of a receiver or for any
other remedy hereunder, it being understood and intended that no one or more
holders of the Bonds shall have any right in any manner whatsoever to enforce
any right hereunder except in the manner herein provided, and that all
proceedings shall be instituted and maintained in the manner herein provided
and for the equal and ratable benefit of the holders of all Bonds then
outstanding.
(b) Nothing in this Agreement contained shall, however, affect
or impair any right to enforcement otherwise conferred on any Bondowner by law
or the right of any Bondowner to enforce the payment of the principal of,
premium, if any, and interest on any Bond at and after the maturity thereof,
or the obligation of the Authority to pay the principal of, premium, if any,
and interest on each of the Bonds issued hereunder to the respective holders
thereof at the time, place, and the source and in the manner in said Bonds and
this Agreement expressed.
Section 909. Rights To Continue. In case the Trustee shall have
proceeded to enforce any right under this Agreement by the appointment of a
receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely, then and in
every such case the Authority, the Trustee and the Bondowners shall be
restored to their former positions and rights hereunder, and all rights,
remedies and powers of the Trustee shall continue as if no such proceedings
had been taken.
Section 910. Waivers of Default. To the extent not precluded by law
the Trustee may, in its discretion, waive any default or Event of Default
hereunder and its consequences and rescind any declaration of maturity of
principal, and shall do so upon the written request of the holders of not less
than a majority in aggregate principal amount of all the Bonds then
outstanding; provided, however, that there shall not be waived (a) any Event
of Default in the payment of the principal, if any, of any Outstanding Bonds
at the date of maturity specified therein or the date fixed for redemption
thereof, (b) any default or Event of Default in the payment when due of
interest on any such Bonds, or (c) any Event of Default in the payment of the
purchase price of the Bonds at the date fixed for the purchase thereof unless
prior to such waiver or rescission, all arrears of interest, and all arrears
of payment of principal or purchase price then due, as the case may be,
together with interest (to the extent permitted by law), at the rate per annum
borne by any of the Bonds, on overdue principal, purchase price and interest,
and all Administrative Expenses of the Trustee, the Paying Agent, and the
Remarketing Agent in connection with such default shall have been paid or
provided for, and in case of any such waiver or rescission, then and in every
such case the Authority, the Trustee and the Bondowners shall be restored to
61<PAGE>
their former positions and rights hereunder, respectively, but no such waiver
or rescission shall extend to any subsequent or other default, or impair any
right consequent thereon.
Section 911. Agreement To Pay Attorneys' Fees and Expenses. In the
event the Company should default under any of the provisions of this Agreement
or the First Mortgage if any First Mortgage Bonds shall have been delivered to
the Trustee and the Authority should employ attorneys or incur other expenses
for the collection of any amounts due from the Company hereunder or the
enforcement of performance or observance of any obligation or agreement of the
Company herein contained, the Company agrees that it will on demand therefor
pay to the Authority the reasonable fees of such attorneys and such other
reasonable expenses so incurred by the Authority.
Section 912. Remedies in Article IX in Addition to Remedies in the
First Mortgage. The remedies conferred in this Article shall be in addition
to any remedies available to the Trustee as holder of the First Mortgage
Bonds, if any, under the First Mortgage.
ARTICLE X: THE BONDOWNERS.
Section 1001. Action by Bondowners.
(a) Any request, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Bondowners may be contained in and evidenced by one or more writings of
substantially the same tenor signed by the requisite number of Bondowners or
their attorneys duly appointed in writing. Proof of the execution of any such
instrument, or of an instrument appointing any such attorney, shall be
sufficient for any purpose of this Agreement (except as otherwise herein
expressly provided) if made as provided in this section, but the Authority or
the Trustee may nevertheless in its discretion require further or other proof
in cases where it deems the same desirable.
(b) The fact and date of the execution by any Bondowner or his
or her attorney of such instrument may be proved by the certificate, which
need not be acknowledged or verified, of an officer of a bank or trust company
satisfactory to the Authority or to the Trustee or of any notary public or
other officer authorized to take acknowledgements of deeds to be recorded in
the state in which he purports to act, that the person signing such request or
other instrument acknowledged to him or her the execution thereof, or by an
affidavit of a witness of such execution, duly sworn to before such notary
public or other officer. The authority of the person or persons executing any
such instrument on behalf of a corporate Bondowner may be established without
further proof if such instrument is signed by a person purporting to be the
president or a vice president of such corporation with a corporate seal
affixed and attested by a person purporting to be its clerk or secretary or an
assistant clerk or secretary.
Section 1002. Ownership of Bonds. The ownership of Bonds and the
amount, numbers and other identification, and date of holding the same shall
be proved by the registry books for the Bonds maintained by the Paying Agent.
62<PAGE>
ARTICLE XI: SUPPLEMENTAL AGREEMENTS.
Section 1101. Supplemental Agreements Without Consent or Notice to
Bondowners. The Authority, the Company and the Trustee may without the
consent of, or notice to, any of the Bondowners, enter into an agreement or
agreements supplemental to this Agreement for any one or more of the following
purposes:
(a) To add to the covenants and agreements of the Authority or
the Company contained in this Agreement other covenants and agreements
thereafter to be observed, and to surrender any right or power herein reserved
to or conferred upon the Authority or the Company.
(b) To modify any of the provisions of this Agreement or release
the Authority from any of the obligations, conditions, or restrictions herein
contained; provided that no such modification or release shall be or become
operative or effective which shall in any manner impair any of the rights of
the Bondowners or the Trustee; and provided further, that the Trustee may in
its sole discretion decline to enter into any such supplemental indenture
which in its opinion may not afford adequate protection to the Trustee when
the same shall become operative.
(c) To cure any ambiguity or to cure, correct, or supplement any
defect or inconsistent provision contained in this Agreement or in any
supplemental agreement in a manner which, in the opinion of bond counsel of
nationally recognized standing, is not adverse to the interest of the
Bondowners.
(d) To make such provision in regard to matters or questions
arising under this Agreement as may be necessary or desirable and not
inconsistent with this Agreement and not, in the opinion of bond counsel of
nationally recognized standing, adverse to the interests of the Bondowners.
(e) To comply with the requirements of the Trust Indenture Act
of 1939, as from time to time amended.
(f) To change the method of determining any interest rate or
Interest Rate Period in a manner not to the prejudice of the Trustee or the
Bondowners.
(g) To change the conversion notice periods and related purchase
procedures in a manner not to the prejudice of the Trustee or the owners of
the Bonds.
(h) To make any change which is required by Moody's, Duff &
Phelps or S&P in order to obtain or maintain a rating of the Bonds.
(i) To make any other change which, in the opinion of bond
counsel of nationally recognized standing, does not materially adversely
affect the rights of the Authority or any Bondowner.
63<PAGE>
Section 1102. Supplemental Agreements With Consent of Majority of
Bondowners.
(a) Exclusive of supplemental agreements covered by Section 1101
and subject to the terms and provisions contained in this Section 1102, and
not otherwise, the holders of not less than a majority in aggregate principal
amount of the Bonds then outstanding shall have the right, from time to time,
anything contained in this Agreement to the contrary notwithstanding, to
consent to and approve the execution by the Company, the Authority and the
Trustee of such other agreement or agreements supplemental hereto as shall be
deemed necessary and desirable by the Company for the purpose of modifying,
altering, amending, adding to or rescinding, in any particular, any of the
terms or provisions contained in this Agreement or in any supplemental
agreement; provided, however that nothing in this Agreement contained shall
permit, or be construed as permitting without the consent of the holders of
all the Bonds then outstanding affected thereby (i) an extension of the
maturity of the principal of or premium, if any, or the interest on or
redemption date of any Bond issued hereunder, or a change in the terms of the
purchase of Bonds delivered pursuant to Section 302, (ii) a reduction in the
principal or premium thereon, or a change in the method of determining the
rate of interest thereon, (iii) a privilege or priority of any Bond or Bonds
over any other Bond or Bonds, (iv) a reduction in the aggregate principal
amount of the Bonds required for consent to such modification, amendment or
supplemental agreement, or (v) impairment of the exclusion from federal income
taxation of interest on any of the outstanding Bonds.
(b) If at any time the Authority or the Company shall request
the Trustee to enter into such supplemental agreement for any of the purposes
of this Section 1102, the Trustee shall, upon being satisfactorily indemnified
with respect to expense, cause notice of the proposed execution of such
supplemental agreement to be given in the manner set forth in Section 303 and
shall give notice to the Remarketing Agent of the proposed execution of such
supplemental agreement. Such notice shall briefly set forth the nature of the
proposed supplemental agreement and shall state that copies thereof are on
file at the designated office of the Trustee for inspection by all Bondowners.
If, within sixty (60) days or such longer period as shall be prescribed by the
Company following the giving of such notice, the holders of not less than a
majority in aggregate principal amount of the Bonds outstanding shall have
consented to and approved the execution thereof as herein provided, no holder
of any Bond shall have any right to object to any of the terms and provisions
contained therein, or the operation thereof, or in any manner to question the
propriety of the adoption thereof, or to enjoin or restrain the Trustee, the
Company or the Authority from taking any action pursuant to the provision
thereof. Upon the execution of any such supplemental agreement as in this
Section 1102 permitted and provided, this Agreement shall be and be deemed to
be modified and amended in accordance therewith.
Section 1103. Consents by Trustee, Tender Agent, Etc. Anything herein
to the contrary notwithstanding, a supplemental agreement under this Article
XI which affects any rights or duties of the Trustee, the Tender Agent, the
Paying Agent or Co-Paying Agent, the Registrar or the Remarketing Agent shall
not become effective unless and until the Trustee, Tender Agent, Paying Agent
or Co-Paying Agent, Registrar or Remarketing agent, as the case may be, shall
have consented in writing to the execution of such supplemental agreement.
64<PAGE>
Section 1104. Notice of Amendments to Rating Agencies. Notice of any
amendment to this Agreement shall be sent by the Trustee to Moody's, if the
Bonds are then rated by Moody's, to S&P, if the Bonds are then rated by S&P,
and to any other rating agency if the Bonds are, at the request of the
Company, rated by such rating agency, at their respective addresses furnished
by such rating agency to the Trustee.
ARTICLE XII: MISCELLANEOUS.
Section 1201. Notices.
(a) All notices, certificates, requests, complaints, demands, consents and
other communications hereunder shall be deemed sufficiently given or filed for
all purposes of this Agreement if and when sent by registered mail, return
receipt requested: to the Authority, if addressed to the Polk County
Industrial Development Authority, P.O. Box 9005, Drawer AT01, 330 West Church
Street, Bartow, Florida 33831-9005; Attention: Chairman; to the Company, if
addressed to Tampa Electric Company, Post Office Box 111, Tampa, Florida
33601, Attention: Corporate Secretary; to the Trustee, if addressed to The
Bank of New York, Towermarc Plaza, 10161 Centurion Parkway, Jacksonville,
Florida 32256, Attention: Corporate Trust Department; to the Paying Agent and
Tender Agent, if addressed to The Bank of New York, 101 Barclay Street, 7th
Floor, New York, New York 10286, Attention: Fiscal Agencies Department; or, as
to all of the foregoing, to such other address as the addressee shall have
indicated by prior written notice to the one giving notice. All notices to a
Bondowner shall be in writing and shall be deemed sufficiently given if sent
by mail, postage prepaid, to the Bondowner at the address shown on the
registration books for the Bonds maintained by the Paying Agent. A Bondowner
may direct the Paying Agent to change its address as shown on the registration
books by written notice to the Paying Agent.
(b) Notice hereunder may be waived prospectively or
retrospectively by the person entitled to the notice, but no waiver shall
affect any notice requirement as to other persons.
(c) All documents received by the Trustee under the provisions
of this Agreement, or photographic copies thereof, shall be retained in its
possession until this Agreement shall be released under the provision of this
Agreement, subject at all reasonable times to the inspection of the Authority,
the Company, any Bondowner and any agent or representative thereof.
Section 1202. Successors and Assigns. The rights and obligations of
the parties to this Agreement shall inure to their respective successors and
assigns.
Section 1203. Agreement Not for the Benefit of Other Parties. Except
as otherwise expressly provided herein, this Agreement is not intended for
the benefit of and shall not be construed to create rights in parties other
than the Company, the Authority, the Trustee and the Bondowners.
Section 1204. No Recourse Against Authority. No recourse under or upon
any obligations, covenants or agreement of this Agreement, or of any Bond, or
in any way based thereon or otherwise in respect thereof, shall be had against
any past, present or future member or officer, as such, of the Authority or
any successor body politic, either directly or through the Authority, whether
65<PAGE>
by virtue of any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability being hereby
expressly waived and released as a conclusion of and as consideration for, the
execution of this Agreement and the issue of the Bonds.
Section 1205. Payments Due, Conversion Dates or Notices on Nonbusiness
Days.
(a) If the date for any payment on the Bonds at a place of
payment shall be other than a Business Day, then payment shall be made on the
next succeeding Business Day, and no interest shall accrue for the intervening
period other than as specifically provided for herein. If any Conversion Date
is other than a Business Day, then actions, other than the giving of notices,
required to be taken under Article III on any such date with respect to the
tender of Bonds, the placement of Bonds and the purchase of Bonds shall not be
taken on that date but shall be taken on the next succeeding Business Day with
the same force and effect as if made on such Conversion Date, and, in the case
of any purchase and placement of Bonds that takes place on that next
succeeding Business Day, interest on those Bonds shall accrue for the benefit
of the new Bondowner from the Conversion Date.
(b) In the event any date required for the giving of any notice
under this Agreement (including without limitation any notice of Bondowner
election and surrender of Bonds) is not a Business Day, such notice shall be
given on the next preceding Business Day.
Section 1206. Severability. In the event that any provision of this
Agreement shall be held to be invalid in any circumstance, such invalidity
shall not affect any other provisions or circumstances.
Section 1207. Counterparts. This Agreement may be executed and
delivered in any number of counterparts, each of which shall be deemed to be
an original, but such counterparts together shall constitute one and the same
instrument.
Section 1208. Captions. The captions and table of contents of this
Agreement are for convenience only and shall not affect the construction
hereof.
Section 1209. Florida Law to Govern. This Agreement and each Bond
shall be deemed to be a contract made under the laws of the State and for all
purposes shall be construed in accordance with the laws of the State.
Section 1210. Time. All references to time of day in this Agreement
are references to New York, New York time.
66<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed under seal all as of the date first above written.
POLK COUNTY INDUSTRIAL
(Official Seal) DEVELOPMENT AUTHORITY
Attest:
By:_______________________________
Title: Chairman
____________________________
Assistant Secretary
(Corporate Seal) TAMPA ELECTRIC COMPANY
Attest:
By:________________________________
Title:
___________________________
Secretary
(Corporate Seal) THE BANK OF NEW YORK, as Trustee
Attest:
By:________________________________
Title: Authorized Agent
___________________________
67<PAGE>
STATE OF FLORIDA )
) ss.:
COUNTY OF POLK )
The foregoing instrument was acknowledged before me this ____ day
of December, 1996, by George W. Harris, Jr., personally known to me, the
Chairman of the Polk County Industrial Development Authority, the public body
corporate and politic and public instrumentality described in and which
executed the above instrument.
_______________________________
Notary Public
[NOTARIAL SEAL] My commission expires:
STATE OF FLORIDA )
) ss.:
COUNTY OF POLK )
The foregoing instrument was acknowledged before me this ____ day
of December, 1996, by Joseph B. Tedder, personally known to me, the Assistant
Secretary of the Polk County Industrial Development Authority, the public body
corporate and politic and public instrumentality described in and which
executed the above instrument.
_______________________________
Notary Public
[NOTARIAL SEAL] My commission expires:
STATE OF FLORIDA )
) ss.:
COUNTY OF HILLSBOROUGH )
The foregoing instrument was acknowledged before me this ____ day
of December, 1996, by William L. Griffin, personally known to me, the Vice
President-Controller and Assistant Secretary of Tampa Electric Company, on
behalf of said corporation.
_______________________________
Notary Public
[NOTARIAL SEAL] My commission expires:
STATE OF FLORIDA )
) ss.:
COUNTY OF HILLSBOROUGH )
The foregoing instrument was acknowledged before me this ____ day
of December, 1996, by Roger H. Kessel, personally known to me, the Secretary
of Tampa Electric Company, on behalf of such corporation.
68<PAGE>
_______________________________
Notary Public
[NOTARIAL SEAL] My commission expires:
STATE OF FLORIDA )
) ss.:
COUNTY OF ____________ )
The foregoing instrument was acknowledged before me this ____ day
of December, 1996, by Sharon L. Atkinson, personally known to me, an
Authorized Agent of The Bank of New York, the New York corporation described
in and which executed the above instrument.
_______________________________
Notary Public
[NOTARIAL SEAL] My commission expires:
STATE OF FLORIDA )
) ss.:
COUNTY OF ____________ )
The foregoing instrument was acknowledged before me this ____ day
of December, 1996, by _____________________, personally known to me, a
__________________ of The Bank of New York, the New York corporation described
in and which executed the above instrument.
_______________________________
Notary Public
[NOTARIAL SEAL] My commission expires:
69<PAGE>
EXHIBIT A
PROJECT DESCRIPTION
The Project collects, processes, stores and disposes of waste slag and
coal handling solid wastes associated with the Company's integrated coal
gasification combined cycle power plant located in southwest Polk County. The
facilities include the following:
Coal Gasifier Slag Disposal Facility
The Coal Gasifier Slag Disposal Facility collects, processes, stores and
disposes of waste slag. The facility includes the slag pond, slag crusher,
lockhopper, drag conveyor, pumps, dewatering area, slag storage area,
filtration pumps, evaporation system, grey and black water systems, cooling
systems and related mechanical, electrical and associated structures.
Coal Handling Solid Wastes Disposal Facility
The Coal Handling Solid Waste Disposal Facility collects, stores and
disposes of coal handling solid wastes. The primary components of the Coal
Handling Solid Waste Disposal Facility include a magnetic separator, metal
detector, coal slurry waste collectors and related mechanical, electrical and
associated structures.
Industrial Wastewater Treatment Solid Waste Facility
The Industrial Wastewater Treatment Solid Waste Facility processes,
stores and disposes of solid wastes removed from the industrial waste water
treatment facility. The Industrial Wastewater Treatment System treats all
potentially contaminated wastewater systems. The primary components of the
Industrial Wastewater Treatment Solid Waste Facility include the clarifier
basin and rake mechanism, sludge recycle pumps, sludge transfer pumps, sludge
thickening tank, filter press feed pumps, filter press, filter cake bins,
filtrate tank, filtrate pump and related mechanical, electrical and associated
structures.
70<PAGE>
Exhibit 10.4
TECO ENERGY GROUP
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR TIMOTHY L. GUZZLE
SECTION 1. PURPOSE AND EFFECTIVE DATE
The purpose of this plan is to provide Timothy L. Guzzle, Chairman of
the Board and Chief Executive Officer of TECO Energy, with additional
retirement income by supplementing the retirement benefits provided under the
retirement plan. The plan was originally effective as of February 22, 1988.
The effective date of this amendment and restatement is October 16, 1996.
SECTION 2. DEFINITIONS
This section contains definitions of terms used in the plan. Where the
context so requires, the singular includes the plural, and the plural includes
the singular.
2.1 Annual earnings will have the same meaning as in the retirement
plan, except that the same will be determined without regard to (a) any dollar
limitation on such annual earnings that may be imposed under the retirement
plan or (b) any reduction in taxable income as a result of voluntary salary
reduction deferrals under the TECO Energy Group Retirement Savings Excess
Benefit Plan.
2.2 Average annual earnings of Mr. Guzzle as of any date of reference
means the average of his annual earnings during whichever of the following
periods yields the highest average: (a) the 36 consecutive months of active
employment preceding the date of reference (or all months of employment if
less than 36), or (b) any three consecutive calendar years out of the five
calendar years preceding the date of reference. Bonuses are included as
compensation for the period in which paid, provided that if more than three
regular annual bonuses are paid in any 36 consecutive month period, only the
largest three bonuses will be counted.
2.3 Board means the Board of Directors of TECO Energy.
2.4 Committee means the retirement plan committee as constituted under
the retirement plan.
2.5 TECO Energy means TECO Energy, Inc. and any successor to all or a
major portion of its assets or business which assumes the obligations of TECO
Energy, Inc. under this plan.
2.6 Disability income plan means the TECO Energy Group Disability
Income Plan, as amended from time to time.
- 168 -<PAGE>
Exhibit 10.4
2.7 Plan means the TECO Energy Group Supplemental Executive Retirement
Plan for T.L. Guzzle, as set forth in this plan instrument, and as it may be
amended from time to time.
2.8 Retirement means termination of Mr. Guzzle's employment with TECO
Energy by Mr. Guzzle or TECO Energy for any reason.
2.9 Retirement plan means the TECO Energy Group Retirement Plan, as
amended from time to time.
2.10 Service will have the same meaning as "plan service" in the
retirement plan.
2.11 Social security benefit of Mr. Guzzle as of any date of reference
(the "computation date") means the primary insurance amount to which he is or
would be entitled, payable under Title II of the Social Security Act as in
effect on such date, based on the assumptions: (a) that no changes in the
benefit levels payable or the wage base under Title II occur after the
computation date; (b) that, if the computation date falls before his 62nd
birthday, his annual earnings during the calendar year in which the
computation date falls and during any subsequent calendar year before the
calendar year in which his 62nd birthday falls is zero; (c) that payment of
his primary insurance amount begins for the month after he reaches age 62, or
his date of retirement if later, without reduction or delay because of future
gainful employment or delay in applying for benefits; and (d) that his
earnings for calendar years before the calendar year in which the computation
date falls will be determined using his actual earnings history if available,
and otherwise by applying a six percent retrospective salary scale to his rate
of annual earnings in effect on the computation date. The social security
benefit of Mr. Guzzle if he retires after his 65th birthday will include any
delayed retirement credit.
2.12 Survivor income plan means the TECO Energy Group Survivor Income
Plan, as amended from time to time.
SECTION 3. RETIREMENT BENEFITS
3.1 Retirement at or after age 62. Subject to the reductions in
Section 6.1 below, if Mr. Guzzle retires on or after attaining age 62, he will
receive a supplemental monthly retirement benefit equal to one-twelfth of 60
percent of his average annual earnings (60 percent is equal to six percent
multiplied by a maximum of 10 years of service). Mr. Guzzle's retirement
benefit hereunder will be calculated using his average annual earnings as of
his actual date of retirement.
3.2 Retirement before age 62. Subject to the reductions in Section
6.1 below, if Mr. Guzzle retires before attaining age 62, he will receive a
supplemental monthly retirement benefit equal to one-twelfth of (a) six
percent of his average annual earnings multiplied by his years of service (or
portions thereof) determined as of his date of retirement, multiplied by (b)
an early retirement factor determined under the following table:
- 169 -<PAGE>
Exhibit 10.4
Years by which the
start of payments Early retirement
precedes age 62* factor
6 .70
5 .75
4 .80
3 .85
2 .90
1 .95
* Interpolate for completed months
3.3 Termination by TECO Energy without Cause or by Mr. Guzzle for Good
Reason. If Mr. Guzzle's employment is terminated by TECO Energy other than
for Cause or disability or by the participant for Good Reason, retirement
benefits payable under Section 3.2 will be computed as though Mr. Guzzle had
continued to be employed at the same rate of annual earnings by TECO Energy
(after the date of termination) for 24 months or, if less, the number of
months from the date of termination until age 62. "Cause" and "Good Reason"
are defined in the employment agreement between TECO Energy and the
participant dated July 20, 1993, as it may be amended from time to time.
3.4 Form of Payment.
(a) Normal form of retirement benefits. The normal form of
retirement benefit payable to Mr. Guzzle under the plan is a life annuity.
Benefits payable in the normal form will begin on the first day of the month
coinciding with or next following the date of Mr. Guzzle s retirement.
(b) Optional lump sum benefit. In lieu of the normal form of
benefit, Mr. Guzzle may elect to receive payment of his benefit in the form of
a commuted single sum payment that is the actuarial equivalent of the normal
form of benefit (including the value of the post-retirement surviving spouse
benefit under Section 4.2(c)). If Mr. Guzzle elects to receive a lump sum
payment, such payment will be made on the first day of the month coinciding
with or next following the date Mr. Guzzle's employment terminates. Actuarial
equivalence will be based on the actuarial assumptions specified from time to
time in the retirement plan for lump sum payments. Mr. Guzzle's election to
receive a lump sum payment will be effective only with respect to a retirement
occurring at least 12 months after the date Mr. Guzzle submits the election,
provided that elections submitted on or before December 31, 1996 will be
immediately effective.
SECTION 4. SURVIVING SPOUSE BENEFIT
4.1 Eligibility. Mr. Guzzle's surviving spouse will receive the
surviving spouse benefit if Mr. Guzzle and his spouse were married to each
other for at least the 12 months preceding Mr. Guzzle's date of death and, in
the case of Mr. Guzzle's death after retirement, Mr. Guzzle and his spouse
were married to each other on Mr. Guzzle's date of retirement.
- 170 -<PAGE>
Exhibit 10.4
4.2 Amount of surviving spouse benefit. Subject to the reductions
described in Section 6.2 below, the benefit provided under the plan to Mr.
Guzzle's surviving spouse will be determined as follows:
(a) Pre-retirement before age 62. If Mr. Guzzle dies during
employment with TECO Energy and before his 62nd birthday, his surviving spouse
will receive a monthly survivor income payment equal to 50 percent of his
monthly projected retirement benefit. Mr. Guzzle's monthly projected
retirement benefit is the monthly benefit he would have received if he had
retired at age 62 under Section 3.1 calculated using his average annual
earnings determined as of his date of death.
(b) Pre-retirement on or after age 62. If Mr. Guzzle dies
during employment with TECO Energy on or after his 62nd birthday, his
surviving spouse will receive a monthly survivor income payment equal to 50
percent of his monthly retirement benefit earned under Section 3.1 using his
average annual earnings as of his date of death.
(c) Post-retirement. If Mr. Guzzle dies on or after the date of
his retirement, his surviving spouse will receive a monthly survivor income
payment equal to 50 percent of the monthly benefit payment he was receiving at
his death (or would have received if he had survived until the first payment
date).
4.3 Form and time of surviving spouse benefit. Surviving spouse
benefits under this Section 4 will be payable only in the form of a life
annuity to the surviving spouse. Benefit payments will begin on the first day
of the month coinciding with or next following the date of Mr. Guzzle's death.
4.4 Death benefit where lump sum paid. If Mr. Guzzle received a lump
sum payment of his benefit under Section 3.4(b), no surviving spouse benefit
or other death benefit will be payable under the plan to any person.
SECTION 5. DISABILITY
5.1 If Mr. Guzzle suffers a total disability (as defined in the
disability income plan) before age 62, he will continue to be credited with
service as if he were actively employed by TECO Energy during his period of
total disability. Mr. Guzzle may not receive benefits under this plan at any
time when he is receiving disability income payments under the disability
income plan. Benefits under this plan will begin when payments cease under
the disability income plan.
5.2 Mr. Guzzle's disability date is his last day of work for TECO
Energy before becoming unable to continue working because of his total
disability. A period of total disability of Mr. Guzzle will begin on his
disability date and will end on the earlier of the last day of the month in
which his final disability income payment is due under the disability income
plan or on the date he retires hereunder and starts receiving benefit
payments.
- 171 -<PAGE>
Exhibit 10.4
5.3 If Mr. Guzzle does not return to active service with TECO Energy
after suffering a total disability, his retirement benefits under Section 3
will be calculated using his average annual earnings as of his disability
date, his total service including service credited under Section 5.1 above,
and his primary social security benefit as of his date of disability.
5.4 If Mr. Guzzle dies while disabled, his surviving spouse will, if
eligible, receive the pre-retirement surviving spouse benefit determined under
Section 4.2(a) or (b).
- 172 -<PAGE>
Exhibit 10.4
SECTION 6. OFFSET FOR OTHER PAYMENTS
6.1 Mr. Guzzle's retirement benefit will be reduced (but not below
zero) by the following payments, with such reductions starting when such
payments are assumed to begin: (a) 100 percent of the social security benefit
of Mr. Guzzle assuming such benefit begins on the later of the date he reaches
age 62 or his actual retirement, and (b) the amount of his benefit payments
under the retirement plan (converted to a life annuity if such payments are in
an optional form), assuming such payments begin on his actual retirement date.
6.2 The benefit of Mr. Guzzle's surviving spouse will be reduced (but
not below zero) by the following payments: (a) payments under the survivor
income plan, and (b) payments under the retirement plan.
SECTION 7. BENEFITS NOT CURRENTLY FUNDED
7.1 Nothing in this plan will be construed to create a trust or to
obligate TECO Energy or any other employer to segregate a fund, purchase an
insurance contract, or in any other way currently to fund the future payment
of any benefits hereunder, nor will anything herein be construed to give Mr.
Guzzle or any other person rights to any specific assets of TECO Energy or of
any other employer or entity.
7.2 Notwithstanding Section 7.1, TECO Energy has established a grantor
trust of which it is treated as the owner under Section 671 of the Internal
Revenue Code to provide for the payment of benefits hereunder.
SECTION 8. ADMINISTRATION
The plan will be administered by the committee, which will have full
power and authority to construe, interpret and administer the plan. Decisions
of the committee will be final and binding on all persons. The committee may,
in its discretion, adopt, amend and rescind rules and regulations relating to
the administration of the plan.
SECTION 9. RIGHTS NON-ASSIGNABLE
Neither Mr. Guzzle, his surviving spouse, nor any other person will have
any right to assign or otherwise to alienate the right to receive payments
under the plan, in whole or in part.
SECTION 10. OTHER BENEFIT PLANS
This plan will supersede any obligation to pay benefits to Mr. Guzzle
under the excess benefit plan contained in the retirement plan or the TECO
Energy Group Supplemental Executive Retirement Plan, as they may be amended
from time to time. No benefits will be payable to Mr. Guzzle under such
excess benefit plan or the TECO Energy Group Supplemental Executive Retirement
Plan.
- 173 -<PAGE>
Exhibit 10.4
SECTION 11. AMENDMENT
TECO Energy reserves the right at any time by action of the board to
amend the plan in any way. However, no amendment of the plan may reduce the
benefits to be paid to Mr. Guzzle or his surviving spouse below those that
would have been paid if the plan had continued without change to the date of
Mr. Guzzle's retirement or termination of employment for any reason.
Executed as of October 16, 1996.
TECO ENERGY, INC.
By:
Roger A. Dunn
V i ce President - Human Resources
TIMOTHY L. GUZZLE
- 174 -<PAGE>
Exhibit 10.5
TECO ENERGY GROUP
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR ROGER H. KESSEL
SECTION 1. PURPOSE AND EFFECTIVE DATE
The purpose of this plan is to provide Roger H. Kessel, Senior Vice
President - General Counsel and Secretary of TECO Energy, with additional
retirement income by supplementing the retirement benefits provided under the
retirement plan. The plan was originally effective as of December 1, 1989.
The effective date of this amendment and restatement is January 15, 1997.
SECTION 2. DEFINITIONS
This section contains definitions of terms used in the plan. Where the
context so requires, the singular includes the plural, and the plural includes
the singular.
2.1 Annual earnings will have the same meaning as in the retirement
plan, except that the same will be determined without regard to (a) any dollar
limitation on such annual earnings that may be imposed under the retirement
plan or (b) any reduction in taxable income as a result of voluntary salary
reduction deferrals under the TECO Energy Group Retirement Savings Excess
Benefit Plan.
2.2 Average annual earnings of Mr. Kessel as of any date of reference
means the average of his annual earnings during whichever of the following
periods yields the highest average: (a) the 36 consecutive months of active
employment preceding the date of reference (or all months of employment if
less than 36), or (b) any three consecutive calendar years out of the five
calendar years preceding the date of reference. Bonuses are included as
compensation for the period in which paid, provided that if more than three
regular annual bonuses are paid in any 36 consecutive month period, only the
largest three bonuses will be counted.
2.3 Board means the Board of Directors of TECO Energy.
2.4 Committee means the retirement plan committee as constituted under
the retirement plan.
2.5 TECO Energy means TECO Energy, Inc. and any successor to all or a
major portion of its assets or business which assumes the obligations of TECO
Energy, Inc. under this plan.
2.6 Disability income plan means the TECO Energy Group Disability
Income Plan, as amended from time to time.
- 175 -<PAGE>
Exhibit 10.5
2.7 Plan means the TECO Energy Group Supplemental Executive Retirement
Plan for Roger H. Kessel, as set forth in this plan instrument, and as it may
be amended from time to time.
2.8 Retirement means termination of Mr. Kessel's employment with TECO
Energy by Mr. Kessel or TECO Energy for any reason on or after he attains age
55.
2.9 Retirement plan means the TECO Energy Group Retirement Plan, as
amended from time to time.
2.10 Service will have the same meaning as "plan service" in the
retirement plan.
2.11 Social security benefit of Mr. Kessel as of any date of reference
(the "computation date") means the primary insurance amount to which he is or
would be entitled, payable under Title II of the Social Security Act as in
effect on such date, based on the assumptions: (a) that no changes in the
benefit levels payable or the wage base under Title II occur after the
computation date; (b) that, if the computation date falls before his 62nd
birthday, his annual earnings during the calendar year in which the
computation date falls and during any subsequent calendar year before the
calendar year in which his 62nd birthday falls is zero; (c) that payment of
his primary insurance amount begins for the month after he reaches age 62, or
his date of retirement if later, without reduction or delay because of future
gainful employment or delay in applying for benefits; and (d) that his
earnings for calendar years before the calendar year in which the computation
date falls will be determined using his actual earnings history if available,
and otherwise by applying a six percent retrospective salary scale to his rate
of annual earnings in effect on the computation date. The social security
benefit of Mr. Kessel if he retires after his 65th birthday will include any
delayed retirement credit.
2.12 Survivor income plan means the TECO Energy Group Survivor Income
Plan, as amended from time to time.
- 176 -<PAGE>
Exhibit 10.5
ECTION 3. RETIREMENT BENEFITS
3.1 Retirement at or after age 62. Subject to the reductions in
Section 6.1 below, if Mr. Kessel retires on or after attaining age 62, he will
receive a supplemental monthly retirement benefit equal to one-twelfth of five
percent of his average annual earnings multiplied by his years of service (or
portions thereof) up to a maximum benefit of 60% of his final average earnings
(60% is equal to five percent multiplied by a maximum of 12 years of service).
Mr. Kessel's retirement benefit hereunder will be calculated using his years
of service (or portions thereof) and average annual earnings as of his actual
date of retirement.
3.2 Retirement before age 62. Subject to the reductions in Section
6.1 below, if Mr. Kessel retires before attaining age 62, he will receive a
supplemental monthly retirement benefit equal to one-twelfth of (a) the amount
determined using the formula in Section 3.1 above, multiplied by (b) an early
retirement factor determined under the following table:
Years by which the
start of payments Early retirement
precedes age 62* factor
7 .65
6 .70
5 .75
4 .80
3 .85
2 .90
1 .95
* Interpolate for completed months
3.3 Form of Payment.
(a) Normal form of retirement benefits. The normal form of
retirement benefit payable to Mr. Kessel under the plan is a life annuity.
Benefits payable in the normal form will begin on the first day of the month
coinciding with or next following the date of Mr. Kessel s retirement.
(b) Optional lump sum benefit. In lieu of the normal form of
benefit, Mr. Kessel may elect to receive payment of his benefit in the form of
a commuted single sum payment that is the actuarial equivalent of the normal
form of benefit (including the value of the post-retirement surviving spouse
benefit under Section 4.2(c)). If Mr. Kessel elects to receive a lump sum
payment, such payment will be made on the first day of the month coinciding
with or next following the date Mr. Kessel s employment terminates. Actuarial
equivalence will be based on the actuarial assumptions specified from time to
time in the retirement plan for lump sum payments. Mr. Kessel s election to
receive a lump sum payment will be effective only with respect to a retirement
occurring at least 12 months after the date Mr. Kessel submits the election,
provided that elections submitted on or before December 31, 1996 will be
immediately effective.
- 177 -<PAGE>
Exhibit 10.5
SECTION 4. SURVIVING SPOUSE BENEFIT
4.1 Eligibility. Mr. Kessel's surviving spouse will receive the
surviving spouse benefit if Mr. Kessel and his spouse were married to each
other for at least the 12 months preceding Mr. Kessel's death and, in the case
of Mr. Kessel s death after retirement, Mr. Kessel and his spouse were married
to each other on Mr. Kessel's date of retirement.
4.2 Amount of surviving spouse benefit. Subject to the reductions
described in Section 6.2 below, the benefit provided under the plan to Mr.
Kessel's surviving spouse will be determined as follows:
(a) Pre-retirement before age 62. If Mr. Kessel dies during
employment with TECO Energy and before his 62nd birthday, his surviving spouse
will receive a monthly survivor income payment equal to 50 percent of his
monthly projected retirement benefit. Mr. Kessel's monthly projected
retirement benefit is the monthly benefit he would have received if he had
retired at age 62 under Section 3.1 calculated using his average annual
earnings determined as of his date of death.
(b) Pre-retirement on or after age 62. If Mr. Kessel dies
during employment with TECO Energy on or after his 62nd birthday, his
surviving spouse will receive a monthly survivor income payment equal to 50
percent of his monthly retirement benefit earned under Section 3.1 using his
years of service (or portions thereof) and his average annual earnings as of
his date of death.
(c) Post-retirement. If Mr. Kessel dies on or after the date of
his retirement, his surviving spouse will receive a monthly survivor income
payment equal to 50 percent of the monthly benefit payment he was receiving at
his death (or would have received if he had survived until the first payment
date).
4.3 Form and time of surviving spouse benefit. Surviving spouse
benefits under this Section 4 will be payable only in the form of a life
annuity to the surviving spouse. Benefit payments will begin on the first day
of the month coinciding with or next following the date of Mr. Kessel's death.
4.4 Death benefit where lump sum paid. If Mr. Kessel received a lump
sum payment of his benefit under Section 3.3(b), no surviving spouse benefit
or other death benefit will be payable under the plan to any person.
SECTION 5. DISABILITY
5.1 If Mr. Kessel suffers a total disability (as defined in the
disability income plan) before age 62, he will continue to be credited with
service as if he were actively employed by TECO Energy during his period of
total disability. Mr. Kessel may not receive benefits under this plan at any
time when he is receiving disability income payments under the disability
income plan. Benefits under this plan will begin when payments cease under
the disability income plan.
- 178 -<PAGE>
Exhibit 10.5
5.2 Mr. Kessel's disability date is his last day of work for TECO
Energy before becoming unable to continue working because of his total
disability. A period of total disability of Mr. Kessel will begin on his
disability date and will end on the earlier of the last day of the month in
which his final disability income payment is due under the disability income
plan or on the date he retires hereunder and starts receiving benefit
payments.
5.3 If Mr. Kessel does not return to active service with TECO Energy
after suffering a total disability, his retirement benefits under Section 3
will be calculated using his average annual earnings as of his disability
date, his total service including service credited under Section 5.1 above,
and his primary social security benefit as of his date of disability.
5.4 If Mr. Kessel dies while disabled, his surviving spouse will, if
eligible, receive the pre-retirement surviving spouse benefit determined under
Section 4.2(a) or (b).
SECTION 6. OFFSET FOR OTHER PAYMENTS
6.1 Mr. Kessel's retirement benefit will be reduced (but not below
zero) by the following payments, with such reductions starting when such
payments are assumed to begin: (a) 100 percent of the social security benefit
of Mr. Kessel assuming such benefit begins on the later of the date he reaches
age 62 or his actual retirement, and (b) the amount of his benefit payments
under the retirement plan (converted to a life annuity if such payments are in
an optional form), assuming such payments begin on the later of the date he
reaches age 55 or his actual retirement.
6.2 The benefit of Mr. Kessel's surviving spouse will be reduced (but
not below zero) by the following payments: (a) payments under the survivor
income plan, and (b) payments under the retirement plan.
SECTION 7. BENEFITS NOT CURRENTLY FUNDED
7.1 Nothing in this plan will be construed to create a trust or to
obligate TECO Energy or any other employer to segregate a fund, purchase an
insurance contract, or in any other way currently to fund the future payment
of any benefits hereunder, nor will anything herein be construed to give Mr.
Kessel or any other person rights to any specific assets of TECO Energy or of
any other employer or entity.
7.2 Notwithstanding Section 7.1, TECO Energy has established a grantor
trust of which it is treated as the owner under Section 671 of the Internal
Revenue Code to provide for the payment of benefits hereunder.
SECTION 8. ADMINISTRATION
The plan will be administered by the committee, which will have full
power and authority to construe, interpret and administer the plan. Decisions
- 179 -<PAGE>
Exhibit 10.5
of the committee will be final and binding on all persons. The committee may,
in its discretion, adopt, amend and rescind rules and regulations relating to
the administration of the plan.
SECTION 9. RIGHTS NON-ASSIGNABLE
Neither Mr. Kessel, his surviving spouse, nor any other person will have
any right to assign or otherwise to alienate the right to receive payments
under the plan, in whole or in part.
SECTION 10. OTHER BENEFIT PLANS
This plan will supersede any obligation to pay benefits to Mr. Kessel
under the excess benefit plan contained in the retirement plan or the TECO
Energy Group Supplemental Executive Retirement Plan, as they may be amended
from time to time. No benefits will be payable to Mr. Kessel under such
excess benefit plan or the TECO Energy Group Supplemental Executive Retirement
Plan.
SECTION 11. AMENDMENT
TECO Energy reserves the right at any time by action of the board to
amend the plan in any way. However, no amendment of the plan may reduce the
benefits to be paid to Mr. Kessel or his surviving spouse below those that
would have been paid if the plan had continued without change to the date of
Mr. Kessel's retirement or termination of employment for any reason.
Executed as of January 15, 1997.
TECO ENERGY, INC.
By:
Roger A. Dunn
V i ce President - Human Resources
ROGER H. KESSEL
- 180 -<PAGE>
TECO ENERGY GROUP
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1996 Amendment and Restatement
SECTION 1. PURPOSE AND EFFECTIVE DATE
The purpose of this plan is to provide key executives of the Company and
its subsidiaries with additional retirement income by supplementing the
retirement benefits provided under the retirement plan. The effective date of
this plan as herein amended and restated is October 16, 1996.
SECTION 2. DEFINITIONS
This section contains definitions of terms used in the plan. Where the
context so requires, the masculine includes the feminine, the singular
includes the plural, and the plural includes the singular.
2.1 Annual earnings will have the same meaning as in the retirement
plan, except that the same will be determined without regard to (a) any dollar
limitation on such annual earnings that may be imposed under the retirement
plan or (b) any reduction in taxable income as a result of voluntary salary
reduction deferrals under the TECO Energy Group Retirement Savings Excess
Benefit Plan.
2.2 Average annual earnings of a participant as of his retirement date
means the average of his annual earnings during whichever of the following
periods yields the highest average: (a) the 36 consecutive months of active
employment preceding the retirement date (or all months of employment if less
than 36), or (b) any three consecutive calendar years out of the five calendar
years preceding the retirement date. Bonuses are included as compensation for
the period in which paid, provided that if more than three regular annual
bonuses are paid in any 36 consecutive month period, only the largest three
bonuses will be counted.
2.3 Board shall mean the Board of Directors of the Company.
2.4 Change in control of the company shall mean a change in control of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), whether or not the Company is in
fact required to comply therewith; provided, that, without limitation, such a
change in control shall be deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities;
(b) during any period of 24 consecutive months (not including
any period prior to the effective date of this plan), individuals who at the
beginning of such period constitute the board and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in paragraphs (a), (c) or (d) of
this Subsection 2.4) whose election by the board or nomination for election by
the stockholders of the company was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (i) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the combined voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no "person"
(as hereinabove defined) acquires 30% or more of the combined voting power of
the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
2.5 Committee means the retirement plan committee as constituted under
the retirement plan.
2.6 Company means TECO Energy, Inc. and any successor to all or a
major portion of its assets or business which assumes the obligations of the
Company under this plan.
2.7 Disability income plan means the TECO Energy Group Disability
Income Plan, as amended from time to time.
2.8 Early retirement age is exactly ten years before the age specified
in the table in Section 2.10.
2.9 Employer will have the same meaning as in the retirement plan.
2.10 Normal retirement age for purposes of this plan is exactly three
years before the age specified in the following table:
Calendar year
of birth Specified age
before 1938 65 exactly
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1943 through 1954 66 exactly
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
after 1959 67 exactly
2.11 Participant means each employee of an employer who has satisfied
the eligibility requirements set forth in Section 3 hereof.
2.12 Plan means the TECO Energy Group Supplemental Executive Retirement
Plan, as set forth in this plan instrument, and as it may be amended from time
to time.
2.13 Retirement means a participant's termination of employment from an
employer on or after (a) he has reached his normal retirement age, (b) he has
reached his early retirement age and completed five years of service, or (c) a
change in control of the Company has occurred.
2.14 Retirement plan means the TECO Energy Group Retirement Plan, as
amended from time to time.
2.15 Service will have the same meaning as "plan service" in the
retirement plan.
2.16 Social Security benefit of a participant as of his retirement date
(the "computation date") means the primary insurance amount to which he is or
would be entitled, payable under Title II of the Social Security Act as in
effect on such date, based on the assumptions: (a) that no changes in the
benefit levels payable or the wage base under Title II occur after the
computation date; (b) if the computation date falls on or after the date when
he reaches his early retirement age and before the date when he reaches his
normal retirement age, that his annual earnings during the calendar year in
which the computation date falls and any subsequent calendar year before the
year in which his normal retirement age falls is zero; (c) if the computation
date falls before the date when he reaches his early retirement age, that his
annual earnings during the calendar year in which the computation date falls
and during each subsequent calendar year before the calendar year in which his
normal retirement age falls is equal to his rate of annual earnings on the
computation date; (d) that payment of his primary insurance amount begins for
the month after he reaches normal retirement age, or his retirement date if
later, without reduction or delay because of future gainful employment or
delay in applying for benefits; and (e) that the participant's earnings for
calendar years before the calendar year in which the computation date falls
will be determined using his actual earnings history if available, and
otherwise by applying a six percent retrospective salary scale to the
employee's rate of annual earnings in effect on the computation date. The
social security benefit of a participant who retires after the age specified
in the table in Section 2.10 will include any delayed retirement credit.
2.17 Survivor income plan means the TECO Energy Group Survivor Income
Plan, as amended from time to time.
SECTION 3. PARTICIPATION
Any active employee of an employer who is elected as an officer by such
employer's board of directors is covered by this plan and is eligible to
receive benefits hereunder if he falls in one of the following categories,
provided that he is not covered by another supplemental executive retirement
plan or arrangement of the Company or any employer:
(a) he is in salary grade level five or above, and his participation
hereunder is requested by the Vice President - Human Resources and approved by
the Chief Executive Officer of the Company; or
(b) he is in a salary grade level below five, and his participation
hereunder is requested by the Vice President - Human Resources and approved by
the Chief Executive Officer of the Company and the Compensation Committee of
the Board.
SECTION 4. RETIREMENT BENEFITS
4.1 Retirement at or after normal retirement age. Subject to the
reductions described in Section 7.1 below, each eligible officer who retires
on or after attaining normal retirement age will receive a supplemental
monthly pension equal to one-twelfth of the following: three percent of his
average annual earnings multiplied by his years of service up to a maximum of
20 years. A participant's retirement benefit hereunder will be calculated
using his years of service and average annual earnings as of the actual date
of his retirement.
4.2 Retirement after early retirement age but before normal retirement
age. A participant who retires on or after attaining early retirement age but
before attaining normal retirement age and who has completed five years of
service will receive a supplemental monthly pension equal to one-twelfth of
the amount determined using the formula in Section 4.1 above, multiplied by an
early retirement factor determined under the following table:
<PAGE>
Years by which the Early
start of payments precedes retirement
normal retirement age *factor
7 .65
6 .70
5 .75
4 .80
3 .85
2 .90
1 .95
*Interpolate for completed months.
Notwithstanding the foregoing, in the event of a change in control of
the Company a participant who subsequently retires on or after attaining early
retirement age but before normal retirement age will receive the benefits
provided under this Section 4.2 whether or not he has completed five years of
service.
4.3 Effect of change in control prior to attainment of early
retirement age. In the event of a change in control of the Company prior to
the attainment of early retirement age by any participant, such participant
will receive upon his retirement thereafter a supplemental monthly pension
equal to one-twelfth of the amount determined using the formula in Section 4.1
above, multiplied by an early retirement factor determined under the following
table:
<PAGE>
Years by which the Early
start of payments precedesretirement
normal retirement age *factor
30 .10
29 .11
28 .12
27 .13
26 .14
25 .15
24 .16
23 .17
22 .18
21 .20
20 .21
19 .23
18 .25
17 .27
16 .30
15 .32
14 .35
13 .38
12 .41
11 .45
10 .49
9 .54
8 .59
*Interpolate for completed months.
4.4 Form of Payment.
(a) Normal form of retirement benefits. The normal form of
retirement benefit payable to a participant under the plan is a life annuity.
Benefits payable in the normal form will begin on the first day of the month
coinciding with or next following the date of a participant's retirement.
(b) Optional lump sum benefit. In lieu of the normal form of
benefit, a participant may elect to receive payment of his benefit in the form
of a commuted single sum payment that is the actuarial equivalent of the
normal form of benefit (including the value of the post-retirement surviving
spouse benefit under Section 5.2(c)). Actuarial equivalence will be based on
the actuarial assumptions specified from time to time in the retirement plan
for lump sum payments. A participant's election to receive a lump sum payment
will be effective only with respect to a retirement occurring at least 12
months after the date the participant submits the election, provided that
elections submitted on or before May 1, 1997 will be immediately effective.
4.5 Enhanced benefits for certain retirees. Certain retirees have
been provided enhanced retirement benefits as set forth in Schedule A hereto.
SECTION 5. SURVIVING SPOUSE BENEFIT
5.1 Eligibility. The surviving spouse of a deceased participant will
receive the surviving spouse benefit if:
(a) the participant dies (i) during employment with an employer
on or after he has completed at least five years of service and his combined
age and years of service total 50 or more, or (ii) after retirement; and
(b) the spouse and the deceased participant were married to each
other for at least the 12 months preceding the participant's date of death
and, in the case of a participant who dies after retirement, were married to
each other on the participant's date of retirement.
5.2 Amount of surviving spouse benefit. Subject to the reductions
described in Section 7.2 below, the benefit provided under the plan to the
surviving spouse of a participant will be determined as follows.
(a) Pre-retirement before normal retirement age. If a
participant dies during employment with an employer and before his normal
retirement age, his surviving spouse will receive a monthly survivor income
payment equal to 50% percent of the participant's monthly projected retirement
benefit. A participant's monthly projected retirement benefit is the monthly
benefit he would have received at normal retirement age under Section 4.1
calculated using the number of years of service he would have had if he had
continued in employment with an employer until normal retirement age and his
average annual earnings determined as of his date of death.
(b) Pre-retirement on or after normal retirement age. If the
participant dies during employment with an employer on or after his normal
retirement age, his surviving spouse will receive a monthly survivor income
payment equal to 50 percent of his monthly retirement benefit earned under
Section 4.1 using his number of years of service and his average annual
earnings as of his date of death.
(c) Post-retirement. If a participant dies on or after his date
of retirement, his surviving spouse will receive a monthly survivor income
payment equal to 50 percent of the monthly benefit payment he was receiving at
his death (or would have received if he had survived until the first payment
date).
5.3 Form and time of surviving spouse benefit. Surviving spouse
benefits under this Section 5 will be payable only in the form of a life
annuity to the surviving spouse. Benefit payments will begin on the first day
of the month on or after the date of the participant's death.
5.4 Death benefit where lump sum paid. If a participant received a
lump sum payment of his benefit under Section 4.4(b), no surviving spouse
benefit or other death benefit will be payable under the plan to any person.
SECTION 6. DISABILITY
6.1 Service during disability. A participant who suffers a total
disability, as defined in the disability income plan, will continue to be
credited with service as if he were actively employed by an employer during
his period of total disability. If such a participant does not return to
active service with an employer, his benefit under Section 4 will be
calculated using his average annual earnings as of his disability date, his
total service including service credited under the preceding sentence, and his
primary social security benefit calculated as of the date of his disability.
6.2 Period of disability. A participant's date of disability is his
last day of work for his employer before becoming unable to continue working
because of his total disability. A period of total disability of a
participant will begin on his disability date and will end on the earlier of
the last day of the month in which his final disability income payment is due
under the disability income plan or on the date he retires hereunder and
starts receiving benefit payments.
6.3 Death while disabled. If a participant dies while disabled, his
surviving spouse will, if eligible, receive the pre-retirement surviving
spouse benefit determined under Section 5.2(a) or (b).
6.4 No duplication of benefits. A participant may not receive
benefits under this plan at any time when he is receiving disability income
benefits under the disability income plan.
SECTION 7. OFFSET FOR OTHER PAYMENTS
7.1 Retirement benefit offsets. The retirement benefit of a
participant will be reduced (but not below zero) by the following payments,
with such reductions starting when such benefits are assumed to begin: (a)
100% percent of the social security benefit of the participant assuming such
benefit begins on the later of his normal retirement age or his actual
retirement, and (b) the amount of his benefit payments under the retirement
plan (converted to a life annuity if such payments are in an optional form),
assuming such payments begin on the later of his early retirement age or his
actual retirement.
7.2 Death benefit offsets. The benefit of a surviving spouse will be
reduced (but not below zero) by the following payments: (a) payments under the
survivor income plan, and (b) payments under the retirement plan.
SECTION 8. BENEFITS NOT CURRENTLY FUNDED
8.1 No funding. Nothing in this plan will be construed to create a
trust or to obligate the Company or any other employer to segregate a fund,
purchase an insurance contract, or in any other way currently to fund the
future payment of any benefits hereunder, nor will anything herein be
construed to give any participant or any other person rights to any specific
assets of the Company or of any other employer or entity.
8.2 Grantor trust. Notwithstanding Section 8.1, the Company has
established a grantor trust of which it is treated as the owner under Section
671 of the Internal Revenue Code.
SECTION 9. ADMINISTRATION
The plan will be administered by the committee, which will have full
power and authority to construe, interpret and administer the plan. Decisions
of the committee will be final and binding on all persons. The committee may,
in its discretion, adopt, amend, and rescind rules and regulations relating to
the administration of the plan.
SECTION 10. RIGHTS NON-ASSIGNABLE
No participant, surviving spouse, or any other person will have any
right to assign or otherwise to alienate the right to receive payments under
the plan, in whole or in part.
SECTION 11. EXCESS BENEFIT PLAN
This plan will supersede any obligation to pay to participants excess
plan benefits under the excess benefit plan contained in the retirement plan,
as such plan may be amended from time to time; no excess plan benefits will be
payable under such excess benefit plan to participants.
SECTION 12. AMENDMENT OR TERMINATION
The Company reserves the right at any time by action of the board to
terminate the plan or to amend its provisions in any way. In addition, if the
retirement plan is terminated, this plan will automatically terminate also as
of the same effective date. Notwithstanding the foregoing, no termination or
amendment of the plan may reduce the benefits payable under the plan to any
person with respect to a participant whose employment with his employer was
terminated before such termination or amendment and no termination or
amendment may reduce the benefits to be paid with respect to a participant on
the date of such termination or amendment below the amount which such
participant would have received if his employment had terminated on the date
before such termination or amendment.
EXECUTED as of October 16, 1996.
TECO ENERGY, INC.
By:________________________________
Roger A. Dunn
Vice President - Human Resources<PAGE>
SCHEDULE A
Enhanced Retirement Benefits
A.1. David N. Campbell and G. Pierce Wood. The retirement benefits of David
N. Campbell and G. Pierce Wood are to be calculated as though each had
continued in employment until age 62 with annual earnings equal to the rate of
earnings in effect on his date of termination of employment.
A.2. 1994-95 Early Retirement Window.
(a) The retirement benefits of each of the following participants are
to be calculated by using the factors set forth below:
Name Increase in Age Increase in Service
William T. Snyder 3 years, 8 months n/a
Robert T. Tomczak 3 years 3 years
Fred W. Maggard 4 years 4 years
R.D. Cornwell 4 years 4 years
(b) Average annual earnings for each of Philip G. Flood and John G.
Graham is to be calculated using the three consecutive calendar years out of
the five calendar years preceding the date of retirement which yield the
highest average.
A.3. Larry D. Noland. The retirement benefit of Larry D. Noland is to be
calculated as though he were age 62 1/2 on his retirement date, resulting in
an increase in the benefit otherwise payable under the plan of $1,062.93 per
month.
Exhibit 10.7
TECO ENERGY GROUP
SUPPLEMENTAL RETIREMENT BENEFITS
TRUST AGREEMENT
1997 Amendment and Restatement
The TECO Energy Group Supplemental Retirement Benefits Trust Agreement
by and between TECO Energy, Inc. (the "Company") and NationsBank, N.A. (South)
(successor to Barnett Banks Trust Company, the "Trustee"), as previously
amended, is hereby amended and restated in its entirety effective as of
January 15, 1997.
WHEREAS, the Company maintains the plans listed on Exhibit A (such plans
being hereinafter collectively referred to as the "plans" and individually as
a "plan") under which certain eligible officers of the Company and its
subsidiaries and their spouses may become eligible for supplemental retirement
income and excess plan benefits ("supplemental benefits"); and
WHEREAS, the Company desires to amend and restate the trust agreement;
NOW THEREFORE, in consideration of the mutual agreements contained
herein, the Company and the Trustee hereby agree to amend and restate the
trust agreement as follows:
SECTION 1. TRUST FUND
1.1. Subject to the claims of its creditors as set forth in Section 4,
the Company has heretofore deposited certain sums of cash or other property
with the Trustee pursuant to the trust agreement. Such cash or other property
shall continue to be held, administered and disposed of by the Trustee as
provided in this trust agreement.
1.2. The trust will be irrevocable. However, if at any time before a
"change in control of the Company" (as defined below), the Company obtains an
opinion of counsel, acceptable to the Company and the Trustee, that the plans
would be deemed "funded" for purposes of Title I of the Employee Retirement
Income Security Act of 1974, as amended, by reason of the trust, or that
amounts held in the trust or contributed thereto, or earnings thereon, would
be includible in the income of trust beneficiaries before distribution to them
from the trust, the trust will become revocable. Any revocation will be
accomplished by written notice thereof from the Company to the Trustee. Upon
receipt of such a notice of revocation, the Trustee will deliver the assets of
the trust to the Company.
1.3. The trust is intended to be a grantor trust of which the Company
is treated as the owner under Section 671 of the Internal Revenue Code of
1986, as it may be amended from time to time, and the trust will be construed
accordingly.
1.4. The principal of the trust and any earnings hereon, unless
returned to the Company under Section 1.2 or Section 6 or used to defray the
expenses of the trust, will be used exclusively for the benefit of trust
beneficiaries or, to the extent provided under Section 4, for the benefit of
general creditors of the Company. No trust beneficiary will have any
preferred claim on, or any beneficial ownership interest in, any assets of the
- 194 -<PAGE>
Exhibit 10.7
trust before such assets are paid to the trust beneficiaries as supplemental
benefits under Section 3, and all rights created under the plans and this
t r u s t agreement will be unsecured contractual rights of the trust
beneficiaries against the Company.
1.5. The Trustee shall keep such records and maintain such books and
accounts as shall at all times be sufficient to indicate, for accounting
purposes, the proportionate part of the trust that is held on behalf of the
officers listed on Exhibit B. For this purpose only, the Trustee shall
maintain separate bookkeeping accounts for each such officer and shall credit
thereto all contributions made by the Company to fund benefits payable to such
officer or his beneficiary, and earnings thereon, and shall charge thereto all
payments made to or for the account of such officer or his beneficiary.
Notwithstanding the foregoing, the Trustee may hold the trust as a single fund
and may invest and reinvest the commingled assets and receive the income and
proceeds thereof, all without regard to the source of any part of the
commingled assets.
SECTION 2. FUNDING OF TRUST FUND
2.1. The Company may at any time and from time to time make deposits of
cash or other property with the Trustee to augment the principal of the trust,
and the Trustee will hold, administer and dispose of such deposits as provided
in this trust agreement.
2.2. If at the time of a "potential change in control of the Company"
(as defined below), this trust (a) has not been terminated or revoked and (b)
is not "fully funded" (as defined below), the Company will promptly deposit in
the trust cash sufficient to cause the trust to be fully funded as of the date
of the deposit. In the event of a potential change in control of the Company,
the Company will recalculate the fully funded amount as of the last day of the
calendar year in which such potential change in control occurs and as of the
last day of every calendar year following the potential change in control. If
the amount so calculated exceeds the fair market value of the assets then held
in trust, the Company will promptly (and in no event later than 30 days after
such recalculation date) deposit in the trust cash equal to such excess. If
the fully funded amount so calculated is less than the fair market value of
the assets held in trust, the Trustee, upon receipt of a written request from
the Company, will distribute to the Company such difference in cash.
2.3. For purposes of this Section 2, the trust will be deemed "fully
funded" as of any date if, as of such date, the fair market value of the
assets held in the trust is not less than the aggregate present value as of
such date of (a) all benefits then in pay status under the plans (including
benefits not yet begun for eligible officers who have retired, died or
otherwise terminated employment under circumstances entitling them to benefits
under any of the plans) plus (b) all benefits that would become payable under
the plans if on such date a change in control of the Company was deemed to
have occurred and all participants under each of the plans were deemed to have
retired for purposes of such plans. In applying the preceding sentence,
present value will be determined by using the interest and mortality
assumptions used in determining lump sum present values under the TECO Energy
Group Retirement Plan, as it may be amended from time to time.
- 195 -<PAGE>
Exhibit 10.7
2.4. For purposes of this trust agreement, a "change in control of the
Company" shall mean a change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") whether or not the Company is in fact required to comply
therewith; provided, that, without limitation, such change in control shall be
deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities;
(b) during any period of 24 consecutive months (not including
any period prior to the effective date of this agreement), individuals who at
the beginning of such period constitute the board of directors of the Company
(the "board") and any new director (other than a director designated by a
person who has entered into an agreement with the Company to effect a
transaction described in paragraphs (a), (c) or (d) of this Section 2.4) whose
election by the board or nomination for election by the stockholders of the
Company was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so approved, cease
for any reason to constitute a majority thereof;
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (i) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the combined voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no "person"
(as hereinabove defined) acquires 30% or more of the combined voting power of
the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
2.5. For purposes of this trust agreement, a "potential change in
control of the Company" shall be deemed to have occurred if:
(a) the Company enters into an agreement, the consummation of
which would result in the occurrence of a change in control of the Company;
- 196 -<PAGE>
Exhibit 10.7
(b) any person (including the Company), publicly announces an
intention to take or consider taking actions which if consummated would
constitute a change in control of the Company;
(c) any person (as hereinabove defined), other than the Company,
any trustee or other fiduciary holding securities under an employee benefit
plan of the Company or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company (a) is or becomes the beneficial owner, (b)
discloses directly or indirectly to the Company or publicly a plan or
intention to become the beneficial owner, or (c) makes a filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect
to securities to become the beneficial owner, directly or indirectly, of
securities representing 9.9% or more of the combined voting power of the
outstanding voting securities of the Company; or
(d) the board adopts a resolution to the effect that, for
purposes of this trust agreement, a potential change in control of the Company
has occurred.
2.6. Upon the termination of employment with the Company of an officer
listed on Exhibit B for any reason, the Company will promptly deposit in the
trust cash equal to the present value of all benefits to which such officer or
his beneficiary is entitled. Such deposit will be credited to the account
established on behalf of such officer under Section 1.5. The Company will
recalculate such present value as of the last day of the calendar year in
which such termination of employment occurs and as of the last day of every
calendar year following the termination of employment. If the amount so
calculated exceeds the fair market value of the assets then credited to such
officer's individual account by at least one percent, the Company will
promptly (and in no event later than 30 days after such recalculation date)
deposit in the trust for crediting to the account cash equal to such excess.
In applying the preceding sentences, present value will be determined by using
the interest and mortality assumptions used in determining lump sum present
values under the TECO Energy Group Retirement Plan, as it may be amended from
time to time.
2.7 The Trustee will, and any participant or beneficiary may, take any
actions necessary to enforce the deposit of funds as required under this
Section 2, including bringing suit or instituting other legal proceedings
against the Company. Any such person taking action to enforce the payment of
contributions will be entitled to reimbursement from the trust or, if such
assets are insufficient, from the Company for any costs or expenses, including
reasonable attorneys fees, of the enforcement action. In taking any such
action, the Trustee may rely on such evidence as it deems appropriate of the
event or events giving rise to the Company's obligation to contribute. In the
case of contributions required under Section 2.2, such evidence may include a
public announcement of the event constituting a "potential change in control
of the Company". In the case of contributions required under Section 2.6,
such evidence may include a participant's affidavit that employment with the
Company has terminated supported by a copy of a resignation letter, severance
agreement or other appropriate documentation of termination.
SECTION 3. PAYMENTS TO TRUST BENEFICIARIES
- 197 -<PAGE>
Exhibit 10.7
3.1. Subject to the availability of the assets in the trust and
provided the Company is not then "insolvent" (as hereinafter defined), the
Trustee will make payments of supplemental benefits to trust beneficiaries as
they fall due in accordance with the plans. If the assets of the trust are
not sufficient to make all payments of supplemental benefits to trust
beneficiaries, the Company will make the balance of such payments as they fall
due.
3.2. If the Company at any time amends the provisions of a plan, the
Company will deliver a copy of the instrument amending such plan to the
Trustee.
3.3. If at any time following a change in control of the Company, it is
determined by the Trustee that amounts held in the trust or contributed
thereto, or earnings thereon, would be includable in the income of trust
beneficiaries before distribution to them from the trust, the Trustee shall
distribute such amounts as are includable in the income of trust beneficiaries
to such beneficiaries. With respect to any amounts contributed under Section
2.6 and the earnings thereon, if at any time before a change in control the
Company obtains an opinion of counsel, acceptable to the Company and the
Trustee, that the related plans would be deemed "funded" for purposes of Title
I of the Employee Retirement Security Act of 1974, as amended, by reason of
the trust, or that amounts held in the trust or contributed thereto, or
earnings thereon, would be includible in the income of trust beneficiaries
before distribution to them from the trust, the Trustee shall distribute such
amounts to such beneficiaries.
3.4. Subject to Section 4, all amounts credited to the account
established on behalf of an officer under Section 1.5, and all earnings
thereon, will be used solely to make payments of supplemental benefits to such
officer or his beneficiary and will not be available for payment of benefits
to any other trust beneficiary. If the amounts credited to the account are
for any reason insufficient to make payments to such officer and his
beneficiary, such payments may be made from any assets in the trust other than
assets credited to the accounts established on behalf of other officers under
Section 1.5. If such other assets of the trust are not sufficient to make
such payments, the Company will make the balance of such payments as they fall
due. Upon payment of all supplemental benefits to such officer and his
beneficiary, any amounts that remain credited to the account established on
behalf of such officer will become general assets of the trust available for
payment of supplemental benefits to any trust beneficiaries.
SECTION 4. PAYMENTS TO TRUST BENEFICIARIES WHEN THE COMPANY IS INSOLVENT
4.1. The Company will be deemed to be "insolvent" for purposes of this
trust agreement upon the occurrence of any of the following:
(a) t h e Company makes an assignment for the benefit of
creditors, files a petition in bankruptcy, petitions or applies to any
t r i b unal for the appointment of a custodian, receiver, liquidator,
sequestrator, or any trustee for it or a substantial part of its assets, or
c o mmences any case under any bankruptcy, reorganization, arrangement,
readjustment of a debt, dissolution, or liquidation law or statute of any
jurisdiction (federal or state), whether now or hereafter in effect; or if any
- 198 -<PAGE>
Exhibit 10.7
such petition or application is filed, or any such case is commenced against
it, in which an order for relief is entered or which remains undismissed and
unstayed for 90 days; or the Company by any act or omission indicates its
consent to, approval of or acquiescence in any such petition, application or
case or order for relief or to the appointment of a custodian, receiver or any
trustee for it or any substantial part of its assets, or suffers any such
custodianship, receivership, or trusteeship to continue undischarged;
(b) the Company generally does not pay its debts as such debts
become due or ceases to pay its debts in the ordinary course of business; or
(c) the sum of the Company's debts is determined to be greater
than all its property at a fair valuation; or
(d) the present saleable value of the Company's assets is
determined to be less than the amount that would be required to pay the
probable liability on its existing debts as they become absolute and matured.
4.2. At all times during the continuance of the trust, the principal
and income of the trust will be subject to claims of general creditors of the
Company, but only to the extent hereinafter set forth.
If at any time the Trustee has actual knowledge that the Company
is insolvent, the Trustee will deliver any undistributed principal and income
in the trust to satisfy such claims as a court of competent jurisdiction may
direct. The board and the chief financial officer of the Company shall inform
the Trustee of the Company's insolvency as soon as practicable after either of
them knows of the Company's insolvency. If the Company or a person claiming
to be a creditor of the Company alleges in writing to the Trustee that the
Company has become insolvent, the Trustee will independently determine, within
30 days after receipt of such writing, whether the Company is insolvent.
P e nding such determination, the Trustee will discontinue payments of
supplemental benefits to trust beneficiaries. The Trustee will resume
payments of supplemental benefits to trust beneficiaries in accordance with
Section 3 of this trust agreement only after the Trustee has determined that
the Company is not insolvent (or is no longer insolvent, if the Trustee
initially determined the Company to be insolvent). The Trustee will have no
duty to inquire whether the Company is insolvent unless the Trustee has actual
knowledge of facts indicating that the Company may be insolvent or has
received an allegation of insolvency as provided in this Section 4.2. The
Trustee may in all events rely on such evidence concerning the Company's
solvency which in the opinion of the Trustee provides a reasonable basis for
making a determination concerning the Company's solvency.
Nothing in this trust agreement will in any way diminish or
augment any rights of trust beneficiaries to pursue their rights as general
creditors of the Company with respect to their supplemental benefits or
otherwise.
4.3. If the Trustee discontinues payments of supplemental benefits from
the trust under Section 4.2 and subsequently resumes such payments, the first
payment following such discontinuance will include the aggregate amount of all
payments which would have been made to trust beneficiaries (together with
interest at a rate equal to the prime rate as published in the Wall Street
- 199 -<PAGE>
Exhibit 10.7
Journal from time to time, compounded annually on the amount delayed) in
accordance with the plans during the period of such discontinuance, less the
aggregate amount of any payments made to trust beneficiaries by the Company in
lieu of the payments provided for hereunder during any such period of
discontinuance.
SECTION 5. INVESTMENT OF PRINCIPAL AND INCOME
Before a change in control of the Company, the Trustee will invest the
principal of the trust and any earnings thereon in accordance with such
investment objectives, policies and restrictions as the Company may from time
to time communicate to the Trustee, or, if the Company has appointed an
investment manager to manage or direct the investment of some or all of the
assets of the trust, in accordance with the directions of such investment
manager. The Trustee is authorized to invest the assets of the trust in a
common, collective or pooled trust fund maintained by the Trustee. The
Trustee will have no duty to inquire into or review the investment objectives,
policies, or restrictions, or the investments made pursuant to the directions
of an investment manager. However, assets held in trust will not be invested
in securities or obligations issued by the Company or any affiliate of the
Company. Following a change in control of the Company, the Trustee will
invest the assets of the trust as it determines in its sole discretion, in any
form of tangible or intangible property, real or personal, or in the
securities or obligations of any form of enterprise wherever it may be located
(other than in securities or obligations of the Company or an affiliate of the
Company).
SECTION 6. DISPOSITION OF PRINCIPAL AND INCOME
At all times during the continuance of the trust, all principal amounts
contributed to the trust and all interest thereon, net of expenses, will,
unless paid as distributions to trust beneficiaries under Section 3.1 or to
creditors of the Company under Section 4.2, be accumulated and reinvested for
the purposes provided herein. Except as provided in Section 1.2 or
Section 2.2, the Company will have no right or power to direct the Trustee to
return to the Company or to direct to others any of the trust assets before
all payments of supplemental benefits payable under the trust have been made
to trust beneficiaries. Upon payment of all such supplemental benefits, the
Trustee will return to the Company all amounts, if any, then remaining in the
trust.
SECTION 7. ACCOUNTING BY THE TRUSTEE
The Trustee will keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions of the trust, including
such specific records as will be agreed upon in writing between the Company
and the Trustee. All such accounts, books and records will be open to
inspection and audit at all reasonable times by the Company. Within 60 days
following the close of each calendar year and within 60 days after the removal
or resignation of the Trustee, the Trustee will deliver to the Company a
written account of its administration of the trust during such year or during
the period from the close of the last preceding year to the date of such
removal or resignation, setting forth all investments, receipts, disbursements
and other transactions of the trust, including a description of all securities
- 200 -<PAGE>
Exhibit 10.7
and investments purchased and sold with the cost or net proceeds of such
p u rchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities and other property held in the
trust at the end of such year or as of the date of such removal or
resignation, as the case may be.
ECTION 8. RESPONSIBILITY OF THE TRUSTEE
8.1. The Trustee will act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that the
Trustee will incur no liability to any one for any action reasonably taken in
accordance with a written direction, request, or approval given by the Company
or by an investment manager appointed by the Company that is contemplated by
and complies with the terms of this trust agreement, including distributions
made in accordance with a plan and to that extent will be relieved of the
prudent person rule for investments.
8.2. The Trustee may consult with legal counsel (who may also be
counsel for the Trustee generally or counsel to the Company) with respect to
any of its duties or obligations hereunder, including any determination as to
whether a change in control of the Company has occurred or as to whether the
Company is insolvent, and will not be held responsible for acting or
refraining from acting in accordance with the advice of any such counsel
selected with reasonable care.
8.3. The Trustee may hire such agents, legal counsel, accountants,
actuaries, investment managers and financial consultants as may be reasonably
necessary to administer the trust.
8.4. The Trustee will have, without exclusion, all powers conferred on
trustees by applicable law unless expressly provided otherwise herein;
provided, however, that if an insurance policy or annuity contract is held as
an asset of the trust, the Trustee will have no power to name a beneficiary of
the policy or contract other than the trust or, except in accordance with
Section 6 hereof, to assign the policy or contract (as distinct from
conversion of the policy or contract to a different form) other than to a
successor to the Trustee or to loan to any person the proceeds of any
borrowing against such policy or contract.
SECTION 9. COMPENSATION AND EXPENSES OF THE TRUSTEE
The Trustee will be entitled to receive such reasonable compensation for
its services as the Company and the Trustee agree upon in writing. The
Trustee will also be entitled to receive its reasonable expenses incurred with
respect to the administration of the trust, including expenditures reasonably
incurred by the Trustee pursuant to Sections 8.2 and 8.3 of this trust
agreement and any taxes required to be paid by the Trustee in respect of the
trust. All such compensation and expenses will be paid by the Company, but if
not paid by the Company will be a charge against and may be paid from the
assets of the trust.
SECTION 10. REPLACEMENT OF THE TRUSTEE
- 201 -<PAGE>
Exhibit 10.7
The Trustee may be removed at any time by the Company, or may resign, in
either case by at least 30 days' advance notice in writing (unless the parties
waive such notice or agree to a shorter notice period). In the case of the
removal or the resignation of the Trustee before a change in control of the
Company, the Company will appoint a new corporate Trustee, independent and not
subject to the control of either the Company, any affiliate thereof or any
trust beneficiary. Following a change in control of the Company, the Trustee
cannot be removed by the Company. If the Trustee resigns following a change
in control of the Company, it will either appoint a successor Trustee (which
will be a corporate Trustee, independent and not subject to the control of
either the Company, any affiliate thereof or any trust beneficiary) or obtain
appointment of such a Trustee by court order.
SECTION 11. AMENDMENT OR TERMINATION
11.1. This trust agreement may be amended at any time and to any extent
by a written instrument executed by the Trustee and the Company; provided,
however, that following a change in control of the Company this trust
agreement may not be amended or terminated, and following a potential change
in control of the Company and prior to the occurrence of a change in control
of the Company the trust agreement may not be amended in any manner adverse to
any trust beneficiaries unless (a) at least one year has expired since the
most recent event or transaction constituting a potential change in control of
the Company and (b) in respect of a potential change in control which
previously occurred, no facts or circumstances continue to exist which, if
initially occurring at the time any termination or amendment of this trust
agreement is to occur, would constitute a potential change in control of the
Company; and provided further, that while the trust is irrevocable, no such
amendment will make the trust revocable or permit assets of the trust, before
the payment of all supplemental benefits, to be returned to the Company or
paid out of the trust to any other person (except to trust beneficiaries
pursuant to the plans or to creditors of the Company under Section 4); and
provided further that this trust agreement may not be amended or terminated in
any manner adverse to any of the officers listed on Exhibit B or their
beneficiaries without the written consent of such officer of beneficiary, as
the case may be.
11.2. The trust will not terminate until the date on which the last
trust beneficiary ceases to be entitled to supplemental benefits payable under
the trust, unless sooner revoked in accordance with Section 1.2; provided,
however, that the trust shall terminate no later than 21 years following the
death of all individuals who were participants in any plan on the date hereof
(and their respective beneficiaries as of such date).
11.3. Upon termination of the trust as provided in Section 11.2 or upon
revocation of the trust under Section 1.2, any assets remaining in the trust
will be returned to the Company.
SECTION 12. SEVERABILITY AND ALIENATION
12.1. Any provision of this trust agreement prohibited by law will be
ineffective to the extent of any such prohibition without invalidating the
remaining provisions hereof.
- 202 -<PAGE>
Exhibit 10.7
12.2. To the extent permitted by law, benefits to trust beneficiaries
under this trust agreement may not be anticipated, assigned (either at law or
in equity), alienated or subject to attachment, garnishment, levy, execution
or other legal or equitable process, and no benefit actually paid to a trust
beneficiary by the Trustee will be subject to any claim for repayment by the
Company or the Trustee.
SECTION 13. GOVERNING LAW
This trust agreement will be governed by and construed in accordance
with the laws of the State of Florida, without giving effect to the conflicts
of law principles thereof.
SECTION 14. ENTIRE AGREEMENT
This trust agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, understandings and
arrangements, oral or written, between the parties hereto and respect to the
subject matter hereof.
IN WITNESS WHEREOF, the Company and the Trustee have executed this
amended and restated trust agreement as of January 15, 1997.
TECO ENERGY, INC.
By:
Roger A. Dunn
Vice President - Human Resources
NATIONSBANK, N.A. (SOUTH),
as Trustee
By:
Name:
Title:
- 203 -<PAGE>
Exhibit 10.7
EXHIBIT A
TECO Energy Group Supplemental Executive Retirement Plan
Excess benefit plan contained in the TECO Energy Group Retirement Plan
TECO Energy Group Retirement Savings Excess Benefit Plan
TECO Energy, Inc. Supplemental Executive Retirement Plan for Girard F.
Anderson
TECO Energy, Inc. Supplemental Executive Retirement Plan for H.L. Culbreath
TECO Energy, Inc. Supplemental Executive Retirement Plan for Roger A. Dunn
TECO Energy, Inc. Supplemental Executive Retirement Plan for Royston K.
Eustace
TECO Energy, Inc. Supplemental Executive Retirement Plan for T.L. Guzzle
TECO Energy, Inc. Supplemental Executive Retirement Plan for Roger H. Kessel
TECO Energy, Inc. Supplemental Executive Retirement Plan for Richard E. Ludwig
TECO Energy, Inc. Supplemental Executive Retirement Plan for Alan D. Oak
TECO Energy, Inc. Supplemental Executive Retirement Plan for Keith S. Surgenor
TECO Energy, Inc. Supplemental Executive Retirement Plan for James K. Taggart
- 204 -<PAGE>
Exhibit 10.7
EXHIBIT B
Girard F. Anderson
Roger A. Dunn
Royston K. Eustace
Timothy L. Guzzle
Roger H. Kessel
Richard E. Ludwig
Alan D. Oak
Keith S. Surgenor
James K. Taggart
- 205 -<PAGE>
Exhibit 10.14
TECO ENERGY GROUP
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR ALAN D. OAK
SECTION 1. PURPOSE AND EFFECTIVE DATE
The purpose of this plan is to provide Alan D. Oak, Senior Vice
President - Finance and Chief Financial Officer of TECO Energy, with
additional retirement income by supplementing the retirement benefits provided
under the retirement plan. The plan was originally effective as of July 21,
1992. The effective date of this amendment and restatement is October 16,
1996.
SECTION 2. DEFINITIONS
This section contains definitions of terms used in the plan. Where the
context so requires, the singular includes the plural, and the plural includes
the singular.
2.1 Annual earnings will have the same meaning as in the retirement
plan, except that the same will be determined without regard to (a) any dollar
limitation on such annual earnings that may be imposed under the retirement
plan or (b) any reduction in taxable income as a result of voluntary salary
reduction deferrals under the TECO Energy Group Retirement Savings Excess
Benefit Plan.
2.2 Average annual earnings of Mr. Oak as of any date of reference
means the average of his annual earnings during whichever of the following
periods yields the highest average: (a) the 36 consecutive months of active
employment preceding the date of reference (or all months of employment if
less than 36), or (b) any three consecutive calendar years out of the five
calendar years preceding the date of reference. Bonuses are included as
compensation for the period in which paid, provided that if more than three
regular annual bonuses are paid in any 36 consecutive month period, only the
largest three bonuses will be counted.
2.3 Board means the Board of Directors of TECO Energy.
2.4 Committee means the retirement plan committee as constituted under
the retirement plan.
2.5 TECO Energy means TECO Energy, Inc. and any successor to all or a
major portion of its assets or business which assumes the obligations of TECO
Energy, Inc. under this plan.
2.6 Disability income plan means the TECO Energy Group Disability
Income Plan, as amended from time to time.
- 208 -<PAGE>
Exhibit 10.14
2.7 Plan means the TECO Energy Group Supplemental Executive Retirement
Plan for Alan D. Oak, as set forth in this plan instrument, and as it may be
amended from time to time.
2.8 Retirement means termination of Mr. Oak's employment with TECO
Energy by Mr. Oak or TECO Energy for any reason on or after he attains age 56.
2.9 Retirement plan means the TECO Energy Group Retirement Plan, as
amended from time to time.
2.10 Service will have the same meaning as "plan service" in the
retirement plan.
2.11 Social security benefit of Mr. Oak as of any date of reference
(the "computation date") means the primary insurance amount to which he is or
would be entitled, payable under Title II of the Social Security Act as in
effect on such date, based on the assumptions: (a) that no changes in the
benefit levels payable or the wage base under Title II occur after the
computation date; (b) that, if the computation date falls before his 63rd
birthday, his annual earnings during the calendar year in which the
computation date falls and during any subsequent calendar year before the
calendar year in which his 63rd birthday falls is zero; (c) that payment of
his primary insurance amount begins for the month after he reaches age 63, or
his date of retirement if later, without reduction or delay because of future
gainful employment or delay in applying for benefits; and (d) that his
earnings for calendar years before the calendar year in which the computation
date falls will be determined using his actual earnings history if available,
and otherwise by applying a six percent retrospective salary scale to his rate
of annual earnings in effect on the computation date. The social security
benefit of Mr. Oak if he retires after his 66th birthday will include any
delayed retirement credit.
2.12 Survivor income plan means the TECO Energy Group Survivor Income
Plan, as amended from time to time.
SECTION 3. RETIREMENT BENEFITS
3.1 Retirement at or after age 63. Subject to the reductions in
Section 6.1 below, if Mr. Oak retires on or after attaining age 63, he will
receive a supplemental monthly retirement benefit equal to one-twelfth of 60
percent of his average annual earnings (60 percent is equal to three percent
multiplied by a maximum of 20 years of service). Mr. Oak's retirement benefit
hereunder will be calculated using his average annual earnings as of his
actual date of retirement.
3.2 Retirement before age 63. Subject to the reductions in Section
6.1 below, if Mr. Oak retires before attaining age 63, he will receive a
supplemental monthly retirement benefit equal to one-twelfth of (a) three
percent of his average annual earnings multiplied by his years of service (or
portions thereof) up to a maximum of 20 years determined as of his date of
retirement, multiplied by (b) an early retirement factor determined under the
following table:
- 209 -<PAGE>
Exhibit 10.14
Years by which the
start of payments Early retirement
precedes age 63* factor
7 .65
6 .70
5 .75
4 .80
3 .85
2 .90
1 .95
* Interpolate for completed months
3.3 Termination before age 56. If Mr. Oak's employment terminates for
any reason before age 56, he will receive a supplemental monthly pension equal
to one-twelfth of the amount determined under the formula in Section 3.2
above, calculated using his years of service (or portions thereof) and average
annual earnings as of his date of termination.
3.4 Form of Payment.
(a) Normal form of retirement benefits. The normal form of retirement
benefit payable to Mr. Oak under the plan is a life annuity. Benefits payable
in the normal form will begin on the first day of the month coinciding with or
next following the date of Mr. Oak s retirement. If Mr. Oak s employment
terminates before his age of retirement set forth in Section 2.8, benefits
will begin on the first day of the month coinciding with or next following the
date he attains that age.
(b) Optional lump sum benefit. In lieu of the normal form of benefit,
Mr. Oak may elect to receive payment of his benefit in the form of a commuted
single sum payment that is the actuarial equivalent of the normal form of
benefit (including the value of the post-retirement surviving spouse benefit
under Section 4.2(c)). If Mr. Oak elects to receive a lump sum payment, such
payment will be made on the first day of the month coinciding with or next
following the date Mr. Oak s employment terminates. Actuarial equivalence
will be based on the actuarial assumptions specified from time to time in the
retirement plan for lump sum payments. Mr. Oak s election to receive a lump
sum payment will be effective only with respect to a retirement occurring at
least 12 months after the date Mr. Oak submits the election, provided that
elections submitted on or before December 31, 1996 will be immediately
effective.
SECTION 4. SURVIVING SPOUSE BENEFIT
4.1 Eligibility. Mr. Oak's surviving spouse will receive the
surviving spouse benefit if Mr. Oak and his spouse were married to each other
for at least the 12 months preceding Mr. Oak's death and, in the case of Mr.
Oak's death after retirement, Mr. Oak and his spouse were married to each
other on Mr. Oak's date of retirement.
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Exhibit 10.14
4.2 Amount of surviving spouse benefit. Subject to the reductions
described in Section 6.2 below, the benefit provided under the plan to Mr.
Oak's surviving spouse will be determined as follows:
(a) Pre-retirement before age 63. If Mr. Oak dies during
employment with TECO Energy and before his 63rd birthday, his surviving spouse
will receive a monthly survivor income payment equal to 50 percent of his
monthly projected retirement benefit. Mr. Oak's monthly projected retirement
benefit is the monthly benefit he would have received if he had retired at age
63 under Section 3.1 calculated using his average annual earnings determined
as of his date of death.
(b) Pre-retirement on or after age 63. If Mr. Oak dies during
employment with TECO Energy on or after his 63rd birthday, his surviving
spouse will receive a monthly survivor income payment equal to 50 percent of
his monthly retirement benefit earned under Section 3.1 using his average
annual earnings as of his date of death.
(c) Post-retirement. If Mr. Oak dies on or after the date of
his retirement, his surviving spouse will receive a monthly survivor income
payment equal to 50 percent of the monthly benefit payment he was receiving at
his death (or would have received if he had survived until the first payment
date).
4.3 Form and time of surviving spouse benefit. Surviving spouse
benefits under this Section 4 will be payable only in the form of a life
annuity to the surviving spouse. Benefit payments will begin on the first day
of the month coinciding with or next following the date of Mr. Oak's death.
4.4 Death benefit where lump sum paid. If Mr. Oak received a lump sum
payment of his benefit under Section 3.4(b), no surviving spouse benefit or
other death benefit will be payable under the plan to any person.
SECTION 5. DISABILITY
5.1 If Mr. Oak suffers a total disability (as defined in the
disability income plan) before age 63, he will continue to be credited with
service as if he were actively employed by TECO Energy during his period of
total disability. Mr. Oak may not receive benefits under this plan at any
time when he is receiving disability income payments under the disability
income plan. Benefits under this plan will begin when payments cease under
the disability income plan.
5.2 Mr. Oak's disability date is his last day of work for TECO Energy
before becoming unable to continue working because of his total disability. A
period of total disability of Mr. Oak will begin on his disability date and
will end on the earlier of the last day of the month in which his final
disability income payment is due under the disability income plan or on the
date he retires hereunder and starts receiving benefit payments.
5.3 If Mr. Oak does not return to active service with TECO Energy
after suffering a total disability, his retirement benefits under Section 3
- 211 -<PAGE>
Exhibit 10.14
will be calculated using his average annual earnings as of his disability
date, his total service including service credited under Section 5.1 above,
and his primary social security benefit as of his date of disability.
5.4 If Mr. Oak dies while disabled, his surviving spouse will, if
eligible, receive the pre-retirement surviving spouse benefit determined under
Section 4.2(a) or (b).
SECTION 6. OFFSET FOR OTHER PAYMENTS
6.1 Mr. Oak's retirement benefit will be reduced (but not below zero)
by the following payments, with such reductions starting when such payments
are assumed to begin: (a) 100 percent of the social security benefit of Mr.
Oak assuming such benefit begins on the later of the date he reaches age 63 or
his actual retirement, and (b) the amount of his benefit payments under the
retirement plan (converted to a life annuity if such payments are in an
optional form), assuming such payments begin on the later of the date he
reaches age 56 or his actual retirement.
6.2 The benefit of Mr. Oak's surviving spouse will be reduced (but not
below zero) by the following payments: (a) payments under the survivor income
plan, and (b) payments under the retirement plan.
SECTION 7. BENEFITS NOT CURRENTLY FUNDED
7.1 Nothing in this plan will be construed to create a trust or to
obligate TECO Energy or any other employer to segregate a fund, purchase an
insurance contract, or in any other way currently to fund the future payment
of any benefits hereunder, nor will anything herein be construed to give Mr.
Oak or any other person rights to any specific assets of TECO Energy or of any
other employer or entity.
7.2 Notwithstanding Section 7.1, TECO Energy has established a grantor
trust of which it is treated as the owner under Section 671 of the Internal
Revenue Code to provide for the payment of benefits hereunder.
SECTION 8. ADMINISTRATION
The plan will be administered by the committee, which will have full
power and authority to construe, interpret and administer the plan. Decisions
of the committee will be final and binding on all persons. The committee may,
in its discretion, adopt, amend and rescind rules and regulations relating to
the administration of the plan.
SECTION 9. RIGHTS NON-ASSIGNABLE
Neither Mr. Oak, his surviving spouse, nor any other person will have
any right to assign or otherwise to alienate the right to receive payments
under the plan, in whole or in part.
- 212 -<PAGE>
Exhibit 10.14
SECTION 10. OTHER BENEFIT PLANS
This plan will supersede any obligation to pay benefits to Mr. Oak under
the excess benefit plan contained in the retirement plan or the TECO Energy
Group Supplemental Executive Retirement Plan, as they may be amended from time
to time. No benefits will be payable to Mr. Oak under such excess benefit
plan or the TECO Energy Group Supplemental Executive Retirement Plan.
SECTION 11. AMENDMENT
TECO Energy reserves the right at any time by action of the board to
amend the plan in any way. However, no amendment of the plan may reduce the
benefits to be paid to Mr. Oak or his surviving spouse below those that would
have been paid if the plan had continued without change to the date of Mr.
Oak's retirement or termination of employment for any reason.
Executed as of October 16, 1996.
TECO ENERGY, INC.
By:
____________________________________
Roger A. Dunn
V i ce President - Human Resources
ALAN D. OAK
___________________________________
- 213 -<PAGE>
Exhibit 10.15
TECO ENERGY GROUP
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR KEITH S. SURGENOR
SECTION 1. PURPOSE AND EFFECTIVE DATE
The purpose of this plan is to provide Keith S. Surgenor, President of
Tampa Electric Company, with additional retirement income by supplementing the
retirement benefits provided under the retirement plan. The plan was
originally effective as of July 21, 1992. The effective date of this
amendment and restatement is October 16, 1996.
SECTION 2. DEFINITIONS
This section contains definitions of terms used in the plan. Where the
context so requires, the singular includes the plural, and the plural includes
the singular.
2.1 Annual earnings will have the same meaning as in the retirement
plan, except that the same will be determined without regard to (a) any dollar
limitation on such annual earnings that may be imposed under the retirement
plan or (b) any reduction in taxable income as a result of voluntary salary
reduction deferrals under the TECO Energy Group Retirement Savings Excess
Benefit Plan.
2.2 Average annual earnings of Mr. Surgenor as of any date of
reference means the average of his annual earnings during whichever of the
following periods yields the highest average: (a) the 36 consecutive months of
active employment preceding the date of reference (or all months of employment
if less than 36), or (b) any three consecutive calendar years out of the five
calendar years preceding the date of reference. Bonuses are included as
compensation for the period in which paid, provided that if more than three
regular annual bonuses are paid in any 36 consecutive month period, only the
largest three bonuses will be counted.
2.3 Board means the Board of Directors of TECO Energy.
2.4 Committee means the retirement plan committee as constituted under
the retirement plan.
2.5 TECO Energy means TECO Energy, Inc. and any successor to all or a
major portion of its assets or business which assumes the obligations of TECO
Energy, Inc. under this plan.
2.6 Disability income plan means the TECO Energy Group Disability
Income Plan, as amended from time to time.
- 215 -<PAGE>
Exhibit 10.15
2.7 Plan means the TECO Energy Group Supplemental Executive Retirement
Plan for Keith S. Surgenor, as set forth in this plan instrument, and as it
may be amended from time to time.
2.8 Retirement means termination of Mr. Surgenor's employment with
TECO Energy by Mr. Surgenor or TECO Energy for any reason on or after he
attains age 56.
2.9 Retirement plan means the TECO Energy Group Retirement Plan, as
amended from time to time.
2.10 Service will have the same meaning as "plan service" in the
retirement plan.
2.11 Social security benefit of Mr. Surgenor as of any date of
reference (the "computation date") means the primary insurance amount to which
he is or would be entitled, payable under Title II of the Social Security Act
as in effect on such date, based on the assumptions: (a) that no changes in
the benefit levels payable or the wage base under Title II occur after the
computation date; (b) that, if the computation date falls before his 63rd
birthday, his annual earnings during the calendar year in which the
computation date falls and during any subsequent calendar year before the
calendar year in which his 63rd birthday falls is zero; (c) that payment of
his primary insurance amount begins for the month after he reaches age 63, or
his date of retirement if later, without reduction or delay because of future
gainful employment or delay in applying for benefits; and (d) that his
earnings for calendar years before the calendar year in which the computation
date falls will be determined using his actual earnings history if available,
and otherwise by applying a six percent retrospective salary scale to his rate
of annual earnings in effect on the computation date. The social security
benefit of Mr. Surgenor if he retires after his 66th birthday will include any
delayed retirement credit.
2.12 Survivor income plan means the TECO Energy Group Survivor Income
Plan, as amended from time to time.
SECTION 3. RETIREMENT BENEFITS
3.1 Retirement at or after age 63. Subject to the reductions in
Section 6.1 below, if Mr. Surgenor retires on or after attaining age 63, he
will receive a supplemental monthly retirement benefit equal to one-twelfth of
60 percent of his average annual earnings (60 percent is equal to three
percent multiplied by a maximum of 20 years of service). Mr. Surgenor's
retirement benefit hereunder will be calculated using his average annual
earnings as of his actual date of retirement.
3.2 Retirement before age 63. Subject to the reductions in Section
6.1 below, if Mr. Surgenor retires before attaining age 63, he will receive a
supplemental monthly retirement benefit equal to one-twelfth of (a) three
percent of his average annual earnings multiplied by his years of service (or
portions thereof) up to a maximum of 20 years determined as of his date of
- 216 -<PAGE>
Exhibit 10.15
retirement, multiplied by (b) an early retirement factor determined under the
following table:
Years by which the
start of payments Early retirement
precedes age 63* factor
7 .65
6 .70
5 .75
4 .80
3 .85
2 .90
1 .95
* Interpolate for completed months
3.3 T e rmination before age 56. If Mr. Surgenor's employment
terminates for any reason before age 56, he will receive a supplemental
monthly pension equal to one-twelfth of the amount determined under the
formula in Section 3.2 above, calculated using his years of service (or
portions thereof) and average annual earnings as of his date of termination.
3.4 Form of Payment.
(a) Normal form of retirement benefits. The normal form of
retirement benefit payable to Mr. Surgenor under the plan is a life annuity.
Benefits payable in the normal form will begin on the first day of the month
coinciding with or next following the date of Mr. Surgenor s retirement. If
Mr. Surgenor s employment terminates before his age of retirement set forth in
Section 2.8, benefits will begin on the first day of the month coinciding with
or next following the date he attains that age.
(b) Optional lump sum benefit. In lieu of the normal form of
benefit, Mr. Surgenor may elect to receive payment of his benefit in the form
of a commuted single sum payment that is the actuarial equivalent of the
normal form of benefit (including the value of the post-retirement surviving
spouse benefit under Section 4.2(c)). If Mr. Surgenor elects to receive a
lump sum payment, such payment will be made on the first day of the month
coinciding with or next following the date Mr. Surgenor s employment
terminates. Actuarial equivalence will be based on the actuarial assumptions
specified from time to time in the retirement plan for lump sum payments. Mr.
Surgenor s election to receive a lump sum payment will be effective only with
respect to a retirement occurring at least 12 months after the date Mr.
Surgenor submits the election, provided that elections submitted on or before
December 31, 1996 will be immediately effective.
- 217 -<PAGE>
Exhibit 10.15
SECTION 4. SURVIVING SPOUSE BENEFIT
4.1 Eligibility. Mr. Surgenor's surviving spouse will receive the
surviving spouse benefit if Mr. Surgenor and his spouse were married to each
other for at least the 12 months preceding Mr. Surgenor's death and, in the
case of Mr. Surgenor's death after retirement, Mr. Surgenor and his spouse
were married to each other on Mr. Surgenor's date of retirement.
4.2 Amount of surviving spouse benefit. Subject to the reductions
described in Section 6.2 below, the benefit provided under the plan to Mr.
Surgenor's surviving spouse will be determined as follows:
(a) Pre-retirement before age 63. If Mr. Surgenor dies during
employment with TECO Energy and before his 63rd birthday, his surviving spouse
will receive a monthly survivor income payment equal to 50 percent of his
monthly projected retirement benefit. Mr. Surgenor's monthly projected
retirement benefit is the monthly benefit he would have received if he had
retired at age 63 under Section 3.1 calculated using his average annual
earnings determined as of his date of death.
(b) Pre-retirement on or after age 63. If Mr. Surgenor dies
during employment with TECO Energy on or after his 63rd birthday, his
surviving spouse will receive a monthly survivor income payment equal to 50
percent of his monthly retirement benefit earned under Section 3.1 using his
average annual earnings as of his date of death.
(c) Post-retirement. If Mr. Surgenor dies on or after the date
of his retirement, his surviving spouse will receive a monthly survivor income
payment equal to 50 percent of the monthly benefit payment he was receiving at
his death (or would have received if he had survived until the first payment
date).
4.3 Form and time of surviving spouse benefit. Surviving spouse
benefits under this Section 4 will be payable only in the form of a life
annuity to the surviving spouse. Benefit payments will begin on the first day
of the month coinciding with or next following the date of Mr. Surgenor's
death.
4.4 Death benefit where lump sum paid. If Mr. Surgenor received a
lump sum payment of his benefit under Section 3.4(b), no surviving spouse
benefit or other death benefit will be payable under the plan to any person.
SECTION 5. DISABILITY
5.1 If Mr. Surgenor suffers a total disability (as defined in the
disability income plan) before age 63, he will continue to be credited with
service as if he were actively employed by TECO Energy during his period of
total disability. Mr. Surgenor may not receive benefits under this plan at
any time when he is receiving disability income payments under the disability
income plan. Benefits under this plan will begin when payments cease under
the disability income plan.
- 218 -<PAGE>
Exhibit 10.15
5.2 Mr. Surgenor's disability date is his last day of work for TECO
Energy before becoming unable to continue working because of his total
disability. A period of total disability of Mr. Surgenor will begin on his
disability date and will end on the earlier of the last day of the month in
which his final disability income payment is due under the disability income
plan or on the date he retires hereunder and starts receiving benefit
payments.
5.3 If Mr. Surgenor does not return to active service with TECO Energy
after suffering a total disability, his retirement benefits under Section 3
will be calculated using his average annual earnings as of his disability
date, his total service including service credited under Section 5.1 above,
and his primary social security benefit as of his date of disability.
5.4 If Mr. Surgenor dies while disabled, his surviving spouse will, if
eligible, receive the pre-retirement surviving spouse benefit determined under
Section 4.2(a) or (b).
SECTION 6. OFFSET FOR OTHER PAYMENTS
6.1 Mr. Surgenor's retirement benefit will be reduced (but not below
zero) by the following payments, with such reductions starting when such
payments are assumed to begin: (a) 100 percent of the social security benefit
of Mr. Surgenor assuming such benefit begins on the later of the date he
reaches age 63 or his actual retirement, and (b) the amount of his benefit
payments under the retirement plan (converted to a life annuity if such
payments are in an optional form), assuming such payments begin on the later
of the date he reaches age 56 or his actual retirement.
6.2 The benefit of Mr. Surgenor's surviving spouse will be reduced
(but not below zero) by the following payments: (a) payments under the
survivor income plan, and (b) payments under the retirement plan.
SECTION 7. BENEFITS NOT CURRENTLY FUNDED
7.1 Nothing in this plan will be construed to create a trust or to
obligate TECO Energy or any other employer to segregate a fund, purchase an
insurance contract, or in any other way currently to fund the future payment
of any benefits hereunder, nor will anything herein be construed to give Mr.
Surgenor or any other person rights to any specific assets of TECO Energy or
of any other employer or entity.
7.2 Notwithstanding Section 7.1, TECO Energy has established a grantor
trust of which it is treated as the owner under Section 671 of the Internal
Revenue Code to provide for the payment of benefits hereunder.
- 219 -<PAGE>
Exhibit 10.15
SECTION 8. ADMINISTRATION
The plan will be administered by the committee, which will have full
power and authority to construe, interpret and administer the plan. Decisions
of the committee will be final and binding on all persons. The committee may,
in its discretion, adopt, amend and rescind rules and regulations relating to
the administration of the plan.
SECTION 9. RIGHTS NON-ASSIGNABLE
Neither Mr. Surgenor, his surviving spouse, nor any other person will
have any right to assign or otherwise to alienate the right to receive
payments under the plan, in whole or in part.
SECTION 10. OTHER BENEFIT PLANS
This plan will supersede any obligation to pay benefits to Mr. Surgenor
under the excess benefit plan contained in the retirement plan or the TECO
Energy Group Supplemental Executive Retirement Plan, as they may be amended
from time to time. No benefits will be payable to Mr. Surgenor under such
excess benefit plan or the TECO Energy Group Supplemental Executive Retirement
Plan.
SECTION 11. AMENDMENT
TECO Energy reserves the right at any time by action of the board to
amend the plan in any way. However, no amendment of the plan may reduce the
benefits to be paid to Mr. Surgenor or his surviving spouse below those that
would have been paid if the plan had continued without change to the date of
Mr. Surgenor's retirement or termination of employment for any reason.
Executed as of October 16, 1996.
TECO ENERGY, INC.
By:
____________________________________
Roger A. Dunn
Vice President - Human Resources
KEITH S. SURGENOR
_____________________________________
- 220 -<PAGE>
Exhibit 10.17
TECO ENERGY GROUP
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR GIRARD F. ANDERSON
SECTION 1. PURPOSE AND EFFECTIVE DATE
The purpose of this plan is to provide Girard F. Anderson, President and
Chief Operating Officer of TECO Energy, with additional retirement income by
supplementing the retirement benefits provided under the retirement plan. The
plan was originally effective as of July 20, 1993. The effective date of this
amendment and restatement is October 16, 1996.
SECTION 2. DEFINITIONS
This section contains definitions of terms used in the plan. Where the
context so requires, the singular includes the plural, and the plural includes
the singular.
2.1 Annual earnings will have the same meaning as in the retirement
plan, except that the same will be determined without regard to (a) any dollar
limitation on such annual earnings that may be imposed under the retirement
plan or (b) any reduction in taxable income as a result of voluntary salary
reduction deferrals under the TECO Energy Group Retirement Savings Excess
Benefit Plan.
2.2 Average annual earnings of Mr. Anderson as of any date of
reference means the average of his annual earnings during whichever of the
following periods yields the highest average: (a) the 36 consecutive months of
active employment preceding the date of reference (or all months of employment
if less than 36), or (b) any three consecutive calendar years out of the five
calendar years preceding the date of reference. Bonuses are included as
compensation for the period in which paid, provided that if more than three
regular annual bonuses are paid in any 36 consecutive month period, only the
largest three bonuses will be counted.
2.3 Board means the Board of Directors of TECO Energy.
2.4 Committee means the retirement plan committee as constituted under
the retirement plan.
2.5 TECO Energy means TECO Energy, Inc. and any successor to all or a
major portion of its assets or business which assumes the obligations of TECO
Energy, Inc. under this plan.
2.6 Disability income plan means the TECO Energy Group Disability
Income Plan, as amended from time to time.
- 222 -<PAGE>
Exhibit 10.17
2.7 Plan means the TECO Energy Group Supplemental Executive Retirement
Plan for Girard F. Anderson, as set forth in this plan instrument, and as it
may be amended from time to time.
2.8 Retirement means termination of Mr. Anderson's employment with
TECO Energy by Mr. Anderson or TECO Energy for any reason.
2.9 Retirement plan means the TECO Energy Group Retirement Plan, as
amended from time to time.
2.10 Service will have the same meaning as "plan service" in the
retirement plan.
2.11 Social security benefit of Mr. Anderson as of any date of
reference (the "computation date") means the primary insurance amount to which
he is or would be entitled, payable under Title II of the Social Security Act
as in effect on such date, based on the assumptions: (a) that no changes in
the benefit levels payable or the wage base under Title II occur after the
computation date; (b) that, if the computation date falls before his 62nd
birthday, his annual earnings during the calendar year in which the
computation date falls and during any subsequent calendar year before the
calendar year in which his 62nd birthday falls is zero; (c) that payment of
his primary insurance amount begins for the month after he reaches age 62, or
his date of retirement if later, without reduction or delay because of future
gainful employment or delay in applying for benefits; and (d) that his
earnings for calendar years before the calendar year in which the computation
date falls will be determined using his actual earnings history if available,
and otherwise by applying a six percent retrospective salary scale to his rate
of annual earnings in effect on the computation date. The social security
benefit of Mr. Anderson if he retires after his 65th birthday will include any
delayed retirement credit.
2.12 Survivor income plan means the TECO Energy Group Survivor Income
Plan, as amended from time to time.
SECTION 3. RETIREMENT BENEFITS
3.1 Retirement at or after age 62. Subject to the reductions in
Section 6.1 below, if Mr. Anderson retires on or after attaining age 62, he
will receive a supplemental monthly retirement benefit equal to one-twelfth of
60 percent of his average annual earnings (60 percent is equal to three
percent multiplied by a maximum of 20 years of service). Mr. Anderson's
retirement benefit hereunder will be calculated using his average annual
earnings as of his actual date of retirement.
3.2 Retirement before age 62. Subject to the reductions in Section
6.1 below, if Mr. Anderson retires before attaining age 62, he will receive a
supplemental monthly retirement benefit equal to one-twelfth of 60 percent of
his average annual earnings reduced by 5/12ths of one percent for each month
by which the start of payments precedes age 62.
3.3 Form of Payment.
- 223 -<PAGE>
Exhibit 10.17
(a) Normal form of retirement benefits. The normal form of
retirement benefit payable to Mr. Anderson under the plan is a life annuity.
Benefits payable in the normal form will begin on the first day of the month
coinciding with or next following the date of Mr. Anderson s retirement.
(b) Optional lump sum benefit. In lieu of the normal form of
benefit, Mr. Anderson may elect to receive payment of his benefit in the form
of a commuted single sum payment that is the actuarial equivalent of the
normal form of benefit (including the value of the post-retirement surviving
spouse benefit under Section 4.2(c)). If Mr. Anderson elects to receive a
lump sum payment, such payment will be made on the first day of the month
coinciding with or next following the date Mr. Anderson s employment
terminates. Actuarial equivalence will be based on the actuarial assumptions
specified from time to time in the retirement plan for lump sum payments. Mr.
Anderson s election to receive a lump sum payment will be effective only with
respect to a retirement occurring at least 12 months after the date Mr.
Anderson submits the election, provided that elections submitted on or before
December 31, 1996 will be immediately effective.
SECTION 4. SURVIVING SPOUSE BENEFIT
4.1 Eligibility. Mr. Anderson's surviving spouse will receive the
surviving spouse benefit if Mr. Anderson and his spouse were married to each
other for at least the 12 months preceding Mr. Anderson's date of death and,
in the case of Mr. Anderson's death after retirement, Mr. Anderson and his
spouse were married to each other on Mr. Anderson's date of retirement.
4.2 Amount of surviving spouse benefit. Subject to the reductions
described in Section 6.2 below, the benefit provided under the plan to Mr.
Anderson's surviving spouse will be determined as follows:
(a) Pre-retirement before age 62. If Mr. Anderson dies during
employment with TECO Energy and before his 62nd birthday, his surviving spouse
will receive a monthly survivor income payment equal to 50 percent of his
monthly projected retirement benefit. Mr. Anderson's monthly projected
retirement benefit is the monthly benefit he would have received if he had
retired at age 62 under Section 3.1 calculated using his average annual
earnings determined as of his date of death.
(b) Pre-retirement on or after age 62. If Mr. Anderson dies
during employment with TECO Energy on or after his 62nd birthday, his
surviving spouse will receive a monthly survivor income payment equal to 50
percent of his monthly retirement benefit earned under Section 3.1 using his
average annual earnings as of his date of death.
(c) Post-retirement. If Mr. Anderson dies on or after the date
of his retirement, his surviving spouse will receive a monthly survivor income
payment equal to 50 percent of the monthly benefit payment he was receiving at
his death (or would have received if he had survived until the first payment
date).
- 224 -<PAGE>
Exhibit 10.17
4.3 Form and time of surviving spouse benefit. Surviving spouse
benefits under this Section 4 will be payable only in the form of a life
annuity to the surviving spouse. Benefit payments will begin on the first day
of the month coinciding with or next following the date of Mr. Anderson's
death.
4.4 Death benefit where lump sum paid. If Mr. Anderson received a
lump sum payment of his benefit under Section 3.3(b), no surviving spouse
benefit or other death benefit will be payable under the plan to any person.
SECTION 5. DISABILITY
5.1 If Mr. Anderson suffers a total disability (as defined in the
disability income plan) before age 62, he will continue to be credited with
service as if he were actively employed by TECO Energy during his period of
total disability. Mr. Anderson may not receive benefits under this plan at
any time when he is receiving disability income payments under the disability
income plan. Benefits under this plan will begin when payments cease under
the disability income plan.
5.2 Mr. Anderson's disability date is his last day of work for TECO
Energy before becoming unable to continue working because of his total
disability. A period of total disability of Mr. Anderson will begin on his
disability date and will end on the earlier of the last day of the month in
which his final disability income payment is due under the disability income
plan or on the date he retires hereunder and starts receiving benefit
payments.
5.3 If Mr. Anderson does not return to active service with TECO Energy
after suffering a total disability, his retirement benefits under Section 3
will be calculated using his average annual earnings as of his disability
date, his total service including service credited under Section 5.1 above,
and his primary social security benefit as of his date of disability.
5.4 If Mr. Anderson dies while disabled, his surviving spouse will, if
eligible, receive the pre-retirement surviving spouse benefit determined under
Section 4.2(a) or (b).
SECTION 6. OFFSET FOR OTHER PAYMENTS
6.1 Mr. Anderson's retirement benefit will be reduced (but not below
zero) by the following payments, with such reductions starting when such
payments are assumed to begin: (a) 100 percent of the social security benefit
of Mr. Anderson assuming such benefit begins on the later of the date he
reaches age 62 or his actual retirement, and (b) the amount of his benefit
payments under the retirement plan (converted to a life annuity if such
payments are in an optional form), assuming such payments begin on his actual
retirement date.
- 225 -<PAGE>
Exhibit 10.17
6.2 The benefit of Mr. Anderson's surviving spouse will be reduced
(but not below zero) by the following payments: (a) payments under the
survivor income plan, and (b) payments under the retirement plan.
SECTION 7. BENEFITS NOT CURRENTLY FUNDED
7.1 Nothing in this plan will be construed to create a trust or to
obligate TECO Energy or any other employer to segregate a fund, purchase an
insurance contract, or in any other way currently to fund the future payment
of any benefits hereunder, nor will anything herein be construed to give Mr.
Anderson or any other person rights to any specific assets of TECO Energy or
of any other employer or entity.
7.2 Notwithstanding Section 7.1, TECO Energy has established a grantor
trust of which it is treated as the owner under Section 671 of the Internal
Revenue Code to provide for the payment of benefits hereunder.
SECTION 8. ADMINISTRATION
The plan will be administered by the committee, which will have full
power and authority to construe, interpret and administer the plan. Decisions
of the committee will be final and binding on all persons. The committee may,
in its discretion, adopt, amend and rescind rules and regulations relating to
the administration of the plan.
SECTION 9. RIGHTS NON-ASSIGNABLE
Neither Mr. Anderson, his surviving spouse, nor any other person will
have any right to assign or otherwise to alienate the right to receive
payments under the plan, in whole or in part.
SECTION 10. OTHER BENEFIT PLANS
This plan will supersede any obligation to pay benefits to Mr. Anderson
under the excess benefit plan contained in the retirement plan or the TECO
Energy Group Supplemental Executive Retirement Plan, as they may be amended
from time to time. No benefits will be payable to Mr. Anderson under such
excess benefit plan or the TECO Energy Group Supplemental Executive Retirement
Plan.
SECTION 11. AMENDMENT
TECO Energy reserves the right at any time by action of the board to
amend the plan in any way. However, no amendment of the plan may reduce the
benefits to be paid to Mr. Anderson or his surviving spouse below those that
would have been paid if the plan had continued without change to the date of
Mr. Anderson's retirement or termination of employment for any reason.
- 226 -<PAGE>
Exhibit 10.17
Executed as of October 16, 1996.
TECO ENERGY, INC.
By:
____________________________________
Roger A. Dunn
Vice President - Human Resources
GIRARD F. ANDERSON
- 227 -<PAGE>
Exhibit 10.20
TECO ENERGY GROUP
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR ROGER A. DUNN
SECTION 1. PURPOSE AND EFFECTIVE DATE
The purpose of this plan is to provide Roger A. Dunn, Vice President -
Human Resources of TECO Energy, with additional retirement income by
supplementing the retirement benefits provided under the retirement plan. The
plan was originally effective as of July 17, 1995. The effective date of this
amendment and restatement is January 15, 1997.
SECTION 2. DEFINITIONS
This section contains definitions of terms used in the plan. Where the
context so requires, the singular includes the plural, and the plural includes
the singular.
2.1 Annual earnings will have the same meaning as in the retirement
plan, except that the same will be determined without regard to (a) any dollar
limitation on such annual earnings that may be imposed under the retirement
plan or (b) any reduction in taxable income as a result of voluntary salary
reduction deferrals under the TECO Energy Group Retirement Savings Excess
Benefit Plan.
2.2 Average annual earnings of Mr. Dunn as of any date of reference
means the average of his annual earnings during whichever of the following
periods yields the highest average: (a) the 36 consecutive months of active
employment preceding the date of reference (or all months of employment if
less than 36), or (b) any three consecutive calendar years out of the five
calendar years preceding the date of reference. Bonuses are included as
compensation for the period in which paid, provided that if more than three
regular annual bonuses are paid in any 36 consecutive month period, only the
largest three bonuses will be counted.
2.3 Board means the Board of Directors of TECO Energy.
2.4 Committee means the retirement plan committee as constituted under
the retirement plan.
2.5 TECO Energy means TECO Energy, Inc. and any successor to all or a
major portion of its assets or business which assumes the obligations of TECO
Energy, Inc. under this plan.
2.6 Disability income plan means the TECO Energy Group Disability
Income Plan, as amended from time to time.
- 228 -<PAGE>
Exhibit 10.20
2.7 Plan means the TECO Energy Group Supplemental Executive Retirement
Plan for Roger A. Dunn, as set forth in this plan instrument, and as it may be
amended from time to time.
2.8 Retirement means termination of Mr. Dunn's employment with TECO
Energy by Mr. Dunn or TECO Energy for any reason on or after he attains age 55
years and 10 months.
2.9 Retirement plan means the TECO Energy Group Retirement Plan, as
amended from time to time.
2.10 Service will have the same meaning as "plan service" in the
retirement plan.
2.11 Social security benefit of Mr. Dunn as of any date of reference
(the "computation date") means the primary insurance amount to which he is or
would be entitled, payable under Title II of the Social Security Act as in
effect on such date, based on the assumptions: (a) that no changes in the
benefit levels payable or the wage base under Title II occur after the
computation date; (b) that, if the computation date falls before his the date
he reaches age 62 years and 10 months, his annual earnings during the calendar
year in which the computation date falls and during any subsequent calendar
year before the calendar year in which he reaches such age is zero; (c) that
payment of his primary insurance amount begins for the month after he reaches
age 62 years and 10 months, or his date of retirement if later, without
reduction or delay because of future gainful employment or delay in applying
for benefits; and (d) that his earnings for calendar years before the calendar
year in which the computation date falls will be determined using his actual
earnings history if available, and otherwise by applying a six percent
retrospective salary scale to his rate of annual earnings in effect on the
computation date. The social security benefit of Mr. Dunn if he retires after
age 65 years and 10 months will include any delayed retirement credit.
2.12 Survivor income plan means the TECO Energy Group Survivor Income
Plan, as amended from time to time.
SECTION 3. RETIREMENT BENEFITS
3.1 Retirement at or after age 62 years and 10 months. Subject to the
reductions in Section 6.1 below, if Mr. Dunn retires on or after attaining age
62 years and 10 months, he will receive a supplemental monthly retirement
benefit equal to one-twelfth of four percent of his average annual earnings
multiplied by his years of service (or portions thereof) up to a maximum
benefit of 40% of his final average earnings (40% is equal to four percent
multiplied by a maximum of 10 years of service) . Mr. Dunn's retirement
benefit hereunder will be calculated using his years of service (or portions
thereof) and average annual earnings as of his actual date of retirement.
3.2 Retirement before age 62 years and 10 months. Subject to the
reductions in Section 6.1 below, if Mr. Dunn retires before attaining age 62
years and 10 months, he will receive a supplemental monthly retirement benefit
equal to one-twelfth of (a) the amount determined using the formula in Section
- 229 -<PAGE>
Exhibit 10.20
3.1 above, multiplied by (b) an early retirement factor determined under the
following table:
Years by which the
start of payments
precedes age 62 Early retirement
years and 10 months* factor
7 .65
6 .70
5 .75
4 .80
3 .85
2 .90
1 .95
* Interpolate for completed months
3.3 Termination before age 55 years and 10 months. If Mr. Dunn's
employment terminates for any reason before age 55 years and 10 months, he
will receive a supplemental monthly pension equal to one-twelfth of the amount
determined under the formula in Section 3.2 above, calculated using his years
of service (or portions thereof) and average annual earnings as of his date of
termination.
3.4 Form of Payment.
(a) Normal form of retirement benefits. The normal form of
retirement benefit payable to Mr. Dunn under the plan is a life annuity.
Benefits payable in the normal form will begin on the first day of the month
coinciding with or next following the date of Mr. Dunn s retirement. If Mr.
Dunn s employment terminates before his age of retirement set forth in Section
2.8, benefits will begin on the first day of the month coinciding with or next
following the date he attains that age.
(b) Optional lump sum benefit. In lieu of the normal form of
benefit, Mr. Dunn may elect to receive payment of his benefit in the form of a
commuted single sum payment that is the actuarial equivalent of the normal
form of benefit (including the value of the post-retirement surviving spouse
benefit under Section 4.2(c)). If Mr. Dunn elects to receive a lump sum
payment, such payment will be made on the first day of the month coinciding
with or next following the date Mr. Dunn s employment terminates. Actuarial
equivalence will be based on the actuarial assumptions specified from time to
time in the retirement plan for lump sum payments. Mr. Dunn s election to
receive a lump sum payment will be effective only with respect to a retirement
occurring at least 12 months after the date Mr. Dunn submits the election,
provided that elections submitted on or before December 31, 1996 will be
immediately effective.
SECTION 4. SURVIVING SPOUSE BENEFIT
- 230 -<PAGE>
Exhibit 10.20
4.1 Eligibility. Mr. Dunn's surviving spouse will receive the
surviving spouse benefit if Mr. Dunn and his spouse were married to each other
for at least the 12 months preceding Mr. Dunn's death and, in the case of Mr.
Dunn's death after retirement, Mr. Dunn and his spouse were married to each
other on Mr. Dunn's date of retirement.
4.2 Amount of surviving spouse benefit. Subject to the reductions
described in Section 6.2 below, the benefit provided under the plan to Mr.
Dunn's surviving spouse will be determined as follows:
(a) Pre-retirement before age 62 years and 10 months. If Mr.
Dunn dies during employment with TECO Energy and before he reaches age 62
years and 10 months, his surviving spouse will receive a monthly survivor
income payment equal to 50 percent of his monthly projected retirement
benefit. Mr. Dunn's monthly projected retirement benefit is the monthly
benefit he would have received if he had retired at age 62 years and 10 months
under Section 3.1 calculated using his average annual earnings determined as
of his date of death.
(b) Pre-retirement on or after age 62 years and 10 months. If
Mr. Dunn dies during employment with TECO Energy on or after age 62 years and
10 months, his surviving spouse will receive a monthly survivor income payment
equal to 50 percent of his monthly retirement benefit earned under Section 3.1
using his years of service (or portions thereof) and his average annual
earnings as of his date of death.
(c) Post-retirement. If Mr. Dunn dies on or after the date of
his retirement, his surviving spouse will receive a monthly survivor income
payment equal to 50 percent of the monthly benefit payment he was receiving at
his death (or would have received if he had survived until the first payment
date).
4.3 Form and time of surviving spouse benefit. Surviving spouse
benefits under this Section 4 will be payable only in the form of a life
annuity to the surviving spouse. Benefit payments will begin on the first day
of the month coinciding with or next following the date of Mr. Dunn's death.
4.4 Death benefit where lump sum paid. If Mr. Dunn received a lump
sum payment of his benefit under Section 3.4(b), no surviving spouse benefit
or other death benefit will be payable under the plan to any person.
SECTION 5. DISABILITY
5.1 If Mr. Dunn suffers a total disability (as defined in the
disability income plan) before age 62 years and 10 months, he will continue to
be credited with service as if he were actively employed by TECO Energy during
his period of total disability. Mr. Dunn may not receive benefits under this
plan at any time when he is receiving disability income payments under the
disability income plan. Benefits under this plan will begin when payments
cease under the disability income plan.
- 231 -<PAGE>
Exhibit 10.20
5.2 Mr. Dunn's disability date is his last day of work for TECO Energy
before becoming unable to continue working because of his total disability. A
period of total disability of Mr. Dunn will begin on his disability date and
will end on the earlier of the last day of the month in which his final
disability income payment is due under the disability income plan or on the
date he retires hereunder and starts receiving benefit payments.
5.3 If Mr. Dunn does not return to active service with TECO Energy
after suffering a total disability, his retirement benefits under Section 3
will be calculated using his average annual earnings as of his disability
date, his total service including service credited under Section 5.1 above,
and his primary social security benefit as of his date of disability.
5.4 If Mr. Dunn dies while disabled, his surviving spouse will, if
eligible, receive the pre-retirement surviving spouse benefit determined under
Section 4.2(a) or (b).
SECTION 6. OFFSET FOR OTHER PAYMENTS
6.1 Mr. Dunn's retirement benefit will be reduced (but not below zero)
by the following payments, with such reductions starting when such payments
are assumed to begin: (a) 100 percent of the social security benefit of Mr.
Dunn assuming such benefit begins on the later of the date he reaches age 62
years and 10 months or his actual retirement, and (b) the amount of his
benefit payments under the retirement plan (converted to a life annuity if
such payments are in an optional form), assuming such payments begin on the
later of the date he reaches age 55 years and 10 months or his actual
retirement.
6.2 The benefit of Mr. Dunn's surviving spouse will be reduced (but
not below zero) by the following payments: (a) payments under the survivor
income plan, and (b) payments under the retirement plan.
SECTION 7. BENEFITS NOT CURRENTLY FUNDED
7.1 Nothing in this plan will be construed to create a trust or to
obligate TECO Energy or any other employer to segregate a fund, purchase an
insurance contract, or in any other way currently to fund the future payment
of any benefits hereunder, nor will anything herein be construed to give Mr.
Dunn or any other person rights to any specific assets of TECO Energy or of
any other employer or entity.
7.2 Notwithstanding Section 7.1, TECO Energy has established a grantor
trust of which it is treated as the owner under Section 671 of the Internal
Revenue Code to provide for the payment of benefits hereunder.
SECTION 8. ADMINISTRATION
The plan will be administered by the committee, which will have full
power and authority to construe, interpret and administer the plan. Decisions
- 232 -<PAGE>
Exhibit 10.20
of the committee will be final and binding on all persons. The committee may,
in its discretion, adopt, amend and rescind rules and regulations relating to
the administration of the plan.
SECTION 9. RIGHTS NON-ASSIGNABLE
Neither Mr. Dunn, his surviving spouse, nor any other person will have
any right to assign or otherwise to alienate the right to receive payments
under the plan, in whole or in part.
SECTION 10. OTHER BENEFIT PLANS
This plan will supersede any obligation to pay benefits to Mr. Dunn
under the excess benefit plan contained in the retirement plan or the TECO
Energy Group Supplemental Executive Retirement Plan, as they may be amended
from time to time. No benefits will be payable to Mr. Dunn under such excess
benefit plan or the TECO Energy Group Supplemental Executive Retirement Plan.
SECTION 11. AMENDMENT
TECO Energy reserves the right at any time by action of the board to
amend the plan in any way. However, no amendment of the plan may reduce the
benefits to be paid to Mr. Dunn or his surviving spouse below those that would
have been paid if the plan had continued without change to the date of Mr.
Dunn's retirement or termination of employment for any reason.
Executed as of January 15, 1997.
TECO ENERGY, INC.
By:
____________________________________
Girard F. Anderson
President
ROGER A. DUNN
___________________________________
- 233 -<PAGE>
<TABLE>
TECO ENERGY, INC. EXHIBIT 11
COMPUTATIONS OF EARNINGS PER COMMON SHARE
Year ended Dec. 31, 1996 1995 1994
<CAPTION>
Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted
Earnings Earnings Earnings Earnings Earnings Earnings
<S> <C> <C> <C> <C> <C> <C>
Net income (1) $ 200.7 $ 200.7 $ 186.1 $ 186.1 $ 153.2 $ 153.2
Common shares
outstanding at
beginning of year(1) 116.7 116.7 116.2 116.2 115.6 115.6
Dividend reinvestment
and common stock
purchase plan:
Shares issued(1) .2 .2 .2 .2 .3 .3
Restricted stock granted .1 .1 -- -- -- --
Stock option plans:
Options exercised(1) .2 .2 .1 .1 -- --
Shares under option
at end of year(1) -- 2.5 -- 2.4 -- 2.1
Treasury shares which
could be purchased(1) -- (2.0) -- (1.8) -- (1.9)
Average number of
shares outstanding(1) 117.2 117.7 116.5 117.1 115.9 116.1
Earnings per average
common share
outstanding $ 1.71 $ 1.71 $ 1.60 $ 1.59 $ 1.32 $ 1.32
</TABLE>
(1) Millions.
235<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
TECO Energy, Inc. owns, directly or indirectly, all the
common stock of or a partnership interest in 46 subsidiaries,
except as indicated below. All of the companies are organized
under the laws of Florida except as indicated.
Tampa Electric Company
TERMCO, Inc.
Power Engineering & Construction, Inc.
TECO Diversified, Inc.
TECO Transport & Trade Corporation
Electro-Coal Transfer Corporation (a Louisiana corporation)
G C Service Company, Inc.
Gulfcoast Transit Company
Mid-South Towing Company
TECO Towing Company
TECO Coal Corporation (a Kentucky corporation)
Gatliff Coal Company (a Kentucky corporation)
Rich Mountain Coal Company (a Tennessee corporation)
Clintwood Elkhorn Mining Company (a Kentucky corporation)
Pike-Letcher Land Company (a Kentucky corporation)
Premier Elkhorn Coal Company (a Kentucky corporation)
TECO Properties Corporation
CPSC, Inc.
City Plaza Partners, Ltd.
30th Street R & D Park, Inc.
UTC II, Inc.
Tampa Essex, Inc.
Tampa Essex Place Associates, Ltd.
TECO Coalbed Methane, Inc. (an Alabama corporation)
TECO Finance, Inc.
TECO Oil & Gas, Inc.
TECO Investments, Inc.
TECO Power Services Corporation
Hardee Power I, Inc.
Hardee Power II, Inc.
Hardee Power Partners, Ltd.
Lake County Power Resources, Inc.
TPS Clean Coal, Inc.
TPS Guatemala One, Inc.
Tampa Centro Americana de Electricidad, Limitada*
(a Guatemalan Limited Liability Company)
TPS Operations Company
TPS Panama One, Inc.
TECO Energy Source, Inc.
TPS International Power, Inc.(a Cayman Islands Limited Liability
Company)
TPS San Jose International, Inc.(a Cayman Islands Limited
Liability Company)
TPS San Jose, LDC (a Cayman Islands Limited Durations Company)
TPS San Jose Power Holding Company, Ltd. (a Cayman Islands
Limited Liability Company)**
Central Generadora Electrica San Jose, Limitada***
(a Guatemalan Limited Liability Company)
Tasajero I, LDC (a Cayman Islands Limited Durations company)
Bosek, Gibson and Associates, Inc.
TeCom Inc.
* TPS Guatemala One, Inc. had an 98.15-percent partnership interest
at Dec. 31, 1996.
** TPS San Jose, LDC had a 50 percent partnership interest at
Dec. 31, 1996
*** TPS San Jose Power Holding Company, Ltd. had a 46-percent partnership
interest at Dec. 31, 1996.
236<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of TECOEnergy, Inc. on Form S-3 (File No. 33-43512), Form
S-4 (File No. 333-16683) and Form S-8 (File Nos. 33-35927, 33-40076,
33-5465, 2-71457 and 333-02563) of our report dated Jan. 15,1997, on
our audits of the consolidated financial statements of TECO Energy, Inc.
and subsidiaries as of Dec. 31, 1996 and 1995 and for the years ended
Dec. 31, 1996, 1995 and 1994, which report is included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
Tampa, Florida
March 26, 1997
237<PAGE>
TECO ENERGY, INC. Exhibit 24.1
POWER OF ATTORNEY
WHEREAS, the Board of Directors of TECO Energy, Inc., a Florida
corporation, at a meeting held on January 15, 1997, authorized the officers
and Directors of the Corporation to execute an Annual Report on Form 10-K and
authorized the officers of the Corporation to file said Annual Report with the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended.
NOW, THEREFORE, each of the undersigned in his capacity as a Director or
officer or both, as the case may be, of said Corporation, does hereby appoint
R. H. Kessel, A. D. Oak and D. R. Pokross, Jr., and each of them, severally,
his true and lawful attorneys or attorney to execute in his name, place and
stead, in his capacity as Director or officer or both, as the case may be, of
said Corporation, said Annual Report and any and all amendments thereto and
all instruments necessary or incidental in connection therewith, and to file
the same with the Securities and Exchange Commission. Each of said attorneys
has the power to act hereunder with or without the other of said attorneys and
shall have full power of substitution and resubstitution. Each of said
attorneys shall have full power and authority to do and perform in the name
and on behalf of each of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises, as fully and to
all intents and purposes as each of the undersigned might or could do in
person, and each of the undersigned hereby ratifies and approves the acts of
said attorneys and each of them.
IN TESTIMONY WHEREOF, the undersigned have executed this instrument on
the dates set forth below.
/s/ T. L. Guzzle January 15, 1997
T. L. Guzzle, Chairman of the Board,
Director and Chief Executive Officer
(Principal Executive Officer)
/s/ A. D. Oak January 15, 1997
A. D. Oak, Vice President-Finance
(Principal Financial and Accounting Officer)
/s/ G. F. Anderson January 15, 1997
G. F. Anderson, President,
Director and Chief Operating Officer
/s/ C. D. Ausley January 15, 1997
C. D. Ausley, Director
<PAGE>
/s/ S. L. Baldwin January 15, 1997
S. L. Baldwin, Director
/s/ H. L. Culbreath January 15, 1997
H. L. Culbreath, Director
/s/ J. L. Ferman, Jr. January 15, 1997
J. L. Ferman, Jr., Director
/s/ E. L. Flom January 15, 1997
E. L. Flom, Director
/s/ H. R. Guild, Jr January 15, 1997
H. R. Guild, Jr., Director
/s/ D. R. Hendrix January 15, 1997
D. R. Hendrix, Director
/s/ R. L. Ryan January 15, 1997
R. L. Ryan, Director
/s/ W. P. Sovey January 15, 1997
W. P. Sovey, Director
/s/ J. T. Touchton January 15, 1997
J. T. Touchton, Director
/s/ J. A. Urquhart January 15, 1997
J. A. Urquhart, Director
/s/ J. O. Welch, Jr. January 15, 1997
J. O. Welch, Jr., Director
Exhibit 24.2
Transcript from Records of Board of Directors
January 15, 1997
*****************************************************************
R E S OLVED, that the preparation and filing with the
Securities and Exchange Commission of an Annual Report on Form 10-
K pursuant to the Securities Exchange Act of 1934, as amended,
including any required exhibits and amendments thereto and
c o ntaining the information required by such form and any
additional information as the officers of the Corporation, with
the advice of counsel, deem necessary, advisable or appropriate
(the Annual Report ) are hereby authorized and approved; that the
Chairman of the Board, President, any Vice President and the
Treasurer of the Corporation be, and each of them acting singly
hereby is, authorized for and in the name and on behalf of the
Corporation to execute the Annual Report and cause it to be filed
with the Securities and Exchange Commission; and that the officers
referred to above be, and each of them hereby is, authorized to
execute the Annual Report through or by A. D. Oak, D. R. Pokross,
Jr. or R. H. Kessel, or any of them, as duly authorized attorneys
pursuant to a Power of Attorney in such form as shall be approved
by the Corporation's general counsel.
*****************************************************************
I, R. H. KESSEL, hereby certify that I am Secretary of TECO Energy, Inc.
(the "Corporation"), a Florida corporation, and there is above set forth a
true, correct and complete copy of a certain resolution duly adopted by the
Board of Directors of said Corporation at a Regular Meeting of said Board
convened and held on January 15, 1997 at which meeting a quorum for the
transaction of business was present and acting throughout.
I further certify that said resolution has not been altered, amended or
rescinded and that the same is now in full force and effect.
WITNESS my hand and the seal of the Corporation this 12th day of March,
1997.
/s/ R. H. Kessel
Secretary
TECO ENERGY, INC.
(CORPORATE SEAL)
146<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TECO
ENERGY, INC. CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME
AND CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000350563
<NAME> TECO Energy, Inc.
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<PERIOD-TYPE> YEAR
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,459,200
<OTHER-PROPERTY-AND-INVEST> 497,400
<TOTAL-CURRENT-ASSETS> 329,300
<TOTAL-DEFERRED-CHARGES> 188,400
<OTHER-ASSETS> 86,400
<TOTAL-ASSETS> 3,560,700
<COMMON> 117,600
<CAPITAL-SURPLUS-PAID-IN> 360,300
<RETAINED-EARNINGS> 854,900
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,332,800
0
20,000
<LONG-TERM-DEBT-NET> 996,300
<SHORT-TERM-NOTES> 2,500
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 303,200
<LONG-TERM-DEBT-CURRENT-PORT> 76,700
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 829,200
<TOT-CAPITALIZATION-AND-LIAB> 3,560,700
<GROSS-OPERATING-REVENUE> 1,473,000
<INCOME-TAX-EXPENSE> 71,400
<OTHER-OPERATING-EXPENSES> 1,130,100
<TOTAL-OPERATING-EXPENSES> 1,130,100
<OPERATING-INCOME-LOSS> 342,900
<OTHER-INCOME-NET> 17,900
<INCOME-BEFORE-INTEREST-EXPEN> 359,000
<TOTAL-INTEREST-EXPENSE> 86,900
<NET-INCOME> 202,500
1,800
<EARNINGS-AVAILABLE-FOR-COMM> 200,700
<COMMON-STOCK-DIVIDENDS> 129,500
<TOTAL-INTEREST-ON-BONDS> 43,400
<CASH-FLOW-OPERATIONS> 372,500
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.71
<FN>
</TABLE>
