SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM 10-K
For the fiscal year ended December 31, 1995 Commission file number 1-3632
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
INTERSTATE POWER COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 42-0329500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Main St., P.O. Box 769, Dubuque, IA 52004-0769
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 319-582-5421
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock Par Value $3.50 Per Share ) New York Stock Exchange
) Chicago Stock Exchange
) Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: N O N E
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ X ]
As of February 1, 1996 the aggregate market value of the voting stock
held by non-affiliates of the registrant was $308,448,256.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock.
Shares Outstanding
February 1, 1996
Common Stock Par Value $3.50 Per Share 9,564,287
Documents incorporated by reference - portions of the Annual Report to
Stockholders for 1995 (Exhibit EX-13) are incorporated by reference in Parts
I, II and IV; portions of the Annual Proxy Statement for 1996 are
incorporated by reference in Part III.
INTERSTATE POWER COMPANY
1995 Form 10-K Annual Report
Table of Contents
Page
Part I
Item 1. Business 1
General 1
Construction Program 1
Electric Operations 1
Sources and Availability of Raw Materials 2
Duration and Effect of Electric Patents and Franchises 3
Electric Seasonal Business 3
Working Capital Items 3
Electric Governmental Regulations 4
Electric Competitive Conditions 4
Other Sources of Power 6
Other Electric Operations 7
Gas Operations 7
Gas Sources and Availability of Raw Materials 8
Duration and Effect of Gas Patents and Franchises 9
Gas Seasonal Business 9
Gas Governmental Regulations 9
Gas Competitive Conditions 10
Dependence of Segment Upon a Single Customer 11
Research and Development 11
Electric and Magnetic Fields 11
Environmental Regulations 11
Employees 14
Accounting Matters 14
Item 2. Properties 15
Electric Properties 15
Generating Stations 16
Gas Properties 17
General Properties 17
Titles 17
Item 3. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 18
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 18
Item 6. Selected Financial Data 18
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 18
Item 8. Financial Statements and Supplementary Data 18
Item 9. Disagreements on Accounting and Financial Disclosure 18
Part III
Item 10. Executive Officers of the Registrant 19
Item 11. Executive Compensation 19
Item 12. Security Ownership of Certain Beneficial Owners and
Management 20
Item 13. Certain Relationships and Related Transactions 20
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 20
PART I
ITEM 1. BUSINESS
(General)
Interstate Power Company (the company), is an operating public
utility incorporated in 1925 under the laws of the State of Delaware.
The company is engaged in the generation, purchase, transmission,
distribution and sale of electricity. It owns property in portions
of twenty-five counties in the northern and northeastern parts of
Iowa, in portions of twenty-two counties in the southern part of
Minnesota, and in portions of four counties in northwestern Illinois.
The company also engages in the distribution and sale of natural gas
in Albert Lea, Minnesota; Clinton, Mason City and Clear Lake, Iowa;
Fulton and Savanna, Illinois and in a number of smaller Minnesota,
Iowa and Illinois communities, and in the transportation of natural
gas within Iowa, Illinois and Minnesota, and in interstate commerce.
For information pertaining to industry segments and lines of business
please refer to page 27 of Exhibit EX-13 (the Annual Report to
Stockholders).
(Construction Program)
The table below shows actual construction expenditures for 1995 and
estimated expenditures for the period 1996 through 2000:
(Thousands of Dollars)
1995 Actual $28,200
1996 Est. $32,200
1997 Est. $36,000
1998 Est. $38,000
1999 Est. $35,400
2000 Est. $38,400
Revisions in the long range construction program have resulted in a
reduction in the projected additional permanent financing. In 1994,
the company originally planned on issuing $25 million of common
stock in 1995. This issue was later delayed until 1996. Current
projections have now postponed indefinitely the need for this public
offering.
Refer to (Environmental Regulations) on page 11 for additional
information on construction expenditures related to compliance with
the regulations of the Clean Air Act of 1990.
(Electric Operations)
Of the 234 communities served with electricity, Dubuque, Iowa, is the
largest with a population of approximately 58,000. Other major
cities served are Albert Lea, Minnesota and Clinton and Mason City,
Iowa. The remainder of the communities served are under 15,000
population, of which 193 are less than 1,000 population. The company
currently sells electricity at wholesale to 19 small communities
which have municipal distribution systems, 13 of which are total
requirements customers, and 6 of which are partial requirements
customers. As discussed under (Electric Competitive Conditions), six
firm municipal electric wholesale customers have given the company
notice that they intend to purchase their requirements from other
utilities when their contracts expire in 1996.
The estimated population of the company's service area is 340,000.
Six large industrial customers account for 32% of electric MWH sales.
A diverse mixture of residential, agricultural, and industrial
customers constitute the remainder of the company's 163,000 electric
customers.
There have been no significant changes since the beginning of the
fiscal year in the kind of products produced, services rendered,
markets or method of distribution.
The facilities owned or operated by the company include facilities
for the transmission of electric energy in interstate commerce or the
sale of electric energy at wholesale in interstate commerce.
(Sources and Availability of Raw Materials)
Electricity generated by the company in 1995 was 90.9% from coal as a
fuel, 0.2% from oil and 8.9% from natural gas. In 1996, the sources
of such generation are estimated to be: 91.8% from coal, 0.6% from
middle distillate oils, and 7.6% from natural gas. In 1995, 73.7% of
the company's coal requirements came from long-term contracts. In
1996, the company anticipates that 77.7% of its coal requirements
will be from long-term contracts. These contracts have expiration
dates ranging through August 31, 1999.
The company entered into a contract effective March 1, 1995 for a
total of 450,000 tons per year of 0.5% sulfur Colorado coal for its
Kapp #2, a 217 MW unit at Clinton, Iowa. The contract continues
through August 1999, and will allow the company to comply with sulfur
dioxide restrictions mandated by the Clean Air Act Amendments of
1990.
The company has a contract for 500,000 tons per year for its 260 MW
Lansing #4 unit. Lansing Unit #4 requires low sulfur coal, which is
being purchased in the Powder River Basin of Wyoming. The coal is
shipped by rail and then transloaded to barge at facilities near
Keokuk, Iowa. A contract with Orba-Johnson Transshipment Company,
Inc., covers rail to barge coal transloading. Coal required for
generation at the Neal #4 unit, located near Sioux City, Iowa, and
the Louisa #1 unit, located near Muscatine, Iowa, is contracted for
by the operator, MidAmerican Energy Company, under terms of the Unit
Participation Agreements.
The company will purchase coal on an annual basis for the Dubuque
Power Plant and for Lansing Units #1, #2 and #3.
The company owns 120 coal cars and has an undivided ownership
(21.528%) in 372 coal cars in connection with Neal #4. The company
has an undivided ownership (4%) in 136 cars in connection with Louisa
#1. Coal requirements in 1996 will require using leased cars for the
Louisa #1 coal supply.
The company relies on spot purchases of oil. The company burned
867,116 gallons of No. 2 and No. 6 oil in 1995 and has 6,477,000
gallons of oil storage capacity in which to store adequate reserves
during periods of high demand on refineries.
The company presently has interruptible natural gas available for its
electric generation station at Clinton, Iowa through Natural Gas
Pipeline Company of America. At the Fox Lake and Dubuque plants,
interruptible gas is available through Peoples Natural Gas Company.
There is no assurance that interruptible gas will continue to be
available as fuel for electric generating plants.
(Duration and Effect of Electric Patents and Franchises)
The company owns no patents.
The company has, in the opinion of its legal counsel, all necessary
franchises or other rights from the incorporated communities and
other governmental subdivisions now served, required for the
operation of its properties. With 195 electric franchises in effect
in cities and villages, and with the majority of such franchises
being for a term of 25 years, the renewal of such franchises is a
continuing process. Twenty-six percent (51) of the franchises have
been secured since January 1, 1986.
(Electric Seasonal Business)
The effects of air conditioning in summer and heating in winter have
a seasonal impact. The air conditioning sales in the summer months
are primarily related to the residential and commercial customer
classes, however, the company does not meter air conditioning sales
separately. During the past five years, the highest and lowest
average residential consumption in the peak summer month has been 960
Kwh (August 1995) and 571 Kwh (June 1993), respectively, compared to
811 Kwh (January 1991) and 651 Kwh (February 1992) during the peak
winter month. The company estimates that hot summer weather boosted
1995 residential electric revenues and electric margin by $4.7
million and $3.6 million, respectively, over 1994. The company
cannot estimate with any degree of accuracy the impact of warm or
humid weather on commercial or large power & light sales. Refer to
the (Electric Governmental Regulations) section for a discussion of
Iowa and Minnesota seasonal rates.
(Working Capital Items)
Three of the company's generating stations are located on the
Mississippi River at Clinton, Dubuque and Lansing, Iowa. The coal
supply for the three plants is delivered by barge during the shipping
season (approximately April 1st to December 1st). Refinements to the
company's fuel delivery process have decreased the amount of
inventory required to carry the company over the winter. Coal
shipments to the company's Neal #4 and Louisa #1 generating stations
are able to continue through the winter as river transportation is
not involved.
(Electric Governmental Regulations)
In August 1993, the company implemented a revised electric tariff
structure. The new tariffs give greater weight to the demand
component of electric usage, and include a provision for a higher
rate during the summer cooling season (June-September), but did not
change the company's overall annual electric revenue.
The company filed an Iowa electric rate increase application in March
1995. The application requested an annual increase of $13.1 million.
Interim rates in an annual amount of $7.1 million were placed in
effect on June 29, 1995, subject to refund. A December 1995 Iowa
Utilities Board (IUB) Order allowed an annual increase of $6.6
million, including a return on common equity of 11.35%. The
company's original rate increase request included a return on common
equity (ROE) and a management efficiency reward which totaled 13.25%.
The IUB allowed a ROE of 11.35% and no efficiency reward. The lower
ROE granted will not have a significant adverse impact on operating
results. In 1996, the company will refund to customers approximately
$250,000 collected in 1995 in excess of the final order. The 1995
financial statements include a provision for the refund.
The company filed a Minnesota electric rate increase application in
June 1995. The application requested an annual increase of $4.6
million (later adjusted by the company to $3.3 million). The
proposed tariffs include a seasonal rate mechanism similar to that
used in the State of Iowa. Interim rates were not requested. On
March 8, 1996 the MPUC received the report of the Administrative Law
Judge (ALJ) hearing the case. The ALJ recommended a $2.3 million
revenue increase. The major component of the $1.0 million reduction
in revenue requirements is the disallowance of the Minnesota portion
of 100 MW of purchased power contracts. The disallowance is similar
to a ruling in a previous rate case, thus, is not expected to have a
material adverse impact on the company's financial condition. A MPUC
Order is expected by April 1996.
The company's electric rate tariffs provide for recovery of the cost
of fuel through energy adjustment clauses. These clauses are subject
to revision from time to time by the regulatory authority having
jurisdiction, and are designed to pass on to the consumer the
increases or decreases in the cost of fuel without formal rate
proceedings. Purchased capacity costs are not recovered from
customers through energy adjustment clauses, but rather must be
addressed in base rates in a formal rate proceeding. In the
company's Iowa electric jurisdiction, the company is required to
return to customers any jurisdictional revenue from capacity sales to
other utilities.
(Electric Competitive Conditions)
In 1993 the Illinois Commerce Commission entered an order determining
that the company, and not Jo-Carroll Electric Cooperative, had the
right to provide electric service to a large new freezer service
plant near East Dubuque, IL. The company is providing service to
that plant pursuant to Commission order. Jo-Carroll filed for
judicial review of the Commission action in the Illinois 15th
Judicial Circuit, which court remanded the proceeding to the
Commission for further hearings. Proceedings on remand are now
pending before the Commission.
The Energy Policy Act of 1992 (Act) allows FERC to order utilities to
grant access to transmission systems by third-party power producers.
The Act specifically prohibits federally-mandated wheeling of power
for retail customers. The company has experienced difficulty in
retaining electric wholesale customers which take service under one
year contracts. To date, 6 of the company's 18 firm municipal
electric wholesale customers have put the company on notice that they
intend to purchase their requirements from other utilities when their
contracts expire. These six customers account for about 62% of the
company's municipal electric load. Firm electric sales to municipal
utilities account for approximately 3.8% of the company's electric
sales and 2.7% of its electric revenue. It is anticipated that five
of the six municipal customers will use the company's transmission
system to transport power from other utilities, and these five
municipal customers will be required to pay the company a wheeling
fee. The net impact on the company's financial condition is not
expected to be significant.
The company's industrial rates generally compare favorably with those
of neighboring utilities. For the company's six largest industrial
customers, the aggregate 1995 rate was approximately 3.4 cents per
KWH. This rate also compares favorably with that of potential
independent power producers and electric wholesale generators. The
company's favorable rates mitigate the incentive that these customers
might otherwise have to relocate, self-generate or purchase
electricity from other suppliers. The company anticipates that its
generating cost will decline slightly over the next several years as
long-term coal purchase and transloading contracts expire and are
renegotiated.
The company currently has no competition from the same type of public
utility service in the sale of electricity in any of the incorporated
communities it serves. In the States of Iowa, Illinois and
Minnesota, territorial laws govern the question of possible service
to customers in unincorporated areas, and such laws regulate
competition in such areas.
Laws and statutory regulations in the different states in which
service is rendered provide, under varying terms and conditions, for
municipal ownership of electric generating plants and distribution
systems. Certain franchises under which utility service is rendered
give the municipality the right to purchase the system of the company
within said municipality upon certain terms and conditions. However,
no such purchase option and no right of condemnation of the company's
properties has been exercised and no municipal generating plant or
municipal distribution system has been established in the territory
now served by the company during the past twenty-five years.
The Iowa Utilities Board, the Illinois Commerce Commission and the
Minnesota Public Utilities Commission have each approved tariffs that
allow the company to offer interruptible electric service for
qualifying customers. The availability of this service provides
price incentives to those customers having the ability to interrupt
their connected load. The primary objective of the incentives is to
reduce the system peak. The incentives also serve to retain existing
customers and attract new customers.
(Other Sources of Power)
The company has been a participant in the Mid-Continent Area Power
Pool (MAPP) Agreement since March 31, 1972. MAPP had a total
coincident 1995 summer peak of 27,961 MW at which time the net
capacity of the pool was 31,182 MW. Membership in the pool permits
sharing of reserve capacities of the members which affects reductions
in plant facilities investment for MAPP members. The minimum reserve
margin for participants in MAPP has been established at 15%.
Parties to the MAPP Agreement include, as participants, 28 electric
power suppliers consisting of 8 investor-owned utilities, the United
States Department of Interior (Western Area Power Administration), a
Canadian system, public power districts and rural electric generating
and transmission cooperative associations, municipal electric supply
agencies and, as associate participants, 30 other electric power
suppliers operating in Canada and in the North Central region of the
United States. The pool coordinates planning and operation of power
suppliers in Minnesota, Wisconsin, Montana, Iowa, Nebraska, North
Dakota and South Dakota and provides reliability and economy for the
company's bulk power supply. The MAPP Agreement was filed with the
FERC and accepted as an initial rate filing effective December 1,
1972 and has been in operation since that time. In 1995, MAPP
implemented an intra-pool transmission service fee. The company has
little historical data to use as a basis for quantifying the
potential maximum intra-pool transmission service fees that are now
required under the MAPP agreement. Current projections of such a
maximum, assuming the MAPP reorganization receives Federal Energy
Regulatory Commission approval, would be little change in 1996 and up
to 3 times the current expense level in the period 1997 to 2001. The
company cannot estimate the impact beyond 2001 due to uncertainties
regarding capacity requirements. The company realized revenues of
$211,000 and transmission service expenses of $91,000 in 1995.
In addition to MAPP, the company has interchange connections with
certain Missouri and Illinois utilities through 345 KV transmission
systems. Future interconnections are planned to meet transmission
requirements for the next ten years.
In 1992, the company entered into three long-term power purchase
contracts with other utilities. The contracts provide for the
purchase of 255 MW of capacity through April 2001. Energy is
available at the company's option at approximately 100% to 110% of
monthly production costs for the designated units. The three power
purchase contracts required capacity payments of $24.6, $24.6, and
$24.1 million in 1995, 1994, and 1993, respectively. Over the
remaining life of the contracts, total capacity payments will be
approximately $130 million. The purchased power contract payments
are not for debt service requirements of the selling utility, nor do
they transfer risk or rewards of ownership.
In Iowa the IUB has concluded that the capacity purchases were
prudent and allowed recovery of costs in rates. The rate structure
approved by the MPUC does not provide for full recovery of purchased
power applicable to the Minnesota jurisdiction. A 1992 rate order by
the MPUC held that the company had 100 MW of excess capacity. The
company is seeking to adjust this disallowance in its current rate
case.
The company has not filed for rate recovery of the allocable portions
of the purchased power payments in the Illinois and FERC
jurisdictions. The payments of approximately $2.5 million annually
are expensed as incurred.
The company has contracts with several governmental power agencies
whereby the company provides transmission service to their
customer/members. During 1995, the company received $1,263,408 for
transmission service to customers of the Western Area Power
Administration (WAPA), and $1,321,801 from Cooperative Power
Association (CPA) for wheeling power to nine of its member
distribution cooperatives.
The company's contract with CPA also provides for payment by the
company for needed mutually utilized facilities constructed and owned
by CPA. During 1995, these payments amounted to $329,471.
The company and Southern Minnesota Municipal Power Agency (SMMPA)
have agreed by contract to compensate each other if
over/underinvestment in the shared transmission system occurs.
During 1995, SMMPA made payments to the company in the amount of
$340,397.
The company's contract with Central Iowa Power Cooperative (CIPCO)
provides for compensation to each other if over/underinvestment in
the shared transmission system occurs. During 1995, the company paid
CIPCO $136,827 for underinvestment in the Liberty Substation
property, of which $41,038 was owed for 1994.
(Other Electric Operations)
The 1995 peak of 1,010,821 KW occurred on July 14, 1995 between 2:00
and 3:00 in the afternoon. At the time of its 1995 peak the company
had a net effective electric capability of 1,310,600 KW. Of this net
effective capability, 903,300 KW was in steam generation, 113,500 KW
was in combustion turbine and the balance was in internal combustion
units and purchases. The previous historical system net peak load
for a sixty-minute period, of 932,081 KW, was reached on June 17,
1994.
(Gas Operations)
The company supplies retail gas service in 39 communities and serves
approximately 48,800 gas customers.
There have been no significant changes since the beginning of the
fiscal year in the kind of products produced, markets or methods of
distribution.
(Gas Sources and Availability of Raw Materials)
The company purchases pipeline transportation capacity from Northern
Natural Gas Company (NNG), Natural Gas Pipeline Company of America
(NGPL) and Northern Border Pipeline Company (NBPL). During 1995 the
company purchased gas from eleven non-traditional suppliers, i.e.
producers, brokers and marketers, at market responsive rates. FERC
Order 636 became effective in 1993. Order 636 unbundled pipeline
supply from its capacity. Subsequent to Order 636, FERC continues to
approve the tariffs of NNG and NGPL, but only with regard to capacity
and storage rates, subject to change as rate cases are filed.
Gas for the company's Mason City, Albert Lea and Savanna service
areas is transported by NNG under capacity contracts for 36,338 Mcf
daily, and for an additional 15,657 Mcf in the November to March time
frame. The majority, 26,999 Mcf, of the above capacities is from the
producing areas of Oklahoma and Texas, etc. These contracts expire
in October, 1997. Gas is supplied by producers, marketers and
brokers, as well as from storage services, to meet the peak heating
season requirements. The company had 15,170 Mcf/d of storage, with
the necessary pipeline capacity, available for the 1994-1995 heating
season.
Gas for its Clinton service area is transported by NGPL under
capacity contracts for 19,611 Mcf annually, with expiration dates of
November 30, 1998, December 1, 2000, February 28, 1996, and November
30, 1996. This gas is supplied by producers, marketers and brokers.
The company supplements this capacity with storage gas, which has the
pipeline capacity embedded in its FERC approved rate. The company
had 16,609 Mcf of storage available for the 1994-1995 heating season.
During 1995, the company utilized approximately 34.9% of its
annualized daily contract gas available from its firm suppliers. The
company's 1995 total throughput level of 35,320,385 Mcf represents a
4.9% increase over 1994. The total throughput was composed of sales
gas (22.1%), spot gas (3.1%) and customer transportation gas (74.8%).
During 1995, twenty-one of Interstate's customers transported a total
of 26,400,766 Mcf of their own gas over the company's pipeline and
distribution systems. This reflects an increase over 1993 and 1994
in the number of customers exercising the transportation option. In
1993, nineteen of Interstate's customers transported a total of
23,994,891 Mcf, and in 1994, eighteen customers transported a total
of 24,498,793 Mcf. The customer owned gas was delivered by
interstate pipeline companies for those customers' accounts to
Interstate's town border stations. The company subsequently
delivered the gas to customers under tariffs approved by respective
state commissions. Company policy is to assist any customer that
wishes to purchase gas directly from the producing sector.
The company owns propane-air gas plants in Albert Lea, Minnesota and
Clinton and Mason City, Iowa. The daily output capacities are:
5,000 Mcf, 4,000 Mcf and 9,600 Mcf of propane-air mix gas
respectively.
The requirement for gas on the peak winter day of the 1994-1995
season was 141,109 Mcf, including both firm and interruptible
customers. This peak consisted of 21.5% jurisdictional sales gas,
9.1% spot gas, 53.4% customer purchased gas, 16.0% storage gas and
0.0% propane-air from the company's peak-shaving plant. The maximum
daily firm gas sales during the 1994-1995 season were as follows:
Albert Lea 12,497 Mcf; Savanna 2,808 Mcf; Clinton 20,651 Mcf; Mason
City 25,218 Mcf, or 43.4% of the peak winter day throughput.
(Duration and Effect of Gas Patents and Franchises)
The company owns no patents.
The company has, in the opinion of its legal counsel, all necessary
franchises or other rights from the incorporated communities and
other governmental subdivisions now served, required for the
operation of its properties. With 34 gas franchises in effect in
cities and villages, and with the larger majority of such franchises
being for a term of 25 years, the renewal of such franchises is a
continuing process. Forty-seven percent (16) of the franchises have
been secured since January 1, 1986.
(Gas Seasonal Business)
The effects of heating sales to the residential and commercial
classes of customers have a significant seasonal impact on the
company's business. The heating sales in the winter months account
for 98% of the total annual sales to these classes of customers. The
average consumption for a residential customer during the peak winter
months is 18.7 Mcf compared to the average of 2.5 Mcf during the
summer. The average consumption for a commercial customer during the
peak winter months is 90.3 Mcf compared to the average of 12.6 Mcf
during the summer.
(Gas Governmental Regulations)
The company filed an Iowa gas rate increase application in August
1995. The application requested an annual increase of $2.2 million.
Interim rates in an annual amount of $1.3 million were placed in
effect on October 20, 1995, subject to refund. The company and other
parties to the rate application have agreed on an increase of $1.1
million subject to approval by the IUB. The IUB, by order dated
February 21, 1996, has approved the $1.1 million increase in revenue
requirements for the company's Iowa gas jurisdiction. The increase
represents a 3.5% increase in rates to Iowa gas customers and 0.4% of
total 1995 revenue. An IUB Order is expected by June 1996. Iowa gas
rates implemented in October 1995 did not include recovery of any
investigative or remediation costs to be incurred in the clean-up of
former manufactured gas plants. However, the company recovered $0.7
million annually of costs through the prior Iowa gas tariffs, and the
company anticipates that future investigation and remediation costs
applicable to the Iowa jurisdiction will be recovered from customers.
The company filed a Minnesota gas rate increase application in May
1995. The application requested an annual increase of $2.4 million,
including a return on common equity of 11.75%. Interim rates in an
annual amount of $1.5 million were placed in effect in June 1995,
subject to refund. A MPUC Order issued February 29, 1996 allowed an
annual increase of $2.1 million and a return on common equity of
10.75%. On March 20, 1996 the Minnesota Department of Public Service
and the Office of the Attorney General both requested reconsideration
of the MPUC Order. The $2.1 million increase in revenues included in
the MPUC Order represented a 24% increase in rates for Minnesota gas
customers and approximately 5% of the company's total gas revenues.
The return on equity granted by the MPUC (10.75%) is lower than
expected, however, it is within a reasonable range and the lower rate
will not have a material adverse impact on the company's financial
condition.
FERC Order 636 provides a mechanism under which pipelines can recover
prudently incurred transition costs associated with the restructuring
process. The company's pipeline suppliers have filed with the FERC
to recover transition costs from the local distribution companies.
The company incurred $2.0 million of transition costs in 1995 and is
currently recovering these costs from customers through the purchased
gas adjustment clause. The Illinois Commerce Commission, in Docket
No. 93-0328, allowed recovery of Gas Supply Realignment costs. The
Iowa Utilities Board accepted transition costs as a component of the
purchased gas adjustment in Dockets PGA-92-229, PGA-92-244, and PGA-
93-7. The Minnesota Public Utilities Commission allowed Order 636
transition costs to be passed through the purchased gas adjustment in
Docket No. G001/AA-94-762. While the ultimate level of transition
costs could vary as Order 636 filings are revised and proceedings
completed, the company estimates that the remainder will aggregate
approximately $3.2 million payable in declining installments from
1996 to 2005. The company anticipates that under customary
ratemaking practices, future transition costs will be recovered from
customers, and has recorded on its balance sheet a liability and a
corresponding regulatory asset in the amount of $3.2 million.
(Gas Competitive Conditions)
The company has no competition from the same type of public utility
service in the sale of gas in any of the incorporated communities
serviced by it. Certain major industrial customers of the company
purchase their own gas supply from producers and have that gas
transported by the company as described in the "Gas Sources and
Availability of Raw Materials" section.
One customer recently proposed to construct independent distribution
facilities and bypass the company's system. This situation raises a
new competitive issue which the company has not previously dealt
with. The company is evaluating its response to the bypass issue and
developing policies to deal with future competitive conditions which
could result from potential system bypass. The customers most likely
to bypass the company's distribution facilities are transportation
customers. At the present time the company has 21 gas transportation
customers with total revenues of $2.6 million (6% of gas revenues and
0.8% of total company revenues). Over 60% of the $2.6 million of
revenues occurs in an area where the potential for bypass is
considered to be minimal. The loss of any one customer would not
have a material adverse impact on the company's financial condition.
(Dependence of Segment Upon a Single Customer)
In 1995, 1994 and 1993, the company had no single customer or
industry for which electric and/or gas sales accounted for 10% or
more of the company's consolidated revenues. In 1995, the company's
three largest industrial customers accounted for 1,396,284,716 Kwh of
electric sales ($45,777,786) and 23,540,434 Mcf of gas sales and
transportation ($1,922,694). The company's largest gas customer,
which represents 31% of the company's total gas throughput, is
committed by contract for the next six years.
(Research and Development)
The company has no full-time professional employees engaged in
research activities and had no company-sponsored research programs
during 1995, 1994 and 1993. In the public utility industry, research
is commonly and traditionally done by manufacturers of equipment,
trade organizations to which the company belongs, and university
research programs. In 1995 approximately $1,054,925 was paid for
research activities compared with $1,072,871 in 1994 and $1,090,184
in 1993.
(Electric and Magnetic Fields)
The possibility that exposure to electric and magnetic fields
emanating from power lines and other electric sources may result in
adverse health effects has been a subject of increased public,
governmental and media attention. A considerable amount of
scientific research has been conducted on this topic with no
definitive results. Research is continuing. It is not possible to
tell what, if any, impact these actions may have on the company's
financial condition.
(Environmental Regulations)
The company is subject to various federal and state government
environmental regulations. The company meets existing air and water
regulations. The Federal Clean Air Act Amendments of 1990 requires
reductions in certain emissions from power plants. The legislation
has two deadlines for compliance, Phase 1 (January 1, 1995) and Phase
2 (January 1, 2000). The company has switched to a low sulfur coal
and installed low nitrogen oxide burners at the 217 MW plant affected
by Phase 1. Management anticipates that additional costs incurred
will be recovered through customer rates.
The United States EPA and the states have promulgated discharge
limits necessary to meet water quality standards. A National
Pollutant Discharge Elimination System (NPDES) permit is required for
all discharges. The company has current NPDES permits for all
discharges and meets or falls within the required discharge limits.
Early this century, various utilities including the company operated
plants which produced manufactured gas for cooking and lighting. The
company's facilities ceased operations approximately 40 years ago
when natural gas pipelines were extended into the upper Midwest.
Some of the former gasification sites contain coal tar waste products
which may present an environmental hazard.
The company has identified nine sites which may contain waste from
former coal gasification sites. The company has recorded an
estimated liability for its pro rata share of expenses applicable to
the sites. Of the nine sites, 3 are on property currently owned by
the company, while the remaining 6 are located on property currently
owned by other parties.
The company has been named a Potentially Responsible Party (PRP) by
Federal or State environmental agencies for most of its former
manufactured gas plant sites. In December 1994, the U.S. EPA, in
submitting an information request, claimed that the company is a
present and former owner of the Clinton, Iowa site. The company has
not been officially named as a PRP for the Savanna and Galena sites
by those agencies. In addition, the current owner of the Galena,
Illinois site has claimed that the company is a PRP at that site
based upon a predecessor company's ownership of the site.
The estimated environmental liabilities recorded on the books of the
company include amounts expected to be incurred to complete the
investigation of those sites where the investigative process has
begun, and the minimum of the estimated cost range for those sites
where the investigation is in its early stages or not been started.
At the present time the company has insufficient information,
regarding the sites that have not been fully investigated, to revise
those cost estimates.
It is possible that cost estimates may be revised upwards as the
investigative process proceeds. In view of the past rate treatment
allowed by the Iowa, Minnesota and Illinois Commissions, the company
believes that prudently incurred unreimbursed costs will be recovered
from customers and that the investigation, remediation or monitoring
process will not have a material adverse impact on the company's
financial condition or the results of operations.
In 1957, the company purchased facilities in Mason City, Iowa, from
Kansas City Power & Light Company (KCPL) which included land
previously used for a coal gasification plant. Coal tar waste was
discovered on the property in 1984. In 1995, a settlement was
reached with KCPL for sharing of costs to remediate the site.
Interstate Power Company has been reimbursed $1.0 million by KCPL for
expenses incurred in the past. The reimbursement has been deferred,
pending a decision by the IUB on the amount to be refunded to
customers. KCPL will pay for future soil remediation costs up to a
$2.6 million level. If soil remediation costs exceed that level, the
next $1.0 million will be shared 2/3 KCPL and 1/3 Interstate Power
Company. If soil remediation costs exceed the $3.6 million level,
Interstate Power Company is 100% responsible. Any ground water
remediation cost will be split 50 - 50 between KCPL and Interstate
Power Company. A Remedial Investigation and Feasibility Study has
been approved and the company has assumed responsibility for managing
the remediation of the Mason City site. The current estimated cost
of soil remediation is $2.6 million, which will be paid by KCPL.
The company formerly operated a manufactured gas plant in Rochester,
Minnesota. Soil remediation was completed in 1995 and post-
remediation groundwater monitoring is underway. From 1991 through
1995, the company incurred costs aggregating $6.7 million applicable
to the Rochester site. Groundwater monitoring costs are expected to
be $75,000 to $100,000 per year for a period of two to twenty years.
The MPUC accounting order allows the company to defer these costs and
recover them in subsequent rate cases. This level of expenditure
would be considered to be immaterial, therefore, the company may
choose to expense them as incurred.
In addition to the Rochester site, the company owned or operated four
other manufactured gas plant sites in Minnesota: Albert Lea, Austin,
New Ulm and Owatonna. Wastes associated with former coal
gasification operations have been identified at each site. The
company anticipates that these sites will be investigated in 1996 or
1997. When the investigation process is complete, the company will
be able to determine if any remediation will be necessary.
In addition, the company has identified three other sites: Galena
and Savanna, Illinois, and Clinton, Iowa. Wastes associated with
former coal gasification operations have been identified at each of
these sites. Little or no activity is expected at any of these sites
in 1996.
In 1994, the company filed a lawsuit against certain of its insurers
to recover the costs of investigating and remediating the former coal
gasification plants. On June 23, 1995, the company filed a lawsuit
in the District Court of Iowa in Clinton County, Iowa against certain
of its insurers to recover the costs of investigating and remediating
the former coal gasification plants. The insurers named as
defendants in this lawsuit include: American Home Assurance Company,
American Re-Insurance Company, C.E. Heath Compensation and Liability
Insurance Company of California (Successor to Employers' Surplus
Lines Insurance Company), Commercial Union Insurance Company
(Successor to Employers' Liability Assurance Corporation, Ltd.), The
Home Insurance Company, Indemnity Insurance Company of North America,
Insurance Company of North America, International Insurance Company
(Successor to International Surplus Lines Insurance Company), Signet
Star Reinsurance Corporation (Successor to North Star Reinsurance
Corporation), Zurich Insurance Company (Successor to Zurich General
Accident and Liability Insurance Company), and Certain Underwriters
at Lloyd's London & London Market Insurance Companies. The company
believes that the insurers have not fulfilled their obligations under
insurance policies sold to the company. Because the company is
seeking full coverage of costs as they are incurred, no specific
dollar amount has been sought in this lawsuit. In addition to
seeking monetary damages in an unspecified amount, the company is
seeking a declaratory order and equitable relief. Two insurers paid
the company a total of $0.3 million in 1995 in order to be discharged
from the lawsuit. The trial against the remaining insurers is
expected to begin in Iowa in 1997. Neither the company nor its legal
counsel is able to predict the amount of any insurance recovery, and
accordingly, no potential recovery has been recorded. The company
anticipates the recovery of insurance proceeds would first be applied
to offset expenses of pursuing the lawsuit against the insurance
companies. It is expected that the company's customers paying for
environmental clean-up costs would also share in the insurance
proceeds. It is uncertain as to what portion of the proceeds, if
any, the company's stockholders would be allowed to retain.
Therefore, based on the above, the company considers the potential
impact on its financial position not to be material.
In April 1995, the company received an accounting order from the
Minnesota Public Utilities Commission (MPUC) which allows the
deferral of investigation and remediation costs applicable to the
Rochester and Albert Lea sites and further allows the company to seek
recovery in a rate case. The company's Minnesota gas rate case filed
in May 1995 seeks recovery of $4.9 million. The company filed a
petition in June 1995 for an accounting order which would allow it to
defer and seek recovery in a future rate case of costs applicable to
the three other Minnesota sites (Austin, Owatonna and New Ulm).
Action by the MPUC is pending.
Under the Federal Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA), a past waste generator can be designated
by the United States Environmental Protection Agency (U.S. EPA) as a
Potentially Responsible Party (PRP). Certain types of used
transformer oil (primarily those containing polychlorinated
biphenyls, or "PCBs") have been designated as hazardous substances by
the U.S. EPA. The company has been cited as a PRP by the U.S. EPA
for the clean-up of the facilities formerly operated by Martha C.
Rose Chemicals, Inc. in Holden, Missouri. Clean-up of the site began
in 1994, with final completion in 1995. The company received a
refund of previously paid costs of $0.1 million in 1995 in final
settlement, and estimated reserves remaining are adequate for
continuing groundwater monitoring.
In 1988, the U.S. EPA designated the company a PRP for the clean-up
of former salvage facilities operated by the Missouri Electric Works,
Inc. (MEW) in Cape Girardeau, Missouri. A portion of the
PCB-contaminated equipment found at the site was formerly owned by
the company. The company has notified the U.S. EPA that it disclaims
responsibility for the site, as the equipment was in proper operating
condition when sold by the company to a third party, which
subsequently made arrangements to transport this equipment to MEW.
The U.S. EPA has not responded to the company's disclaimer. The
company has not recorded any liability for the MEW site, and
management believes that it will be able to successfully defend
itself against any claims applicable to the site.
(Employees)
The company has 935 regular employees consisting of 902 full-time and
33 part-time employees.
(Accounting Matters)
The company will be required to adopt SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" in 1996. The new standard imposes stricter standards
for regulatory assets by requiring that such assets be probable of
future recovery at each balance sheet date. The company believes
that the initial adoption of SFAS 121 will not have a material impact
on its financial position or results of operations.
ITEM 2. PROPERTIES
The principal power plants and other materially important physical
properties of the company are maintained in accordance with sound
operating practices. Their general character and location are
described below:
(Electric Properties)
The company has been a participant in the Mid-Continent Area Power
Pool (MAPP) Agreement since March 31, 1972. As a part of this power
network the company is the owner of a 55.0 mile section of the 345 KV
transmission line extending from St. Louis, Missouri to Minneapolis,
Minnesota; a 15.5 mile section of the 345 KV transmission line
between Minneapolis, Minnesota and Kansas City, Missouri; a 5.0 mile
345 KV transmission line from near Clinton, Iowa to near Cordova,
Illinois; a 49.8 mile 345 KV transmission line from near Clinton,
Iowa to a substation south of Dubuque, Iowa; and three associated
345/161 KV substations.
The company's electric generating stations at year-end consist of six
steam plants, three combustion turbine stations, and five internal
combustion facilities. Pertinent information regarding each electric
generating station is shown on the following page:
INTERSTATE POWER COMPANY GENERATING STATIONS
Net
Generating Units December 31, 1995 Output
Nameplate Capability in KWH
Unit Capacity Year KW KW (000's)
Location Number KW Installed (Gross) (Net) 1995
STEAM:
Dubuque, IA 2 15,000 1929 82,500 78,000 194,561
3 25,000 1952
4 33,000 1959
Clinton, IA 1 15,000 1947 254,900 235,000 1,050,504
(M.L.Kapp Plt.) 2 212,284 1967
Lansing, IA 1 15,000 1948 337,800 320,000 775,611
2 11,500 1949
3 33,000 1957
4 252,649 1977
Sherburn, MN 1 11,500 1950 113,500 108,000 335,179
(Fox Lake Plt.) 2 11,500 1951
3 75,000 1962
Sioux City, IA 4* 125,924 1979 142,000 134,300 993,471
(Neal Unit #4)
Louisa County, IA 1** 27,400 1983 29,400 28,000 174,882
(Louisa Unit #1)
TOTAL STEAM 960,100 903,300 3,524,208
GAS TURBINE:
Montgomery, MN 1 26,535 1974 22,200 22,200 253
Sherburn, MN 4 26,535 1974 21,300 21,300 332
(Fox Lake Plt.)
Mason City, IA 1 37,520 1991 70,400 70,000 3,012
(Lime Creek Plt.) 2 37,520 1991
TOTAL GAS TURBINE 113,900 113,500 3,597
INTERNAL COMBUSTION:
Dubuque, IA 1 2,000 1966 4,600 4,600 (83)
2 2,000 1966
Hills, MN 2 2,000 1960 2,000 2,000 (57)
Lansing, IA 1 1,000 1970 2,000 2,000 11
2 1,000 1971
New Albin, IA 1 685 1970 700 700 (50)
Rushford, MN 1 2,000 1961 2,000 2,000 (95)
TOTAL INTERNAL COMBUSTION 11,300 11,300 (274)
TOTAL COMPANY 1,085,300 1,028,100 3,527,531
* Interstate owns 21.528% of a 584,931 KW unit operated by MidAmerican
Energy Company.
** Interstate owns 4.0% of a 685,000 KW unit operated by MidAmerican
Energy Company.
(Gas Properties)
The company owns and operates natural gas distributing systems in
Albert Lea, Minnesota; Savanna, Illinois; Clinton, Mason City and
Clear Lake, Iowa and in a number of smaller Minnesota, Illinois and
Iowa communities. At Albert Lea, the company owns 14 tanks with a
liquid propane storage capacity of 357,000 gallons; at Clinton, there
are 12 tanks with 306,000 gallons capacity and at Mason City, 22
tanks with 561,000 gallons capacity.
The company also owns 95 gas regulating stations and approximately
972 miles of gas distribution mains.
(General Properties)
The company owns numerous properties in various parts of its
territory which are used for office, service and other purposes. The
most important of these are three General Office buildings in Dubuque
and the district office buildings at Clinton, Decorah, Dubuque, Mason
City and Oelwein, Iowa and Albert Lea, and Winnebago, Minnesota and
the distribution service buildings in each of those locations. The
company, as lessee, leases office space at various locations. The
company also leases a few small parcels of land for storage of poles
and miscellaneous temporary uses.
(Titles)
In the opinion of legal counsel for the company, the company has
satisfactory title to its properties for use in its utility
businesses subject only to permitted liens as defined in the Bond
Indenture and to minor defects and encumbrances customarily found in
cases of like size and character and which do not materially
interfere with the use of such properties.
Properties such as electric transmission and electric and gas
distribution lines are constructed principally on rights-of-way which
are maintained under franchise or held by easement only.
All properties of the company, other than "excepted property" as
defined in the Bond Indenture, are subject to the lien of the
company's Bond Indenture dated as of January 1, 1948, as
supplemented, securing the company's outstanding First Mortgage
Bonds.
ITEM 3. LEGAL PROCEEDINGS
Reference is made to "Electric Governmental Regulations", "Electric
Competitive Conditions" and "Environmental Regulations" under "Item
1. Business" for certain pending legal proceedings and proceedings
known to be contemplated by governmental authorities. Reference is
also made to Note 8 to Financial Statements of the Annual Report to
Stockholders, included herein as EX-13. Other than these items,
there are no material pending legal proceedings, or proceedings known
to be contemplated by governmental authorities, other than ordinary
routine litigation incidental to the business, to which the company
is a party or of which any of the company's property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no submission of matters to a vote of security holders
during the fourth quarter of the 1995 year.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
For information pertaining to common stock market data required by
Item 201 of Regulation S-K please refer to page 31 of Exhibit EX-13
(the Annual Report to Stockholders).
ITEM 6. SELECTED FINANCIAL DATA
For information pertaining to selected financial data required by
Item 301 of Regulation S-K please refer to page 30 of Exhibit EX-13
(the Annual Report to Stockholders).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For information pertaining to management's discussion and analysis
required by Item 303 of Regulation S-K please refer to pages 1
through 9 of Exhibit EX-13 (the Annual Report to Stockholders).
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data incorporated by reference
to Exhibit EX-13 (the Annual Report to Stockholders for 1995):
Statements of Income and Retained Earnings Page 10
Balance Sheets Pages 11 & 12
Statements of Cash Flows Page 13
Statements of Capitalization Page 14
Notes to Financial Statements Pages 15 - 27
Independent Auditors' Report Page 28
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Offices Held Past 5 Years
W. H. Stoppelmoor 62 5-1-90 - President, Chief Executive Officer
& Chairman of the Board
M. R. Chase 57 1-1-91 - Vice President-Production
5-7-91 - Vice President-Power Production
7-1-95 - Executive Vice President
*A. D. Cordes 64 5-1-90 - Vice President-District
Administration & Public Affairs
R. R. Ewers 51 5-1-90 - Vice President-Administrative
Services
7-1-95 - Vice President-Administration
D. E. Hamill 59 9-1-80 - Vice President-Budgets &
Regulatory Affairs
**G. L. Kopischke 64 9-1-80 - Vice President-Electric Operations
J. C. McGowan 58 2-1-89 - Secretary & Treasurer
R. P. Richards 59 1-1-91 - Vice President-Gas Operations
D. R. Sharp 55 7-1-95 - Vice President-Power Production
1-1-96 - Vice President-Engineering
W. C. Troy 57 5-1-86 - Controller
*Retired effective 7-1-95
**Retired effective 1-1-96
All officers are elected and serve as such until the next annual
meeting of directors. There are no arrangements or understandings
with respect to election of any person as an officer.
For information pertaining to directors, and other data required by
Items 401 and 405 of Regulation S-K, refer to pages 136 through 139
of the company's Official Proxy Statement to be filed with the
Securities and Exchange Commission within 120 days after the last day
of the fiscal year ended December 31, 1995.
ITEM 11. EXECUTIVE COMPENSATION
Refer to information on pages 141 through 145 of the company's
Official Proxy Statement filed with the Securities and Exchange
Commission to be filed with the Securities and Exchange Commission
within 120 days after the last day of the fiscal year ended December
31, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Refer to information on pages 139 and 140 of the company's Official
Proxy Statement filed with the Securities and Exchange Commission to
be filed with the Securities and Exchange Commission within 120 days
after the last day of the fiscal year ended December 31, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others:
In 1995 there were no transactions and there are presently proposed
no transactions with management, to which the company or its
subsidiary was or is to be a party, of the character as to which
answer is called for in response to Item 404(a) of Regulation S-K.
Indebtedness of Management:
No director or officer, or nominee for election as a director, or any
associate of any thereof, was indebted to the company or its
subsidiary during 1995, as to which answer is called for in response
to Item 404(b) of Regulation S-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report:
1. The financial statements, including supporting schedules,
are listed in the Index to Financial Statements, Schedules
and Exhibits filed as part of this Annual Report.
2. Exhibits which are filed herewith, including those incor-
porated by reference are listed in the Index to Financial
Statements, Schedules and Exhibits filed as part of this
Annual Report.
(b) Reports on Form 8-K:
The company filed a Form 8-K report with the Securities and
Exchange Commission dated November 17, 1995. This report
related to the signing of a merger agreement on November 10
1995, by Interstate Power Company, IES Industries Inc., and
WPL Holdings, Inc., providing for the combination of the three
companies into a holding company which will be known as
Interstate Energy Corporation.
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
The 1995, 1994 and 1993 financial statements, together with the
Independent Auditors' Report thereon of Deloitte & Touche LLP, dated
January 26, 1996, appearing on pages 10 through 28 of Exhibit EX-13
(the 1995 Annual Report to Stockholders), are incorporated in this
Form 10-K Annual Report. The following additional data, as attached
on EX-23.a, EX-23.b, and S-1 should be read in conjunction with the
financial statements in such Exhibit EX-13.
Schedules and other historical financial information not included with
this additional financial data have been omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
Page or Exhibit Reference
Exhibit EX-13
Form (Annual Report to
10-K Stockholders)
Report of Independent Auditors EX-23.a
Consent of Independent Auditors EX-23.b
Financial Statements:
Statements of Income and Retained Earnings
for the years ended December 31, 1995,
1994 and 1993 10
Balance Sheets, December 31, 1995 and 1994 11 & 12
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 13
Statements of Capitalization, December 31,
1995 and 1994 14
Notes to Financial Statements 15 - 27
Selected Financial Data 30
Common Stock Market Data 31
Management's Discussion and Analysis 1 - 9
Schedule II: Valuation and Qualifying Accounts
and Provisions S-1
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS (CONT'D.)
Exhibits filed as part of this report:
EX-3.(ii) By-Laws of Interstate Power Company as adopted April 20, 1925
and as amended January 26, 1996.
EX-10.a Coal Transloading Agreement between Interstate Power Company and
Orba-Johnson Transshipment Company dated December 20, 1995
EX-10.b Coal Transshipment Agreement by and between Interstate
Power Company and Orba-Johnson Transshipment Company dated
December 20, 1979 (previously physically filed in Form 10-K for
the Year Ended December 31, 1979 as EXHIBIT F)
EX-10.c Interstate Amendment Agreement between Orba-Johnson
Transshipment Company and Interstate Power Company dated
September 1, 1981 (previously physically filed in Form 10-K for
the Year Ended December 31, 1981 as EXHIBIT J)
EX-12 Statement re Computation of Ratios
EX-13 The Company's 1995 Annual Report to Stockholders.
EX-23.a Report of Independent Auditors
EX-23.b Consent of Independent Auditors
EX-27 Financial Data Schedule
EX-99.a Listing of current material contracts, indentures and other
exhibits and identified as having been previously filed with the
Commission.
EX-99.b Interstate Power Company Supplemental Retirement Plan as amended
and restated November 10, 1995.
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.
INTERSTATE POWER COMPANY
Date March 29, 1996 By /s/ W. H. STOPPELMOOR
(W. H. Stoppelmoor,
President and Chief
Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title
/s/ W. H. STOPPELMOOR President and Chief Executive
(W. H. Stoppelmoor) Officer (Principal Executive
Officer and Principal
Financial Officer)
/s/ W. C. TROY Controller (Principal
(W. C. Troy) Accounting Officer)
/s/ A. B. ARENDS Director
(A. B. Arends)
/s/ J. E. BYRNS Director
(J. E. Byrns)
/s/ M. R. CHASE Director
(M. R. Chase)
/s/ A. D. CORDES Director
(A. D. Cordes)
/s/ J. L. HANES Director
(J. L. Hanes)
/s/ G. L. KOPISCHKE Director
(G. L. Kopischke)
Date March 29, 1996
SCHEDULE II
INTERSTATE POWER COMPANY
VALUATION AND QUALIFYING ACCOUNTS AND PROVISIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Thousands of Dollars)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED CHARGED DEDUCTION BALANCE
BEGINNING TO TO OTHER FROM AT END
DESCRIPTION OF YEAR INCOME ACCOUNTS RESERVES OF YEAR
YEAR ENDED DEC. 31, 1995
Valuation account
deducted from caption
of which it applies -
accumulated provision
for doubtful accounts $200 $169 $144 (a) $313 (b) $200
Provision for medical
benefits, injuries
and damages $4,671 $5,729 $1,081 $6,799 (c) $4,682
YEAR ENDED DEC. 31, 1994
Valuation account
deducted from caption
of which it applies -
accumulated provision
for doubtful accounts $203 $243 $148 (a) $394 (b) $200
Provision for medical
benefits, injuries
and damages $4,105 $7,240 $2,757 $9,431 (c) $4,671
YEAR ENDED DEC. 31, 1993
Valuation account
deducted from caption
of which it applies -
accumulated provision
for doubtful accounts $206 $225 $134 (a) $362 (b) $203
Provision for medical
benefits, injuries
and damages $1,506 $4,302 $3,521 $5,224 (c) $4,105
(a) Recoveries on accounts previously written off.
(b) Accounts written off.
(c) Claims and damages paid and expenses in connection therewith.
S-1
INDEX OF EXHIBITS
EX-3.(ii) By-Laws of Interstate Power Company as adopted April 20, 1925
and as amended January 26, 1996.
EX-10.a Coal Transloading Agreement between Interstate Power Company
and Orba-Johnson Transshipment Company dated December 20, 1995
EX-10.b Coal Transshipment Agreement by and between Interstate
Power Company and Orba-Johnson Transshipment Company dated
December 20, 1979 (previously physically filed in Form 10-K
for the Year Ended December 31, 1979 as EXHIBIT F)
EX-10.c Interstate Amendment Agreement between Orba-Johnson
Transshipment Company and Interstate Power Company dated
September 1, 1981 (previously physically filed in Form 10-K
for the Year Ended December 31, 1981 as EXHIBIT J)
EX-12 Statement re Computation of Ratios
EX-13 The Company's 1995 Annual Report to Stockholders.
EX-23.a Report of Independent Auditors
EX-23.b Consent of Independent Auditors
EX-27 Financial Data Schedule
EX-99.a Listing of current material contracts, indentures and other
exhibits and identified as having been previously filed with
the Commission.
EX-99.b Interstate Power Company Supplemental Retirement Plan as
amended and restated November 10, 1995.
EX-3.(ii)
INTERSTATE POWER COMPANY
(A DELAWARE CORPORATION)
BY-LAWS
ADOPTED APRIL 20, 1925
AS AMENDED
OCTOBER 24, 1938
NOVEMBER 16, 1939
JUNE 28, 1943
APRIL 11, 1944
MAY 24, 1944
MAY 9, 1947
AUGUST 29, 1947
AUGUST 21, 1953
NOVEMBER 5, 1957
JANUARY 16, 1958
FEBRUARY 11, 1959
FEBRUARY 17, 1965
MAY 4, 1965
JANUARY 16, 1969
JULY 15, 1970
NOVEMBER 19, 1970
MAY 2, 1973
JUNE 13, 1979
NOVEMBER 19, 1980
JUNE 18, 1981
JANUARY 1, 1982
DECEMBER 13, 1982
JANUARY 31, 1984
JULY 24, 1986
JULY 23, 1987
OCTOBER 15, 1987
DECEMBER 10, 1987
JULY 20, 1989
MAY 7, 1991
January 26, 1996
BY-LAWS
OF
INTERSTATE POWER COMPANY
(a Delaware Corporation)
ARTICLE I.
OFFICES.
SECTION 1: The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware. (Amended
2/17/65; 1/16/69.)
SECTION 2: The Corporation may also have an office in the
City of Dubuque, Iowa, and also offices at such other places as the
Board of Directors may from time to time determine or the business
of the Corporation may require. (Amended 2/11/59; 2/17/65.)
ARTICLE II.
SEAL.
The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its organization, and the words
"CORPORATE SEAL, DELAWARE." Said seal may be used by causing it or
a facsimile thereof to be impressed or affixed or reproduced.
(Amended 8/29/47.)
ARTICLE III.
STOCKHOLDERS' MEETINGS.
SECTION 1: All meetings of the stockholders entitled to vote
thereat shall be held in Dubuque, Iowa, or at such other location
as set by the Board of Directors from time to time, at such place
as designated by the Board of Directors and stated in the notice of
meeting. (Amended 2/17/65; 1/16/69; 10/15/87.)
SECTION 2: The annual meeting of the stockholders entitled to
vote thereat shall be held in Dubuque, Iowa, or at such other
location as set by the Board of Directors from time to time, at
such place as designated by the Board of Directors and stated in
the notice of meeting on the first Tuesday of May of each year at
the hour of two o'clock P.M., local time in the place where the
meeting is to be held unless such day shall be a legal holiday, in
which event the meeting shall be held on the next succeeding
business day, or on such other day and/or time as set by the Board
of Directors from time to time, and stated in the notice of
meeting. At said meeting the stockholders shall elect by a
plurality vote, by ballot, a board of directors, the number and
term of which shall be set by SECTION 1 and SECTION 1(b) of ARTICLE
IV of these By-Laws. The order of business at a stockholders'
meeting shall be as follows:
1. Call meeting to order.
2. Proof of notice of meeting.
3. Reading of minutes of last previous meeting.
4. Reports of committees.
5. Election of directors when that is the purpose of the
meeting.
6. Miscellaneous business.
(Amended 11/16/39; 4/11/44; 5/9/47; 2/17/65; 1/16/69; 1/1/82;
12/13/82; 7/23/87; 10/15/87; 12/10/87; 7/20/89; 5/7/91; 1/26/96.)
SECTION 3: The holders of a majority of the stock issued and
outstanding and entitled to vote, present in person or represented
by proxy, shall be requisite and sufficient to constitute a quorum
at all meetings of the stockholders for the transaction of
business, except as otherwise provided by law, by the Certificate
of Incorporation, or these By-Laws. If, however, such quorum shall
not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or by
proxy shall have power to adjourn the meeting from time to time
without notice other than announcement at the meeting, until a
quorum shall be present or represented, when any business may be
transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at
the meeting. (Amended 1/16/69.)
SECTION 4: When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which
by express provision of the statutes or of the Certificate of
Incorporation a different vote is required, in which case such
express provision shall govern; and control the decision of such
question. (Added 2/17/65.)
SECTION 5: At each meeting of the stockholders, every
stockholder entitled to vote or to express consent or dissent to
corporate action in writing without a meeting may vote or act in
person or by proxy appointed by an instrument in writing subscribed
by such stockholder or by his duly authorized attorney and
delivered to the Secretary of the Corporation. But no such proxy
shall be voted or acted upon after three (3) years from its date,
unless the proxy provides for a longer period. Unless otherwise
provided in the Restated Certificate of Incorporation, as amended,
each stockholder entitled to vote shall have one vote upon each
matter submitted to a vote at a meeting of shareholders for each
share of stock registered in his name on the record date fixed by
the Board of Directors for said meeting or action by stockholders.
The principle of cumulative voting shall not apply. The vote for
directors, and, upon the demand of any stockholder entitled to
vote, the vote upon any question before the meeting shall be by
written ballot. All elections shall be had by plurality vote and
all other questions shall be decided by a majority vote, except as
otherwise provided by law, the Restated Certificate of
Incorporation, as amended, or these By-Laws. (Amended 2/17/65;
1/16/69; 5/7/91.)
SECTION 6: Unless otherwise required by law, written notice
of any stockholders' meeting shall be mailed, postage prepaid, to
each stockholder entitled to vote thereat at such address as
appears on the records of the Corporation, which notice shall state
the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is
called, and said notice shall be given not less than ten (10) nor
more than sixty (60) days before the date of the meeting. (Amended
1/16/69; 6/13/79.)
SECTION 7: Subject to the provisions of Article FOURTH of the
Certificate of Incorporation, and unless otherwise prescribed by
statute, special meetings of the stockholders for any purpose or
purposes may be called by the Board of Directors, or by the
Chairman of the Board of Directors, the President or a Vice-
President, and shall be called at the request in writing of
stockholders owning twenty-five percent (25%) of the shares of
stock of the Corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the
proposed meeting. (Amended 8/21/53; 11/5/57; 2/17/65; 1/16/69.)
SECTION 8: Business transacted at any special meeting shall
be confined to objects stated in the call and matters germane
thereto.
(Former Section 9 deleted 1/16/69)
ARTICLE IV.
DIRECTORS.
SECTION 1: The property, business and affairs of this
Corporation shall be managed by its Board of Directors. Such Board
of Directors shall consist of: seven (7) directors. They shall be
elected by the stockholders at the annual meeting of the
stockholders of the Corporation, except as provided in SECTION 1(b)
and SECTION 2 of this Article, and each director shall hold office
until his successor is duly elected and qualified. Directors need
not be stockholders. (Amended 4/11/44; 5/9/47; 2/17/65; 1/1/82;
12/13/82; 1/31/84; 7/24/86; 12/10/87; 5/7/91.)
SECTION 1(a): The Chairman of the Board of Directors shall
preside at all meetings of the stockholders and the Board of
Directors. In order to assist the Board of Directors in the
formulation of policies to be pursued by the officers of the
Corporation he shall provide oversight over major problems,
policies and activities of the Corporation and make reports and
recommendations as appropriate to ensure that policies of the Board
of Directors are effected. He shall be a member and Chairman of
the Executive Committee and shall ex-officio be a member of all
standing committees and, except as otherwise provided in these By-
Laws or ordered by the Board of Directors, shall appoint all
special or other committees of the Board of Directors, and, in
general, he shall perform such other duties as may, from time to
time, be assigned to him by the Board of Directors. (Added 1/1/82;
amended 7/24/86.)
SECTION 1(b): At each annual meeting of stockholders,
directors of the Corporation shall be elected to hold office until
the expiration of the term for which they are elected, and until
their successors have been duly elected and qualified; except that
if any such election shall not be so held, such election shall take
place at a stockholders' meeting called and held in accordance with
the Delaware General Corporation Law. The directors of the
Corporation shall be divided into three classes as nearly equal in
size as is practicable, hereby designated Class I, Class II, and
Class III. The term of office of the initial Class I directors
shall expire at the next succeeding annual meeting of stockholders,
the term of office of the initial Class II directors shall expire
at the second succeeding annual meeting of stockholders and the
term of office of the initial Class III directors shall expire at
the third succeeding annual meeting of the stockholders. For the
purposes hereof, the initial Class I, Class II and Class III
directors shall be those directors elected at the May 7, 1991
annual meeting and designated as members of such Class. At each
annual meeting after the May 7, 1991 annual meeting, directors to
replace those of a Class whose terms expire at such annual meeting
shall be elected to hold office until the third succeeding annual
meeting and until their respective successors shall have been duly
elected and shall qualify. If the number of directors is hereafter
changed, any newly created directorships or decrease in
directorships shall be so apportioned among the classes as to make
all classes as nearly equal in number as is practicable.
Notwithstanding the foregoing, the Board of Directors may, by
resolution adopted or to be adopted by them, require that directors
mandatorily retire prior to the expiration of the term for which
they are elected upon their attaining a particular age, as may be
set by resolution of the Board, or upon their relocating from the
Company's service area, subject to such short extensions within
their elected term as the remaining directors may judge to be in
the best interests of the Company.
The foregoing provisions relating to the classification of the
Board are subject to the provisions of Paragraph XII of Article
FOURTH of the Restated Certificate of Incorporation, as
amended.(Added 5/7/91.)
SECTION 1(c): Any director may be removed from office only
for cause in accordance with Article EIGHTH, subparagraph (1) of
the Restated Certificate of Incorporation, as amended. (Added
5791.)
SECTION 2: Subject to the provisions of Paragraph XII of
Article FOURTH of the Certificate of Incorporation, vacancies on
the Board of Directors and newly created directorships resulting
from any increase in the authorized number of directors may be
filled by a majority of the directors then in office, though less
than a quorum, or by a sole remaining director at any meeting of
the Board of Directors and the directors so chosen shall hold
office until the next election of the Class for which such
directors shall have been chosen and until their successors shall
have been duly elected and qualified, unless sooner displaced. If
there are no directors in office, then an election of directors may
be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the
directors then in office shall constitute less than a majority of
the whole board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least ten percent of the
total number of shares at the time outstanding having the right to
vote for such directors, summarily order an election to be held to
fill any such vacancies or newly created directorships, or to
replace the directors chosen by the directors then in office.
(Added 2/17/65; amended 1/16/69; 6/13/79; 5/7/91.)
SECTION 3: The directors may hold their meetings and have one
or more offices and keep the books and records of the Corporation
(except such as are required by law to be kept within the State of
Delaware), at the office of the Corporation in the City of Dubuque,
Iowa, or at such other places as they may from time to time
determine. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books
of account, and minute books, may be kept on, or be in the form of,
punch cards, magnetic tape, photographs, micro-photographs, or any
other information storage device; provided that the records so kept
can be converted into clearly legible form within a reasonable
time. (Amended 1/17/65; 1/16/69.)
SECTION 4: In addition to the powers and duties by these By-
Laws expressly conferred upon it, the Board of Directors may
exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws directed or required to be
exercised or done by the stockholders.
SECTION 5: Compensation for attendance at a regular or
special meeting of the Board of Directors, or of any committee
thereof, shall be payable in such amounts as the Board shall
determine by resolution from time to time, but only to directors or
persons who are not full-time employees or officers of the
Corporation. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving
compensation therefor. (Added 6/28/43; amended 5/24/44; 2/17/65;
6/13/79.)
ARTICLE V.
MEETINGS OF THE BOARD - COMMITTEES.
SECTION 1: A regular meeting of the Board of Directors shall
be held annually immediately following the annual meeting of the
stockholders, and other regular meetings of the Board shall be held
at such time and place as may be fixed by resolution of the Board.
No notice of regular meetings of the Board shall be required. Any
meeting of the Board may be held either within or without the State
of Delaware.
SECTION 2: At all meetings of the Board a majority of the
directors shall be necessary and sufficient to constitute a quorum
for the transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall
be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of
Incorporation or by these By-Laws. If a quorum shall not be
present at any meeting of the Board, the directors present thereat
may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
(Amended 2/17/65.)
SECTION 3: Special meetings of the Board may be called by the
Chairman, the President or any two directors on two days' notice by
mail or one day's notice by telephone or telegraph to each
director, which notice shall state the time, place and purpose of
the holding thereof. (Amended 8/21/53; 11/5/57; 2/17/65.)
SECTION 4: The Board of Directors may designate and appoint
a standing committee to be known as the "Executive Committee" to
consist of three members, including the Chairman, with the full
powers of the Board of Directors in the management of the business
and affairs of the Corporation including the declaration of a
dividend, the issuance of stock and the voting powers,
designations, preferences, and relative, participating, optional or
other rights thereof, if any, or the qualifications, limitations or
restrictions thereof, if any, (except as the Board of Directors
shall otherwise direct and except when the Board of Directors shall
be in session), but subject to the restrictions of Section 5 of
this Article and of any applicable statute, and with power to
authorize the seal of the Corporation to be affixed to all papers
which may require it. (Added 2/17/65; amended 11/19/70; 6/13/79;
1/1/82; 7/23/87.)
SECTION 5: The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees
in addition to the Executive Committee, each committee to consist
of one or more of the directors of the Corporation, which, to the
extent provided by the resolution, shall have and may exercise the
powers of the Board in the management of the business and affairs
of the Corporation and may authorize the seal of the Corporation to
be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to
amending the Certificate of Incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution
of the Corporation or a revocation of a dissolution, or amending
the By-Laws of the Corporation. In the absence or disqualification
of any member of such committee or committees, the member or
members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board to act at the
meeting in the place of any such absent or disqualified member.
Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board.
(Added 2/17/65; amended 11/19/70; 6/13/79.)
SECTION 6: Each committee shall keep regular minutes of its
meetings and report the same to the Board when required. (Added
2/17/65.)
SECTION 7: Unless otherwise restricted by statute, or by the
Certificate of Incorporation or by these By-Laws, any action
required or permitted to be taken at any meeting of the Board or of
any committee thereof may be taken without a meeting, if prior to
such action a written consent thereto is signed by all members of
the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the
Board or committee. (Added 2/17/65.)
ARTICLE VI.
OFFICERS
SECTION 1: The officers of the Corporation shall be a
President, an Executive Vice-President, one or more other Vice-
Presidents, a Secretary, a Treasurer, a Controller, an Assistant
Controller, and one or more Assistance Secretaries and Assistant
Treasurers, who shall be elected by the Board of Directors at its
first meeting after each annual meeting of the stockholders.
(Amended 10/24/38; 8/21/53; 11/5/57; 2/17/65; 6/13/79; 1/1/82.)
SECTION 2: The Board may appoint such other officers and
agents as it shall deem necessary, who shall have such authority
and perform such duties as from time to time shall be prescribed by
the Board or the President. (Amended 1/1/82.)
SECTION 3: The salaries of all officers of the Corporation
shall be fixed by the Board of Directors.
SECTION 4: The officers of the Corporation shall hold office
for one year and until their successors are elected and qualified.
Any officers elected or appointed by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the
whole Board of Directors. (Amended 2/17/65.)
ARTICLE VII.
DUTIES OF OFFICERS.
SECTION 1: President. The President shall be the chief
executive officer of the Corporation; in the absence or disability
of the Chairman, he shall preside at all meetings of the
stockholders; he shall ex-officio be a member of all standing
committees; he shall have general and active management of and
exercise general supervision over the business and property of the
Corporation and shall have such other power and duties as usually
appertain to the office of President and as may be assigned to him
by the Board of Directors. (Amended 8/21/53; 11/5/57; 2/17/65;
11/19/70; 6/13/79; 11/19/80; 1/1/82.)
SECTION 2: Vice-Presidents. In the absence or disability of
the President, the Executive Vice-President shall perform the
duties and exercise the powers of the President. If other Vice-
Presidents are elected, they shall have such powers and perform
such duties as the President or Board of Directors shall from time
to time assign to them. (Amended 10/24/38; 8/21/53; 11/5/57;
2/17/65; 11/19/70; 6/13/79; 1/1/82.)
SECTION 3: Secretary and Assistant Secretaries. The
Secretary shall attend all meetings of the stockholders and Board
of Directors, and shall record all votes and other proceedings in
a book to be kept for that purpose. He shall give, or cause to be
given, all required notices of meeting of the stockholders and
Board of Directors. He shall have the custody of the seal of the
Corporation and of its records and shall perform such other duties
as usually appertain to the office of Secretary and as may be
prescribed by the President or the Board of Directors. He shall be
sworn to the faithful discharge of his duty. The Assistant
Secretaries shall perform such duties as shall be delegated to them
by the Board of Directors, the President or the Secretary. (Amended
8/21/53; 11/5/57; 2/17/65; 11/19/70; 6/13/79; 1/1/82.)
SECTION 4: Treasurer and Assistant Treasurers. The Treasurer
shall have the custody of the corporate funds, and securities, and
shall keep full and accurate accounts of receipts and disbursements
in books of the Corporation to be kept for that purpose, and shall
deposit all moneys and other valuable effects in the name and to
the credit of the Corporation, in such depositaries as may be
designated by authority of the Board of Directors. He shall
disburse the funds of the Corporation as may be ordered by the
Board of Directors, or the President taking proper vouchers for
such disbursements, and shall render to the Board of Directors, at
the regular meetings of the Board, or whenever it may so require,
an account of all his transactions as Treasurer and of the
financial condition of the Corporation and shall have such other
powers and duties as may be assigned to him by the President or the
Board of Directors. The Assistant Treasurers shall perform such
duties as shall be delegated to them by the Board of Directors, the
President or the Treasurer. (Amended 8/21/53; 11/5/57; 2/17/65;
11/19/70; 6/13/79; 1/1/82.)
SECTION 5: Controller and Assistant Controller. The
Controller shall be the principal accounting officer and as such
shall have charge of the books and accounts of the Corporation
subject to the direction of the President. He shall keep or cause
to be kept full and complete books of account of all operations of
the Corporation and of its assets and liabilities (except those
kept by the Treasurer as herein provided).
He shall render to the Chairman, the President and the Board
of Directors, as and when requested, reports of the operations and
business of the Corporation and of its financial condition.
He shall have such other powers and perform such other duties
as the President and the Board of Directors may from time to time
assign to him. The Assistant Controller shall perform such duties
as shall be delegated to him or her by the board of Directors, the
President or the Controller. (Added 2/17/65; amended 11/19/70;
6/13/79; 1/1/82.)
SECTION 6: The Board of Directors may, by resolution, require
any officers of the Corporation to furnish bonds conditioned for
the faithful performance of their respective duties as such
officers, with a surety company satisfactory to such Board as
surety, the expense of which shall be paid by the Corporation.
(Amended 8/21/53; 11/5/57.)
ARTICLE VIII.
OFFICERS - VACANCIES.
If the office of the President, the Executive Vice-President,
Vice-President, Secretary, Treasurer, Controller, or other officer
or agent, one or more, becomes vacant by reason of death,
resignation, retirement, disqualification, removal from office or
otherwise, the directors then in office may choose a successor or
successors, who shall hold office for the unexpired term in respect
of which such vacancy occurred. (Amended 8/21/53; 11/5/57; 2/17/65;
1/1/82.)
ARTICLE IX.
DUTIES OF OFFICERS MAY BE DELEGATED.
In case of the absence of any officer of the Corporation, or
for any other reason that the Board may deem sufficient, the Board
may delegate the powers or duties of such officer to any other
officer, or to any director, for the time being.
ARTICLE IX-A.
INDEMNIFICATION OF DIRECTORS AND OTHERS BY THE CORPORATION.
Provided he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or
proceeding, he had no reasonable cause to believe his conduct was
unlawful, every person (and the heirs, executors and administrators
of such person) who is or was a director, officer, employee or
attorney of the Corporation, or of any partnership, joint venture,
trust or other enterprise or of any other corporation which he
served or is serving as such at the request of the Corporation,
and, as to such other corporation, in which the Corporation owns
shares of capital stock or is a creditor, shall be indemnified by
the Corporation against all legal and other fees and expenses
(including judgements, fines or penalties and amounts paid, other
than to the Corporation, or actually and reasonably incurred in
connection with settlements, whether with or without court
approval, made with a view to curtailment of costs of litigation
and with the approval of a majority of the Directors of the
Corporation then in office other than those who have incurred
expenses in relation to the matter for which indemnification is or
has been sought, whether or not such majority constitutes a quorum,
or if there are no such Directors then with the approval of
independent Counsel appointed by the Board) actually and reasonably
incurred by him in connection with or resulting from any
threatened, pending or completed claim, action, suit or proceeding
(whether brought by or in the right of the Corporation or such
other corporation or otherwise), civil, criminal, administrative or
investigative, or any appeal therein, in which he is made a party
by reason of his serving or having served at the request of the
Corporation as a director, officer, employee or attorney of the
Corporation, or such other corporation, partnership, joint venture,
trust or other enterprise, before or after the adoption of this By-
Law. Such person shall be indemnified against expenses (including
attorneys fees) except in relation to matters as to which he shall
be finally determined as a result of such claim, action, suit or
proceeding to be liable to the Corporation, whether such
determination is made by a court of competent jurisdiction or, in
the absence of that, either by such majority of Directors not
seeking indemnification, acting on the advice of Counsel, or by
independent Counsel appointed by the Board, unless and only to the
extent a court of competent jurisdiction, upon timely application
being made, despite a final determination of liability, determines
that in view of all of the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses
which such court deems proper. Expenses incurred with respect to
any claim, action, suit or proceeding of the character above
described shall be advanced by the Corporation prior to the final
disposition thereof upon receipt of an undertaking by or on behalf
of the recipient to repay such amount if it is ultimately
determined that he is not entitled to indemnification under this
Article IX-A. In the case of any claim, action, suit or proceeding
(whether civil, administrative or investigative), a judgment in or
settlement of a civil, administrative or investigative claim,
action, suit or proceeding, or in the case of a criminal action,
suit or proceeding, a conviction or judgment (whether based on a
plea of guilty or nolo contendere or its equivalent, or after
trial) shall not be deemed a determination or create a presumption
that such director, officer, employee or attorney, or former
director, officer, employee, or attorney, did not act in good faith
and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful. Notwithstanding any prior
judgement, settlement or conviction as aforesaid, indemnification
hereunder shall be mandatory upon the determination that such
director, officer, employee, or attorney, or former director,
officer, employee, or attorney, was acting in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and with respect to any criminal
action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. The indemnification and advancement of
expenses granted hereunder shall not be deemed exclusive of any
other rights to which such director, officer, employee, or attorney
may be entitled under any agreement, vote of stockholders, or at
law or in equity or otherwise, and the indemnification hereby
granted shall be in addition to and not in restriction or
limitation of any other privilege or power which the Corporation
may lawfully exercise with respect to the indemnification or
advancement of expenses to directors, officers, employees, or
attorneys, or persons formerly holding such positions. For the
purposes of this Article IX-A, references to the "the Corporation"
shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees, or
attorneys, so that any person who is or was a director, officer,
employee, or attorney of such constituent corporation, or is or was
serving at the request of such constituent corporation as a
director, officer, employee, or attorney of another corporation,
partnership, joint venture, trust or other enterprise, shall stand
in the same position under this Article IX-A with respect to the
resulting or surviving corporation as he would have with respect to
such constituent corporation if its separate existence had
continued. (Adopted by stockholders 5/4/65; amended 7/15/70;
5/2/73; 6/13/79; 10/15/87.)
ARTICLE IX-B.
REGARDING DUTIES OF DIRECTORS AND OTHERS.
SECTION 1: Unless otherwise provided by statute, or by the
Certificate of Incorporation, no liability shall attach to any
person (and the heirs, executors and administrators of such person)
who is or was a director, officer, employee or attorney of the
Corporation, or of any partnership, joint venture, trust or other
enterprise in which position he is or was acting as such at the
request of the Corporation, or of any other corporation which he
served or is serving as such at the request of the Corporation, and
in which the Corporation owns shares of capital stock or is a
creditor (hereinafter in this Article referred to as "such
person"), who shall perform or have performed his duties in good
faith in a manner he reasonably believes or believed to be in or
not opposed to the best interests of the Corporation with such care
that an ordinarily prudent person in a like position would use
under similar circumstances. (Added 6/18/81; amended 10/15/87.)
SECTION 2: Any "such person" in the performance of his duties
shall be entitled to rely in good faith on information, opinions,
reports or statements, including financial statements and other
financial data, in each case prepared or presented by: (a) one or
more officers or employees of the Corporation whom "such person"
reasonably believes to be reliable and competent in the matters
presented, (b) counsel, public accountants, appraisers or other
persons as to matters which "such person" reasonably believes to be
within the other person's professional or expert competence, or (c)
a committee of the Board upon which he does not serve, duly
designated in accordance with a provision of the Certificate of
Incorporation of the By-Laws, as to matters within its designated
authority, which committee "such person" reasonably believes to
merit confidence; but he shall not be considered to be acting in
good faith if he has knowledge concerning the matter in question
that would cause such reliance to be unwarranted. Any "such
person" who so performs his duties for the Corporation shall have
no liability by reason of such reliance. (Added 6/18/81.)
SECTION 3: No "such person" who makes or causes to be made
any disclosure in any application, report or document found to be
misleading with respect to any material fact shall have any
liability who shall sustain the burden of proof with respect to (a)
any matter not purporting to be made on the authority of an expert,
and not purporting to be a copy of or extract from a report or
valuation of an expert, and not purporting to be made on the
authority of a public official document or statement, that he had,
after reasonable investigation, reasonable ground to believe and
did believe, at the time such matter was published, that the
statements therein were true and that there was no omission to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and (b) as regards any
matter purporting to be made upon his authority as an expert or
purporting to be a copy of or extract from a report or valuation of
himself as an expert, (i) he had, after reasonable investigation,
reasonable ground to believe and did believe, at the time such
matter was published, that the statements therein were true and
that there was no omission to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or (ii) such matter did not fairly represent his
statement as an expert or was not a fair copy of or extract from
his report or valuation as an expert; and (c) as regards any matter
purporting to be made on the authority of an expert (other than
himself), he had no reasonable ground to believe and did not
believe, at the time such matter was published, that the statements
therein were untrue or that there was an omission to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, or that such matter did not
fairly represent the statement of the expert or was not a fair copy
of or extract from the report or valuation of the expert; and (d)
as regards any matter purporting to be a statement made by an
official person or purporting to be a copy of or extract from a
public official document, he had no reasonable ground to believe
and did not believe, at the time such matter was published, that
the statements therein were untrue, or that there was an omission
to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that such matter
did not fairly represent the statement made by the official person
or was not a fair copy of or extract from the public official
document. (Added 6/18/81.)
SECTION 4: In determining, for the purpose of Section 3 of
this Article, what constitutes reasonable investigation and
reasonable ground for belief, the standard of reasonableness shall
be that required of a prudent man in the management of his own
property. (Added 6/18/81.)
SECTION 5: Any suit for liability as above provided may be to
recover only such damages as shall represent the difference between
the amount paid for the security issued by the Corporation (not
exceeding the price at which the security was offered to the
public) and (i) the value thereof as of the time such suit was
brought, or (ii) the price at which such security shall have been
disposed of in the market before suit, or (iii) the price at which
such security shall have been disposed of after suit but before
judgment if such damages shall be less than the damages
representing the difference between the amount paid for the
security (not exceeding the price at which the security was offered
to the public) and the value thereof as of the time such suit was
brought: Provided, that if the defendant proves that any portion
or all of such damages represents other than the depreciation in
value of such security resulting from such material misleading
matter, with respect to which his liability is asserted, not being
true or omitting to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
such portion of or all such damages shall not be recoverable.
(Added 6/18/81.)
SECTION 6: All or any one or more of the persons held liable
as above provided in Section 5 of this Article shall be jointly and
severally liable, and every person who becomes so liable to make
any payment may recover contribution as in cases of contract from
any person who, if sued separately, would have been liable to make
the same payment, unless the person who has become liable was, and
the other was not, guilty of fraudulent misrepresentation. (Added
6/18/81.)
SECTION 7: In no case shall the amount recoverable exceed the
price at which the security was offered to the public. (Added
6/18/81.)
ARTICLE X.
SECTION 1: Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the
Corporation by the President or a Vice-President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of
shares owned by him in the Corporation. If such certificate is
countersigned (1) by a transfer agent other than the Corporation or
its employee, or, (2) by a registrar other than the Corporation or
its employee, any other signature on the certificate may be a
facsimile. In case any officer or officers who have signed, or
whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or
officers of the Corporation, whether because of death, resignation
or otherwise, before such certificate or certificates have been
delivered by the Corporation, such certificate or certificates may
nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer
or officers of the Corporation. (Amended 8/29/47; 2/17/65; 1/16/69;
1/1/82.)
SECTION 2: If the Corporation shall be authorized to issue
more than one class of stock, or more than one series of any class,
the designations, preferences and relative, participating, optional
or other special rights of each class of stock or series thereof
and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized
on the face or back of the certificate which the Corporation shall
issue to represent such class of stock; provided, however, that
except as otherwise provided by statute, in lieu of the foregoing
requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such
class or series of stock, a statement that the Corporation will
furnish without charge to each stockholder who so requests, the
designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences
and/or rights. (Added 2/17/65.)
ARTICLE XI.
TRANSFER OF STOCK, FIXING RECORD DATE, ETC.
SECTION 1: The shares of stock of the Corporation shall be
transferable as provided in the Uniform Commercial Code as enacted
in the State of Delaware. (Amended 1/16/69.)
SECTION 2: In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a
record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days
prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting. (Amended 1/16/58; 2/17/65; 1/16/69)
SECTION 3: The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in
fact thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such shares on the part
of any other person, whether or not it shall have express or other
notice thereof, save as expressly provided by the laws of Delaware.
SECTION 4: The Board of Directors may appoint one or more
transfer agents and registrars for its stock, and may require all
stock certificates to bear the signature either of a transfer agent
or of a registrar, or both.
ARTICLE XII.
LOST, STOLEN OR DESTROYED CERTIFICATES.
Any person claiming a certificate of stock to be lost, stolen
or destroyed shall make an affidavit or affirmation of the fact and
advertise the same in such manner as the Board of Directors may
require, and shall give the Corporation and/or the transfer agents
and/or the registrars, if they shall so require, a bond of
indemnity, in form and with one or more sureties satisfactory to
the Board, and/or the transfer agents and/or the registrars, in
such sum as they may direct, whereupon a new certificate may be
issued of the same tenor and for the same number of shares as the
one alleged to be lost, stolen or destroyed, but always subject to
the approval of the Board of Directors. (Amended 2/17/65; 1/16/69.)
ARTICLE XIII.
INSPECTION OF BOOKS.
The Board of Directors shall determine from time to time
whether, and, if allowed, when and under what conditions and
regulations the accounts and books of the Corporation (except such
as may by statute be specifically open to inspection) or any of
them, shall be open to the inspection of the stockholders, and the
stockholder's rights in this respect are and shall be restricted
and limited accordingly.
ARTICLE XIV.
CONTRACTS, ETC.
SECTION 1: All checks, notes, drafts, acceptances or other
demands or orders for the payment of money of the Corporation shall
be signed by such officer or officers or person or persons as the
Board of Directors may from time to time designate.
SECTION 2: All contracts, deeds, mortgages, leases or
instruments that require the corporate seal of the Corporation to
be affixed thereto shall be signed by the President or a Vice-
President, and by the Secretary, or an Assistant Secretary, or by
such other officer or officers, or person or persons, as the Board
of Directors may by resolution prescribe. (Amended 8/21/53;
11/5/57; 2/17/65; 1/1/82.)
ARTICLE XV
FISCAL YEAR.
The fiscal year shall be the calendar year.
ARTICLE XVI.
DIVIDENDS.
Subject to the provisions of law and of the Certificate of
Incorporation, the Board of Directors shall have absolute
discretion in the declaration of dividends and in fixing and
changing the date for the declaration and payment of dividends.
Before payment of any dividend or making any distribution of
profits, the Board of Directors may set aside, out of the surplus
or net profits of the Corporation, such sum or sums as the
directors may from time to time in their absolute discretion deem
proper as a reserve or reserves to meet contingencies or for
equalizing dividends, or for repairing or maintaining any property
of the Corporation, or for any other purpose which the directors
shall think conducive to the interests of the Corporation and the
directors may modify or abolish any such reserve. (Amended
2/17/65.)
ARTICLE XVII.
NOTICES.
SECTION 1: Notices to directors and stockholders shall be in
writing and delivered personally or mailed to the directors or
stockholders at their addresses appearing on the books of the
Corporation or, in default of other address, to such director,
officer or stockholder at the General Post Office in the City of
Dubuque, Iowa. Notice by mail shall be deemed to be given at the
time when the same shall be mailed. Notice to directors may also
be given by telegram. (Amended 2/17/65.)
SECTION 2: Whenever any notice is required to be given under
the provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent
thereto. (Amended 2/17/65.)
ARTICLE XVIII.
AMENDMENTS.
These By-Laws may be altered, amended or repealed, and new By-
Laws may be made at any annual, regular or special meeting of the
stockholders by the affirmative vote of a majority in interest of
the stock then issued and outstanding and entitled to vote, or at
any regular or special meeting of the Board of Directors by the
affirmative vote of a majority of such Board.
EX-10.a
COAL TRANSLOADING AGREEMENT
By and Between
INTERSTATE POWER COMPANY
and
ORBA-JOHNSON TRANSSHIPMENT COMPANY
December 20, 1995
Effective May 31, 1996
COAL TRANSLOADING AGREEMENT
Table of Contents
ARTICLE
I. DUTIES OF OJT: SCOPE
1.1 Compliance
1.2 Operating Capabilities
l.3 Limitations
1.4 Weights
II. DUTIES OF INTERSTATE
2.1 General Duties
2.2 Shipping Estimate
2.3 Minimum Tonnage
2.4 Responsibility for Interstate Coal
2.5 Consistent Delivery and Pickup
2.6 Equipment
III. COMPENSATION: PAYMENT TERMS
3.1 Schedule of Payments
3.2 Harbor and Fleeting Service
3.3 Excess Storage
3.4 Reconciliation and Verification
3.5 Third Party Contracts
3.6 Escalation
3.7 Barge and Train Weights
3.8 Train Storage
3.9 Winter Storage
3.10 Other Storage
3.11 Shipping Season
3.12 Remaining Coal
IV. INDEMNITIES
4.1 Indemnification by OJT
4.2 Indemnification by Interstate
4.3 Application of Available Insurance; Waiver of
Subrogation
V. TERM & TERMINATION
5.1 Term
5.2 Extended Term
5.3 Termination
VI. DEFAULTS
6.1 Events of Default
6.2 Remedies
VII. INSURANCE
7.1 OJT Coverages
VIII. FORCE MAJEURE
IX. RESOLUTION OF DISPUTES: ARBITRATION
X. REPRESENTATIONS AND WARRANTIES
10.1 Interstate Representation
10.2 OJT Representation
XI. MISCELLANEOUS
11.1 Delays
11.2 Notices
11.3 Entire Subject Matter
11.4 Governing Law
11.5 Binding Nature
11.6 Assignment
11.7 Representatives of Parties
11.8 Article and Section Headings
FORMULA
EXAMPLE 1
EXAMPLE 2
COAL TRANSSHIPMENT AGREEMENT
THIS COAL TRANSSHIPMENT AGREEMENT, made on this 20 day of
December, 1995, and effective as of May 31, 1996, (this "Agreement") by
and between
INTERSTATE POWER COMPANY, a Delaware corporation, having its
principal office at 1000 Main Street, Dubuque, Iowa 52004
("Interstate"); and
ORBA-JOHNSON TRANSSHIPMENT COMPANY, an Iowa joint venture having
addresses c/o ORBA CORPORATION, P. O. Box 369, Alvin, Texas 77512-0369,
and c/o JOHNSON BROS. CORPORATION, P. O. Box 1002, Litchfield,
Minnesota 55355 ("OJT").
W I T N E S S E T H:
WHEREAS, Interstate wishes to enter into an agreement with ORBA-
JOHNSON TRANSSHIPMENT CO. "OJT") for the transloading of Interstate
coal thru the OJT terminal on the right descending bank of the
Mississippi River at River Mile 371, north of Keokuk, Iowa, (the
"Facility"); and
WHEREAS, OJT is a joint venture formed pursuant to a Partnership
Agreement, dated as of October 3, 1979, between ORBA TRANSSHIPMENT
CORPORATION OF IOWA, an Iowa corporation, which is a wholly-owned
subsidiary of ORBA CORPORATION ("ORBA"), and JOHNSON BROS.
TRANSSHIPMENT CORPORATION OF IOWA, an Iowa corporation, which is a
wholly-owned subsidiary of JOHNSON BROS. CORPORATION ("JBC"); and
WHEREAS, Interstate wishes to designate and to engage OJT for
the receiving, storage and transshipment of coal, ("Interstate Coal"),
and OJT is willing to so engage itself and the Facility, all on the
terms hereinafter set forth; and
NOW THEREFORE, in consideration of the premises, and of the
mutual covenants and agreements of the parties set forth herein, the
parties hereto agree as follows:
ARTICLE I
DUTIES OF OJT: SCOPE
1.1 Compliance
OJT will comply in all material respects with applicable laws,
ordinances, rules and regulations of any court or other
governmental authority having jurisdiction.
1.2 Operating Capabilities
During the term of this Agreement, OJT will:
a. Provide sufficient personnel and equipment to properly man
and operate the Facility in accordance herewith;
b. Unload railcars, store the coal and load barges in
accordance with sound and customary practice in the
industry.
c. Operate the Facility on a 24 hour demand schedule; i.e.,
unload trains upon arrival and load barges on a schedule to
minimize barge delays.
d. Operate the Facility so that each unit train is unloaded
during the allowable 4.5 hours of free time, unless
exempted by force majeure conditions.
1.3 Limitations
Notwithstanding any other provisions hereof, OJT shall have no
liability or obligation to Interstate, and OJT shall not be
deemed in default hereunder, with respect to any of the
following matters:
a. Any operating or other problems, delays, costs or expenses
incurred by Interstate due to Force Majeure conditions, or
due to the tender of coal by Interstate or any other party
in excess of the Shipping Estimate or the reasonable
receiving, storage or loading capacities of the Facility;
b. Any loss, cost, expense or damage arising out of or
attributable to operational requests or directives of
Interstate or of any railroad or barge line serving the
Facility other than as contemplated hereby;
c. Any loss, cost, expense or damage to the Facility or any
property of Interstate except (i) to the extent otherwise
provided by the insurance described in Article VII hereof,
and (ii) those matters as to which OJT has indemnified
Interstate pursuant to Section 4.1 hereof;
d. Any incidental, special or consequential damages of any
nature whatsoever incurred by Interstate or any other
person or entity;
e. Demurrage, delay charges, or any consequential costs
associated with transportation delays.
f. Inventory losses or gains due to wind, erosion, water or
for any other reasons.
1.4 Weights
OJT plans on using the existing scale system for weights for
loaded barges. In the event of a breakdown, OJT will use its
best efforts to fix the scales as soon as possible and, in the
meantime, will use calculated weights based on each barge
characteristics.
ARTICLE II
DUTIES OF INTERSTATE
2.1 General Duties
During the Term of this Agreement, Interstate will cooperate
with OJT in the performance of its duties under this Agreement,
and in any event shall:
(a) Provide OJT with reasonably current reports of the
scheduled arrival of trains and barges used for Interstate
Coal;
(b) Make the payments in the manner required by Article III
hereof;
(c) Obtain all required approvals or authorizations, if any, of
any governmental authority for the execution, delivery and
performance of this Agreement.
(d) Cause certification of each train weight.
2.2 Shipping Estimate
On or before March 1, 1996, and November 1st of each year during
the Term, Interstate shall submit to OJT its written estimate of
the anticipated number of tons of Interstate Coal to be
delivered to and loaded out from the Facility, but not less than
500,000 tons, forecast on a monthly basis for the succeeding
year (herein referred to as the "Shipping Estimate"). Interstate
may revise the Shipping Estimate as frequently as required, and
shall promptly notify OJT of such revisions.
2.3 Minimum Tonnage
Interstate agrees that during the Term hereof, it shall pay for
the transshipment of no less than 500,000 tons annually of
Interstate Coal (the "Minimum Annual Interstate Tonnage")
through the Facility. Failure to transship all or any part of
such Minimum Interstate Tonnage shall not under any
circumstances relieve Interstate of the obligation to make the
payments required by Article III hereof, which shall be computed
and paid as if the Minimum Interstate Tonnage had been
transshipped through the Facility, except for the 1996 fiscal
year for which the Minimum Interstate Tonnage will be the coal
actually transshipped from May 31, 1996 through December 31,
1996, and the payment obligations of Interstate under Article
III shall be absolute and unconditional and shall not be subject
to any abatement, diminution, setoff, counterclaim, recoupment,
agreement, defense, suspension, deferment, interruption, or
other right which Interstate may have against OJT or any other
person or entity for any reason whatsoever, including, without
limitation, (a) any damage to, destruction, theft or loss of the
Facility or any portion thereof,(b) any event of Force Majeure,
(c) breach of any warranty of any seller or manufacturer of the
Facility, or any component thereof, (d) the physical failure of
the Facility, or any component thereof due to inadequacy,
condemnation, confiscation or public requisition of the Facility
or any portion thereof, (e) any claim as a result of business
dealings between OJT and Interstate, (f) any circumstance which
might give rise to a claim by Interstate of commercial
frustration, or (g) any insolvency, bankruptcy, reorganization
or similar proceedings by or against Interstate.
2.4 Responsibility for Interstate Coal
Interstate is responsible for and owner of the Interstate Coal
and shall be liable for any costs or charges due to its
ownership thereof, including all taxes.
2.5 Consistent Delivery and Pickup
Interstate shall be responsible for reasonably consistent
deliveries and pickups. "Reasonably consistent" shall mean 75%
to 125% of the annual Shipping Estimate as projected on a
monthly basis.
2.6 Equipment
a. Rail equipment shall be rotary dump cars of a weight and
size consistent with OJT's existing capabilities as of
January 1, 1995.
b. Barge equipment shall be standard jumbo hopper barges with
a nominal capacity of 1400 tons for rake barges and 1600
tons for box barges and shall be seaworthy when brought to
the OJT dock. OJT reserves the right to not load any barge
that it deems to be unseaworthy at no cost to OJT for
recycling the barge.
c. No train delivered to OJT shall have more than 117 cars and
(3 engines and 1 caboose) or (4 engines).
d. OJT shall be indemnified by Interstate from any damage to
transportation equipment or personnel in accordance with
Section 4.2 hereof.
ARTICLE III
COMPENSATION: PAYMENT TERMS
3.1 Schedule of Payments (See attached Formula)
a. The fee will be $2.25 per transshipped ton plus Harbor and
Fleeting Service (as described in Section 3.2), and
escalation (as described in Section 3.6).
b. Interstate will pay OJT per the attached Formula, subject
to the reconciliation as described in Section 3.4.
c. Transshipped tons are defined as: Tonnage received plus
tonnage shipped, the sum of which is divided by two (2).
3.2 Harbor and Fleeting Service
Interstate shall pay to OJT the cost for Harbor and Fleeting
Service at OJT as contracted for and provided and invoiced to
and by OJT, subject to the Harbor and Fleeting Service Contract
attached.
3.3 Excess Storage
Interstate shall pay to OJT $0.10/ton per month for any coal
storage in excess of 150,000 tons. The tonnage shall be
calculated on the highest tonnage in the month in which the
tonnage is in excess of 150,000 tons.
3.4 Reconciliation and Verification
At the end of each calendar year, OJT shall verify the actual
transshipped tonnage and reimburse Interstate for over-payment
or invoice Interstate for under-payment. The verification will
be complete and submitted by December 31 of the current calendar
year. Interstate, upon proper notification, may perform an audit
of the reconciliation.
3.5 Third Party Contracts
To the extent that Interstate enters into contracts with third
parties that affect OJT's operations and/or costs to transship
coal, the unit price for each transshipped ton will be adjusted
accordingly.
3.6 Escalation
a. Escalation in the cost per ton shall be calculated in
December of each year and will be based on the increase in
the Producer Price Index (all commodities) from December,
1994. The Producer Price Index (all commodities) in
December 1994 was 121.9.
b. The index will be calculated annually in December and
escalation will be based on the December, 1994 publication
of the Producer Price Index (all commodities).
c. If the December publication is not available prior to
invoicing, the adjustment will be made as soon as the
publication is available and will be invoiced on the next
billing.
3.7 Barge and Train Weights
Interstate, or its agents, shall furnish to OJT, in writing, the
weight of each train loaded and OJT shall furnish to Interstate,
in writing, the weight of each barge loaded.
3.8 Train Storage
If train storage is available and Interstate desires to use it,
Interstate shall pay OJT $1.00 per day per car for car storage
on OJT property.
3.9 Winter Storage
Interstate shall pay OJT $0.01 per ton per day for coal left on
the ground at OJT from the end of the shipping season to the
beginning of the next shipping season. However, Interstate will
not be obligated for payment of the winter storage charges
beyond March 15th of any year if on or after March 15th force
majeure conditions exist that prevent the loading of coal into
barges.
3.10 Other Services
Interstate shall pay OJT for other services requested by
Interstate and agreed to by OJT at a rate equal to OJT's cost
plus 10%.
3.11 Shipping Season
The shipping season is nominally defined as March 15th through
November 15th.
3.12 Remaining Coal
Coal on the ground at the beginning of this Agreement (May 31,
1996) will be invoiced at one-half (1/2) of the transloading
rates as referred to in Section 3.1 (see Example 2).
ARTICLE IV
INDEMNITIES
4.1 Indemnification by OJT
OJT hereby agrees to indemnify Interstate, its directors,
officers, employees and agents from and against any and all
claims, damages, demands, expenses, liabilities and losses of
every kind, character and nature (other than incidental, special
or consequential damages) asserted by or on behalf of any
person, firm, corporation or governmental authority arising out
of or resulting from the acts or omissions of OJT in breach or
violation of the provisions of this Agreement, or on account of
the willful misconduct or gross negligence of OJT. OJT also
covenants and agrees at no expense to Interstate to indemnify
and save Interstate and such of its related persons harmless of,
from, and against all costs and expenses (including reasonable
counsel fees) incurred in investigating or defending against any
such claims and demands, including those arising in any
proceeding or action. In the event that any such claims or
demands are asserted against Interstate or any of its related
persons, Interstate shall give notice thereof to OJT within
twenty (20) days thereafter, and OJT shall thereupon have the
right and option to assume (and at the request of Interstate
shall assume) the defense of any such claim or demands,
including the right to compromise and settle the matter on such
basis as it shall deem appropriate. Interstate and its counsel
may, at the option of Interstate, participate in the defense,
compromise and settlement of such claims or demands as to which
OJT has assumed the defense, provided that Interstate shall bear
the costs and expenses relating to such participation.
Notwithstanding the foregoing, OJT shall not be required to
indemnify and save Interstate and such of its related persons
harmless with respect to any such claims, losses and the like
otherwise described in this section 4.1 (i) arising out of any
willful or negligent acts or omissions of Interstate or any of
such of its related persons, (ii) to the extent that such claims
or losses exceed the amount of the insurance proceeds available
therefor from the insurance to be procured and maintained by
OJT, as set forth in Section 7.1 hereof, or (iii) as to which
Interstate is obligated to indemnify OJT pursuant to Section 4.2
hereof.
4.2 Indemnification by Interstate
Interstate, for and on behalf of itself and its insurers,
successors and assigns, hereby covenants and agrees, at no
expense to OJT or the other indemnified parties set forth below,
to indemnify and save OJT, its joint venture participants, ORBA
and JBC, and the respective officers, directors, employees and
agents of any of them, of, from and against, any and all claims,
damages, demands, expenses, liabilities and losses of every
kind, character and nature (other than incidental, special or
consequential damages) asserted by or on behalf of any person,
firm, corporation or governmental authority arising out of, or
resulting from any (i) acts or omissions by railroad, barge line
or other transportation personnel or equipment, (ii) acts or
omissions of Interstate in breach of its obligations hereunder,
or (iii) the willful misconduct or gross negligence of
Interstate. Interstate also covenants and agrees to indemnify
and save OJT, and any other indemnified party set forth above,
harmless of, from and against all costs and expenses (including
reasonable counsel fees) incurred in investigating or defending
against any such claims and demands, including those arising in
any proceeding or action. In the event that any such claims or
demands are made against OJT or any of such other persons, the
persons claiming indemnity shall give notice thereof to
Interstate within twenty (20) days thereafter, and Interstate
shall thereupon have the right and option to assume (and at the
request of the indemnified party shall assume) the defense of
any such claims, demands, action or proceeding based upon or
arising out of any such claim or demand. The obligations of
Interstate to OJT hereunder shall not extend to any claims,
damages, demands, expenses, liabilities or losses of any kind
for which OJT is obligated to indemnify Interstate or its
related persons pursuant to Section 4.1 hereof.
4.3 Application of Available Insurance: Waiver of Subrogation
The obligations of the parties to provide the indemnification
set forth above shall be reduced to the extent that (or, in the
case of OJT limited to) proceeds received under any insurance
policies to cover any loss, cost or expense of any indemnified
party. Each party waives for itself and any insurer engaged by
it, any rights of subrogation whatsoever.
ARTICLE V
TERM & TERMINATION
5.1 Term
The term of this agreement shall be from May 31, 1996 to
December 31, 1998, (the "Term").
5.2 Extended Term
The Term may be extended for five (5) years, at a price mutually
agreed upon, in writing, by Interstate and OJT. In any event,
Interstate will notify OJT not less than twelve (12) months
prior to the end of the Term of its intention to extend or not
extend, as the case may be.
5.3 Termination
This Agreement may not be terminated prior to December 31, 1998
without the prior written approval of both parties.
ARTICLE VI
DEFAULTS
6.1 Events of Default
Any one of the following occurrences shall be an "Event of
Default" hereunder:
(a) Either party shall:
(i) Consent to the appointment of a receiver, trustee
or a liquidator of itself or of a substantial part
of its property, or admit in writing its inability
to pay its debts generally as they come due, or
shall make a general assignment for the benefit of
creditors; or
(ii) File a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorgani-
zation in a proceeding under any bankruptcy laws
(as now or hereafter in effect) or an answer
admitting the material allegations of a petition
filed against it in any such proceeding or, by
voluntary petition, answer or consent, seek relief
under the provisions of any other now-existing or
future bankruptcy or other similar law (other than
a law which does not provide for or permit the
readjustment or alteration of its obligations
hereunder) providing for an agreement, composition,
extension or adjustment with its creditors; or
(iii) Suffer the entry of an order, judgment or decree in
any proceeding by any court of competent
jurisdiction appointing, without its consent, a
receiver, trustee or liquidator of such party or of
any substantial part of its property, which shall
remain in force undismissed, unstayed or unvacated
for a period of ninety (90) days after the date of
entry thereof; or
(iv) Permit a petition against it in a proceeding under
the Federal bankruptcy laws or other insolvency
laws to be filed and not withdrawn or dismissed
within sixty (60) days thereafter or, permit any
court of competent jurisdiction to assume
jurisdiction, custody or control of such party or
of any substantial part of its property, which
jurisdiction, custody or control shall remain in
force unrelinquished, unstayed or unterminated for
a period of sixty (60) days; or
(b) Interstate shall fail to make any payment required by
Section 3.1 (a) on the date such payment shall become due;
or
(c) Interstate shall fail to make any other payments required
by Article III with in ten (10) days after the same shall
become due; or
(d) Except as provided in Section 6.1 (e) and provided that
such failure is not due to Force Majeure cause, either
party is in default in the performance of any other
material covenant, agreement or undertaking to be performed
by it pursuant to this Agreement, and such default shall
continue for a period of thirty (30) days after notice
thereof from the other party (or, if such default is not
susceptible of being cured within thirty (30) days, such
longer period as shall be required to cure the same through
diligent effort, so long as the defaulting party is in good
faith exercising diligent efforts to cure the same); or
(e) OJT shall fail promptly to transship any Interstate Coal
tendered pursuant and subject to the terms and provisions
of this Agreement for transshipment, or shall fail to load
out any Interstate Coal requested by Interstate from the
Facility, provided that any such failure is not due to
Force Majeure cause, or that any such failure is not cured
by OJT within forty-five (45) days of notice of such
failure by Interstate to OJT.
6.2 Remedies
(a) Upon the occurrence of an Event of Default on the part of
Interstate, and so long as the same shall be continuing,
OJT shall, at its option, be excused from performance of
any of its obligations hereunder, and may, at its option,
declare this Agreement to be in default, and at any time
after such declaration, so long as Interstate shall not
have remedied all such outstanding Events of Default, OJT
may do any one or more of the following:
(i) terminate this Agreement;
(ii) exercise any other legal or equitable right or
remedy which may be available to it or proceed by
appropriate arbitration or court action to enforce
the terms hereof or to recover damages for the
breach hereof.
(b) Upon the occurrence of an Event of Default on the part of
OJT, and so long as the same shall be continuing,
Interstate may, at its option, declare this Agreement to be
in default, and at any time thereafter, so long as OJT
shall not have remedied all such outstanding Events of
Default, Interstate may do any one or more of the
following:
(i) with respect to defaults under Section 6.1 (a),
terminate this Agreement.
(ii) with respect to all defaults, including defaults
under Section 6.1 (e), exercise any legal right or
remedy which may be available to it (other than
termination of this Agreement or failure or refusal
to make the payments required hereunder or
otherwise to carry out its obligations hereunder)
or proceed by appropriate arbitration or court
action to enforce the terms hereof, or to recover
damages for the breach hereof;
(iii) with respect to any defaults under Section 6.1 (e)
(but only after all applicable cure and grace
periods have expired), upon written notice to OJT
given after such cure and grace periods have
expired, terminate this Agreement effective as of a
date no earlier than three (3) months from the date
of such notice (which date of termination may be
extended by Interstate from time to time by written
notice to OJT).
(c) Except as otherwise expressly provided above, no remedy
referred to in this Article is intended to be exclusive,
but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available at law or
in equity, including without limitation the right to
enforce the terms hereof or to recover damages for breach
of any terms hereof; and the exercise or beginning of
exercise of any one or more of such remedies shall not
preclude the simultaneous or later exercise of any or all
such other remedies. No express or implied waiver of any
Event of Default shall in any way be, or be construed to
be, a waiver of any future or subsequent Event of Default.
(d) Notwithstanding any other provision of this Agreement,
neither party shall be liable for any incidental, special
or consequential damages arising out of or relating to this
Agreement for any reason whatsoever.
ARTICLE VII
INSURANCE
7.1 OJT Coverages
OJT shall furnish to Interstate certificates of insurance
evidencing the following coverages:
Worker's Compensation & Statutory
Employers Liability $ 100,000
General Liability $ 500,000 BI
$ 500,000 PD
Umbrella Liability $1,000,000
ARTICLE VIII
FORCE MAJEURE
As used herein, the term "Force Majeure" shall include an Act of
God, strike, lock-out or other labor dispute, act of the public
enemy, war declared or undeclared, riot, insurrection, civil
commotion, lightning, fire, storm, flood, earthquake, insured or
uninsured casualty, condemnation of all or any part of the
Facility, embargo, inability to obtain or delay in obtaining
governmental approvals, permits, licenses or allocations, fuel
or power shortages and rationing, lack of available coal to
ship, legal impediments to the transportation or storage of coal
or the use or operation of the Facility, any inability or
failure to the Facility to transship coal within its designed
capacity because of faulty design, construction, manufacture,
erection or materials, or otherwise, lack of available trains,
hopper cars, river barges or tugs, equipment failures of any
kind, and other like or similar occurrences, whether of the kind
specifically enumerated above or otherwise, which like or
similar occurrences are not reasonably within the control of the
party claiming Force Majeure.
ARTICLE IX
RESOLUTION OF DISPUTES: ARBITRATION
(a) The parties hereto shall attempt in good faith to negotiate
between themselves a settlement or resolution of any
dispute which may arise under this Agreement. If no such
settlement or resolution is reached within sixty (60) days
after the existence of a dispute, such dispute shall be
submitted to arbitration in the following manner: Either
party hereto may request arbitration by delivery of written
notice to the other party, and within fifteen (15) days
after delivery of such notice each party shall appoint one
arbitrator, and the two arbitrators so appointed shall
appoint a third arbitrator. If either party shall fail to
appoint an arbitrator, or if their respective arbitrators
shall be unable to agree upon a third arbitrator, the
arbitrator or arbitrators not so appointed shall be
appointed by the American Arbitration Association
(b) All arbitrations hereunder shall be held in Chicago,
Illinois, under the rules of the American Arbitration
Association in effect at the time, although such
proceedings need not be conducted under the auspices of the
Association. The parties agree that there shall be no
suspension of work nor of payment when any such arbitrable
dispute arises, or while it is subject to arbitration.
(c) The award of any two of the arbitrators shall be final and
binding upon the parties, and a decree or judgment on the
award may be entered in any court having jurisdiction
thereof.
(d) Notwithstanding the foregoing, all matters involving
disputes as to financial or accounting matters shall be
submitted to a panel of three accountants who are members
of accounting firms of recognized national standing, and
who shall be selected as provided above.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1 Interstate Representation
Interstate hereby represents and warrants to OJT, which
representations shall survive the execution and delivery of this
Agreement, as follows:
(a) Interstate has full power and authority to enter into this
Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement, and the
performance thereof, has been authorized by all corporate
action required on the part of Interstate.
(b) The execution, delivery and performance of this Agreement
on the part of Interstate has received whatever consents,
approvals and other authorizations as may be required from
any governmental authority pursuant to existing law, and
Interstate has received opinions of counsel to such effect.
(c) The execution, delivery and performance of this Agreement
on the part of Interstate will not conflict with any
provision of any indenture, agreement or other instrument
to which Interstate is a party or by which it or its
properties are bound.
10.2 OJT Representations
OJT hereby represents and warrants to Interstate, which
representations and warranties shall survive the execution and
delivery of this Agreement, as follows:
(a) OJT has full power and authority to enter into this
agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement, and the
performance thereof, has been authorized by all corporate
and other action required on the part of OJT.
ARTICLE XI
MISCELLANEOUS
11.1 Delays
Neither party hereto shall be liable for any delay or default
with respect to performance of its obligations hereunder
occasioned by any Force Majeure condition or occurrence, and the
time for performance in any such instance shall be extended for
a period equal to the delay caused by such condition or
occurrence, provided that except as provided in Section 6.2
(b)(iii) hereof, neither the occurrence of any Force Majeure
condition nor any other event of any sort shall relieve
Interstate of its obligations to pay when due the charges
payable pursuant to Article III. Promptly after a party becomes
aware of any Force Majeure condition, such party shall give
written notice thereof, specifying the nature and probable
duration of such condition and the resultant delay.
11.2 Notices
All notices and instruction permitted to be given or required
hereunder shall be deemed sufficiently given if delivered in
person or mailed by Registered or Certified Mail, postage
prepaid; or sent via facsimile, receipt acknowledged, as
follows:
(a) If to OJT:
TO: Orba-Johnson Transshipment Company
P. O. Box 788
Keokuk, IA 52632
Attention: General Manager
Facsimile: (319)524-6843
(b) If to Interstate:
TO: Interstate Power Company
P. O. Box 769
Dubuque, IA 52004-0769
Attention: President
Facsimile: (319)557-2265
Either party may change the address for sending of notices by
giving notice in compliance herewith.
11.3 Entire Subject Matter
This Agreement, together with the appendices, schedules and
examples referred to herein, contains the entire agreement of
the parties hereto with respect to the subject matter hereof and
may not be altered or amended except by an instrument in writing
executed by all of the parties hereto. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original and which, together, shall constitute one and
the same instrument.
11.4 Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of Iowa applicable to agreements made
and to be performed in such state.
11.5 Binding Nature
This Agreement shall be binding upon and subject to the
provisions of Section 11.6, and shall inure to the benefit of
Interstate and OJT and their respective successors, assigns,
receivers and other representatives.
11.6 Assignment
(a) Neither party shall have the right to assign any of its
rights, duties or obligations under this Agreement without
the prior written consent of the other party, which consent
shall not be unreasonably withheld. Either party may,
however, upon thirty (30) days' prior written notice,
assign this Agreement to any other firm or corporation
controlling, controlled by or under common control with it,
but such assignment shall not relieve the assignor from
liability hereunder. In no event shall this Section
prohibit OJT's ability to sell or transfer all or a part of
its interest in the Facility provided the purchaser or
transferee agrees to assume OJT's obligations under this
Agreement.
11.7 Representatives of Parties
(a) Interstate hereby designates Ed Jertson as project manager
with respect to the Facility. OJT shall be entitled to deal
with such project manager as the duly authorized
representative of Interstate with respect to all actions to
be taken by Interstate. Interstate reserves the right to
change the designation of the project manager from time to
time upon advance written notice to OJT.
(b) OJT hereby designates Breen Turley as project manager with
respect to the Facility. Interstate shall be entitled to
deal with such project manager as the duly authorized
representative of OJT with respect to all actions to be
taken by OJT. OJT reserves the right to change the
designation of project manager from time to time upon
advance written notice to Interstate.
11.8 Article and Section Headings
The use of Article and Section headings herein is merely for
convenience of reference and shall not be construed to limit,
broaden or affect the meaning of the provisions contained in
each paragraph. The illegality or invalidity of any provisions
of this Agreement shall not impair, affect or invalidate the
other provisions of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by one of their duly authorized officers, effective as of the
date first above written.
Executed in the presence of: INTERSTATE POWER COMPANY
/s/ J. C. McGowan By /s/ Dale R. Sharp
Date: 12/18/95 V.P. Power Production
ORBA-JOHNSON TRANSSHIPMENT COMPANY
By ORBA Transshipment Corporation
of Iowa, a Partner
/s/ W. Breen Turley By /s/ Jeffry D. Love
Date: 12/20/95 V.P.
By Johnson Bros. Transshipment
Corporation of Iowa, Partner
/s/ W. Breen Turley By /s/ Walter D. Johnson
Date: 12/20/95 Pres.
FORMULA
Invoicing will be monthly beginning on January 1 and ending on
September 1.
The invoice amount will be the resultant of the Annual Shipping
Estimate Tonnage divided by 9 (months) times the effective rates per
ton as set out in Article III and shown in Example 1.
Adjustments for variations between actual and projected tonnage will be
resolved by December 31st of the current fiscal year.
OJT may request in writing an extension of the adjustment time not
later than December 1. Interstate may not unreasonably delay or
withhold its approval.
EXAMPLE 1
ANNUAL SHIPPING ESTIMATE x 1.0125 550,000 Tons
TIMES X
1/2 MOISTURE FACTOR 1.0125
TIMES X
BASE RATE $2.25/Ton
TIMES X
ESCALATION
PRODUCER PRICE INDEX (all commodities) 125.5
(December, 1995)
DIVIDED BY /
PRODUCER PRICE INDEX (all commodities) 121.9
(December, 1994)
EQUALS =
SUBTOTAL
$1,289,971.93
PLUS +
HARBOR SERVICE RATE $0.259/Ton
TIMES X
ANNUAL SHIPPING ESTIMATE 550,000
TIMES X
1/2 MOISTURE FACTOR 1.0125
EQUALS =
SUBTOTAL $
144,230.63
TOTAL
$1,434,202.56
DIVIDED BY /
9 MONTHS 9
EQUALS =
ACTUAL MONTHLY INVOICE $ 159,355.84
1. 55O,OOO is the projected tonnage for 1996.
2. Harbor Service ($0.259) is the average cost as bid by the Harbor
Service.
3. The Producer Price Index (all commodities) was 121.9 in
December, 1994, and projected Producer Price Index (all
commodities) for December, 1995, is an estimate.
EXAMPLE 2
COAL AT OJT ON 5-31-96 50,000 Tons
TIMES X
1/2 MOISTURE FACTOR 1.0125
TIMES X
BASE RATE $2.25/Ton
TIMES X
PRODUCER PRICE INDEX (all commodities) 125.5
(December, 1995)
DIVIDED BY /
PRODUCER PRICE INDEX (all commodities) 121.9
(December, 1994)
EQUALS =
SUBTOTAL $
117,270.18
PLUS +
HARBOR SERVICE RATE $0.259/Ton
TIMES X
ANNUAL SHIPPING ESTIMATE 50,000
TIMES X
1/2 MOISTURE FACTOR 1.0125
EQUALS =
HARBOR SERVICE CHARGES $ 13,111.88
SUBTOTAL $
130,382.06
DIVIDED BY /
TWO 2
ACTUAL CHARGES FOR REMAINING COAL $ 65,191.03
1. 5O,OOO is an estimate.
2. Harbor Service is the average cost as bid.
3. The Producer Price Index (all commodities) of 124.0 is an
estimate.
EX-10.b
AMENDED AND RESTATED
COAL TRANSSHIPMENT AGREEMENT
By and Between
INTERSTATE POWER COMPANY
and
ORBA-JOHNSON TRANSSHIPMENT COMPANY
December 20, 1979
As of October 3, 1979
AMENDED AND RESTATED
COAL TRANSSHIPMENT AGREEMENT
Table of Contents
ARTICLE
I. Duties of OJT; Scope
1.1 Acquisition of Facility
1.2 General Duties
1.3 Start-up of Operations
1.4 Annual Operating Budget; Estimated Operating Charge Per
Ton
1.5 Limitation on OJT Obligations
II. Duties and Responsibilities of Interstate
2.1 General Duties
2.2 Shipping Estimate
2.3 Minimum Tonnage
III. Compensation; Payment Terms
3.1 Amount of Compensation for OJT Services
3.2 Definition of Financial Terms
3.3 Payments During 1979
3.4 Payment during 1980 and Thereafter
3.5 Payment of Usage Fee
3.6 Reconciliation and Verification
IV. Third Party Coal
4.1 Authorization
4.2 Fees for Third Party Coal
4.3 Expenses of Third Party Coal
4.4 Priority of Interstate Coal
4.5 Procedures for Third Party Coal
4.6 Third Party Coal Revenues After Expiration of Term
4.7 Competitive Ventures
V. Special Arrangements
5.1 Prohibition on Other Activities
5.2 Contracts with Venture Partners and Affiliates
5.3 Obligations of Orba and JBC
5.4 Responsibility for Interstate Coal
5.5 Disposition of Excess Property
VI. Indemnities
6.1 Indemnification by OJT
6.2 Indemnification by Interstate
6.3 Application of Available Insurance; Waiver of Subrogation
VII. Term and Termination
7.1 Initial Term; Extended Terms
7.2 Termination for Delay in Start-up, Lack of Facility
Financing or Litigation
VIII. Defaults
8.1 Events of Default
8.2 Remedies
IX. Insurance; Casualty; Condemnation
9.1 OJT Coverages
9.2 Casualty
9.3 Condemnation
X. Force Majeure
XI. Resolution of Disputes; Arbitration
XII. Representations and Warranties
12.1 Interstate Representations
12.2 OJT Representations
XIII. Miscellaneous
13.1 Delays
13.2 Notices
13.3 Entire Subject Matter
13.4 Governing Law
13.5 Binding Nature
13.6 Assignment
13.7 Representatives of Parties
13.8 Article and Section Headings
AMENDED AND RESTATED
COAL TRANSSHIPMENT AGREEMENT
THIS AGREEMENT, made on the 3rd day of December, 1979, and effective
as of October 3, 1979, by and between
INTERSTATE POWER COMPANY, a Delaware corporation having its
principal office at 1000 Main Street, Dubuque, Iowa 52001 ("Interstate");
and
ORBA-JOHNSON TRANSSHIPMENT COMPANY, an Iowa joint venture having
addresses c/o ORBA CORPORATION, One Gothic Plaza, Fairfield, New Jersey
07006, and c/o JOHNSON BROS. CORPORATION, P.O. Box 1002, Litchfield,
Minnesota 55355 ("OJT").
W I T N E S S E T H:
WHEREAS, Interstate has entered into an agreement (the "Facility
Development Agreement") with ORBA-JOHNSON SYSTEMS, INC. ("OJS") for the
construction and development of a rail-to-barge coal transloading and
storage facility located on the right descending bank of the Mississippi
River at River Mile 371, north of Keokuk, Iowa (hereinafter referred to
as the "Facility") on the real property described in Schedule A annexed
hereto; and
WHEREAS, OJT is a joint venture formed pursuant to a Partnership
Agreement, dated as of October 3, 1979, between ORBA TRANSSHIPMENT
CORPORATION OF IOWA, an Iowa corporation ("O-Sub"), which is a wholly-
owned subsidiary of ORBA CORPORATION ("ORBA"), and JOHNSON BROS.
TRANSSHIPMENT CORPORATION OF IOWA, an Iowa corporation ("J-Sub"), which
is a wholly-owned subsidiary of JOHNSON BROS. CORPORATION ("JBC"); and
WHEREAS, the Facility Development Agreement provides for the
purchase by Interstate or its designee of the Facility upon the
completion thereof; and
WHEREAS, the Facility is now complete and has been accepted by
Interstate, and Interstate wishes to designate OJT under the Facility
Development Agreement as the purchaser of the Facility, and to engage OJT
and the Facility for the receiving, storage and transshipment of coal,
and OJT is willing to so engage itself and the Facility, all on the terms
hereinafter set forth; and
WHEREAS, Interstate and OJT have previously entered into a Coal
Transshipment Agreement, dated as of October 3, 1979 (the "Original
Transshipment Agreement") and now desire to amend and restate the terms
of the Original Transshipment Agreement as hereinafter set forth, all
effective as of October 3, 1979.
NOW THEREFORE, in consideration of the premises, and of the mutual
covenants and agreements of the parties set forth herein, the parties
hereto agree as follows:
ARTICLE I
DUTIES OF OJT; SCOPE
1.1 Acquisition of Facility.
Interstate hereby designates OJT as its designee to
acquire the Facility from OJS pursuant to the Facility Development
Agreement and OJT agrees to use its best efforts to acquire the Facility
and to make the Facility available pursuant hereto. In addition, OJT
shall use its best efforts to obtain long-term financing for such
acquisition.
1.2 General Duties.
During the term of this Agreement and following
acquisition of the Facility, OJT will operate, manage and maintain the
Facility and all Mobile Equipment (hereinafter defined) Inventory Items
(hereinafter defined) and other supplies and equipment acquired by it by
purchase or lease for use in performing its obligations hereunder (which
items, together with the Mobile Equipment and Inventory Items, are
hereinafter collectively referred to as the "Ancillary Hardware") in a
good and workmanlike manner in accordance with sound and customary
practices in the industry. OJT shall dedicate all reasonable efforts to
the proper and efficient management of the Facility and the transshipment
operations in a manner consistent with the reasonable requirements of
Interstate, and subject to the conditions and limitations contained in
this Agreement, including limitations relating to the reasonable
receiving, storage and loading capacities of the Facility and Ancillary
Hardware, OJT shall receive, store and transship through the Facility all
of the coal which Interstate may tender to it for transshipment. The
parties acknowledge and agree that the factors listed on Schedule 1.2
hereof relating to the construction and design of the Facility are the
limitations which determine the reasonable receiving, storage and loading
capacities of the Facility and Ancillary Hardware.
As used herein, "Interstate Coal" shall mean all coal
owned by Interstate tendered for transshipment through the Facility and
intended for use at any generating plant owned by Interstate.
By way of amplification and not by way of limitation of
the foregoing, OJT shall:
(a) Operate, service and maintain the Facility and
Ancillary Hardware and the components and equipment thereof in a manner
comparable to that which is employed by other concerns similarly
situated, having due regard, however, for the operational requirements of
the Facility and the Ancillary Hardware and the requirements of
Interstate as outlined herein and in the Shipping Estimate;
(b) Form and maintain an organization of qualified
personnel and/or subcontractors capable of meeting the reasonable
requirements of Interstate for the storage and transshipment of coal as
set forth on the Shipping Estimate, as in effect from time to time;
(c) Procure (subject to the prior approval of Interstate
as provided in Sections 1.3 and 1.4 hereof) and maintain an inventory of
spare parts, supplies, equipment and tools (hereinafter referred to as
"Inventory Items") to support the operation of the Facility;
(d) Maintain accurate accounting and cost records in
reasonable detail and prepare and submit the Annual Operating Budget
hereinafter referred to, together with periodic updates and quarterly
reports showing variance of actual cost from the Annual Operating Budget;
(e) Keep the Facility and the Ancillary Hardware and the
components thereof in good operating order and perform in a timely manner
any repairs and service to the Facility and Ancillary Hardware and their
components as shall be reasonably required to keep the Facility and
Ancillary Hardware in usable condition for the intended purposes;
(f) Comply in all material respects with all applicable
laws, ordinances, rules and orders of any court or other governmental
authority with respect to the maintenance and operations of the Facility
and Ancillary Hardware and with any reasonable operational regulations
and procedures as will not unduly interfere with the operation of the
Facility and as shall be mutually agreed upon in writing by Interstate
and OJT;
(g) Procure and maintain in effect the insurance required
to be provided by OJT pursuant to Section 9.1; and
(h) Take such action as the designee of Interstate, as
shall be reasonable to enforce the warranties with respect to design,
construction and installation of the Facility available pursuant to the
Facility Development Agreement and the subcontracts thereunder.
1.3 Start-up of Operations.
The parties acknowledge that in order to be fully
operational as a coal storage and transshipment facility, it will be
necessary for OJT to obtain an adequate supply of Inventory Items (as
defined in Section 1.2(c)) and certain bulldozing and other mobile
equipment (the "Mobile Equipment"). OJT shall promptly provide
Interstate with its estimate of the Inventory Items and Mobile Equipment
(and estimated costs thereof) initially required for operation of the
Facility, which shall be subject to the approval of Interstate. After
such approval, OJT shall promptly procure such Inventory Items and Mobile
Equipment, either by purchase or under lease, on such basis as OJT and
Interstate may agree.
Additions or replacements of the Inventory Items and Mobile
Equipment shall be made by OJT as and when required for the proper and
prudent operation of the Facility, provided that the cost of any such
items acquired during any Fiscal Year shall either have been included in
the Annual Operating Budget for such Fiscal Year or shall otherwise have
been approved by Interstate.
1.4 Annual Operating Budget; Estimated Operating Charge Per Ton.
(a) On or before December 1, 1979 and December 1st of
each succeeding year during the Term, OJT shall submit to Interstate its
itemized written estimate of the Reimbursable Costs, as hereinafter
defined, for providing the services required hereunder for the succeeding
Fiscal Year (herein referred to as the "Annual Operating Budget"). The
Annual Operating Budget shall be limited to said Reimbursable Costs and
shall not include the Base Charge per Ton, as hereinafter defined, which
shall be payable to Interstate under all circumstances until this
Agreement is terminated as provided in Articles VII or VIII hereof. In
addition, commencing with 1980, each Annual Operating Budget shall also
contain a computation of the "Estimated Operating Charge Per Ton", which
shall be the per ton charge derived by dividing the Reimbursable Costs
shown on the Annual Operating Budget, by the greater of the Minimum
Interstate Tonnage or the number of tons of Interstate Coal shown on the
Shipping Estimate. Interstate shall have the right to dispute such
Annual Operating Budget, by written notice to OJT within thirty (30) days
after the receipt thereof, specifying its objection. If any such written
objections are submitted, and the parties are unable to resolve such
objections within thirty (30) days after submission thereof, the matter
shall be submitted to arbitration as hereinafter provided. The
submission of any such objections to arbitration shall not relieve
Interstate from its obligation to make interim payments of the Estimated
Operating Charge Per Ton required by such Annual Operating Budget, as
provided in Section 3.4 hereof, subject to adjustment as determined by
said arbitration.
(b) OJT may revise the Annual Operating Budget (and the
Estimated Operating Charge Per Ton) not more frequently than quarterly,
based upon actual or projected variations from its prior estimates or
from the Shipping Estimates of Interstate or any Third Party User
(hereinafter defined). Any such revision shall be subject to the review
and objection of Interstate in accordance with the provisions of Section
1.4(a) above, provided that subsequent interim payments of the Estimated
Operating Charge Per Ton shall be made on the basis of such revision,
subject to credit to Interstate for excess prior payments or
reimbursement to OJT for deficient prior payments, as provided in Section
3.6 hereof.
1.5 Limitations on OJT Obligations.
Notwithstanding any other provision hereof, OJT shall have
no liability or obligation to Interstate, and OJT shall not be deemed in
default hereunder, with respect to any of the following matters:
(a) Any operating or other problems, delays, costs or
expenses incurred by Interstate due to Force Majeure conditions, or due
to the tender of coal by Interstate or any other party in excess of the
Shipping Estimate or the reasonable receiving, storage or loading
capacities of the Facility and Ancillary Hardware;
(b) Any loss, cost, expense or damage arising out of or
attributable to operational requests or directives of Interstate or of
any railroad or barge line serving the Facility other than as
contemplated hereby;
(c) Any loss, cost, expense or damage to the Facility or
Ancillary Hardware or any property of Interstate except (i) to the extent
otherwise provided in Article IX hereof, and (ii) those matters as to
which OJT has indemnified Interstate pursuant to Section 6.1 hereof;
(d) Any incidental, special or consequential damages of
any nature whatsoever incurred by Interstate; or
(e) Any modifications, additions or improvements to the
Facility or Ancillary Hardware required (i) to bring the Facility or
Ancillary Hardware into compliance with any present or future laws,
regulations or ordinances of any federal, state or local governmental
entity, except that, at the written request of Interstate, OJT shall use
its best efforts to accomplish such modifications, additions or
improvements required to bring the Facility into such compliance, so long
as Interstate shall agree in writing in advance that the costs of doing
so are Reimbursable Costs hereunder, and except that, if in accordance
with the provisions of the Facility Development Agreement and the
Subcontracts thereunder, OJS (or ORBA or JBC) would be obligated to
provide modification, additions or improvements without cost to
Interstate, OJT and, to such extent as shall be reasonable and
appropriate, Interstate, each hereby covenants to enforce such rights as
each, respectively, shall have under the Facility Development Agreement
and said Subcontracts to cause OJS to fulfill such obligations, or (ii)
to meet the operational requirements of Interstate in order to transship
in excess of 1,000,000 tons of Interstate Coal in any Fiscal Year, or if
such operational requirements are materially more burdensome on OJT than
those contemplated hereunder as mutually agreed upon in writing between
Interstate and OJT.
ARTICLE II
DUTIES AND RESPONSIBILITIES OF INTERSTATE
2.1 General Duties.
During the Term of this Agreement, Interstate will
cooperate with OJT in the performance of its duties under this Agreement,
and in any event shall:
(a) provide OJT with reasonably current reports of the
scheduled arrival of trains and barges used for Interstate Coal;
(b) Make the payments in the manner required by Article
III hereof;
(c) Obtain all required approvals or authorization, if
any, of any governmental authority for the execution, delivery and
performance of this Agreement or the utilization of the Facility and the
Ancillary Hardware on the part of Interstate; and
(d) to such extent as shall be reasonable and proper,
take such action as may be directed by OJT or any lender providing the
Facility Financing to enforce the warranties with respect to the design,
construction and installation of the Facility available to Interstate
pursuant to the Facility Development Agreement and subcontracts
thereunder. Interstate hereby acknowledges that any such warranties are
not enforceable against OJT.
2.2 Shipping Estimate.
On or before November 1, 1979 and November 1st of each
succeeding year during the Term, Interstate shall submit to OJT its
written estimate of the anticipated number of tons of Interstate Coal to
be delivered to and loaded out from the Facility, forecast on a monthly
basis for the succeeding Fiscal Year (herein referred to as the "Shipping
Estimate"). Interstate may revise the Shipping Estimate as frequently as
required, and shall promptly notify OJT of such revisions. Interstate
recognizes that its operational requirements do not permit the efficient
operation or utilization of the Facility and agrees that Reimbursable
Costs shall reflect its transloading requirements.
2.3 Minimum Tonnage.
Interstate agrees that during each Fiscal Year during the
Term hereof, it shall pay for the transshipment of no less than 800,000
tons of Interstate Coal (the "Minimum Interstate Tonnage") through the
Facility. Unless and until this Agreement is terminated in accordance
with the provisions of Article VII or Article VIII hereof, or Interstate
is relieved of its obligation to pay the Operating Charge Per Ton under
Section 8.2(b)(iii) hereof (but only to such extent), failure to
transship all or any part of such Minimum Interstate Tonnage shall not
under any circumstances relieve Interstate of the obligation to make the
payments required by Article III hereof, which shall be computed and paid
as if the Minimum Interstate Tonnage had been transshipped through the
Facility, and the payment obligations of Interstate under Article III
shall be absolute and unconditional and shall not be subject to any
abatement, diminution, set-off, counterclaim, recoupment, agreement,
defense, suspension, deferment, interruption, or other right which
Interstate may have against OJT or any other person or entity for any
reason whatsoever, including, without limitation, (a) any damage to,
destruction, theft or loss of the Facility or any portion thereof, (b)
any event of Force Majeure, (c) breach of any warranty of any seller or
manufacturer of the Facility or the Ancillary Hardware, or any component
thereof, (d) the physical failure of the Facility, the Ancillary Hardware
or any component thereof due to inadequacy, condemnation, confiscation or
public requisition of the Facility or the Ancillary Hardware or any
portion thereof, (e) any claim as a result of business dealings between
OJT and Interstate, (f) any circumstance which might give rise to a claim
by Interstate of commercial frustration, or (g) any insolvency,
bankruptcy, reorganization or similar proceedings by or against
Interstate.
ARTICLE III
COMPENSATION; PAYMENT TERMS
3.1 Amount of Compensation for OJT Services.
As compensation for its services hereunder, Interstate
shall pay OJT during each Fiscal Year an amount equal to:
(i) a Base Charge Per Ton for each ton of the Minimum Interstate
Tonnage; plus
(ii) an Operating Charge Per Ton for the greater of (1) each ton of
Minimum Interstate Tonnage, or (2) each ton of Interstate Coal
transshipped through the Facility during such Fiscal Year;
plus
(iii) a Usage Fee for each ton of Interstate Coal in excess
of 1,000,000 tons transshipped through the Facility in
each Fiscal Year during the Initial Term, and for each
ton of Interstate Coal so transshipped in each Fiscal
Year during any Extended Term.
3.2 Definition of Financial Terms.
(a) "Base Charge Per Ton" shall mean the per ton charge
derived by dividing (i) the aggregate amount of all debt service payments
due in any Fiscal Year with respect to the Facility Financing (including
any balloon payments), by (ii) the Minimum Interstate Tonnage.
(b) "Facility Financing" shall mean any indebtedness
incurred by OJT to finance the acquisition of the Facility, any portion
of the Ancillary Hardware and certain of the start-up expenses, and any
renewals or refinancings thereof, including any construction financing
assumed by OJT in connection with the acquisition of the Facility (the
"Construction Financing").
(c) "Estimated Monthly Interstate Tonnage" shall be the
greater of (i) 67,000 tons, or (ii) one-twelfth (1/12th) of the aggregate
annual tons of Interstate Coal shown on the Shipping Estimate then in
effect.
(d) "Estimated Operating Charge Per Ton" shall be the
annual Operating Charge Per Ton as estimated from time to time by OJT on
the basis of the Annual Operating Budget and the Shipping Estimate, all
in accordance with Section 1.4 hereof.
(e) "Operating Charge Per Ton" shall mean total aggregate
Reimbursable Costs incurred by OJT during any Fiscal Year, divided by the
number of tons of Interstate Coal transshipped during such Fiscal Year.
(f) "Fiscal Year" shall mean the year or other fiscal
period ending on December 31st, or such other date as OJT and Interstate
may agree in writing. In the event that any Fiscal Year during the Term
of this Agreement is less than twelve full calendar months, then all
computations and calculations hereunder dependent upon passage of time
during a full Fiscal Year shall be equitably pro-rated; and
(g) "Reimbursable Costs" shall mean all costs reasonably
incurred by OJT in the performance of its services hereunder, including
services for the handling, storage and transshipment of Third Party Coal
pursuant to Article IV hereof, except those otherwise specifically
limited by the terms of this Agreement.
(h) "Ton(s) ... transshipped through the Facility" during
any Fiscal Year when used as the basis for any computations under this
Agreement shall mean the aggregate number of tons of coal received at the
Facility during such Fiscal Year. Computation of the number of tons
shall be based upon the weight records of the incoming railroads, or on
such other basis as OJT and Interstate may agree in writing.
(i) "Usage Fee" shall mean initially a fee of $.25 per
ton for each ton of Interstate Coal over 1,00,000 Tons transshipped
through the Facility in any Fiscal Year during the Initial Term
commencing with 1980, and for each ton of Interstate Coal transshipped
through the Facility in any Fiscal Year during any Extended Term,
provided that the Usage Fee shall be increased or decreased, as the case
may be, on an annual basis commencing with such Fee due during 1981 and
succeeding Fiscal Years in such a manner that the amount due during such
Fiscal Year shall be determined by multiplying the Usage Fee in effect
for 1980 by a fraction, the numerator of which is the Gross National
Product Implicit Prices Deflator, as published by the U.S. Department of
Commerce Bureau of Economic Analysis in the "Survey of Current Business"
(the "GNP Deflator") for the last quarter of the preceding Fiscal Year,
and the denominator of which is such GNP Deflator for the last calendar
quarter of 1979.
3.3 Payments During 1979.
Interstate shall make the following payments to OJT during
1979:
Due Date Amount
October 15, 1979 $250,000
November 1, 1979 535,000
December 1, 1979 525,000
The foregoing payment schedule shall remain in effect until submission of
the 1979 Operating Budget, which shall thereafter be subject to monthly
revision by OJT, and all payments due in 1979 shall be based upon the
Operating Budget then in effect. The 1979 Operating Budget and any
revisions thereof shall be subject to the arbitration provisions of
Section 1.4. All such payments shall be made in immediately available
funds and shall be credited against the obligations of Interstate to pay
the Base Charge Per Ton and Operating Charge Per Ton on all tons of
Interstate Coal transshipped during 1979. The parties acknowledge and
agree that the Minimum Interstate Tonnage for 1979 to be utilized in
measuring the per ton charge incurred during 1979 shall be 200,000 Tons.
Any excess or deficiency of the amounts paid by Interstate during 1979
shall be reconciled, verified and adjusted in accordance with Section
3.6.
3.4 Payments During 1980 and Thereafter.
(a) On the first day of each month, commencing with
January, 1980, Interstate shall pay to OJT, or its designee, an amount
equal to the Base Charge per Ton multiplied by 67,000 tons, which is the
allocable share of the Minimum Interstate Tonnage attributable to each
month. The parties acknowledge that OJT intends to designate an escrow
agent to receive all payments due from Interstate pursuant to this
Section 3.4(a) and that all such payments received by such escrow agent
are to be applied to the payments due from OJT with respect to the
Facility Financing. OJT agrees that all investment income, if any,
earned on any such payments deposited with such escrow agent, net of the
costs of such escrow agent's services, may be paid out by such escrow
agent to OJT from time to time, and the amount thereof so paid to OJT
shall be credited against the obligation of Interstate for the next
succeeding monthly payment due pursuant to Section 3.4(b). OJT or the
escrow agent shall promptly notify Interstate of the payment of any such
amount.
(b) On the first day of each month commencing with
January, 1980, Interstate shall pay to OJT an amount equal to the
Estimated Operating Charge Per Ton multiplied by the Estimated Monthly
Interstate Tonnage. On or about the 20th of each month, OJT shall
invoice Interstate for the payment with respect to the Operating Charge
Per Ton due on the first of the next succeeding month. The monthly
payment due under this Section 3.4(b) shall be made in immediately
available funds and may be adjusted no more frequently than quarterly on
the basis of revisions to the Annual Operating Budget, Estimated
Operating Charge Per Ton and the Shipping Estimate. In the event that
the Annual Operating Budget is revised, as provided in Section 1.4(b),
then all monthly payments due under this Section 3.4(b) after the
submission of such revised Annual Operating Budget, Estimated Operating
Charge Per Ton and/or Shipping Estimate shall be based upon such
revision, provided that Interstate shall be entitled to credit for any
excess payments made pursuant to this Section 3.4(b) prior to such
revisions against the next monthly payment(s) due under this Section
3.4(b) (and not against any payments due under Section 3.4(a)), or
Interstate shall promptly pay OJT any deficiency in such prior payments
arising on account of such revisions.
OJT shall use reasonable efforts to invest such amounts
received from Interstate pursuant to this Section 3.4(b) in short-term
United States Government securities or in a "Business Investment Account"
or its equivalent with the escrow agent or agents referred to in Section
3.4(a), and any investment income received by OJT pursuant to said
investment shall be credited to Interstate's obligations under this
Section 3.4(b) for the month following the month of receipt of such
income.
(c) No objection by Interstate to the annual Operating
Budget or the Estimated Operating Charge Per Ton, or any revision
thereof, nor to any computation of the Transshipment Fee or other payment
due to OJT hereunder, shall entitle Interstate to withhold or delay
payment to OJT in accordance with the terms hereof. Any such objection
shall be resolved by the parties as provided herein, either informally or
pursuant to the procedures for arbitration set forth in Article XI,
provided, however, that Interstate shall have no right to object to
payments required pursuant to Section 3.4(a) or to withhold or delay any
such payments.
3.5 Payment of Usage Fee.
OJT shall promptly notify Interstate during the Initial
Term when the number of tons of Interstate Coal transshipped during any
Fiscal Year has exceeded 1,000,000 tons. Thereafter, on or before the
tenth day of the month following the remaining months of the Fiscal Year,
and on or before the tenth day of each month during any Extended Term,
OJT shall compute and provide a written statement to Interstate of the
amount of Usage Fee due for the prior month, which amount shall be paid
to OJT within twenty (20) days after receipt of such statement.
3.6 Reconciliation and Verification.
(a) Not later than sixty (60) days after the end of each
Fiscal Year, OJT shall prepare and submit to Interstate (i) an audited
statement of its Reimbursable Costs actually incurred with respect to
such Fiscal Year in providing its services hereunder (hereinafter
referred to as the "Operating Statement"), with itemized statements
conforming to the cost classification of its Annual Operating Budget,
(ii) a statement of the actual amounts due and payable with respect to
the Facility Financing during such Fiscal Year, (iii) a computation of
the number of Tons of Interstate Coal transhipped through the Facility
during such Fiscal Year, (iv) a computation of the aggregate Base Charge
Per Ton and Operating Charges Per Ton due from Interstate to OJT for such
Fiscal Year, and (v) a computation of the Usage Fee earned during such
Fiscal Year. Subject to possible adjustment arising out of the review
provided for in subsection (b) below, Interstate shall pay to OJT (or OJT
shall pay or apply to subsequent obligations of Interstate to pay the
Operating Charge Per Ton or the Usage Fee, as the case may be), within
twenty (20) days after submission of the Operating Statement and such
other computations, the difference between the amounts shown to be due
from Interstate with respect to the Operating Charge Per Ton, Base Charge
Per Ton and Usage Fee on the basis of such Operating Statement and other
computations, and the aggregate interim payments to OJT by Interstate
with respect to such Fiscal Year.
(b) Interstate shall have a period of sixty (60) days
from the date of submission of the Operating Statement and such other
computations to give written notice to OJT of any exceptions to such
information, specifying each item with respect to which an exception is
raised, and the grounds for the exceptions, provided, however, that
Interstate shall have no such right to raise any exception with respect
to any payments required to be made pursuant to Section 3.4(a). The
Operating Statement and such other computations shall become final and
binding upon the parties as to those items to which no exception is made
during such period, and as to those items to which exception is taken,
such items not resolved by the parties in accordance with the provision
of Article XI.
(c) OJT shall keep and have audited all books and records
of its Reimbursable Costs, costs for Facility Financing and other
financial data required hereunder in accordance with this Agreement and
generally accepted accounting principles consistently applied, and such
books and records shall be available, at reasonable times and upon
reasonable notice, for audit and review by Interstate or by any
nationally recognized independent accounting firm engaged by Interstate,
provided that the right to such audit shall not affect the obligation to
make payments in the manner required by Sections 3.3, 3.4 and 3.5. OJT
shall maintain satisfactory records of the time spent by its personnel in
the performance of services under this Agreement, and shall furnish to
Interstate such statements, invoices, receipts, vouchers, and other
information as may be reasonably required by Interstate to verify the
Reimbursable Costs incurred by OJT.
(d) OJT shall use its best efforts to include in any
contracts with subcontractors and vendors which are on a "cost-plus"
basis, provisions as to the verification of costs which are similar to
those contained in this Article III.
(e) OJT shall submit to Interstate such evidence,
including waivers of lien from subcontractors, as Interstate may
reasonably request, that all payrolls, material bills, and other
obligations theretofore incurred by OJT in connection with the
performance of its services have been paid.
ARTICLE IV
THIRD PARTY COAL
4.1 Authorization.
The parties acknowledge that the Facility and Ancillary
Hardware have a capacity for storage and transloading of coal exceeding
the anticipated requirements of Interstate. Accordingly, subject to the
prior written approval of Interstate as to each agreement for handling
the coal ("Third Party Coal") owned by others ("Third Party Users"), and
all of the terms and conditions thereof (which approval may not be
unreasonably withheld or delayed), OJT may contract with Third Party
Users for the transloading of Third Party Coal through the Facility. OJT
shall use its best efforts to locate potential Third Party Users of the
Facility and to negotiate satisfactory arrangements with them, provided
that OJT shall have no liability or obligation to Interstate in the event
that OJT is unable to locate Third Party Users, and provided further that
OJT shall have no obligation to make additions to the Facility or
Ancillary Hardware to accommodate the transshipment of Third Party Coal.
4.2 Fees for Third Party Coal.
(a) Any gross revenues received by OJT for the
transloading of Third Party Coal through the Facility during the Initial
Term, or either Extended Term hereof, shall be shared and credited two-
thirds (2/3rds) for the account of Interstate and one-third (1/3rd) for
the account of OJT.
(b) The amount of any such Third Party Coal revenues
actually received by OJT which is due to Interstate shall be promptly
paid to Interstate, or may, at the option of Interstate, be credited
against payments due (i) on account of the Base Charge Per Ton or the
Usage Fee due to OJT pursuant to Section 3.4(a) hereof, but only to the
extent that the funds so applied as a credit have been deposited in an
escrow account solely for the benefit of the lenders providing the
Facility Financing, or (ii) on account of the Operating Charge Per Ton or
the Usage Fee due to OJT pursuant to Sections 3.3, 3.4(b) or 3.5 hereof.
At the request of Interstate, OJT shall make such escrow account
deposits. Promptly after the end of each month, OJT shall provide
Interstate with written reports of the tons of Third Party Coal
transloaded through the Facility, and the fees paid or accrued with
respect thereto.
4.3 Expenses of Third Party Coal.
All expenses in locating potential Third Party Users and
of negotiating arrangements with them shall be borne by OJT, and all
costs of receiving, storage and transshipment of Third Party Coal (other
than costs required for additions to the Facility or Ancillary Hardware
required to transship Third Party Coal) shall be deemed to be part of the
Reimbursable Costs and paid by Interstate as part of the Operating Charge
Per Ton. The Annual Operating Budget prepared by OJT shall be
appropriately modified to reflect any gain or loss of Third Party Coal
during any Fiscal Year.
4.4 Priority of Interstate Coal.
OJT acknowledges that, to the maximum extent feasible and
consistent with agreements with Third Party Users which have been
approved by Interstate, Interstate Coal shall be entitled to priority
over Third Party Coal in the receiving, storage and loading functions of
the Facility and Ancillary Hardware.
4.5 Procedures for Third Party Coal.
OJT shall develop and submit for the approval of
Interstate, prior to the transloading of any Third Party Coal, procedures
for the handling, segregation and storage of Third Party Coal and
determining the respective amounts of Interstate Coal and Third Party
Coal received and stored at and shipped from the Facility, and shall
maintain appropriate records relating to such matters.
4.6 Third Party Coal Revenues After Expiration of Term.
Following the Initial Term or the First Extended Term, in
the event that Interstate does not elect to extend this Agreement for the
First Extended Term and/or the Second Extended Term, then during the
period as to which Interstate has not elected to extend, OJT shall pay to
Interstate, within 120 days after the end of each Fiscal Year, or at such
other time or times as the parties may agree, an amount equal to 50% of
the net pre-tax profit earned by OJT with respect to all tons of Third
Party Coal transshipped through the Facility during such Fiscal Year
pursuant to agreements with such Third Party Users in effect for the
Facility at the end of the Initial Term, or First Extended Term, as the
case may be, for ten or five years, respectively.
4.7 Competitive Ventures.
OJT, ORBA and JBC agree that during the Term hereof, none
of them, nor any subsidiary of any of them, shall have any material
financial interest in any coal transshipment facilities located on the
Mississippi River within 200 river miles of the Facility unless all
proposals for the transshipment of coal through such facilities shall
first have been submitted to Interstate for approvals as Third Party Coal
contracts for the Facility, or any such potential Third Party User shall
have certified to OJT and Interstate in writing its objections to use of
the Facility, specifying the reasons therefor provided that nothing
contained herein shall limit the right of either ORBA or JBC, or any
affiliate of either, from participating in the design, construction or
erection of any coal handling facilities, nor shall the provision hereof
extend to any contact with a single transshipper for an annual volume of
coal in excess of the then remaining unused reasonable capacity of the
Facility.
ARTICLE V
SPECIAL ARRANGEMENTS
5.1 Prohibition on Other Activities.
Neither O-Sub nor J-Sub shall engage in any material
business activities, or incur any material liabilities, except in
connection with its participation in OJT. In addition, without the prior
written consent of Interstate, OJT shall not engage in any material
business activities, either at the Facility or elsewhere, other than the
storage and transshipment of Interstate Coal approved by Interstate.
5.2 Contracts with Venture Partner and Affiliates.
Any contracts, agreements or arrangements between OJT and
any of O-Sub, J-Sub, ORBA or JBC, or any entity controlled by or
controlling any such corporation shall be performed on a cost-plus basis
on terms satisfactory to Interstate.
5.3 Obligations of ORBA and JBC.
In the event that OJT becomes obligated or liable to
Interstate hereunder and is unable to fully discharge such obligation or
liability, then each of ORBA and JBC have agreed to advance funds to OJT
to discharge any such obligation or liability thus undischarged (but no
more than $1,000,000 in the aggregate, or $500,000 each as to ORBA and
JBC respectively, less (i) the amount of such liability discharged by
OJT, and (ii) in each case less the amount of funds otherwise advanced by
ORBA and JBC in O-Sub and J-Sub, respectively, by way of equity, debt or
open account advance.) Notwithstanding the fact that employees and
agents of JBC and ORBA may, from time to time, perform managerial or
professional services for OJT related to the Facility, except as stated
above, nothing herein shall impose any liability or other obligations
upon JBC or ORBA, as parents of their respective subsidiaries which make
up the joint venture of OJT and, except as expressly stated in this
Section 5.3, Interstate agrees to look solely to such subsidiaries and
OJT with respect to any damages, obligations or liabilities arising
hereunder. In measurement of any damage assessed hereunder against OJT,
there shall be allocated to OJT only such amount of damages as shall be
commensurate with the responsibility which its fault bears to the
aggregate of the circumstances which cause such damages to be incurred,
provided that such limitation shall be effective only in such
circumstances where Interstate shall be entitled to recover from all
other parties at fault the balance of such damages not allocated to OJT.
5.4 Responsibility for Interstate Coal.
Interstate and OJT acknowledge that Interstate is and
shall be deemed for all purposes to be the owner of the Interstate Coal
received and stored at the Facility and transloaded from the Facility,
and that all risk of loss to such Interstate Coal, whether by casualty,
disappearance or causes unknown, shall be borne by Interstate, except for
loss caused solely by the willful misconduct or gross negligence of OJT
or loss required to be indemnified by OJT pursuant to section 6.1. The
parties shall develop mutually satisfactory written procedures for
determining the number of tons of coal received at and transloaded from
the Facility during any Fiscal Year and stored at the Facility at any
time.
5.5 Disposition of Excess Property.
In the event that OJT acquires the Facility or Ancillary
Hardware and subsequently disposes of any portion of the property or
rights so acquired, all proceeds received upon such disposition shall be
promptly applied by OJT against the outstanding balance of the Facility
Financing to the extent permitted by the lender thereof. Otherwise, such
proceeds shall be applied as agreed in writing by Interstate and OJT.
Notwithstanding the foregoing, proceeds of disposition of excess or
obsolete Ancillary Hardware may be utilized to acquire replacement
Ancillary Hardware. The provisions of this Section 5.5 are subject to
the requirements of any agreements with any lenders providing the
Facility Financing.
ARTICLE VI
INDEMNITIES
6.1 Indemnification by OJT.
OJT hereby agrees to indemnify Interstate, its directors,
officers, employees and agents from and against any and all claims,
damages, demands, expenses, liabilities and losses of every kind,
character and nature (other than incidental, special or consequential
damages) asserted by or on behalf of any person, firm, corporation or
governmental authority arising out of or resulting from the acts or
omissions of OJT in breach or violation of the provisions of this
Agreement, or on account of the willful misconduct or gross negligence of
OJT. OJT also covenants and agrees at no expense to Interstate to
indemnify and save Interstate and such of its related persons harmless
of, from and against all costs and expenses (including reasonable counsel
fees) incurred in investigating or defending against any such claims and
demands, including those arising in any proceeding or action. In the
event that any such claims or demands are asserted against Interstate or
any of its related persons, Interstate shall give notice thereof to OJT
within twenty (20) days thereafter, and OJT shall thereupon have the
right and option to assume (and at the request of Interstate shall
assume) the defense of any such claim or demands, including the right to
compromise and settle the matter on such basis as it shall deem
appropriate. Interstate and its counsel may, at the option of
Interstate, participate in the defense, compromise and settlement of such
claims or demands as to which OJT has assumed the defense, provided that
Interstate shall bear the costs and expenses relating to such
participation. Notwithstanding the foregoing, OJT shall not be required
to indemnify and save Interstate and such of its related persons harmless
with respect to any such claims, losses and the like otherwise described
in this Section 6.1 (i) solely arising out of any willful or negligent
acts or omissions of Interstate or any of such of its related persons,
(ii) to the extent that such claims or losses exceed the amount of the
insurance proceeds available therefor from the insurance to be procured
and maintained by OJT, as set forth in Section 9.1 hereof, or (iii) as to
which Interstate is obligated to indemnify OJT pursuant to Section 6.2
hereof. Nothing herein shall limit or impair the rights of Interstate to
obtain damages or any other remedy expressly permitted pursuant to
Section 8.2 hereof.
6.2 Indemnification by Interstate.
Interstate, for and on behalf of itself and its insurers,
successors and assigns, hereby covenants and agrees, at no expense to OJT
or the other indemnified parties set forth below, to indemnify and save
OJT, its joint venture participants, ORBA and JBC, and the respective
officers, directors, employees, and agents of any of them, as well as the
lenders providing the Facility Financing harmless of, from and against,
any and all claims, damages, demands, expenses, liabilities and losses of
every kind, character and nature (other than incidental, special or
consequential damages) asserted by or on behalf of any person, firm,
corporation or governmental authority arising out of, resulting from or
in any way connected with (i) the acts or omission of Interstate in
breach of its obligations hereunder, or (ii) the willful misconduct or
gross negligence of Interstate. Interstate also covenants and agrees to
indemnify and save OJT, and any other indemnified party set forth above,
harmless of, from and against all costs and expenses (including
reasonable counsel fees) incurred in investigating or defending against
any such claims and demands, including those arising in any proceeding or
action. In the event that any such claims or demand are made against OJT
or any of such other persons, the persons claiming indemnity shall give
notice thereof to Interstate within twenty (20) days thereafter, and
Interstate shall thereupon have the right and option to assume (and at
the request of the indemnified party shall assume) the defense of any
such claims, demands, action or proceeding based upon or arising out of
any such claim or demand. The obligations of Interstate to OJT hereunder
(but not to the lenders providing the Facility Financing) shall not
extend to any claims, damages, demands, expenses, liabilities or losses
of any kind for which OJT is obligated to indemnify Interstate or its
related persons pursuant to Section 6.1 hereof.
6.3 Application of Available Insurance; Waiver of Subrogation.
The obligations of the parties to provide the
indemnification set forth above shall be reduced to the extent that
proceeds are received under any insurance policies to cover any loss,
cost or expense of any indemnified party. Each party waives for itself
and any insurer engaged by it, any rights of subrogation whatsoever.
ARTICLE VII
TERM AND TERMINATION
7.1 Initial Term; Extended Terms.
(a) The initial term of the Agreement shall commence as of
October 3, 1979, and shall continue until May 30, 1996, subject to
earlier termination as provided herein and in Article VIII (the "Initial
Term").
(b) Interstate shall have the right to extend this
Agreement beyond the Initial Term for an additional term of five (5)
years ending May 30, 2001 (the "First Extended Term") and for an
additional extended term of five (5) years ending May 30, 2006 (the
"Second Extended Term"), all on the same terms and conditions as
contained herein, provided that (i) the Usage Fee provided for in Section
3.5 shall apply to each ton on Interstate Coal transshipped during either
such Extended Term, and (ii) there shall be no Base Charge per Ton,
except with respect to Facility changes and additions agreed upon in
writing by OJT and Interstate. Interstate shall exercise its options to
extend by notice in writing to OJT not less than six months prior to the
end of the Initial Term, or First Extended Term, as the case may be.
7.2 Termination for Delay in Start-Up, Lack of Facility Financing
or Litigation.
(a) Provided that no Facility Financing in addition to
the Construction Financing has been consummated, in the event that the
acquisition and start-up of the Facility is not accomplished by OJT on or
before December 31, 1979, then either party may terminate this Agreement
upon not less than ten (10) days' prior written notice.
(b) In the event that OJT acquires the Facility on or
before December 31, 1979, but Facility Financing in addition to the
Construction Financing is not consummated by such date for any reason
whatsoever, then upon not less than ten (10) days' prior written notice
from either party this Agreement shall be terminated, and Interstate, or
an entity designated by Interstate, shall purchase the Facility and
Ancillary Hardware from OJT for a price equal to (i) the price paid or
payable to OJS to purchase the Facility pursuant to the Facility
Development Agreement, (ii) all Reimbursable Costs incurred by OJT in
acquiring, owning and disposing of the Facility to the extent not covered
by the payments required to be made by Interstate pursuant to Article 3
hereof, (iii) the costs of acquiring the Ancillary Hardware, and (iv) any
amounts then due to OJT pursuant to any indemnity or other arrangements
or agreements between Interstate and OJT.
(c) If hereafter governmental regulatory jurisdiction
were to be established over the execution, delivery and/or performance of
this Agreement, by a final, non-appealable order of any governmental
agency or court of competent jurisdiction and governmental regulatory
approval or authority is not forthcoming within a period of one hundred
twenty (120) days from the date of any such order becoming final and non-
appealable, then, at the option of OJT, (i) Interstate, or an entity
designated by it, shall purchase the Facility and all Ancillary Hardware
owned by OJT, and all other assets of OJT (all of which shall be
transferred free and clear of any liens securing the Facility Financing),
and satisfy or assume all liabilities of OJT incurred in connection with
the operation of the Facility and Ancillary Hardware and the performance
of its services hereunder, other than OJT's liabilities for the Facility
Financing or any liabilities incurred in violation or contravention of
the provisions of this Agreement (the "Operating Liabilities") for a
price equal to the aggregate amount of the higher of (A) or (B) below,
plus the amount of the Operating Liabilities, and (ii) effective upon a
conveyance of the Facility to Interstate or such designated entity and
the release of any liens securing the Facility Financing, this Agreement
shall terminate. Concurrently with tender of appropriate documents of
transfer and conveyance, Interstate (or such entity), shall pay the
purchase price thereof to OJT by a cash payment in an amount equal to the
higher of (A) the Net Book Value of the Facility and Ancillary Hardware
owned by OJT, as defined in Section 8.2 (a) (ii), or (B) the outstanding
principal, interest and other charges (including prepayment premium, if
any) payable with respect to the Facility Financing, and by satisfaction
or assumption of the Operating Liabilities.
(d) In the event that OJT acquires the Facility and
successfully consummates or assumes the Facility Financing (including
Construction Financing), and thereafter is ordered by any court or
governmental agency of competent jurisdiction under a final, non-
appealable order to transfer the Facility to any third party, then,
effective upon such conveyance, this Agreement shall terminate, and
Interstate shall purchase, for cash, all Ancillary Hardware owned by OJT,
and other assets of OJT not required to be transferred all of which
shall be transferred free and clear of any lien securing the Facility
Financing, and shall pay OJT concurrently with such transfer and
conveyance a cash payment in an amount equal to the excess of (i) the
higher of the Net Book Value of the Facility and Ancillary Hardware and
other assets transferred, or the aggregate amount of the outstanding
principal, interest and other charges (including prepayment premium, if
any), payable with respect to the Facility Financing (including the
Construction Financing), plus in each case, all other amounts then due to
OJT pursuant to this Agreement, over (ii) the cash payment received by
OJT from the transferee in consideration of such conveyance of the
Facility and any other properties or assets conveyed in connection
therewith. In addition, concurrently with such conveyance, Interstate
shall satisfy or assume all Operating Liabilities of OJT and secure or
cause to be secured the release of any liens on the Facility or the
Ancillary Hardware securing the Facility Financing. Any cash proceeds
subsequently received by OJT from the transferee of the Facility and such
other properties or assets on account of such conveyance shall be
promptly turned over to Interstate.
ARTICLE VIII
DEFAULTS
8.1 Events of Default.
Any one of the following occurrences shall be an "Event of
Default" hereunder:
(a) Either party shall:
(i) Consent to the appointment of a receiver, trustee or
liquidator of itself or of a substantial part of its
property, or admit in writing its inability to pay its debts
generally as they come due, or shall make a general
assignment for the benefit of creditors; or
(ii) File a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization in a proceeding
under any bankruptcy laws (as now or hereafter in effect) or
an answer admitting the material allegations of a petition
filed against it in any such proceeding or, by voluntary
petition, answer or consent, seek relief under the provisions
of any other now-existing or future bankruptcy or other
similar law (other than a law which does not provide for or
permit the readjustment or alteration of its obligations
hereunder) providing for an agreement, composition, extension
or adjustment with its creditors; or
(iii) Suffer the entry of an order, judgement or decree in any
proceeding by any court of competent jurisdiction appointing,
without its consent, a receiver, trustee or liquidator of
such party or of any substantial part of its property, which
shall remain in force undismissed, unstayed or unvacated for
a period of ninety (90) days after the date of entry thereof;
or
(iv) Permit a petition against it in a proceeding under the
Federal bankruptcy laws or other insolvency laws to be filed
and not withdrawn or dismissed within sixty (60) days
thereafter or, permit any court of competent jurisdiction to
assume jurisdiction, custody or control of such party or of
any substantial part of its property, which jurisdiction,
custody or control shall remain in force unrelinquished,
unstayed or unterminated for a period of sixty (60) days; or
provided, however, that no such occurrence with respect to OJT or
Interstate, respectively shall constitute an "Event of Default" hereunder
where such occurrence has been caused, directly or indirectly, by any
default by the other party of any of such other party's obligations
hereunder; or
(b) Interstate shall fail to make any payment required by
Section 3.4(a) on the date such payment shall become due; or
(c) Interstate shall fail to make any other payments
required by Article III within ten (10) days after the same shall become
due; or
(d) Except as provided in Section 8.1(e) and provided
that such failure is not due to Force Majeure cause, either party is in
material default in the performance of any other covenant, agreement or
undertaking to be performed by it pursuant to this Agreement, and such
default shall continue for a period of thirty (30) days after notice
thereof from the other party (or, if such default is not susceptible of
being cured within thirty (30) days, such longer period as shall be
required to cure the same through diligent effort, so long as the
defaulting party is in good faith exercising diligent efforts to cure the
same); or
(e) OJT shall fail promptly to transship any Interstate
Coal tendered pursuant and subject to the terms and provisions of this
Agreement for transshipment, or shall fail to load out any Interstate
Coal requested by Interstate from the Facility, provided that any such
failure is not due to Force Majeure cause, or that any such failure is
not cured by OJT within forty-five (45) days of notice of such failure by
Interstate to OJT.
8.2 Remedies.
(a) Upon the occurrence of an Event of Default on the
part of Interstate, and so long as the same shall be continuing, OJT may,
at its option, declare this Agreement to be in default, and at any time
thereafter, so long as Interstate shall not have remedied all such
outstanding Events of Default, OJT may do any one or more of the
following:
(i) terminate this Agreement;
(ii) require that Interstate purchase the Facility and all
Ancillary Hardware owned by OJT, and all other assets of OJT
(all of which shall be transferred free and clear of any
liens securing the Facility Financing) and satisfy or assume
all liabilities of OJT incurred in connection with the
operation of the Facility and the performance of its services
hereunder, other than OJT's Facility Financing liabilities or
liabilities incurred in violation or contravention of the
provisions of this Agreement (the "Operating Liabilities"),
for a price equal to the aggregate amount of the highest of
(A),(B) or (C) below, plus the amount of the Operating
Liabilities, and upon tender of appropriate documents of
transfer and conveyance, Interstate shall pay the purchase
price by a cash payment equal to the greatest of (A) the fair
market value of the property purchased, as determined by
independent appraisal, (B) the depreciated book value of the
property purchased, as shown on the books of OJT (the "Net
Book Value"), or (C) the outstanding principal, accrued
interest and other charges (including prepayment premium, if
any) payable with respect to the Facility Financing as of the
date of purchase, and by satisfaction or assumption of the
Operating Liabilities and shall secure or cause to be secured
the release of any liens on the Facility or Ancillary
Hardware securing the Facility Financing. The foregoing
obligation of Interstate may be fulfilled by an entity
designated by it. In the event of the exercise of OJT of its
rights under this Subsection 8.2(a)(ii), the amount due under
(C) above shall be paid in cash immediately upon such
exercise, and the excess, if any, of (A) or (B) over such
amount shall be paid immediately upon the determination of
the purchase price;
(iii) exercise any other legal or equitable right or remedy which
may be available to it or proceed by appropriate arbitration
or court action to enforce the terms hereof or to recover
damages for the breach hereof.
(b) Upon the occurrence of an Event of Default on the
part of OJT, and so long as the same shall be continuing, Interstate may,
at its option, declare this Agreement to be in default, and at any time
thereafter, so long as OJT shall not have remedied all outstanding Events
of Default, Interstate may do any one or more of the following:
(i) with respect to defaults under Section 8.1(a), terminate this
Agreement, provided that upon termination, Interstate, or any
entity designated by it in writing shall have the right and
option to purchase the Facility and all Ancillary Hardware
owned by OJT, and all other assets of OJT, provided that in
connection therewith Interstate shall satisfy or assume the
Operating Liabilities and upon tender of appropriate
documents of transfer and conveyance Interstate shall pay the
purchase price by a cash payment equal to the greater of (A)
the Net Book Value of the property purchased, or (B) the
outstanding principal, interest and other charges (including
prepayment premium, if any) payable with respect to the
Facility Financing as of the date of purchase and by
satisfaction or assumption of the Operating Liabilities, and
shall secure or cause to be secured the release of any liens
on the Facility or the Ancillary Hardware securing the
Facility Financing.
(ii) with respect to all defaults, including defaults under
Section 8.1(e) exercise any legal or equitable right or
remedy which may be available to it (other than termination
of this Agreement or failure or refusal to make the payments
required hereunder or otherwise to carry out its obligations
hereunder) or proceed by appropriate arbitration or court
action to enforce the terms hereof, or to recover damages for
the breach hereof;
(iii) with respect to any defaults under Section 8.1(e) (but only
after all applicable cure and grace periods have expired),
upon written notice to OJT given after such cure and grace
periods have expired and subject to the right to cure
hereinafter set forth, terminate this Agreement effective as
of a date no earlier than six (6) months from the date of
such notice (which date of termination my be extended by
Interstate from time to time by written notice to OJT), and
during any such period, Interstate need not tender any
Interstate Coal for transshipment, provided that prior to the
date of termination of this Agreement, (A) Interstate shall
continue payment of the Base Charge Per Ton in the amount and
at the times required hereunder, and (B) Interstate shall
continue to pay the Operating Charge Per Ton unless it, or an
entity designated by Interstate in writing, shall exercise
the right and option hereby granted, upon written notice to
OJT, to assume and take over control of the operations of the
Facility and Ancillary Hardware, provided that Interstate's
operation of the Facility and Ancillary Hardware shall at all
times be consistent with the obligations and duties of OJT
pursuant to any agreements with lenders providing the
Facility Financing, and all costs arising out of the
operations or use of the Facility and Ancillary Hardware by
Interstate, or its designee, during such period shall be paid
by Interstate, and (C) if at any time prior to the date of
termination, and regardless of whether Interstate shall have
exercised its option provided in clause (B) hereof, any
assignee of OJT's rights hereunder or, with the written
consent of such assignee, OJT shall cure (and Interstate and
OJT hereby jointly grant OJT and any such assignee the right,
directly or indirectly, to assume and take control of the
Facility and Ancillary Hardware at any time during any such
period in order to attempt to effect such cure) all existing
defaults of OJT, then Interstate shall relinquish its control
of the Facility and Ancillary Hardware to OJT (or such
assignee) and this Agreement shall not be terminated except
pursuant to the provisions hereof for defaults occurring
subsequent thereto. Nothing contained herein shall limit or
impair the rights of Interstate to seek and recover damages
from OJT on account of such default, notwithstanding any
period of control of the Facility and Ancillary Hardware by
Interstate or any cure of defaults, provided that no assignee
of OJT's rights shall be or become liable for any damages
resulting from such a default.
(c) Except as otherwise expressly provided above, no
remedy referred to in this Section is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above
or otherwise available at law or in equity, including without limitation
the right to enforce the terms hereof or to recover damages for breach of
any terms hereof; and the exercise or beginning of exercise of any one or
more of such remedies shall not preclude the simultaneous or later
exercise of any or all such other remedies. No express or implied waiver
of any Event of Default shall in any way be, or be construed to be, a
waiver of any future or subsequent Event of Default.
(d) Notwithstanding any other provision of this
Agreement, neither party shall be liable for any incidental, special or
consequential damages arising for any reason whatsoever.
ARTICLE IX
INSURANCE; CASUALTY; CONDEMNATION
9.1 OJT Coverages.
During the term of this Agreement, OJT shall maintain the
insurance coverages required by Schedule 9.1 annexed hereto.
The insurance policies shall name Interstate as an
additional insured, and OJT shall furnish Certificates of Insurance
providing for not less than thirty (30) days' prior notice to Interstate
and any assignee of OJT's rights hereunder of cancellation or non-
renewal. Such policies shall otherwise comply with the requirements of
Schedule 9.1 hereof.
All losses, costs, damages, expenses and other similar
items of cost covered by insurance but within the deductible amounts
permitted in such insurance coverage or in excess of the policy limits or
similar items of cost which could be insured against but are not required
to be so insured against by the requirements of Schedule 9.1 shall be
Reimbursable Costs hereunder.
9.2 Casualty.
In the event that the Facility or Ancillary Hardware or
any component thereof shall be damaged or destroyed by fire or other
casualty, then, subject to any requirements of the agreements with any
lenders providing the Facility Financing, the following provisions shall
apply:
(a) If the estimated cost to repair, rebuild or replace
the damaged portion of the Facility or Ancillary Hardware shall be less
than $100,000, then OJT shall promptly commence work to accomplish such
repair, rebuilding and/or replacement and to bring the Facility and
Ancillary Hardware into operating condition in compliance with this
Agreement. All proceeds of any insurance recoverable or paid on account
of such casualty shall be paid over to OJT to cover the cost of such
repair and/or replacement work, and any excess cost not covered by such
proceeds shall be deemed to be part of the Reimbursable Expenses for
operating the Facility, except to the extent that OJT is required to
indemnify Interstate with respect thereto pursuant to Section 6.1 hereof.
(b) If the estimated cost to repair or replace the
damaged portion of the Facility or Ancillary Hardware equals or exceeds
$100,000, then OJT shall not be obligated to repair, rebuild or replace
such damaged portions except to the extent that the aggregate amount of
insurance proceeds and other funds made available by Interstate (at no
cost to OJT) for such purpose shall equal or exceed the estimated cost of
such repair, rebuilding or replacement. In the event that such funds are
sufficient, OJT shall promptly prepare plans and specifications covering
such work and submit the same to Interstate for approval, and upon
receipt of such approval, OJT shall diligently commence and complete such
repair, rebuilding, or replacement work. All proceeds of any insurance
or payments by Interstate shall be deposited with an escrow agent
satisfactory to Interstate and OJT and shall be released to OJT
periodically to cover the cost of work completed in such repair,
rebuilding, or replacement.
(c) In the event that any damage to the Facility or
Ancillary Hardware results in the inability of OJT to use the Facility as
contemplated by this Agreement and proceeds from any business
interruption insurance are paid or payable to OJT, then any such proceeds
actually received by OJT shall be promptly deposited with the escrow
agent designated by OJT to receive payments on account of the Base Charge
Per Ton due under Section 3.4(a), and to the extent of such deposits,
shall be applied against the obligations of Interstate to make such
payments required by Section 3.4(a) hereof.
9.3 Condemnation.
(a) OJT shall give Interstate prompt written notice of
the institution of any proceedings for the taking of the Facility or any
part thereof in condemnation or by the power of eminent domain, and will
keep Interstate fully advised of the status thereof. OJT shall not
consent to any such taking except as approved by Interstate.
(b) In the event of the taking of all of the Facility, or
of a substantial part thereof to the extent that the Facility cannot be
practicably utilized for the transshipment of at least 1,125,000 tons of
coal in any Fiscal Year, then (i) all proceeds arising out of such taking
shall be applied, first to the payment of the outstanding principal,
interest and other charges (including prepayment premium, if any) payable
with respect to the Facility Financing, second to the reimbursement of
OJT for any costs incurred in connection with such taking, and third to
OJT in an amount equal to the excess of the then book value of the
property subject to the taking over the amount of the Facility Financing,
and (ii) the balance shall be divided between the parties as partial
compensation for their respective loss of bargain hereunder, 50% to OJT
and 50% to Interstate. Any remaining portions of the Facility may be
retained by OJT for its own uses and purposes.
(c) In the event of a partial taking of the Facility such
that it can be utilized, or with the performance of a reasonable amount
of repair, rebuilding or restoration work having an estimated cost of no
more than the proceeds arising out of such taking, can be practicably
utilized for the transshipment of at least 1,125,000 tons of coal in any
Fiscal Year, then OJT shall promptly commence work to repair, rebuild and
restore the Facility to such capacity. The proceeds arising out of any
such taking shall be deposited with an escrow agent satisfactory to
Interstate and OJT and shall be paid out, first to OJT periodically to
reimburse it for the cost of such repair, rebuilding and restoration work
completed, second to OJT to reimburse it for other costs incurred in
connection with or as a result of such taking, and third to OJT in an
amount equal to the excess of the then book value of the property subject
to the taking over, the cost of the repair, rebuilding and restoration
work, and the balance shall be divided between the parties as partial
compensation for their loss of bargain hereunder, 50% to OJT and 50% to
Interstate.
(d) In the event of any temporary taking of the Facility
or any portion thereof, all proceeds arising out of such taking actually
received by OJT shall be promptly deposited with the escrow agent
designated by OJT to receive payments under section 3.4(a), and to the
extent of such deposit, shall be applied against the obligations of
Interstate to make such payments required by Section 3.4(a) hereof.
(e) The foregoing provisions of this Section 9.3 shall be
subject to the requirements of any agreements with any lenders providing
the Facility Financing.
ARTICLE X
FORCE MAJEURE
As used herein, the term "Force Majeure" shall include an
Act of God, strike, lock-out or other labor dispute, act of the public
enemy, war declared or undeclared, riot, insurrection, civil commotion,
lightning, fire, storm, flood, earthquake, insured or uninsured casualty,
condemnation of all or any part of the Facility, embargo, inability to
obtain or delay in obtaining governmental approvals, permits, licenses or
allocations, fuel or power shortages and rationing, lack of available
coal to ship, legal impediments to the transportation or storage of coal
or the use or operation of the Facility, any inability or failure of the
Facility to transship coal within its designed capacity because of faulty
design, construction, manufacture, erection or materials, or otherwise,
lack of available trains, hopper cars, river barges or tugs, equipment
failures of any kind, and other like or similar occurrences, whether of
the kind specifically enumerated above or otherwise, which like or
similar occurrences are not reasonably within the control of the party
claiming Force Majeure.
ARTICLE XI
RESOLUTION OF DISPUTES; ARBITRATION
The parties hereto shall attempt in good faith to
negotiate between themselves a settlement or resolution of any dispute
which may arise under this Agreement. If no such settlement or
resolution is reached within sixty (60) days after the existence of a
dispute, such dispute shall be submitted to arbitration in the following
manner. Either party hereto may request arbitration by delivery of
written notice to the other party, and within fifteen (15) days after
delivery of such notice each party shall appoint one arbitrator, and the
two arbitrators so appointed shall appoint a third arbitrator. If either
party shall fail to appoint an arbitrator, or if their respective
arbitrators shall be unable to agree upon a third arbitrator, the
arbitrator or arbitrators not so appointed shall be appointed by the
American Arbitration Association.
All arbitrations hereunder shall be held in Chicago,
Illinois, under the rules of the American Arbitration Association in
effect at the time, although such proceedings need not be conducted under
the auspices of the Association. The parties agree that there shall be
no suspension of work nor of payment when any such arbitrable dispute
arises, or while it is subject to arbitration.
The award of any two of the arbitrators shall be final and
binding upon the parties, and a decree or judgement on the award may be
entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, all matters involving
disputes as to financial or accounting matters shall be submitted to a
panel of three accountants who are members of accounting firms of
recognized national standing, and who shall be selected as provided
above.
The costs incurred by OJT in connection with the
arbitration of the Annual Operating Budget or the Operating Statement
shall be a Reimbursable Cost, except in instances where the position or
claim of OJT is specifically found by the arbitrator to be without
reasonable basis, in which case OJT shall bear its own cost.
The parties hereto shall give notice of any arbitration or
other proceedings pursuant to this Article XI to each lender providing
the Facility Financing.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES
12.1 Interstate Representations.
Interstate hereby represents and warrants to OJT, which
representations shall survive the execution and delivery of this
Agreement, as follows:
(a) Interstate has full power and authority to enter into
this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement, and the performance thereof, has been
authorized by all corporate action required on the part of Interstate;
and
(b) The execution, delivery and performance of this
Agreement on the part of Interstate has received whatever consents,
approvals and other authorizations as may be required from any
governmental authority pursuant to existing law, and Interstate has
received opinions of counsel to such effect.
(c) The execution, delivery and performance of this
Agreement on the part of Interstate will not conflict with any provision
of any indenture, agreement or other instrument to which Interstate is a
party or by which it or its properties are bound.
12.2 OJT Representations.
OJT hereby represents and warrants to Interstate, which
representations and warranties shall survive the execution and delivery
of this Agreement, as follows:
(a) OJT has full power and authority to enter into this
Agreement and to perform its obligations hereunder, and that the
execution and delivery of this Agreement, and the performance hereof, has
been authorized by all corporate and other action required on the part of
OJT; and
(b) Based upon the representations of qualified
environmental consultants, OJT believes that all permits, approvals and
authorizations of all governmental agencies required for the use and
operation of the Facility and Ancillary Hardware either have been
obtained or can be obtained within a reasonable period without
jeopardizing the continuous use of the Facility.
ARTICLE XIII
MISCELLANEOUS
13.1 Delays.
Neither party hereto shall be liable for any delay or
default with respect to performance of its obligations hereunder
occasioned by any Force Majeure condition or occurrence, and the time for
performance in any such instance shall be extended for a period equal to
the delay caused by such condition or occurrence, provided that except as
provided in Section 8.2(b)(iii) hereof, neither the occurrence of any
Force Majeure condition nor any other event of any sort shall relieve
Interstate of its obligations to pay when due the charges payable
pursuant to Article III. Promptly after a party becomes aware of any
Force Majeure condition, such party shall give written notice thereof,
specifying the nature and probable duration of such condition and the
resultant delay.
13.2 Notices.
(a) All notices and instructions permitted to be given or
required hereunder shall be deemed sufficiently given if delivered in
person or mailed by Registered or Certified Mail, postage prepaid, as
follows:
(a) If to OJT:
TO: Orba-Johnson Transshipment Company
c/o Orba Corporation
One Gothic Plaza
Fairfield, New Jersey 07006
Attention: President
and:
c/o Johnson Bros. Corporation
P.O. Box 1002
Litchfield, Minnesota 55355
Attention: President
(b) If to Interstate:
TO: Interstate Power Company
1000 Main Street
Dubuque, Iowa 52001
Attention: President
Either party may change the address for sending of notices
by giving notice in compliance herewith.
(b) Any notices hereunder shall also be given to any
lenders providing the Facility Financing and to any assignee of OJT's
rights hereunder.
13.3 Entire Subject Matter.
This Agreement, together with the appendices referred to
herein) contains the entire agreement of the parties hereto with respect
to the subject matter hereof and may not be altered or amended except by
an instrument in writing executed by all of the parties hereto, provided
that after the Facility Financing has been consummated, no such
alteration or amendment shall be effective without the written consent of
the lender thereof and of any assignee of OJT's rights hereunder. This
Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and which, together, shall constitute one and
the same instrument.
13.4 Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Iowa applicable to agreements
made and to be performed in such state.
13.5 Binding Nature.
This Agreement shall be binding upon and, subject to the
provisions of Section 13.6, shall inure to the benefit of Interstate and
OJT and their respective successors, assigns, receivers and other
representatives.
13.6 Assignment.
(a) Neither party shall have the right to assign any of
its rights, duties or obligations under this Agreement without the prior
written consent of the other party, provided, however, that (i) either
party, upon thirty (30) days' prior written notice, may assign this
Agreement to any other firm or corporation controlling, controlled by or
under common control with it, but no such assignment shall relieve the
assignor from liability hereunder, and (ii) as permitted by Subsection
(b) below, OJT may assign its rights hereunder in connection with
obtaining the Facility Financing.
(b) The parties acknowledge that OJT contemplates making
a security assignment to the lender(s) providing the Facility Financing
of OJT's rights to payments due under Sections 3.4(a), 5.5, 7.2 and 8.2,
and its rights to enforce the performance of Interstate's obligations
hereunder (but excluding any obligations or liabilities of OJT
hereunder), including the rights of OJT to receive the Base Charge Per
Ton in the manner contemplated hereby and subject to the terms hereof.
No consent or acknowledgement by Interstate of any such assignment by OJT
of its rights hereunder shall in any manner whatsoever obligate
Interstate to assume any obligation or liability, whether as endorser,
guarantor, surety or otherwise, with respect to any indebtedness of OJT
or any security issued by it or on its behalf.
Upon any such assignment by OJT, the parties hereto
recognize and agree that, to the extent set forth in said assignment or
in other documents relating to the Facility Financing, OJT will be
prohibited, without the prior consent of said assignee, from giving
consents, reaching mutual agreement with Interstate, amending this
Agreement, acting with respect to the resolution of certain disputes or
arbitration or taking certain other action contemplated by this
Agreement.
13.7 Representatives of Parties.
(a) Interstate hereby designates Earl Forslund as project
manager with respect to the Facility. OJT shall be entitled to deal with
such project manager as the duly authorized representative of Interstate
with respect to all actions to be taken by Interstate. Interstate
reserves the right to change the designation of the project manager from
time to time upon advance written notice to OJT.
(b) OJT hereby designates William E. Hall II as project
manager with respect to the Facility. Interstate shall be entitled to
deal with such project manager as the duly authorized representative of
OJT with respect to all actions to be taken by OJT. OJT reserves the
right to change the designation of project manager from time to time upon
advance written notice to Interstate.
13.8 Article and Section Headings.
The use of Article and Section headings herein is merely
for convenience of reference and shall not be construed to limit, broaden
or affect the meaning of the provisions contained in each paragraph. The
illegality or invalidity of any provisions of this Agreement shall not
impair, affect or invalidate the other provisions of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by one of their duly authorized officers, effective as of the
date first above written.
Executed in the INTERSTATE POWER COMPANY
presence of:
BY /s/ D. J. Carlson
Title: Vice President
ORBA-JOHNSON TRANSSHIPMENT COMPANY
By ORBA Transshipment Corporation
of Iowa, a Partner
By /s/ C. H. Ricker, Jr.
Title: Executive Vice President
By Johnson Bros. Transshipment
Corporation of Iowa, a Partner
By /s/ Walter D. Johnson
Title: Secretary
Agreement of ORBA and JBC
The undersigned ORBA Corporation and Johnson Bros.
Corporation are executing this Agreement solely to evidence their
respective consent and agreement to the provisions of Sections 4.7 and
5.3 hereof, and for no other purpose whatsoever.
ORBA CORPORATION
By /s/ C. H. Ricker, Jr.
Title: Executive Vice President
JOHNSON BROS. CORPORATION
By /s/
Title: Vice President
STATE OF MINNESOTA)
) ss
COUNTY OF HENNEPIN)
On the 4th day of December, 1979, before me, the undersigned,
in and for said County and State, personally appeared D. J. Carlson, to
me personally known, who, being duly sworn, did say that he is the Vice
President of Interstate Power Company; that the seal affixed thereto is
the seal of said corporation; that said instrument was signed and sealed
on behalf of said corporation by authority of its Board of Directors;
that the said D. J. Carlson as such officer acknowledged the execution of
said instrument to be the voluntary act and deed of said corporation, by
it and by him voluntarily executed.
/s/ W. A. Whitlock
Notary Public in and for said
County and State
(SEAL)
W. A. WHITLOCK
NOTARY PUBLIC - MINNESOTA
HENNEPIN COUNTY
My Commission Expires June 16, 1985
STATE OF MINNESOTA)
) ss
COUNTY OF HENNEPIN)
On the 4th day of December, 1979, before me, the undersigned,
in and for said County and State, personally appeared Charles H. Ricker,
Jr. to me personally known, who being duly sworn, did say that he is the
President of ORBA Transshipment Corporation of Iowa, one of the partners
of ORBA-Johnson Transshipment Company, an Iowa partnership, that said
corporation has no seal; that said instrument was signed by him on behalf
of such corporation as a partner of such partnership by authority of the
board of directors of such corporation; and that the said Charles H.
Ricker, Jr. in such capacity acknowledged the execution of said
instrument to be the voluntary act of said corporation as a partner of
such partnership, by it and him voluntarily executed.
/s/ W. A. Whitlock
Notary Public in and for said
County and State
(SEAL)
W. A. WHITLOCK
NOTARY PUBLIC - MINNESOTA
HENNEPIN COUNTY
My Commission Expires June 16,
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On the 4th day of December, 1979, before me, the undersigned, in and
for said County and State, personally appeared Walter D. Johnson to me
personally known, who, being duly sworn, did say that he is the Secretary
of Johnson Bros. Transshipment Corporation of Iowa, one of the partners
of ORBA-Johnson Transshipment Company, an Iowa partnership; that said
corporation has no seal; that said instrument was signed by him on behalf
of such corporation as a partner of such partnership by authority of the
board of directors of such corporation; and that the said Walter D.
Johnson in such capacity acknowledged the execution of said instrument to
be the voluntary act of said corporation as a partner of such
partnership, by it and him voluntarily executed.
/s/ W. A. Whitlock
Notary Public in and for said
County and State
(SEAL)
W. A. WHITLOCK
NOTARY PUBLIC - MINNESOTA
HENNEPIN COUNTY
My Commission Expires June 16, 1985
SCHEDULE A
TO
COAL TRANSSHIPMENT AGREEMENT
Tract I
The Fractional North 1/2, N1/2, NW1/4, Fractional Section 30, T66N, R4W,
5th P.M., Lee County, Iowa, described by the following metes and bounds:
Beginning at the NW corner of said Sec. 30; thence East, 19 chains, 1,254
ft., to the original meander line of the Mississippi River; thence
Southerly parallel with the shoreline to the south line of the N1/2,
N1/2, NW1/4, said Sec. 30; thence west with said line to the west line of
said Sec. 30; thence North, 667.5 ft. with the section line to the point
of beginning and subject to public road easement over the West 33 ft. and
an 80 ft. railroad right of way along the Mississippi River, and
excepting therefrom the House Tract sold to Walter and Marcia Caldwell.
(Vollie Rose Farm)
Tract II
The Fractional North 106.0 ft. of the S1/2, N1/2, NW1/4, Fractional
Section 30, T66N, R4W, 5th P.M., Lee County, Iowa, fronting 106.0 ft. on
the East side of the Keokuk-Montrose River Road and extending to the
Mississippi River, containing 3.0 acres, including the county highway
right of way along the west boundary and the Burlington Northern Railroad
right of way along the river, and excepting therefrom the House Tract
sold to Walter and Marcia Caldwell. (Richard C. Bryant and Barbara A.
Bryant Tract)
Tract III
Commencing at the NW corner of Fractional Section 30, T66N, R4W, 5th
P.M., Lee County, Iowa; thence S00deg55'E, 600.9 ft. with the section
line and centerline of county road to the point of beginning; thence
S89deg52'E, 600 ft.; thence N19deg30'E, 452 ft.; thence S89deg52'E, 150
ft.; thence S00deg08'W, 600 ft.; thence N89deg52'W, 900 ft. to the
section line and centerline of county road; thence N00deg55'E, 173.5 ft.
to the point of beginning and subject to public road right of way along
the west boundary. (Caldwell House Tract)
Tract IV
The S1/2, N1/2, of the Fractional NW1/4, Section 30, except the North 106
ft. thereof, and all of the S1/2, Fractional NW1/4, Section 30 which is
north of the following described line:
Beginning on the West line of said Fractional Sec. 30 at a point
located 1258.7 ft. south of the NW corner of said Sec. 30; thence East,
33 ft. to the east right of way line of the county road (River Road);
thence the following courses with an existing fence: S63deg26'E, 76.6
ft.; S52deg57'E, 147.6 ft.; S79deg29'E, 159.7 ft.; S44deg23'E, 326.3 ft.;
S00deg14'E, 457.2 ft. to a corner located 400 ft. normal to the Bryant
south property line; thence N89deg46'E, 589.7 ft. parallel and 400 ft.
normal to the said south property line to a point located 60 ft. normal
to the westerly right of way line of the Burlington Northern Railroad;
thence S04deg56'W, 301.2 ft. parallel to an 50 ft. normal to westerly
right of way of the Burlington Northern Railroad; thence East to the
Original Meander Line of the Mississippi River.
except, the right of way of the Burlington Northern Railroad along
the Easterly side of said tracts;
a strip of land along the Easterly side of said tract heretofore
conveyed to the Keokuk and Hamilton Water Power Company by two deeds
recorded in Deed Book 73, at pages 281 and 294; and
a strip of land Sixty (60') feet in width along the Westerly side of
said tracts conveyed to Lee County, Iowa, for road purposes
described in Deed Book 77, page 179. (Bryant Tract)
Tract V
A wedge shaped tract in the SE corner of Section 24, T66N, R5W, 5th P.M.,
described as follows: Beginning at the SE corner of said Sec. 24, thence
North, 75 ft. with the section line thence West, 285.5 ft. to the
centerline of Keokuk-Montrose River Road; thence with said road
centerline the following courses and distances: S03deg40'E, 448 ft. and
S35deg00'E, 398 ft. to the South line of said Sec. 24; thence East, 28.6
ft. to the place of beginning, of which 0.60 acre is subject to road
right of way.
Also, a rectangular tract in the SW corner of Frac. Sec. 19, T66N, R4W,
5th P.M., described as follows: beginning at the southwest corner of
said Sec. 19; thence North, 1449 ft. with the section line; thence East,
820 ft. to the westerly right of way line of the Burlington Northern
Railroad; thence S09deg21'E, 1465 ft. with said railroad right of way
line to the south line of said Sec. 19; thence West, 1058.5 ft. to the
section corner and point of beginning. (Alyn Erickson Tracts)
Tract VI
The West Half (W1/2) of the Southeast Quarter (SE1/4) of Section 24,
T66N, R5W, of the 5th P.M., Lee County, Iowa, containing 80 acres, and
subject to public road right of way along the south and west boundaries.
(Paul D. Boyd and Vera M. Boyd Tract)
Tract 1:
The Northwest Quarter (NW 1/4) of Fractional Section 30, Township 66
North, Range 4 West of the 5th P.M., Lee County, Iowa, EXCEPTING
therefrom the following:
The South 166.6 feet thereof;
The right of way of the Burlington Northern Railroad along the
easterly side of said tract;
A strip of land along the easterly side of said tract conveyed to
the Keokuk and Hamilton Power Company by two deeds recorded in Deed Book
73, at Pages 281 and 294;
A strip of land 60 feet in width along the Westerly side of said
tract conveyed to Lee County, Iowa, for road purposes described in Deed
Book 77, Page 179; and
That part thereof lying North of the following described line:
Beginning at a point on the West line of said Fractional Section 30
at a point located 1258.7 feet South of the NW corner of said Section 30;
thence East 33 feet to the east right of way line of the County road
(River Road); thence the following courses with an existing fence: South
63deg26' East, 76.6 feet; South 52deg57' East, 147.6 feet; South 79deg29'
East, 159.7 feet; South 44deg23' East, 326.3 feet; South 00deg14' East,
457.2 feet to a corner located 566.6 feet normal to the 1/4 Section line;
thence North 89deg46' East, 589.7 feet parallel with and 566.6 feet
normal to the 1/4 Section line to a point located 50 feet normal to the
westerly right of way line of the Burlington Northern Railroad; thence
South 04deg56' West, 301.2 feet parallel with and 50 feet normal to the
said railroad right of way; thence North 89deg46' East to the original
meander line of the Mississippi River, extending parallel with and 266.6
feet normal to the 1/4 Section line.
Tract 2:
All that part of Lots Thirty-three (33), Thirty-four (34) and One
Hundred Eighty-Six (186) in the Town of Galland, formerly known as
Nashville, which lies East of the Keokuk, and Montrose River Road; also
those parts of the North one-half (N1/2) of Broadway Street, and West
one-half (W1/2) of Main Street adjacent to said portion of said lots
except for Railroad Right of Way.
Tract 3:
That part of the South One Hundred Sixty-six and Six-tenths (166.6)
feet of the fractional Northwest Quarter (NW1/4) of Section Thirty (30)
Township Sixty-six (66) North, Range Four (4) West, which lies easterly
of a line drawn parallel to, 45 feet Westerly of and normal to the
westerly right of way line of the Burlington Northern Railroad, except
that part thereof included within said right of way.
Tract 4:
All that part of the following described premises: the Fractional
Northwest Quarter of the Southwest Quarter of Section Thirty, Township
Sixty-six north, Range Four West in Lee County, Iowa, except the north
400 feet thereof; lying easterly of a line drawn parallel with, 25 feet
westerly of and normal to the westerly right of way line of the
Burlington Northern Railroad, except that part thereof included within
said right of way.
Tract 5:
A 1.11 Acre Tract in the Southeast quarter (SE1/4) of Section
Twenty-four (24), Township Sixty-six (66) North, Range Five (5) West of
the 5th Principal Meridian, Montrose Township, Lee County, Iowa, fronting
on the Easterly side of River Road and described by the following metes
and bounds:
Commencing at the Southeast Corner of said Southeast Quarter (SE1/4)
of Section Twenty-four (24); thence North, One Thousand Six Hundred
Seventy-seven and Eight-tenths (1667.8) feet with the Section Line;
thence West One Hundred Ninety-one and Eight-tenths (191.8) feet to the
Point of Beginning; thence continuing West, Two Hundred Sixteen and Two-
tenths (216.2) feet to the centerline of River Road; thence Northerly,
Three Hundred Thirty-five and Six-tenths (335.6) feet with a Three
Hundred Seventy (370) Foot Radius Curve Concave Southeasterly to the
centerline of an entrance roadway; thence with said centerline the
following courses and distances; South Forty-five (45) Degrees Twenty-
eight (28) minutes East, Two Hundred Forty-six and Eight-tenths (246.8)
feet and East Twenty-two and Five-tenths (22.5) feet; thence South One
Hundred Fifty and Nine-tenths (150.9) feet to the point of beginning,
containing One and Eleven Hundredths (1.11) Acres, of which the Westerly
Thirty-three (33) feet is subject to right of way for River Road, Lee
County, Iowa.
Tract 6:
A Two (2) Acre Tract Fronting Two Hundred Ninety-seven (297.0) feet
on the East side of the County River Road, located in the Southeast
Quarter (SE 1/4) of the Southeast Quarter (SE 1/4) of Section Twenty-four
(24), Township Sixty-six (66) North, Range Five (5) West, of the Fifth
Principal Meridian, Lee County, Iowa, and described by the following
metes and bounds: Beginning on the East line of said Section Twenty-four
(24) at a point located Seven Hundred Seventy-five (775) feet North of
the Southeast Corner; thence West Two Hundred Eighty-five and Five-tenths
(285.5) feet to the center of the Keokuk-Montrose River Road; thence
North Three (03) Degrees Forty (40) Minutes West, Two Hundred Ninety-
seven (297.0) feet with the said Center of the Road; thence East Three
Hundred Four and Five-tenths (304.5) feet to the Section line; thence
South Two Hundred Ninety-six and Four-tenths (296.4) feet with the
Section line to the point of beginning and containing Two and One-
hundredths (2.01) Acres with the Westerly Thirty-three (33) feet, more or
less, subject to Public Road Right-of-way, in Lee County, Iowa.
Tract 7:
Lots One Hundred Seven (107), One Hundred Eight (108) and One
Hundred Nine (109) in the Town of Galland, (Formerly Nashville) in Lee
County, Iowa; also those parts of the West one-half (W1/2) of Main
Street, South one-half (S1/2) of Broadway Street, and East one-half
(E1/2) of Alley, all adjacent to said lots except Keokuk and Montrose
River Road.
Tract 8:
All of the South half of Section Nineteen (19), Township Sixty-six
(66), Range Four (4) lying West of the right-of-way of C. B. & Q.
Railroad, South of a line beginning at the center of the County Highway
on the West line of Lot One Hundred Eighty-two (182) in the town of
Galland; thence Easterly following the center line of the highway to the
center line of Prospect Street in said town; thence South on the center
line of Prospect Street to the line dividing former Lots One Hundred
Fifty-three (153) and One Hundred Fifty-four (154) in said town, produced
Westerly; thence East on said produced line and on line between former
Lots One Hundred Fifty-three (153) and One Hundred Fifty-four (154) and
on line between former Lots One Hundred Nine (109) and One Hundred Ten
(110) and said line produced Easterly to the center line of vacated Main
Street in this portion of said town; thence South on said center line of
vacated Main Street to center line of vacated Harrison Street; thence
East on center line of vacated Harrison Street to the right of way of
said C. B. & Q. Railroad, and North of a line beginning on the West line
of said Section Nineteen (19), Fourteen Hundred Forty-nine (1449) feet
North of the Southwest corner of said Section Nineteen (19), said point
being in the center of the West line of former Lot One Hundred Seventy-
eight (178) in the town of Galland; thence East on center line of former
Lots One Hundred Seventy-eight (178) and One Hundred Sixty-one (161) and
the North line of former Lots One Hundred Forty-seven (147), One Hundred
Sixteen (116) and Ninety-seven (97), Eight Hundred Twenty (820) feet,
more or less, to the Westerly right of way line of C. B. & Q. Railroad,
in Lee County, Iowa.
Tract 9:
A 4.61 Acre Tract fronting 2670.4 Feet on the West side of the
Burlington Northern Railroad, located in Section Thirteen (13), Township
Sixty-six (66) North, Range Five (5) West, of the 5th P.M., Lee County,
Iowa, more particularly described as follows:
Commencing at the Northwest Corner of the Southeast Quarter of said
Section Thirteen (13): thence Easterly, 575.00 Feet with the North line
of said Southeast Quarter (SE 1/4); thence North 52deg24' East, 301.7
Feet, more or less, to the Westerly right of way line of the Burlington
Northern Railroad, being 33 feet normally distant from and parallel to
the centerline of said Railroad; thence South 30deg21'10" East, 983.2
feet with said Right of Way line to the Southeast Corner of a Tract
presently owned by John E. and Mary J. Koehler, said Southeast corner
being the true point of beginning; thence South 55deg25'00" West, 75.2
feet with the North line of Union Electric Company's Lot 48 to the
Southwest Corner of the Tract; thence North 30deg21'10" West, 2675.96
feet on a line 75 feet normally distant from and parallel to said
Westerly Right of Way line to the centerline of an existing 30 foot
access road; thence North 59deg38'57" East, 75.00 feet with the
centerline of said access road to the Westerly Right of Way Line of said
Railroad and the Northwest Corner of the Tract; thence South 30deg21'10"
East, 2670.4 feet with the Westerly Right of Way Line to the point of
Beginning, containing 4.61 Acres, more or less, of which the Northerly
.03 Acre is subject to said access roadway easement, being 15 foot normal
and parallel to the centerline of said access roadway.
Tract 10:
The North Six and Eighty-eight Hundredths (6.88) Acres in the
Southeast Quarter (SE 1/4) of Section Twenty-four (24), Township Sixty-
six (66) North, Range Five (5) West, Fifth Principal Meridian, Lee
County, Iowa, located South and East of the centerline of River Road;
described by the following metes and bounds:
Beginning at the Southeast corner of this tract, located on the East
line of said Section Twenty-four (24) at a point One Thousand Four
Hundred Seventy-seven and Three-tenths (1477.3) feet North of the
Southeast corner of the Section; thence West, Three Hundred Thirty and
Five-tenths (330.5) Feet to the centerline of the River Road; thence the
following courses and distances with said centerline of roadway;
Northwesterly, One Hundred Forty and One-tenth (140.1) Feet with a Seven
Hundred Sixteen and Two-tenths (716.2) Foot Radius Curve Concave Westerly
(L.C. North Twelve (12) Degrees Fifty-two (52) Minutes West, One Hundred
Thirty-nine and Nine-tenths (139.9) Feet) and tangent to the following
course; North Nineteen (19) Degrees Forty (40) Minutes West, Eighty-seven
and Six-tenths (87.6) Feet; Northeasterly, Six Hundred Seventeen and Two-
tenths (617.2) Feet with a Three Hundred Ninety-five and Fourteen
Hundredths (395.14) Foot Radius Curve Concave Easterly and tangent to the
preceding course (L.C. North Twenty-five (25) Degrees Five (05) Minutes
East, Five Hundred Fifty-six and Thirty-seven Hundredths (556.37) Feet);
North Sixty-nine (69) Degrees Fifty (50) Minutes East, Sixty-nine and
Six-tenths (696) Feet; Northeasterly, Ninety-seven and Three-tenths
(97.3) Feet with a Two Hundred Eighty-six and Forty-eight Hundredths
(286.48) Foot Radius Curve Concave Southerly (L.C. North Seventy-nine
(79) Degrees Fifty-five (55) Minutes East, Ninety-six and Eight-tenths
(96.8) Feet) to the East line of said Section; thence South, Seven
Hundred Sixty-two and Seven-tenths (762.7) Feet with the Section Line to
the point of beginning, containing Six and Thirteen Hundredths (6.13)
Acres exclusive of the West and Northerly Thirty-three (33) Feet that is
subject to public road right of way, in Lee County, Iowa.
EXCEPTING THEREFROM: Beginning at a point 1477.3 Feet North of the
Southeast Corner of Section 24, Township 66, North, Range 5 West, which
is also the Northeast corner of a tract presently owned by Theodore
Charles Breakbill, thence due North with the East line of said Section
200 Feet; thence West to the center line of the Keokuk-Montrose River
Road approximately 387.4 feet; thence Southerly following the center line
of said River Road 208.4 feet to a point due West of point of beginning;
thence due East to the point of beginning with the Northerly line of said
Breakbill tract 330.5 feet, subject to the right of way of said River
Road and containing approximately 1-1/2 acres.
ALSO EXCEPTING THEREFROM: A 1.11 Acre Tract in the Southeast
Quarter of Section 24, Township 66 North, Range 5 West of the 5th P.M.,
Montrose Township, Lee County, Iowa, fronting on the Easterly side of
River Road and described by the following metes and bounds:
Commencing at the Southeast Corner of said Southeast Quarter of
Section 24; thence North 1,677.8 Feet with the Section Line; thence West
191.8 Feet to the Point of Beginning; thence continuing West 216.2 Feet
to the centerline of River Road; thence Northerly 335.6 Feet with a 370
Foot Radius Curve Concave Southeasterly to the centerline of an entrance
roadway; thence with said centerline the following courses and distances;
South 45 Degrees 28 Minutes East, 246.8 Feet and East 22.5 Feet; thence
South 150.9 Feet to the point of beginning, containing 1.11 acres, of
which the Westerly Thirty-three feet is subject to right of way for River
Road, Lee County, Iowa.
Tract 11:
That part of the Southeast Quarter (SE 1/4) of Section Thirteen
(13), in Township Sixty-six (66) North, Range Five (5) West of the Fifth
Principal Meridian, in Lee County, Iowa, described as follows, to-wit:
Beginning at the Southwest Corner of the Southeast Quarter (SE 1/4) of
said Section Thirteen (13); thence South 89 Degrees East 1165 Feet, the
South line of said Section Thirteen (13) to the Westerly right of way
line of the Chicago, Burlington and Quincy Railroad; thence North 28
Degrees 45 Minutes West thereon 1800 feet; thence North 63 Degrees 59
Minutes West 430 feet; thence South 82 Degrees 14 Minutes West 193 feet
to the Intersection of the center lines of the relocated Keokuk and
Montrose Wagon Road and Miller's Creek; thence along the center line of
said Miller's Creek on the following courses: South 71 Degrees 30
Minutes West 60 Feet, South 24 Degrees 15 Minutes West 128 Feet, South 70
Degrees 00 Minutes West 262 Feet to the West line of the Southeast
Quarter (SE 1/4) of the Northwest Quarter (NW 1/4) of the Southeast
quarter (SE 1/4) of said Section Thirteen (13); thence South 1 Degree 5
Minutes West 837.4 feet; thence South 89 Degrees 04 Minutes East 649.5
feet; thence South 00 Degrees 45 Minutes West 664.4 feet, more or less,
to the place of beginning.
Excepting therefrom that part lying Westerly of the relocated
Keokuk-Montrose Wagon Road, and further excepting therefrom the said
relocated Keokuk-Montrose Wagon Road extending across the same and being
60 feet in width; also that part conveyed to Lee County, Iowa for road
purposes by Easement for Public Highway document dated September 13,
1977, filed for record November 18, 1977 in Deed Book 169 at Page 434.
Tract 12:
All that part of the north 400 feet of the Northwest Quarter of the
Southwest Quarter of Fractional Section 30, Township 66 North, Range Four
West, lying easterly of a line drawn parallel to and 25 feet Westerly of
and normal to the Westerly right of way line of the Burlington Northern
Railroad, except that part thereof included within said right of way.
Tract 13:
That part of the East Half of the SE 1/4 of Section 24, Township 66,
Range 5 lying South of center of public highway running East and West
through said tract as located on June 1, 1912, and West of the public
highway running North and South through said tract, being known as the
Keokuk to Montrose Highway, in Lee County, Iowa.
Parcel 13-1:
All that part of the Southeast 1/4 of Fractional Section 13,
Township 66 North, Range 5 West, 5th P.M., Lee County, Iowa,
described as follows: Commencing at the Northwest corner of said
Southeast 1/4; thence Easterly on the North line of said Southeast
1/4, 575 feet; thence N52deg24'E, 301.7 feet to the Westerly right
of way line of the Burlington Northern Railroad; thence
Southeasterly along said Westerly right of way line 983.2 feet to
the point of beginning; thence continuing on said Westerly right of
way line 465.3 feet to a point distant 1800 feet measured along said
Westerly right of way line from the South line of said Southeast
1/4; thence N63deg09'W, 430 feet; thence S82deg14'W, 62.75 feet;
thence N43deg52'30"W, 59.43 feet; thence N55deg26'E, 306.12 feet to
the point of beginning.
Parcel 19/24-1:
All that part of the Northeast 1/4 of Fractional Section 24,
Township 66 North, Range 5 West, 5th P.M., and the Northwest 1/4 of
Fractional Section 19, Township 66 North, Range 4 West, 5th P.M.,
Lee County, Iowa, and Lots 211, 212 and 213, Short Street and
Franklin Street, as platted for the Town of Galland (formerly
Nashville), lying East of the Keokuk and Montrose River Road and
lying West of the Westerly right of way line of the Burlington
Northern Railroad.
Parcel 19-2:
All that part of Lots 103, 104, 105 and 106, as platted for the Town
of Galland (formerly Nashville), Lee County, Iowa, lying West of the
Westerly right of way line of the Burlington Northern Railroad.
Also, that part of the North 1/2 of Harrison Street lying East of
the centerline of Main Street and West of the Westerly right of way
line of the Burlington Northern Railroad, and that part of the East
1/2 of Main Street lying North of the Westerly extension of the
South line of Lot 103 and West of the Westerly right of way line of
said railroad, all as platted for the Town of Galland (formerly
Nashville), Lee County, Iowa.
Parcel 19-2A:
All that part of Lots 31 and 32, as platted for the Town of Galland
(formerly Nashville), Lee County, Iowa, lying East of the Keokuk and
Montrose River Road.
Also that part of the West 1/2 of Main Street, as platted for the
Town of Galland (formerly Nashville), Lee County, Iowa, lying North
of the Easterly extension of the South line of Lot 32, Town of
Galland, and West of the Westerly right of way line of the
Burlington Northern Railroad.
Parcel 19-3:
All that part of the Southwest 1/4 of Fractional Section 19,
Township 66 North, Range 4 West, 5th P.M., Lee County, Iowa,
described as follows: Beginning at the intersection of the South
line of said Fractional Southwest 1/4 and the Easterly right of way
line of the Burlington Northern Railroad, said point lying 1148.1
feet East of the Southwest corner of said Fractional Southwest 1/4;
thence 38deg39'W along said Easterly right of way line 2692 feet to
the North line of said Fractional Southwest 1/4; thence Easterly on
said Fractional 1/4 Section line 150 feet to the bank of a creek;
thence Southerly and Southwesterly 350 feet on said bank of creek;
thence S68deg39'E, 2350 feet to the intersection of the West bank of
the Des Moines Rapids Canal and the South line of said Fractional
Southwest 1/4; thence Westerly on said Section line 60 feet to the
point of beginning, including portions of Lots 38-42 and 102-106,
Union, Harrison, Main and Broadway Streets, and the alley adjacent
to Lots 51-54, but excluding Lots 49-55, as platted for the Town of
Galland (formerly Nashville).
Parcel 19-3A:
All that part of the Fractional Northwest 1/4 of Section 19,
Township 66 North, Range 4 West, 5th P.M., Lee County, Iowa, being
an irregularly shaped strip of land lying East of and abutting the
Easterly right of way line of the Burlington Northern Railroad and
comprising part of Lots 5, 8, 9, 10, 15, 16, 17, 18 and 37 in the
Town of Galland (formerly Nashville) and Main Street, Liberty
Street, Monroe Street and Wall Street, in the platted Town of
Galland (formerly Nashville), more particularly described as
follows, to wit: Commencing at the intersection of the said
Easterly right of way line and the South line of said Fractional
Northwest 1/4 Easterly 693.2 feet from the Southwest corner thereof;
thence North 8deg39' West 696 feet on said Easterly right of way
line; thence Northwesterly 1960 feet by a 50 minute curve to the
Left on said right of way line to the West line of said Fractional
Northwest 1/4; thence Northerly 70 feet thereon to bank of the
Mississippi River; thence Southeasterly and Southerly following the
shore line of said river 2870 feet more or less to the South line of
said Fractional Northwest 1/4; thence Westerly 150 feet thereon to
the place of beginning.
Parcel 13/24-1:
All that part of the Southeast 1/4 of Fractional Section 13,
Township 66 North, Range 5 West, 5th P.M., Lee County, Iowa, lying
South of the centerline of Miller's Creek, and the Northeast 1/4 of
Fractional Section 24, Township 66 North, Range 5 West, 5th P.M.,
Lee County, Iowa; all of same lying East of the Easterly right of
way line of the Burlington Northern railroad.
A tract formerly submerged by the Mississippi River consisting of 5.76
acres in the NW 1/4, Fractional Section 30, T66N, R4W, 5th P.M. described
by the following metes and bounds:
Beginning on the north line said NW 1/4, Frac. Sec. 30 at a point
1254.0 ft. (19 chains) east of the NW corner said NW 1/4, Frac. Sec. 30;
thence East, 305.5 ft. with the Section Line; thence S08deg39'E, 782.4
ft. parallel with the shore line and Burlington Northern Railroad; thence
West 446.6 ft. to the easterly right of way line of the Burlington
Northern Railroad and ordinary high water line of the Mississippi River;
thence Northerly, 106.3 ft. with said right of way line to the south line
of the N 1/2, NW 1/4, NW 1/4, said Frac. Sec. 30; thence East, 133.0 ft.
with said south line of the N 1/2, NW 1/4, NW 1/4, Frac. Sec. 30 to a
point located 150 ft. normally distant from the centerline tangent of the
Burlington Northern Railroad; thence N08deg39'W, 675.2 ft. parallel with
the railroad tangent and west shoreline of the Mississippi River to the
point of beginning. (INRC Leased Tract).
1. Easement over, across, and under that portion of real estate
conveyed to the Chicago, Burlington and Quincy Railroad in Deed Book 137,
page 380, dated September 21, 1964, and assigned by assignment dated
October 28, 1977 and filed for record October 28, 1977 in Deed Book 169
at page 375.
2. Easement rights granted from Edna Fern Fortune, a widow, to
Orba-Johnson Systems, Inc. by document dated October 31, 1977 and filed
for record October 31, 1977 in Deed Book 169 at Page 403 of the records
of Lee County, Iowa; said Easement covering property legally described
as: That part of the Fractional Southwest Quarter (SW 1/4) of the
Southwest Quarter (SW 1/4) of Section 30 on Township 66 North, Range 4
West of the 5th P.M., lying Easterly of a line drawn parallel with and 25
feet Westerly of and normal to the Westerly right-of-way line of the
Burlington Northern Railroad, except that part thereof included within
said right-of-way.
Schedule 1.2
To Coal Transshipment Agreement
Design and Construction Factors Determining
Capacities of Facility and Ancillary Hardware
A. System 1 - Receiving/Stockpiling System
Components:
a. Unit Train Handling:
Car Dumper and Car Positions
b. Stocking - out Conveyor System:
Belt Feeders #1 and #2 and
Stocking - out Conveyor #1
Capacity:
Design Rate capacity of 3,000 tons of coal per hour (2,000 lbs.
per ton). Design rate is maximum instantaneous rate of
handling coal achieved at any time during operation of System.
B. System 2 - Reclaim/Barge Loading System
Components:
a. Storage Reclaim System:
Vibratory Feeders and Reclaim Conveyor #2
b. Barge Loading System:
Barge Loading Shuttle Conveyor #3 and Shuttle
Traverse Drive
Capacity:
Design Rate capacity of 1,500 tons per hour (2,000 lbs. per
ton). Design rate is maximum instantaneous rate of handling
coal achieved at any time during operation of System.
C. System 3 - Storage
On-ground storage capacity of at least 150,000 tons of Amax
Coal Co. coal from its Belle Ayr Mine near Gillette, Wyoming
(average density) compacted with normal and usual means.
D. Ancillary Hardware
a. Operation assumes use of leased D9 Caterpillar Dozer and
988 Caterpillar Front-end Loader for all compaction,
storage and loading operations.
b. Basic minimal spare parts inventory to be located at site;
some spare parts to be available from inventory at other
similar facilities managed by Orba.
EX-10.c
INTERSTATE AMENDMENT AGREEMENT
This Agreement dated as of September 1, 1981 (the "Interstate
Amendment Agreement") between ORBA-JOHNSON TRANSSHIPMENT COMPANY, AN IOWA
PARTNERSHIP ("OJT") and INTERSTATE POWER COMPANY, a Delaware corporation
("Interstate"),
W I T N E S S E T H:
WHEREAS, OJT is an Iowa partnership formed pursuant to a Second
Amended Partnership Agreement dated as of December 20, 1979 (the
"Partnership Agreement") between Johnson Bros. Transshipment Corporation
of Iowa, an Iowa corporation ("J-Sub"), which is a wholly-owned
subsidiary of Johnson Brothers Corporation, a Minnesota corporation
("Johnson Bros."), and Orba Transshipment Corporation of Iowa, an Iowa
corporation ("O-Sub"), which is a wholly-owned subsidiary of Orba
Corporation, a Delaware corporation ("Orba");
WHEREAS, Interstate Power Company ("Interstate") designated OJT to
acquire a rail-to-barge coal transloading and storage facility located on
the right descending bank of the Mississippi River at River Mile 371,
North of Keokuk, Iowa (the "Facility") and engaged OJT and the Facility
for the receiving, storage and transshipment of coal, and OJT so acquired
and agreed to so operate, and has so operated, the Facility;
WHEREAS, Interstate and OJT have entered into a Second Amended and
Restated Coal Transshipment Agreement, dated as of December 20, 1979,
effective October 3, 1979, which agreement was recorded on December 20,
1979 in Book 9 at page 152 in the Records of Lee County, Iowa (the
"Transshipment Agreement"), and OJT is operating the Facility upon the
terms and conditions thereof;
WHEREAS, OJT and The Travelers Insurance Company, on its own behalf
and on behalf of a certain separate account maintained by it
(collectively, the "Lender"), entered into two Bond Agreements, dated as
of December 20, 1979 (collectively, the "1979 Agreement"), pursuant to
which the Lender loaned OJT $27,000,000 for the long-term financing of
the Facility and pursuant to which OJT issued its 10 3/8% First Mortgage
Bonds, due March 1, 1996 (the "1979 Bonds");
WHEREAS, pursuant to a Representation Agreement dated as of December
20, 1979 between OJT and Interstate (the "Representation Agreement"),
Interstate provided OJT with certain representations, warranties and
covenants, the rights under which were assigned by OJT to the Lender for
the benefit of the holders of the 1979 Bonds;
WHEREAS, Lender, acting on behalf of a certain separate account
maintained by it, is entering into a Bond Agreement, dated as of the date
hereof, pursuant to which the Lender will loan OJT up to $540,000 for
financing the planning and installation of certain environmental control
equipment for the Facility, and OJT will issue its 15 1/2% First Mortgage
Bonds, Series B, due July 1, 1986 (the "Series B Bonds") to the Lender as
evidence of such loan;
WHEREAS, in order to finance additions or improvements to the
Facility, the Lender may, from time to time, make further purchases of
first mortgage bonds, to be issued in additional series by OJT, pursuant
to additional bond agreements between OJT and the Lender (the 1979
Agreement, the Series B Bond Agreement and any such additional bond
agreements, collectively referred to herein as the "Bond Agreement"; the
1979 Bonds, the Series B Bonds and any additional bonds issued pursuant
to any such additional bond agreements between OJT and the Lender,
collectively referred to herein as the "Bonds"); and
WHEREAS, pursuant to a Security Agreement and Assignment of
Contracts, dated as of December 20, 1979, as amended as of September 1,
1981 (the "Security Agreement"), OJT has assigned to Lender all of its
right, title and interest in, to and under the Collateral (as defined in
the Security Agreement), including its rights under the Transshipment
Agreement, in order to secure the prompt and complete payment and
performance when due of all of the Obligations (as defined in the
Security Agreement); and
WHEREAS, pursuant to the terms of an Indemnity Assignment from OJT,
Orba and Johnson Bros. to the Lender, dated as of December 20, 1979 (the
"Indemnity Assignment"), and pursuant to the terms of a Consent and
Clarification, dated as of October 3, 1979, OJT, Orba and Johnson Bros.
assigned to the Lender for the benefit of all holders of the 1979 Bonds
all their rights under an indemnity letter (the "Indemnity Letter") dated
October 3, 1979 from Interstate to Orba and Johnson;
WHEREAS, in order to induce the Lender to enter into the Series B
Bond Agreement and any such additional bond agreements which may be
entered into between the Lender and OJT from time to time to finance
additions or improvements to the Facility, and in consideration of the
Lender's entering into the Series B Bond Agreement and purchasing the
Series B Bonds pursuant to the terms thereof, and in consideration of the
Lender's entering into any additional bond agreements between the Lender
and OJT to finance additions or improvements to the Facility and
purchasing any additional series of Bonds pursuant to the terms thereof,
OJT intending to be legally bound hereby has agreed to provide the Lender
with the protection and security provided by the following amendments to
the Transshipment Agreement, the Representation Agreement and the Consent
and Clarification contained herein;
WHEREAS, in order to induce the Lender and OJT to carry out the
transactions contemplated hereby and by the Transshipment Agreement,
Interstate has been requested by OJT and the Lender to provide, and
Interstate has agreed to provide, the amendments to the various
agreements contained herein;
WHEREAS, the Lender desires to amend the Representation Agreement,
the Transshipment Agreement and the Consent and Clarification so that the
holders of all Bonds will be entitled to all rights and benefits provided
to the holders of the 1979 Bonds under the Representation Agreement, the
Transshipment Agreement, the Security Agreement and the Indemnity
Assignment;
NOW THEREFORE, in consideration of the premises, of the agreements
of OJT contained in the Transshipment Agreement, of the agreements of OJT
and the Lender with respect to the long-term financing of the Facility
and additions and improvements thereto and of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
SECTION 1 REPRESENTATION AGREEMENT
1.1 The first paragraph and the "Witnesseth" clause of the
Representation Agreement are hereby amended to read as follows:
"This REPRESENTATION AGREEMENT dated as of December 20, 1979, as
amended as of September 1, 1981, between ORBA-JOHNSON TRANSSHIPMENT
COMPANY, an Iowa partnership ("OJT") and INTERSTATE POWER COMPANY, a
Delaware corporation ("INTERSTATE"),
W I T N E S S E T H:
WHEREAS, Interstate has designated OJT to acquire a rail-to-barge
coal transloading and storage facility located on the right descending
bank of the Mississippi River at River Mile 371, North of Keokuk, Iowa
(the "Facility") and has engaged OJT and the Facility for the receiving,
storage and transshipment of coal, and OJT has so acquired and agreed to
so operate the Facility;
WHEREAS, Interstate and OJT have entered into a Second Amended and
Restated Coal Transshipment Agreement, dated as of December 20, 1979,
effective as of October 3, 1979, as further amended as of September 1,
1981 (the "Transshipment Agreement"), pursuant to which OJT will so
operate the Facility and Interstate will make certain payments to OJT
upon the terms and conditions thereof;
WHEREAS, in order to obtain the requisite long-term financing for
the Facility, OJT entered into two Bond Agreements, dated as of December
20, 1979 (collectively, the "1979 Agreement") with The Travelers
Insurance Company, on its own behalf and on behalf of a certain separate
account maintained by it (collectively, the "Lender"), pursuant to which
the Lender loaned OJT up to $27,000,000 for the long-term financing of
the Facility and OJT issued its 10 3/8% First Mortgage Bonds (the "1979
Bonds") to the Lender as evidence of such loan;
WHEREAS, in order to obtain the financing for the planning and
installation of certain environmental control equipment for the Facility,
OJT proposes to enter into a Bond Agreement, dated as September 1, 1981,
with the Lender, acting on behalf of a certain separate account
maintained by it (the "Series B Bond Agreement"), pursuant to which the
Lender will loan OJT up to $540,000 for financing the planning and
installation of certain environmental control equipment for the Facility
and OJT will issue its 15-1/2% First Mortgage Bonds, due July 1, 1986,
(the "Series B Bonds") as evidence of such loan;
WHEREAS, in order to obtain additional financing for additions and
improvements to the Facility, OJT may propose, from time to time, to
enter into additional bond agreements with the Lender, pursuant to which
the Lender will loan OJT additional amounts and OJT will issue its first
mortgage bonds in additional series to the Lender as evidence of such
loans (the 1979 Agreement, the Series B Bond Agreement and any such
additional bond agreements entered into between OJT and the Lender,
collectively referred to herein as the "Bond Agreement"; the 1979 Bonds,
the Series B Bonds and any additional first mortgage bonds issued
pursuant to any such additional bond agreements, collectively referred to
herein as the "Bonds"); and
WHEREAS, in order to induce OJT and Lender to carry out the
transactions contemplated hereby and by the Transshipment Agreement,
Interstate has been requested by OJT and Lender to provide, and
Interstate has agreed to provide, certain representations, warranties and
covenants, all on the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the premises, of the agreements
of OJT contained in the Transshipment Agreement, of the agreements of OJT
and the Lender with respect to the long-term financing of the Facility
and additions or improvements thereto and of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1.2 Terms Defined. The definition of "Operative Agreements" in
Section 5.1 of the Representation Agreement is hereby amended to read as
follows:
"Operative Agreements - collectively, this Agreement, the
Transshipment Agreement, the 1979 Agreement, the Series B Bond Agreement,
any additional bond agreement entered into between OJT and the Lender to
finance additions or improvements to the Facility, and each of the
following agreements as defined in the Series B Bond Agreement, or in the
event Lender and OJT enter into any additional bond agreements to finance
additions or improvements to the Facility, as defined in the most recent
of such bond agreements then in effect: the Lease, the Mortgage, the
Guaranty Agreement, the Security Agreement, the Performance Guaranty
Agreements, the Indemnity Agreement, the Indemnity Assignment, the
Assignment of Option to Repurchase, the Escrow Agreement, the Amendment
Agreement, the Interstate Amendment Agreement and the Amendment to the
Mortgage and Security Agreement, as each such agreement may be amended or
supplemented from time to time."
1.3 Additional Provisions
(a) A new Section 2.18 is hereby added to the Representation
Agreement to read as follows:
"2.18 Financial Statements
The consolidated balance sheet of Interstate and its Subsidiaries as
of December 31, 1980 and related statements of income, retained earnings
and changes in financial position for the fiscal year ended on such date,
accompanied by a report as therein noted, by Deloitte, Haskins & Sells,
independent certified public accountants, and the consolidated balance
sheet of Interstate and its subsidiaries as of June 30, 1981 and the
related statements of income, retained earnings and changes in financial
position for the six months ended on such date, copies of which have been
delivered to Lender, have been prepared in accordance with generally
accepted accounting principles consistently applied, and present fairly
the financial position of Interstate and its Subsidiaries as of such
dates and the results of their operations for such periods. These
consolidated financial statements include the accounts of all
Subsidiaries of Interstate for the respective periods during which a
subsidiary relationship has existed."
(b) A new Section 2.19 is hereby added to the Representation
Agreement to read as follows:
"2.19 Business and Property
Interstate's Annual Report on Form 10-K for the fiscal year ended
December 31, 1980 filed by Interstate with the Securities and Exchange
Commission (the "Form 10-K") correctly describes the general nature of
the business and principal properties of Interstate and its
Subsidiaries."
1.4 Representations and Warranties. Interstate hereby warrants and
represents to OJT that the representations and warranties of Interstate
set forth in the Representation Agreement, as hereby amended, are true
and correct on and as of the date of execution and delivery of this
Agreement with the same force and effect as if such representations and
warranties had been made on and as of such date. Interstate hereby
affirms to OJT, as of the date of execution and delivery of this
Agreement, that it has complied with all covenants and agreements of
Interstate contained in the Representation Agreement and will comply with
all such covenants and agreements in the Representation Agreement, as
hereby amended.
SECTION 2 TRANSSHIPMENT AGREEMENT
2.1 Definition of Financial Terms. Subsection (b) of Section 3.2
of the Transshipment Agreement is hereby amended to read as follows:
"`Facility Financing' shall mean any long-term indebtedness incurred
by OJT to finance the construction or acquisition of the Facility,
including the planning, construction, acquisition and installation of any
modifications, additions or improvements to the Facility or Ancillary
Hardware required to meet the requirements of this Agreement, any portion
of the Ancillary Hardware and certain of the start-up expenses, and any
renewals or refinancings thereof, including any construction financings
assumed by OJT in connection with the acquisition of the Facility (the
"Construction Financing")."
2.2 The modifications, additions or improvements to the Facility or
Ancillary Hardware (as defined in the Transshipment Agreement, as
amended) for the purpose of complying with environmental requirements and
the costs related to the planning, construction, acquisition and
installation of said modifications, additions or improvements, which are
to be financed by the sale of the Series B Bonds, do not constitute
"Reimbursable Costs" as defined in Section 3.2(g) of the Transshipment
Agreement, as amended, and, notwithstanding the provisions of Section
1.5(e) of the Transshipment Agreement, the financing of such costs will
constitute "Facility Financing" as defined in Section 3.2(b) of the
Transshipment Agreement, as amended.
SECTION 3 CONSENT AND CLARIFICATION
3.1 The second paragraph of the introduction to the Consent and
Clarification of Interstate, dated as of December 20, 1979, is hereby
amended to read as follows:
"Interstate hereby acknowledges notice of the assignment by OJT,
ORBA and Johnson Bros. to The Travelers Insurance Company, on its own
behalf and on behalf of a certain separate account maintained by it (said
Travelers and said separate account being herein called collectively the
"Lender") of the right to enforce and collect directly from Interstate
all indemnities due pursuant to the Indemnity Letter to OJT, Orba or
Johnson Bros. for which OJT, Orba or Johnson Bros. would be obligated to
Lender (the "Assignment"). In order to induce Lender to carry out the
transactions contemplated by those certain Bond Agreements dated as of
December 20, 1979 (collectively, the "1979 Agreement"), that certain
Bond Agreement dated as of September 1, 1981 (the "Series B Bond
Agreement") and any future bond agreements which may be entered into from
time to time by Lender with OJT to finance additions or improvements to
the Facility (the 1979 Agreement, the Series B Bond Agreement and any
such additional bond agreements are collectively referred to herein as
the "Bond Agreement") and thereby to enable OJT to carry out its
obligations to Interstate pursuant to the Second Amended and Restated
Coal Transshipment Agreement dated December 20, 1979, as amended and
restated effective as of October 3, 1979, and as further amended as of
September 1, 1981 (the "Transshipment Agreement"), Interstate agrees
hereby to consent to such assignment by OJT, Orba and Johnson Bros. and
to confirm Lender's direct rights under the Indemnity Letter and to
hereby clarify the scope and substance of the indemnification provided to
Lender therein."
3.2 The first paragraph of Section 2 of the Consent and
Clarification is hereby amended as follows:
"Interstate hereby confirms that the Indemnity Letter may and shall
be interpreted and enforced so that Lender and any of its successors,
assigns, servants and agents, including without limitation, all of the
holders, from time to time, of the Bonds (as defined in the Series B Bond
Agreement, or, in the event Lender and OJT enter into any additional bond
agreements to finance additions or improvements to the Facility, as
defined in the most recent of such bond agreements then in effect) (such
holders herein called the "Lender Indemnitees") shall each be indemnified
by Interstate under the Indemnity Letter and, pursuant thereto,
Interstate shall protect, save, keep harmless and make whole each thereof
from and against, any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, expenses and disbursements
(including, without limitation, legal fees and expenses and claims
involving strict or absolute liability in tort) of any kind and nature
whatsoever ("Claims") imposed on, incurred by or asserted against any
Indemnitee, in any way relating to or arising out of any of the
following:"
SECTION 4 OTHER AMENDMENT AGREEMENTS
Interstate hereby consents to the terms of the Amendment Agreement,
dated as of September 1, 1981 (the "Amendment Agreement"), among OJT, O-
Sub, J-Sub, Orba, AMCA International Corporation, a Delaware corporation,
Johnson Bros., Northwestern Bank of Minneapolis, a national banking
association, the Lender and the other holders of the 1979 Bonds, and to
the terms of the Amendment to Mortgage and Security Agreement (the
"Amendment to Mortgage and Security Agreement"), dated as of September 1,
1981, between the Lender and OJT. Interstate acknowledges receipt of
copies of the Amendment Agreement and the Amendment to Mortgage and
Security Agreement.
SECTION 5 GENERAL
5.1 Notices. Any notice required or permitted to be given
hereunder shall be deemed to have been given when mailed, first
class, postage prepaid, addressed as follows:
(a) if to Interstate, at 1000 Main Street, Dubuque, Iowa 52001,
Attn: President; and
(b) if to OJT, at P.O. Box 768, River Road, Keokuk, Iowa 52632,
with a copy to OJT c/o Orba Corporation, Attn: President,
One Gothic Plaza, Fairfield, New Jersey 07006.
5.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Iowa.
5.3. Survival. All warranties, representations, and covenants made
by Interstate herein or in any certificate or other instrument delivered
by it or on its behalf under this Agreement or any of the other Operative
Agreements (as defined in the Series B Bond Agreement, or, in the event
the Lender and OJT enter into any additional bond agreements to finance
additions or improvements to the Facility, as defined in the most recent
of such bond agreements then in effect) shall be considered to have been
relied upon by OJT and Lender and shall survive the delivery of this
Agreement and the Bonds regardless of any investigation made by or on
behalf of either of them. All statements in any such certificate or
other instrument shall constitute warranties and representations by
Interstate hereunder.
5.4 Successors and Assigns. This Agreement shall inure to the
benefit of, and be binding upon, the successors and assigns of each of
the parties. The provisions of this Agreement are intended to be for the
benefit of all holders, from time to time, of the Bonds, and shall be
enforceable by any such holder, whether or not an express assignment to
such holder of rights under this Agreement has been made.
5.5 Counterparts. This Agreement may be executed in several
counterparts, such counterparts constituting but one and the same
agreement.
5.6 Authorization. The execution, delivery and performance of this
Agreement by Interstate has been duly authorized by the Executive
Committee of Interstate's Board of Directors.
5.7 Effective Date. This Agreement shall become effective when
counterparts are executed and delivered on behalf of the parties hereto.
Upon such effectiveness, the amendments contained herein shall be
effective as of September 1, 1981. The agreements amended hereby shall
remain in full force and effect, as so amended.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by one of their duly authorized officers, effective as of the
date first above written.
Executed in the
presence of:
/s/ T. H. Mahoney INTERSTATE POWER COMPANY
/s/ Ann M. Mongell By /s/ Clyde Kurlander
Title: Attorney in Fact
/s/ T. H. Mahoney ORBA-JOHNSON TRANSSHIPMENT COMPANY
By Orba Transshipment Corporation
of Iowa, a Partner
/s/ Ann M. Mongell By /s/ Thomas H. Peck
Title: Vice President
/s/ T. H. Mahoney By Johnson Bros. Transshipment
Corporation of Iowa, a Partner
/s/ Ann M. Mongell By /s/ Walter D. Johnson
Title: Secretary
STATE OF Connecticut )
) ss
COUNTY OF Hartford )
On the 15 day of September, 1981, before me, the undersigned, in and
for said County and State, personally appeared Walter D. Johnson to me
personally known, who, being duly sworn, did say that he is the Secretary
of Johnson Bros. Transshipment Corporation of Iowa, one of the partners
of Orba-Johnson Transshipment Company, an Iowa partnership, that said
corporation has no seal; that said instrument was signed by him on behalf
of such corporation as a partner of such partnership by authority of the
Board of Directors of such corporation; and that the said Walter D.
Johnson in such capacity acknowledged the execution of said instrument to
be the voluntary act of said corporation as a partner of such
partnership, by it and him voluntarily executed.
/s/ Ann M. Mongell
Notary Public in and for
said County and State
STATE OF Connecticut )
) ss
COUNTY OF Hartford )
On the 15 day of September, 1981, before me, the undersigned, in and
for said County and State, personally appeared Thomas H. Peck to me
personally known, who, being duly sworn, did say that he is the Vice
President of Orba Transshipment Corporation of Iowa, one of the partners
of Orba-Johnson Transshipment Company, an Iowa partnership, that said
corporation has no seal; that said instrument was signed by him on behalf
of such corporation as a partner of such partnership by authority of the
Board of Directors of such corporation; and that the said Thomas H. Peck
in such capacity acknowledged the execution of said instrument to be the
voluntary act of said corporation as a partner of such partnership, by it
and him voluntarily executed.
/s/ Ann M. Mongell
Notary Public in and for
said County and State
STATE OF Connecticut )
) ss
COUNTY OF Hartford )
On the 15 day of September, 1981, before me, the undersigned, in and
for said County and State, personally appeared Clyde Kurlander, to me
personally known, who, being duly sworn, did say that he is the Attorney
in Fact of Interstate Power Company, a Delaware corporation, that the
seal affixed thereto is the seal of said corporation; that said
instrument was signed and sealed on behalf of said corporation by
authority of the Executive Committee of its Board of Directors; that the
said Clyde Kurlander as such officer acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation, by it
and by him voluntarily executed.
/s/ Ann M. Mongell
Notary Public in and for
said County and State
EX-12
Computation of Ratio of Earnings to Fixed Charges
1991 1992 1993 1994 1995
(Thousands of Dollars)
Fixed Charges, as defined:
Interest on long-term debt $ 15,120 16,292 16,166 15,405 14,811
Other interest 1,605 586 596 1,771 2,325
Interest component of rents
charged to operating expenses 232 214 183 177 227
Total Fixed Charges, as defined $ 16,957 17,092 16,945 17,353 17,363
Earnings, as defined:
Net income $ 29,510 19,217 18,987 20,667 27,656
Add:
Income taxes 17,382 9,698 9,464 9,188 19,453
Fixed charges 16,957 17,092 16,945 17,353 17,363
Total Earnings, as defined $ 63,849 46,007 45,396 47,208 64,472
Ratio of Earnings to Fixed Charges 3.77x 2.69x 2.68x 2.72x 3.71x
Computation of Ratio of Earnings to Fixed Charges
and Preferred & Preference Dividends
1991 1992 1993 1994 1995
(Thousands of Dollars)
Fixed Charges, as defined:
Interest on long-term debt $ 15,120 16,292 16,166 15,405 14,811
Other interest 1,605 586 596 1,771 2,325
Interest component of rents
charged to operating expenses 232 214 183 177 227
Total Fixed Charges, as defined $ 16,957 17,092 16,945 17,353 17,363
Preferred & Preference Dividends,
as defined (a) 4,886 4,476 4,287 3,545 4,187
Fixed Charges and Preferred &
Preference Dividends, as defined $ 21,843 21,568 21,232 20,898 21,550
Earnings, as defined:
Net income $ 29,510 19,217 18,987 20,667 27,656
Add:
Income taxes 17,382 9,698 9,464 9,188 19,453
Fixed charges 16,957 17,092 16,945 17,353 17,363
Total Earnings, as defined $ 63,849 46,007 45,396 47,208 64,472
Ratio of Earnings to Fixed Charges
and Preferred & Preference
Dividends, as defined 2.92x 2.13x 2.14x 2.26x 2.99x
(a) Preferred and preference dividends have been adjusted by multiplying the
requirement by the ratio that income before income taxes bears to net
income. Such ratios were as follows: 159% in 1991, 151% in 1992, 150% in
1993, 145% in 1994 and 170% in 1995.
EX-13
INTERSTATE POWER COMPANY
Annual Report to Stockholders
1995
MANAGEMENT'S DISCUSSION AND ANALYSIS
MERGER
The Company, WPL Holdings, Inc. (WPLH) and IES Industries Inc. (IES) have
entered into an Agreement and Plan of Merger (Merger Agreement), dated
November 10, 1995, providing for: a) Interstate Power Company (IPC)
becoming a wholly-owned subsidiary of WPLH and b) the merger of IES with
and into WPLH, which merger will result in the combination of IES and WPLH
as a single holding company (collectively, the Proposed Merger). The new
holding company will be named Interstate Energy Corporation (Interstate
Energy) and IES will cease to exist. The Proposed Merger, which will be
accounted for as a pooling of interests, is subject to approval by the
shareholders of each company as well as several federal and state
regulatory agencies. The companies expect to receive the shareholder
approvals in the second quarter of 1996 and the regulatory approvals by
the second quarter of 1997.
The business of Interstate Energy will consist of utility operations and
various non-utility enterprises, and it is expected that its utility
subsidiaries will serve more than 870,000 electric customers and 360,000
natural gas customers in Iowa, Illinois, Minnesota and Wisconsin.
Under the terms of the Merger Agreement, the outstanding shares of WPLH's
common stock will remain unchanged and outstanding as shares of Interstate
Energy. Each outstanding share of IES common stock will be converted to
0.98 shares of Interstate Energy's common stock. Each share of the
Company's common stock will be converted to 1.11 shares of Interstate
Energy's common stock. It is anticipated that Interstate Energy will
retain WPLH's common share dividend payment level as of the effective time
of the merger. On January 24, 1996, the Board of Directors of WPLH
declared a quarterly dividend of 49.25 cents per share. This represents an
equivalent annual rate of $1.97 per share.
WPLH is a holding company headquartered in Madison, Wisconsin, and is the
parent company of Wisconsin Power and Light Company (WP&L) and Heartland
Development Corporation (HDC). WP&L supplies electric and gas service to
approximately 377,000 and 146,000 customers, respectively, in south and
central Wisconsin. HDC and its principal subsidiaries are engaged in
businesses in three major areas: environmental engineering and consulting,
affordable housing and energy services.
IES is a holding company headquartered in Cedar Rapids, Iowa, and is the
parent company of IES Utilities Inc. (Utilities) and IES Diversified Inc.
(Diversified). Utilities supplies electric and gas service to
approximately 333,000 and 174,000 customers, respectively, in Iowa.
Diversified and its principal subsidiaries are primarily engaged in the
energy-related, transportation and real estate development businesses.
Interstate Energy will be the parent company of Utilities, WP&L and IPC
and will be registered under the Public Utility Holding Company Act of
1935 (1935 Act), as amended. The merger agreement provides that these
operating utility companies will continue to operate as separate entities
for a minimum of three years beyond the effective date of the merger. In
addition, the non-utility operations of IES and WPLH will be combined
shortly after the effective date of the merger under one entity to manage
the diversified operations of Interstate Energy. The corporate
headquarters of Interstate Energy will be in Madison.
The Securities and Exchange Commission (SEC) historically has interpreted
the 1935 Act to preclude registered holding companies, with limited
exceptions, from owning both electric and gas utility systems. Although
the SEC has recently recommended that registered holding companies be
allowed to hold both gas and electric utility operations if the affected
states agree, it remains possible that the SEC may require as a condition
to its approval of the Proposed Merger that the Company, WPLH and IES
divest their gas utility properties, and possibly certain non-utility
ventures of IES and WPLH, within a reasonable time after the effective
date of the Proposed Merger.
Legislation to repeal the 1935 Act was introduced in Congress in 1995 and
is pending. No assurance can be given as to when or if such legislation
will be considered or enacted. The Staff of the SEC has also recommended
that the SEC "permit combination systems by registered holding companies
if the affected states concur", and the SEC has proposed rules that would
relax current restrictions on investment by registered holding companies
in certain "energy related", non-utility businesses. No prediction can be
made as to the outcome of these legislative and regulatory proposals.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities was $61 million in 1995. The funds
were primarily used to pay the company's construction program, to redeem
$14 million of 4 5/8% First Mortgage Bonds which matured, and to pay
common and preferred dividends. It is management's opinion that the
company has adequate access to capital markets and will be able to satisfy
anticipated capital requirements.
Construction expenditures were $29, $41 and $34 million in 1995, 1994 and
1993, respectively. For the five year period from 1996 through 2000,
construction expenditures are estimated to be $180 million. The company
anticipates that approximately 75% of the construction funds for years
1996 and 1997 will be generated internally. The 1996 and 1997 construction
programs are estimated to be $32 and $36 million, respectively. Budgeted
construction expenditures for 1997 and 1998 include approximately $14
million for a baghouse/precipitator at the Lansing unit #4 plant to comply
with the Clean Air Act.
The company has authorization from the Federal Energy Regulatory
Commission (FERC) to issue up to $70 million in short-term debt. At year
end 1995, a $55 million line of credit was available. Lines of credit are
generally used in support of commercial paper, which is the primary source
of short-term financing. At year end 1995, the company had $39.3 million
of commercial paper payable. The company projects that the short-term debt
will decline to $36 million at year end 1996.
At December 31, 1995, based upon the most restrictive earnings test
contained in the company's Indenture pursuant to which first mortgage
bonds are issued, the company could issue in excess of $200 million of
additional first mortgage bonds. The company's fixed charge coverage ratio
was 3.7 times for 1995 and 2.7 times for 1994 and 1993.
The company's stock price increased from $23.75 at year end 1994 to
$33.125 at year end 1995. Effective December 1994, the company elected to
purchase shares of common stock for the Dividend Reinvestment and Stock
Purchase Plan on the open market rather than issuing new stock. The
company anticipates that it will resume the issuance of new stock to
satisfy Dividend Reinvestment and Stock Purchase Plan requirements in the
third quarter of 1996.
Electric and gas rates include a fuel adjustment clause and a purchased
gas adjustment clause whereby increases or decreases in fuel and purchased
gas costs are included in current revenue without having changes in base
rates approved in formal hearings. Under present regulations, electric
capacity costs are not recovered from customers through fuel adjustment
clauses, but rather must be addressed in base rates in a formal rate
proceeding. However, any Iowa jurisdictional revenue from electric
capacity sales to other utilities is returned to customers through the
fuel adjustment clause.
The company is subject to regulation which recognizes only original cost
rate base. This may result in economic losses when the effects of
inflation are not recovered from customers on a timely basis.
NEW ACCOUNTING STANDARD - SFAS 121
The Company will be required to adopt Statement of Financial Accounting
Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" in 1996. The new
standard imposes stricter standards for regulatory assets by requiring
that such assets be probable of future recovery at each balance sheet
date. The company believes that the initial adoption of SFAS 121 will not
have a material impact on its financial position or results of operations.
POWER PURCHASE CONTRACTS
In 1992, the company entered into three long-term power purchase contracts
with other utilities. The contracts provide for the purchase of 255 MW of
capacity through April 2001. Energy is available at the company's option
at approximately 100% to 110% of monthly production costs for the
designated units. The three power purchase contracts required capacity
payments of $24.6, $24.6 and $24.1 million in 1995, 1994 and 1993,
respectively. Over the remaining life of the contracts, total capacity
payments will be approximately $130 million. The purchased power contract
payments are not for debt service requirements of the selling utility, nor
do they transfer risk or rewards of ownership.
The rate structure approved by the Minnesota Public Utilities Commission
(MPUC) does not provide for full recovery of purchased power costs
applicable to the Minnesota jurisdiction. A 1992 rate order by the MPUC
held that the company had 100 MW of excess capacity. The company is
seeking to adjust this disallowance in its current rate case.
The company has not filed for rate recovery of the allocable portions of
the purchased power payments in the Illinois and FERC jurisdictions. The
payments of approximately $2.5 million annually are expensed as incurred.
CLEAN AIR ACT
The company meets the existing federal and state environmental
regulations. The Federal Clean Air Act Amendments of 1990 requires
reductions in sulfur dioxide and nitrogen oxide emissions from power
plants. The most restrictive provisions relate to sulfur dioxide
emissions. Phase 1 of the Clean Air Act became effective January 1, 1995,
while Phase 2 is effective January 1, 2000. To comply with Phase 1, the
company has switched to low sulfur coal and installed low nitrogen oxide
burners. Although the financial impact of Phase 2 has not been fully
determined, Phase 2 regulations will affect approximately 87% of the
company's current generating capacity and will require capital, operating
and maintenance costs beyond those required for Phase 1. The company
anticipates the costs of compliance with the Clean Air Act will be
recovered through the ratemaking process.
COAL TAR DEPOSITS
Early this century, various utilities including the company operated
plants which produced manufactured gas for cooking and lighting. The
company's facilities ceased operations approximately 40 years ago when
natural gas pipelines were extended into the upper Midwest. Some of the
former gasification sites contain coal tar waste products which may
present an environmental hazard. The company has identified nine sites
which may contain hazardous waste from former coal gasification plants and
has recorded an estimated liability for its pro rata share of expenses
applicable to the sites.
Previous actions by Iowa, Illinois and Minnesota regulators have permitted
utilities to recover prudently incurred unreimbursed investigation and
remediation costs.
In 1957, the company purchased facilities in Mason City, Iowa, from Kansas
City Power & Light Company (KCPL) which included land previously used for
a coal gasification plant. Coal tar waste was discovered on the property
in 1984. In 1995, a settlement was reached with KCPL for sharing of costs
to remediate the site. A Remedial Investigation and Feasibility Study has
been approved and the company has assumed responsibility for managing the
remediation of the Mason City site. The current estimated cost of soil
remediation is $2.6 million, which will be paid by KCPL.
The company formerly operated a manufactured gas plant in Rochester,
Minnesota. Soil remediation was completed in 1995 and post-remediation
groundwater monitoring is underway. From 1991 through 1995, the company
incurred costs aggregating $6.7 million applicable to the Rochester site.
In addition to the Rochester site, the company owned or operated four
other manufactured gas plant sites in Minnesota: Albert Lea, Austin, New
Ulm and Owatonna. Potentially hazardous wastes associated with former coal
gasification operations have been identified at each site. The company
anticipates that these sites will be investigated in 1996 or 1997. When
the investigation process is complete, the company will be able to
determine if any remediation will be necessary.
In April 1995, the company received an accounting order from the MPUC
which allows the deferral of investigation and remediation costs
applicable to the Rochester and Albert Lea sites and further allows the
company to seek recovery in a rate case. The company's Minnesota gas rate
case filed in May 1995 seeks recovery of $4.9 million. The company filed a
petition in June 1995 for an accounting order which would allow it to
defer and seek recovery in a future rate case the costs applicable to the
three other Minnesota sites (Austin, Owatonna and New Ulm). Action by the
MPUC is pending.
In addition, the company has identified three other sites: Galena and
Savanna, Illinois, and Clinton, Iowa. Potentially hazardous wastes
associated with former coal gasification operations have been identified
at each of these sites. Little or no activity is expected at any of these
sites in 1996.
In 1994, the company filed a lawsuit against certain of its insurers to
recover the costs of investigating and remediating the former coal
gasification plants. Two insurers paid the company a total of $0.3 million
in 1995 in order to be discharged from the lawsuit. The trial against the
remaining insurers is expected to begin in Iowa in 1997. Neither the
company nor its legal counsel is able to predict the amount of any
insurance recovery, and accordingly, no potential recovery has been
recorded.
LARGE ELECTRIC CUSTOMERS
The company's six largest electric customers consumed a total of 1,752,340
MWH of electricity in 1995, which accounts for over 32 percent of total
MWH sales. These customers are involved in the production of agricultural,
chemical and cement products and their usage is generally not affected by
weather variations. The company is not aware of any plan by these
customers to significantly reduce consumption. Electric consumption by
these customers increased 4.9 percent over 1994, while 1994 consumption
was 3.0 percent over 1993. The aggregate 1995 rate for these customers was
approximately 3.4 cents per KWH.
DEMAND SIDE MANAGEMENT COSTS
Regulations in Iowa and Minnesota require that utilities conduct demand
side management or energy efficiency programs. The company's long-term
forecast projects that these programs may offset the need for
approximately 150 MW of generating capacity by the year 2001. Program
costs and related carrying costs are deferred pending regulatory prudency
reviews.
The company's Minnesota rates recover jurisdictional demand side
management expenditures and lost revenues. Other operating expenses for
1995, 1994 and 1993 include $0.6, $0.5 and $0.5 million, respectively, for
the amortization of Minnesota demand side management costs. A 1994 Iowa
Utilities Board (IUB) Order allows recovery of $6.7 million of deferred
Iowa demand side management costs incurred through 1992 over a four year
period; such recovery began October 1994. Other operating expenses for
1995 and 1994 include $1.2 and $0.3 million, respectively, for the
amortization of Iowa demand side management costs. As of December 31, 1995
and 1994, the total demand side management costs deferred were $23.1 and
$17.0 million, respectively. Of the $23.1 million deferred, approximately
$19.8 million relates to demand side management costs incurred in 1995,
1994 and 1993. The company anticipates filing in Iowa in 1996 for recovery
of costs incurred through 1995. Management believes that the amounts
deferred meet the criteria established for recovery as demand side
management costs.
ORDER 636
FERC Order 636, effective in late 1993, shifted primary responsibility for
gas supply acquisition from pipelines to local distribution companies such
as the company.
Order 636 provides a mechanism under which pipelines can recover prudently
incurred transition costs associated with the restructuring process. The
company paid $2.0 million of transition costs in 1995 and is currently
recovering these costs from customers through the purchased gas adjustment
clause. The company anticipates that under customary ratemaking practices,
future transition costs will be recovered from customers, and has recorded
on its balance sheet a liability and a corresponding regulatory asset in
the amount of $3.2 million.
INDUSTRIAL AND COMMERCIAL GAS CUSTOMERS
Current regulatory rules allow industrial and commercial customers to
purchase their gas supply directly from producers and use the company's
facilities to transport the gas. Transportation customers pay the company
a fee equivalent to the margin on a retail sale. Acting as a gas
transporter, rather than as a merchant, reduces the risk applicable to
taking ownership of the gas. Twenty-one large customers currently purchase
a majority of their gas requirements from producers or gas marketers.
Consumption for the three largest gas customers was up 4.4% over 1994 and
currently accounts for approximately 66% of system throughput. The
company's largest gas customer, which represents 31% of the company's
total gas throughput, is committed by contract for the next six years.
GAS SYSTEM PROFITABILITY
Over the last five years, gas operating income before income taxes has
averaged 5.5% of net gas utility plant. Environmental remediation costs,
unfavorable rate treatment and the offering of incentive rates contributed
to the low return. The company is seeking recovery of environmental
remediation costs from insurance as well as through rates.
RATE MATTERS
The company filed for rate increases in 1995 in the Iowa electric, Iowa
gas, Minnesota electric, and Minnesota gas jurisdictions. Such
applications seek to recover the costs associated with the purchased power
contracts, the environmental clean-up of former manufactured gas plant
sites, jurisdictional post-retirement benefit costs, an increased return
on common equity and attrition due to inflation.
The company filed an Iowa electric rate increase application in March
1995. The application requested an annual increase of $13.1 million.
Interim rates in an annual amount of $7.1 million were placed in effect on
June 29, 1995, subject to refund. A December 1995 IUB Order allowed an
annual increase of $6.6 million, including a return on common equity of
11.35%. In 1996, the company will refund to customers approximately
$250,000 collected in 1995 in excess of the final order. The 1995
financial statements include a provision for the refund.
The company filed an Iowa gas rate increase application in August 1995.
The application requested an annual increase of $2.2 million. Interim
rates in an annual amount of $1.3 million were placed in effect on October
20, 1995, subject to refund. The company and other parties to the rate
application have agreed on an increase of $1.1 million subject to approval
by the IUB. An IUB Order is expected by June 1996.
The company filed a Minnesota electric rate increase application in June
1995. The application requested an annual increase of $4.6 million (later
adjusted by the company to $3.3 million). Interim rates were not
requested. A MPUC Order is expected by April 1996.
The company filed a Minnesota gas rate increase application in May 1995.
The application requested an annual increase of $2.4 million, including a
return on common equity of 11.75%. Interim rates in an annual amount of
$1.5 million were placed in effect in June 1995, subject to refund. A MPUC
Order is expected by March 1996.
As discussed under Demand Side Management Costs, the company anticipates
filing in 1996 for recovery of Iowa demand side management costs incurred
in 1995, 1994 and 1993.
RESULTS OF OPERATIONS
The company's results of operations and financial condition are affected
by numerous factors, including weather, general economic conditions and
rate changes.
Earnings per share of common stock were $2.63 for 1995, compared with
$1.92 for 1994 and $1.73 for 1993. Hot summer weather, electric and gas
rate increases and cost cutting efforts contributed to the increased
earnings. The 1995 return on common equity was 13.0%, compared with 9.5%
for 1994 and 8.5% in 1993.
Electric retail sales for 1995 were unusually high primarily because of
warm and humid weather during the air conditioning season. KWH use per
residential customer was 8,280; 7,799 and 7,816 for years 1995, 1994 and
1993, respectively.
Electric "margin" is defined as electric revenue less the cost of fuel and
power purchased. Electric margins for years 1995, 1994 and 1993 were
$155.1, $142.0 and $137.8 million, respectively. The hot summer weather
boosted the 1995 electric margin for residential sales by approximately
$3.6 million. The Iowa electric rate increase implemented in June 1995
increased the electric margin by approximately $3.6 million.
Gas "margin" is defined as gas revenue less purchased gas cost. The gas
margins for 1995, 1994 and 1993 were $17.8, $15.0 and $15.4 million,
respectively. An increase in residential and transportation gas volumes of
2.3% and 7.8%, respectively, contributed to the higher gas margin. In
addition, interim rate increases in the Minnesota and Iowa gas rate cases
contributed $0.6 and $0.3 million, respectively.
Other operating expenses, excluding a MPUC deferred accounting order, were
$51.1, $51.9 and $48.6 million for 1995, 1994 and 1993, respectively.
Other operating expenses for 1995 include $1.5 million of merger and
strategic planning expenses. Other operating expenses for the years 1995,
1994 and 1993, include $1.0, $1.8 and $3.8 million, respectively, for
environmental investigation, remediation and litigation costs.
Maintenance expense for 1995 was $14.9 million, compared to $17.2 million
in 1994 and $16.8 million in 1993. The reduction is primarily due to cost
cutting efforts.
Depreciation expense was $29.3, $27.8 and $26.3 million, for 1995, 1994
and 1993, respectively. The increase is primarily due to additional
investment in pollution control equipment and the implementation of higher
depreciation rates approved by the MPUC.
Property taxes were $13.4, $13.7 and $14.5 million, for 1995, 1994 and
1993, respectively. The majority of the decline is applicable to a
decrease in assessed values in the state of Iowa.
The company and the Internal Revenue Service negotiated a settlement of
income tax audits in 1994, for tax years through 1991. To reflect the
settlement, the company recorded additional interest income and reduced
income tax expense. The additional interest income and reduced income tax
expense resulted in approximately $2.1 million of additional 1994 income.
Interest on long-term debt was $14.8, $15.4 and $16.2 million for 1995,
1994 and 1993, respectively. The decline is attributable to a 1994
Pollution Control Bond refinancing, as well as the maturity of $14 million
of 4 5/8% First Mortgage Bonds on May 1, 1995, and the 1993 maturity of $6
million of 4 3/8% First Mortgage Bonds. The percentage of total
capitalization attributable to long-term debt has declined from 45.4% at
year end 1994 to 44.8% at year end 1995.
Other interest charges for 1995 were $2.3 million, compared with $1.8
million for 1994 and $0.6 million for 1993. Interest on commercial paper
payable was $2.1, $0.7 and $0.3 million for 1995, 1994 and 1993,
respectively. The increased commercial paper interest expense is primarily
attributable to a higher average balance outstanding. At year end 1995,
the company had $39.3 million of short-term commercial paper payable,
compared with $35.6 million at year end 1994.
The company's investment in coal stockpiles was $15.8 million at December
31, 1995 and $19.4 million at December 31, 1994. Refinements to the
company's fuel delivery process have decreased the amount of inventory
required to carry the company over the winter.
The company's investment in gas stored underground was $2.4, $3.7 and $4.6
million at December 31, 1995, 1994 and 1993, respectively. The decline is
attributable to low gas prices during the summer injection season of 1995
and the cancellation of a storage service which had been used in the prior
two years.
Gas Sales 1995 MCF VOLUMES
Average 1995
Revenue 1995 vs. 1994
per MCF % of Total % Change
Three Largest Transportation $0.07 66.3% 4.4%
All Other Transportation 0.32 8.4 45.3
Residential 5.13 13.7 2.3
Commercial 4.31 8.0 1.0
Industrial 3.24 3.2 (28.2)
Other 2.91 0.4 144.3
100.0% 5.0%
Electric Sales 1995 KWH SALES
Average 1995 1994
Revenue 1995 vs. 1994 vs. 1993
per KWH % of Total % Change % Change
Six Largest Industrial 3.4 cents 32.3% 4.9% 3.0%
All Other Industrial 4.4 cents 27.4 4.6 8.9
Residential (Non-Heat) 7.6 cents 17.3 9.0 2.1
General Service (Commercial) 6.3 cents 10.7 1.4 (5.8)
Sales for Resale 3.6 cents 5.6 (36.0) 53.6
Farm 7.7 cents 2.9 0.1 (0.9)
Residential (Electric Heat) 6.4 cents 2.0 1.4 (4.3)
All Other Categories 7.8 cents 1.8 (8.9) (11.1)
Total Company 5.0 cents 100.0% 1.0% 5.8%
Statements of Income and Retained Earnings
For the years ended December 31 1995 1994 1993
(Thousands of Dollars)
OPERATING REVENUES:
Electric $274,873 $261,730 $255,759
Gas 43,669 45,920 53,709
Total operating revenues 318,542 307,650 309,468
OPERATING EXPENSES:
Operation:
Fuel for electric generation 62,164 61,384 64,059
Power purchased 57,566 58,339 53,936
Cost of gas sold 25,888 30,905 38,309
Other operating expenses 45,717 51,917 48,567
Maintenance 14,881 17,160 16,771
Depreciation and amortization 29,560 28,212 26,955
Income taxes:
Federal current 11,608 1,395 4,694
State current 3,549 454 1,445
Deferred taxes - net 6,506 7,092 3,856
Investment tax credit amortization (1,028) (1,028) (1,028)
Property and other taxes 15,990 16,298 17,080
Total operating expenses 272,401 272,128 274,644
OPERATING INCOME 46,141 35,522 34,824
OTHER INCOME AND DEDUCTIONS (1,690) 1,990 780
INCOME BEFORE INTEREST CHARGES 44,451 37,512 35,604
INTEREST CHARGES:
Long-term debt 14,811 15,405 16,166
Other interest charges 2,325 1,772 596
Borrowed funds used during construction (341) (332) (145)
Total interest charges 16,795 16,845 16,617
NET INCOME 27,656 20,667 18,987
PREFERRED AND PREFERENCE STOCK DIVIDENDS (2,458) (2,454) (2,861)
INCOME AVAILABLE FOR COMMON STOCK 25,198 18,213 16,126
RETAINED EARNINGS BEGINNING OF YEAR 55,893 57,397 60,648
DIVIDENDS ON COMMON STOCK (19,941) (19,717) (19,377)
RETAINED EARNINGS END OF YEAR $ 61,150 $ 55,893 $ 57,397
EARNINGS PER AVERAGE COMMON SHARE
OUTSTANDING based on 9,564,287;
9,478,741 and 9,316,387 shares,
respectively $ 2.63 $ 1.92 $ 1.73
DIVIDENDS PAID PER COMMON SHARE $ 2.08 $ 2.08 $ 2.08
The accompanying notes are an integral part of these financial statements.
Balance Sheets
ASSETS
As of December 31
1995 1994
(Thousands of Dollars)
UTILITY PLANT:
In Service:
Electric:
Production $374,489 $369,828
Transmission 183,858 178,891
Distribution 221,645 211,731
General 54,232 50,460
Total Electric 834,224 810,910
Gas 63,303 61,447
897,527 872,357
Less - accumulated depreciation 402,685 379,216
494,842 493,141
Held for future use 590 592
Construction work in progress 3,095 6,948
Net utility plant 498,527 500,681
OTHER PROPERTY AND INVESTMENTS 555 522
CURRENT ASSETS:
Cash and cash equivalents 1,537 1,537
Accounts receivable, less reserves of $200 27,797 22,350
Inventories - at average cost:
Fuel 19,332 24,220
Materials and supplies 5,509 5,208
Prepaid pension cost 3,870 3,702
Prepaid income tax 6,690 6,197
Other prepayments and current assets 614 2,252
Total current assets 65,349 65,466
DEFERRED DEBITS:
Regulatory assets 62,841 54,958
Unamortized debt expense 5,915 6,116
Other 1,129 1,102
Total deferred debits 69,885 62,176
TOTAL $634,316 $628,845
The accompanying notes are an integral part of these financial statements.
Balance Sheets
CAPITALIZATION AND LIABILITIES
As of December 31
1995 1994
(Thousands of Dollars)
CAPITALIZATION, per accompanying statements:
Common stock, par value $3.50 per share;
authorized - 30,000,000 shares; issued and
outstanding - 9,564,287 in 1995 and 1994 $ 33,475 $ 33,475
Additional paid-in capital 103,145 103,137
Retained earnings 61,150 55,893
Total common equity 197,770 192,505
Preferred stock (optional sinking fund) 10,819 10,819
Preferred stock (mandatory sinking fund) 24,036 23,933
Long-term debt 188,880 189,032
Total capitalization 421,505 416,289
CURRENT LIABILITIES:
Commercial paper 39,300 35,600
Long-term debt maturing within one year - 14,000
Accounts payable 11,868 14,133
Dividends payable - preferred stock 599 599
Payrolls accrued 2,846 2,634
Taxes accrued 16,758 13,778
Interest accrued 2,819 2,930
FERC Order 636 transition costs 3,200 5,200
Other 4,756 2,878
Total current liabilities 82,146 91,752
DEFERRED CREDITS AND OTHER NON-CURRENT
LIABILITIES:
Accumulated deferred income taxes 95,518 88,176
Accumulated deferred investment tax credits 18,041 19,069
Deferred pension cost 4,900 4,827
Accrued postretirement benefit cost 2,792 2,869
Environmental clean-up costs 6,860 3,470
Other 2,554 2,393
Total deferred credits and other non-current
liabilities 130,665 120,804
COMMITMENTS AND CONTINGENCIES
TOTAL $634,316 $628,845
Statements of Cash Flows
For the years ended December 31
1995 1994 1993
(Thousands of Dollars)
RECONCILIATION OF NET INCOME TO CASH FLOWS
FROM OPERATING ACTIVITIES:
Net Income $27,656 $20,667 $18,987
Adjustment for non-cash items:
Depreciation and amortization 29,560 28,212 26,955
Deferred income taxes 6,912 5,488 5,259
Investment tax credit amortization (1,028) (1,028) (1,028)
Equity funds used during construction (AFUDC) - (166) (68)
Prepaid pension cost 74 9 812
Changes in assets and liabilities:
Accounts receivable - net (5,447) 3,710 (1,998)
Inventories 4,599 (1,536) 3,751
Accounts payable and other current liabilities (6,415) 4,324 3,686
Accrued and prepaid taxes 2,379 (1,011) (2,602)
Interest accrued (111) (160) (1,061)
Other prepayments and current assets 1,469 (656) (249)
Rate refund payable 256 - (4,064)
Regulatory assets - deferred demand side
management costs (6,177) (7,295) (5,005)
Regulatory assets - other 4,263 (8,267) -
Other operating activities 3,275 721 1,930
Cash flows from operating activities 61,265 43,012 45,305
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (28,238) (40,600) (33,904)
Borrowed funds used during construction (AFUDC) (341) (332) (145)
Other 137 (658) (231)
Cash flows from investing activities (28,442) (41,590) (34,280)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock - 4,237 2,786
Issuance of preferred stock - - 27,250
Issuance of long-term debt - 13,250 94,000
Retirement of long-term debt (14,235) (13,487) (88,784)
Redemption of preferred and preference stock - - (25,474)
Debt and stock discount and financing expenses - (357) (8,795)
Dividends on common, preferred and preference
stock (22,288) (22,111) (22,331)
Sale of commercial paper - net 3,700 15,500 11,100
Cash flows from financing activities (32,823) (2,968) (10,248)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ - $(1,546) $ 777
CASH AND CASH EQUIVALENTS:
Beginning of year $ 1,537 $ 3,083 $ 2,306
End of year $ 1,537 $ 1,537 $ 3,083
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of interest capitalized) $16,655 $16,773 $17,588
Income taxes $11,134 $ 8,066 $ 8,863
The accompanying notes are an integral part of these financial statements.
Statements of Capitalization
As of December 31 1995 1994
(Thousands of Dollars)
COMMON EQUITY $197,770 46.9% $192,505 46.2%
CUMULATIVE PREFERRED STOCKS:
Authorized:
Preferred - 2,000,000 shares at $50.00 par value
Preference - 2,000,000 shares at $1.00 par value (A)
Issued and outstanding (B):
Redemption
Series Shares Price
Preferred with optional sinking fund provisions:
4.36% 60,455 $52.30 3,023 3,023
4.68% 55,926 $51.62 2,796 2,796
7.76% 100,000 $52.03 5,000 5,000
10,819 2.6% 10,819 2.6%
Preferred with mandatory sinking fund provisions:
6.40% 545,000 $53.20 27,250 27,250
Unamortized Discount on 6.40% Preferred Stock (1,990) (2,053)
Unamortized Issuance Expense on 6.40%
Preferred Stock (104) (108)
Unamortized Call Premiums on Preferred Stock (1,120) (1,156)
24,036 5.7% 23,933 5.8%
LONG-TERM DEBT:
First Mortgage Bonds:
6 1/8% Series due 1997 17,000 17,000
8 % Series due 2007 25,000 25,000
8 5/8% Series due 2021 25,000 25,000
7 5/8% Series due 2023 94,000 94,000
161,000 161,000
Pollution Control Revenue Bonds:
5.95% due 1996 to 1998 6,300 6,525
6 3/8% due 1998 to 2007 11,400 11,400
5.75% due 2003 1,000 1,000
6.25% due 2009 1,000 1,000
6.30% due 2010 5,600 5,600
6.35% due 2012 5,650 5,650
30,950 31,175
Other Long-Term Debt 104 115
Unamortized Discount on Long-Term Debt (3,174) (3,258)
Total Long-Term Debt - net 188,880 44.8% 189,032 45.4%
TOTAL CAPITALIZATION $421,505 100.0% $416,289 100.0%
(A) None outstanding.
(B) Redeemable at the option of the company upon 30 days notice at the
current prices shown.
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
1. Summary of Accounting Policies
GENERAL
The company is an operating public utility engaged primarily in the
generation, transmission, distribution and sale of electricity. The
company also distributes and sells natural gas. The company is subject to
seasonal variations common to the utility industry.
The financial statements are based on generally accepted accounting
principles, which give recognition to the ratemaking and accounting
practices of the Federal Energy Regulatory Commission (FERC) and state
commissions having regulatory jurisdiction over the company.
UTILITY PLANT
Utility plant is recorded at original cost. The cost of additions to
utility plant and replacement of units of property includes contracted
labor, company labor, materials, allowance for funds used during
construction and overheads. Repairs of property and replacement of items
less than units of property are charged to maintenance expense. The
original cost of units retired, plus removal costs, less salvage is
charged to accumulated depreciation. Substantially all property is subject
to the lien of the First Mortgage Bond Indenture.
DEPRECIATION
Depreciation is computed on the straight-line method based on net salvage
values and the estimated remaining service lives of depreciable property.
The provision for book depreciation as a percentage of the average balance
of depreciable property in service was 3.5% in 1995 and 1994 and 3.4% in
1993.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
AFUDC includes the net cost of borrowed funds and a reasonable rate on
equity funds used for construction. It was capitalized at gross rates of
6.0% for 1995, 6.3% for 1994 and 6.0% for 1993. Gross AFUDC rates are
computed in accordance with the FERC regulations, including approval to
incorporate demand side management costs in the formula. AFUDC does not
contribute to the current cash flow of the company. Under normal
regulatory practices, the company anticipates earning a fair rate of
return on such capitalized costs and recovery of those costs in customer
rates after completion of the related construction.
STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, the company considers all
liquid investments with a maturity of three months or less to be cash
equivalents.
REVENUES AND FUEL COSTS
Annual revenues do not include unbilled revenues for service rendered from
the date of the last meter reading to year end. The company's electric and
gas tariffs contain a fuel adjustment clause and a purchased gas
adjustment clause whereby increases or decreases in fuel costs are
included in current revenue without having changes in base rates approved
in formal hearings. Purchased capacity costs are not recovered from
electric customers through fuel adjustment clauses, but rather must be
addressed in base rates in a formal rate proceeding.
DEBT REACQUISITION PREMIUM
In accordance with normal regulatory practices, the company defers debt
redemption premiums and amortizes such costs over the life of the
replacement bonds.
REGULATORY ASSETS
Regulatory assets represent probable future revenue associated with
certain incurred costs. The company is subject to the provisions of
Statement of Financial Accounting Standards (SFAS) No. 71 "Accounting for
the Effects of Certain Types of Regulation".
Regulatory assets of $62.8 million are classified as deferred debits on
the balance sheet. Deferred income taxes, environmental clean-up costs and
FERC Order 636 transition costs have corresponding deferred credits.
Demand side management costs (DSM) and Minnesota deferred employee/retiree
benefits do not have corresponding liabilities. Regulators allow the
company to earn a return on DSM costs, but not on the other regulatory
assets.
At December 31, 1995, regulatory assets were as follows:
Regulatory Assets
(Millions of Dollars)
Deferred income taxes (Note 9) $27.8
Deferred demand side management (Note 12) 23.1
Environmental clean-up (Note 2) 6.2
FERC Order No. 636 transition costs (Note 8) 3.2
Employee/retiree benefits (Note 7) 2.4
Other 0.1
Total $62.8
NEW ACCOUNTING STANDARD
The company will be required to adopt SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" in 1996. The new standard imposes stricter standards for regulatory
assets by requiring that such assets be probable of future recovery at
each balance sheet date. The company believes that the initial adoption of
SFAS 121 will not have a material impact on its financial position or
results of operations.
SIGNIFICANT ESTIMATES
Significant estimates used in the preparation of the accompanying
financial statements include environmental remediation costs, depreciation
and projection of future employee pension and medical benefits. Such
estimates are based on informed judgement with appropriate consideration
to materiality. In the opinion of management, the financial statements
fairly state the company's financial position and the results of
operations.
CONCENTRATION OF SALES
The company provides service to six large electric customers which account
for over 32% of electric MWH sales. The company provides transportation
service to three large gas customers, which account for 66% of system
throughput. The company does not take title to the gas consumed by these
transportation customers. The Management's Discussion and Analysis section
of the Annual Report provides additional information regarding these large
electric and gas customers.
In addition, the company provides electric service to 163,394 electric
customers in 234 communities and 48,823 gas customers in 39 communities.
Credit risk for these customers is spread over a diversified base of
residential, commercial and small industrial customers.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior years financial
statements to conform with the presentation for 1995. Such
reclassifications had no impact on net income or stockholders' equity.
2. Environmental Regulations
The company is subject to various federal and state government
environmental regulations. The company meets existing air and water
regulations. The Federal Clean Air Act requires reductions in certain
emissions from power plants. The company has switched to a low sulfur coal
and installed low nitrogen oxide burners at the 217 MW plant affected by
Phase 1, which became effective January 1, 1995. Management anticipates
that additional costs incurred to comply with Phase 2 environmental
standards, which take effect January 1, 2000, will be recovered through
customer rates.
The company has identified nine sites which may contain hazardous waste
from former coal gasification plants and has recorded an estimated
liability for its pro rata share of expenses applicable to the sites.
In 1957, the company purchased facilities in Mason City, Iowa, from Kansas
City Power & Light Company (KCPL) which included land previously used for
a coal gasification plant. Coal tar waste was discovered on the property
in 1984. In 1995, a settlement was reached with KCPL for sharing of costs
to remediate the site. A Remedial Investigation and Feasibility Study has
been approved and the company has assumed responsibility for managing the
remediation of the Mason City site. The current estimated cost of soil
remediation is $2.6 million, which will be paid by KCPL.
The company formerly operated a manufactured gas plant in Rochester,
Minnesota. Soil remediation was completed in 1995 and post-remediation
groundwater monitoring is underway. From 1991 through 1995, the company
incurred costs aggregating $6.7 million applicable to the Rochester site.
In addition to the Rochester site, the company owned or operated four
other manufactured gas plant sites in Minnesota: Albert Lea, Austin, New
Ulm and Owatonna. Potentially hazardous wastes associated with former coal
gasification operations have been identified at each site. The company
anticipates that these sites will be investigated in 1996 or 1997. When
the investigation process is complete, the company will be able to
determine if any remediation will be necessary.
In April 1995, the company received an accounting order from the Minnesota
Public Utilities Commission (MPUC) which allows the deferral of
investigation and remediation costs applicable to the Rochester and Albert
Lea sites and further allows the company to seek recovery in a rate case.
The company's Minnesota gas rate case filed in May 1995 seeks recovery of
$4.9 million. The company filed a petition in June 1995 for an accounting
order which would allow it to defer and seek recovery in a future rate
case of costs applicable to the three other Minnesota sites (Austin,
Owatonna and New Ulm). Action by the MPUC is pending.
In addition, the company has identified three other sites: Galena and
Savanna, Illinois, and Clinton, Iowa. Potentially hazardous wastes
associated with former coal gasification operations have been identified
at each of these sites. Little or no activity is expected at any of these
sites in 1996.
In 1994, the company filed a lawsuit against certain of its insurers to
recover the costs of investigating and remediating the former coal
gasification plants. Two insurers paid the company a total of $0.3 million
in 1995 in order to be discharged from the lawsuit. The trial against the
remaining insurers is expected to begin in Iowa in 1997. Neither the
company nor its legal counsel is able to predict the amount of any
insurance recovery, and accordingly, no potential recovery has been
recorded.
Previous actions by Iowa, Illinois and Minnesota regulators have permitted
utilities to recover prudently incurred unreimbursed investigation and
remediation costs.
3. Fair Value of Financial Instruments
The estimated fair values of the company's financial instruments at year
end 1995 and 1994 did not vary significantly from their carrying values.
The estimated fair values were based on quoted market prices for the same
or similar issues or on the current rates for debt of the same remaining
maturities.
4. Preferred, Preference and Common Stock
In 1993, the company issued 545,000 shares of 6.40% $50 par value
preferred stock with a final redemption date of May 1, 2022. Under the
provisions of the mandatory sinking fund, beginning in 2003 the company is
required to redeem annually $1.4 million of 6.40% preferred stock (27,250
shares). The discount and other issuance expenses in an aggregate amount
of $2.1 million as of year end 1995 are reflected as an offset to
preferred stock and are being amortized to common equity.
Call premiums related to the 1993 retirement of the preferred and
preference stock in the amount of $1.1 million as of year end 1995 are
reflected as an offset to preferred stock and are being amortized to
common equity. The amortization transfers the amount of the call premiums
from preferred to common equity over the life of the refunding 6.40%
issue, but has no effect on net income.
In 1993, the company retired preferred and preference stock as follows:
Number of
Shares Total Redemption
Issue Retired Price (Thousands)
8% Preferred, $50 par 63,000 $ 3,206
9% Preferred, $50 par 116,643 $ 6,113
9%-A Preferred, $50 par 128,000 $ 6,652
$2.28 Preference, $1 par 400,000 $10,712
The company's Common Stock Dividend Reinvestment and Stock Purchase Plan
gives the company the option of issuing new stock or purchasing shares on
the open market. The Dividend Reinvestment Plan acquired 176,971; 44,868
and 60,299 shares of common stock on the open market during 1995, 1994 and
1993, respectively. The company received $4.2 million for 174,446 shares
of new common stock issued in the first eleven months of 1994 and $2.8
million for 92,093 shares of new common stock issued in 1993. None of the
authorized shares of preferred, preference or common stock are reserved
for officers and employees, or for options, warrants, conversions and
other rights.
5. Long-Term Debt
On May 1, 1995, $14 million of 4 5/8% First Mortgage Bonds matured. Total
debt maturities for the years 1996 through 2000 are $0.2, $17.2, $6.3,
$0.4 and $0.4 million, respectively.
Annual sinking fund requirements are $2.0, $1.8, $1.8, $1.8 and $1.8
million for the years 1996 through 2000, respectively. Such sinking fund
requirements for first mortgage bonds may be satisfied with property
additions at the rate of 167% of such requirements. Sinking fund
requirements for 1995 were met by property additions.
6. Short-Term Borrowings
The company had available bank lines of credit aggregating $55.0 million
at December 31, 1995. There are no compensating balances required, but
some of the banks require commitment fees; such fees were not significant.
The maximum amount of short-term borrowing at any month end in 1995, 1994
and 1993 was $46.8, $35.6 and $20.1 million, respectively, all in
commercial paper, with the average outstanding borrowing during the year
of $36.2, $15.6 and $9.4 million, respectively. The average interest rate
on borrowings was 5.96%, 4.73% and 3.29% for the years 1995, 1994 and
1993, respectively. At December 31, 1995, the interest rate was 5.85%.
7. Employee/Retiree Benefits
The company has a non-contributory defined benefit pension plan for all
full-time employees. Plan benefits are based primarily on years of service
and employee compensation. The company uses the "projected unit credit"
actuarial method in computing pension costs for accounting purposes. Plan
assets consist of high-grade bonds, commercial mortgages and other fixed
income investments. Company policy is to fund the plan under the
"aggregate" actuarial cost method to the extent deductible under tax
regulations. Contributions to the plan for the years ended December 31,
1995, 1994 and 1993 were $3.4, $3.4 and $2.8 million, respectively. In
addition to the pension plan, the company has a non-qualified supplemental
retirement plan which, as amended in 1995, provides a retirement benefit
for officers of the company.
The company is collecting an annual funding amount in customer rates and
anticipates that it will continue to do so. The cumulative difference
between the higher funded amount and the accounting pension cost amount is
a deferred credit on the balance sheet.
Pension Cost Components: 1995 1994 1993
(Thousands of Dollars)
Service cost $ 2,369 $ 2,668 $ 1,888
Return on plan assets (3,335) (1,707) (2,214)
Interest cost on projected benefit
obligation 3,778 3,710 3,504
Net amortization and deferral 196 (953) (1,270)
Net pension cost $ 3,008 $ 3,718 $ 1,908
The assumptions used for measurement purposes are as follows:
Discount rate for obligation 7.5% 7.5% 7.0%
Discount rate for expense 7.5% 7.0% 8.0%
Assumed rate of compensation increase 5.0% 5.0% 5.0%
Expected long-term rate of return 8.0% 7.0% 8.0%
Reconciliation of Funded Status
as of November 1:
Plan assets at fair value $49,568 $49,282 $48,827
Vested benefit obligation $35,024 $36,626 $34,242
Nonvested benefit obligation 1,970 2,365 1,728
Accumulated benefit obligation 36,994 38,991 35,970
Additional benefits based on
estimated future salary levels 16,972 13,547 13,872
Projected benefit obligation $53,966 $52,538 $49,842
Plan assets greater or (less) than
the projected benefit obligation $(4,398) $(3,256) $(1,015)
Unrecognized net obligation at
October 31, 1986, being amortized
over 16.1 years 2,412 2,753 3,094
Unrecognized prior service cost 911 3,487 399
Unrecognized net (gain)loss 4,945 718 2,340
Net prepaid pension cost $ 3,870 $ 3,702 $ 4,818
In addition to providing pension benefits, the company provides life
insurance for retired employees and health care benefits for 930 retirees
and spouses. Substantially all of the company's 902 full-time employees
and spouses become eligible for benefits if they reach retirement age
while working for the company. The estimated future cost of providing
these postretirement benefits is accrued during the employees' service
periods, and was $4.1, $4.9 and $4.9 million for 1995, 1994 and 1993,
respectively. Funding of the benefit obligation is concurrent with
recovery in customer rates. Plan assets consist of high-grade debt
securities. Assuming a one percent increase in the medical cost trend
rate, the company's 1995 cost of postretirement benefits would increase by
$0.5 million and the accumulated benefit obligation would increase by $4.1
million.
The table below sets forth the postretirement health care plan's
accumulated benefit obligation (in thousands):
December 31, 1995 January 1, 1995
Retirees $21,168 $18,902
Active plan participant 13,141 12,642
Total accumulated benefit obligation 34,309 31,544
Less fair value of plan assets 6,640 4,072
Accumulated postretirement benefit
obligation in excess of plan assets 27,669 27,472
Unrecognized net gain or (loss) 812 1,756
Unrecognized transition obligation (23,991) (25,253)
Accrued postretirement benefit cost $ 4,490 $ 3,975
The components of the estimated cost of postretirement benefits other than
pensions for the twelve months ended December 31, 1995 and 1994, are as
follows (in thousands):
1995 1994
Service cost $1,097 $1,205
Return on plan assets (440) (48)
Interest cost on accrued postretire-
ment benefit obligation 2,291 2,345
Amortization of transition obligation 1,543 1,543
Net amortization and deferral (377) (159)
Net cost $4,114 $4,886
The assumptions used for measurement purposes are as follows:
1996 1995
Discount rate for obligations 7.5% 7.5%
Discount rate for expense 7.5% 7.0%
Initial medical cost trend rate 8.0% 9.0%
Ultimate medical cost trend rate 6.0% 6.0%
Year that the medical cost trend
rate is assumed to decrease to
the ultimate rate 1997 1997
8. Rate Matters
IOWA
The company filed an Iowa electric rate increase application in March
1995. The application requested an annual increase of $13.1 million.
Interim rates in an annual amount of $7.1 million were placed in effect on
June 29, 1995, subject to refund. A December 1995 Iowa Utilities Board
(IUB) Order allowed an annual increase of $6.6 million, including a return
on common equity of 11.35%. In 1996, the company will refund to customers
approximately $250,000 collected in 1995 in excess of the final order. The
1995 financial statements include a provision for the refund. The company
filed an Iowa gas rate increase application in August 1995. The
application requested an annual increase of $2.2 million. Interim rates in
an annual amount of $1.3 million were placed in effect on October 20,
1995, subject to refund. The company and other parties to the rate
application have agreed on an increase of $1.1 million subject to approval
by the IUB. An IUB Order is expected by June 1996.
MINNESOTA
The company filed a Minnesota electric rate increase application in June
1995. The application requested an annual increase of $4.6 million (later
adjusted by the company to $3.3 million). Interim rates were not
requested. A MPUC Order is expected by April 1996. The company filed a
Minnesota gas rate increase application in May 1995. The application
requested an annual increase of $2.4 million, including a return on common
equity of 11.75%. Interim rates in an annual amount of $1.5 million were
placed in effect in June 1995, subject to refund. A MPUC Order is expected
by March 1996.
FEDERAL ENERGY REGULATORY COMMISSION (FERC)
FERC Order 636 provides a mechanism under which gas pipelines can recover
transition costs from local distribution companies. The company estimates
its remaining share of transition costs will aggregate approximately $3.2
million payable in declining annual installments from 1996 to 2005. The
company is recovering transition costs from customers.
9. Income Taxes
A deferred tax asset or liability is recognized for each temporary
book/tax difference. Corresponding regulatory assets or liabilities,
reflecting the anticipated future rate treatment, have also been
recognized. The balance sheet as of December 31, 1995, includes regulatory
assets and deferred tax liabilities in an equal amount of $27.8 million.
Investment tax credits have been deferred and are credited to operating
income over the lives of the property which gave rise to the credits.
The principal components of the company's deferred tax (assets)
liabilities recognized in the December 31, 1995 and 1994, balance sheet
are shown below:
Item: Thousands of Dollars
1995 1994
Property $84,865 $80,484
Energy Conservation Costs 7,589 5,195
Call Premiums on Reacquired Bonds 1,948 2,005
Unbilled Revenue (3,348) (3,310)
Other (2,226) (2,396)
Total $88,828 $81,978
Gross deferred assets $(6,690) $(6,197)
Gross deferred liabilities 95,518 88,175
Total $88,828 $81,978
The total income tax expense produces the overall effective income tax
rate shown in the table. The percentages are computed by dividing total
income tax expense by the sum of such tax expense and net income.
1995 1994 1993
Federal statutory tax rate 35.0% 35.0% 35.0%
Increases (reductions) in taxes resulting from:
State income taxes net of federal income tax benefit 5.7% 4.0% 4.7%
Investment tax credit amortization (2.2%) (3.4%) (3.6%)
Additional depreciation deducted for book purposes 1.5% 2.0% 2.0%
Other 1.3% (6.8%) (4.8%)
Overall effective income tax rate 41.3% 30.8% 33.3%
The current and deferred tax expense is comprised of (Thousands):
Federal and state currently payable $15,157 $1,849 $6,139
Deferred income tax - federal and state:
Additional tax depreciation - net 3,673 3,270 3,256
Coal contract buyout - - (526)
Energy efficiency costs 2,394 2,413 1,466
Environmental clean-up 154 2,010 (1,166)
Other 285 (601) 826
Investment tax credit amortization (1,028) (1,028) (1,028)
Federal and state currently payable -
other income and deductions (1,182) 1,276 497
Total $19,453 $9,189 $9,464
10. Jointly-Owned Utility Plant
The company has a 21.528% (134,300 KW) interest in a 624,000 KW coal-
fired unit (Neal #4), completed in 1979. Amounts at December 31, 1995 and
1994, included in utility plant were $82.0 million and the accumulated
provision for depreciation was $40.8 and $38.6 million, respectively. In
addition, the company has a long-term participation power purchase for
25,000 KW of Neal #4 generating capacity which expires in 2003. Minimum
future capacity payments under the participation power purchase agreement
are approximately $15.7 million. The 21.528% ownership share and the
long-term participation purchase provide the company with an aggregate of
159,300 KW of Neal #4 generating capacity.
The company also has a 4% (28,000 KW) interest in a 675,000 KW coal-fired
unit (Louisa #1), completed in 1983. Utility plant at December 31, 1995
and 1994, was $24.8 million and the accumulated provision for depreciation
was $9.6 and $8.8 million, respectively.
The company's share of direct expenses of Neal #4 and Louisa #1 is
included in the appropriate operating expenses in the statements of income
and retained earnings.
11. Purchased Power Contracts
The company has three long-term power purchase contracts with other
electric utilities. The contracts provide for the purchase of 255
megawatts of capacity through April 2001. The company is obligated to pay
the capacity charges regardless of the actual electric demand by the
company's customers. Energy is available at the company's option at
approximately 100% to 110% of monthly production costs for the designated
units.
The three power purchase contracts required capacity payments of $24.6,
$24.6 and $24.1 million in 1995, 1994 and 1993, respectively. Over the
remaining period of the contracts, total capacity payments will be
approximately $130 million.
In Iowa the IUB has concluded that the capacity purchases were prudent and
allowed recovery of costs in rates.
The rate structure approved by the MPUC does not provide for full recovery
of purchased power applicable to the Minnesota jurisdiction. A 1992 rate
order by the MPUC held that the company had 100 MW of excess capacity. The
company is seeking to adjust this disallowance in its current rate case.
The company has not filed for rate recovery of the allocable portions of
the purchased power payments in the Illinois and FERC jurisdictions. The
payments of approximately $2.5 million annually are expensed as incurred.
The purchased power contract payments are not for debt service
requirements of the selling utility, nor do they transfer risk or rewards
of ownership.
12. Demand Side Management Costs
Minnesota and Iowa regulations require that utilities conduct energy
efficiency and demand side management programs. Demand side management
expenditures applicable to the Minnesota jurisdiction in an annual amount
of approximately $0.6 million are currently being recovered through rates.
Iowa jurisdiction tariffs which provide for the recovery of demand side
management costs incurred through December 31, 1992, were placed in effect
in October 1994. The Iowa tariffs provide for the recovery of $6.7 million
of demand side management costs over a four year period. The company
anticipates filing in 1996 for recovery of costs incurred through 1995. As
of December 31, 1995 and 1994, the amounts deferred were $23.1 and $17.0
million, respectively.
13. Quarterly Information (Unaudited)
The quarterly information has not been audited but, in the opinion of the
company, reflects all adjustments necessary for the fair statement of the
results of operations for each period.
The quarterly data shown below reflects seasonal and timing variations
which are common in the utility industry.
(Thousands of Dollars)
(Except Earnings Per Share)
1995 March 31 June 30 Sept. 30 Dec. 31
Operating revenues $82,765 $72,054 $86,340 $77,383
Operating income 11,815 10,880 15,283 8,163
Net income 7,757 3,865 11,731 4,303
Earnings per share of common stock .74 .34 1.16 .38
1994 March 31 June 30 Sept. 30 Dec. 31
Operating revenues $85,575 $71,863 $79,808 $70,404
Operating income 13,051 5,460 10,607 6,404
Net income 9,251 1,354 6,867 3,195
Earnings per share of common stock .91 .07 .65 .27
Net income for the fourth quarter of 1995 was $4.3 million, compared with
$3.2 million in 1994. Increased electric and gas sales, electric and gas
rate increases and cost containment efforts were major factors.
Residential electric sales for the fourth quarter of 1995 increased 6.2%
over the same period of 1994, while large power and light sales increased
2.8%. The electric margin for the fourth quarter of 1995 (revenue minus
cost of fuel and purchased power) was $36.1 million compared to $33.2
million for the same period of 1994. The Iowa electric rate increase
implemented in June 1995 contributed $1.4 million to the fourth quarter
electric margin.
The gas margin for the fourth quarter of 1995 (revenue minus cost of gas
sold) was $5.3 million compared to $2.8 million for the same period of
1994. Residential and transportation gas volumes increased 29.5% and 6.9%,
respectively. Minnesota and Iowa interim rate increases in an annual
amount of $1.5 and $1.3 million, respectively, were implemented in June
and October 1995.
Other operating expense for the fourth quarter of 1995 includes $1.3
million of legal and consulting fees related to the proposed merger of
Interstate Power Company, IES Industries and WPL Holdings.
14. Commitments and Contingencies
The company has a barge transportation contract, coal supply contracts, a
rail transportation contract and a coal transloading agreement applicable
to its power plants. Such contracts, the last of which expires in 1999,
require estimated minimum future payments of $110.7 million.
The company has two natural gas supply contracts, four natural gas
transportation contracts, and two natural gas storage contracts, which
collectively obligate the company for a minimum annual commitment of
approximately $9.8 million. Such agreements individually expire from 1996
through 2001.
15. Merger
The Company, WPL Holdings, Inc. (WPLH) and IES Industries Inc. (IES) have
entered into an Agreement and Plan of Merger (Merger Agreement), dated
November 10, 1995, providing for: a) Interstate Power Company (IPC)
becoming a wholly-owned subsidiary of WPLH and b) the merger of IES with
and into WPLH, which merger will result in the combination of IES and WPLH
as a single holding company (collectively, the Proposed Merger). The new
holding company will be named Interstate Energy Corporation (Interstate
Energy) and IES will cease to exist. The Proposed Merger, which will be
accounted for as a pooling of interests, is subject to approval by the
shareholders of each company as well as several federal and state
regulatory agencies. The companies expect to receive the shareholder
approvals in the second quarter of 1996 and the regulatory approvals by
the second quarter of 1997.
Under the terms of the Merger Agreement, the outstanding shares of WPLH's
common stock will remain unchanged and outstanding as shares of Interstate
Energy. Each outstanding share of IES common stock will be converted to
0.98 shares of Interstate Energy's common stock. Each share of the
Company's common stock will be converted to 1.11 shares of Interstate
Energy's common stock. It is anticipated that Interstate Energy will
retain WPLH's common share dividend payment level as of the effective time
of the merger. On January 24, 1996, the Board of Directors of WPLH
declared a quarterly dividend of 49.25 cents per share. This represents an
equivalent annual dividend rate of $1.97 per share.
WPLH is a holding company headquartered in Madison, Wisconsin, and is the
parent company of Wisconsin Power and Light Company (WP&L) and Heartland
Development Corporation (HDC). WP&L supplies electric and gas service to
approximately 377,000 and 146,000 customers, respectively, in south and
central Wisconsin. HDC and its principal subsidiaries are engaged in
businesses in three major areas: environmental engineering and consulting,
affordable housing and energy services.
IES is a holding company headquartered in Cedar Rapids, Iowa, and is the
parent company of IES Utilities Inc. (Utilities) and IES Diversified Inc.
(Diversified). Utilities supplies electric and gas service to
approximately 333,000 and 174,000 customers, respectively, in Iowa.
Diversified and its principal subsidiaries are primarily engaged in the
energy-related, transportation and real estate development businesses.
Interstate Energy will be the parent company of Utilities, WP&L and IPC
and will be registered under the Public Utility Holding Company Act of
1935 (1935 Act), as amended. The merger agreement provides that these
operating utility companies will continue to operate as separate entities
for a minimum of three years beyond the effective date of the merger. In
addition, the non-utility operations of IES and WPLH will be combined
shortly after the effective date of the merger under one entity to manage
the diversified operations of Interstate Energy. The corporate
headquarters of Interstate Energy will be in Madison.
The Securities and Exchange Commission (SEC) historically has interpreted
the 1935 Act to preclude registered holding companies, with limited
exceptions, from owning both electric and gas utility systems. Although
the SEC has recently recommended that registered holding companies be
allowed to hold both gas and electric utility operations if the affected
states agree, it remains possible that the SEC may require as a condition
to its approval of the Proposed Merger that the Company, WPLH and IES
divest their gas utility properties, and possibly certain non-utility
ventures of IES and WPLH, within a reasonable time after the effective
date of the Proposed Merger.
The operating revenues, net income from continuing operations and total
assets of the companies were as follows:
PRO FORMA
COMBINED
IES WPLH IPC (Unaudited)
(in thousands)
1995 operating revenues $851,010 $807,255 $318,542 $1,976,807
1995 net income from
continuing operations 64,176 71,618 25,198 160,992
Assets at December 31, 1995 1,985,591 1,872,414 634,316 4,492,321
16. Segments of Business
Information about the company's operations in different segments of
business for 1995, 1994 and 1993 are shown in the table below.
Electric Gas Total
(Thousands of Dollars)
1995
Revenue $274,873 $43,669 $318,542
Operating income (Before income taxes) $ 57,255 $ 9,521 $ 66,776
Depreciation and amortization expense $ 27,442 $ 2,118 $ 29,560
Capital expenditures $ 26,583 $ 2,117 $ 28,700
Utility plant - net $459,250 $39,277 $498,527
1994
Revenue $261,730 $45,920 $307,650
Operating income (Before income taxes) $ 42,881 $ 554 $ 43,435
Depreciation and amortization expense $ 26,156 $ 2,056 $ 28,212
Capital expenditures $ 38,129 $ 2,969 $ 41,098
Utility plant - net $461,245 $39,436 $500,681
1993
Revenue $255,759 $53,709 $309,468
Operating income (Before income taxes) $ 44,573 $ (782) $ 43,791
Depreciation and amortization expense $ 24,732 $ 2,223 $ 26,955
Capital expenditures $ 29,030 $ 5,087 $ 34,117
Utility plant - net $449,430 $38,534 $487,964
Independent Auditors' Report
DELOITTE & TOUCHE LLP
To the Stockholders and Board of Directors of Interstate Power Company:
We have audited the accompanying balance sheets and statements of
capitalization of Interstate Power Company as of December 31, 1995 and
1994 and the related statements of income and retained earnings and of
cash flows for each of the three years in the period ended December 31,
1995. These financial 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 statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1995 and
1994 and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Davenport, Iowa
January 26, 1996
REPORT OF MANAGEMENT ON FINANCIAL STATEMENT RESPONSIBILITY
Company management has prepared and is responsible for the integrity and
objectivity of the financial statements and related financial information
included in this Annual Report to Stockholders. These statements have been
prepared in conformity with generally accepted accounting principles and
necessarily include amounts based on informed judgements and estimates
with appropriate consideration to materiality of events pending at year
end.
In meeting its responsibility, management has implemented an internal
accounting system designed to safeguard the assets of the company and
assure that transactions are executed in accordance with its directives.
An organizational structure has been developed that provides for
appropriate functional responsibilities. A qualified internal audit staff
is responsible for monitoring the system of policies, procedures and
methods of operation. The company believes its system of internal controls
appropriately balances the cost/benefit relationship, and that errors or
irregularities will be detected and corrected on a timely basis.
The Audit Committee of the Board of Directors, comprised of three
directors who are not employees, periodically meets with management and
with the independent certified public accountants to discuss and evaluate
auditing, internal control and financial reporting matters.
Management believes that these policies and procedures provide reasonable
assurance that the operations of the company are in accordance with the
standards and responsibilities entrusted to management.
/s/ Wayne H. Stoppelmoor
Wayne H. Stoppelmoor
Chairman of the Board,
President and Chief
Executive Officer
Selected Financial Data
1995 1994 1993 1992 1991
(Thousands of Dollars)
Operating revenues $318,542 $307,650 $309,468 $285,298 $291,805
Operation 191,335 202,545 204,871 181,391 172,709
Maintenance 14,881 17,160 16,771 16,966 17,567
Depreciation and
amortization 29,560 28,212 26,955 25,887 25,303
Income taxes 20,635 7,913 8,967 9,337 17,113
Property and other taxes 15,990 16,298 17,080 16,533 15,315
272,401 272,128 274,644 250,114 248,007
Operating income 46,141 35,522 34,824 35,184 43,798
Other income
(deductions) - net (1,690) 1,990 780 724 1,269
Income before interest
charges 44,451 37,512 35,604 35,908 45,067
Interest charges 16,795 16,845 16,617 16,691 15,557
Net income 27,656 20,667 18,987 19,217 29,510
Preferred and preference
dividends 2,458 2,454 2,861 2,975 3,075
Earnings available for
common stock $ 25,198 $ 18,213 $ 16,126 $ 16,242 $ 26,435
Average number of common
shares outstanding 9,564,287 9,478,741 9,316,387 9,297,748 9,297,748
Earnings per common share $ 2.63 $ 1.92 $ 1.73 $ 1.74 $ 2.84
Common dividends declared
per share $ 2.08 $ 2.08 $ 2.08 $ 2.08 $ 2.04
Total assets $634,316 $628,845 $604,361 $558,100 $550,631
Long-term debt and
mandatory sinking fund
preferred stock $212,916 $212,965 $227,007 $207,958 $220,818
Common Stock Market Data
The company's common stock (IPW) is listed on the New York, Midwest and
Pacific Stock Exchanges. The company's preferred stock and first mortgage
bonds are traded in the over-the-counter market. The company was
reorganized as of March 31, 1948, and dividends on common stock have been
paid each quarter since September 20, 1948, with the annual payments
rising from $0.60 per share to $2.08 per share. As of December 31, 1995,
there were 15,127 holders of common stock and 173 holders of preferred
stock. Historical quarterly data for the company's common stock is shown
below:
Avg. Shares
Dividends Price Range Outstanding
Quarter Ended Paid High Low 12 Months Ended
March 31, 1993 $0.52/Share 34 1/8 - 30 3/8 9,297,748
June 30, 1993 $0.52/Share 32 3/4 - 29 9,297,748
Sept. 30, 1993 $0.52/Share 31 3/4 - 29 9,301,030
Dec. 31, 1993 $0.52/Share 30 3/4 - 29 1/8 9,316,387
March 31, 1994 $0.52/Share 30 1/4 - 26 3/8 9,341,751
June 30, 1994 $0.52/Share 29 - 22 1/4 9,379,249
Sept. 30, 1994 $0.52/Share 24 3/4 - 21 9,428,183
Dec. 31, 1994 $0.52/Share 23 3/4 - 20 7/8 9,478,741
March 31, 1995 $0.52/Share 25 1/4 - 23 9,519,098
June 30, 1995 $0.52/Share 25 - 23 1/2 9,548,054
Sept. 30, 1995 $0.52/Share 27 1/4 - 23 1/4 9,563,020
Dec. 31, 1995 $0.52/Share 33 1/4 - 27 1/8 9,564,287
EX-23.a
DELOITTE & TOUCHE LLP
INDEPENDENT AUDITORS' REPORT
Interstate Power Company:
We have audited the financial statements of Interstate Power
Company as of December 31, 1995 and 1994, and for each of the
three years in the period ended December 31, 1995, and have
issued our report thereon dated January 26, 1996; such financial
statements and report are included in your 1995 Annual Report to
Stockholders and are incorporated herein by reference. Our
audits also included the financial statement schedule of
Interstate Power Company, listed in Item 14. This financial
statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedule,
when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Davenport, Iowa
January 26, 1996
EX-23.b
DELOITTE & TOUCHE LLP
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration
Statement No. 33-59352 on Form S-3 and Registration Statement No.
33-32529 on Form S-8 of Interstate Power Company of our reports
dated January 26, 1996, appearing in and incorporated by reference
in the Annual Report on Form 10-K of Interstate Power Company for
the year ended December 31, 1995.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Davenport, Iowa
March 27, 1996
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 498,527
<OTHER-PROPERTY-AND-INVEST> 555
<TOTAL-CURRENT-ASSETS> 65,349
<TOTAL-DEFERRED-CHARGES> 69,885
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 634,316
<COMMON> 33,475
<CAPITAL-SURPLUS-PAID-IN> 103,145
<RETAINED-EARNINGS> 61,150
<TOTAL-COMMON-STOCKHOLDERS-EQ> 197,770
24,036
10,819
<LONG-TERM-DEBT-NET> 188,880
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 39,300
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0
<CAPITAL-LEASE-OBLIGATIONS> 105
<LEASES-CURRENT> 15
<OTHER-ITEMS-CAPITAL-AND-LIAB> 173,391
<TOT-CAPITALIZATION-AND-LIAB> 634,316
<GROSS-OPERATING-REVENUE> 318,542
<INCOME-TAX-EXPENSE> 20,635
<OTHER-OPERATING-EXPENSES> 251,766
<TOTAL-OPERATING-EXPENSES> 272,401
<OPERATING-INCOME-LOSS> 46,141
<OTHER-INCOME-NET> (1,690)
<INCOME-BEFORE-INTEREST-EXPEN> 44,451
<TOTAL-INTEREST-EXPENSE> 16,795
<NET-INCOME> 27,656
2,458
<EARNINGS-AVAILABLE-FOR-COMM> 25,198
<COMMON-STOCK-DIVIDENDS> 19,941
<TOTAL-INTEREST-ON-BONDS> 14,526
<CASH-FLOW-OPERATIONS> 0
<EPS-PRIMARY> $2.63
<EPS-DILUTED> $2.63
</TABLE>
EX-99.a
ITEM 11(a)(2). EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
Those financial statement schedules required to be filed by Item 8
of this Form and the financial statements required by Regulation S-X
(17 CFR 210) which are excluded from the annual report to stockholders
by Rule 14a-3(b)(1).
Listed below are current documents incorporated by reference and
identified as having been previously filed with the Commission.
1. The Original through the Nineteenth Supplemental Indentures of
Interstate Power Company to The Chase Manhattan Bank and Carl E.
Buckley and C. J. Heinzelmann, as Trustees, dated January 1, 1948
securing First Mortgage Bonds (physically filed in Registration
Statement No. 33-59352 dated March 11, 1993 under the Securities
Act of 1933 as Exhibits (4)(b) through (4)(t)).
2. Twentieth Supplemental Indenture of Interstate Power Company to
The Chase Manhattan Bank and C. J. Heinzelmann, as Trustees, dated
May 15, 1993 (physically filed in Registration Statement No. 33-
59352 dated March 11, 1993 under the Securities Act of 1933 as
Exhibit (4)(u)).
3. Dividend Reinvestment and Stock Purchase Plan filed on Form S-3
covering the registration of 500,000 shares of Common Stock, dated
May 11, 1993 (physically filed in Registration Statement No. 33-
66244 under the Securities Act of 1933).
4. Guaranty Agreement between Interstate Power Company and Commerce
Union Bank as Trustee dated as of December 1, 1973 (City of
Dubuque, Iowa $4,400,000 Pollution Control Revenue Bonds)
(physically filed in Registration Statement No. 2-50685 as EXHIBIT
5-GG.1a).
5. Security Agreement dated as of December 1, 1973 between Interstate
Power Company (Guarantor) and Commerce Union Bank (Trustee) (City
of Dubuque, Iowa $4,400,000 Pollution Control Revenue Bonds)
(physically filed in Registration Statement No. 2-50685 as EXHIBIT
5-GG.1b).
6. Guaranty Agreement between Interstate Power Company and Commerce
Union Bank as Trustee dated as of December 1, 1973 (Town of
Lansing, Iowa $3,700,000 Pollution Control Revenue Bonds)
(physically filed in Registration Statement No. 2-50685 as EXHIBIT
5-GG.2a).
7. Security Agreement dated as of December 1, 1973 between Interstate
Power Company (Guarantor) and Commerce Union Bank (Trustee) (Town
of Lansing, Iowa $3,700,000 Pollution Control Revenue Bonds)
(physically filed in Registration Statement No. 2-50685 as EXHIBIT
5-GG.2b).
8. Guaranty Agreement between Interstate Power Company and Commerce
Union Bank as Trustee dated as of December 1, 1973 (City of
Clinton, Iowa $900,000 Pollution Control Revenue Bonds)
(physically filed in Registration Statement No. 2-50685 as EXHIBIT
5-GG.3a).
9. Security Agreement dated as of December 1, 1973 between Interstate
Power Company (Guarantor) and Commerce Union Bank (Trustee) (City
of Clinton, Iowa $900,000 Pollution Control Revenue Bonds)
(physically filed in Registration Statement No. 2-50685 as EXHIBIT
5-GG.3b).
10. Registration Statement No. 33-32529 on Form S-8 covering the
registration of $10,000,000 of participation interests, including
the registration of up to 402,010 shares of Common Stock, par
value $3.50 per share, of Interstate Power Company pursuant to its
401(k) Plan (filed with the Commission on December 12, 1989).
11. IPC Development Co. Articles of Incorporation, State of Iowa dated
May 24, 1978 (physically filed in Form 10-K for the Year Ended
December 31, 1978 as EXHIBIT G).
12. IPC Development Co. By-Laws adopted May 10, 1978 (physically filed
in Form 10-K for the Year Ended December 31, 1978 as EXHIBIT H).
13. Restated Certificate of Incorporation of Interstate Power Company
as originally filed April 18, 1925 and as amended effective
through October 21, 1993 (filed in Form 10-K for the Year Ended
December 31, 1993 as EX-3.a).
14. Summary Plan Description for the Interstate Power Company 401(k)
Plan dated November 30, 1993 (filed in Form 10-K for the Year
Ended December 31, 1993 as EX-99.c).
15. Interstate Power Company Irrevocable Trust Agreement dated
April 30, 1990 (filed in Form 10-K for the Year Ended December 31,
1993 as EX-99.f).
16. Interstate Power Company Amended Deferred Compensation Plan as
amended through January 30, 1990 (filed in Form 10-K for the Year
Ended December 31, 1993 as EX-99.e).
17. Participation Power and Block Energy Agreement between United
Power Association and Interstate Power Company, dated August 7,
1991 (physically filed in Form 10-K for the Year Ended December
31, 1991 as EXHIBIT F).
18. Unit Participation Power Agreement between Iowa Public Service
Company and Interstate Power Company, dated August 12, 1991
(physically filed in Form 10-K for the Year Ended December 31,
1991 as EXHIBIT G).
19. Unit Participation Power Agreement between Minnesota Power and
Interstate Power Company, dated August 14, 1991 (physically filed
in Form 10-K for the Year Ended December 31, 1991 as EXHIBIT H).
20. Mid-Continent Area Power Pool Agreement Amendment dated January 1,
1991 (physically filed in Form 10-K for the Year Ended December
31, 1991 as EXHIBIT I).
21. Mid-Continent Area Power Pool Coordination Center Agreement dated
September 18, 1990 (physically filed in Form 10-K for the Year
Ended December 31, 1991 as EXHIBIT J).
22. Statement regarding availability upon request of Loan Agreement
and Pollution Control Indenture (filed in Form 10-K for the Year
Ended December 31, 1994 as EX-4).
23. Coal Transportation Agreement ICC-BN-C-2536 between Interstate
Power Company and Burlington Northern Railroad Company dated
February 21, 1990 (physically filed in Form 10-K for the Year
Ended December 31, 1990 as EXHIBIT D).
24. Third Amended and Restated Coal Supply Agreement between
Interstate Power Company and AMAX Coal Company and a fully
executed Release and Discharge Agreement for the previous
Agreement and Amendments. Both dated April 9, 1990 (physically
filed in Form 10-K for the Year Ended December 31, 1990 as EXHIBIT
E).
25. Indemnity Agreement between Orba-Johnson Transshipment Company and
Interstate Power Company dated October 3, 1979 (physically filed
in Form 10-K for the Year Ended December 31, 1979 as EXHIBIT E).
26. Consent and Clarification Agreement between Orba-Johnson
Transshipment Company, Orba Corporation, Johnson Bros. Corporation
Travelers Insurance Company and Interstate Power Company dated
December 20, 1979 (physically filed in Form 10-K for the Year
Ended December 31, 1979 as EXHIBIT G).
27. Consent and Agreement to Amend Security Agreement and Mortgage
Agreement between Orba-Johnson Transshipment Co., Travelers
Insurance Co., and Interstate Power Co., dated September 1, 1981
(physically filed in Form 10-K for the Year Ended December 31,
1981 as EXHIBIT K).
28. Barge Transportation Agreement dated March 1, 1990 between Orgulf
Transport Company and Interstate Power Company for the shipment of
coal from the Orba-Johnson Transshipment Terminal near Keokuk,
Iowa to the Unit 4 power-generating facility at Lansing, Iowa
(physically filed in Form 10-K for the Year Ended December 31,
1990 as EXHIBIT J).
29. Coal Supply Agreement between Interstate Power Company and
Powderhorn Coal Company filed under Form SE as confidential and
non-public (filed in Form 10-K for the Year Ended December 31,
1994 as EX-10.a).
EX-99.b
INTERSTATE POWER COMPANY
SUPPLEMENTAL RETIREMENT PLAN
AS AMENDED AND RESTATED
NOVEMBER 10, 1995
Table of Contents
Page
ARTICLE I - INTRODUCTION . . . . . . . . . . . . . . . . . . . .1
1.1 Purpose. . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . . . . . .2
2.1 Accrued Benefit . . . . . . . . . . . . . . . . .2
2.2 Board or Board of Directors . . . . . . . . . . .2
2.2.5 Change in Control . . . . . . . . . . . . . . . .2
2.3 Code. . . . . . . . . . . . . . . . . . . . . . .3
2.4 Compensation. . . . . . . . . . . . . . . . . . .3
2.5 Early Retirement Date . . . . . . . . . . . . . .3
2.6 Effective Date. . . . . . . . . . . . . . . . . .3
2.7 Employer. . . . . . . . . . . . . . . . . . . . .4
2.8 Normal Retirement Date. . . . . . . . . . . . . .4
2.9 Officer . . . . . . . . . . . . . . . . . . . . .4
2.9.5 Participant . . . . . . . . . . . . . . . . . . .4
2.10 Plan. . . . . . . . . . . . . . . . . . . . . . .4
2.11 Plan Administrator. . . . . . . . . . . . . . . .4
2.12 Plan Year . . . . . . . . . . . . . . . . . . . .4
2.12.5 Re-entry Date . . . . . . . . . . . . . . . . . .4
2.13 Retirement Plan . . . . . . . . . . . . . . . . .4
2.14 Social Security Benefit . . . . . . . . . . . . .4
2.15 Spouse. . . . . . . . . . . . . . . . . . . . . .5
2.16 Trust . . . . . . . . . . . . . . . . . . . . . .5
2.17 Trust Fund. . . . . . . . . . . . . . . . . . . .5
2.18 Trustee . . . . . . . . . . . . . . . . . . . . .5
2.19 Year(s) of Benefit Service. . . . . . . . . . . .5
ARTICLE III - PARTICIPATION. . . . . . . . . . . . . . . . . . .6
3.1 Participation . . . . . . . . . . . . . . . . . .6
3.2 Death . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE IV - CONTRIBUTIONS . . . . . . . . . . . . . . . . . . .7
4.1 Employer Contributions. . . . . . . . . . . . . .7
4.2 Change in Control . . . . . . . . . . . . . . . .7
4.3 Binding Effect on Successor . . . . . . . . . . .7
ARTICLE V - BENEFITS . . . . . . . . . . . . . . . . . . . . . .8
5.1 Normal Retirement Pension . . . . . . . . . . . .8
5.2 Early Retirement Pension. . . . . . . . . . . . .8
5.3 Prior Employer's Plan . . . . . . . . . . . . . .9
5.4 Form of Payment . . . . . . . . . . . . . . . . .9
5.5 Suspension of Benefits. . . . . . . . . . . . . 10
5.6 Termination for Cause . . . . . . . . . . . . . 10
5.7 Surviving Spouse Benefits . . . . . . . . . . . 11
5.8 Claims Procedure. . . . . . . . . . . . . . . . 11
5.9 Forfeiture of Benefits. . . . . . . . . . . . . 13
ARTICLE VI - ADMINISTRATION OF PLAN. . . . . . . . . . . . . . 14
6.1 Administration. . . . . . . . . . . . . . . . . 14
6.2 Records . . . . . . . . . . . . . . . . . . . . 15
6.3 Information Available . . . . . . . . . . . . . 15
6.4 Expenses. . . . . . . . . . . . . . . . . . . . 15
ARTICLE VII - AMENDMENT AND TERMINATION. . . . . . . . . . . . 16
7.1 Right to amend or Terminate Plan. . . . . . . . 16
7.2 Amendments. . . . . . . . . . . . . . . . . . . 16
ARTICLE VIII - MISCELLANEOUS PROVISIONS. . . . . . . . . . . . 17
8.1 No Employment Rights. . . . . . . . . . . . . . 17
8.2 Non-alienability. . . . . . . . . . . . . . . . 17
8.3 Facility of Payment . . . . . . . . . . . . . . 17
8.4 Severability. . . . . . . . . . . . . . . . . . 17
8.5 Headings. . . . . . . . . . . . . . . . . . . . 17
8.6 Number and Gender . . . . . . . . . . . . . . . 18
8.7 Governing Law . . . . . . . . . . . . . . . . . 18
INTERSTATE POWER COMPANY
SUPPLEMENTAL RETIREMENT PLAN
AS AMENDED AND RESTATED
ARTICLE I - INTRODUCTION
1.1 Purpose
Interstate Power Company ("Employer"), is establishing the
Supplemental Retirement Plan ("Plan") for the purpose of
providing defined benefit retirement income supplement for the
officers of the Employer. The Plan has been designed as, and
is intended to be, an unfunded plan for purposes of the
Employee Retirement Income Security Act of 1974, as amended,
except as otherwise specifically provided under the terms of
this Plan. The Plan has also been designed as, and is
intended to be, a non-qualified plan for purposes of Section
401 of the Internal Revenue Code of 1986, as amended. The
Plan shall be effective April 30, 1990 as amended and restated
November 10, 1995.
ARTICLE II - DEFINITIONS
Capitalized terms as described in this Article II shall have the
meanings as described herein unless a different meaning is clearly
required by the context of the Plan.
2.1 Accrued Benefit shall mean the retirement benefit that
the Officer would receive upon such Officer's Normal
Retirement Date, as provided in Section 5.1.
2.2 Board or Board of Directors shall mean the Board of
Directors of the Employer.
2.2.5 Change in Control of the Employer shall have the
following meaning and shall be deemed to have occurred
if:
(i) any Person is or becomes the Beneficial Owner
(as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934 (the "Exchange Act")),
directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such
Person any securities acquired directly from the Company)
representing twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding
securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to
November 1, 1995), 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 clause (i), (iii) or (iv) of
this definition or any such individual whose initial
assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened
solicitation of proxies or consents) whose election by
the Board or nomination for election by the Company's
stockholders 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 such period or
whose election or nomination for election was previously
so approved, cease for any reason to constitute a
majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to
which all or substantially all of the individuals and
entities who were Beneficial Owners, immediately prior to
such reorganization, merger or consolidation, of the
combined voting owner of the Company's then outstanding
securities beneficially own, directly or indirectly,
immediately after such reorganization, merger or
consolidation, more then seventy-five percent (75%) of
the combined voting power of the securities of the
corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as
their respective ownership, immediately prior to such
reorganization, merger or consolidation, of the combined
voting owner of the Company's securities; or
(iv) the shareholders of the Company approve (a)
the sale or disposition by the Company (other than to a
subsidiary of the Company) of all or substantially all of
the assets of the Company (or any such sale or
disposition is effected through condemnation
proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall
not include any event, circumstance or transaction which
results from the action (excluding the Executive's
employment activities with the Company or any of its
affiliates) of any Person or group of Persons which
includes, is directly affiliated with or is wholly or
partly controlled by one or more executive officers of
the Company and in which the Executive actively
participates.
2.3 Code shall mean the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
2.4 Compensation shall mean the Officer's highest consecutive
twelve (12) months of compensation, consisting of amounts
which are actually paid to the Officer during the
calendar year, including any nonqualified plan deferrals,
expense reimbursements and taxable employee benefits.
2.5 Early Retirement Date shall mean the first day of the
month on or after the Officer reaches age fifty-five
(55).
2.6 Effective Date shall mean April 30, 1990 as amended and
restated November 10, 1995.
2.7 Employer shall mean Interstate Power Company. This will
also include any successor corporation or firm of the
Employer which shall, by written agreement, assume the
obligations of this Plan.
2.8 Normal Retirement Date shall mean the date that the
Officer reaches age sixty-five (65).
2.9 Officer shall mean an employee of the Employer who is
determined by the Employer to be eligible to participate
in this Plan. Notwithstanding anything contained herein
to the contrary, the term "Officer" shall include any
employee who is an assistant officer.
2.9.5 Participant shall mean an officer or former Officer of
Employer who has been determined by the Employer eligible
to participate in the Plan or who has entered into the
Plan. See 3.1.
2.10 Plan shall mean this Interstate Power Company
Supplemental Retirement Plan, as set forth herein or in
any amendments hereto.
2.11 Plan Administrator shall mean the Employer or the
individual or committee duly appointed or duly authorized
by the Employer or by the Board of Directors to
administer the terms of the Plan.
2.12 Plan Year shall mean the twelve (12) consecutive month
period beginning with January 1 and ending December 31.
2.12.5 Re-entry Date shall mean the date a former active Officer
re-enters the plan.
2.13 Retirement Plan shall mean the plan sponsored by the
Employer, known as the Interstate Power Company
Retirement Income Plan, which is qualified under Section
401 and 501 of the Code.
2.14 Social Security Benefit shall mean the maximum benefit
that the Officer is eligible to receive from Social
Security:
(a) at age sixty-two (62), if the Officer retires at
age Sixty-two (62); or
(b) on the date that the Officer retires, if the
Officer retires after age sixty-two (62); or
(c) at age sixty-two (62), assuming that the Officer
continues to earn zero Compensation from the date
of Retirement until the Officer reaches age sixty-
two (62), if the Officer retires before age sixty-
two (62).
2.15 Spouse shall mean a person to whom the Officer was
legally married on the date of the Officer's death.
2.16 Trust shall mean the agreement of trust, called
Interstate Power Company Irrevocable Trust Agreement,
1990, between the Interstate Power Company and the
trustee established for the purpose of holding the assets
of the Trust Fund under the provisions of this Plan.
2.17 Trust Fund shall mean the total funds held under the
Trust for purpose of providing benefits for the
Participants. These funds result from a transfer of
general assets of the Employer made under the Plan which
are forwarded to the Trustee to be deposited in the Trust
Fund. In the event of the Employer's insolvency, assets
in the trust Fund are subject to the claims of the
Employer's general creditors.
2.18 Trustee shall mean the trustee or trustees under the
Trust. The term Trustee as it is used in this Plan is
deemed to include the plural unless the context clearly
indicates otherwise.
2.19 Year(s) of Benefit Service shall mean an Officer's total
period of service as an employee of the Employer,
beginning with such Officer's employment commencement
date expressed in years and months, including fractions
of years, and ending on the date that the employee's
employment with the Employer is terminated. For purposes
of this Section 2.19 any part of a month shall be deemed
to be a whole month.
ARTICLE III - PARTICIPATION
3.1 Participation.
The only employees eligible to participate in this plan
are Officers. Participation in the Plan shall commence
upon the notification to the Officer by the Employer of
such Officer's eligibility to participate in this Plan
and upon the Officer's entry into this Plan. The
Employer shall determine the Officer's entry date into
this Plan. See 5.5 Suspension of Benefits.
3.2 Death.
If an Officer dies while actively employed by the
Employer, a benefit shall be payable under this Plan.
The benefit shall be payable as provided in Section 5.7.
See 5.5 Suspension of Benefits.
ARTICLE IV - CONTRIBUTIONS
4.1 Employer Contributions.
(a) All contributions under this Plan are made by the
Employer.
(b) In establishing this Plan and the Trust, the
Employer agrees and undertakes to make the Trust
Fund subject to the claims of the Employer's
general creditors. The right of any Participant to
payment of benefits from the Employer's general
assets shall be no greater than that of any other
general unsecured creditor of the Employer.
4.2 Change in Control, Funding.
In the event that a change in control of the Employer
occurs or in the event of a change in the ownership of
all or substantially all of the assets of the Employer
occurs as defined in Section 2.2.5 this Plan shall become
funded upon the date that the Securities and Exchange
Commission is notified of such change. The amount of
such funding shall be equal to the present value of the
Officer's Accrued Benefit (See Definition 2.1) based upon
7% interest per annum and the 1983 Group Annuity
Mortality Table for males. All Plan participants shall
become one hundred percent (100%) vested in their Accrued
Benefit.
4.3 Binding Effect on Successor.
The Plan shall be binding upon and inure to the benefit
of any successor to the Employer or its business as the
result of merger, consolidation, reorganization, transfer
of assets or otherwise and any subsequent successor
thereto. In no event shall such merger, consolidation,
reorganization, transfer of assets or other similar
transaction suspend or delay the rights of any
Participant to receive benefits hereunder.
ARTICLE V - BENEFITS
5.1 Normal Retirement Pension.
(a) An Officer shall be eligible for a normal
retirement pension under this Section 5.1 if the
Officer terminates service with the Employer on or
after such Officer's Normal Retirement Date.
(b) An Officer's monthly normal retirement pension is
based upon one twelfth (1/12th) of the following
formula, based on a single life annuity:
three and three-fourths percent (3-3/4%)
multiplied by Years of Benefit Service (not in
excess of 20) multiplied by Compensation minus
the Officer's annual accrued benefit from the
Retirement Plan payable as a single life
annuity, any other employer's annual
retirement pension and the Officer's annual
Social Security Benefit.
5.2 Early Retirement Pension.
(a) If the Officer terminates service with the Employer
on or after such Officer's Early Retirement Date,
the Officer shall receive an early retirement
pension or a normal retirement pension as provided
under this Section 5.2. If the Officer terminates
service with the Employer before such Officer's
Early Retirement Date, no benefits will be payable
to such Officer under this Plan.
(b) An Officer's monthly early retirement pension is
based upon one twelfth (1/12th) of the following
formula, based upon a single life annuity:
three and three-fourths percent (3-3/4%)
multiplied by Years of Benefit Service (not in
excess of 20 and determined on the date that
the Officer terminates service with the
Employer) multiplied by Compensation
(determined on the date that the Officer
terminates service with the Employer) minus
the Officer's annual accrued benefit from the
Retirement Plan payable as a single life
annuity, any other employer's annual
retirement pension and the Officer's annual
Social Security Benefit.
(c) If the Officer commences benefit on his Early
Retirement Date, the Officer will receive the
following percentage of such Officer's pension:
Age When Benefits Begin Percentage of Benefit Received
65 100.00%
64 97.50%*
63 95.00%*
62 92.50%*
61 90.00%
60 80.00%
59 70.00%
58 60.00%
57 50.00%
56 40.00%
55 30.00%
* These percentages are subject to subsection (d)
below.
(d) Notwithstanding anything contained in this Plan to
the contrary, if the Officer commences benefits on
or after age sixty-two (62) with thirty-five (35)
or more Years of Benefit Service with the Employer,
the Officer may retire and qualify for 100% of the
Officer's benefit under this Plan.
5.3 Prior Employer's Plan.
If the Officer is eligible to receive a benefit from a
previous employer's defined benefit retirement plan, the
Officer's benefit under this Plan shall be reduced. The
amount of the reduction is equal to the monthly pension
benefit the Officer earned from the prior employer's plan
payable as a single life annuity at such Officer's
retirement date.
5.4 Form of Payment.
(a) Benefits under this Plan shall be paid on the
Officer's Normal Retirement Date or Early
Retirement Date in the form selected by the
Officer. The forms of payments which are available
for selection under this Plan are the same options
which are available under the Retirement Plan, as
provided in subsection (b) below. The Officer may
choose a different form of payment under this Plan
from the form selected under the Retirement Plan.
(b) The optional forms of retirement benefit for the
benefit derived from the Officer's Accrued Benefit
shall be the following:
(i) a straight life annuity;
(ii) a straight life annuity with Social
Security adjustment option;
(iii) single life annuities with period certain
of five (5), ten (10) or fifteen (15)
years; and
(iv) survivorship life annuities with
survivorship percentages of 50, 66 2/3 or
100.
The benefit payable under any optional annuity form
(except for subsection (ii) and the normal form of
payment under the retirement Plan) shall be the actuarial
equivalent (as defined in the Retirement Plan) of the
normal form of payment under the Retirement Plan.
5.5 Suspension of Benefits.
If the Officer terminates service with the Employer and
is rehired after commencement of benefits but prior to
attaining age sixty-five (65), payment of benefits under
this Plan shall cease. Payment of benefits under this
Plan shall resume when the Officer again terminates
service with the Employer.
5.6 Termination for Cause.
If the Officer is terminated for cause, the Officer will
not receive any benefits under this Plan. Termination
for cause shall be determined by the Board of Directors
and will include, but shall not be limited to:
(a) embezzlement of Employer funds;
(b) fraud; and
(c) acts which cause harm to the Employer or its
reputation.
5.7 Surviving Spouse Benefits.
(a) If the Officer is unmarried and dies prior to
retirement, no benefits are payable under this
Plan. If the Officer is married and dies prior to
retirement, the Officer's Spouse will receive a
pre-retirement survivor annuity.
(b) The Spouse shall receive a lifetime monthly pension
equal to the percent from the table below of the
Officer's Accrued Benefit:
Percentage of Benefit
Age at Time of Death Spouses Receives
64 48%
63 46%
62 44%
61 42%
60 40%
59 38%
58 36%
57 34%
56 32%
55 and under 30%
(c) If the Officer dies after such Officer's Early
Retirement Date, the pension amount is determined
as if the Officer retired on such Officer's date of
death. The Spouse commences payments as of the
Officer's date of death.
(d) If the Officer dies before such Officer's Early
Retirement Date, the pension amount is determined
as if the Officer terminated service with the
Employer on the date of death. The Spouse shall
commence payments on the earliest date that the
Officer was eligible to retire.
(e) If the Officer dies after the Officer retired and
commenced payments, the death benefit payable will
be based on the form of payment selected by the
Officer.
5.8 Claims Procedure.
(a) Filing a Claim.
Any Officer or Spouse may file a written claim for
a Plan benefit with the Plan Administrator.
(b) Notice of Denial of Claim.
In the event of a denial or limitation of any
benefit or payment due to a claimant, the claimant
shall be given a written notification containing
specific reasons for the denial or limitation of
such claimant's benefit. The written notification
shall contain specific reference to the pertinent
Plan provisions on which the denial or limitation
of his benefit is based. In addition, it shall
contain a description of any other material or
information necessary for the claimant to perfect a
claim and an explanation of why such material or
information is necessary. The notification shall
further provide appropriate information as to the
steps to be taken if the claimant wishes to submit
the claim for review. This written notification
shall be given to a claimant within ninety (90)
days after receipt of the claim by the Plan
Administrator unless special circumstances require
an extension of time for processing the claim. If
such an extension of time is required, written
notice of the extension shall be furnished to the
claimant prior to the termination of said ninety
(90) day period, and such notice shall indicate the
special circumstances which make the postponement
appropriate.
(c) Right of Review.
In the event of a denial or limitation of his
benefit, the claimant shall be permitted to review
pertinent documents and to submit to the Plan
Administrator issues and comments in writing. In
addition, the claimant may make a written request
for a full and fair review of the claim and its
denial by the Plan Administrator, provided,
however, that such written request is received by
the Plan Administrator within sixty (60) days after
receipt by the claimant of written notification of
the denial or limitation of the claim. The sixty
(60) day requirement may be waived by the Plan
Administrator in appropriate cases.
(d) Decision on Review.
A decision shall be rendered by the Plan
Administrator within sixty (60) days after the
receipt of the request for review, provided that
where special circumstances require an extension of
time for processing the decision, it may be
postponed with written notice to the claimant
(prior to the expiration of the initial sixty (60)
day period) for an additional sixty (60) days, but
in no event shall the decision be rendered more
than one hundred twenty (120) days after the
receipt of such request for review. Any decision
by the Plan Administrator shall be furnished to the
claimant in writing and shall set forth the
specific reason for the decision and the specific
Plan provisions on which the decision is based.
(e) Court Action.
No Officer or Spouse shall have the right to seek
judicial review of a denial of benefits or to bring
any action in any court to enforce a claim for
benefits prior to filing a claim for benefits or
exhausting the rights to review under this Section
5.8.
5.9 Forfeiture of Benefits.
Upon the occurrence of the following events, the
Officer's benefits under this Plan shall be forfeited and
no benefits shall be payable to the Officer under this
Plan:
(a) as provided in Sections 3.2, 5.2(a), 5.6, and
5.7(a);
(b) if the Plan terminates, no further benefits shall
be accrued under this Plan. The Officer's Accrued
Benefit under this Plan shall be the benefit
accrued as of the date the Plan is terminated;
(c) if the Officer terminates service with the Employer
and begins employment with an employer which the
Board of Directors determines to be a competitor of
the Employer or with any employer in the utility
industry. This limitation does not, however, apply
to successors and assigns of Employer.
ARTICLE VI - ADMINISTRATION OF PLAN
6.1 Administration.
(a) Subject to this Article VI, the Plan administrator
has complete control of the administration of the
Plan. The Plan Administrator has all the powers
necessary to properly carry out its administrative
duties. Not in limitation, but in amplification of
the foregoing, the Plan Administrator has the power
in its sole and complete discretion to construe the
terms of the Plan, to interpret and resolve any
ambiguity which may arise under the Plan and all
questions which may arise under the Plan, including
questions relating to the eligibility of officers
to participate in the Plan and the amount of
benefit to which any Participant may become
entitled. The Plan Administrator's decisions upon
all matters within the scope of its authority shall
be final.
(b) Unless otherwise set out in the Plan, the Plan
Administrator may delegate recordkeeping and other
duties which are necessary to assist it with the
administration of the Plan to any person or firm
which agrees to accept such duties. The Plan
Administrator shall be entitled to rely upon all
tables, valuations, certificates and reports
furnished by the consultant or actuary appointed by
the Plan Administrator and upon all opinions given
by any counsel selected or approved by the Plan
Administrator.
(c) The Plan Administrator shall receive all claims for
benefits by Participants or former Participants.
The Plan Administrator shall determine all facts
necessary to establish the right of any claimant to
benefits and the amount of those benefits under the
provisions of the Plan. The Plan Administrator may
establish rules and procedures to be followed by
claimants in filing claims for benefits, in
furnishing and verifying proof necessary to
determine age, and in any other matters required to
administer the Plan.
6.2 Records.
(a) All acts and determination of the Plan
Administrator shall be duly recorded. All these
records, together with other documents necessary
for the administration of the Plan, shall be
preserved in the Plan Administrator's custody.
(b) Writing (handwriting, typing, printing), photo-
stating, photographing, microfilming, magnetic
impulse, mechanical or electrical recording or
other forms of data compilation shall be acceptable
means of keeping records.
6.3 Information Available.
Any participant in the Plan may examine copies of this
Plan. The Plan Administrator shall maintain the Plan in
its office, or in such other place or places as it may
designate. The Plan may be examined during reasonable
business hours. Upon the written request of a
Participant receiving benefits under the Plan, the Plan
Administrator shall furnish such Participant with a copy
of the Plan.
6.4 Expenses.
The Employer shall pay all expenses of administering the
Plan.
ARTICLE VII - AMENDMENT AND TERMINATION
7.1 Right to Amend or Terminate Plan.
While the Employer intends to maintain this Plan
indefinitely, the Employer, through the action of the
Board of Directors, reserves the right to amend and/or
terminate this Plan at any time for whatever reason it
may deem appropriate; provided, however, that any such
amendment and/or termination adopted by the Board of
Directors or otherwise after the occurrence of any Change
in Control shall not be effective against any Participant
participating in this Plan on the date of any such Change
in Control if such amendment and/or termination would
have any adverse effect on the benefit rights and/or
entitlements, accrued or potential, of such Participant,
when compared to any such benefit rights and/or
entitlements as the same existed immediately prior to the
adoption of any such amendment and/or termination of this
Plan, without the prior express written consent of any
such adversely effected Participant.
7.2 Amendments.
No amendment to this Plan may be made except by action of
a simple majority of the Board of Directors.
ARTICLE VIII - MISCELLANEOUS PROVISIONS
8.1 No Employment Rights.
Nothing contained in this Plan shall be construed as a
contract of employment between the Employer and any
Officer or as a right of any Officer to be continued in
employment or as a limitation on the right of any
Employer to discharge any of its Officers with or without
cause.
8.2 Non-alienability.
The rights of an Officer to the payment of benefits under
this Plan shall not be assigned, transferred, pledged or
encumbered, or be subject in any manner to alienation or
anticipation.
8.3 Facility of Payment.
Any amounts payable under this Plan to any person under
a legal disability or who, in the judgement of the
Employer, is unable to properly manage his financial
affairs may be paid to the legal representative of such
person or may be applied for the benefit of such person
in any manner which the Employer may select.
8.4 Severability.
Whenever possible, each provision of the Plan shall be
interpreted in such manner as to be effective and valid
under applicable law, but if any provision of the Plan
shall be held to be prohibited by or invalid under
applicable law, then such provision shall be deemed to be
amended to accomplish the objectives of the provision as
originally written to the fullest extent permitted by law
and all other provisions of the Plan shall remain in full
force and effect. Such provision shall be deemed to have
been drafted in such manner on the Effective Date.
8.5 Headings.
The headings are for convenience of reference only. In
the event of a conflict between a heading and the content
of a section, the content of the section shall control.
8.6 Number and Gender.
The masculine pronoun used herein shall include the
feminine pronoun and the singular number shall include
the plural number unless the context of this Plan
requires otherwise.
8.7 Governing Law.
The provisions of this Plan shall be interpreted in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the Employer has caused its corporate seal to
be hereunto affixed and has caused its name to be signed hereto by
the person duly authorized below, pursuant to the authority of the
Board of Directors, to be effective as first above written, on this
10th day of November , 19 95 .
INTERSTATE POWER COMPANY
By: /s/ W. H. Stoppelmoor
Title: Chairman, President & CEO
(Corporate Seal)
Attest:
/s/ J. C. McGowan
Secretary
