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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/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, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
COMMISSION FILE NUMBER 1-3571
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LONG ISLAND LIGHTING COMPANY
Incorporated pursuant to the Laws of New York State
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INTERNAL REVENUE SERVICE - EMPLOYER IDENTIFICATION NUMBER 11-1019782
175 EAST OLD COUNTRY ROAD, HICKSVILLE, NEW YORK 11801
516-755-6650
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class so registered:
<TABLE>
<S> <C> <C>
Common Stock ($5 par)
Preferred Stock ($100 par, cumulative):
Series B, 5.00% Series I, 5 3/4%,
Convertible
Series E, 4.35% Series CC, 7.66%
Preferred Stock ($25 par, cumulative):
Series AA, 7.95% Series NN, $1.95
Series GG, $1.67 Series QQ, 7.05%
General and Refunding Bonds:
8 3/4% Series Due 1996 8.50% Series Due 2006 9 5/8% Series Due 2024
8 3/4% Series Due 1997 7.90% Series Due 2008
7.85% Series Due 1999 9 3/4% Series Due 2021
Debentures:
10.25% Series Due 1994 7.30% Series Due 2000 11.375% Series Due 2019
11.75% Series Due 1994 7.05% Series Due 2003 8.90% Series Due 2019
10.875% Series Due 1999 7.00% Series Due 2004 9% Series Due 2022
7.30% Series Due 1999 7.50% Series Due 2007 8.20% Series Due 2023
</TABLE>
NAME OF EACH EXCHANGE ON WHICH EACH CLASS IS REGISTERED: The New York Stock
Exchange and the Pacific Stock Exchange are the only exchanges on which the
Common Stock is registered. The New York Stock Exchange is the only exchange on
which each of the other securities listed above is registered.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of the Common Stock held by non-affiliates of
the Company at March 1, 1994 was $2,616,304,039.50. The aggregate market value
of Preferred Stock held by non-affiliates of the Company at March 1, 1994,
established by Lehman Brothers based on the average bid and asked price, was
$681,486,015.
COMMON STOCK ($5 PAR) -- SHARES OUTSTANDING AT FEBRUARY 22, 1994: 112,527,452
The Company's proxy statement for its Annual Meeting of Shareowners to be
held on April 12, 1994 has been incorporated by reference into Part III of this
Form 10-K to provide information required in Item 10 (Directors and Executive
Officers of the Company) as to Directors, Item 11 (Executive Compensation), Item
12 (Security Ownership of Certain Beneficial Owners and Management) and Item 13
(Certain Relationships and Related Transactions).
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<PAGE> 2
TABLE OF CONTENTS
Page
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ABBREVIATIONS iii
ITEM 1. BUSINESS 1
The Company 1
Territory 1
Segments of Business 2
Employees 2
Regulation and Accounting Controls 2
Electric Operations 3
General 3
System Requirements and Reliability 4
Energy Sources 5
Oil 5
Gas 5
Nuclear 5
Independent Power Producers and Cogenerators 5
Interconnections 6
Conservation Services 6
1989 Settlement and Electric Rates 6
General 6
The Rate Moderation Agreement 7
Electric Rates 7
Gas Operations 9
General 9
Gas System Requirements 9
Gas Transportation and Supply 9
Gas Transportation 10
Year-Round Pipeline Firm Transportation 10
Winter Seasonal Pipeline Firm Transportation 10
Storage 10
Gas Supply 10
Year-Round Firm Supply 11
Winter Seasonal Firm Supply 11
Peak Shaving 11
Gas Rates 11
Non-Regulated Activities 11
Recovery of Transition Costs 11
Environment 12
General 12
Air 12
Water 12
Land 12
Nuclear Waste 13
The Company's Securities 14
General 14
The G&R Mortgage 14
The First Mortgage 16
Unsecured Debt 16
Equity Securities 17
Shoreham Decommissioning 18
Executive Officers of the Company 19
Capital Requirements, Liquidity and Capital Provided 22
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Page
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ITEM 2. PROPERTIES 22
ITEM 3. LEGAL PROCEEDINGS 22
Shoreham 22
Nine Mile Point 2 23
Environmental 24
Human Resources 24
Other Matters 24
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 24
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 25
ITEM 6. SELECTED FINANCIAL DATA 26
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 35
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 52
Statement of Income 53
Balance Sheet 54
Statement of Capitalization 56
Statement of Cash Flows 58
Statement of Retained Earnings 59
Notes to Financial Statements 60
Report of Ernst & Young, Independent Auditors 87
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 88
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY 88
ITEM 11. EXECUTIVE COMPENSATION 88
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 88
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 88
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K 88
List of Financial Statements 88
List of Financial Statement Schedules 89
List of Exhibits 89
Reports on Form 8-K 109
Schedules V, VI, VIII and X 111
SIGNATURES 119
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ABBREVIATIONS
The following abbreviations are sometimes used in this Annual Report.
<TABLE>
<S> <C>
AFC . . . . . . . . . . . . . Allowance For Funds Used During Construction
BFC . . . . . . . . . . . . . Base Financial Component
BVPA . . . . . . . . . . . . Bondable Value of Property Additions
DEC . . . . . . . . . . . . . New York State Department of Environmental Conservation
DOE . . . . . . . . . . . . . United States Department of Energy
DSM . . . . . . . . . . . . . Demand Side Management
Dth . . . . . . . . . . . . . Dekatherms
EFRBs . . . . . . . . . . . . Electric Facilities Revenue Bonds
EPA . . . . . . . . . . . . . United States Environmental Protection Agency
FCA . . . . . . . . . . . . . Fuel Cost Adjustment
FERC . . . . . . . . . . . . Federal Energy Regulatory Commission
First Mortgage . . . . . . . Indenture of Mortgage and Deed of Trust
FRA . . . . . . . . . . . . . Financial Resource Asset
G&R Bonds . . . . . . . . . . General and Refunding Bonds
G&R Mortgage . . . . . . . . General and Refunding Indenture
GAAP . . . . . . . . . . . . Generally Accepted Accounting Principles
Kw . . . . . . . . . . . . . Kilowatts
kWh . . . . . . . . . . . . . Kilowatt hour
LIPA . . . . . . . . . . . . Long Island Power Authority
MW . . . . . . . . . . . . . Megawatts
Niagara Mohawk . . . . . . . Niagara Mohawk Power Corporation
Nine Mile Point 2 . . . . . . Nine Mile Point Nuclear Power Station, Unit 2
NRC . . . . . . . . . . . . . Nuclear Regulatory Commission
NYPA . . . . . . . . . . . . New York Power Authority
NYSEG . . . . . . . . . . . . New York State Electric & Gas Corporation
NYSERDA . . . . . . . . . . . New York State Energy Research and Development Authority
PCRBs . . . . . . . . . . . . Pollution Control Revenue Bonds
PILOTS . . . . . . . . . . . Payments in-lieu-of-taxes
PRP . . . . . . . . . . . . . Potentially Responsible Party
PSC . . . . . . . . . . . . . Public Service Commission of the State of New York
RMA . . . . . . . . . . . . . Rate Moderation Agreement
RMC . . . . . . . . . . . . . Rate Moderation Component
Shoreham . . . . . . . . . . Shoreham Nuclear Power Station
</TABLE>
iii
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A LISTING OF ABBREVIATIONS FREQUENTLY
USED IN THIS REPORT MAY BE FOUND
IMMEDIATELY AFTER THE TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS
THE COMPANY:
Long Island Lighting Company (the "Company") was
incorporated in 1910 under the Transportation Corporations Law of the
State of New York and supplies electric and gas service in Nassau and
Suffolk Counties and to the Rockaway Peninsula in Queens County, all on Long
Island, New York. The mailing address of the Company is 175 East Old
Country Road, Hicksville, New York 11801 and its general telephone number is
(516) 755-6650.
TERRITORY:
The Company's service territory covers an area of approximately
1,230 square miles. The population of the service area, according to the
Company's 1993 estimate, is about 2.7 million persons, including
approximately 98,000 persons who reside in Queens County within the City of
New York. The 1993 population estimate reflects a .14% increase since the 1990
census.
Approximately 80% of all workers residing in Nassau and Suffolk
Counties are employed within the two counties. In 1993, total
non-agricultural employment in Nassau and Suffolk Counties increased by
approximately 5,200 employees, an employment increase of 0.5%.
The area served is predominantly residential, but the Company
receives approximately one-half of its electric revenues from commercial and
industrial customers. Although electronics and aerospace are the largest
manufacturing industries in the area, about 88% of total employment is
non-manufacturing. Industrialization is gradually increasing in Suffolk
County which, with three times the land area, has only one-third the
population density of Nassau County.
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SEGMENTS OF BUSINESS:
The percentages of total revenues and operating income before
income taxes derived from electric and gas operations for each of the last
three years are shown in the following table:
<TABLE>
<CAPTION>
Percentage of Percentage of
Total Operating
Revenues Income*
------------- ----------------
Electric Gas Electric Gas
-------- --- -------- ---
<S> <C> <C> <C> <C>
1991 86 14 98 2
1992 84 16 92 8
1993 82 18 89 11
</TABLE>
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* Before income taxes.
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For additional information respecting the Company's electric and
gas financial results and operations, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations for the Year Ended
December 31, 1993" and "Selected Financial Data" and Notes 2, 3, and 11 of
Notes to Financial Statements for the Year Ended December 31, 1993.
EMPLOYEES:
The Company has approximately 6,300 full-time employees, of
which approximately 2,500 belong to Local 1049 and approximately 1,500 belong
to Local 1381 of the International Brotherhood of Electrical Workers
("A.F.L.-C.I.O."). On February 6, 1992, the Company and the unions agreed
upon contracts which will expire on February 13, 1996.
REGULATION AND ACCOUNTING CONTROLS:
The Company is subject to regulation by the Public Service
Commission of the State of New York (the "PSC") with respect to rates,
issuance and sale of securities, adequacy and continuance of service, safety
and siting of certain facilities, accounting, conservation of energy,
management effectiveness and other matters. To ensure that its
accounting controls and procedures are consistently maintained, the Company
has created a program which is monitoring those controls and procedures.
The Audit Committee of the Company's Board of Directors, as part
of its responsibilities, periodically reviews this monitoring program.
New York law requires that all utilities be periodically
audited to identify those aspects of their operations, if any, which are in
need of improvement. A comprehensive management audit report was issued by
the PSC in March 1993. The audit report favorably recognized many of the
initiatives the Company is taking, including its efforts to improve
customer service and control costs while changing the basic culture and
orientation of employees. The report also contains constructive
recommendations for improving the effectiveness of the Company's overall
management. During 1993, the PSC also completed an audit of the Company
Customer Service Incentives Program and of the practices for provision and
management of legal services.
The Company is also subject, in certain of its activities,
including accounting, to the jurisdiction of the United States Department
of Energy ("DOE") and the Federal Energy Regulatory Commission ("FERC").
In addition to its accounting jurisdiction, FERC has jurisdiction over the
rates the Company may charge for the sale of electric energy for resale
in interstate commerce, including the rates the Company charges for
electricity sold to
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municipal electric systems within the Company's territory, and for the
transmission, through the Company's system, of electric energy to other
utilities or to industrial customers. FERC also has some jurisdiction over
a portion of the Company's gas supplies and substantial jurisdiction over
transportation to the Company of its gas supplies.
Operation of Nine Mile Point Nuclear Power Station, Unit 2
("Nine Mile Point 2"), a nuclear facility in which the Company has an 18%
interest, is subject to regulation by the Nuclear Regulatory Commission
("NRC").
ELECTRIC OPERATIONS:
General
The Company's system energy requirements are supplied from
sources located both on and off Long Island. Company-owned generating
facilities with an aggregate summer generating capability of approximately
4,251,000 kilowatts ("kW") include five steam electric generating stations
and a number of internal combustion and diesel supplemental generating units,
all located on Long Island, and the Company's 18% share of Nine Mile Point 2,
a nuclear generating station located in upstate New York. Generating
facilities owned by others, such as independent power producers and
cogenerators located on Long Island and investor-owned and public electric
systems located off Long Island, provide the balance of the Company's energy
supplies.
In the years between 1982 and 1991, the Company purchased between
13% to 25% of its power requirements from others. In 1992, purchased power
increased to 38%. In 1993, the amount of power purchased from others
amounted to 41%. In 1992 and 1993, cogenerators and independent power
producers provided 9.4% of the Company's system requirements for each of
those years. During 1995, after the 136 MW Holtsville facility owned by the
New York Power Authority ("NYPA") is completed in early 1994 and the new 40 MW
cogeneration facility at the Stony Brook campus of the State University of
New York ("Stony Brook")is completed in early 1995, independent power
producers and cogenerators will provide an estimated 13.7% of the Company's
system energy requirements. For information about a 300 MW cogeneration
facility that is the subject of litigation, see the discussion about
Mayflower Energy Partners, L.P. ("Mayflower") under the heading "Energy
Sources -- Independent Power Producers and Cogenerators."
The Company does not expect any new major independent power
producers to be built on Long Island in the foreseeable future for several
reasons. Under federal law, the Company is required to buy energy from
qualified producers at the Company's avoided costs. Current long-range
avoided cost estimates for the Company have significantly reduced the economic
advantage to entrepreneurs seeking to compete with the Company and with
existing independent power producers. Also, with the Company's load being
45% residential, 52% commercial and industrial and 3% other sales, and with
approximately 200 MW of net capacity from independent power producers and
cogenerators already installed on Long Island, the market for additional large
electric projects to provide power to the Company's remaining commercial and
industrial customers is small.
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The following table indicates the 1993 summer capacity of the
Company's major generating stations and internal combustion units as reported
to the New York Power Pool ("NYPP") in December 1993:
<TABLE>
<CAPTION>
Description Number of Units MW
----------- --------------- ----
<S> <C> <C>
Northport . . . . . . . . . . . . . 4 1514
Port Jefferson . . . . . . . . . . 4 474
Glenwood . . . . . . . . . . . . . 2 230
E.F. Barrett/Island Park . . . . . 2 387
Far Rockaway . . . . . . . . . . . 1 114
Internal Combustion Units . . . . . 42 1344
Nine Mile Point 2 (18% Share) . . . 1 188
-- ---
Total . . . . . . . . . . . . 56 4251
== ====
</TABLE>
The maximum demand on the Company's system to date was
3,967,000 kW on July 9, 1993, representing 83% of its total available
capacity of 4,799,000 kW on that day, which included 548,000 kW of firm
capacity purchased from other sources. By agreement with the NYPP, the
Company is required to maintain, on a monthly basis, an installed and
contracted firm power reserve generating capacity equal to at least 18% of
its actual peak load. The Company is currently meeting this NYPP requirement.
System Requirements and Reliability
The Company's current electric load forecasts indicate
that, with continued implementation of its conservation and load
management programs and with the availability of electricity provided by
the Company's existing generating facilities, by its portion of nuclear
energy generated at NMP2 and by power purchased from other electric systems
and from certain non- Company-owned facilities, located within the Company's
service territory, Long Island has adequate generating sources to meet its
energy demands through the end of the century.
System kWh energy requirements in 1993 were 2.6% higher than in
1992 and .5% higher than in 1988. The compound annual growth rate for the
five-year period ended December 31, 1993 was .1%.
As a result of the implementation of conservation programs
and the availability to customers of energy supplies from cogeneration
sources discussed below under the heading "Independent Power Producers and
Cogenerators," the Company forecasts a 0.7% and 1.7% decrease, relative to
the year 1993, in system energy requirements for the years 1994 and 1995,
respectively. However, for the period 1993-2003, the Company forecasts an
average annual growth rate in system energy requirements of .6%.
The Company's system electric requirements for the last three
years were provided as follows:
Percentage of System Requirements
<TABLE>
<CAPTION>
Purchased
Oil* Gas* Nuclear** Power***
--- --- ------- -----
<S> <C> <C> <C> <C>
1991 50 18 7 25
1992 37 19 6 38
1993 33 19 7 41
</TABLE>
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* Generated on the Company's own system. Oil consumption for the Company's
system electric energy requirements in 1993 was 9.7 million barrels
compared to 10.7 million barrels in 1992. Certain units may be fired
with natural gas when it is available on an economic or as-required
basis. Gas consumption for the Company's system electric energy
requirements in 1993 was 36.3 million dekatherms compared to 34.5 million
dekatherms in 1992.
** Generated at Nine Mile Point 2.
*** Generated at (i) more economical nuclear, coal, oil and hydroelectric
units owned by other electric systems and transmitted to the Company
over its interconnections and (ii) cogenerators and independent power
producers located within the Company's service territory.
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Energy Sources
Oil: Oil is the principal fuel burned in the Company's electric
generating stations. In recent years, the Company has been able to reduce
its oil requirements by burning natural gas, by using nuclear energy
generated at Nine Mile Point 2 and by purchasing power from other systems,
cogenerators and independent power producers. The availability and cost of
oil used by the Company are affected by factors beyond its control such
as the international oil market, environmental regulations, conservation
measures and the availability of alternative fuels. However, any changes in
oil costs are reflected in rates charged to the Company's customers. The
Company's fuel oil is supplied principally by five suppliers, no one of which
normally provides more than one-half of the total requirements.
For information concerning federal and other regulatory
environmental limitations on fuel oil burned by the Company, see
"Environment -- Air." For additional information concerning the recovery
of fuel oil costs, see Note 1 to Notes to Financial Statements for the Year
Ended December 31, 1993.
Gas: In addition to burning oil, several of the Company's
generating stations have the capability of burning natural gas. These
dual-fired units enable the Company to burn the most cost efficient fuel and
to reduce its dependency on oil.
Nuclear: The Company holds an 18% interest in Nine Mile Point 2,
a 1,047 megawatt ("MW") nuclear generating unit near Oswego, New York. The
cotenants of Nine Mile Point 2, in addition to the Company, are Niagara
Mohawk Power Corporation ("Niagara Mohawk"), New York State Electric & Gas
Corporation ("NYSEG"), Rochester Gas and Electric Corporation ("RG&E") and
Central Hudson Gas & Electric Corporation.
For additional information on Nine Mile Point 2 and nuclear plant
insurance, see Notes 5 and 9, respectively, of Notes to Financial Statements
for the Year Ended December 31, 1993.
Independent Power Producers and Cogenerators: Independent
power producers and cogenerators located within the Company's service
territory provided approximately 200 MW of power to the Company, the
equivalent of approximately 9.4% of the Company's energy requirements in
1993. Capacity from these sources is expected to reach 340 MW by the summer of
1994.
The Company has also entered into contracts for approximately 50
MW of power from various projects under construction on an energy-only basis,
including the Stony Brook project. The Company has also signed contracts for
energy-only purchases totaling over 400 MW from several projects that are not
expected to be built prior to the expiration date of these contracts,
December 31, 1994. In addition, the Company was ordered by the PSC to
enter into a contract, which it executed under protest, with Mayflower to
purchase, on an energy-only
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basis, power for 15 years from a 300 MW facility scheduled to begin commercial
operation in 1995. On December 30, 1993, the Appellate Division, Third
Department, of the New York Supreme Court, affirmed the Supreme Court of the
State of New York Special Term's decision that had annulled the PSC order
requiring the Company to enter into the agreement with Mayflower (Long
Island Lighting Company v. Public Service Commission of the State of New
York and Mayflower Energy Partners, L.P.). In the Special Term decision,
the court held that the PSC had violated the federal Public Utility Regulatory
Policies Act ("PURPA") and the New York Public Service Law, and had acted
arbitrarily when it ordered the Company to sign a power purchase contract
with Mayflower incorporating the PSC's 1989 Long Run Avoided Cost estimates.
The Third Judicial Department affirmed the Special Term's decision, finding
that the PSC-determined rates were not just and reasonable as required under
PURPA and the New York Public Service Law.
Interconnections: Five interconnections allow for the transfer
of electricity between the Company and members of the NYPP and the New
England Power Pool. Energy from these sources is transmitted pursuant to
transmission agreements with Niagara Mohawk, NYPA and Consolidated Edison
Company of New York, Inc. ("Con Edison") and displaces energy which would
otherwise be generated on the Company's system with higher cost fuel oil.
The capacity of these interconnections is utilized for (i) the requirements
of Con Edison, a co-owner with the Company of three of these
interconnections, (ii) the requirements on Long Island of NYPA, the
owner of one of these interconnections, (iii) the transmission of the
Company's share of power from Nine Mile Point 2 and (iv) the Company's
purchases from NYPA and other utilities.
Conservation Services: The Company's 1993 Electric Conservation
and Load Management Plan called for a cumulative 194 MW reduction in
coincident peak demand by December 31, 1993 and a cumulative annualized
energy savings of 578 gigawatthours ("GWh"). The Company has met these targets
with an expenditure of $33.5 million. These reductions were achieved
through several different program types including customer
education/information rebate, audit and direct installation which targeted a
number of energy efficient technologies.
In the fourth quarter of 1993, the Company filed a Modified
Demand Side Management ("DSM") Plan with the PSC to support the objectives
of the Company's December 31, 1993 electric filing. For additional
information, see the discussion under the heading, "1989 Settlement and
Electric Rates--Electric Rates." Under this modified plan, which includes
a substantially lower budget than the one approved for 1994, a greater
emphasis will be placed on the educational aspect of the Company's
conservation efforts in lieu of the conventional reliance on rebates. This
will help to shift the responsibility for adopting and implementing energy
efficient practices away from the utility and to the customer. In
addition, to control DSM costs further, the Company will promote financing
programs and look to foster cost sharing relationships with manufacturers
of energy efficient appliances.
1989 Settlement and Electric Rates
General: On February 28, 1989, the Company and the State of New
York (by its Governor) entered into an agreement (the "1989 Settlement")
settling certain issues relating to the Company and providing for, among other
matters, the transfer of the Shoreham Nuclear Power Station ("Shoreham") to
the Long Island Power Authority ("LIPA"), Shoreham's subsequent
decommissioning and the return of the Company to financial health.
For additional information respecting the 1989 Settlement, see
the discussion under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations for the Year Ended December
31, 1993" and Note 2 of Notes to Financial Statements for the Year Ended
December 31, 1993.
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<PAGE> 11
The Rate Moderation Agreement: The Rate Moderation Agreement
("RMA"), a constituent document of the 1989 Settlement approved by the PSC,
created an asset known as the Financial Resource Asset (the "FRA") and provides
for its full recovery. The FRA has two components, the Base Financial
Component (the "BFC") and the Rate Moderation Component (the "RMC").
The RMA, by its terms, specifies that the FRA was created to
provide the Company with adequate financial indicia to restore the Company's
debt securities to investment grade levels as determined by independent
rating agencies.
The BFC, as initially established, represented the present
value of the future net-after-tax cash flows which the RMA provided the
Company for its financial recovery. The BFC was granted rate base treatment
under the terms of the RMA, similar to other plant investments, and is
included in the Company's electric rates through an amortization over 40
years on a straight-line basis. At December 31, 1993, the BFC amounted to
$3.6 billion.
The RMC reflects the difference between the Company's
revenue requirements under conventional ratemaking and the revenues
resulting from the implementation of the rate moderation plan provided for
in the RMA. This revenue difference, together with a carrying charge equal to
the allowed rate of return on rate base, has been deferred. The RMC has
provided the Company with a substantial amount of non-cash earnings since
the effective date of the 1989 Settlement through December 31, 1992,
because the revenues provided under the RMA were less than the revenues
required under conventional ratemaking. The RMC balance was $652 million at
December 31, 1992. During 1993, however, as revenues provided under the
RMA began to exceed the revenues that would have been provided under
conventional ratemaking, the RMC balance began to decline. Thus, at
December 31, 1993, the RMC balance was $610 million.
The Company has no reason to believe that the PSC will fail to
continue to honor its commitments, contained in the RMA, respecting
the recovery of the FRA and other 1989 Settlement-deferred charges.
This belief is based, in part, upon the PSC's actions granting the Company
six of the 11 electric rate increases contemplated by the RMA, discussed below,
and, in part, upon the PSC's publicly confirmed commitment to the
effectuation of the 1989 Settlement. Those actions have been consistent
with provisions of the RMA regarding the establishment and recovery from
ratepayers of the FRA and other 1989 Settlement-deferred charges provided by
the RMA.
For additional information respecting the RMA, the BFC and the
RMC, see Notes 1, 2 and 3 of Notes to Financial Statements for the Year Ended
December 31, 1993.
Electric Rates: The RMA contemplated, among other objectives, a
series of rate increases designed to restore the Company to financial
health. Pursuant to the RMA, the Company received electric rate increases
of 5.4% effective February 18, 1989 and 5.0% for each of the rate years that
began on December 1, 1989 and December 1, 1990. In 1991, the PSC approved
annual electric rate increases of 4.15%, 4.1% and 4.0% to be effective on
December 1 of 1991, 1992 and 1993, respectively.
On December 31, 1993, the Company filed a three-year electric rate
plan with the PSC for the period beginning December 1, 1994, that minimizes
future electric rate increases while retaining consistency with the RMA's
objective of continuing the restoration of the Company's financial health.
The filing proposes no base electric rate increases in years one and two of
the plan and an overall increase of 4.3% in the third year. The Company's
electric rate plan filing is subject to PSC approval.
Although base electric rates would be frozen during the first
two years of the plan, annual rate increases of 1% in the first year and
2% in the second year are expected to result in these years from the
operation of the Company's fuel cost adjustment clause ("FCA"). The FCA
captures, among other amounts, any increases in the cost of fuel above the
level recovered in base rates and, under the rate mechanisms that have been
in effect since 1991, a portion of (i) earned incentives and (ii)
variances in actual versus forecasted electric revenues and certain cost
components occurring in prior periods.
The Company's proposed electric rate plan provides for lower
annual electric rate increases than were originally anticipated under the
1989 Settlement. However, as a result of changes in certain assumptions
upon which the RMA was based, their impact on the RMC and the Company's
plans to reduce DSM, operations,
7
<PAGE> 12
maintenance and capital expenditures, the Company has determined that the
overall objectives of the RMA can be met under the proposed multi-year plan
described in the preceding paragraph. Because of lower inflation rates,
interest costs, property taxes, fuel costs and return on common equity allowed
by the PSC, the RMC, which originally had been anticipated to peak at $1.2
billion in 1994, has already peaked at $652 million in 1992. With the
exception of an increase in 1995-1996, which is not now projected to cause
the RMC to increase above its $652 million peak, the RMC is expected to
decline until it is fully amortized. The actual length of the period over
which the RMC is to be amortized will depend on the extent to which the
assumptions underlying the rate plan materialize. While the proposed electric
rate plan may extend the recovery period for the RMC by one but not more than
three years, the Company's current projections indicate that the RMC will
be recovered in a period of approximately 11 years that began on July 1, 1989.
On November 2, 1993, the New York State Consumer Protection
Board and the Long Island Power Authority ("CPB/LIPA") filed a Petition with
the PSC asking the PSC to hold a proceeding on freezing or possibly reducing
the Company's electric rates for the period December 1994 to November 1997.
In written comments filed on January 12, 1994 in response to the CPB/LIPA
Petition, LILCO urged the PSC to reject the Petition and consider the
CPB/LIPA's issues in the proceeding that has been established regarding the
Company's three-year rate application. Staff of the Department of Public
Service filed a response urging the PSC to reject the Petition and consider
these issues in the Company's current electric rate proceeding. The Attorney
General for New York State also filed comments that urge the PSC to conduct a
full investigation of the Company's rates in the course of the current
proceeding concerning its proposed electric rate plan.
For additional information respecting electric rate increases,
see Note 3 of Notes to Financial Statements for the Year Ended December 31,
1993.
8
<PAGE> 13
GAS OPERATIONS:
General
In 1993, recognizing the growing importance of its gas operations
and the dynamic changes then anticipated as a result of proceedings before
FERC to deregulate the transportation of natural gas, the Company established
its gas operations as a separate corporate business unit. During 1993, the
Company's gas business unit focused on two areas: one, continuing its
marketing efforts on Long Island and two, seeking opportunities in the newly
de-regulated national natural gas market.
Gas System Requirements
At year-end 1993, the Company had a total of 445,830 firm gas
customers, compared to 441,580 at year-end 1992, and 436,352 at year-end
1991. Of the 1993 year-end total, 269,994 were space heating customers.
Total sales in 1993 were 59,182,674 dekatherms ("Dth"), compared to
56,292,131 Dth in 1992. The maximum daily firm demand experience on the
Company's gas system in 1993 was 485,896 Dth on December 26, 1993; the
prior maximum daily firm demand of 466,517 Dth was on February 1, 1993.
Accompanied by unusually cold weather, seven new maximum daily firm demand
records came in early 1994 -- the highest being 585,227 Dth on January 19,
1994.
The forecasted maximum daily firm gas demand for the 1993-94
winter season (November 1 - March 31) was 577,900 Dth, representing 85% of
the Company's maximum daily firm operating supply capability of 682,284 Dth
for this period. This forecast was exceeded in January 1994. Based on the
forecasted maximum daily firm gas demand, the Company should have a peak day
surplus of 77,057 Dth of firm supply including peak shaving capability for
the 1993-94 winter season. The Company recovers the costs of its gas supply
from both its firm and interruptible customers through provisions in the
Company's rate schedules.
Continuing its recent efforts to expand the base of customers
across which its fixed costs can be absorbed, the Company is emphasizing
residential and commercial gas marketing. In particular, new market
segments and new uses for natural gas are being sought. The technology for
natural gas vehicles ("NGVs") is becoming commercially viable, and the
Company is working internally and with customers to put NGVs on the road.
For example, the Metropolitan Suburban Bus Authority ("MSBA"), a subsidiary
corporation of the Metropolitan Transportation Authority principally serving
Nassau County, has installed a natural gas compression station and is
operating ten dedicated NGVs. MSBA anticipates purchasing more than 200
buses fueled by compressed natural gas over the next five years.
Gas Transportation and Supply
The proceedings before FERC, developing out of its Order No.
636, have resulted in a regulatory "unbundling" of the gas supply,
transportation and storage services that for decades had been provided by
the nation's natural gas pipelines. In the past, local distribution
companies ("LDCs") have purchased their gas supplies at the citygate
from those pipelines serving their territories. The citygate is generally
the location where the interstate pipeline meets the local distribution
company's system. The Company shares common citygate facilities, known as
the New York Facilities, with Con Ed and the Brooklyn Union Gas Company. The
Company's principal pipelines have been Transcontinental Gas Pipe Line
Corporation ("Transcontinental"), Texas Eastern Transmission Corporation
("Texas Eastern"), CNG Transmission Corporation ("CNG"), Tennessee Gas
Pipeline Company ("Tennessee") and, beginning in early 1992, the Iroquois
Gas Transmission System ("Iroquois"). Through two wholly-owned
subsidiaries, the Company is a general partner in Iroquois, with an equity
share of 1%, and in the Liberty Pipeline Company ("Liberty"), with an equity
share of 3-1/3%. With respect to Liberty, proceedings for authority to
construct and operate are now pending before FERC.
9
<PAGE> 14
Under FERC Order No. 636, pipelines, for the most part, no longer
act as sales agents to bundle the mix of services from the producers and
other interstate pipelines. LDCs must now make arrangements for gas
supplies and gas storage directly with producers, marketers and the owners
of storage facilities. In addition, each LDC must now also make separate
transportation arrangements with each pipeline in the path between the
supplier and the LDC's citygate and not merely with the nearest pipeline
connecting to the LDC's system. This fundamental change in the way LDCs
conduct their activities has affected the reliability, pricing and
diversification of their natural gas supplies.
Gas Transportation: The Company's gas transportation capacity
for meeting its 1993-94 winter season requirements is provided from a
portfolio of year-round, winter seasonal and storage services summarized
below:
<TABLE>
<CAPTION>
1993-94 Winter Peak-Day Transportation Capacity:
-----------------------------------------------
<S> <C>
Type of Supply Dth Per Day
-------------- -----------
Year-Round 243,692
Winter Seasonal 2,726
Storage 287,839
-------
Total 534,257
=======
</TABLE>
Year-Round Pipeline Firm Transportation: The Company has
303,692 Dth per day of year- round pipeline firm transportation
capacity from four interstate pipeline companies: Transcontinental,
Texas Eastern, Tennessee and Iroquois. For the winter 1993-1994 season,
options on 60,000 Dth per day of capacity have been granted to off-system
markets leaving a total of 243,692 Dth available to meet system peak-day
requirements.
Winter Seasonal Pipeline Firm Transportation: The Company has
winter seasonal pipeline firm transportation capacity on Transcontinental
amounting to 2,726 Dth per day. This incremental capacity is available
through March 31, 1994.
Storage: The Company also has long-term firm storage services
to meet higher winter demand which provide a total operating supply of
approximately 287,839 Dth per day with a total capacity of 22,692,363 Dth
for the winter period. Of these totals, 277,589 Dth per day, or a total
capacity of 21,455,363 Dth, is provided by a gas storage field at Leidy,
Pennsylvania, and 10,250 Dth per day, or a total capacity of 1,237,000 Dth
for the winter period is provided by a gas storage field in upstate New York
operated by Honeoye Storage Corporation, in which the Company has a 23-1/3%
equity interest. In addition, the Company has the right to request 812,500
Dth in the winter period from a cogeneration facility with the obligation to
return quantities in kind during the following summer period.
The Company also contracts for storage capacity in a facility
in the Gulf Coast near sources of supply and pipeline transportation. Up
to 50,687 Dth per day can be withdrawn with a total of 4,459,220 Dth of
storage capacity in the Washington storage facility in Louisiana. While
this facility provides the Company with greater security of supply and
enhanced operational flexibility in meeting peak-day requirements, the Company
has no related firm pipeline transportation agreement for these supplies.
Therefore, to take gas from this storage, the Company must curtail the
transportation of some of its firm contract supply.
Gas Supply: The Company's gas supplies for the 1993-94 winter
season are provided from a portfolio of year-round, winter seasonal, storage
and peak shaving supplies summarized below.
10
<PAGE> 15
Year-Round Firm Supply: Of the 213,469 Dth of firm supplies,
83,575 Dth are Canadian and 129,894 Dth are domestic. The Company is a 2.7%
equity owner of Boundary Gas, Inc., ("Boundary"), a corporation formed with
15 other gas utility companies to act as a purchasing agent for the
importation of natural gas from Canada. The Company obtains 2,470 Dth per
day of its long-term firm Canadian supply from this source. Gas supplies to
use 90,223 Dth per day of the remaining year-round pipeline firm
transportation capacity are purchased by the Company in both the seasonal and
monthly spot markets.
Winter Seasonal Firm Supply: The Company also contracts for
firm seasonal supply of 90,223 Dth delivered during the five winter
months each year from a number of winter seasonal suppliers.
Peak Shaving: The Company has its own peak shaving supplies to
meet its requirements on excessively cold winter days. This includes a
liquefied natural gas plant with a storage capacity of approximately 620,000
Dth of gas and vaporization facilities which provide 103,300 Dth per day to
the peak-day capability of the Company's system. In addition, the Company
has propane facilities that produce 17,400 Dth per day of peak shaving with a
storage capacity of approximately 100,000 Dth.
Gas Rates
In December 1993, the PSC approved a three-year gas rate
settlement between the Company and the Staff of the PSC. The gas rate
settlement provides that the Company receives, for each of the rate years
beginning December 1, 1993, 1994 and 1995, annual gas rate increases of 4.7%,
3.8% and 2.8%, respectively. In the determination of the revenue
requirements for the first year of the gas rate settlement, an allowed rate
of return on equity of 10.1% was used. The gas rate decision also provides
for earnings in excess of a 10.6% return on equity in any of the three rate
years covered by the settlement, to be shared equally between the Company's
firm gas customers and its shareowners.
In November 1992, the PSC approved a gas rate increase of
7.1%, or $35.7 million annually, effective December 1, 1992, with an allowed
return on common equity from gas operations of 11.0%. In November 1991, the
Company received a gas rate increase of 4.1% effective December 1, 1991.
Non-Regulated Activities
The unbundling of gas transportation activities and the need
for local distribution companies to negotiate directly with producers and
other suppliers and with pipelines has provided the Company with new
business opportunities. These new opportunities include providing gas to
non- traditional markets including LDCs and end-users from Mississippi to
Connecticut. In addition, the Company has formed a wholly-owned
subsidiary, Northeast Gas Marketers, Inc. ("NGMI"), to broker natural gas
in the unregulated market. The Company is presently awaiting PSC
authorization to fund up to $20 million of NGMI's unregulated gas brokering
activities.
Recovery of Transition Costs
Transition costs are the costs associated with unbundling
the pipelines' merchant services in compliance with FERC Order No. 636.
They include pipelines' unrecovered gas costs and the costs that pipelines
incur as a result of reforming or terminating their gas supply contracts.
In order to recover transition costs, pipelines must demonstrate to FERC (i)
that such costs were attributable to FERC Order No. 636 and (ii) that they
were prudently incurred. While the Company is challenging, on both
eligibility and prudence grounds, its pipelines' efforts to recover their
claimed transition costs, the Company presently estimates that it could be
charged as much as $14 million in transition costs by several of its
pipelines. The Company will seek permission from the PSC to recover these
costs from its gas customers.
11
<PAGE> 16
ENVIRONMENT:
General
The Company is subject to federal, state and local laws and
regulations dealing with air and water quality and other environmental matters.
It is not possible to ascertain with certainty if or when the various
required governmental approvals for which applications have been made will
be issued, whether, except as noted below, additional facilities or
modifications of existing or planned facilities will be required or,
generally, what effect existing or future controls may have upon Company
operations. Except as set forth herein below, no material proceedings have
been commenced or, to the knowledge of the Company, are contemplated by any
federal, state or local agency against the Company, nor is the Company a
defendant in any material litigation with respect to any matter relating to
the protection of the environment.
In 1994 and 1995, the Company anticipates expenditures of $12.5
million and $4.1 million, respectively, for environmental projects including
projects described below for emission monitoring requirements and nitrogen
oxide ("NOx") reduction requirements.
Air
Federal, state and local regulations affecting new and
existing electric generating plants govern, among other emissions, sulfur
dioxide and NOx and, in the future, hazardous air pollutants.
The laws governing the sulfur content, by weight, of the fuel
oil being burned by the Company in compliance with the United States
Environmental Protection Agency ("EPA")-approved Air Quality State
Implementation Plan ("SIP") are administered by the New York State
Department of Environmental Conservation ("DEC"). The Company does not
expect to incur any costs to satisfy amendments to the Clean Air Act with
respect to the reduction of sulfur dioxide emissions, since the Company
already uses fuel with acceptable low levels of sulfur.
The Company expects that it will have to expend $4.3 million in
1994 to meet continuous emission monitoring requirements and $3.5 million in
1994 and $2.0 million in 1995 to meet Phase I NOx reduction requirements.
In addition, subject to requirements that are expected to appear in
regulations that have not yet been issued, the Company estimates that it may
be required to expend as much as $125 million by May 1999 to meet Phase II
NOx reduction requirements and approximately $50 million by 2000 to meet
requirements for the control of hazardous air pollutants from power plants.
Water
Under the federal Clean Water Act and the New York State
Environmental Conservation Law, the Company is required to obtain a State
Pollutant Discharge Elimination System permit to make any discharge into the
waters of the United States or New York State. The DEC has the jurisdiction
to issue those permits and their renewals and has issued permits for the
Company's existing generating units. The permits allow the continued use of
the existing circulating water systems which have been determined to be in
compliance with State Water Quality Standards. The permits also allow for
the continued use of the existing chemical treatment systems.
Land
The Company is the owner of six pieces of property on which the
Company or certain of its predecessor companies produced manufactured gas.
The Company has investigated two of these sites for possible environmental
contamination caused by these prior operations and plans to submit the
findings to the appropriate regulatory agencies in 1994. The Company's
clean-up costs, if any, cannot be determined until the remediation
alternatives have been reviewed by the regulatory agencies and negotiations
with them have been completed. The Company will conduct similar
investigations of the remaining four sites over the next several years. The
Company
12
<PAGE> 17
cannot determine the costs of remediation for these four sites until the
investigations have been completed and the results reviewed by the
appropriate regulatory agencies. The costs for the remediation of these
sites are not expected to have a material impact on the Company's
financial condition.
The Company and nine other potentially responsible parties
("PRPs") have entered into an Administrative Order by Consent ("Consent
Order") with the EPA to complete a Remedial Investigation and Feasibility
Study ("RI/FS") for a site in Philadelphia, Pennsylvania, operated by a
company known as Metal Bank of America, to which the EPA alleges that the
Company shipped scrap transformers, possibly containing polychlorinated
biphenyls. The RI/FS, which will be completed in 1994, will assess the
nature and extent of site contamination and will suggest cleanup alternatives.
The amount of the Company's liability, if any, which may be joint and several
if imposed, cannot be ascertained until the EPA has selected a remedy from
among the cleanup alternatives. The Company has notified the appropriate
insurers but no lawsuit has been commenced.
The EPA has conducted a thorough, unannounced inspection of the
Company's hazardous waste Treatment Storage and Disposal Facility ("TSDF").
The inspection focused on compliance with hazardous waste management
regulations. The EPA subsequently issued a Complaint and Compliance Order
which noted several deficiencies, primarily related to permit modifications
and minor operational issues, and proposed a $29,000 civil penalty. The
Company has protested the amount of the penalty. The EPA also issued a
letter requesting additional information on the Company's TSDF operations to
which the Company has responded.
Nuclear Waste
Niagara Mohawk, on behalf of the NMP2 cotenants, entered into
a contract with the Department of Energy ("DOE") for the permanent
storage of NMP2 spent nuclear fuel. Under that contract, the NMP2
cotenants are currently paying DOE a user-fee of one-mil per kilowatthour of
net nuclear generation. The Company is collecting its portion of the
user-fee from the Company's ratepayers.
Under the federal Low Level Radioactive Waste Policy Amendment Act
of 1985, New York was required, by January 1, 1993, to have arranged for the
disposal of all low level, radioactive waste generated within the state or,
in the alternative, contracted for the disposal of waste at an operating
facility outside the state. Failure to do so would require New York to
either (1) take title to and possession of, and assume all liability for,
all waste generated in the state or (2) forfeit to the generators of waste
in the state the rebate of a portion of the surcharges paid by such
generators for the disposal of waste at operating facilities outside the state.
New York has entered into a contract with the State of South
Carolina for the disposal of all low level radioactive waste (except mixed
wastes) through June 1994. The Company can provide no assurance as to what
disposal arrangements, if any, New York will have in place after that date
if New York fails to make other waste
13
<PAGE> 18
disposal arrangements. The Company may incur additional costs for
temporary storage of NMP2-generated waste at the NMP2 site.
The Company expects that its costs to dispose of low level
radioactive waste, including any surcharges or penalties, in an amount yet
undetermined, will be recovered in electric rates. Moreover, under the
Amended and Restated Asset Transfer Agreement, discussed below, LIPA
is responsible for the disposal of waste associated with the decommissioning
of Shoreham, although such costs will be paid by the Company and recovered
through electric rates.
THE COMPANY'S SECURITIES:
General
The Company's securities are rated by Moody's Investors
Service, Inc. ("Moody's"), Standard and Poor's Corporation ("S&P"), Fitch
Investors Service, Inc. ("Fitch") and Duff and Phelps, Inc. ("D&P"). The
Company's securities are rated as follows:
<TABLE>
<CAPTION>
Moody's S&P Fitch D&P
------- --- ----- ---
<S> <C> <C> <C> <C>
First Mortgage Bonds . . . . . . . . Baa2 BBB- BBB BBB
G&R Bonds . . . . . . . . . . . . . . Baa2 BBB- BBB BBB
1985 PCRBs* . . . . . . . . . . . . . Aaa NR NR NR
1993 EFRBs* . . . . . . . . . . . . . Aa2 NR NR NR
Other EFRBs and PCRBs (unsecured) . . Baa3 BB+ NR NR
Debentures (unsecured) . . . . . . . Baa3 BB+ BBB- BB+
Preferred Stock . . . . . . . . . . . "baa3" BB+ BBB- BB
MINIMUM INVESTMENT GRADE Baa3 BBB- BBB- BBB-
- ---------------
</TABLE>
* - Secured by Letters of Credit.
NR - Not rated.
- ---------------
The G&R Mortgage
The Company's General and Refunding Indenture dated June 1, 1975
(the "G&R Indenture" or "G&R Mortgage") is a lien upon substantially all of
the Company's properties. The lien of the G&R Mortgage, which is currently
subordinate to the lien of the Company's Indenture of Mortgage and Deed of
Trust dated September 1, 1951 (the "Indenture of Mortgage" or "First
Mortgage"), will become the Company's most senior mortgage in 1997, the year
in which the last of the currently outstanding non- pledged First Mortgage
Bonds matures. Outstanding at December 31, 1993 were approximately $1.7
billion of General and Refunding Bonds (the "G&R Bonds") and $125 million
of First Mortgage Bonds, excluding $1.0 billion of First Mortgage Bonds (the
"Pledged Bonds") which are pledged with the G&R Trustee as additional
security for the G&R Bonds. Additional information concerning the
Company's G&R Mortgage and the First Mortgage is discussed below and in Note 7
of Notes to Financial Statements for the Year Ended December 31, 1993.
Under the G&R Mortgage, the Company may issue G&R Bonds on the
basis of either matured or
14
<PAGE> 19
redeemed G&R Bonds and First Mortgage Bonds (other than Pledged Bonds)
or on the basis of the Bondable Value of Property Additions ("BVPA").
Generally, when issuing G&R Bonds, the Company must satisfy a mortgage
interest coverage requirement (the "G&R Mortgage Interest Coverage"). The
G&R Mortgage Interest Coverage requires that the Net Earnings available
for interest for any 12 consecutive calendar months within the 15
consecutive calendar months preceding the issuance of the G&R Bonds must be
equal to at least two times the stated annual interest payable on outstanding
G&R Bonds and Prior Lien Bonds (other than Pledged Bonds), including any new
G&R Bonds. Under the G&R Mortgage Interest Coverage, the Company would
currently be able to issue approximately $4.3 billion of additional G&R Bonds
based upon: (i) earnings for the 12 months ended December 31, 1993 and (ii)
an assumed interest rate of 9% for such additional G&R Bonds. A change of
1/8 of 1% in the assumed interest rate of such G&R Bonds would result in a
change of approximately $58.6 million in the amount of such G&R Bonds that the
Company could issue. Currently, the Company is able to issue G&R Bonds only
on the basis of matured or redeemed G&R Bonds and First Mortgage Bonds
(other than Pledged Bonds). The maximum amount of additional G&R Bonds which
the Company is able to issue on this basis is approximately $683 million.
The Company is currently unable to issue G&R Bonds on the basis of
the BVPA because it is required to recognize, for purposes of the G&R
Mortgage, a "deficit" in the BVPA of approximately $202 million as of
December 31, 1993. As the Company continues to make capital improvements to
its system (i.e., add Property Additions), this deficit will be reduced
at an estimated rate of approximately $250 million each year. The existence
of the deficit in the BVPA does not require that any outstanding G&R Bonds be
retired or that the deficit be eliminated by deposits of cash or retired G&R
Bonds or First Mortgage Bonds. The Company expects this deficit to be
eliminated prior to 1995. G&R Bonds are, however, subject to retirement
through the normal operation of the G&R Sinking and Maintenance Funds or
through maturities.
The Company believes that, based upon currently scheduled
redemptions and maturities, it will have sufficient retired G&R Bonds and
First Mortgage Bonds for the foreseeable future to satisfy the requirements
of the G&R Sinking Fund or to withdraw with retired G&R Bonds and First
Mortgage Bonds any cash that may be deposited to satisfy the Sinking Fund
requirements. The Sinking Fund requires the Company to pay $24 million or
to certify a like amount of retired G&R Bonds and First Mortgage Bonds on or
before June 30, 1994. The Company is planning to satisfy this requirement
in 1994 with retired G&R Bonds. In addition, subsequent to 1994, when the
Company expects that Property Additions will again become available for the
various purposes contemplated by the G&R Mortgage, the Company may elect to
use such Property Additions either to issue G&R Bonds or to satisfy the
G&R Sinking Fund requirements.
The Maintenance Fund covenant under the G&R Mortgage requires
that the aggregate amount of Property Additions added subsequent to December
31, 1974 must be, as of the end of each calendar year subsequent to 1974, at
least equal to the cumulative Provision for Depreciation (as defined in the
G&R Mortgage) from December 31, 1974. The G&R Mortgage requires cash (or
retired G&R Bonds or retired First Mortgage Bonds) to be deposited to satisfy
the Maintenance Fund requirements only when such cumulative Provision for
Depreciation exceeds such aggregate amount of Property Additions. As of
December 31, 1993, the amount of such cumulative Property Additions calculated
pursuant to the G&R Mortgage was approximately $9.4 billion, including
approximately $5.5 billion of Property Additions attributable to Shoreham.
Also, as of December 31, 1993, the amount of the cumulative Provision for
Depreciation, similarly calculated, was approximately $1.4 billion. The
Company anticipates that the aggregate amount of Property Additions will
continue to exceed the cumulative Provision for Depreciation.
15
<PAGE> 20
The First Mortgage
Under the provisions of the G&R Mortgage, the Company may not
issue any additional bonds under the Company's First Mortgage other than
Pledged Bonds which are required, concurrently with the issuance of each new
series of G&R Bonds, to be deposited with the G&R Trustee. The issuance of
any such Pledged Bonds does not create additional indebtedness. The
coverage requirements of the First Mortgage and the Company's ability to
issue additional Pledged Bonds do not restrict the Company's ability to
issue additional G&R Bonds. Of the approximately $1.2 billion of First
Mortgage Bonds outstanding at December 31, 1993, $1.0 billion, or 89%, were
Pledged Bonds. After satisfying the 1993 Depreciation Fund and Sinking Fund
requirements discussed below, the Company expects that it will issue
additional Pledged Bonds when it next issues additional G&R Bonds.
The First Mortgage requires the Company to pay the First Mortgage
Trustee by June 30 of each year cash equal to 1% of all previously issued
First Mortgage Bonds (excluding bonds issued on the basis of retired
bonds). Currently, the annual First Mortgage Sinking Fund requirement is
approximately $18 million. The Company expects to satisfy this requirement
prior to June 30, 1994, with retired First Mortgage Bonds. The annual
Sinking Fund requirement is not expected to change, because of restrictions
in the G&R Mortgage, until and unless the Company issues additional G&R
Bonds. The Company expects to be able to satisfy the Sinking Fund
requirement in each year through 1996, the last year in which this requirement
must be met, with cash, available Property Additions or retired First Mortgage
Bonds which become available through scheduled maturities.
The Depreciation Fund covenant of the First Mortgage requires that
the Company pay to the First Mortgage Trustee by June 30 of each year cash
(which may be withdrawn up to the amount of Gross Bondable Additions and First
Mortgage Bonds made the basis for such withdrawal) equal to the greater of
(a) the amount actually charged on the Company's books as a utility
operating revenue deduction for the preceding calendar year for
depreciation, depletion, obsolescence, retirements and amortization of the
Company's Utility Plant ("Book Depreciation") or (b) an amount equal to (i)
15% of gross operating revenues (less the cost of electricity and gas
purchased for resale) from Utility Plant for such year less (ii) the amount
actually expended for maintenance of Utility Plant during such year ("Revenue
Depreciation"). Since the oil crisis of the 1970s, Revenue Depreciation in
each year has been greater than Book Depreciation for such year. The Revenue
Depreciation requirement for 1993 was approximately $216 million. Instead
of paying cash to satisfy this Depreciation Fund requirement, the First
Mortgage permits the Company to deliver First Mortgage Bonds or certify
Property Additions. The Company expects to satisfy the 1993 requirement by
June 30, 1994, using a combination of First Mortgage Bonds and Property
Additions. The Company presently plans, assuming that its expenditures
for capital improvements are approximately $250 million annually and
notwithstanding that G&R Bonds may be issued which would require, in turn,
the issuance of First Mortgage Bonds to be pledged, that it will have
adequate Property Additions to satisfy the Depreciation Fund requirements
in 1995 and 1996, the last year in which this requirement must be met. The
Company also expects that retired First Mortgage Bonds, including
Pledged Bonds, will be available to satisfy the Depreciation Fund
requirement in 1995 and 1996, if such retired First Mortgage Bonds are not
applied to other purposes.
Unsecured Debt
The Company's First Mortgage, its G&R Mortgage and its
Restated Certificate of Incorporation do not contain any limitations upon
the issuance of debt secured by liens which are subordinate to the above
mortgages or upon the issuance of unsecured debt.
The Company's Debenture Indenture, dated as of November 1, 1986,
as supplemented, and the Debenture Indenture, dated as of November 1,
1992, as supplemented, (together, the "Debenture Indentures") each provide
for the issuance of an unlimited amount of Debentures to be issued in
amounts that may be authorized from time to time in one or more series. The
Debentures are unsecured and rank pari passu with all other unsecured
indebtedness of the Company subordinate to the obligations secured by the
Company's two mortgages. Currently, there are approximately $2.9 billion of
Debentures outstanding.
16
<PAGE> 21
As of December 31, 1993, the Company had outstanding approximately
$817 million principal amount of promissory notes, securing $215 million of
tax-exempt Pollution Control Revenue Bonds (the "PCRBs"), $2 million of
tax-exempt Industrial Development Revenue Bonds and $600 million of
tax-exempt Electric Facilities Revenue Bonds ("EFRBs"). Of these amounts,
$17 million issued in 1982, $150 million issued in 1985 (the "1985 PCRBs")
and $100 million issued in 1993 (the "1993 EFRBs") are subject to periodic
tenders by the holders of the tax-exempt bonds. The 1985 PCRBs and 1993
EFRBs are supported by letters of credit pursuant to which the letter of
credit banks have agreed to pay the principal, interest and premium, if
applicable, on any tendered 1985 PCRBs or 1993 EFRBs, in the aggregate, up
to approximately $163 million and $109 million, respectively, in the event
of default. These letters of credit expire on March 16, 1996 and
November 17, 1996, respectively. The obligations of the Company to
reimburse the letter of credit banks supporting the 1985 PCRBs and the 1993
EFRBs are unsecured. Each of the PCRBs, the Industrial Development Revenue
Bonds and the EFRBs have been issued by the New York State Energy Research
and Development Authority ("NYSERDA").
See Note 7 of Notes to Financial Statements for the Year Ended
December 31, 1993 for additional information respecting the Company's Notes
securing tax-exempt bonds and the Company's other outstanding unsecured
debt.
Equity Securities
The Company's Restated Certificate of Incorporation provides
that the Company may not issue additional Preferred Stock unless the net
earnings of the Company available for payment of interest on its debt after
depreciation and all taxes for any 12 consecutive calendar months within the
15 calendar months preceding the month of issuance are at least 1.50 times
the aggregate of the annual interest charges and dividend requirements on
the debt and Preferred Stock to be outstanding immediately after the
issuance of such Preferred Stock (the "Earnings Ratio"). Currently, the
Company cannot satisfy the Earnings Ratio and therefore cannot issue
Preferred Stock except, under certain circumstances, to redeem outstanding
Preferred Stock. When the proceeds from the sale of the Preferred Stock to
be issued are used to redeem outstanding Preferred Stock, the requirement
to satisfy the Earnings Ratio is not applicable if the dividend requirement
and the requirements for redemption in a voluntary liquidation of the
Preferred Stock to be issued do not exceed the respective amounts for
the Preferred Stock which is to be retired. Additional Preferred Stock may
also be issued beyond amounts permitted under the Earnings Ratio with the
approval of at least two-thirds of the votes entitled to be cast by the
holders of the total number of shares of outstanding Preferred Stock.
Default in the payment of dividends on any shares of
Preferred Stock in an amount equivalent to or exceeding four full quarterly
dividends for any series of Preferred Stock entitles all holders of shares of
Preferred Stock, voting separately as a class and regardless of series, to
elect a majority of the Board of Directors of the Company. The remaining
Directors are elected by the holders of Common Stock. The right of holders
of shares of Preferred Stock to elect a majority of the Board of Directors
ceases when and if the Company ceases to be in default in the payment of its
Preferred Stock dividends. At that time, the terms of office of the
Directors of the Company elected by the holders of Preferred Stock terminates
and the resulting vacancies are to be filled by the vote of the remaining
Common Stock Directors.
Issuance of Preference Stock, which is subordinate to the
Company's Preferred Stock, but senior to its Common Stock, with respect to
declaration and payment of dividends and the right to receive amounts payable
on any dissolution, does not require satisfaction of a net earnings test or
any other coverage requirement, unless established by the Board of Directors
for one or more series of Preference Stock, prior to the issuance of such
series. No Preference Stock has been issued by the Company nor does the
Company currently plan to issue any Preference Stock.
Before paying any dividends, the Company's Board of Directors
considers, among other factors, the Company's financial condition, its
ability to comply with provisions of the Company's Restated and Amended
Certificate of Incorporation and the availability of retained earnings,
future earnings and cash.
17
<PAGE> 22
SHOREHAM DECOMMISSIONING:
As contemplated by the 1989 Settlement, the Company
transferred Shoreham and the Company's possession-only license for Shoreham
to LIPA on February 29, 1992, following a decision by the NRC that approved
the transfer. The NRC decision requires that the Company maintain adequate
capability to take over the possession-only license in the event LIPA ceases
to exist or is otherwise found to be unqualified to hold the license.
On June 11, 1992, the NRC issued an order authorizing the
decommissioning of Shoreham by LIPA. The order requires that additional NRC
approvals be obtained if certain conditions regarding fuel and solid
radioactive waste are not met.
The Company is required under an agreement with LIPA (the
"Amended and Restated Asset Transfer Agreement") to reimburse LIPA for any
of its costs associated with the decommissioning of Shoreham and recover
these reimbursed amounts from its ratepayers. The Site Cooperation and
Reimbursement Agreement (the "Site Agreement") entered into by the Company
and LIPA describes the payment by the Company of LIPA's and NYPA's
expenses attributable to the transfer, ownership, possession, maintenance
and decommissioning of Shoreham, including certain taxes and payments
in-lieu-of-taxes with respect to the Shoreham site, and governs, among other
things, the conduct of the parties and of NYPA, and their access to facilities
and properties at the Shoreham site.
The NRC has granted the Company an exemption from
decommissioning funding requirements which generally require utilities to
maintain separate funds or obtain letters of credit dedicated to and
sufficient to cover all expected decommissioning costs. Instead, the NRC
has approved the dedication of a portion of the funds available to the
Company under the 1989 Revolving Credit Agreement (the "1989 RCA") to
support the Company's obligation to provide funding for the
decommissioning of Shoreham. For additional information respecting the 1989
RCA, see Notes 2 and 7 of Notes to Financial Statements for the Year Ended
December 31, 1993. The NRC also required that the Company establish an
external fund of $10 million to cover emergency decommissioning costs.
The RMA assumed that post settlement costs would total
approximately $670 million, including $330 million for property taxes and
payments-in-lieu-of-taxes ("PILOTS"). The remaining $340 million was
estimated for decommissioning costs, fuel disposal costs and all other
costs incurred at Shoreham after June 30, 1989. These post settlement
costs are being capitalized and amortized over a 40-year period on a
straight line remaining life basis. The RMA also contemplated that Shoreham
would be transferred to LIPA on July 1, 1989. Certain of the assumptions in
the RMA have changed. For example, the Company experienced delays in
obtaining approval to transfer the plant, resulting in the payment of
additional property taxes. In addition, PILOTS have been greater than had
been assumed in the RMA. As a result, at December 31, 1993, Shoreham post
settlement costs totalled approximately $777 million (net of accumulated
amortization of $34 million). The $777 million includes $363 million of
property taxes and PILOTS and $448 million of decommissioning costs, fuel
disposal costs and all other costs incurred at Shoreham after June 30, 1989.
The Company currently estimates that post settlement costs (other than property
taxes and PILOTS) will total approximately $550 million. The precise amount of
taxes and PILOTS that must be paid is the subject of the litigation described
in Item 3, "Legal Proceedings -- Shoreham."
Although the Company can give no assurance that the cost to
decommission Shoreham will approximate its current estimate, the amount which
is assumed in the LIPA decommissioning plan or the RMA, or that the
decommissioning process will be completed within the period stated above, the
PSC has determined that all costs associated with Shoreham which are
prudently incurred by the Company subsequent to the effectiveness of the
1989 Settlement are decommissioning costs, and has confirmed that the RMA
provides for the recovery of such
18
<PAGE> 23
expenses through electric rates. It is the Company's position that, should
the decommissioning costs be greater and the duration of decommissioning be
longer than the amount and the time, respectively, assumed in the RMA, the
additional prudently incurred costs relating to decommissioning, including
maintenance of Shoreham during such longer period, will be recovered from
the Company's ratepayers through electric rates over the balance of a 40-year
period ending 2029.
Pursuant to the 1989 Settlement, the Company reflects the costs
of the nuclear fuel related to Shoreham as a deferred charge under the
heading "Regulatory Assets." The RMA contemplates that the Company will
recover from its ratepayers the costs of its Shoreham nuclear fuel. The
Company is required under the Amended and Restated Asset Transfer Agreement to
reimburse LIPA for any of its costs associated with the storage and disposal of
Shoreham's fuel and recover these reimbursed amounts from its ratepayers as
well.
For additional information respecting the 1989 Settlement, see
Note 2 of Notes to Financial Statements for the Year Ended December 31,
1993.
EXECUTIVE OFFICERS OF THE COMPANY:
Current information regarding the Company's Executive Officers,
all of whom serve at the will of the Board of Directors, follows:
William J. Catacosinos: Dr. Catacosinos has served as
Chairman of the Board of Directors and Chief Executive Officer of the
Company since January 1984, and as a Director since December 1978. Dr.
Catacosinos is currently serving as President on an interim basis and
previously served in that capacity from March 1984 to January 1987. Dr.
Catacosinos, 63, a resident of Mill Neck, Long Island, earned a bachelor of
science degree, a masters degree in business administration and a doctoral
degree in economics from New York University. He is the former chairman and
chief executive officer of Applied Digital Data Systems, Inc., Hauppauge,
New York, a manufacturer of computer and related products. Previously,
Dr. Catacosinos served as chairman of the board and treasurer of
Corometric Systems, Inc. of Wallingford, Connecticut and was Assistant
Director at Brookhaven National Laboratory. Dr. Catacosinos currently
chairs the Executive Committee of the Company's Board of Directors and he
is a member of the board of Utilities Mutual Insurance Co. and Ketema, Inc.,
a diversified manufacturer of, among other things, electrical and aerospace
equipment. In compliance with Section 305(b) of the Federal Power Act, Dr.
Catacosinos has authorization from FERC to hold the position of an officer
or director of a public utility and at the same time the position of an
officer or director of a firm that supplies electrical equipment to such
public utility.
Theodore A. Babcock: Mr. Babcock was named Treasurer of the
Company on February 4, 1994. As Treasurer, he will be responsible for
Treasury Operations, Debt Management, Trust Asset Management, Risk
Management and Remittance Processing. Mr. Babcock, 39, joined the Company in
July 1992 as Assistant Treasurer. He previously spent five years in
the AMBASE Corporation as an Assistant Vice President and was promoted in
1988 to Vice President and Treasurer. Prior to AMBASE, Mr. Babcock spent 11
years with the Associated Dry Goods Corporation where he was promoted to
Assistant Treasurer and Director of Corporate Treasury Operations in 1984.
Mr. Babcock received a bachelor of science degree in accounting from
Manhattan College and a masters degree in finance from Iona College.
William N. Dimoulas: Vice President of Information Systems and
Technology since May 1990, Mr. Dimoulas, 50, joined the Company in 1988. He
received a bachelor of science degree and a masters of business
administration degree from Long Island University. Previously, Mr. Dimoulas
was a vice president at Chemical Bank concentrating in Corporate Banking and
Information Technology.
19
<PAGE> 24
James T. Flynn: Mr. Flynn was named Chief Operating Officer of
the Company on March 1, 1994 and will continue in his position of Executive
Vice President which he assumed in April 1992. Mr. Flynn joined the Company
in October 1986 as Vice President of Fossil Production and later assumed the
position of Group Vice President, Engineering and Operations. Before
joining the Company, Mr. Flynn, 60, was general manager-Eastern Service
Department for General Electric. His career began as a member of General
Electric's Technical Marketing Program in 1957. He holds a bachelor of
science degree in mechanical engineering from Bucknell University and is a
Licensed Professional Engineer in the State of Pennsylvania.
Robert J. Grey: Mr. Grey joined the Company in September
1992 as General Counsel. Before joining the Company, Mr. Grey, 43, was
senior utility partner and managing partner of the Portland office with
the northwest law firm of Preston, Thorgrimson, Shidler, Gates & Ellis.
Previously, Mr. Grey was staff counsel for the New York State Public
Service Commission and an attorney for the United States Environmental
Protection Agency. Mr. Grey has a bachelors degree from Columbia University,
a juris doctorate from Emory University and an LL.M in Taxation from
George Washington University.
Robert X. Kelleher: Vice President of Human Resources since July
1986, Mr. Kelleher, 57, joined the Company in 1959 and has held various
managerial positions in the Finance, Accounting, Purchasing, Stores and
Employee Relations organizations. He was Industrial Relations Manager from
1975 to 1979, Manager of the Employee Relations Department from 1979 to
1985 and Assistant Vice President of the Employee Relations Department from
1985 to 1986. Mr. Kelleher is a graduate of St. Francis College and the
Human Resources Management and Executive Management Programs of Pennsylvania
State University. Mr. Kelleher is a member of the American Compensation
Association, Personnel Directors Council, Industrial Relations Research
Institute, Edison Electric Institute's Labor Relations Committee and is on
the advisory council of New York Institute of Technology's Center for Labor
Relations.
John D. Leonard, Jr.: Mr. Leonard joined the Company in 1984,
initially serving as Vice President of Nuclear Operations. In July 1989, he
assumed additional duties as Vice President of Corporate Services. Mr.
Leonard, 61, was the vice president and assistant chief engineer for design
and analysis at the New York Power Authority, from 1980 to 1984. Prior to
this position, he served as a resident manager of the Fitzpatrick Nuclear
Power Plant for approximately five years. Before accepting a position at
the New York Power Authority, Mr. Leonard served as corporate supervisor of
operational quality assurance of the Virginia Electric Power Company from 1974
to 1976. In 1974, Mr. Leonard retired with the rank of Commander from the
United States Navy, having commanded two nuclear powered submarines in a
career that spanned 20 years. He holds a bachelor of science degree from
Duke University and a master of science degree from the Naval Post
Graduate School. He is a registered professional engineer in the State of
New York.
Adam M. Madsen: Vice President of Corporate Planning since 1984,
Mr. Madsen, 57, holds a bachelors degree in electrical engineering from
Manhattan College and a master of science degree in nuclear engineering from
Long Island University. He has been with the Company since 1961, serving in
various engineering positions including Manager of Engineering from 1978 to
1984. Prior to that time, he held the position of Manager of the Planning
Department. Since 1978, Mr. Madsen has been the Company's representative to
the Planning Committee of the New York Power Pool. He is a member of the
Northeast Power Coordinating Council's Joint Coordinating Committee and an
alternate to the Council's Executive Committee. He also serves on the Board
of Directors of the Empire State Electric Energy Research Company. Mr. Madsen
is a registered professional engineer in the State of New York.
Kathleen A. Marion: Corporate Secretary since April 1992, Ms.
Marion served as Assistant Corporate Secretary from April 1990 to 1992. Ms.
Marion also continues to serve as Assistant to the Chairman, a position she
has held since April 1987. Ms. Marion, 39, has a bachelor of science degree
in business and finance from the State University of New York at Old Westbury.
20
<PAGE> 25
Arthur C. Marquardt: Senior Vice President of Gas Business Unit
since March 1992, Mr. Marquardt, 47, joined the Company in January 1991.
He held the position of Vice President of Strategic Business Planning from
January 1991 through March 1992. He is chairman of the New York Facilities
executive committee and a director of the Huntington Chamber of
Commerce and the Huntington Chamber Foundation. Mr. Marquardt has had
extensive and varied business experience at Combustion Engineering Inc.,
General Electric Company, Quadrex Corporation, and at Pacific Nuclear
Systems, Inc. where he was president and chief operating officer. He received
a bachelor of science degree in mechanical engineering from Tufts University.
Brian R. McCaffrey: Vice President of Administration since
March 1987, Mr. McCaffrey, 48, joined the Company in 1973. Mr. McCaffrey
holds a bachelor of science degree in aerospace engineering from the
University of Notre Dame. He also received a master of science degree
in aerospace engineering from Pennsylvania State University and a master of
science degree in nuclear engineering from Polytechnic University. He is a
licensed professional engineer in New York. Prior to this assignment as
Vice President, Mr. McCaffrey served in many positions in the nuclear
organizations of the Company and positions in engineering capacities
associated with gas turbine and fossil power station projects. Mr.
McCaffrey is a member of the executive board of the Suffolk County Council
Boy Scouts of America.
Joseph W. McDonnell: Vice President of External Affairs since
July 1992, Dr. McDonnell, 42, joined the Company in 1984. Dr. McDonnell was
Assistant to the Chairman from 1984 through 1988 when he was named Vice
President of Communications. Prior to joining the Company, Dr. McDonnell was
the director of strategic planning and business administration for Applied
Digital Data Systems, Inc. and associate director of the University Hospital
at the State University of New York at Stony Brook. He holds bachelor of
arts and master of arts degrees in philosophy and a master of arts degree
in theology from the State University of New York at Stony Brook and a Ph.D
in communications from the University of Southern California.
Anthony Nozzolillo: Mr. Nozzolillo was named Senior Vice
President of Finance and Chief Financial Officer of the Company on February
4, 1994. His reporting responsibilities will include the offices of
Controller, Treasurer, Tax & Benefits Planning, Investor Relations and
Financial Planning. Prior to this appointment he had been the Company's
Treasurer since July 1992. He has been with the Company since 1972 serving
in various positions including Manager of Financial Planning and Manager of
Systems Planning. Mr. Nozzolillo is a director of Utilities Mutual Insurance
Company and Nuclear Mutual Ltd. Mr. Nozzolillo, 45, holds a bachelor of
science degree in electrical engineering from the Polytechnic Institute of
Brooklyn and a master of business administration degree from Long Island
University C.W. Post Campus.
William G. Schiffmacher: Vice President of Electric Operations
since July 1990, Mr. Schiffmacher, 50, joined the Company in 1965 after
receiving a bachelor of electrical engineering degree from Manhattan
College. Mr. Schiffmacher also holds a master of science degree in management
engineering from Long Island University. He has held a variety of
positions in the Company, including Manager of Electric System Operation,
Manager of Electrical Engineering and Vice President of Engineering and
Construction.
Robert B. Steger: Vice President of Fossil Production since
February 1990, Mr. Steger, 57, joined the Company in 1963 and has since
held progressive operating and engineering positions including Manager of
Electric Production-Fossil from 1985 through 1989. He holds a bachelor
of mechanical engineering degree from Pratt Institute and is a registered
professional engineer in the State of New York.
William E. Steiger, Jr.: Vice President of Engineering and
Construction since July 1990, Mr. Steiger, 50, has been with the Company
since 1968. During his career with the Company, Mr. Steiger has served,
among other positions, as Lead Nuclear Engineer for Shoreham, Chief
Operations Engineer for Shoreham, Plant Manager for Shoreham as well as
Assistant Vice President of Nuclear Operations. He received a bachelor of
science degree in marine engineering from the United States Merchant Marine
Academy and a master of science degree in nuclear engineering from Long
Island University.
21
<PAGE> 26
Thomas J. Vallely, III: Controller and Chief Accounting Officer
of the Company since February 1991, Mr. Vallely, 47, holds a bachelor of
science degree in accounting from St. John's University and a masters
degree in corporate financial management from Pace University. He is the
former controller and chief accounting officer of the New York City Transit
Authority, an agency of the Metropolitan Transportation Authority.
Walter F. Wilm, Jr.: Vice President of Corporate Reorganization
since March 1992, Mr. Wilm, 57, joined the Company in 1962. During his
career with the Company, Mr. Wilm has served, among other positions, as
Assistant Manager of Gas Construction and Maintenance, Manager of Meter and
Test, Vice President of Administration, Vice President of Customer
Relations and Vice President of Gas Operations. Mr. Wilm holds a bachelor
of science degree in electrical engineering from Indiana Institute of
Technology and is a licensed professional engineer.
Edward J. Youngling: Vice President of Customer Relations and
Conservation since March 1993, Mr. Youngling, 49, holds a bachelor of
science degree in mechanical engineering from Lehigh University. He joined
the Company in 1968 as an Assistant Engineer in the Electric Production
Department and has held various positions in the offices of fossil
production, engineering and nuclear operations including service as
Department Manager of Nuclear Engineering. In 1988, Mr. Youngling was
named Vice President of Conservation and Load Management. In 1990, Mr.
Youngling became Vice President of Customer Relations. The Office of
Customer Relations and the Office of Conservation were merged in March 1993.
CAPITAL REQUIREMENTS, LIQUIDITY AND CAPITAL PROVIDED:
Information as to Capital Requirements, Liquidity and Capital
Provided appears in Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations for the Year Ended December
31, 1993."
ITEM 2. PROPERTIES
The location and general character of the principal
properties of the Company are described in Item 1, "Business" under the
headings "Electric Operations" and "Gas Operations."
ITEM 3. LEGAL PROCEEDINGS
Shoreham
The Company's Shoreham-related litigation includes a lawsuit
against certain contractors and suppliers regarding the construction of
Shoreham, a breach of contract suit against Suffolk County and a tax
certiorari proceeding seeking review of certain tax assessments of Shoreham.
On December 13, 1993, the United States District Court for the
Eastern District of New York issued an opinion in Long Island Lighting
Company v. Stone & Webster Engineering Corp. granting a motion by Stone &
Webster Engineering Corp. ("SWEC") to dismiss the Company's complaint in
this action and dismissing SWEC's counter-claim. The Company's complaint
had sought to recover damages against SWEC for breach of contract,
negligence, professional malpractice and gross negligence in connection with
SWEC's work as architect-engineer and construction manager for Shoreham. The
parties entered into a settlement in which both parties agreed not to pursue an
appeal.
On February 11, 1988, the Company began a lawsuit in
Suffolk County Supreme Court against Suffolk County, seeking the recovery
of approximately $54 million in damages for Suffolk County's breach of a
contract to prepare an offsite emergency response plan for Shoreham (Long
Island Lighting Company v. County of Suffolk). In addition, the complaint
alleges that, because of the delays that have resulted, the Company has been
22
<PAGE> 27
damaged in an additional amount of $706 million. On October 30, 1992, the
court granted, in part, and denied, in part, Suffolk County's motion to
amend its answer to assert additional defenses and counterclaims. Two
proposed counterclaims were allowed seeking approximately $16 million in
damages as well as $700 million in alleged punitive damages. The outcome of
these counterclaims, if adverse, could have a material effect on the
financial condition of the Company. The Company maintains that there is no
basis for punitive damages and intends to vigorously prosecute its claims
against Suffolk County and to defend against Suffolk County's counterclaims.
Pursuant to the Long Island Power Authority Act ("LIPA Act"),
LIPA is required to make PILOTS to the municipalities that impose real
property taxes on Shoreham. Under the 1989 Settlement Agreement with New
York State which resolved disputes over the Shoreham plant, the Company agreed
to fund LIPA's PILOTS obligation. The timing and duration of PILOTS under
the LIPA Act are the subject of the litigation entitled LIPA, et al. v.
Shoreham-Wading River Central School District, et al. LIPA brought this
action in Nassau County Supreme Court against, among others, Suffolk County,
Town of Brookhaven and the Shoreham-Wading River Central School District.
The Company was permitted to intervene in the lawsuit. On January 10, 1994,
the Appellate Division, Second Department, affirmed a lower court's March 29,
1993 decision holding, in major part, that the Company is not obligated for
any real property taxes that accrued after February 28, 1992,
attributable to property that it conveyed to LIPA, that PILOTS commence on
March 1, 1992, that PILOTS are subject to refunds and that the LIPA Act does
not provide for the termination of PILOTS. The effects of this affirmance
cannot yet be quantified. Furthermore, all of the parties have filed
motions with the Second Department seeking leave to appeal to the New York
Court of Appeals. Generally, these holdings are favorable to the Company.
The proper amount of PILOTS is to be determined in pending litigation
described in the next paragraph.
The costs of Shoreham included real property taxes imposed by the
Town of Brookhaven on Shoreham and capitalized by the Company during
construction. The Company has sought judicial review in Suffolk County
Supreme Court (Long Island Lighting Company v. The Assessor of the Town
of Brookhaven, et al.) of the assessments upon which those taxes were based
for the years 1976 through 1992 (excluding 1979). The Court has consolidated
the review of the tax years at issue into two phases: 1976 through 1983,
excluding 1979 (Phase 1); and 1984 through 1992 (Phase 2). On October 26,
1992, the court ruled that Shoreham had been overvalued for property tax
purposes for Phase 1. Although the Court did not award a refund because of
a need to make further factual findings, the Company estimates that it is
entitled to a refund of approximately $34 million plus interest. In Phase
2, the Company is seeking to recover over $500 million, excluding interest,
in property taxes paid on Shoreham during this period. A trial date of
April 14, 1994 has been set by the Suffolk County Supreme Court. The amount
of the Company's recovery, if any, in the 1984-1992 proceeding and the timing
of all refunds cannot yet be determined. The Company has indicated to the
PSC that all refunds, less litigation costs, will be used to reduce
future electric costs. LIPA has been permitted to intervene for limited
purposes in this pending litigation.
Nine Mile Point 2
In 1988, the Company and the other cotenants of Nine Mile Point
2 commenced a lawsuit entitled Niagara Mohawk Power Corporation, et al. v.
Stone & Webster Engineering Corp., ITT Fluid Products Corp. and ITT Fluid
Technology Corporation in the United States District Court for the
Northern District of New York, alleging damages arising from breach of
contract, negligence, professional malpractice and gross negligence in
connection with certain work performed at Nine Mile Point 2. SWEC
furnished architect-engineering and construction management services, while
ITT fabricated and erected piping for the Nine Mile Point 2 unit. The case
against SWEC was settled in 1991. The case against the ITT defendants was
not settled and went to trial before a jury in June 1992. The jury
returned a verdict for the ITT defendants on all causes of action. The
parties entered into a settlement in which the cotenants agreed not to
pursue an appeal. ITT agreed to withdraw its claim for costs and to pay the
cotenants $25,000.
23
<PAGE> 28
Environmental
On February 18, 1994, a lawsuit was filed in the United States
District Court for the Eastern District of New York by the Town of Oyster
Bay (the "Town"), New York, against the Company and 19 other potentially
responsible parties ("PRPs"). The Town is seeking indemnification for
remediation and investigation costs that have been or will be incurred for
a federal Superfund site in Syosset, New York, which served as a Town-owned
and operated landfill between 1954 and 1975. In a Record of Decision issued
on or about September 27, 1990, the EPA set forth a remedial design plan,
the cost of which was estimated at $27 million and is reflected in the Town's
lawsuit. In an Administrative Consent Decree entered into between the EPA
and the Town on December 6, 1990, the Town agreed to undertake remediation at
the site. The Company has agreed to participate in a joint PRP defense
effort with several other defendants. Liability, if imposed, would be joint and
several. While the outcome of this matter is not certain, based upon the
Company's past experience in similar matters and the number and financial
condition of the corporate defendants named in the litigation, the Company
does not believe that this proceeding will have a material impact on its
financial condition.
Human Resources
Pending before federal courts, the Federal Equal Employment
Opportunity Commission and the New York State Division of Human Rights are
charges by individuals alleging that the Company discriminated against them
on various grounds.
The Civil Rights Bureau of the New York Attorney General's
office has subpoenaed the Company for the production of documents to aid in
its investigation as to whether the Company has engaged in discriminatory
employment practices based upon age. No charges have been filed by the
Attorney General.
The Company has estimated that any costs to the Company resulting
from these matters will not have a material adverse effect on its financial
condition.
Other Matters
On January 13, 1993, the New York State Department of Law
("DOL") informed the Company that the DOL's Antitrust Bureau opened an
investigation into its Full Service Pilot Program and Contractor Advisory
Council, two programs designed to increase the Company's residential natural
gas sales. The DOL stated that the implementation of the Full Service Pilot
Program and the practices of the Contractor Advisory Council may have
anticompetitive effects in the gas-fired heating equipment installation and
conversion business and that a preliminary investigation has raised
questions of possible violations of the New York General Business Law and
the Sherman Act. The Company expects that it can demonstrate that the
programs identified by the DOL for investigation are very limited in scope and
do not involve any violations. The outcome of the investigation by the DOL,
if adverse, is not expected to have a material effect on the financial
condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
24
<PAGE> 29
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
At February 22, 1994, the Company had 95,084 registered
holders of record of Common Stock.
The Common Stock of the Company is traded on the New York Stock
Exchange and the Pacific Stock Exchange. Certain of the Company's Preferred
Stock series are traded on the New York Stock Exchange.
Information respecting the high and low sales prices and the
dividends paid on the Company's Common Stock during the past two years is set
forth in the table below.
<TABLE>
<CAPTION>
============================================================
1993 1992
------------------------------ ----------------------------
Prices Dividends Prices Dividends
----------------- Paid Per ---------------- Paid Per
High Low Share High Low Share
===========================================================================
<S> <C> <C> <C> <C> <C> <C>
1st Quarter 28 3/4 24 7/8 $0.435 24 5/8 22 1/8 $0.425
2nd Quarter 28 1/4 24 3/4 $0.435 24 1/4 22 3/8 $0.425
3rd Quarter 29 5/8 27 $0.435 25 5/8 23 3/8 $0.425
4th Quarter 27 3/4 23 1/4 $0.445 25 7/8 23 5/8 $0.435
===========================================================================
</TABLE>
25
<PAGE> 30
<TABLE>
<CAPTION>
ITEM 6: SELECTED FINANCIAL DATA (In thousands of dollars)
- ------------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET TABLE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Net Utility Plant $ 3,347,557 $ 3,161,148 $ 3,002,733 $ 2,888,079 $ 2,781,157
Regulatory Assets 7,610,639 5,221,143 4,951,086 4,723,357 4,335,845
Other assets 2,497,841 2,382,168 2,184,676 1,905,802 2,156,949
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 13,456,037 $ 10,764,459 $ 10,138,495 $ 9,517,238 $ 9,273,951
====================================================================================================================================
CAPITALIZATION AND LIABILITIES
Capitalization
Long-term debt $ 4,870,340 $ 4,741,002 $ 4,986,166 $ 4,532,891 $ 4,531,429
Preferred stock
- redemption required 649,150 557,900 524,912 527,550 541,187
Preferred stock
- no redemption required 64,038 154,276 154,371 154,674 155,592
Common shareowners' equity 2,232,950 2,184,775 2,130,491 2,067,234 1,941,745
- ------------------------------------------------------------------------------------------------------------------------------------
Total Capitalization 7,816,478 7,637,953 7,795,940 7,282,349 7,169,953
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities 5,639,559 3,126,506 2,342,555 2,234,889 2,103,998
- ------------------------------------------------------------------------------------------------------------------------------------
Total Capitalization and
Liabilities $ 13,456,037 $ 10,764,459 $ 10,138,495 $ 9,517,238 $ 9,273,951
====================================================================================================================================
</TABLE>
26
<PAGE> 31
<TABLE>
<CAPTION>
(In thousands of dollars except per share amounts)
- ------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS TABLE 2
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 2,880,995 $ 2,621,839 $ 2,547,729 $ 2,456,902 $ 2,347,614
Total operating income
(loss) $ 755,551 $ 741,105 $ 785,280 $ 802,630 $ 620,423
Income (loss) before
cumulative effect
of accounting
change $ 296,563 $ 301,974 $ 305,538 $ 319,637 $ (95,803)
Cumulative effect of
accounting change
for unbilled gas
revenues (net of
taxes) - - - $ 11,680 -
Earnings (loss) for
common stock $ 240,455 $ 238,020 $ 239,144 $ 263,156 $ (175,035)
Average common shares
outstanding (000) 112,057 111,439 111,348 111,290 111,215
- ------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per
common share before
cumulative effect
of accounting
change $ 2.15 $ 2.14 $ 2.15 $ 2.26 $ (1.57)
Cumulative effect
of accounting change - - - .10 -
- ------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per
common share $ 2.15 $ 2.14 $ 2.15 $ 2.36 $ (1.57)
==============================================================================================================================
Common stock dividends
declared per share $ 1.76 $ 1.72 $ 1.60 $ 1.25 $ .50
Common stock dividends
paid per share $ 1.75 $ 1.71 $ 1.55 $ 1.125 $ .25
Book value per common
share at year end $ 19.88 $ 19.58 $ 19.13 $ 18.57 $ 17.45
Common shareowners at
year end 94,877 86,111 90,435 82,903 85,142
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 32
<TABLE>
<CAPTION>
(In thousands of dollars)
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS AND MAINTENANCE EXPENSE DETAILS TABLE 3
- ------------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total payroll and
employee benefits $ 410,329 $ 413,817 $ 398,000 $ 357,689 $ 329,694
Less-Charged to construction
and other 116,988 124,076 123,838 97,650 117,761
- ------------------------------------------------------------------------------------------------------------------------------------
Payroll and employee benefits
charged to operations 293,341 289,741 274,162 260,039 211,933
- ------------------------------------------------------------------------------------------------------------------------------------
Fuels-electric operations 287,349 282,138 354,859 444,458 461,576
Fuels-gas operations 248,559 182,201 175,046 175,877 188,139
Purchased power costs 292,136 280,914 197,154 168,749 128,368
Fuel cost adjustments deferred (453) (3,469) 41,643 (2,085) (5,631)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Fuel and Purchased Power 827,591 741,784 768,702 786,999 772,452
- ------------------------------------------------------------------------------------------------------------------------------------
All other 228,319 208,204 248,597 215,770 215,373
- ------------------------------------------------------------------------------------------------------------------------------------
Total Operations and
Maintenance Expense $ 1,349,251 $ 1,239,729 $ 1,291,461 $ 1,262,808 $ 1,199,758
====================================================================================================================================
Employees at December 31 6,337 6,541 6,605 6,630 6,239
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 33
<TABLE>
<CAPTION>
(In thousands of dollars)
- -----------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRIC OPERATING INCOME TABLE 4
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Residential $ 1,145,891 $ 1,045,799 $ 1,047,490 $ 997,868 $ 915,644
Commercial and industrial 1,132,487 1,076,302 1,070,098 1,017,387 981,740
Other system revenues 49,790 49,395 47,838 46,673 42,232
- -----------------------------------------------------------------------------------------------------------------------------
Total system revenues 2,328,168 2,171,496 2,165,426 2,061,928 1,939,616
Sales to other utilities 12,872 9,997 23,040 24,140 42,880
Other revenues 11,069 13,139 8,102 9,592 792
- -----------------------------------------------------------------------------------------------------------------------------
Total Revenues 2,352,109 2,194,632 2,196,568 2,095,660 1,983,288
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
Operations-fuel and
purchased power 579,032 559,583 593,656 611,122 584,313
Operations-other 306,116 294,909 296,798 271,608 237,931
Maintenance 111,765 105,341 127,446 118,545 115,502
Depreciation and amortization 106,149 104,034 104,172 98,022 91,759
Base financial component
amortization 100,971 100,971 100,971 100,971 50,485
Regulatory liability component
amortization (79,359) (79,359) (79,359) (79,359) (39,679)
1989 Settlement credits
amortization (9,214) (9,214) (9,214) (9,214) (4,607)
Other regulatory amortizations (17,082) (21,984) 10,375 14,427 1,248
Rate moderation component 88,667 (30,444) (228,572) (297,214) (131,167)
Regulatory liability component - - - - 793,592
Jamesport amortization - - - - 104,160
Operating taxes 326,407 331,122 338,429 322,197 312,456
Federal income tax-current 6,324 530 515 3,138 14,612
Federal income tax-deferred
and other 158,941 158,908 173,259 169,274 (738,500)
- -----------------------------------------------------------------------------------------------------------------------------
Total Expenses 1,678,717 1,514,397 1,428,476 1,323,517 1,392,105
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRIC OPERATING INCOME $ 673,392 $ 680,235 $ 768,092 $ 772,143 $ 591,183
=============================================================================================================================
</TABLE>
29
<PAGE> 34
<TABLE>
<CAPTION>
(In thousands of dollars)
- ---------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GAS OPERATING INCOME TABLE 5
- ---------------------------------------------------------------------------------------------------------------------------
REVENUES
Residential-space heating $ 310,109 $ 243,950 $ 190,976 $ 198,734 $ 209,192
-other 39,515 33,035 29,383 30,854 31,692
Non-residential-space heating 106,140 90,363 70,938 68,441 72,351
-other 33,181 29,094 25,515 26,501 28,674
- ---------------------------------------------------------------------------------------------------------------------------
Total firm revenues 488,945 396,442 316,812 324,530 341,909
Interruptible revenues 24,028 19,658 21,686 30,515 19,226
- ---------------------------------------------------------------------------------------------------------------------------
Total system revenues 512,973 416,100 338,498 355,045 361,135
Other revenues 15,913 11,107 12,663 6,197 3,191
- ---------------------------------------------------------------------------------------------------------------------------
Total Revenues 528,886 427,207 351,161 361,242 364,326
- ---------------------------------------------------------------------------------------------------------------------------
EXPENSES
Operations-fuel 248,559 182,201 175,046 175,877 188,139
Operations-other 81,692 77,300 78,469 68,910 59,587
Maintenance 22,087 20,395 20,046 16,746 14,286
Depreciation and amortization 16,322 15,103 14,783 12,862 11,671
Regulatory amortizations (962) (88) - - -
Operating taxes 59,440 57,866 49,951 48,120 51,935
Federal income tax-current - - - 500 -
Federal income tax-deferred
and other 19,589 13,560 (4,322) 7,740 9,468
- ---------------------------------------------------------------------------------------------------------------------------
Total Expenses 446,727 366,337 333,973 330,755 335,086
- ---------------------------------------------------------------------------------------------------------------------------
GAS OPERATING INCOME $ 82,159 $ 60,870 $ 17,188 $ 30,487 $ 29,240
===========================================================================================================================
</TABLE>
30
<PAGE> 35
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------
ELECTRIC SALES AND CUSTOMERS TABLE 6
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SALES-millions of kWh
Residential 7,118 6,788 7,023 7,022 7,063
Commercial and industrial 8,257 8,181 8,322 8,359 8,636
Other 449 471 469 472 470
- ------------------------------------------------------------------------------------------------------------------
System sales 15,824 15,440 15,814 15,853 16,169
Sales to other utilities 304 227 598 532 633
- ------------------------------------------------------------------------------------------------------------------
Total Sales 16,128 15,667 16,412 16,385 16,802
- ------------------------------------------------------------------------------------------------------------------
CUSTOMERS-monthly average
Residential 905,997 902,885 898,974 895,294 890,406
Commercial and industrial 102,254 101,838 101,740 101,562 100,481
Other 4,553 4,593 4,540 4,504 4,452
- ------------------------------------------------------------------------------------------------------------------
Customers-total
monthly average 1,012,804 1,009,316 1,005,254 1,001,360 995,339
==================================================================================================================
Customers-total
at year end 1,011,965 1,009,028 1,005,363 1,001,441 996,488
- ------------------------------------------------------------------------------------------------------------------
RESIDENTIAL
kWh per customer 7,856 7,518 7,812 7,844 7,932
Revenue per kWh 16.10c. 15.41c. 14.92c. 14.21c. 12.96c.
- ------------------------------------------------------------------------------------------------------------------
COMMERCIAL AND INDUSTRIAL
Kwh per customer 80,749 80,346 81,797 82,304 85,943
Revenue per Kwh 13.72c. 13.16c. 12.86c. 12.17c. 11.37c.
- ------------------------------------------------------------------------------------------------------------------
SYSTEM
Kwh per customer 15,631 15,297 15,731 15,832 16,245
Revenue per Kwh 14.71c. 14.06c. 13.69c. 13.01c. 12.00c.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 36
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------
GAS SALES AND CUSTOMERS TABLE 7
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SALES-thousands of dth
Residential
-space heating 37,191 35,089 29,687 29,810 32,024
-other 3,297 3,203 3,195 3,448 3,491
Non-residential
-space heating 14,366 13,662 11,636 11,271 11,548
-other 4,329 4,338 4,171 4,352 4,539
- -----------------------------------------------------------------------------------------------------------------------
Total firm sales 59,183 56,292 48,689 48,881 51,602
Interruptible sales 5,920 5,090 4,538 6,347 5,300
Off system sales 2,894 - - - -
- -----------------------------------------------------------------------------------------------------------------------
Total Sales 67,997 61,382 53,227 55,228 56,902
=======================================================================================================================
CUSTOMERS
-monthly average
Residential
-space heating 233,882 227,834 220,562 211,400 204,982
-other 166,974 169,189 171,581 176,000 179,415
Non-residential
-space heating 32,783 31,666 30,453 29,072 27,733
-other 10,631 10,777 11,003 11,310 11,517
- -----------------------------------------------------------------------------------------------------------------------
Total firm customers 444,270 439,466 433,599 427,782 423,647
Interruptible customers 542 531 472 410 359
- -----------------------------------------------------------------------------------------------------------------------
Customers-total
monthly average 444,812 439,997 434,071 428,192 424,006
=======================================================================================================================
Customers-total
at year end 446,384 442,117 436,853 430,571 426,060
- -----------------------------------------------------------------------------------------------------------------------
RESIDENTIAL
dth per customer 101.0 96.4 83.9 85.8 92.4
Revenue per dth $ 8.64 $ 7.23 $ 6.70 $ 6.90 $ 6.78
- -----------------------------------------------------------------------------------------------------------------------
NON-RESIDENTIAL
dth per customer 430.6 424.1 381.3 386.9 409.9
Revenue per dth $ 7.45 $ 6.64 $ 6.10 $ 6.08 $ 6.28
- -----------------------------------------------------------------------------------------------------------------------
SYSTEM
dth per customer 146.4 139.5 122.6 128.9 134.2
Revenue per dth $ 7.88 $ 6.78 $ 6.36 $ 6.43 $ 6.35
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 37
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRIC OPERATIONS TABLE 8
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ENERGY-millions of kWh
Net generation 10,514 10,592 13,570 13,981 15,220
Power purchased-net 6,719 6,211 3,638 2,989 2,087
- -----------------------------------------------------------------------------------------------------------------------------
Total system requirements 17,233 16,803 17,208 16,970 17,307
Company use and unaccounted for (1,387) (1,363) (1,395) (1,117) (1,138)
- -----------------------------------------------------------------------------------------------------------------------------
System sales 15,846 15,440 15,813 15,853 16,169
Sales to other utilities 304 227 598 532 633
- -----------------------------------------------------------------------------------------------------------------------------
Total Energy Available 16,150 15,667 16,411 16,385 16,802
=============================================================================================================================
PEAK DEMAND-mW
Station coincident demand 2,931 2,975 3,085 3,260 3,178
Power purchased-net 1,036 636 819 426 510
- -----------------------------------------------------------------------------------------------------------------------------
System Peak Demand 3,967 3,611 3,904 3,686 3,688
- -----------------------------------------------------------------------------------------------------------------------------
SYSTEM CAPABILITY-mW
LILCO stations 4,063 4,091 4,078 4,077 4,066
Nine Mile Point 2
(LILCO's 18% share) 188 188 194 194 194
Firm purchases-net 548 432 423 408 400
- -----------------------------------------------------------------------------------------------------------------------------
Total Capability 4,799 4,711 4,695 4,679 4,660
- -----------------------------------------------------------------------------------------------------------------------------
FUEL CONSUMED FOR ELECTRIC OPERATIONS
Oil-thousands of barrels 9,740 10,656 15,314 16,401 20,480
Gas-thousands of dth 36,269 34,475 32,924 36,477 26,490
Nuclear-thousands of mW days 181 124 154 108 105
Total-billions of Btu 98,025 102,126 129,937 139,874 154,669
Dollars per million Btu $ 2.79 $ 2.62 $ 2.61 $ 3.07 $ 2.86
Cents per kWh of net generation 2.97c. 2.76c. 2.73c. 3.24c. 3.06c.
Heat rate-Btu per net kWh 10,628 10,558 10,484 10,564 10,704
- -----------------------------------------------------------------------------------------------------------------------------
FUEL MIX (Percentage of system requirements)
Oil 33% 37% 50% 56% 67%
Gas 19 19 18 20 13
Purchased Power 41 38 25 20 16
Nuclear Fuel 7 6 7 4 4
- -----------------------------------------------------------------------------------------------------------------------------
Total 100% 100% 100% 100% 100%
=============================================================================================================================
</TABLE>
33
<PAGE> 38
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
GAS OPERATIONS TABLE 9
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ENERGY-thousands of dth
Natural gas 69,970 64,911 55,579 55,407 60,359
Manufactured gas and change
in storage (68) 48 60 (15) 53
- ------------------------------------------------------------------------------------------------------------------------------------
Total Natural and
Manufactured Gas 69,902 64,959 55,639 55,392 60,412
====================================================================================================================================
Total system requirements 69,902 64,959 55,639 55,392 60,412
Company use and unaccounted for (1,905) (3,577) (2,412) (164) (3,510)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Energy Available 67,997 61,382 53,227 55,228 56,902
====================================================================================================================================
MAXIMUM DAY SENDOUT-dth 485,896 448,726 435,050 406,177 462,610
- ------------------------------------------------------------------------------------------------------------------------------------
SYSTEM CAPABILITY-dth per day
Natural gas 561,584 561,584 507,344 507,344 461,788
LNG manufactured or LP gas 120,700 120,700 128,200 128,200 145,600
- ------------------------------------------------------------------------------------------------------------------------------------
Total Capability 682,284 682,284 635,544 635,544 607,388
====================================================================================================================================
CALENDAR DEGREE DAYS
(67-year average 5,027) 4,899 5,066 4,378 4,139 5,169
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 39
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis addresses matters of significance with regard to
the Company and its financial condition, liquidity, capital requirements and
results of operations for the last three years.
OVERVIEW
Nearly five years have passed since the effective date of the 1989 Settlement,
discussed in Note 2 of Notes to Financial Statements, which resolved the
controversy surrounding the Shoreham Nuclear Power Station (Shoreham). Over
this period of time, the Company has focused on managing costs and improving
operating efficiencies. This, coupled with six electric rate increases, lower
than anticipated fuel and financing costs and significantly lower production
expenses has helped to improve the Company's financial health. This also
enabled the Company to file with the Public Service Commission of the State of
New York (PSC) on December 31, 1993 an electric rate plan requesting that base
rates be frozen for a two-year period beginning December 1, 1994.
The Company's electric rate plan to freeze base rates is designed to moderate
the rate increases that were originally contemplated in the 1989 Settlement.
The two-year base rate freeze will help better position the Company to respond
to the current environment in the utility industry and to assist in Long
Island's economic recovery.
Other significant events during 1993 included:
o Approval, by the PSC, of the third annual electric rate
increase of 4.0% effective December 1, 1993, under the
three-year electric rate plan authorized in 1991.
o For the first time since the 1989 Settlement became effective,
revenues provided under the Rate Moderation Agreement exceeded
revenues that would have been provided under conventional
ratemaking, resulting in the decline of the Rate Moderation
Component balance and an improvement in the Company's cash
flow position.
o An increase in the Company's common stock quarterly dividend
from 43 1/2 cents per share to 44 1/2 cents per share,
representing the fourth consecutive year of dividend
increases.
Earnings for common stock in 1993 were $2.15 per common share
compared to $2.14 per common share in 1992.
o The approval by the PSC of a three-year gas rate plan
providing annual rate increases of 4.7%, 3.8% and 2.8%, for
the rate years beginning December 1, 1993, 1994, and 1995,
respectively. This follows an increase in
35
<PAGE> 40
gas rates of 7.1% that was effective December 1, 1992.
o The addition of over 9,000 new gas space heating customers,
resulting from the Company's gas expansion program.
o The refinancing of a significant amount of the Company's
higher-cost securities as a result of very favorable long-term
interest rates.
Refinancing of approximately $983 million of higher-cost
securities significantly lowered the Company's cost of debt
and preferred stock. These 1993 refinancings will result in
more than $18 million in annual cash savings through lower
interest expense and preferred stock dividends.
Since the 1989 Settlement became effective, the Company's
aggressive refinancing program has resulted in annual cash
savings of approximately $88 million.
LIQUIDITY AND CAPITAL RESOURCES
CASH AND REVOLVING CREDIT
At December 31, 1993, the Company's cash and cash equivalents amounted to
approximately $249 million, compared to $309 million at December 31, 1992. In
addition, the Company has approximately $276 million available through October
1, 1994, provided by its 1989 Revolving Credit Agreement (1989 RCA). At
December 31, 1993, no amounts were outstanding under the 1989 RCA. For a
further discussion of the 1989 RCA, see Note 7 of Notes to Financial
Statements.
CAPITAL REQUIREMENTS AND CAPITAL PROVIDED
During 1993, the Company continued its aggressive refinancing of higher-cost
debt and preferred stock, taking advantage of declining interest rates. In
1993, the Company redeemed $568 million of higher-cost securities through the
issuance of approximately $382 million of debentures and $204 million of
preferred stock. The Company also issued $420 million of debentures to redeem
$415 million of maturing debt.
In addition to these refinancings, the Company issued $200 million of
debentures and $100 million of tax-exempt securities and used the proceeds to
reimburse the Company's treasury for previously incurred capital expenditures.
In November 1993, the Company satisfied the maturity of $175 million of
debentures with cash on hand.
For a further discussion on the Company's capital stock and long-term debt, see
Notes 6 and 7 of Notes to Financial Statements.
36
<PAGE> 41
The Company expects that it will seek external financing of
approximately $1.1 billion solely for the purpose of refunding maturing debt in
the years 1994, 1995 and 1996 as follows:
<TABLE>
<CAPTION>
(In millions of dollars)
------------------------
1994 1995 1996
------------------------
<S> <C> <C> <C>
First Mortgage Bonds $ 25 $ 25 $ 40
General and Refunding Bonds - - 415
Debentures 575 - -
------------------------
$600 $ 25 $455
========================
</TABLE>
The Company is planning, subject to market conditions, to fund a portion of
these mandatory redemptions with the issuance of common equity in order to
improve its debt-to-equity ratio.
Capital requirements and capital provided for 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
(In millions of dollars)
- ---------------------------------------------------------------------------
CAPITAL REQUIREMENTS 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C>
CONSTRUCTION
Electric $ 136 $ 137
Gas 125 104
Common 41 27
- ---------------------------------------------------------------------------
Total Construction 302 268
- ---------------------------------------------------------------------------
REFUNDINGS AND DIVIDENDS
Long-term debt 960 1,344
Preferred stock 206 389
Preferred stock dividends 57 70
Common stock dividends 196 191
Redemption costs 15 159
- ---------------------------------------------------------------------------
Total Refundings and Dividends 1,434 2,153
- ---------------------------------------------------------------------------
Shoreham post settlement costs 207 228
- ---------------------------------------------------------------------------
TOTAL CAPITAL REQUIREMENTS $ 1,943 $ 2,649
===========================================================================
- ---------------------------------------------------------------------------
CAPITAL PROVIDED 1993 1992
- ---------------------------------------------------------------------------
Decrease (increase) in cash $ 61 $ (11)
Long-term debt 1,090 1,660
Preferred stock 202 411
Financing costs (2) (7)
Other financing activities 10 6
Internal cash generation
from operations 582 590
- ---------------------------------------------------------------------------
TOTAL CAPITAL PROVIDED $ 1,943 $ 2,649
===========================================================================
</TABLE>
For further information, see the Statement of Cash Flows.
37
<PAGE> 42
For 1994, total capital requirements (excluding common stock dividends) are
estimated at $1.1 billion, of which mandatory redemptions are $600 million,
construction requirements are $327 million, preferred stock sinking fund
requirements are $5 million, preferred stock dividends are $53 million and
Shoreham post settlement costs are $158 million.
During 1994, the Company expects to access the capital markets only for funds
required to satisfy maturing securities or to refund outstanding securities to
reduce financing costs. It is anticipated that the internal funds generated
from operations will be sufficient to satisfy all other capital requirements,
including both common and preferred stock dividends.
CAPITALIZATION
The Company's capitalization, including current maturities of long-term debt
and current redemption requirements of preferred stock, at December 31, 1993,
was approximately $8.4 billion, as compared to $8.2 billion at December 31,
1992. This increase in capitalization of approximately $185 million
principally reflects an increase in long-term debt and preferred stock
associated with the Company's financing activities in 1993 and an increase in
common shareowners' equity comprising 1993 net income of approximately $296
million reduced by common and preferred stock dividends of approximately $253
million.
At December 31, 1993 and 1992, the components of the Company's capitalization
ratios were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
CAPITALIZATION RATIOS 1993 1992
- -----------------------------------------------------------------
<S> <C> <C>
Long-term debt 65.0% 64.7%
Preferred stock 8.5 8.8
Common shareowners' equity 26.5 26.5
- -----------------------------------------------------------------
100.0% 100.0%
=================================================================
</TABLE>
The Company's debt-to-equity ratio reflects two substantial charges to common
shareowners' equity made in 1988 and 1989. In 1988, the Company was required
to write-down net assets of approximately $1.3 billion, net of tax effects,
relating to its investments in Shoreham and Nine Mile Point Nuclear Power
Station, Unit 2 (NMP2). In 1989, the Company incurred a loss for common stock
of approximately $175 million, reflecting the effects of the 1989 Settlement
and the Class Settlement, discussed in Notes 2 and 4 of Notes to Financial
Statements. The Company is committed to improving its debt-to-equity ratio
through growth in retained earnings, debt reduction through improved cash
flows, and the issuance of common equity.
38
<PAGE> 43
RATE MATTERS
ELECTRIC
In conjunction with the 1989 Settlement, the PSC authorized the recognition of
a regulatory asset known as the Financial Resource Asset (FRA). The FRA
consists of two components, the Base Financial Component (BFC) and the Rate
Moderation Component (RMC). The Rate Moderation Agreement (RMA), one of the
constituent documents of the 1989 Settlement, provides for the full recovery of
the FRA. The RMA, by its terms, specifies that the FRA was created to provide
the Company adequate financial indicia for the period 1989 through 1999 and to
restore the Company's debt securities to investment grade levels as determined
by independent rating agencies.
The BFC, as initially established, represents the present value of the future
net-after-tax cash flows which the RMA provided the Company for its financial
recovery. The BFC was granted rate base treatment under the terms of the RMA
and is included in the Company's revenue requirements through an amortization
included in rates over forty years on a straight-line basis that began July 1,
1989.
The RMC reflects the difference between the Company's revenue requirements
under conventional ratemaking and the revenues resulting from the
implementation of the rate moderation plan provided for in the RMA. This
revenue difference, together with a carrying charge equal to the allowed rate
of return on rate base, has been deferred. The RMC has provided the Company
with a substantial amount of non-cash earnings since the effective date of the
1989 Settlement through December 31, 1992, because the revenues provided under
the RMA were less than the revenues required under conventional ratemaking.
During 1993, however, as revenues provided under the RMA began to exceed the
revenues that would have been provided under conventional ratemaking the RMC
balance began to decline.
Pursuant to the 1989 Settlement, the Company has received six electric rate
increases consistent with the objectives of the RMA. In response to the
Company's rate filing in December 1990, the PSC approved the Long Island
Lighting Company Ratemaking and Performance Plan (LRPP) in November 1991, which
provided for annual electric rate increases of 4.15%, 4.1% and 4.0% effective
December 1, 1991, 1992 and 1993, respectively. Effective December 1, 1993, the
Company began receiving the third of these three annual electric rate
increases. The LRPP provides for an allowed return on common equity from
electric operations of 11.6% for each of the three rate years.
39
<PAGE> 44
The LRPP was designed to be consistent with the RMA's long-term goals.
One principal objective of the LRPP is to reassign risk so that the Company
assumes the responsibility for risks within the control of management, whereas
risks largely beyond the control of management would be assumed by the
ratepayers. One of the major components of the LRPP provides for a revenue
reconciliation mechanism that mitigates the impact on earnings of
experiencing electric sales that are above or below the LRPP forecast by
providing a fixed annual net margin level (defined as sales revenues, net of
fuel and gross receipts taxes) that the Company will receive for each of the
three rate years under the LRPP. Another component of the LRPP allows the
Company to earn for each rate year up to 60 additional basis points, or forfeit
up to 38 basis points, of the allowed return on common equity as a result of
its performance within certain incentive and/or penalty programs. These
programs consist of a customer service performance plan, a demand side
management program, a time-of-use program, a partial pass through fuel cost
incentive plan and effective December 1, 1993, an electric transmission and
distribution reliability plan. For the rate years ended November 30, 1993 and
1992, the Company earned approximately $9.2 million and $4.3 million, net of
tax effects, respectively, based upon its performance within these programs.
The LRPP contains a mechanism whereby earnings in excess of the allowed rate of
return on common equity (11.6%), excluding the impacts of the various incentive
and/or penalty programs, are shared equally between ratepayers and shareowners.
For the rate years ended November 30, 1993 and 1992, the Company earned
approximately $8.9 million and $21.4 million, net of tax effects, respectively,
in excess of its allowed rate of return on common equity which was shared
equally between ratepayers and shareowners.
In December 1993, the Company filed a three-year electric rate plan with the
PSC for the period beginning December 1, 1994 that minimizes future electric
rate increases while retaining consistency with the RMA's objective of
continuing the restoration of the Company's financial health. The filing
provides for zero percentage base rate increases in years one and two of the
plan and a rate increase of 4.3% in the third year. Although base electric
rates would be frozen during the first two years of the plan, annual rate
increases of approximately 1% to 2% are expected to result in these years from
the operation of the Company's fuel cost adjustment (FCA) clause. The FCA
captures, among other amounts, any increases in the cost of fuel above the
level recovered in base rates and, under a continuation of the rate mechanisms
provided by the LRPP, any amounts to be recovered or refunded to ratepayers in
excess of $15 million which result from the reconciliation of revenue, certain
expenses and earned performance incentive components. The electric rate plan
requests an allowed rate of return on equity of 11.0%. The Company's rate
filing reflects four underlying objectives: (i) to limit the balance of the RMC
during the three-year period to no more than its 1992 peak balance of $652
million; (ii) to recover the RMC within no more than thirteen years of its 1989
inception; (iii) to minimize the final three rate increases that will follow
the two-year rate freeze period; and (iv) to continue the Company's gradual
return to financial health. The Company's electric rate plan is subject to
approval by the PSC.
The Company's current electric rate plan provides for lower annual electric
rate increases than originally anticipated under the 1989 Settlement. However,
as a result of changes in certain assumptions upon which the RMA was based,
their impact on the RMC, and the Company's plans to reduce demand side
management (DSM), operations, maintenance and capital expenditures, the Company
has determined that the overall objectives of the RMA can be met under the
multi-year plan described above. As a result of
40
<PAGE> 45
lower than originally anticipated inflation rates, interest costs, property
taxes, fuel costs and the return on common equity allowed by the PSC, the RMC,
which originally had been anticipated to peak at $1.2 billion in 1994, has
already peaked at $652 million in 1992. With the exception of an increase in
the 1995-1996 period, which is not now projected to cause the RMC to increase
above its $652 million peak, the RMC is expected to decline until it is fully
amortized.
Under this electric rate plan, the recovery of the RMC would be extended, if
necessary, for an additional period of not more than three years beyond the
approximate ten-year period envisioned in the RMA. The actual length of the
RMC extension will depend on the extent to which the assumptions underlying the
rate plan materialize. The Company's current projections indicate that the RMC
will be recovered in eleven years.
For a further discussion of the 1989 Settlement and Rate Matters, see Notes 2
and 3 of Notes to Financial Statements.
GAS
In December 1993, the PSC approved a three-year gas rate settlement between the
Company and the staff of the PSC. The gas rate settlement provides that the
Company receive, for the rate years beginning December 1, 1993, 1994 and 1995,
annual gas rate increases of 4.7%, 3.8% and 2.8%, respectively. In the
determination of the revenue requirements for the first year of the gas rate
settlement an allowed rate of return on equity of 10.1% was used. The gas rate
decision also provides for earnings in excess of a 10.6% return on equity in
any of the three rate years covered by the settlement be shared equally between
the Company's firm gas customers and its shareowners. The allowed rate of
return for the rate year that began December 1, 1992 was 11.0 %.
ELECTRIC COMPETITION
NON-UTILITY GENERATORS (NUGs) The development of the NUG industry has been
encouraged by federal and state legislation. There are two ways that NUGs may
negatively impact the Company: first, NUGs may locate on a customer's site,
providing part or all of that customer's electric energy requirements. The
Company estimates that in 1993 sales lost to such on-site NUGs totalled 234
gigawatt-hours (Gwh) in sales or approximately $20 million in revenues, net of
fuel. This represents only 1.0% of the Company's 1993 net revenues. Second,
in accordance with the Public Utility Regulatory Policy Act of 1978 (PURPA),
the Company is required to purchase all the power offered by NUGs that are
Qualified Facilities (QF). QFs have the choice of pricing these sales at
either (i) PSC published estimates of the Company's long run avoided costs
(LRAC) or (ii) the Company's tariff rates. Additionally, until repeal in
1992, New York State law set a minimum price of six cents per kilowatt-hour
(Kwh) for certain categories of QFs, considerably above the Company's avoided
cost. The six-cent minimum now only applies to contracts entered into before
June 1992.
The Company believes that the repeal of the six-cent law, coupled
41
<PAGE> 46
with the PSC's updates which resulted in lower LRAC estimates, has
significantly reduced the economic advantage to entrepreneurs seeking to
compete with the Company.
As of December 31, 1993, 39 QFs were on line and selling approximately 200
megawatts (MW) of power to the Company. The Company estimates that in 1993,
the purchases federal and state law required it to make from QFs cost the
Company $47 million more than it would have cost to generate this power itself.
With the exception of approximately 40 MW of power to be produced at the Stony
Brook campus of the State University of New York beginning in early 1995, the
Company does not expect any new major NUGs to be built on Long Island in the
foreseeable future.
RETAIL COMPETITION For over a decade, the Company has voluntarily provided
wheeling of New York Power Authority (NYPA) power for economic development. As
a result, NYPA power has displaced approximately 400 Gwh of energy sales. The
net revenue loss associated with this amount of sales is approximately $27
million or 1.3% of the Company's 1993 net revenues. The potential loss of
additional load is limited by conditions in the Company's current transmission
agreements with NYPA.
Competition for customer loads also comes from other electric utilities
(including those in Connecticut, New York, and New Jersey) which seek to entice
commercial and industrial customers to relocate within their service
territories by offering reduced rates and other incentives.
In order to retain existing and attract new commercial and industrial
customers, the Company offers an Economic Development Rate which provides rate
abatement to new or existing customers that qualify under the program approved
by the PSC.
Neither federal nor New York State law mandates retail wheeling. The Staff of
the PSC has recently recommended that the PSC examine the issues attending
retail wheeling.
42
<PAGE> 47
CONSERVATION AND SUPPLY
The Company's 1993 Electric Conservation and Load Management Plan called for a
cumulative 194 MW reduction in coincident peak demand by December 31, 1993 and
a cumulative annualized energy savings of 578 Gwh, at a cost of $33.5 million.
The Company has met these targets. These reductions were achieved through
several different programs including customer education/information, rebate,
audit and direct installation which targeted a number of energy efficient
technologies.
In the fourth quarter of 1993, a modified DSM Plan was filed with the PSC to
support the objectives of the Company's December 31, 1993 electric rate plan
filing. Under this modified plan a greater emphasis will be placed on the
educational aspect of the Company's conservation efforts in lieu of the
conventional reliance on rebates. This will help to shift the responsibility
for adopting and implementing energy efficient practices away from the utility
and to the customer.
The Company's current electric load forecasts indicate that, with continued
implementation of its conservation and load management programs and with the
availability of electricity provided by QFs located within the Company's
service territory, the Company's existing generating facilities, its portion of
nuclear energy generated at NMP2 and power purchased from other electric
systems are adequate to meet the energy demands on Long Island beyond the end
of the century.
INVESTMENT RATING
The Company's securities are rated by Moody's Investors Service, Inc.
(Moody's), Standard and Poor's Corporation (S&P), Fitch Investors Service, Inc.
(Fitch) and Duff and Phelps (D&P).
During the period 1989 through 1992, the rating agencies significantly upgraded
their ratings of the Company's securities. In 1993, both Moody's and Fitch
reaffirmed their assigned ratings on the Company's securities. S&P however,
lowered its ratings on the Company's First Mortgage Bonds and G&R Bonds one
level to minimum investment grade and lowered its ratings on the Company's
Debentures and Preferred Stock to one level below minimum investment grade.
D&P lowered its ratings on the Company's debentures and preferred stock one
level.
S&P's actions reflect its concerns regarding the utility industry's challenges
relating to intensified competitive pressures, sluggish demand expectations,
slow earnings growth prospects, high common dividend payouts, environmental
cost pressures and nuclear operating and decommissioning costs.
43
<PAGE> 48
CLEAN AIR ACT
In late 1990, significant amendments to the federal Clean Air Act were adopted.
As a result, the Company expects that it will have to expend $4.3 million in
1994 to meet continuous emission monitoring requirements and $3.5 million in
1994 and $2.0 million in 1995 to meet Phase I nitrogen oxide (NOx) reduction
requirements. In addition, subject to regulations that have not yet been
issued, the Company estimates that it may be required to expend as much as $125
million by May 1999 to meet Phase II NOx reduction requirements and
approximately $50 million by 2000 to meet requirements for the control of
hazardous air pollutants from power plants. The Company believes that all such
costs would be recoverable in rates.
44
<PAGE> 49
RESULTS OF OPERATIONS
EARNINGS
Summary results of earnings for the years 1993, 1992 and 1991 were as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
(In millions of dollars and shares
except earnings per share)
<S> <C> <C> <C>
Net Income $296 $302 $305
Preferred Stock Dividend
Requirements 56 64 66
----- ----- ----
Earnings for Common Stock $240 $238 $239
===== ===== =====
Average Shares Outstanding 112.1 111.4 111.3
Earnings per Common Share $2.15 $2.14 $2.15
AFC & RMC (Deducted) Included
in Net Income $(25) $60 $183
AFC & RMC - % of Net Income (8)% 20% 60%
</TABLE>
For all periods, net income, earnings for common stock and earnings per common
share include a non-cash allowance for funds used during construction (AFC) and
the effects of the RMC.
Overall earnings remained stable in 1993 while the Company's improved cash flow
continued, consistent with the 1989 Settlement. The earnings in the electric
business were lower in 1993 when compared to 1992 due primarily to the
expensing of previously deferred storm costs, lower interest rates associated
with the short-term investments, and regulatory adjustments. The lower level
of earnings in the electric business was offset by a significant increase in
the gas business earnings. The Company saw continued expansion in the gas
business in 1993.
45
<PAGE> 50
REVENUES
Total revenues in 1993, including revenues from recovery of fuel costs, were
$2.9 billion, representing an increase of $259 million or 9.9% over 1992
revenues. Total revenues for the Company's electric and gas operations for the
years 1993, 1992 and 1991 were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
(In millions of dollars)
<S> <C> <C> <C>
Electric $2,352 $2,195 $2,197
Gas 529 427 351
------ ------ ------
Total Revenues $2,881 $2,622 $2,548
====== ====== ======
</TABLE>
ELECTRIC REVENUES In 1993, electric revenues increased $157 million when
compared to 1992. Revenues in 1992 had decreased $2 million compared with
1991. The changes in the level of revenues when compared to the prior year
resulted from the following factors:
<TABLE>
<CAPTION>
'93/'92 '92/'91
------- -------
(In millions of dollars)
<S> <C> <C>
Rate Increases $ 75 $ 72
Sales Volumes 60 (61)
Fuel Cost Recoveries 22 (13)
------ ------
Total $ 157 $ (2)
====== ======
</TABLE>
RATE INCREASES The Company received electric rate increases of 4.0% effective
December 1, 1993 and 4.1% effective December 1, 1992. These rate increases
provided $75 million in additional revenues for 1993 when compared to 1992. A
4.15% rate increase effective December 1, 1991 provided $72 million in
additional revenues for 1992 when compared to 1991.
SALES VOLUMES The increase in revenue from sales volumes was primarily
attributable to warmer weather experienced in the summer of 1993 when compared
to the same period in 1992. The decrease in revenues from sales volumes for
1992 when compared to 1991 is also attributable to weather. The Company's
current electric rate structure, discussed above under the heading "Rate
Matters," provides for a revenue reconciliation mechanism which mitigates the
impact on earnings of experiencing electric sales that are above or below the
levels reflected in rates. As a result of lower than adjudicated electric
sales, the Company recorded non-cash income, which is included in "Other
Regulatory Amortizations" of $43.5 million, $78.5 million and $0.4 million in
1993, 1992 and 1991, respectively. For a further discussion on the
recoverability of these amounts see the discussion under the heading "Rate
Matters."
46
<PAGE> 51
Summary of electric kilowatt hour (Kwh) sales for the years 1993, 1992 and 1991
were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
(In millions of Kwh)
<S> <C> <C> <C>
Residential 7,118 6,788 7,023
Commercial/Industrial 8,257 8,181 8,322
Other 449 471 469
------ ------ ------
System Sales 15,824 15,440 15,814
Power Pool Sales 304 227 598
------ ------ ------
Total Sales 16,128 15,667 16,412
====== ====== ======
</TABLE>
The increase in residential and commercial/industrial sales in 1993 was largely
due to the warmer weather experienced during the summer months. Residential
sales, representing 45% of system sales, were up by 4.9% when compared with
1992, while commercial/industrial sales, which accounted for 52% of system
sales, increased by 0.9%. Power pool sales fluctuate with relative costs and
power pool system availabilities.
The average number of electric customers served in 1993 and 1992 was
approximately 1,013,000 and 1,009,000, respectively. The customer increase in
1993 is similar to the increase experienced in 1992 when compared to 1991.
FUEL COST RECOVERIES Total electric fuel cost recoveries for 1993 were up $22
million compared with 1992, primarily as a result of higher sales volumes,
partially offset by a decrease in the average cost of fuel. In 1992, fuel cost
recoveries decreased by $13 million compared with 1991, principally due to
lower sales volumes, partially offset by an increase in the average cost of
fuel.
GAS REVENUES In 1993, gas revenues increased by $102 million, or 23.8%, when
compared to 1992. Revenues in 1992 increased by $76 million, or 21.7%, when
compared to 1991. The changes in the level of revenues when compared to the
prior year resulted from the following factors:
<TABLE>
<CAPTION>
'93/'92 '92/'91
------- -------
(In millions of dollars)
<S> <C> <C>
Rate Increases $ 35 $ 17
Sales Volumes 34 50
Fuel Cost Recoveries 33 9
------ ------
Total $ 102 $ 76
====== ======
</TABLE>
47
<PAGE> 52
RATE INCREASES The Company received a gas rate increase of 4.7%, effective
December 31, 1993, but was permitted by the PSC to recognize additional
revenues of $4.6 million in 1993, as if the rate increase had been effective on
December 1, 1993. The Company had also received rate increases of 7.1%,
effective December 1, 1992, and 4.1%, effective December 1, 1991. The effects
of these rate increases was to increase revenues by $35 million in 1993 when
compared with 1992, and by $17 million in 1992 when compared with 1991.
SALES VOLUMES The increase in 1993 revenues due to sales volumes was primarily
due to customer additions and conversions resulting from the Company's gas
expansion program. The Company added over 9,000 new gas space heating
customers to its system in 1993. In 1992, the Company added approximately
10,000 new gas space heating customers.
Summary of gas decatherm (dth) sales for the years 1993, 1992 and 1991 were as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
(In thousands of dth)
<S> <C> <C> <C>
Space Heating 51,557 48,751 41,323
Non-Space Heating 7,626 7,541 7,366
------ ------ ------
Total Firm 59,183 56,292 48,689
Interruptible 5,920 5,090 4,538
------ ------ ------
Total System 65,103 61,382 53,227
------ ------ ------
Off-System Sales 2,894 - -
------ ------ ------
Total Sales 67,997 61,382 53,227
====== ====== ======
</TABLE>
FUEL COST RECOVERIES Recoveries of gas fuel expenses in 1993 revenues
increased by $33 million compared with 1992, primarily due to higher sales
volumes. In 1992, fuel recovery revenues had increased by $9 million,
primarily due to higher average gas prices.
48
<PAGE> 53
FUELS AND PURCHASED POWER
Expenses for fuels and purchased power increased by $86 million in 1993
compared with 1992, and decreased by $27 million in 1992 compared with 1991.
Summary of fuel and purchased power expenses for the years 1993, 1992 and 1991
were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
(In millions of dollars)
<S> <C> <C> <C>
Fuels for Electric Operations
Oil $180 $190 $301
Gas 93 79 66
Nuclear 13 11 13
Purchased Power 293 280 214
---- ---- ----
Total 579 560 594
---- ---- ----
Gas Fuels 249 182 175
---- ---- ----
Total $828 $742 $769
==== ==== ====
</TABLE>
The Company has significantly reduced the amount of oil it would otherwise have
used to generate electricity by burning gas, purchasing power and utilizing
nuclear generation from NMP2.
Summary of electric fuel and purchased power mix for the years 1993, 1992 and
1991 were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
(Percent of system energy requirements)
<S> <C> <C> <C>
Oil 33% 37% 50%
Gas 19 19 18
Nuclear 7 6 7
Purchased Power 41 38 25
--- --- ---
Total 100% 100% 100%
=== === ===
</TABLE>
OPERATIONS AND MAINTENANCE EXPENSES
Total operations and maintenance expenses, excluding fuel and purchased power,
for 1993, 1992 and 1991 were $522 million, $498 million and $523 million,
respectively. The $24 million, or 4.8%, increase in 1993 when compared to
1992 was primarily due to the recognition of previously deferred storm costs,
the recording of higher accruals for uncollectible accounts and higher
transmission and distribution costs for both the electric and gas businesses.
The $25 million, or 4.8%, decrease in 1992 compared to 1991 was primarily
attributable to lower electric operations expenses.
49
<PAGE> 54
INTEREST EXPENSE
Interest expense for 1993, 1992 and 1991 was $534 million, $513 million and
$524 million, respectively. The increase in 1993 when compared to 1992 was
attributable to higher debt levels and the conversion in June 1992 of $400
million of tax-exempt securities from a weekly variable interest rate to a
higher 30-year fixed rate. Also contributing to the increase, was the issuance
in November 1992 of 30-year fixed rate debentures, the proceeds of which were
used to eliminate variable rate bank debt. The conversion of the tax-exempt
securities and refinancing of bank debt was done in order to take advantage of
historically low interest rates. Partially offsetting this increase in interest
expense were the effects of the Company's aggressive refinancing of higher-cost
debt in 1993. The decrease in 1992 when compared to 1991 is due to
significantly lower interest rates on the Company's outstanding debt, primarily
resulting from the Company's aggressive refinancing efforts in the latter part
of 1991 and during 1992.
RATE MODERATION COMPONENT
In 1993, the Company recorded non-cash charges to income of approximately $49
million reflecting the amortization of the RMC offset by related carrying
charges. In 1992 and 1991, the Company recorded non-cash credits to income of
approximately $73 million and $269 million, respectively, representing the
accretion of the RMC and related carrying charges. For a discussion of the RMC
and RMA, see Notes 2 and 3 of Notes to Financial Statements.
BASE FINANCIAL COMPONENT
For each of the years 1993, 1992 and 1991, the Company recorded non-cash
charges to income of approximately $101 million, reflecting the continuing
amortization of the BFC, which is afforded rate base treatment under the RMA.
For a further discussion of the BFC and 1989 Settlement, see Notes 1 and 2 of
Notes to Financial Statements.
ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1993 the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions. SFAS No. 106 requires the Company
to recognize the expected cost of providing postretirement benefits when
employee services are rendered rather than on a pay-as-you-go method. The
Company recorded an accumulated postretirement benefit obligation and
corresponding regulatory asset of approximately $376 million which represents
the transition obligation at January 1, 1993. As a result of adopting SFAS No.
106, the Company's annual postretirement benefit cost for 1993 increased by
approximately $28 million above the amount that would have been recorded under
the pay-as-you-go method. This additional non-cash
50
<PAGE> 55
postretirement benefit cost has been accounted for as a regulatory asset. The
PSC has permitted recovery of these regulatory assets through rates. The
adoption of SFAS No. 106 had no impact on net income for the year ended
December 31, 1993. For a further discussion of SFAS No. 106, see Note 8 of
Notes to Financial Statements.
Effective January 1, 1993 the Company adopted SFAS No. 109, Accounting for
Income Taxes. As permitted under SFAS No. 109, the Company has elected not to
restate the financial statements of prior years. The adoption of SFAS No. 109
is in compliance with the PSC's Statement of Interim Policy on Accounting and
Ratemaking issued in January 1993. This statement asserts that the adoption
and ongoing implementation of SFAS No. 109 on an interim basis will be done in
such a manner that all its provisions shall be complied with on a revenue
neutral basis. As of January 1, 1993, the cumulative adjustment to the
deferred tax liability and the corresponding regulatory asset is approximately
$1.6 billion. The $800 million increase from the amount reported in interim
financial statements results from the Company's further analysis of deferred
taxes to recognize SFAS No. 109 requirements to present tax assets and
liabilities gross. SFAS No. 109 requires, among other matters, recognition of
the amount of current and deferred taxes payable or refundable at the date of
the financial statements as a result of all events that have been recognized in
the financial statements and adjustment of deferred income taxes for an enacted
change in tax laws. For regulated enterprises, SFAS No. 109 prohibits net of
tax accounting and reporting and requires recognition of a deferred tax
liability for the tax benefits which are flowed through to its customers. A
regulatory asset or liability will be recognized relating to such items if it
is probable that the future increase or decrease in taxes payable thereon shall
be recovered from or returned to customers through future rates. For a further
discussion of SFAS No. 109, see Notes 1 and 10 of Notes to Financial
Statements.
SELECTED FINANCIAL DATA
Additional information respecting revenues, expenses, electric and gas
operating income and operations data and balance sheet information for the last
five years is provided in Tables 1 through 9 of Item 6, Selected Financial
Data. Information with regard to the Company's business segments for the last
three years is provided in Note 11 of Notes to Financial Statements.
51
<PAGE> 56
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<S> <C>
PAGE
----
Statement of Income for each of the three years
in the period ended December 31, 1993. 53
Balance Sheet at December 31, 1993 and 1992. 54
Statement of Capitalization at December 31, 1993
and 1992. 56
Statement of Cash Flows for each of the three years
in the period ended December 31, 1993. 58
Statement of Retained Earnings for each of the three
years in the period ended December 31, 1993. 59
Notes to Financial Statements. 60
Report of Ernst & Young, Independent Auditors. 87
Financial Statement Schedules - 89
The following Financial Statement Schedules are
submitted as part of Item 14, "Exhibits, Financial
Statement Schedules and Reports on Form 8-K", of
this Annual Report. (All other Financial Statement
Schedules are omitted because they are not
applicable, or the required information appears in
the Financial Statements or the Notes thereto.)
- Property, Plant and Equipment (Schedule V) 111
- Accumulated Depreciation, Depletion and
Amortization of Property, Plant and
Equipment (Schedule VI) 114
- Valuation and Qualifying Accounts
(Schedule VIII) 117
- Supplementary Income Statement Information
(Schedule X) 118
</TABLE>
52
<PAGE> 57
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENT OF INCOME (In thousands of dollars except per share amounts)
- -------------------------------------------------------------------------------------------------------------------
For year ended December 31 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Electric $ 2,352,109 $ 2,194,632 $ 2,196,568
Gas 528,886 427,207 351,161
- -------------------------------------------------------------------------------------------------------------------
Total Revenues 2,880,995 2,621,839 2,547,729
- -------------------------------------------------------------------------------------------------------------------
EXPENSES
Operations-fuel and purchased power 827,591 741,784 768,702
Operations-other 387,808 372,209 375,267
Maintenance 133,852 125,736 147,492
Depreciation and amortization 122,471 119,137 118,955
Base financial component amortization 100,971 100,971 100,971
Regulatory liability component amortization (79,359) (79,359) (79,359)
1989 Settlement credits amortization (9,214) (9,214) (9,214)
Other regulatory amortizations (18,044) (22,072) 10,375
Rate moderation component 88,667 (30,444) (228,572)
Operating taxes 385,847 388,988 388,380
Federal income tax-current 6,324 530 515
Federal income tax-deferred and other 178,530 172,468 168,937
- -------------------------------------------------------------------------------------------------------------------
Total Expenses 2,125,444 1,880,734 1,762,449
- -------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 755,551 741,105 785,280
- -------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds
used during construction 2,473 4,725 2,202
Rate moderation component carrying charges 40,004 42,837 40,456
Other income and deductions, net 38,997 29,273 35,492
Class Settlement (23,178) (22,541) (25,467)
Federal income tax (charge)-
deferred and other 12,578 12,036 (12,201)
- -------------------------------------------------------------------------------------------------------------------
Total Other Income and (Deductions) 70,874 66,330 40,482
- -------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INTEREST CHARGES 826,425 807,435 825,762
- -------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES AND (CREDITS)
Interest on long-term debt 466,538 450,621 472,974
Other interest 67,534 62,226 50,842
Allowance for borrowed funds
used during construction (4,210) (7,386) (3,592)
- -------------------------------------------------------------------------------------------------------------------
Total Interest Charges and (Credits) 529,862 505,461 520,224
- -------------------------------------------------------------------------------------------------------------------
NET INCOME 296,563 301,974 305,538
Preferred stock dividend requirements 56,108 63,954 66,394
- -------------------------------------------------------------------------------------------------------------------
EARNINGS FOR COMMON STOCK $ 240,455 $ 238,020 $ 239,144
===================================================================================================================
AVERAGE COMMON SHARES OUTSTANDING (000) 112,057 111,439 111,348
EARNINGS PER COMMON SHARE $ 2.15 $ 2.14 $ 2.15
DIVIDENDS DECLARED PER COMMON SHARE $ 1.76 $ 1.72 $ 1.60
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
53
<PAGE> 58
<TABLE>
<CAPTION>
BALANCE SHEET (In thousands of dollars)
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS at December 31 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITY PLANT
Electric $ 3,544,569 $ 3,429,803
Gas 860,899 760,635
Common 201,418 172,703
Construction work in progress 176,504 161,663
Nuclear fuel in process and in reactor 16,533 19,216
- -------------------------------------------------------------------------------------------------------------------------------
4,799,923 4,544,020
Less-Accumulated depreciation
and amortization 1,452,366 1,382,872
- -------------------------------------------------------------------------------------------------------------------------------
Total Net Utility Plant 3,347,557 3,161,148
- -------------------------------------------------------------------------------------------------------------------------------
REGULATORY ASSETS
Base financial component (less accumulated
amortization of $454,369 and $353,398) 3,584,461 3,685,432
Rate moderation component 609,827 651,657
Shoreham post settlement costs 777,103 586,045
Shoreham nuclear fuel 75,497 77,629
Postretirement benefits other than pensions 402,921 -
Regulatory tax asset 1,848,998 -
Other 311,832 220,380
- -------------------------------------------------------------------------------------------------------------------------------
Total Regulatory Assets 7,610,639 5,221,143
- -------------------------------------------------------------------------------------------------------------------------------
NONUTILITY PROPERTY AND OTHER INVESTMENTS 23,029 20,730
- -------------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents 248,532 309,485
Special deposits 23,439 23,683
Customer accounts receivable (less allowance
for doubtful accounts of $23,889 and $24,375) 249,074 208,049
Other accounts receivable 12,199 6,937
Accrued unbilled revenues 170,042 143,172
Materials and supplies at average cost 68,882 86,482
Fuel oil at average cost 35,857 51,702
Gas in storage at average cost 75,182 47,002
Prepayments and other current assets 41,652 40,402
- -------------------------------------------------------------------------------------------------------------------------------
Total Current Assets 924,859 916,914
- -------------------------------------------------------------------------------------------------------------------------------
DEFERRED CHARGES
Unamortized cost of issuing securities 350,239 380,267
Accumulated deferred income taxes 1,157,009 1,027,733
Other 42,705 36,524
- -------------------------------------------------------------------------------------------------------------------------------
Total Deferred Charges 1,549,953 1,444,524
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $13,456,037 $10,764,459
===============================================================================================================================
</TABLE>
See Notes to Financial Statements.
54
<PAGE> 59
<TABLE>
<CAPTION>
(In thousands of dollars)
- ------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES at December 31 1993 1992
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITALIZATION
Long-term debt $ 4,887,733 $ 4,755,733
Unamortized premium and (discount) on debt (17,393) (14,731)
- ------------------------------------------------------------------------------------------------------------------------
4,870,340 4,741,002
- ------------------------------------------------------------------------------------------------------------------------
Preferred stock-redemption required 649,150 557,900
Preferred stock-no redemption required 64,038 154,276
- ------------------------------------------------------------------------------------------------------------------------
Total Preferred Stock 713,188 712,176
- ------------------------------------------------------------------------------------------------------------------------
Common stock 561,662 558,002
Premium on capital stock 1,010,283 998,089
Capital stock expense (50,427) (39,304)
Retained earnings 711,432 667,988
- ------------------------------------------------------------------------------------------------------------------------
Total Common Shareowners' Equity 2,232,950 2,184,775
- ------------------------------------------------------------------------------------------------------------------------
Total Capitalization 7,816,478 7,637,953
- ------------------------------------------------------------------------------------------------------------------------
REGULATORY LIABILITIES
Regulatory liability component 436,476 515,835
1989 Settlement credits 155,081 164,294
Regulatory tax liability 177,669 -
Other 138,612 100,470
- ------------------------------------------------------------------------------------------------------------------------
Total Regulatory Liabilities 907,838 780,599
- ------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Current maturities of long-term debt 600,000 590,000
Current redemption requirements of preferred stock 4,800 8,200
Accounts payable and accrued expenses 277,519 275,612
Accrued taxes (including federal income
tax of $28,424 and $27,100) 52,656 67,525
Accrued interest 142,409 131,179
Dividends payable 54,542 53,966
Class Settlement 30,000 30,000
Customer deposits 27,046 24,815
- ------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 1,188,972 1,181,297
- ------------------------------------------------------------------------------------------------------------------------
DEFERRED CREDITS
Class Settlement 164,942 167,066
Accumulated deferred income taxes 2,932,029 970,373
Other 12,622 9,871
- ------------------------------------------------------------------------------------------------------------------------
Total Deferred Credits 3,109,593 1,147,310
- ------------------------------------------------------------------------------------------------------------------------
RESERVES FOR CLAIMS AND DAMAGES 8,714 2,687
- ------------------------------------------------------------------------------------------------------------------------
PENSIONS AND OTHER POSTRETIREMENT BENEFITS 424,442 14,613
- ------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES - -
- ------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITALIZATION AND LIABILITIES $ 13,456,037 $ 10,764,459
========================================================================================================================
</TABLE>
See Notes to Financial Statements.
55
<PAGE> 60
<TABLE>
<CAPTION>
STATEMENT OF CAPITALIZATION (In thousands of dollars)
- ----------------------------------------------------------------------------------------------------------------------------------
At December 31 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding
------------------------
1993 1992
------------------------
<S> <C> <C> <C> <C>
COMMON SHAREOWNERS' EQUITY
Common stock, $5.00 par value 112,332,490 111,600,376 $ 561,662 $ 558,002
Premium on capital stock 1,010,283 998,089
Capital stock expense (50,427) (39,304)
Retained earnings 711,432 667,988
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON SHAREOWNERS' EQUITY 2,232,950 2,184,775
- ----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK -
REDEMPTION REQUIRED
PAR VALUE $100 PER SHARE
7.40% Series L 192,500 203,000 19,250 20,300
8.40% Series M - 238,000 - 23,800
8.50% Series R 112,500 150,000 11,250 15,000
7.66% Series CC 570,000 570,000 57,000 57,000
Less - Sinking fund requirement 4,800 6,200
- ----------------------------------------------------------------------------------------------------------------------------------
82,700 109,900
- ----------------------------------------------------------------------------------------------------------------------------------
PAR VALUE $25 PER SHARE
$2.47 Series O - 880,000 - 22,000
$2.35 Series Z - 2,600,000 - 65,000
7.95% Series AA 14,520,000 14,520,000 363,000 363,000
$1.67 Series GG 880,000 - 22,000 -
$1.95 Series NN 1,554,000 - 38,850 -
7.05% Series QQ 3,464,000 - 86,600 -
6.875% Series UU 2,240,000 - 56,000 -
Less - Sinking fund requirement - 2,000
- ----------------------------------------------------------------------------------------------------------------------------------
566,450 448,000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stock -
Redemption Required 649,150 557,900
- ----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK -
NO REDEMPTION REQUIRED
PAR VALUE $100 PER SHARE
5.00% Series B 100,000 100,000 10,000 10,000
4.25% Series D 70,000 70,000 7,000 7,000
4.35% Series E 200,000 200,000 20,000 20,000
4.35% Series F 50,000 50,000 5,000 5,000
5 1/8% Series H 200,000 200,000 20,000 20,000
5 3/4% Series I - Convertible 20,375 22,757 2,038 2,276
8.12% Series J - 250,000 - 25,000
8.30% Series K - 300,000 - 30,000
- ----------------------------------------------------------------------------------------------------------------------------------
64,038 119,276
- ----------------------------------------------------------------------------------------------------------------------------------
PAR VALUE $25 PER SHARE
$2.43 Series P - 1,400,000 - 35,000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stock -
No Redemption Required 64,038 154,276
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCK 713,188 712,176
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE> 61
<TABLE>
<CAPTION>
LONG-TERM DEBT at December 31 (In thousands of dollars)
- -------------------------------------------------------------------------------------------------------------------
Maturity Interest Rate Series 1993 1992
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIRST MORTGAGE BONDS (EXCLUDES PLEDGED BONDS)
April 1, 1993 4.40% M - 40,000
June 1, 1994 4 5/8% N 25,000 25,000
June 1, 1995 4.55% 0 25,000 25,000
March 1, 1996 5 1/4% P 40,000 40,000
April 1, 1997 5 1/2% Q 35,000 35,000
September 1, 1999 8.20% R - 35,000
April 1, 2001 7 1/4% U - 40,000
December 1, 2001 7 1/2% V - 50,000
September 1, 2002 7 5/8% W - 50,000
December 1, 2003 8 1/8% X - 60,000
- -------------------------------------------------------------------------------------------------------------------
Total First Mortgage Bonds 125,000 400,000
- -------------------------------------------------------------------------------------------------------------------
GENERAL AND REFUNDING BONDS
May 1, 1996 8 3/4% 415,000 415,000
February 15, 1997 8 3/4% 250,000 250,000
May 15, 1999 7.85% 56,000 56,000
May 15, 2006 8.50% 75,000 75,000
December 1, 2006 8 5/8% - 50,000
May 1, 2007 8 5/8% - 85,000
July 15, 2008 7.90% 80,000 80,000
May 1, 2021 9 3/4% 415,000 415,000
July 1, 2024 9 5/8% 375,000 375,000
- -------------------------------------------------------------------------------------------------------------------
Total General and Refunding Bonds, 1,666,000 1,801,000
- -------------------------------------------------------------------------------------------------------------------
DEBENTURES
April 1, 1993 11 3/8% - 375,000
November 15, 1993 11.70% - 175,000
June 15, 1994 10.25% 400,000 400,000
November 15, 1994 11.75% 175,000 175,000
June 15, 1999 10.875% 30,545 30,545
July 15, 1999 7.30% 397,000 397,000
January 15, 2000 7.30% 36,000 -
July 15, 2001 6.25% 145,000 -
March 15, 2003 7.05% 150,000 -
March 1, 2004 7.00% 59,000 -
June 1, 2005 7.125% 200,000 -
March 1, 2007 7.50% 142,000 -
June 15, 2019 11.375% 4,513 4,513
July 15, 2019 8.90% 420,000 420,000
November 1, 2022 9% 451,000 451,000
March 15, 2023 8.20% 270,000 -
- -------------------------------------------------------------------------------------------------------------------
Total Debentures 2,880,058 2,428,058
- -------------------------------------------------------------------------------------------------------------------
AUTHORITY FINANCING NOTES
Pollution Control Revenue Bonds
December 1, 2006 7.5% 1976 A 28,375 28,375
December 1, 2009 7.8% 1979 B 19,100 19,100
October 1, 2012 8 1/4% 1982 17,200 17,200
March 1, 2016 2.5% 1985 A,B 150,000 150,000
Electric Facilities Revenue Bonds
September 1, 2019 7.15% 1989 A,B 100,000 100,000
June 1, 2020 7.15% 1990 A 100,000 100,000
December 1, 2020 7.15% 1991 A 100,000 100,000
February 1, 2022 7.15% 1992 A,B 100,000 100,000
August 1, 2022 6.90% 1992 C,D 100,000 100,000
November 1, 2023 2.95% 1993 A 50,000 -
November 1, 2023 2.85% 1993 B 50,000 -
Industrial Development Revenue Bonds
December 1, 2006 7.5% 1976 A,B 2,000 2,000
- -------------------------------------------------------------------------------------------------------------------
Total Authority Financing Notes 816,675 716,675
- -------------------------------------------------------------------------------------------------------------------
Unamortized Premium and (Discount) on Debt (17,393) (14,731)
- -------------------------------------------------------------------------------------------------------------------
Total Long-Term Debt 5,470,340 5,331,002
Less--Current maturities 600,000 590,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL LONG-TERM DEBT LESS CURRENT MATURITIES 4,870,340 4,741,002
- -------------------------------------------------------------------------------------------------------------------
TOTAL CAPITALIZATION $ 7,816,478 $ 7,637,953
===================================================================================================================
</TABLE>
See Notes to Financial Statements.
57
<PAGE> 62
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS (In thousands of dollars)
- ----------------------------------------------------------------------------------------------------------------------------
For year ended December 31 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 296,563 $ 301,974 $ 305,538
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation and amortization 122,471 119,137 118,955
Fuel moderation component - - 34,025
Provision for doubtful accounts 18,555 16,329 35,431
Base financial component amortization 100,971 100,971 100,971
Regulatory liability component amortization (79,359) (79,359) (79,359)
1989 Settlement credits amortization (9,214) (9,214) (9,214)
Rate moderation component 88,667 (30,444) (228,572)
Rate moderation component carrying charges (40,004) (42,837) (40,456)
Other regulatory amortizations (18,044) (22,072) 10,375
Class Settlement 23,178 22,541 25,467
Amortization of cost of issuing and
redeeming securities 52,063 41,204 27,456
Federal income tax-deferred and other 165,952 160,432 181,138
Allowance for other funds used
during construction (2,473) (4,725) (2,202)
Other (2,197) 699 38,068
CHANGES IN OPERATING ASSETS AND LIABILITIES
Accounts receivable (65,898) (14,275) (26,045)
Accrued unbilled revenues (26,870) (6,607) 2,352
Materials and supplies, fuel oil and
gas in storage 5,265 (10,933) 28,217
Prepayments and other current assets (1,250) (5,548) (1,035)
Accounts payable and accrued expenses (8,800) 62,513 34,560
Accrued taxes (14,869) 7,351 3,926
Other (22,694) (17,073) (39,168)
- ----------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 582,013 590,064 520,428
- ----------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Construction and nuclear fuel expenditures (302,220) (268,179) (235,349)
Shoreham post settlement costs (207,114) (227,658) (158,432)
Other (934) (1,484) (3,923)
- ----------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (510,268) (497,321) (397,704)
- ----------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 1,089,770 1,659,928 1,532,247
Redemption of long-term debt (960,000) (1,344,283) (1,129,000)
Proceeds from sale of preferred stock 201,709 411,373 63,130
Redemption of preferred stock (205,600) (389,428) (70,638)
Preferred stock dividends paid (56,727) (69,923) (65,838)
Common stock dividends paid (195,794) (190,477) (172,584)
Cost of issuing and redeeming securities (17,036) (166,066) (88,586)
Other 10,980 7,520 3,707
- ----------------------------------------------------------------------------------------------------------------------------
Net Cash (Used in) Provided by
Financing Activities $ (132,698) (81,356) 72,438
- ----------------------------------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and
Cash Equivalents $ (60,953) $ 11,387 $ 195,162
============================================================================================================================
Cash and cash equivalents at beginning of year $ 309,485 $ 298,098 $ 102,936
Net (decrease) increase in cash and
cash equivalents (60,953) 11,387 195,162
- ----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 248,532 $ 309,485 $ 298,098
============================================================================================================================
SUPPLEMENTARY INFORMATION
Interest paid, before reduction for the allowance
for borrowed funds used during construction $ 469,978 $ 424,842 $ 477,240
Federal income tax paid $ 6,000 $ 2,100 $ 1,650
Federal income tax refunded $ 1,000 $ 1,566 $ 642
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
58
<PAGE> 63
<TABLE>
<CAPTION>
STATEMENT OF RETAINED EARNINGS (In thousands of dollars)
- ---------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $ 667,988 $ 620,373 $ 560,405
Net income for the year 296,563 301,974 305,538
- ---------------------------------------------------------------------------------------------------------------------
964,551 922,347 865,943
Deductions
Cash dividends declared on preferred stock 55,861 62,387 67,261
Cash dividends declared on common stock 197,236 191,693 178,169
Capital stock expense 22 279 140
- ---------------------------------------------------------------------------------------------------------------------
Balance at December 31 $ 711,432 $ 667,988 $ 620,373
=====================================================================================================================
</TABLE>
See Notes to Financial Statements.
59
<PAGE> 64
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REGULATION
The Company's accounting policies conform to generally accepted accounting
principles (GAAP) as they apply to a regulated enterprise. Its accounting
records are maintained in accordance with the Uniform Systems of Accounts
prescribed by the Public Service Commission of the State of New York (PSC) and
the Federal Energy Regulatory Commission (FERC).
UTILITY PLANT
Additions to and replacements of utility plant are capitalized at original
cost, which includes material, labor, overhead and an allowance for the cost of
funds used during construction. The cost of renewals and betterments relating
to units of property is added to utility plant. The cost of property replaced,
retired or otherwise disposed of is deducted from utility plant and, generally,
together with dismantling costs less any salvage, is charged to accumulated
depreciation. The cost of repairs and minor renewals is charged to maintenance
expense. Mass properties (such as poles, wire and meters) are accounted for on
an average unit cost basis by year of installation.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
The Uniform Systems of Accounts defines the allowance for funds used during
construction (AFC) as the net cost of borrowed funds for construction purposes
and a reasonable rate of return upon the utility's equity when so used. AFC is
not an item of current cash income. AFC is computed monthly using a rate
permitted by FERC on a portion of construction work in progress. The average
annual AFC rate, without giving effect to compounding, was 9.73%, 9.98% and
10.74% for the years 1993, 1992 and 1991, respectively.
DEPRECIATION
The provisions for depreciation result from the application of straight-line
rates to the original cost, by groups, of depreciable properties in service.
The rates are determined by age-life studies performed annually on depreciable
properties. Depreciation for electric properties was equivalent to
approximately 3.0%, 3.2% and 3.3% of respective average depreciable plant costs
for the years 1993, 1992 and 1991. Depreciation for gas properties was
equivalent to approximately 2.0%, 2.6% and 2.9% of respective average
depreciable plant costs for the years 1993, 1992 and 1991.
FINANCIAL RESOURCE ASSET
GAAP authorizes recognition of the existence of a regulatory asset when it is
probable that a regulator will permit full recovery of a previously incurred
cost. Pursuant to the 1989 Settlement and in accordance with GAAP, the Company
recorded a regulatory asset known as the Financial Resource Asset (FRA). The
FRA is designed to provide the Company with sufficient cash flows to assure its
financial recovery. The FRA has two components, the Base Financial Component
(BFC) and the Rate Moderation
60
<PAGE> 65
Component (RMC). The Rate Moderation Agreement (RMA), one of the constituent
documents of the 1989 Settlement, provides for the full recovery of the FRA.
For a further discussion of the 1989 Settlement and the FRA, see Note 2.
CASH AND CASH EQUIVALENTS
Cash equivalents are highly liquid investments with maturities of three months
or less when purchased. The carrying amount approximates fair value because of
the short maturity of these investments.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair values for the Company's long-term debt and redeemable preferred stock
are based on quoted market prices, where available. The fair values for all
other long-term debt and redeemable preferred stock are estimated using a
discounted cash flow analyses which is based upon the Company's current
incremental borrowing rate for similar types of securities.
CAPITALIZATION-PREMIUMS, DISCOUNTS AND EXPENSES
Premiums or discounts and expenses related to the issuance of long-term debt
are amortized over the life of each issue. Unamortized premiums or discounts
and expenses related to issues of long-term debt that are refinanced are
amortized and recovered through rates over the shorter life of either the
redeemed or new issues. Capital stock expense and redemption costs related to
certain issues of preferred stock that have been refinanced as well as the cost
of issuance of the preferred stock issued are recorded as deferred charges.
These amounts are being amortized and recovered through rates over the shorter
life of the redeemed or new issues.
REVENUES
The Company accrues electric and gas revenues for services rendered to
customers but not billed at month-end.
FUEL COST ADJUSTMENTS
The Company's electric and gas tariffs include fuel cost adjustment (FCA)
clauses which provide for the disposition of the difference between actual fuel
costs and the fuel costs allowed in the Company's base tariff rates (base fuel
costs). The Company defers these differences to future periods in which they
will be billed or credited to customers, except for base electric fuel costs in
excess of actual electric fuel costs, which are currently credited to the RMC
as incurred.
FEDERAL INCOME TAXES
Effective January 1, 1993, the Company adopted the Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No.
109, Accounting for Income Taxes. As permitted under SFAS No. 109, the Company
has elected not to restate the financial statements of prior years. The
adoption of SFAS No. 109 is in compliance with the PSC's Statement of Interim
Policy on Accounting and Ratemaking issued
61
<PAGE> 66
January 15, 1993. This statement asserts that the adoption and ongoing
implementation of SFAS No. 109 on an interim basis will be done in such a
manner that all its provisions shall be complied with on a revenue neutral
basis. As of January 1, 1993, the cumulative adjustment to the deferred tax
liability and the corresponding regulatory asset is approximately $1.6 billion.
The $800 million increase from the amount reported in interim financial
statements results from the Company's further analysis of deferred taxes to
recognize SFAS No. 109 requirements to present tax assets and liabilities
gross. SFAS No. 109 requires, among other matters, recognition of the amount
of current and deferred taxes payable or refundable at the date of the
financial statements as a result of all events that have been recognized in the
financial statements and adjustment of deferred income taxes for an enacted
change in tax laws. For regulated enterprises, SFAS No. 109 prohibits net of
tax accounting and reporting and requires recognition of a deferred tax
liability for the tax benefits which are flowed through to its customers. A
regulatory asset or liability will be recognized relating to such items if it
is probable that the future increase or decrease in taxes payable thereon shall
be recovered from or returned to customers through future rates.
The tax effects of other differences between income for financial statement
purposes and for federal income tax purposes are accounted for as current
adjustments in federal income tax provisions.
Prior to the adoption of SFAS No. 109 the Company provided deferred federal
income taxes with respect to certain items of income and expense that were
reported in different years in the financial statements and the tax return.
The Company defers the benefit of 60% of pre-1982 gas and pre-1983 electric and
100% of all other investment tax credits, with respect to regulated properties,
when realized on its tax returns. Accumulated deferred investment tax credits
are amortized ratably over the lives of the related properties.
For ratemaking purposes, the Company provides deferred federal income taxes
with respect to certain differences between net income before income taxes and
taxable income in certain instances when approved by the PSC, as disclosed in
Note 10. Also certain accumulated deferred federal income taxes are deducted
from rate base and amortized or otherwise applied as a reduction (increase) in
federal income tax expense in future years.
RESERVES FOR CLAIMS AND DAMAGES
Losses arising from claims against the Company, including worker's compensation
claims, property damage, extraordinary storm costs and general liability
claims, are partially self-insured. Extraordinary storm losses incurred by the
Company are partially insured by certain commercial insurance carriers. These
insurance carriers provide partial insurance coverage for individual storm
losses between $5 million and $50 million. Storm losses which are outside of
the above-mentioned range are self-insured by the Company. Reserves for these
losses are based on, among other things, experience, risk of loss and the
ratemaking practices of the PSC.
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<PAGE> 67
RECLASSIFICATIONS
To conform with an order of the FERC, dated March 31, 1993, the Company
reclassified certain deferred items as regulatory assets and regulatory
liabilities on its Balance Sheet. Regulatory assets and liabilities, as
defined in this order, are assets and liabilities created through the
ratemaking actions of regulatory agencies.
Certain other prior year amounts have been reclassified in the financial
statements to be consistent with the current year's presentation.
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<PAGE> 68
NOTE 2. THE 1989 SETTLEMENT
On February 28, 1989, the Company and the State of New York (by its Governor)
entered into the 1989 Settlement resolving certain issues relating to the
Company and providing, among other matters, for the transfer of the Shoreham
Nuclear Power Station (Shoreham) and its subsequent decommissioning. On
February 29, 1992, the Company transferred ownership of Shoreham to the Long
Island Power Authority (LIPA), an agency of the State of New York. Pursuant to
the 1989 Settlement, LIPA is responsible for the decommissioning of Shoreham
and has estimated that the decommissioning, in which Company employees are
participating, will be completed in 1994. Based on the latest available
information, LIPA has projected that the cost of decommissioning Shoreham will
total approximately $164 million. This estimate excludes the costs associated
with the disposal of Shoreham's fuel which is estimated to be $122 million. At
December 31, 1993, the Company has funded approximately $140 million and $30
million of these costs, respectively. LIPA anticipates that the Nuclear
Regulatory Commission (NRC) will terminate its license for Shoreham by the end
of 1994.
Upon the effectiveness of the 1989 Settlement, in June of 1989, the Company
simultaneously recorded on its Balance Sheet the retirement of its investment
of approximately $4.2 billion principally in Shoreham and the establishment of
the FRA, discussed in Note 1.
The BFC, a component of the FRA, as initially established, represents the
present value of the future net-after-tax cash flows which the RMA provided the
Company for its financial recovery. The BFC was granted rate base treatment
under the terms of the RMA and is included in the Company's revenue
requirements through an amortization included in rates over forty years on a
straight-line basis that began July 1, 1989. At December 31, 1993 and 1992,
the unamortized balance of the BFC was approximately $3.6 billion and $3.7
billion, respectively.
The RMC, a component of the FRA, reflects the difference between the Company's
revenue requirements under conventional ratemaking and the revenues resulting
from the implementation of the rate moderation plan provided for in the RMA.
The RMC is currently adjusted, on a monthly basis, for the Company's share of
certain Nine Mile Point Nuclear Power Station, Unit 2 (NMP2) operations and
maintenance expenses, fuel credits resulting from the Company's electric fuel
cost adjustment clause discussed in Note 1 and state gross receipts tax
adjustments related to the FRA. The RMC has provided the Company with a
substantial amount of non-cash earnings from the effective date of the 1989
Settlement through December 31, 1992.
At December 31, 1993 and 1992, the RMC balance was $610 million and $652
million, respectively. Prior to December 31, 1992 the RMC had increased as the
difference between revenues resulting from the implementation of the rate
moderation plan provided for in the RMA and revenue requirements under
conventional ratemaking, together with a carrying charge equal to the allowed
rate of return on rate base, had
64
<PAGE> 69
been deferred. Subsequent to December 31, 1992, the RMC balance has been
decreasing as revenues resulting from the implementation of the rate moderation
plan are greater than revenue requirements under conventional ratemaking. For
a further discussion of the impact on the amortization of the RMC under the
Company's current electric rate structure and the Company's proposed electric
rate plan for the three-year period beginning December 1, 1994, see Note 3.
Under the 1989 Settlement, certain tax benefits attributable to the Shoreham
abandonment are to be shared between ratepayers and shareowners. A regulatory
liability of approximately $794 million was recorded in June 1989 to preserve
an amount equivalent to the ratepayer tax benefits attributable to the Shoreham
abandonment. This amount is being amortized over a ten-year period on a
straight-line basis from the effective date of the 1989 Settlement. The
Company has reclassified the regulatory liability component which was
previously reported as a reduction of the corresponding deferred tax asset
arising from the abandonment loss deduction.
Shoreham post settlement costs (decommissioning, payments in lieu of property
taxes and other costs as incurred) are being capitalized and amortized and
recovered through rates over a forty-year period on a straight-line remaining
life basis.
Upon the effectiveness of the 1989 Settlement, Shoreham nuclear fuel was
reclassified to deferred charges included in the Regulatory Asset section of
the Balance Sheet and is being amortized and recovered through rates over a
forty-year period on a straight-line remaining life basis.
The 1989 Settlement credits on the Balance Sheet of approximately $155 million,
net of amortization, reflect an adjustment of the book write- off to the
negotiated 1989 Settlement amount. A portion of this amount is being amortized
over a ten-year period. The remaining portion is not currently being
recognized for ratemaking purposes under the 1989 Settlement.
65
<PAGE> 70
NOTE 3. RATE MATTERS
ELECTRIC
Pursuant to the 1989 Settlement, discussed in Note 2, the Company received
electric rate increases contemplated by the RMA for each of the three rate
years in the period ended November 30, 1991. The RMA contemplates that the
Company will apply to the PSC for targeted annual rate increases of 4.5% to
5.0% in each year for an eight-year period beginning December 1, 1991. In
response to the Company's December 1990 rate filing, the PSC approved the Long
Island Lighting Company Ratemaking and Performance Plan (LRPP) in November
1991, which provides that the Company receive, for each of the three rate years
in the period beginning December 1, 1991, annual electric rate increases of
4.15%, 4.1% and 4.0%, respectively, with an allowed return on common equity
from electric operations of 11.6% for each of the three rate years. After
giving effect to the reductions required by the Class Settlement discussed in
Note 4, the Company's annual electric rate increases were approximately 4.15%,
3.9% and 3.9%, with an allowed return on common equity from electric operations
of 10.92%, 10.72% and 10.58%, for the rate years beginning December 1, 1991,
1992 and 1993, respectively.
The LRPP was designed to be consistent with the RMA's long-term goals. One
principal objective of the LRPP is to reassign risk so that the Company assumes
the responsibility for risks within the control of management, whereas risks
largely beyond the control of management would be assumed by the ratepayers.
The LRPP reflects an update of the long-range forecast of the Company's revenue
requirements which was the basis of the RMA's initial three rate increases.
The LRPP contains three major components--revenue reconciliation, expense
attrition and reconciliation, and performance incentives.
Revenue reconciliation is provided through a mechanism that reduces the impact
of experiencing electric sales that are above or below the LRPP forecast by
providing a fixed annual net margin level (defined as sales revenues, net of
fuel and gross receipts taxes) that the Company will receive over the three
rate years under the LRPP. The differences between the actual electric net
revenues and the annual net margin level are deferred on a monthly basis during
the rate year.
The expense attrition and reconciliation component permits the Company to make
adjustments for certain expenses recognizing that certain cost increases are
unavoidable due to inflation and changes in the business. The LRPP includes
the annual reconciliation of certain expenses for wage rates, property taxes,
interest charges and demand side management (DSM) costs, the deferral and
amortization of certain costs for enhanced reliability, production operations
and maintenance expenses, and the application of an inflation index to other
expenses for the rate years beginning December 1, 1992 and 1993.
Under the performance incentive component of the LRPP, the Company is allowed
to earn for each rate year up to 60 additional basis points, or forfeit up to
38 basis points, of the allowed return on common equity as a result of its
performance within certain incentive and/or penalty programs. These programs
consist of a customer service program, a time-of-use program, a partial pass
through fuel cost incentive plan and, effective December 1, 1993, an electric
transmission and distribution reliability plan. The incentives and/or
penalties related to the customer
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<PAGE> 71
service performance plan, the time-of-use program, the electric transmission
and distribution reliability plan and the partial pass through fuel cost
incentive plan are determined on a monthly basis during the rate year and
deferred until final approval from the PSC. The incentives earned from the DSM
program are collected in rates on a monthly basis through the FCA. Based upon
the Company's performance within these programs, the Company earned a total of
approximately 49 basis points or approximately $9.2 million, net of tax
effects, and 23 basis points, or approximately $4.3 million, net of tax
effects, for the rate years ended November 30, 1993 and 1992, respectively.
The deferred balances resulting from the net margin, property taxes, interest
expense, wage rates, performance incentives and associated carrying charges,
excluding DSM incentives, are netted at the end of each rate year. The LRPP
established a band whereby the first $15 million of the total net deferrals are
used to increase or decrease the RMC balance. The LRPP provides for the
disposition of the total net deferrals in excess of the $15 million band. Upon
approval by the PSC, the total net deferrals in excess of $15 million are
refunded or recovered from the ratepayers through the FCA over a twelve-month
period in the following rate year.
During 1993, the PSC authorized the Company recovery of $45.2 million of the
total net deferrals for the rate year ended November 30, 1992. The first $15
million of the total net deferrals was recorded as an increase to the RMC, with
the remaining $30.2 million being recovered from the ratepayers through the FCA
through July 31, 1994. For the rate year ended November 30, 1993, the total
net deferrals, to be recovered from the ratepayers, subject to PSC review,
amounted to approximately $63 million of which $48 million will be recovered
through the FCA, over a twelve-month period beginning December 1, 1994.
The Company earned $8.9 million and $21.4 million, net of tax effects, for the
rate years ended November 30, 1993 and 1992, respectively, in excess of its
allowed rate of return on common equity of 11.6% which, in accordance with the
LRPP, was shared equally between ratepayers (by a reduction to the RMC) and
shareowners. Prior to December 1, 1991, the RMA provided that earned returns
on common equity in excess of targeted allowed rates of return, were to be
applied to reduce the RMC or mitigate rates, as determined by the PSC, at the
end of each rate year. For the rate year ended November 30, 1991, the Company
earned $10.1 million, net of tax effects, in excess of its allowed rate of
return, which was applied as a reduction to the RMC.
To assist in the recovery of the RMC balance under the rates provided by the
LRPP, the Company, in accordance with the LRPP, has credited the RMC with
several deferred ratepayer benefits. In December 1993 and 1992, the Company
applied a total of approximately $10.1 million and $22.5 million of various
deferred ratepayer benefits to the RMC including the ratepayers portion of the
excess earnings for the rate years ended November 30, 1993 and 1992,
respectively.
In December 1993, the Company filed a three-year electric rate plan with the
PSC for the period beginning December 1, 1994 that minimizes future electric
rate increases while retaining consistency with the RMA's objective of
continuing the restoration of the Company's financial health. The electric
rate plan provides for zero percentage base rate increases before giving effect
to the reductions required by the Class Settlement,
67
<PAGE> 72
discussed in Note 4, in years one and two of the plan and a base rate increase
of 4.3% in the third year prior to giving effect to the reductions required by
the Class Settlement. Although base electric rates would be frozen during the
first two years of the plan, annual rate increases of approximately 1% to 2%
are expected to result in these years from the operation of the Company's FCA.
The FCA captures, among other amounts, any increases in the cost of fuel above
the level recovered in base rates, and under the LRPP, any amounts to be
recovered or refunded to ratepayers in excess of $15 million which result from
the reconciliation of revenue, certain expenses and earned performance
incentive components, discussed above. The electric rate plan requests an
allowed rate of return on equity of 11.0%. The Company's two-year base rate
freeze proposal reflects four underlying objectives: (i) to limit the balance
of the RMC during the three-year period to no more than its 1992 peak balance
of $652 million; (ii) to recover the RMC within no more than thirteen years of
its 1989 inception; (iii) to minimize the final three rate increases that will
follow the two-year rate freeze period; and (iv) to continue the Company's
gradual return to financial health. The Company's electric rate plan is
subject to approval by the PSC.
The Company's current electric rate plan provides for lower annual electric
rate increases than originally anticipated under the 1989 Settlement. However,
as a result of changes in certain assumptions upon which the RMA was based,
their impact on the RMC and the Company's plans to reduce DSM, operations and
maintenance and capital expenditures, the Company has determined that the
overall objectives of the RMA can be met under the multi-year plan described
above. As a result of lower than originally anticipated inflation rates,
interest costs, property taxes, fuel costs and return on common equity allowed
by the PSC, the RMC, which originally had been anticipated to peak at $1.2
billion in 1994, has already peaked at $652 million in 1992. With the
exception of an increase in 1995-1996, which is not now projected to cause the
RMC to increase above its $652 million peak, the RMC is expected to decline
until it is fully amortized.
Under the electric rate plan, the recovery of the RMC would be extended, if
necessary, for an additional period of not more than three years beyond the
approximate ten-year period envisioned in the RMA. The actual length of the
RMC extension will depend on the extent to which the assumptions underlying the
rate plan materialize. The Company's current projections indicate that the RMC
will be recovered in eleven years instead of ten years.
GAS
In December 1993, the PSC approved a three-year gas rate settlement between the
Company and the Staff of the PSC. The gas rate settlement provides that the
Company receive, for each of the rate years beginning December 1, 1993, 1994
and 1995, annual gas rate increases of 4.7%, 3.8% and 2.8%, respectively. In
the determination of the revenue requirements for the first year of the gas
rate settlement an allowed rate of return on equity of 10.1% was used. The gas
rate decision also provides for earnings in excess of a 10.6% return on equity
in any of the three rate years covered by the settlement be shared equally
between the Company's firm gas customers and its shareowners. The allowed rate
of return for the rate year that began December 1, 1992 was 11.0%.
68
<PAGE> 73
NOTE 4. THE CLASS SETTLEMENT
The Class Settlement, which became effective on June 28, 1989, resolved a civil
lawsuit against the Company brought under the federal Racketeer Influenced and
Corrupt Organizations Act (RICO Act). The lawsuit which the Class Settlement
resolved, had alleged that the Company made inadequate disclosures before the
PSC concerning the construction and completion of nuclear generating
facilities. The Class Settlement provides the Company's ratepayers with
reductions, aggregating $390 million, that are to be reflected as adjustments
to their monthly electric bills over a ten-year period which began on June 1,
1990.
The reductions in each of the remaining twelve-month periods are as follows:
<TABLE>
<S> <C>
June 1994 $30 million
June 1995 $40 million
June 1996 $50 million
June 1997 $60 million
June 1998 $60 million
June 1999 $60 million
</TABLE>
Upon its effectiveness, the Company recorded its liability for the Class
Settlement on a present value basis at $170 million and simultaneously recorded
a charge to income (net of tax effects of $57 million) of approximately $113
million. Each month the Company records the changes in the present value of
such liability that result from the passage of time and from monthly
reductions. The Company expects the Class Settlement liability will be fully
satisfied by May 31, 2000.
As a result of the Class Settlement, the Company's electric rate increases on
average will be approximately .2% to .3% per year lower than they would
otherwise have been during the Class Settlement period.
69
<PAGE> 74
NOTE 5. NINE MILE POINT NUCLEAR POWER STATION, UNIT 2
The Company has an 18% undivided interest in NMP2 which is operated by Niagara
Mohawk Power Corporation (NMPC) near Oswego, New York. Ownership of NMP2 is
shared by five cotenants: the Company (18%), NMPC (41%), New York State
Electric & Gas Corporation (18%), Rochester Gas and Electric Corporation (14%)
and Central Hudson Gas & Electric Corporation (9%). At December 31, 1993, the
Company's net utility plant investment in NMP2 was $759 million, net of
accumulated depreciation of $119 million, which is included in the Company's
rate base. Output of NMP2 is shared in the same proportions as the cotenants'
respective ownership interests. The operating expenses of NMP2 are also
allocated to the cotenants in the same proportions as their respective
ownership interests. The Company's share of these expenses is included in the
appropriate operating expenses on the Statement of Income. The Company is
required to provide its respective share of financing for any capital additions
to NMP2. Nuclear fuel costs associated with NMP2 are being amortized on the
basis of the quantity of heat produced for the generation of electricity.
NMPC has contracted with the United States Department of Energy for the
disposal of nuclear fuel. The Company reimburses NMPC for its 18% share of the
cost under the contract at a rate of $1.00 per megawatt hour of net generation
less a factor to account for transmission line losses.
Based upon a study performed by NMPC which reflects a change in the NRC minimum
decommissioning funding requirement effective 1993, the Company's share of the
decommissioning costs for NMP2 is estimated to be $80 million (in 1993 dollars)
assuming that decommissioning will commence in 2027 (which will be $234 million
in 2027 dollars). The Company's share of estimated decommissioning costs are
being provided for in electric rates and are being charged to operations as
depreciation expense. The amount of accumulated decommissioning costs
collected from the Company's ratepayers through December 31, 1993 was $7.1
million. Amounts collected by the Company for the decommissioning of the
contaminated portion of the NMP2 plant, which approximate 92% of total
decommissioning costs, are held in an independent decommissioning trust fund.
This fund complies with regulations issued by the NRC governing the funding of
nuclear plant decommissioning costs. The Company's funding plan for its share
of decommissioning costs will provide reasonable assurance that, at the time of
termination of operation, adequate funds for the decommissioning of the
Company's share of the contaminated portion of NMP2 plant will be available.
70
<PAGE> 75
NOTE 6. CAPITAL STOCK
PREFERRED STOCK
The Company has 7,000,000 authorized shares, cumulative preferred stock, par
value $100 and 30,000,000 authorized shares, cumulative preferred stock, par
value $25. Dividends on preferred stock are paid in preference to dividends on
common stock or any other stock ranking junior to preferred stock.
PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
The aggregate fair value of redeemable preferred stock with mandatory
redemptions at December 31, 1993 and 1992 amounted to $658,795,000 and
$581,984,000, respectively, compared to their carrying amounts of $653,950,000
and $566,100,000, respectively.
At December 31, 1993, the Company had the option to redeem all outstanding
preferred stock Series L, $100 par value, and Series R, $100 par value, at
their optional redemption prices of $102.99 per share and $100.50 per share,
respectively. No other preferred stock series subject to mandatory redemptions
were redeemable at December 31, 1993.
The Company is required to redeem the following series of preferred stock
through the operation of various sinking fund provisions: (i) on each July 31,
10,500 shares of the Series L at a price of $100 per share; (ii) on each
December 15, 37,500 shares of the Series R at a price of $100 per share; (iii)
on each March 1, commencing March 1, 1999, 77,700 shares of the Series NN at a
price of $25 per share; and (iv) on each October 15, commencing October 15,
1999, 112,000 shares of the Series UU at a price of $25 per share. In
addition, the Company will have the noncumulative option to double the number
of shares to be redeemed pursuant to the sinking fund in any year for the
preferred stock series mentioned above. The aggregate par value of preferred
stock required to be redeemed by use of sinking funds in each of the years 1994
through 1996 is $4.8 million and in 1997 and 1998 is $1.1 million.
The Company is also required to redeem certain series of preferred stock which
are not subject to sinking fund requirements. The scheduled mandatory
redemption for these series are as follows: (i) Series CC on August 1, 2002;
(ii) Series AA on June 1, 2000; (iii) Series GG on March 1, 1999; and (iv)
Series QQ on May 1, 2001.
During 1992, the Company issued $363 million Preferred Stock, 7.95% Series AA
and $57 million Preferred Stock, 7.66% Series CC, the proceeds of which were
used to redeem $320 million Preferred Stock, $2.65 Series Y and $55 million
Preferred Stock, 9.80% Series S, respectively, at their optional redemption
prices.
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<PAGE> 76
PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
The Company has the option to redeem certain series of its preferred stock.
For the series subject to optional redemption at December 31, 1993, the call
prices were as follows:
<TABLE>
<S> <C>
5.00% Series B $101.00
4.25% Series D 102.00
4.35% Series E 102.00
4.35% Series F 102.00
5 1/8% Series H 102.00
5 3/4% Series I - Convertible 100.00
</TABLE>
PREFERENCE STOCK
None of the authorized 7,500,000 shares of nonparticipating preference stock,
par value $1 per share, which ranks junior to preferred stock, are outstanding.
COMMON STOCK
Of the 150,000,000 shares of authorized common stock at December 31, 1993,
1,789,842 shares were reserved for sale through the Company's Employee Stock
Purchase Plan, 5,946,929 shares were committed to the Automatic Dividend
Reinvestment Plan (ADRP) and 118,812 shares were reserved for conversion of the
Series I Convertible Preferred Stock at a rate of $17.15 per share. In June
1992, the Company reinstated the ADRP which had been suspended since February
1984. Common and preferred stock dividend limitations in the mortgage securing
the Company's First Mortgage Bonds are not material. There are no dividend
limitations contained in the Company's other debt instruments.
72
<PAGE> 77
NOTE 7. LONG-TERM DEBT
Each of the Company's outstanding mortgages is a lien on substantially all of
the Company's properties.
FIRST MORTGAGE
All of the bonds issued under the First Mortgage, including those issued after
June 1, 1975 and pledged with the Trustee of the G&R Mortgage (G&R Trustee) as
additional security for General & Refunding Bonds (G&R Bonds), are secured by
the lien of the First Mortgage. First Mortgage Bonds pledged with the G&R
Trustee do not represent outstanding indebtedness of the Company. Amounts of
such pledged bonds outstanding were $1.03 billion at December 31, 1993 and
1992. The annual First Mortgage depreciation fund and sinking fund
requirements for 1993, due not later than June 30, 1994, are estimated at $216
million and $18 million, respectively. The Company expects to meet these
requirements with property additions and retired First Mortgage Bonds.
G&R MORTGAGE
The lien of the G&R Mortgage is subordinate to the lien of the First Mortgage.
The annual G&R Mortgage sinking fund requirement for 1993, due not later than
June 30, 1994, is estimated at $24 million. The Company expects to satisfy
this requirement with retired G&R Bonds.
1989 REVOLVING CREDIT AGREEMENT
The Company has an estimated $276 million available to it through
October 1, 1994, under its $300 million 1989 Revolving Credit Agreement (1989
RCA). This line of credit is secured by a first lien upon the Company's
accounts receivable and fuel oil inventories.
The Company is currently, with the approval of the NRC, dedicating $24 million
of the 1989 RCA to cover estimated, not yet incurred, costs attributable to the
decommissioning of Shoreham, discussed in Note 2. The amount of credit
available to the Company under the 1989 RCA will increase as decommissioning
costs are funded by the Company.
At December 31, 1993, no amounts were outstanding under the 1989 RCA. The
Company has the option, when amounts are outstanding, to commit to one of three
interest rates including: (i) the Adjusted Certificate of Deposit Rate which is
a rate based on the certificate of deposit rates of certain of the lending
banks, (ii) the Base Rate which is generally a rate based on Citibank, N.A.'s
prime rate and (iii) the Eurodollar Rate which is a rate based on the London
Interbank Offering Rate (LIBOR). The Company has agreed to pay a fee of one
quarter of one percent per annum on the unused portion. The termination date
of the 1989 RCA may be extended for one-year periods upon the acceptance by the
lending banks of the Company's request delivered to the lending banks prior to
April 1 in each year.
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<PAGE> 78
AUTHORITY FINANCING NOTES
Authority Financing Notes are issued by the Company to the New York State
Energy Research and Development Authority (NYSERDA) to secure certain
tax-exempt Pollution Control Revenue Bonds (PCRBs), Electric Facilities Revenue
Bonds (EFRBs) and Industrial Development Revenue Bonds issued by NYSERDA.
Certain of these bonds are subject to periodic tender at which time their
interest rates are subject to redetermination.
The 1993 EFRBs and the 1985 PCRBs are supported by letters of credit pursuant
to which the letter of credit banks have agreed to pay the principal, interest
and premium if applicable, in the aggregate, up to approximately $272 million
in the event of default. The obligation of the Company to reimburse the letter
of credit banks is unsecured. These letters of credit expire November 17, 1996
for the 1993 EFRBs and on March 16, 1996 for the 1985 PCRBs, at which time the
Company is required to obtain either an extension of the letters of credit or
substitute credit backup. If neither can be obtained, the 1993 EFRBs and the
1985 PCRBs must be redeemed unless the Company purchases them in lieu of
redemption and subsequently remarkets them.
Tender requirements of Authority Financing Notes at December 31, 1993 are as
follows:
<TABLE>
<CAPTION>
Interest (In thousands of dollars)
Rate Series Principal
------------------------------------------------------------------
<S> <C> <C> <C> <C>
PCRBs
8 1/4 % 1982 $ 17,200 Tendered every three
years, next tender
October 1994.
2.5 % 1985 A,B $150,000 Tendered annually on
March 1.
EFRBs
2.95 % 1993 A $ 50,000 Tendered weekly.
2.85 % 1993 B $ 50,000 Tendered annually on
November 1.
</TABLE>
FAIR VALUES OF LONG-TERM DEBT
The carrying amounts and fair values of the Company's long-term debt consisted
of the following at December 31:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993
---------------------------
Fair Value Carrying Amount
----------- ---------------
<S> <C> <C>
First Mortgage Bonds $ 124,719 $ 125,000
General and Refunding Bonds 1,806,728 1,666,000
Debentures 2,944,499 2,880,058
Authority Financing Notes 851,800 816,675
---------- ----------
Total Long-Term Debt $5,727,746 $5,487,733
========== ==========
</TABLE>
74
<PAGE> 79
<TABLE>
<CAPTION>
1992
---------------------------
Fair Value Carrying Amount
---------- ---------------
<S> <C> <C>
First Mortgage Bonds $ 397,971 $ 400,000
General and Refunding Bonds 1,891,842 1,801,000
Debentures 2,523,721 2,428,058
Authority Financing Notes 729,610 716,675
---------- ----------
Total Long-Term Debt $5,543,144 $5,345,733
========== ==========
</TABLE>
MATURITY SCHEDULE
Total long-term debt maturing in the next five years is $600 million (1994),
$25 million (1995), $455 million (1996), $286 million (1997) and $1 million
(1998).
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<PAGE> 80
NOTE 8. RETIREMENT BENEFIT PLANS
PENSION PLANS
The Company maintains a primary defined benefit pension plan (Primary Plan)
which covers substantially all employees, a supplemental plan (Supplemental
Plan) which covers officers and certain key executives and a retirement plan
which covers the Board of Directors (Directors' Plan).
Primary Plan
The Company's funding policy is to contribute annually to the Primary Plan a
minimum amount consistent with the requirements of the Employee Retirement
Income Security Act of 1974 (ERISA) plus such additional amounts, if any, as
the Company may determine to be appropriate from time to time.
Effective January 1, 1992, the Plan was amended to update the benefit
calculation, whereby for service before January 1, 1992, pension benefits are
determined based on the greater of the accrued benefit as of December 31, 1991,
or by applying a moving five-year average of Plan compensation, not to exceed
the January 1, 1992 salary, to a certain percentage, determined by years of
service at December 31, 1991. For service after January 1, 1992, pension
benefits are equal to 2% of Plan compensation through age 49 and 2 1/2%
thereafter. Employees are vested in the pension plan after five years of
service with the Company.
The Primary Plan's funded status reflects changes in assumptions used in
accounting due to changes in market conditions. The 1993 projected benefit
obligation increased by approximately $31 million due to changes in the
discount rate used, partially offset by a lower rate of future compensation
increases.
The Primary Plan's funded status and amounts recognized on the Balance Sheet at
December 31, 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993 1992
-----------------------
<S> <C> <C>
Actuarial present value of benefit obligation
Vested benefits $512,692 $ 453,201
Nonvested benefits 5,920 4,326
-------- ---------
Accumulated benefit obligation $518,612 $ 457,527
Plan assets at fair value $598,600 $ 556,399
Actuarial present value of projected benefit
obligation $597,128 536,818
-------- ---------
Projected benefit obligation less than plan assets 1,472 19,581
Unrecognized January 1, net obligations 91,397 98,147
Unrecognized net gain (97,029) (128,218)
-------- ---------
Net accrued pension cost $ (4,160) $ (10,490)
======== =========
</TABLE>
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<PAGE> 81
Periodic pension cost for 1993, 1992 and 1991 for the Primary Plan included the
following components:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993 1992 1991
-----------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $14,481 $ 13,661 $ 14,323
Interest cost on projected benefit obligation
and service cost 41,865 39,574 33,698
Actual return on plan assets (54,010) (47,156) (63,875)
Net amortization and deferral 10,025 12,849 33,569
------- -------- --------
Net periodic pension cost $12,361 $ 18,928 $ 17,715
======= ======== ========
</TABLE>
Assumptions used in accounting for the Primary Plan were:
<TABLE>
<CAPTION>
1993 1992 1991
------------------------------
<S> <C> <C> <C>
Discount rate 7.25% 7.75% 7.75%
Rate of future compensation increases 5.0% 5.5% 5.5%
Long-term rate of return on assets 7.5% 7.5% 7.0%
</TABLE>
The Primary Plan assets at fair value primarily include cash, cash equivalents,
group annuity contracts, bonds and listed equity securities.
In 1993, the PSC issued an order which addressed the accounting and ratemaking
treatment of pension costs in accordance with SFAS No. 87, Employers'
Accounting For Pensions. Under the PSC order, the Company is required to
recognize any deferred net gains or losses over a ten- year period rather than
using the corridor approach method. The Company believes that by adopting this
method of accounting for financial reporting purposes, a better matching of
revenues and the Company's pension cost will result from the implementation of
the PSC order. For the year ended December 31, 1993, this change in the annual
pension cost calculation reduced pension expense by approximately $4.6 million.
The Company deferred a like amount of revenues to reflect the difference
between pension expense in rates and pension expense under the PSC's order. In
addition, the PSC authorized the Company to defer the difference between the
pension rate allowance and annual pension contributions deposited into the
pension fund. The Company is required to accrue, to the benefit of the
ratepayer, a carrying charge on any such deferred balance.
Supplemental Plan
The Supplemental Plan, the cost of which is borne by the Company's shareowners,
provides supplemental death and retirement benefits for officers and other key
executives without contribution from such employees. The Supplemental Plan is
a non-qualified plan under the Internal Revenue Code. Death benefits are
currently provided by insurance. The provision for retirement benefits, which
is unfunded, totaled approximately $2,800,000, $685,000 and $675,000 which was
recognized as an expense in 1993, 1992 and 1991, respectively.
Directors' Plan
The Directors' Plan, adopted in February 1990, provides benefits to directors
who are not officers of the Company. Directors who have
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<PAGE> 82
served in that capacity for more than five years qualify as participants under
the plan. The Directors' Plan is a non-qualified plan under the Internal
Revenue Code. The provision for retirement benefits, which is unfunded,
totaled approximately $150,000, $133,000 and $101,000 which was recognized as
expense in 1993, 1992 and 1991, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In addition to providing pension benefits, the Company provides certain medical
and life insurance benefits for retired employees. Substantially all of the
Company's employees may become eligible for these benefits if they reach
retirement age after working for the Company for a minimum of five years.
These and similar benefits for active employees are provided by the Company or
by insurance companies whose premiums are based on the benefits paid during the
year. Effective January 1, 1993, the Company adopted the provisions of SFAS
No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions,
which requires the Company to recognize the expected cost of providing
postretirement benefits when employee services are rendered rather than on a
pay-as-you-go method.
Effective January 1, 1993, the Company recorded an accumulated postretirement
benefit obligation and a corresponding regulatory asset of approximately $376
million. Additionally, as a result of adopting SFAS No. 106, the Company's
annual postretirement benefit cost for 1993 increased by approximately $28
million above the amount that would have been recorded under the pay-as-you-go
method.
In 1993, the PSC issued a final order which required that the effects of
implementing SFAS No. 106 be phased into rates. The order required the Company
to defer as a regulatory asset the difference between postretirement benefit
expense recorded for accounting purposes in accordance with SFAS No. 106 and
the postretirement benefit expense reflected in rates. The ongoing annual
postretirement benefit expense will be phased into and fully reflected in rates
within a five-year period with the accumulated postretirement obligation being
recovered in rates over a twenty-year period.
Accumulated postretirement benefits obligation other than pensions at December
31 were as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993 1992
----------------------------
<S> <C> <C>
Retirees $ 152,800 $ 140,900
Fully eligible plan participants 63,800 78,500
Other active plan participants 137,200 156,200
--------- ---------
Accumulated postretirement
benefits obligation 353,800 375,600
Unrecognized net gain 49,237 -
Unrecognized transition
obligation - (375,600)
--------- ---------
Accrued postretirement
benefit cost $ 403,037 $ -
========= =========
</TABLE>
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<PAGE> 83
Periodic postretirement benefit cost other than pensions for the years 1993 and
1992 were as follows:
<TABLE>
<CAPTION>
1993 1992
--------------------------
<S> <C> <C>
Service cost - benefits
earned during the period $ 12,980 $ -
Interest cost on projected
benefits obligation and
service cost 29,531 -
--------- ---------
Periodic postretirement
cost $ 42,511 $ 13,400
========= =========
</TABLE>
Assumptions used in accounting for postretirement benefits other than pensions
were as follows:
<TABLE>
<CAPTION>
1993 1992
-----------------------
<S> <C> <C>
Discount rate 7.25% 7.75%
Rate of future compensation 5.0% 5.5%
increases
</TABLE>
The assumed health care cost trend rates used in measuring the accumulated
postretirement benefit obligation at December 31, 1993 and 1992 were 9.5% and
15.0%, respectively, gradually declining to 6.0% in 2001 and thereafter. A
one-percentage point increase in the health care cost trend rate would increase
the accumulated postretirement benefit obligation as of December 31, 1993 and
1992 by approximately $46 million and $58 million, respectively, and the sum of
the service and interest costs in 1993 by $8 million.
POSTEMPLOYMENT BENEFITS
In November 1992, the FASB issued SFAS No. 112, Employers' Accounting for
Postemployment Benefits, which establishes accounting standards for employers
who provide benefits to former or inactive employees after employment but
before retirement. The Company will be required to comply with the new rules
beginning in 1994. The effect of adopting the new rules will not be material
to the Company's financial position or results of operations. The Company
believes it will be permitted to recover these costs through rates.
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<PAGE> 84
NOTE 9. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
The Company has entered into substantial commitments for fossil fuel, gas
supply, purchased power and transmission facilities. The costs associated with
these commitments are normally recovered from ratepayers through provisions in
the Company's rate schedules.
The Company expects that it will have to expend $4.3 million in 1994 to meet
continuous emission monitoring requirements and $3.5 million in 1994 and $2.0
million in 1995 to meet Phase I nitrogen oxide (NOx) reduction requirements.
In addition, subject to details that are expected to appear in regulations that
have not yet been issued, the Company estimates that it may be required to
expend as much as $125 million by May 1999 to meet Phase II NOx reduction
requirements and approximately $50 million by 2000 to meet requirements for the
control of hazardous air pollutants from power plants. The Company believes
that such cost would be recoverable in rates.
CONTINGENCIES
Litigation
On February 11, 1988, the Company began a lawsuit in Suffolk County Supreme
Court against Suffolk County, seeking the recovery of approximately $54 million
in damages for Suffolk County's breach of a contract to prepare an off site
emergency response plan for Shoreham (Long Island Lighting Company v. County of
Suffolk). In addition, the complaint alleges that, because of the delays that
have resulted, the Company has been damaged in an additional amount of $706
million. On October 30, 1992, the court granted in part and denied in part
Suffolk County's motion to amend its answer to assert additional defenses and
counterclaims. Two proposed counterclaims were allowed seeking approximately
$16 million in damages as well as $700 million in alleged punitive damages.
The outcome of these counterclaims, if adverse, could have a material effect on
the financial condition of the Company. The Company has argued that there is
no basis for punitive damages and intends to vigorously prosecute its claim
against Suffolk County and to defend against these counterclaims.
Environmental
The Company is subject to environmental laws and regulations of the United
States Environmental Protection Agency (EPA) and other regulatory agencies.
The Company is monitoring its activities and to date, has not identified any
material environmental contingencies. The Company believes that costs related
to such contingencies, if any, would be recoverable in rates.
80
<PAGE> 85
NUCLEAR PLANT INSURANCE
The Company has property damage insurance and third-party bodily injury and
property liability insurance for its 18% share in NMP2 and for Shoreham. The
premiums for this coverage are not material. The policies for this coverage
provide for retroactive premium assessments under certain circumstances.
Maximum retroactive premium assessments could be as much as approximately $4.7
million. For property damage at each nuclear generating site, the NRC requires
a minimum of $1.06 billion of coverage. The NRC has provided the Company with
a partial exemption from these requirements for Shoreham.
Under certain circumstances, the Company may be assessed additional amounts in
the event of a nuclear incident. Under agreements established pursuant to the
Price Anderson Act, the Company could be assessed up to approximately $79.3
million per nuclear incident in any one year at any nuclear unit, but not in
excess of approximately $10 million in payments per year for each incident.
The Price Anderson Act also limits liability for third-party bodily injury and
third-party property damage arising out of a nuclear occurrence at each unit to
$9.4 billion.
81
<PAGE> 86
NOTE 10. FEDERAL INCOME TAXES
As of December 31, 1993, the significant components of the Company's deferred
tax assets and liabilities calculated under the provisions of SFAS No. 109 were
as follows:
<TABLE>
<CAPTION>
Deferred Tax Assets (In thousands of dollars)
- ------------------- -------------------------
<S> <C>
Net operating loss carryforwards $ 707,400
Litigation settlements 87,050
Shoreham property 38,535
Accelerated depreciation 20,612
Excess credits 35,362
Unutilized investment tax credits 67,215
Tax credit carryforwards 138,035
Other 62,800
-----------
Total Deferred Tax Assets $1,157,009
-----------
</TABLE>
<TABLE>
<CAPTION>
Deferred Tax Liabilities
- ------------------------
<S> <C>
1989 Settlement $2,180,413
Accelerated depreciation 597,827
Call premiums 63,735
Rate case deferrals 43,957
Other 46,097
----------
Total Deferred Tax Liabilities 2,932,029
----------
Net Deferred Tax Liability $1,775,020
==========
</TABLE>
The Company's net operating loss (NOL) carryforward for federal income tax
purposes is estimated to be approximately $2 billion at December 31, 1993. The
NOL will expire in the years 2003 through 2007. The amount of investment tax
credit (ITC) carryforward is approximately $219 million. The ITC credits
expire by the year 2002. In accordance with the Tax Reform Act of 1986 (TRA
86), ITC allowable as credits to tax returns for years after 1987 must be
reduced by 35%. The amount of the reduction will not be allowed as a credit
for any other taxable year. For financial reporting purposes, a valuation
allowance was not required to offset the deferred tax assets related to these
carryforwards.
On January 8, 1990 and October 10, 1992, the Company received Revenue Agents'
Reports disallowing certain deductions claimed by the Company on its tax
returns for the audit cycle years 1984-1987 and 1988-1989, respectively. The
Revenue Agents' Reports reflects proposed adjustments to the Company's federal
income tax returns for 1984 through 1989 which, if sustained, would give rise
to tax deficiencies totaling approximately $220 million. The Revenue Agents
have proposed ITC adjustments which, if sustained, would reduce the Company's
carryforward by approximately $96 million. The Company is protesting some of
the adjustments and seeks an administrative and, if necessary, a judicial
review of the conclusions reached in the Revenue Agents' Reports. The Company
cannot predict either
82
<PAGE> 87
the timing or the manner in which these matters will be resolved. If however,
the ultimate disposition of any or all matters raised in the Revenue Agents'
Reports are adverse to the Company, the Company expects that any deficiencies
that may arise will be substantially offset by the net operating loss
carrybacks associated with the 1989 Shoreham abandonment loss deduction of $1.8
billion and thus any impact would not have a material effect on the Company's
financial condition or cash flows.
83
<PAGE> 88
The federal income tax amounts included in the Statement of Income differ from
the amounts which result from applying the statutory federal income tax rate to
net income before income taxes. The table below sets forth the reasons for
such differences.
<TABLE>
<CAPTION>
(In thousands of dollars)
- --------------------------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------------------------
% of % of % of
Pre-Tax Pre-Tax Pre-Tax
Amount Income Amount Income Amount Income
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FEDERAL INCOME TAX, PER STATEMENT
OF INCOME
Current $ 6,324 $ 530 $ 515
Deferred and other (see Note 1)
1989 Settlement
Shoreham property 4,753 3,806 10,677
Bokum Resources Corporation - - 20,400
Rate moderation component (30,511) 10,351 77,715
Other 1989 Settlement items 11,396 8,622 872
Net Operating Loss Carryforward 78,708 (14,121) (14,510)
Shoreham post settlement costs 62,993 60,125 50,375
Contractor litigation settlement (503) - (18,758)
Accelerated tax depreciation 32,101 35,951 30,447
Call premiums (5,460) 35,441 18,496
Ratemaking and performance plan 14,369 17,680 (371)
Other items (1,894) 2,577 5,795
- --------------------------------------------------------------------------------------------
Total Deferred and Other 165,952 160,432 181,138
- --------------------------------------------------------------------------------------------
TOTAL FEDERAL INCOME TAX EXPENSE 172,276 160,962 181,653
Net Income 296,563 301,974 305,538
- --------------------------------------------------------------------------------------------
Income before federal income taxes $ 468,839 $ 462,936 $ 487,191
============================================================================================
STATUTORY FEDERAL INCOME TAX $ 164,094 35.0% $ 157,398 34.0% $ 165,645 34.0%
Additions (reductions) in federal
income tax
1989 Settlement
Shoreham property 4,256 0.9 4,003 0.9 4,003 0.8
Allowance for funds used during
construction (2,304) (0.5) (4,118) (0.9) (1,310) (0.3)
Tax credits (6,871) (1.5) (6,586) (1.4) (2,980) (0.6)
Excess of book depreciation over
tax depreciation 12,437 2.7 12,193 2.6 13,108 2.7
Interest capitalized 3,443 0.7 2,947 0.6 4,232 0.9
Other items (2,779) (0.6) (4,875) (1.0) (1,045) (0.2)
- --------------------------------------------------------------------------------------------
TOTAL FEDERAL INCOME TAX EXPENSE $ 172,276 36.7% $ 160,962 34.8% $ 181,653 37.3%
============================================================================================
</TABLE>
84
<PAGE> 89
NOTE 11. SEGMENTS OF BUSINESS
The Company is a public utility engaged in the generation, distribution and
sale of electric energy and the purchase, distribution and sale of natural gas
to residential, commercial and industrial customers in Nassau and Suffolk
Counties and the Rockaway Peninsula in Queens County, all on Long Island, New
York. Identifiable assets by segment include net utility plant, regulatory
assets, materials and supplies (excluding common), accrued unbilled revenues,
gas in storage, fuel and deferred charges (excluding common). Assets utilized
for overall Company operations consist of other property and investments, cash
and cash equivalents, special deposits, accounts receivable, prepayments and
other current assets, unamortized debt expense and other deferred charges.
<TABLE>
<CAPTION>
(In thousands of dollars)
- ------------------------------------------------------------------------------------------------------------------
For year ended December 31 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUES
Electric $2,352,109 $2,194,632 $ 2,196,568
Gas 528,886 427,207 351,161
- ------------------------------------------------------------------------------------------------------------------
Total $2,880,995 $2,621,839 $ 2,547,729
==================================================================================================================
OPERATING EXPENSES (EXCLUDES FEDERAL INCOME TAX)
Electric $1,513,452 $1,354,959 $ 1,254,702
Gas 427,138 352,777 338,295
- ------------------------------------------------------------------------------------------------------------------
Total $1,940,590 $1,707,736 $ 1,592,997
==================================================================================================================
OPERATING INCOME (BEFORE FEDERAL INCOME TAX)
Electric $ 838,657 $ 839,673 $ 941,866
Gas 101,748 74,430 12,866
- ------------------------------------------------------------------------------------------------------------------
Total 940,405 914,103 954,732
AFC (6,683) (12,111) (5,794)
Other income and deductions (55,823) (49,569) (50,481)
Interest charges 534,072 512,847 523,816
Federal income tax-operating 184,854 172,998 169,452
Federal income tax-non-operating (12,578) (12,036) 12,201
- ------------------------------------------------------------------------------------------------------------------
Net income $ 296,563 $ 301,974 $ 305,538
==================================================================================================================
DEPRECIATION AND AMORTIZATION
Electric $ 106,149 $ 104,034 $ 104,172
Gas 16,322 15,103 14,783
- ------------------------------------------------------------------------------------------------------------------
Total $ 122,471 $ 119,137 $ 118,955
==================================================================================================================
CONSTRUCTION AND NUCLEAR FUEL EXPENDITURES*
Electric $ 170,941 $ 163,609 $ 144,356
Gas 133,752 109,295 93,195
- ------------------------------------------------------------------------------------------------------------------
Total $ 304,693 $ 272,904 $ 237,551
==================================================================================================================
<FN>
*Includes non-cash allowance for other funds used during construction and excludes Shoreham post settlement costs.
</TABLE>
<TABLE>
<CAPTION>
At December 31 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
IDENTIFIABLE ASSETS
Electric $11,253,674 $ 8,867,205 $ 8,582,081
Gas 1,080,906 767,444 621,570
- ------------------------------------------------------------------------------------------------------------------
Total 12,334,580 9,634,649 9,203,651
Assets utilized for overall Company operations 1,121,457 1,129,810 934,844
- ------------------------------------------------------------------------------------------------------------------
Total Assets $13,456,037 $10,764,459 $10,138,495
==================================================================================================================
</TABLE>
85
<PAGE> 90
NOTE 12. QUARTERLY FINANCIAL INFORMATION
(Unaudited)
<TABLE>
<CAPTION>
(In thousands of dollars except earnings per common share)
- ---------------------------------------------------------------------------------------------------------------------------
1993 1992
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING REVENUES
For the quarter ended March 31 $760,451 $697,761
June 30 604,871 580,498
September 30 849,700 747,729
December 31 665,973 595,851
- ---------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME
For the quarter ended March 31 $192,391 $179,741
June 30 167,599 166,954
September 30 263,984 256,800
December 31 131,577 137,610
- ---------------------------------------------------------------------------------------------------------------------------
NET INCOME
For the quarter ended March 31 $ 67,861 $ 66,706
June 30 56,806 59,285
September 30 144,549 141,388
December 31 27,347 34,595
- ---------------------------------------------------------------------------------------------------------------------------
EARNINGS FOR COMMON STOCK
For the quarter ended March 31 $ 53,286 $ 50,553
June 30 42,451 41,040
September 30 131,022 126,295
December 31 13,696 20,132
- ---------------------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE
For the quarter ended March 31 $ .48 $ .45
June 30 .38 .37
September 30 1.17 1.14
December 31 .12 .18
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1993, the Company recorded income of approximately
$6.5 million, net of tax effects, or $.06 per common share related to the
settlement of certain litigation. In addition, during the fourth quarter of
1993, the Company recorded a charge to earnings of approximately $7.3 million,
net of tax effects or $.07 per common share principally related to previously
deferred storm costs and the reconciliation of certain ratemaking mechanisms
recorded in connection with the conclusion of the Company's rate year.
86
<PAGE> 91
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
To the Shareowners and Board of Directors of Long Island Lighting Company
We have audited the accompanying balance sheet of Long Island Lighting Company
and the related statement of capitalization, as of December 31, 1993 and 1992,
and the related statements of income, retained earnings, and cash flows for
each of the three years in the period ended December 31, 1993. Our audits also
included the financial statement schedules listed in the Index at Item 14 (a).
These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules 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 all 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Long Island Lighting Company
at December 31, 1993 and 1992, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
As discussed in Notes 8 and 10 to the financial statements, effective January
1, 1993, the Company changed its methods of accounting for postretirement
benefits other than pensions and income taxes.
/s/ ERNST & YOUNG
Melville, New York
February 4, 1994
87
<PAGE> 92
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information required by Item 10 as to the Company's Executive
Officers is set forth in Item 1, "Business" under the heading "Executive
Officers of the Company" above. Information required by Item 10 as to the
Company's Directors may be found in the Company's proxy statement for its
Annual Meeting to be held on April 12, 1994. Such proxy statement is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Item 11 may be found in the Company's
proxy statement for its Annual Meeting to be held on April 12, 1994.
Such proxy statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Item 12 may be found in the Company's
proxy statement for its Annual Meeting to be held on April 12, 1994.
Such proxy statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 may be found in the Company's
proxy statement for its Annual Meeting to be held on April 12, 1994.
Such proxy statement is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) List of Financial Statements
Balance Sheet at December 31, 1993 and 1992.
Statement of Income for each of the three years in the period
ended December 31, 1993.
Statement of Capitalization at December 31, 1993 and 1992.
Statement of Cash Flows for each of the three years in the
period ended December 31, 1993.
Statement of Retained Earnings for each of the three years
in the period ended December 31, 1993.
Notes to Financial Statements.
88
<PAGE> 93
(2) List of Financial Statement Schedules
Property, Plant and Equipment (Schedule V)
Accumulated Depreciation, Depletion and Amortization
of Property, Plant and Equipment (Schedule VI)
Valuation and Qualifying Accounts (Schedule VIII)
Supplementary Income Statement Information
(Schedule X)
(3) List of Exhibits
*3(a) Restated Certificate of Incorporation of the Company dated November
11, 1993.
(b) By-laws of the Company as amended on May 28, 1991 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1991 and incorporated herein by reference).
4(a) General and Refunding Indenture dated as of June 1, 1975 and 21
supplements thereto (filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1987 and incorporated herein by
reference) as follows:
G&R Indenture dated as of June 1, 1975.
First Supplemental Indenture to G&R Indenture
dated as of June 1, 1975.
Second Supplemental Indenture to G&R Indenture
dated as of September 1, 1975.
Third Supplemental Indenture to G&R Indenture
dated as of June 1, 1976.
Fourth Supplemental Indenture to G&R Indenture
dated as of December 1, 1976.
Fifth Supplemental Indenture to G&R Indenture
dated as of May 1, 1977.
Sixth Supplemental Indenture to G&R Indenture
dated as of April 1, 1978.
- ------------------------
* Filed herewith.
89
<PAGE> 94
Seventh Supplemental Indenture to G&R Indenture
dated as of March 1, 1979.
Eighth Supplemental Indenture to G&R Indenture
dated as of February 1, 1980.
Ninth Supplemental Indenture to G&R Indenture
dated as of March 1, 1981.
Tenth Supplemental Indenture to G&R Indenture
dated as of July 1, 1981.
Eleventh Supplemental Indenture to G&R
Indenture dated as of July 1, 1981.
Twelfth Supplemental Indenture to G&R Indenture
dated as of December 1, 1981.
Thirteenth Supplemental Indenture to G&R
Indenture dated as of December 1, 1981.
Fourteenth Supplemental Indenture to G&R
Indenture dated as of June 1, 1982.
Fifteenth Supplemental Indenture to G&R
Indenture dated as of October 1, 1982.
Sixteenth Supplemental Indenture to G&R
Indenture dated as of April 1, 1983.
Seventeenth Supplemental Indenture to G&R
Indenture dated as of May 1, 1983.
Eighteenth Supplemental Indenture to G&R
Indenture dated as of September 1, 1984.
Nineteenth Supplemental Indenture to G&R
Indenture dated as of October 1, 1984.
Twentieth Supplemental Indenture to G&R
Indenture dated as of June 1, 1985.
Twenty-first Supplemental Indenture to G&R
Indenture dated as of April 1, 1986.
Twenty-second Supplemental Indenture to G&R
Indenture dated as of February 1, 1991 (filed
as an Exhibit to the Company's Form 10-K for
the Year Ended December 31, 1990 and
incorporated herein by reference).
90
<PAGE> 95
Twenty-third Supplemental Indenture to G&R
Indenture dated as of May 1, 1991 (filed as an
Exhibit to the Company's Form 10-K for the Year
Ended December 31, 1991 and incorporated herein
by reference).
Twenty-fourth Supplemental Indenture to G&R
Indenture dated as of July 1, 1991 (filed as an
Exhibit to the Company's Form 10-K for the Year
Ended December 31, 1991 and incorporated herein
by reference).
Twenty-fifth Supplemental Indenture to G&R
Indenture dated as of May 1, 1992 (filed as an
Exhibit to the Company's Form 10-K for the Year
Ended December 31, 1992 and incorporated herein
by reference).
Twenty-sixth Supplemental Indenture to G&R
Indenture dated as of July 1, 1992 (filed as
an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1992 and incorporated
herein by reference).
4(b) Indenture of Mortgage and Deed of Trust dated as of September 1,
1951 and 44 supplements thereto (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1987 and
incorporated herein by reference) as follows:
Indenture of Mortgage dated as of September 1,
1951.
First Supplemental Indenture to the Indenture
of Mortgage dated as of December 1, 1951.
Second Supplemental Indenture to the Indenture
of Mortgage dated as of October 1, 1952.
Third Supplemental Indenture to the Indenture
of Mortgage dated as of September 1, 1953.
Fourth Supplemental Indenture to the Indenture
of Mortgage dated as of December 1, 1954.
Fifth Supplemental Indenture to the Indenture
of Mortgage dated as of November 1, 1955.
Sixth Supplemental Indenture to the Indenture
of Mortgage dated as of December 1, 1956.
Seventh Supplemental Indenture to the Indenture
of Mortgage dated as of May 1, 1958.
91
<PAGE> 96
Eighth Supplemental Indenture to the Indenture
of Mortgage dated as of July 1, 1959.
Ninth Supplemental Indenture to the Indenture
of Mortgage dated as of August 1, 1961.
Tenth Supplemental Indenture to the Indenture
of Mortgage dated as of April 1, 1963.
Eleventh Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1964.
Twelfth Supplemental Indenture to the Indenture
of Mortgage dated as of June 1, 1965.
Thirteenth Supplemental Indenture to the
Indenture of Mortgage dated as of March 1,
1966.
Fourteenth Supplemental Indenture to the
Indenture of Mortgage dated as of April 1,
1967.
Fifteenth Supplemental Indenture to the
Indenture of Mortgage dated as of September 1,
1969.
Sixteenth Supplemental Indenture to the
Indenture of Mortgage dated as of September 1,
1970.
Seventeenth Supplemental Indenture to the
Indenture of Mortgage dated as of April 1,
1971.
Eighteenth Supplemental Indenture to the
Indenture of Mortgage dated as of December 1,
1971.
Nineteenth Supplemental Indenture to the
Indenture of Mortgage dated as of September 1,
1972.
Twentieth Supplemental Indenture to the
Indenture of Mortgage dated as of December 1,
1973.
Twenty-first Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1974.
Twenty-second Supplemental Indenture to the
Indenture of Mortgage dated as of November 1, 1974.
Twenty-third Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1975.
92
<PAGE> 97
Twenty-fourth Supplemental Indenture to the
Indenture of Mortgage dated as of September 1,
1975.
Twenty-fifth Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1976.
Twenty-sixth Supplemental Indenture to the
Indenture of Mortgage dated as of December 1,
1976.
Twenty-seventh Supplemental Indenture to the
Indenture of Mortgage dated as of May 1, 1977.
Twenty-eighth Supplemental Indenture to the
Indenture of Mortgage dated as of April 1,
1978.
Twenty-ninth Supplemental Indenture to the
Indenture of Mortgage dated as of March 1,
1979.
Thirtieth Supplemental Indenture to the
Indenture of Mortgage dated as of February 1,
1980.
Thirty-first Supplemental Indenture to the
Indenture of Mortgage dated as of March 1,
1981.
Thirty-second Supplemental Indenture to the
Indenture of Mortgage dated as of July 1, 1981.
Thirty-third Supplemental Indenture to the
Indenture of Mortgage dated as of July 1, 1981.
Thirty-fourth Supplemental Indenture to the
Indenture of Mortgage dated as of December 1,
1981.
Thirty-fifth Supplemental Indenture to the
Indenture of Mortgage dated as of December 1,
1981.
Thirty-sixth Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1982.
Thirty-seventh Supplemental Indenture to the
Indenture of Mortgage dated as of October 1,
1982.
Thirty-eighth Supplemental Indenture to the
Indenture of Mortgage dated as of April 1,
1983.
Thirty-ninth Supplemental Indenture to the
Indenture of Mortgage dated as of May 1, 1983.
93
<PAGE> 98
Fortieth Supplemental Indenture to the
Indenture of Mortgage dated as of February 29,
1984.
Forty-first Supplemental Indenture to the
Indenture of Mortgage dated as of September 1,
1984.
Forty-second Supplemental Indenture to the
Indenture of Mortgage dated as of October 1,
1984.
Forty-third Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1985.
Forty-fourth Supplemental Indenture to the
Indenture of Mortgage dated as of April 1,
1986.
Forty-fifth Supplemental Indenture to the
Indenture of Mortgage dated as of February 1,
1991 (filed as an Exhibit to the Company's
Form 10-K for the Year Ended December 31, 1990
and incorporated herein by reference).
Forty-sixth Supplemental Indenture to the
Indenture of Mortgage dated as of May 1, 1991
(filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1991 and
incorporated herein by reference).
Forty-seventh Supplemental Indenture to the
Indenture of Mortgage dated as of July 1, 1991
(filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1991 and
incorporated herein by reference).
Forty-eighth Supplemental Indenture to the
Indenture of Mortgage dated as of May 1, 1992
(filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1992 and
incorporated herein by reference).
Forty-ninth Supplemental Indenture to the
Indenture of Mortgage dated as of July 1, 1992
(filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1992 and
incorporated herein by reference).
94
<PAGE> 99
*4(c) Debenture Indenture dated as of November 1, 1986 from the Company
to The Connecticut Bank and Trust Company, National Association, as
Trustee (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1986 and incorporated herein by reference).
First Supplemental Indenture dated as of
November 1, 1986 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December
31, 1986 and incorporated herein by reference).
Second Supplemental Indenture dated as of
April 1, 1989 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by
reference).
Third Supplemental Indenture dated as of July
1, 1989 (filed as an Exhibit to the Company's
Form 10-K for the Year Ended December 31, 1989
and incorporated herein by reference).
Fourth Supplemental Indenture dated as of
July 1, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
Fifth Supplemental Indenture dated as of
November 1, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
*Sixth Supplemental Indenture dated as of
June 1, 1993.
*Seventh Supplemental Indenture dated as of
July 1, 1993.
4(d) Debenture Indenture dated as of November 1, 1992 from the Company
to Chemical Bank, as Trustee (filed as an Exhibit to the Company's
Form 10-K for the Year Ended December 31, 1992 and incorporated
herein by reference).
First Supplemental Indenture dated as of
January 1, 1993 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
- ------------------------
* Filed herewith.
95
<PAGE> 100
Second Supplemental Indenture dated as of
March 1, 1993 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
Third Supplemental Indenture dated as of
March 1, 1993 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
Fourth Supplemental Indenture dated as of
March 1, 1993 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
10(a) Sound Cable Project Facilities and Marketing Agreement dated as of
August 26, 1987 between the Company and the Power Authority of the
State of New York (filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1987 and incorporated herein by
reference).
10(b) Transmission Agreement by and between the Company and Consolidated
Edison Company of New York, Inc. dated as of March 31, 1989 (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference).
10(c) Contract for the sale of Firm Power and Energy by and between the
Company and the State of New York dated as of April 26, 1989 (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference).
10(d) Capacity Supply Agreement dated as of December 13, 1991 between the
Company and the Power Authority of the State of New York (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1991 and incorporated herein by reference).
*10(e) Nine Mile Point Nuclear Station Unit 2 Operating Agreement dated as
of January 1, 1993 by and between the Company, New York State
Electric & Gas Corporation, Rochester Gas and Electric Corporation
and Central Hudson Gas and Electric Corporation.
10(f) Settlement Agreement on Issues Related to Nine Mile Two Nuclear
Plant dated as of June 6, 1990 by and between the Company, the
Staff of the Department of Public Service and others (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1990 and incorporated herein by reference).
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* Filed herewith.
96
<PAGE> 101
10(g) Settlement Agreement -- LILCO Issues dated as of February 28, 1989
by and between the Company and the State of New York (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1988 and incorporated herein by reference).
10(h) Amended and Restated Asset Transfer Agreement by and between the
Company and the Long Island Power Authority dated as of June 16,
1988 as amended and restated on April 14, 1989 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1989 and
incorporated herein by reference).
10(i) Memorandum of Understanding concerning proposed agreements on power
supply for Long Island dated as of June 16, 1988 by and between the
Company and New York Power Authority as amended May 24, 1989 (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference).
10(j) Rate Moderation Agreement submitted by the staff of the New York
State Public Service Commission on March 16, 1989 and supported by
the Company (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1989 and incorporated herein by reference).
10(k) Site Cooperation and Reimbursement Agreement dated as of January
24, 1990 by and between the Company and Long Island Power Authority
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference).
10(l) Stipulation of settlement of federal Racketeer Influenced and
Corrupt Organizations Act ("RICO") Class Action and False Claims
Action dated as of February 27, 1989 among the attorneys for the
Company, the ratepayer class, the United States of America and the
individual defendants named therein (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1988 and
incorporated herein by reference).
10(m) Revolving Credit Agreement dated as of June 27, 1989, between Long
Island Lighting Company and the banks and co-agents listed therein,
with the Exhibits thereto (filed as an Exhibit to the Company's
Form 10-K for the Year Ended December 31, 1989 and incorporated
herein by reference) and as amended by the First Amendment dated as
of October 13, 1989 (filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1990 and incorporated herein by
reference) and as amended by the Second Amendment dated as of March
5, 1992 and as modified by a Waiver dated November 5, 1992 (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by reference).
10(n) Indenture of Trust dated as of December 1, 1989 by and between New
York State Energy Research and Development Authority and The
Connecticut National Bank, as Trustee, relating to the 1989
Electric Facilities Revenue Bonds (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1989 and
incorporated herein by reference).
97
<PAGE> 102
Participation Agreement dated as of December 1, 1989 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1989 Electric Facilities Revenue Bonds
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference).
10(o) Indenture of Trust dated as of May 1, 1990 by and between New York
State Energy Research and Development Authority and The Connecticut
National Bank, as Trustee, relating to the 1990 Electric Facilities
Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for
the Year Ended December 31, 1990 and incorporated herein by
reference).
Participation Agreement dated as of May 1, 1990 by and between the
New York State Energy Research and Development Authority and the
Company relating to the 1990 Electric Facilities Revenue Bonds
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1990 and incorporated herein by reference).
10(p) Indenture of Trust dated as of January 1, 1991 by and between New
York State Energy Research and Development Authority and The
Connecticut National Bank, as Trustee, relating to the 1991
Electric Facilities Revenue Bonds (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1990 and
incorporated herein by reference).
Participation Agreement dated as of January 1, 1991 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1991 Electric Facilities Revenue Bonds
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1990 and incorporated herein by reference).
10(q) Indenture of Trust dated as of February 1, 1992 by and between New
York State Energy Research and Development Authority and IBJ
Schroder Bank and Trust Company, as Trustee, relating to the 1992
Electric Facilities Revenue Bonds, Series A (filed as an Exhibit to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference).
Participation Agreement dated as of February 1, 1992 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1992 Electric Facilities Revenue Bonds,
Series A (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1991 and incorporated herein by reference).
10(r) Indenture of Trust dated as of February 1, 1992 by and between New
York State Energy Research and Development Authority and IBJ
Schroder Bank and Trust Company, as Trustee, relating to the 1992
Electric Facilities Revenue Bonds, Series B (filed as an Exhibit to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference).
98
<PAGE> 103
Participation Agreement dated as of February 1, 1992 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1992 Electric Facilities Revenue Bonds,
Series B (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1991 and incorporated herein by reference).
10(s) Indenture of Trust dated as of August 1, 1992 by and between New
York State Energy Research and Development Authority and IBJ
Schroder Bank and Trust Company, as Trustee, relating to the 1992
Electric Facilities Revenue Bonds, Series C (filed as an Exhibit to
the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1992 Electric Facilities Revenue Bonds,
Series C (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1992 and incorporated herein by reference).
10(t) Indenture of Trust dated as of August 1, 1992 by and between New
York State Energy Research and Development Authority and IBJ
Schroder Bank and Trust Company, as Trustee, relating to the 1992
Electric Facilities Revenue Bonds, Series D (filed as an Exhibit to
the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1992 Electric Facilities Revenue Bonds,
Series D (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1992 and incorporated herein by reference).
*10(u) Indenture of Trust dated as of November 1, 1993 by and between New
York State Energy Research and Development Authority and Chemical
Bank, as Trustee, relating to the 1993 Electric Facilities Revenue
Bonds, Series A.
Participation Agreement dated as of November 1, 1993 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1993 Electric Facilities Revenue Bonds,
Series A.
*10(v) Indenture of Trust dated as of November 1, 1993 by and between New
York State Energy Research and Development Authority and Chemical
Bank, as Trustee, relating to the 1993 Electric Facilities Revenue
Bonds, Series B.
Participation Agreement dated as of November 1, 1993 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1993 Electric Facilities Revenue Bonds,
Series B.
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* Filed herewith.
99
<PAGE> 104
*10(w) Supplemental Death and Retirement Benefits Plan as amended and
restated effective January 1, 1993 and related Trust Agreement,
which Trust Agreement was filed as Exhibit 10(q) to the Company's
Form 10-K for the Year Ended December 31, 1990 and incorporated
herein by reference.
*10(x) Executive Agreements and Management Contracts
*(1) Executive Employment Agreement dated as of January 30, 1984 by and
between William J. Catacosinos and Long Island Lighting Company,
as amended by amendments dated March 20, 1987 (filed as Exhibit
10(e) to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference), December 22, 1989
(filed as Exhibit 10(o) to the Company's Form 10-K for the Year
Ended December 31, 1989 and incorporated herein by reference) and
December 2, 1991 (filed as Exhibit 10(u) to the Company's Form 10-K
for the Year Ended December 31, 1991 and incorporated herein by
reference); an Employment Agreement dated as of March 20, 1987
(filed as Exhibit 10(e) to the Company's Form 10-K for the Year
Ended December 31, 1987 and incorporated herein by reference) as
amended by amendments dated November 30, 1989 (filed as Exhibit
10(q) to the Company's Form 10-K for the Year Ended December 31,
1989 and incorporated herein by reference), an amendment dated
December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K
for the Year Ended December 31, 1991 and incorporated herein by
reference), an amendment dated December 31, 1992 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1992 and incorporated herein by reference), and as amended by an
amendment dated December 31, 1993.
*(2) Employment Agreement dated as of February 23, 1994 by and between
Theodore A. Babcock and Long Island Lighting Company and related
Trust Agreement, which Trust Agreement was filed as Exhibit 10(q)
to the Company's Form 10-K for the Year Ended December 31, 1989 and
incorporated herein by reference.
(3) Employment Agreement dated as of May 14, 1990 by and between
William N. Dimoulas and Long Island Lighting Company and related
Trust Agreement (filed as an Exhibit to the Company's Form 10-K for
the Year Ended December 31, 1990 and incorporated herein by
reference) as amended by an amendment dated December 2, 1991 (filed
as Exhibit 10(w) to the Company's Form 10-K for the Year Ended
December 31, 1991 and incorporated herein by reference) as amended
by an amendment dated as of December 31, 1992 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
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* Filed herewith.
100
<PAGE> 105
(4) Employment Agreement dated as of March 20, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between James T. Flynn and
Long Island Lighting Company and related Trust Agreement (filed as
Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference) as amended by an amendment dated
as of December 31, 1992 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1992 and incorporated herein
by reference) and as amended by an amendment dated December 31,
1993 which amendment is identical to that filed with Exhibit
10(x)(1).
(5) Employment Agreement dated as of September 11, 1992 by and between
Robert J. Grey and Long Island Lighting Company and related Trust
Agreement as amended by an amendment dated as of December 31, 1992
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by reference) and as
amended by an amendment dated December 31, 1993 which amendment is
identical to that filed with Exhibit 10(x)(1).
(6) Employment Agreement dated as of March 20, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Robert X. Kelleher
and Long Island Lighting Company and related Trust Agreement (filed
as Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference) as amended by an amendment dated
as of December 31, 1992 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1992 and incorporated herein
by reference) and as amended by an amendment dated December 31,
1993 which amendment is identical to that filed with Exhibit
10(x)(1).
(7) Employment Agreement dated as of March 20, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between John D. Leonard,
Jr. and Long Island Lighting Company and related Trust Agreement
(filed as Exhibit 10(q) to the Company's Form 10-K for the Year
Ended December 31, 1989 and incorporated herein by reference) as
amended by an amendment dated December 2, 1991 (filed as Exhibit
10(w) to the Company's Form 10-K for the Year Ended December 31,
1991 and incorporated herein by reference) as amended by an
amendment dated as of December 31, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
101
<PAGE> 106
(8) Employment Agreement dated as of March 20, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Adam M. Madsen and
Long Island Lighting Company and related Trust Agreement (filed as
Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference) as amended by an amendment dated
as of December 31, 1992 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1992 and incorporated herein
by reference) and as amended by an amendment dated December 31,
1993 which amendment is identical to that filed with Exhibit
10(x)(1).
(9) Employment Agreement dated as of May 30, 1990 by and between
Kathleen A. Marion and Long Island Lighting Company and related
Trust Agreement as amended by an amendment dated December 2, 1991
as amended by an amendment dated as of December 31, 1992 (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1992 and incorporated herein by reference) and as amended by an
amendment dated December 31, 1993 which amendment is identical to
that filed with Exhibit 10(x)(1).
(10) Employment Agreement dated as of January 21, 1991 by and between
Arthur C. Marquardt and Long Island Lighting Company and related
Trust Agreement (filed as an Exhibit to the Company's Form 10-K for
the Year Ended December 31, 1990 and incorporated herein by
reference) as amended by an amendment dated December 2, 1991 (filed
as Exhibit 10(w) to the Company's Form 10-K for the Year Ended
December 31, 1991 and incorporated herein by reference) as amended
by an amendment dated as of December 31, 1992 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
(11) Employment Agreement dated as of April 16, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1987 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Brian R. McCaffrey
and Long Island Lighting Company and related Trust Agreement (filed
as Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991
incorporated herein by reference) and as amended by an amendment
dated as of December 31, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
102
<PAGE> 107
(12) Employment Agreement dated as of March 18, 1988 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1988 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Joseph W.
McDonnell and Long Island Lighting Company and related Trust
Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for
the Year Ended December 31, 1989 and incorporated herein by
reference) as amended by an amendment dated December 2, 1991 (filed
as Exhibit 10(w) to the Company's Form 10-K for the Year Ended
December 31, 1991 and incorporated herein by reference) as amended
by an amendment dated as of December 31, 1992 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
(13) Employment Agreement dated as of July 29, 1992 by and between
Anthony Nozzolillo and Long Island Lighting Company and related
Trust Agreement and as amended by an amendment dated as of December
31, 1992 (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1992 and incorporated herein by reference)
and as amended by an amendment dated December 31, 1993 which
amendment is identical to that filed with Exhibit 10(x)(1).
(14) Employment Agreement dated as of July 29, 1987 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1987 and
incorporated herein by reference) as amended by an amendment dated
November 30, 1989 by and between William G. Schiffmacher and Long
Island Lighting Company and related Trust Agreement (filed as
Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference) as amended by an amendment dated
as of December 31, 1992 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1992 and incorporated herein
by reference) and as amended by an amendment dated December 31,
1993 which amendment is identical to that filed with Exhibit
10(x)(1).
(15) Employment Agreement dated as of February 20, 1990 by and between
Robert B. Steger and Long Island Lighting Company and related Trust
Agreement (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1989 and incorporated herein by reference)
as amended by an amendment dated December 2, 1991 (filed as Exhibit
10(w) to the Company's Form 10-K for the Year Ended December 31,
1991 and incorporated herein by reference) as amended by an
amendment dated as of December 31, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
103
<PAGE> 108
(16) Employment Agreement dated as of March 9, 1989 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1990 and
incorporated herein by reference) as amended by an amendment dated
November 30, 1989 by and between William E. Steiger, Jr. and Long
Island Lighting Company and related Trust Agreement (filed as
Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference) as amended by an amendment dated
as of December 31, 1992 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1992 and incorporated herein
by reference) and as amended by an amendment dated December 31,
1993 which amendment is identical to that filed with Exhibit
10(x)(1).
(17) Employment Agreement dated as of April 17, 1991 by and between
Thomas J. Vallely, III and Long Island Lighting Company and related
Trust Agreement as amended by an amendment dated December 2, 1991
(filed as Exhibit 10(w) to the Company's Form 10-K for the Year
Ended December 31, 1991 and incorporated herein by reference) as
amended by an amendment dated as of December 31, 1992 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1992 and incorporated herein by reference) and as amended by an
amendment dated December 31, 1993 which amendment is identical to
that filed with Exhibit 10(x)(1).
(18) Employment Agreement dated as of March 20, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Walter F. Wilm,
Jr. and Long Island Lighting Company and related Trust Agreement
(filed as Exhibit 10(q) to the Company's Form 10-K for the Year
Ended December 31, 1989 and incorporated herein by reference) as
amended by an amendment dated December 2, 1991 (filed as Exhibit
10(w) to the Company's Form 10-K for the Year Ended December 31,
1991 and incorporated herein by reference) as amended by an
amendment dated as of December 31, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
(19) Employment Agreement dated as of November 4, 1988 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1988 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Edward J.
Youngling and Long Island Lighting Company and related Trust
Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for
the Year Ended December 31, 1989 and incorporated herein by
reference) as amended by an amendment dated December 2, 1991 (filed
as Exhibit 10(w) to the Company's Form 10-K for the Year Ended
December 31, 1991 and incorporated herein by reference) as amended
by an amendment dated as of December 31, 1992 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
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<PAGE> 109
(20) Retirement Agreement dated as of January 7, 1987 by and between
George J. Sideris and Long Island Lighting Company, as amended
March 20, 1987, and related Trust Agreement (filed as an Exhibit to
the Company's Form 10-K for the Year Ended December 31, 1986 and
incorporated herein by reference).
*(21) Indemnification Agreement dated as of February 23, 1994 by and
between Theodore A. Babcock and Long Island Lighting Company.
(22) Indemnification Agreement dated as of January 31, 1992 by and
between A. James Barnes and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1991 and incorporated herein by reference).
(23) Indemnification Agreement dated as of May 30, 1990 by and between
George Bugliarello and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1990 and incorporated herein by reference).
(24) Indemnification Agreement dated as of April 17, 1992 by and between
Renso L. Caporali and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1992 and incorporated herein by reference).
(25) Indemnification Agreement dated as of November 19, 1987 by and
between William J. Catacosinos and Long Island Lighting Company
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(26) Indemnification Agreement dated as of April 23, 1992 by and between
Peter O. Crisp and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1992 and incorporated herein by reference).
(27) Indemnification Agreement dated as of May 14, 1990 by and between
William N. Dimoulas and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1990 and incorporated herein by reference).
(28) Indemnification Agreement dated as of November 25, 1987 by and
between James T. Flynn and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1987 and incorporated herein by reference).
(29) Indemnification Agreement dated as of November 19, 1987 by and
between Winfield E. Fromm and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
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* Filed herewith.
105
<PAGE> 110
*(30) Indemnification Agreement dated as of January 3, 1994 by and
between Vicki L. Fuller and Long Island Lighting Company.
(31) Indemnification Agreement dated as of September 11, 1992 by and
between Robert J. Grey and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1992 and incorporated herein by reference).
(32) Indemnification Agreement dated as of November 25, 1987 by and
between Robert X. Kelleher and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(33) Indemnification Agreement dated as of November 25, 1987 by and
between John D. Leonard, Jr. and Long Island Lighting Company
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(34) Indemnification Agreement dated as of November 25, 1987 by and
between Adam M. Madsen and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1987 and incorporated herein by reference).
(35) Indemnification Agreement dated as of May 30, 1990 by and between
Kathleen A. Marion and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1990 and incorporated herein by reference).
(36) Indemnification Agreement dated as of January 21, 1991 by and
between Arthur C. Marquardt and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1990 and incorporated herein by reference).
(37) Indemnification Agreement dated as of November 25, 1987 by and
between Brian R. McCaffrey and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(38) Indemnification Agreement dated as of March 18, 1988 by and between
Joseph W. McDonnell and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1988 and incorporated herein by reference).
(39) Indemnification Agreement dated as of July 29, 1992 by and between
Anthony Nozzolillo and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1992 and incorporated herein by reference).
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* Filed herewith.
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<PAGE> 111
*(40) Indemnification Agreement dated as of April 20, 1993 by and between
Katherine D. Ortega and Long Island Lighting Company.
(41) Indemnification Agreement dated as of November 19, 1987 by and
between Basil A. Paterson and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(42) Indemnification Agreement dated as of November 25, 1987 by and
between William Schiffmacher and Long Island Lighting Company
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(43) Indemnification Agreement dated as of February 8, 1992 by and
between Richard L. Schmalensee and Long Island Lighting Company
(filed as an Exhibit to the Company Form 10- K for the Year Ended
December 31, 1991 and incorporated herein by reference).
(44) Indemnification Agreement dated as of November 30, 1987 by and
between George J. Sideris and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(45) Indemnification Agreement dated as of February 20, 1990 by and
between Robert B. Steger and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1989 and incorporated herein by reference).
(46) Indemnification Agreement dated as of March 1, 1989 by and between
William E. Steiger, Jr. and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1990 and incorporated herein by reference).
(47) Indemnification Agreement dated as of November 19, 1987 by and
between John H. Talmage and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1987 and incorporated herein by reference).
(48) Indemnification Agreement dated as of April 17, 1991 by and between
Thomas J. Vallely, III and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1991 and incorporated herein by reference).
(49) Indemnification Agreement dated as of November 19, 1987 by and
between Phyllis A. Vineyard and Long Island Lighting Company
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
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* Filed herewith.
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<PAGE> 112
(50) Indemnification Agreement dated as of November 25, 1987 by and
between Walter F. Wilm, Jr. and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(51) Indemnification Agreement dated as of November 4, 1988 by and
between Edward J. Youngling and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1988 and incorporated herein by reference).
(52) Long Island Lighting Company Officers' and Directors' Protective
Trust dated as of April 18, 1988 by and between the Company and
Clarence Goldberg, as Trustee (filed as an Exhibit to the Company's
Form 10-K for the Year Ended December 31, 1988 and incorporated
herein by reference).
(53) Long Island Lighting Company's Retirement Plan for Directors dated
as of February 2, 1990 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1989 and incorporated herein
by reference).
*(54) Agreement dated as of April 20, 1993 by and between the Company and
Lionel M. Goldberg.
*(55) Agreement dated as of April 20, 1993 by and between the Company and
Eben W. Pyne.
*23 Consent of Ernst & Young, Independent Auditors.
*24(a) Powers of Attorney executed by the Directors and Officers of the
Company.
*24(b) Certificate as to Corporate Power of Attorney.
*24(c) Certified copy of Resolution of Board of Directors authorizing
signature pursuant to Power of Attorney.
Financial Statements of subsidiary companies accounted for by the
equity method have been omitted because such subsidiaries do not constitute
significant subsidiaries.
- ----------------------
* Filed herewith.
108
<PAGE> 113
(b) Reports on Form 8-K
In its Report on Form 8-K dated October 8, 1993, the Company stated that:
1. On September 22, 1993, the United States Court of Appeals for the
Second Circuit issued its opinion affirming the United States
District Court for the Southern District of New York's jury award of
$18.4 million, in favor of the Company, for a breach of warranty
cause of action against Transamerica Delaval, Inc., now IMO
Industries, Inc. and the District Court's dismissal of the Company's
claims as to all categories of damages other than the amount
attributable to the breach of warranty action.
2. If the Company concludes that the overall objectives of the RMA can
be met, it may submit to the PSC, for the rate period commencing
December 1, 1994, a multi-year electric rate plan providing for
annual percentage increases that are significantly lower than the
targeted levels contemplated by the RMA.
3. Subsequent to the issuance of the ALJ's Recommended Decision on the
Company's gas rate application, the Company negotiated a multi-year
rate settlement with Staff of the PSC which is subject to review by
the ALJ and approval by the PSC.
In its Report on Form 8-K dated December 3, 1993, the Company stated that:
1. On November 15, 1993, the PSC authorized the Company to increase its
base electric rates by 4% effective December 1, 1993. This increase
is the sixth in a series of 11 rate increases contemplated in the
PSC-approved 1989 RMA.
2. The Company is in the process of preparing a three-year electric
rate plan for the period beginning December 1, 1994 that provides
for zero percentage base rate increases in years one and two of the
plan and a base rate increase of approximately 4% in the third year,
while retaining consistency with the RMA's objective of continuing
the restoration of the Company's financial health.
No other Reports on Form 8-K were filed in the fourth quarter of 1993.
In its Report on Form 8-K dated January 21, 1994, the Company stated that:
1. The Company has announced the resignation of its President and Chief
Operating Officer, Anthony F. Earley, Jr., effective March 1, 1994.
2. On December 31, 1993, the Company filed a three-year electric rate
plan with the PSC for the period beginning December 1, 1994 that
proposes no base electric rate increases in years one and two of the
plan and an overall increase of 4.3% in the third year.
3. On January 12, 1994, the Company filed comments in response to the
November 2, 1993 Petition filed by the CPB and LIPA with the PSC
asking the PSC to hold a proceeding on freezing or possibly reducing
the Company's electric rates for the period December 1994 to
November 1997.
109
<PAGE> 114
4. In December 1993, the PSC approved, with an effective date of
December 31, 1993, the Company's negotiated three-year gas rate
settlement with the Staff of the PSC which provided for a first year
increase of $26.6 million and two subsequent increases of $23
million and $20 million to be effective on December 1, 1995 and
1996, respectively.
5. On December 30, 1993, the Appellate Division, Third Judicial
Department, affirmed the Supreme Court of the State of New York
Special Term's decision in LILCO v. PSC/Mayflower, which held that
the PSC had violated PURPA and the New York Public Service Law and
had acted arbitrarily when it ordered the Company to sign a power
purchase contract with Mayflower Energy Partners, L.P. incorporating
the PSC's 1989 Long Run Avoided Cost estimates.
6. On December 13, 1993, the United States District Court for the
Eastern District of New York issued an opinion in LILCO v. Stone &
Webster Engineering Corp. granting a motion by SWEC to dismiss the
Company's complaint in this action which had sought to recover
damages against SWEC for breach of contract, negligence,
professional malpractice and gross negligence in connection with
SWEC's work as architect-engineer and construction manager for
Shoreham.
7. Pursuant to the LIPA Act, LIPA is required to make PILOTS to the
municipalities that impose real property taxes on Shoreham. On
January 10, 1994, the Appellate Division, Second Department,
affirmed Nassau County Supreme Court's March 29, 1993 decision in
LIPA, et al. v. Shoreham-Wading River Central School District, et
al. holding, in major part, that the Company is not obligated for
any real property taxes that accrued after February 28, 1992,
attributable to property that it conveyed to LIPA, that PILOTS
commence on March 1, 1992, that PILOTS are subject to refunds and
that the LIPA Act does not provide for the termination of PILOTS.
In its Report on Form 8-K dated February 7, 1994, the Company reported
earnings of $2.15 per common share on revenues of $2,880,995,000 for the
year ended December 31, 1993.
110
<PAGE> 115
LONG ISLAND LIGHTING COMPANY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
Other
Changes
Balance Additions Add Balance
Classifications 12-31-92 at Cost Retirements (Deduct) (A) 12-31-93
--------------- ---------- ---------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
Utility Plant
Plant and Equipment at Original Cost
Electric -
Production $1,770,221 $46,659 $18,116 32,570 1,831,334
Transmission 492,270 $20,667 1,889 (39,282) 471,766
Distribution 1,125,172 $77,129 7,144 6,015 1,201,172
General 34,563 $494 3,034 697 32,720
Constr. Work in Progress 94,977 (13,150) 0 0 81,827
Plant Held for Future Use 7,577 0 0 0 7,577
--------- -------- --------- --------- ---------
3,524,780 131,799 30,183 0 3,626,396
Nuclear Fuel in Process and
in Reactor 19,216 (2,683) 0 0 16,533
Gas-
Production 11,269 $131 713 (366) 10,321
Other Storage 22,278 $166 6 (962) 21,476
Transmission 98,266 $11,574 246 (3,692) 105,902
Distribution 612,757 $92,490 4,510 5,652 706,389
General 15,311 $2,763 1,386 (631) 16,057
Constr. Work in Progress 49,167 17,736 0 (1) 66,902
--------- -------- --------- --------- ---------
809,048 124,860 6,861 0 927,047
Gas Stored Underground 754 0 0 0 754
Common-
General 171,991 31,995 3,280 0 200,706
Constr. Work in Progress 17,519 10,256 0 0 27,775
Plant Held for Future Use 712 0 0 0 712
--------- -------- --------- --------- ---------
190,222 42,251 3,280 0 229,193
--------- -------- --------- --------- ---------
Total $4,544,020 $296,227 $40,324 $0 $4,799,923
========= ======== ========= ========= =========
</TABLE>
(A) Adjustments between Plant Accounts.
111
<PAGE> 116
LONG ISLAND LIGHTING COMPANY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1992
(Thousands of Dollars)
<TABLE>
<CAPTION>
Other
Changes
Balance Additions Add Balance
Classifications 12-31-91 at Cost Retirements (Deduct) (A) 12-31-92
--------------- -------- --------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
Utility Plant
Plant and Equipment at Original Cost
Electric -
Production $1,740,453 $50,866 $21,098 $ - $1,770,221
Transmission 488,335 6,759 2,824 - 492,270
Distribution 1,051,386 88,165 14,379 - 1,125,172
General 35,217 1,770 2,394 (30) 34,563
Constr. Work in Progress 103,220 (8,243) - - 94,977
Plant Held for Future Use 7,617 - - (40) 7,577
---------- ---------- ---------- ---------- ----------
3,426,228 139,317 40,695 (70) 3,524,780
Nuclear Fuel in Process and
in Reactor 29,818 (10,602) - - 19,216
Gas-
Production 11,702 (163) 270 - 11,269
Other Storage 22,997 (647) 72 - 22,278
Transmission 81,509 17,523 766 - 98,266
Distribution 533,924 80,936 2,243 140 612,757
General 16,018 536 1,243 - 15,311
Constr. Work in Progress 43,323 5,844 - - 49,167
---------- ---------- ---------- ---------- ----------
709,473 104,029 4,594 140 809,048
Gas Stored Underground 754 - - - 754
Common-
General 156,783 20,574 5,256 (110) 171,991
Constr. Work in Progress 10,968 6,551 - - 17,519
Plant Held for Future Use 712 - - - 712
---------- ---------- ---------- ---------- ----------
168,463 27,125 5,256 (110) 190,222
---------- ---------- ---------- ---------- ----------
Total $4,334,736 $259,869 $50,545 ($40) $4,544,020
========== ========== ========== ========== ==========
</TABLE>
(A) Adjustments between Plant Accounts.
112
<PAGE> 117
LONG ISLAND LIGHTING COMPANY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1991
(Thousands of Dollars)
<TABLE>
<CAPTION>
Other
Changes
Balance Additions Add Balance
Classifications 12-31-90 at Cost Retirements (Deduct) (A) 12-31-91
--------------- -------- --------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
Utility Plant
Plant and Equipment at Original Cost
Electric -
Production $1,731,388 $19,014 $9,917 ($32) $1,740,453
Transmission 440,379 48,675 745 26 488,335
Distribution 996,610 68,832 14,054 (2) 1,051,386
General 37,001 362 2,146 - 35,217
Constr. Work in Progress 114,032 (10,812) - - 103,220
Plant Held for Future Use 7,654 - - (37) 7,617
--------- --------- --------- --------- ---------
3,327,064 126,071 26,862 (45) 3,426,228
Nuclear Fuel in Process and
in Reactor 47,481 (17,663) - - 29,818
Gas-
Production 11,739 (37) 0 - 11,702
Other Storage 19,673 3,375 51 - 22,997
Transmission 68,309 13,203 3 - 81,509
Distribution 448,094 87,290 1,460 - 533,924
General 16,703 (50) 635 - 16,018
Constr. Work in Progress 57,155 (13,832) - - 43,323
--------- --------- --------- --------- ---------
621,673 89,949 2,149 - 709,473
Gas Stored Underground 754 - - - 754
Common-
General 140,988 19,140 3,345 - 156,783
Constr. Work in Progress 12,150 (1,182) - - 10,968
Plant Held for Future Use 712 - - - 712
--------- --------- --------- --------- ---------
153,850 17,958 3,345 - 168,463
--------- --------- --------- --------- ---------
Total $4,150,822 $216,315 $32,356 ($45) $4,334,736
========= ========= ========= ========= =========
</TABLE>
(A) Adjustments between Plant Accounts.
113
<PAGE> 118
LONG ISLAND LIGHTING COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
Additions Other
Charged Changes
Balance to Cost Add Balance
Description 12-31-92 & Expenses Retirements (Deduct)(A) 12-31-93
----------- -------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Accumulated Depreciation, Depletion and
Amortization of Plant and Equipment
Electric-
Steam Production $380,695 $19,555 $1,317 ($16) $398,917
Nuclear Production 104,664 24,787 16,649 387 113,189
Other Production 96,054 9,279 150 236 105,419
Transmission Plant 180,107 11,392 1,888 452 190,063
Distribution Plant 350,946 33,982 7,144 (665) 377,119
General Plant 26,426 5,213 3,034 (8,576) 20,029
Plant Held for Future Use 447 28 0 0 475
Nuclear Fuel Burn-Up and Disposal 3,430 (2,657) 0 0 773
--------- --------- --------- --------- ---------
1,142,769 101,579 30,182 (8,182) 1,205,984
Gas-
Production 6,924 137 713 (329) 6,019
Other Gas Storage 10,677 658 6 138 11,467
Transmission Plant 28,363 1,426 246 610 30,153
Distribution Plant 119,049 7,989 4,510 1,782 124,310
General Plant 13,419 3,202 1,386 (4,047) 11,188
--------- --------- --------- --------- ---------
178,432 13,412 6,861 (1,846) 183,137
Common-
General 61,671 4,806 3,280 48 63,245
--------- --------- --------- --------- ---------
Total $1,382,872 $119,797 $40,323 ($9,980) $1,452,366
========= ========= ========= ========= =========
</TABLE>
Note:
(A) Includes transfers between reserves, costs of removal and salvage.
114
<PAGE> 119
LONG ISLAND LIGHTING COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1992
(Thousands of Dollars)
<TABLE>
<CAPTION>
Additions Other
Charged Changes
Balance to Cost Add Balance
Description 12-31-91 & Expenses Retirements (Deduct)(A) 12-31-92
----------- -------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Accumulated Depreciation, Depletion and
Amortization of Plant and Equipment
Electric-
Steam Production $377,327 $18,173 $17,689 $2,884 $380,695
Nuclear Production 85,203 24,936 5,588 113 104,664
Other Production 91,506 8,890 3,002 (1,340) 96,054
Transmission Plant 171,969 10,837 2,824 125 180,107
Distribution Plant 331,487 32,823 14,379 1,015 350,946
General Plant 28,211 9,409 2,395 (8,799) 26,426
Plant Held for Future Use 870 29 - (452) 447
Nuclear Fuel Burn-Up and Disposal 11,984 (8,554) - - 3,430
--------- --------- --------- --------- ---------
1,098,557 96,543 45,877 (6,454) 1,142,769
Gas-
Production 6,663 450 269 80 6,924
Other Gas Storage 10,107 748 72 (106) 10,677
Transmission Plant 27,804 1,186 766 139 28,363
Distribution Plant 110,510 8,570 2,243 2,212 119,049
General Plant 14,241 4,013 1,243 (3,592) 13,419
--------- --------- --------- --------- ---------
169,325 14,967 4,593 (1,267) 178,432
Common-
General 64,121 2,954 5,256 (148) 61,671
--------- --------- --------- --------- ---------
Total $1,332,003 $114,464 $55,726 ($7,869) $1,382,872
========= ========= ========= ========= =========
</TABLE>
Note:
(A) Includes transfers between reserves, costs of removal and salvage.
115
<PAGE> 120
LONG ISLAND LIGHTING COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1991
(Thousands of Dollars)
<TABLE>
<CAPTION>
Additions Other
Charged Changes
Balance to Cost Add Balance
Description 12-31-90 & Expenses Retirements (Deduct)(A) 12-31-91
----------- -------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Accumulated Depreciation, Depletion and
Amortization of Plant and Equipment
Electric-
Steam Production $365,243 $17,934 $6,834 $984 $377,327
Nuclear Production 63,512 24,524 2,969 136 85,203
Other Production 83,000 8,640 35 (99) 91,506
Transmission Plant 162,172 9,791 745 751 171,969
Distribution Plant 317,395 26,502 14,054 1,644 331,487
General Plant 24,768 11,368 1,863 (6,062) 28,211
Plant Held for Future Use 854 29 - (13) 870
Nuclear Fuel Burn-Up and Disposal 27,259 (15,275) - - 11,984
--------- --------- --------- --------- ---------
1,044,203 83,513 26,500 (2,659) 1,098,557
Gas-
Production 6,208 410 80 125 6,663
Other Gas Storage 9,424 714 51 20 10,107
Transmission Plant 26,623 1,144 3 40 27,804
Distribution Plant 103,108 6,672 1,471 2,201 110,510
General Plant 12,648 4,881 629 (2,659) 14,241
--------- --------- --------- --------- ---------
158,011 13,821 2,234 (273) 169,325
Common-
General 60,529 6,996 3,629 225 64,121
--------- --------- --------- --------- ---------
Total $1,262,743 $104,330 $32,363 ($2,707) $1,332,003
========= ========= ========= ========= =========
</TABLE>
Note:
(A) Includes transfers between reserves, costs of removal and salvage.
116
<PAGE> 121
LONG ISLAND LIGHTING COMPANY
SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ----------------------------------------------------------------------------------------------------------------------------------
Additions
-----------------------------
Charged
Balance at Charged to to other Balance at
DESCRIPTION beginning costs and accounts- Deductions- end of
of period expenses describe describe period
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31,1993
Deducted from asset accounts:
Allowance for doubtful accounts $24,375 $18,555 $19,041 (1) $23,889
Year ended December 31,1992
Deducted from asset accounts:
Allowance for doubtful accounts $26,935 $16,329 $18,889 (1) $24,375
Year ended December 31,1991
Deducted from asset accounts:
Allowance for doubtful accounts $18,684 $35,431 $27,180 (1) $26,935
</TABLE>
(1) Uncollectible accounts written off, net of recoveries.
117
<PAGE> 122
LONG ISLAND LIGHTING COMPANY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
For the year ended December 31,
1993 1992 1991
-----------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
1. Maintenance and repairs $133,852 $125,736 $147,492
========== ========== ==========
2. Depreciation, depletion and
amortization of property and
equipment:
Total Accrual $124,643 $121,411 $123,693
Less - charge to other income
and clearing accounts 2,172 2,274 4,738
---------- ---------- ----------
Depreciation Expense $122,471 $119,137 $118,955
========== ========== ==========
3. Taxes, other than Federal income taxes:
Property taxes $221,067 $214,866 $219,894
State and local gross income taxes 90,785 94,713 85,687
State gross earnings taxes 17,857 15,630 18,279
State dividends tax 6,137 5,344 6,684
Petroleum Business tax 28 15,307
Metropolitan Business tax 20,359 17,500 14,331
Corporate tax surcharge 15,046 24,784 12,300
Payroll taxes 14,507 15,647 14,347
Other 88 476 1,551
---------- ---------- ----------
Total Operating Taxes $385,846 $388,988 $388,380
========== ========== ==========
</TABLE>
Advertising expenses for the years 1993 - 1991 were not presented
as such amounts represent less than 1% of total revenues.
118
<PAGE> 123
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
Date Signature and Title
---- ---------------------------
WILLIAM J. CATACOSINOS*
---------------------------
William J. Catacosinos, Principal
Executive Officer, President and
Chairman of the Board of Directors
THOMAS J. VALLELY, III
---------------------------
Thomas J. Vallely, III, Controller,
Principal Accounting Officer
A. JAMES BARNES*
---------------------------
A. James Barnes, Director
GEORGE BUGLIARELLO*
---------------------------
George Bugliarello, Director
March 15, 1994
RENSO L. CAPORALI*
---------------------------
Renso L. Caporali, Director
PETER O. CRISP*
---------------------------
Peter O. Crisp, Director
WINFIELD E. FROMM*
---------------------------
Winfield E. Fromm
VICKI L. FULLER*
---------------------------
Vicki L. Fuller, Director
KATHERINE D. ORTEGA*
---------------------------
Katherine D. Orgega, Director
BASIL A. PATERSON*
---------------------------
Basil A. Paterson, Director
RICHARD J. SCHMALENSEE*
---------------------------
Richard L. Schmalensee, Director
GEORGE J. SIDERIS
---------------------------
George J. Sideris, Director
JOHN H. TALMAGE
---------------------------
John H. Talmage, Director
PHYLLIS S. VINEYARD
---------------------------
Phyllis S. Vineyard, Director
*ANTHONY NOZZOLILLO
---------------------------
Anthony Nozzolillo (Individually,
as Senior Vice President and Chief
Financial Officer and as
attorney-in-fact for each of
the persons indicated)
March 15, 1994
</TABLE>
119
<PAGE> 124
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.
LONG ISLAND LIGHTING COMPANY
Date: March 15, 1994
By: ANTHONY NOZZOLILLO
------------------------
Anthony Nozzolillo
Chief Financial Officer
Original powers of attorney, authorizing Kathleen A. Marion,
Anthony Nozzolillo and Robert J. Grey, and each of them, to sign this report
and any amendments thereto, as attorney-in-fact for each of the Directors and
Officers of the Company, and a certified copy of the resolution of the Board of
Directors of the company authorizing said persons and each of them to sign this
report and amendments thereto as attorney-in-fact for any Officers signing on
behalf of the Company, have been, are being filed or will be filed with the
Securities and Exchange Commission.
120
<PAGE> 125
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Post-Effective
Amendment No. 3 to Registration Statement (No 33-16238) on Form S-8 relating to
Long Island Lighting Company's Employee Stock Purchase Plan, Post-Effective
Amendment No. 1 to Registration Statement (No. 2-87427) on Form S-3 relating to
Long Island Lighting Company's Automatic Dividend Reinvestment Plan and in the
related Prospectus, Registration Statement (No. 2-88578) on Form S-3 relating
to the issuance of Common Stock and in the related Prospectus and Registration
Statement (No. 33-45834) on Form S-3 relating to the issuance of General and
Refunding Bonds and in the related Prospectus and Registration Statement (No.
33-60744) on Form S-3 relating to the issuance of General and Refunding Bonds,
Debentures, Preferred Stock or Common Stock and in the related Prospectus, of
our report dated February 4, 1994, with respect to the financial statements and
schedules of Long Island Lighting Company included in this Annual Report on
Form 10-K for the year ended December 31, 1993.
ERNST & YOUNG
Melville, New York
March 11, 1994
<PAGE> 126
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
*3(a) Restated Certificate of Incorporation of the Company dated November
11, 1993.
(b) By-laws of the Company as amended on May 28, 1991 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1991 and incorporated herein by reference).
4(a) General and Refunding Indenture dated as of June 1, 1975 and 21
supplements thereto (filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1987 and incorporated herein by
reference) as follows:
G&R Indenture dated as of June 1, 1975.
First Supplemental Indenture to G&R Indenture
dated as of June 1, 1975.
Second Supplemental Indenture to G&R Indenture
dated as of September 1, 1975.
Third Supplemental Indenture to G&R Indenture
dated as of June 1, 1976.
Fourth Supplemental Indenture to G&R Indenture
dated as of December 1, 1976.
Fifth Supplemental Indenture to G&R Indenture
dated as of May 1, 1977.
Sixth Supplemental Indenture to G&R Indenture
dated as of April 1, 1978.
- ------------------------
* Filed herewith.
<PAGE> 127
Exhibit
No. Description
- ------- -----------
Seventh Supplemental Indenture to G&R Indenture
dated as of March 1, 1979.
Eighth Supplemental Indenture to G&R Indenture
dated as of February 1, 1980.
Ninth Supplemental Indenture to G&R Indenture
dated as of March 1, 1981.
Tenth Supplemental Indenture to G&R Indenture
dated as of July 1, 1981.
Eleventh Supplemental Indenture to G&R
Indenture dated as of July 1, 1981.
Twelfth Supplemental Indenture to G&R Indenture
dated as of December 1, 1981.
Thirteenth Supplemental Indenture to G&R
Indenture dated as of December 1, 1981.
Fourteenth Supplemental Indenture to G&R
Indenture dated as of June 1, 1982.
Fifteenth Supplemental Indenture to G&R
Indenture dated as of October 1, 1982.
Sixteenth Supplemental Indenture to G&R
Indenture dated as of April 1, 1983.
Seventeenth Supplemental Indenture to G&R
Indenture dated as of May 1, 1983.
Eighteenth Supplemental Indenture to G&R
Indenture dated as of September 1, 1984.
Nineteenth Supplemental Indenture to G&R
Indenture dated as of October 1, 1984.
Twentieth Supplemental Indenture to G&R
Indenture dated as of June 1, 1985.
Twenty-first Supplemental Indenture to G&R
Indenture dated as of April 1, 1986.
Twenty-second Supplemental Indenture to G&R
Indenture dated as of February 1, 1991 (filed
as an Exhibit to the Company's Form 10-K for
the Year Ended December 31, 1990 and
incorporated herein by reference).
<PAGE> 128
Exhibit
No. Description
- ------- -----------
Twenty-third Supplemental Indenture to G&R
Indenture dated as of May 1, 1991 (filed as an
Exhibit to the Company's Form 10-K for the Year
Ended December 31, 1991 and incorporated herein
by reference).
Twenty-fourth Supplemental Indenture to G&R
Indenture dated as of July 1, 1991 (filed as an
Exhibit to the Company's Form 10-K for the Year
Ended December 31, 1991 and incorporated herein
by reference).
Twenty-fifth Supplemental Indenture to G&R
Indenture dated as of May 1, 1992 (filed as an
Exhibit to the Company's Form 10-K for the Year
Ended December 31, 1992 and incorporated herein
by reference).
Twenty-sixth Supplemental Indenture to G&R
Indenture dated as of July 1, 1992 (filed as
an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1992 and incorporated
herein by reference).
4(b) Indenture of Mortgage and Deed of Trust dated as of September 1,
1951 and 44 supplements thereto (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1987 and
incorporated herein by reference) as follows:
Indenture of Mortgage dated as of September 1,
1951.
First Supplemental Indenture to the Indenture
of Mortgage dated as of December 1, 1951.
Second Supplemental Indenture to the Indenture
of Mortgage dated as of October 1, 1952.
Third Supplemental Indenture to the Indenture
of Mortgage dated as of September 1, 1953.
Fourth Supplemental Indenture to the Indenture
of Mortgage dated as of December 1, 1954.
Fifth Supplemental Indenture to the Indenture
of Mortgage dated as of November 1, 1955.
Sixth Supplemental Indenture to the Indenture
of Mortgage dated as of December 1, 1956.
Seventh Supplemental Indenture to the Indenture
of Mortgage dated as of May 1, 1958.
<PAGE> 129
Exhibit
No. Description
- ------- -----------
Eighth Supplemental Indenture to the Indenture
of Mortgage dated as of July 1, 1959.
Ninth Supplemental Indenture to the Indenture
of Mortgage dated as of August 1, 1961.
Tenth Supplemental Indenture to the Indenture
of Mortgage dated as of April 1, 1963.
Eleventh Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1964.
Twelfth Supplemental Indenture to the Indenture
of Mortgage dated as of June 1, 1965.
Thirteenth Supplemental Indenture to the
Indenture of Mortgage dated as of March 1,
1966.
Fourteenth Supplemental Indenture to the
Indenture of Mortgage dated as of April 1,
1967.
Fifteenth Supplemental Indenture to the
Indenture of Mortgage dated as of September 1,
1969.
Sixteenth Supplemental Indenture to the
Indenture of Mortgage dated as of September 1,
1970.
Seventeenth Supplemental Indenture to the
Indenture of Mortgage dated as of April 1,
1971.
Eighteenth Supplemental Indenture to the
Indenture of Mortgage dated as of December 1,
1971.
Nineteenth Supplemental Indenture to the
Indenture of Mortgage dated as of September 1,
1972.
Twentieth Supplemental Indenture to the
Indenture of Mortgage dated as of December 1,
1973.
Twenty-first Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1974.
Twenty-second Supplemental Indenture to the
Indenture of Mortgage dated as of November 1, 1974.
Twenty-third Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1975.
<PAGE> 130
Exhibit
No. Description
- ------- -----------
Twenty-fourth Supplemental Indenture to the
Indenture of Mortgage dated as of September 1,
1975.
Twenty-fifth Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1976.
Twenty-sixth Supplemental Indenture to the
Indenture of Mortgage dated as of December 1,
1976.
Twenty-seventh Supplemental Indenture to the
Indenture of Mortgage dated as of May 1, 1977.
Twenty-eighth Supplemental Indenture to the
Indenture of Mortgage dated as of April 1,
1978.
Twenty-ninth Supplemental Indenture to the
Indenture of Mortgage dated as of March 1,
1979.
Thirtieth Supplemental Indenture to the
Indenture of Mortgage dated as of February 1,
1980.
Thirty-first Supplemental Indenture to the
Indenture of Mortgage dated as of March 1,
1981.
Thirty-second Supplemental Indenture to the
Indenture of Mortgage dated as of July 1, 1981.
Thirty-third Supplemental Indenture to the
Indenture of Mortgage dated as of July 1, 1981.
Thirty-fourth Supplemental Indenture to the
Indenture of Mortgage dated as of December 1,
1981.
Thirty-fifth Supplemental Indenture to the
Indenture of Mortgage dated as of December 1,
1981.
Thirty-sixth Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1982.
Thirty-seventh Supplemental Indenture to the
Indenture of Mortgage dated as of October 1,
1982.
Thirty-eighth Supplemental Indenture to the
Indenture of Mortgage dated as of April 1,
1983.
Thirty-ninth Supplemental Indenture to the
Indenture of Mortgage dated as of May 1, 1983.
<PAGE> 131
Exhibit
No. Description
- ------- -----------
Fortieth Supplemental Indenture to the
Indenture of Mortgage dated as of February 29,
1984.
Forty-first Supplemental Indenture to the
Indenture of Mortgage dated as of September 1,
1984.
Forty-second Supplemental Indenture to the
Indenture of Mortgage dated as of October 1,
1984.
Forty-third Supplemental Indenture to the
Indenture of Mortgage dated as of June 1, 1985.
Forty-fourth Supplemental Indenture to the
Indenture of Mortgage dated as of April 1,
1986.
Forty-fifth Supplemental Indenture to the
Indenture of Mortgage dated as of February 1,
1991 (filed as an Exhibit to the Company's
Form 10-K for the Year Ended December 31, 1990
and incorporated herein by reference).
Forty-sixth Supplemental Indenture to the
Indenture of Mortgage dated as of May 1, 1991
(filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1991 and
incorporated herein by reference).
Forty-seventh Supplemental Indenture to the
Indenture of Mortgage dated as of July 1, 1991
(filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1991 and
incorporated herein by reference).
Forty-eighth Supplemental Indenture to the
Indenture of Mortgage dated as of May 1, 1992
(filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1992 and
incorporated herein by reference).
Forty-ninth Supplemental Indenture to the
Indenture of Mortgage dated as of July 1, 1992
(filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1992 and
incorporated herein by reference).
<PAGE> 132
Exhibit
No. Description
- ------- -----------
*4(c) Debenture Indenture dated as of November 1, 1986 from the Company
to The Connecticut Bank and Trust Company, National Association, as
Trustee (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1986 and incorporated herein by reference).
First Supplemental Indenture dated as of
November 1, 1986 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December
31, 1986 and incorporated herein by reference).
Second Supplemental Indenture dated as of
April 1, 1989 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by
reference).
Third Supplemental Indenture dated as of July
1, 1989 (filed as an Exhibit to the Company's
Form 10-K for the Year Ended December 31, 1989
and incorporated herein by reference).
Fourth Supplemental Indenture dated as of
July 1, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
Fifth Supplemental Indenture dated as of
November 1, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
*Sixth Supplemental Indenture dated as of
June 1, 1993.
*Seventh Supplemental Indenture dated as of
July 1, 1993.
4(d) Debenture Indenture dated as of November 1, 1992 from the Company
to Chemical Bank, as Trustee (filed as an Exhibit to the Company's
Form 10-K for the Year Ended December 31, 1992 and incorporated
herein by reference).
First Supplemental Indenture dated as of
January 1, 1993 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
- ------------------------
* Filed herewith.
<PAGE> 133
Exhibit
No. Description
- ------- -----------
Second Supplemental Indenture dated as of
March 1, 1993 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
Third Supplemental Indenture dated as of
March 1, 1993 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
Fourth Supplemental Indenture dated as of
March 1, 1993 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by
reference).
10(a) Sound Cable Project Facilities and Marketing Agreement dated as of
August 26, 1987 between the Company and the Power Authority of the
State of New York (filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1987 and incorporated herein by
reference).
10(b) Transmission Agreement by and between the Company and Consolidated
Edison Company of New York, Inc. dated as of March 31, 1989 (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference).
10(c) Contract for the sale of Firm Power and Energy by and between the
Company and the State of New York dated as of April 26, 1989 (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference).
10(d) Capacity Supply Agreement dated as of December 13, 1991 between the
Company and the Power Authority of the State of New York (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1991 and incorporated herein by reference).
*10(e) Nine Mile Point Nuclear Station Unit 2 Operating Agreement dated as
of January 1, 1993 by and between the Company, New York State
Electric & Gas Corporation, Rochester Gas and Electric Corporation
and Central Hudson Gas and Electric Corporation.
10(f) Settlement Agreement on Issues Related to Nine Mile Two Nuclear
Plant dated as of June 6, 1990 by and between the Company, the
Staff of the Department of Public Service and others (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1990 and incorporated herein by reference).
- ------------------------
* Filed herewith.
<PAGE> 134
Exhibit
No. Description
- ------- -----------
10(g) Settlement Agreement -- LILCO Issues dated as of February 28, 1989
by and between the Company and the State of New York (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1988 and incorporated herein by reference).
10(h) Amended and Restated Asset Transfer Agreement by and between the
Company and the Long Island Power Authority dated as of June 16,
1988 as amended and restated on April 14, 1989 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1989 and
incorporated herein by reference).
10(i) Memorandum of Understanding concerning proposed agreements on power
supply for Long Island dated as of June 16, 1988 by and between the
Company and New York Power Authority as amended May 24, 1989 (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference).
10(j) Rate Moderation Agreement submitted by the staff of the New York
State Public Service Commission on March 16, 1989 and supported by
the Company (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1989 and incorporated herein by reference).
10(k) Site Cooperation and Reimbursement Agreement dated as of January
24, 1990 by and between the Company and Long Island Power Authority
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference).
10(l) Stipulation of settlement of federal Racketeer Influenced and
Corrupt Organizations Act ("RICO") Class Action and False Claims
Action dated as of February 27, 1989 among the attorneys for the
Company, the ratepayer class, the United States of America and the
individual defendants named therein (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1988 and
incorporated herein by reference).
10(m) Revolving Credit Agreement dated as of June 27, 1989, between Long
Island Lighting Company and the banks and co-agents listed therein,
with the Exhibits thereto (filed as an Exhibit to the Company's
Form 10-K for the Year Ended December 31, 1989 and incorporated
herein by reference) and as amended by the First Amendment dated as
of October 13, 1989 (filed as an Exhibit to the Company's Form 10-K
for the Year Ended December 31, 1990 and incorporated herein by
reference) and as amended by the Second Amendment dated as of March
5, 1992 and as modified by a Waiver dated November 5, 1992 (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by reference).
10(n) Indenture of Trust dated as of December 1, 1989 by and between New
York State Energy Research and Development Authority and The
Connecticut National Bank, as Trustee, relating to the 1989
Electric Facilities Revenue Bonds (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1989 and
incorporated herein by reference).
<PAGE> 135
Exhibit
No. Description
- ------- -----------
Participation Agreement dated as of December 1, 1989 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1989 Electric Facilities Revenue Bonds
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference).
10(o) Indenture of Trust dated as of May 1, 1990 by and between New York
State Energy Research and Development Authority and The Connecticut
National Bank, as Trustee, relating to the 1990 Electric Facilities
Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for
the Year Ended December 31, 1990 and incorporated herein by
reference).
Participation Agreement dated as of May 1, 1990 by and between the
New York State Energy Research and Development Authority and the
Company relating to the 1990 Electric Facilities Revenue Bonds
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1990 and incorporated herein by reference).
10(p) Indenture of Trust dated as of January 1, 1991 by and between New
York State Energy Research and Development Authority and The
Connecticut National Bank, as Trustee, relating to the 1991
Electric Facilities Revenue Bonds (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1990 and
incorporated herein by reference).
Participation Agreement dated as of January 1, 1991 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1991 Electric Facilities Revenue Bonds
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1990 and incorporated herein by reference).
10(q) Indenture of Trust dated as of February 1, 1992 by and between New
York State Energy Research and Development Authority and IBJ
Schroder Bank and Trust Company, as Trustee, relating to the 1992
Electric Facilities Revenue Bonds, Series A (filed as an Exhibit to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference).
Participation Agreement dated as of February 1, 1992 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1992 Electric Facilities Revenue Bonds,
Series A (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1991 and incorporated herein by reference).
10(r) Indenture of Trust dated as of February 1, 1992 by and between New
York State Energy Research and Development Authority and IBJ
Schroder Bank and Trust Company, as Trustee, relating to the 1992
Electric Facilities Revenue Bonds, Series B (filed as an Exhibit to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference).
<PAGE> 136
Exhibit
No. Description
- ------- -----------
Participation Agreement dated as of February 1, 1992 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1992 Electric Facilities Revenue Bonds,
Series B (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1991 and incorporated herein by reference).
10(s) Indenture of Trust dated as of August 1, 1992 by and between New
York State Energy Research and Development Authority and IBJ
Schroder Bank and Trust Company, as Trustee, relating to the 1992
Electric Facilities Revenue Bonds, Series C (filed as an Exhibit to
the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1992 Electric Facilities Revenue Bonds,
Series C (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1992 and incorporated herein by reference).
10(t) Indenture of Trust dated as of August 1, 1992 by and between New
York State Energy Research and Development Authority and IBJ
Schroder Bank and Trust Company, as Trustee, relating to the 1992
Electric Facilities Revenue Bonds, Series D (filed as an Exhibit to
the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1992 Electric Facilities Revenue Bonds,
Series D (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1992 and incorporated herein by reference).
*10(u) Indenture of Trust dated as of November 1, 1993 by and between New
York State Energy Research and Development Authority and Chemical
Bank, as Trustee, relating to the 1993 Electric Facilities Revenue
Bonds, Series A.
Participation Agreement dated as of November 1, 1993 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1993 Electric Facilities Revenue Bonds,
Series A.
*10(v) Indenture of Trust dated as of November 1, 1993 by and between New
York State Energy Research and Development Authority and Chemical
Bank, as Trustee, relating to the 1993 Electric Facilities Revenue
Bonds, Series B.
Participation Agreement dated as of November 1, 1993 by and between
the New York State Energy Research and Development Authority and
the Company relating to the 1993 Electric Facilities Revenue Bonds,
Series B.
- ------------------------
* Filed herewith.
<PAGE> 137
Exhibit
No. Description
- ------- -----------
*10(w) Supplemental Death and Retirement Benefits Plan as amended and
restated effective January 1, 1993 and related Trust Agreement,
which Trust Agreement was filed as Exhibit 10(q) to the Company's
Form 10-K for the Year Ended December 31, 1990 and incorporated
herein by reference.
*10(x) Executive Agreements and Management Contracts
*(1) Executive Employment Agreement dated as of January 30, 1984 by and
between William J. Catacosinos and Long Island Lighting Company,
as amended by amendments dated March 20, 1987 (filed as Exhibit
10(e) to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference), December 22, 1989
(filed as Exhibit 10(o) to the Company's Form 10-K for the Year
Ended December 31, 1989 and incorporated herein by reference) and
December 2, 1991 (filed as Exhibit 10(u) to the Company's Form 10-K
for the Year Ended December 31, 1991 and incorporated herein by
reference); an Employment Agreement dated as of March 20, 1987
(filed as Exhibit 10(e) to the Company's Form 10-K for the Year
Ended December 31, 1987 and incorporated herein by reference) as
amended by amendments dated November 30, 1989 (filed as Exhibit
10(q) to the Company's Form 10-K for the Year Ended December 31,
1989 and incorporated herein by reference), an amendment dated
December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K
for the Year Ended December 31, 1991 and incorporated herein by
reference), an amendment dated December 31, 1992 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1992 and incorporated herein by reference), and as amended by an
amendment dated December 31, 1993.
*(2) Employment Agreement dated as of February 23, 1994 by and between
Theodore A. Babcock and Long Island Lighting Company and related
Trust Agreement, which Trust Agreement was filed as Exhibit 10(q)
to the Company's Form 10-K for the Year Ended December 31, 1989 and
incorporated herein by reference.
(3) Employment Agreement dated as of May 14, 1990 by and between
William N. Dimoulas and Long Island Lighting Company and related
Trust Agreement (filed as an Exhibit to the Company's Form 10-K for
the Year Ended December 31, 1990 and incorporated herein by
reference) as amended by an amendment dated December 2, 1991 (filed
as Exhibit 10(w) to the Company's Form 10-K for the Year Ended
December 31, 1991 and incorporated herein by reference) as amended
by an amendment dated as of December 31, 1992 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
- ------------------------
* Filed herewith.
<PAGE> 138
Exhibit
No. Description
- ------- -----------
(4) Employment Agreement dated as of March 20, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between James T. Flynn and
Long Island Lighting Company and related Trust Agreement (filed as
Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference) as amended by an amendment dated
as of December 31, 1992 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1992 and incorporated herein
by reference) and as amended by an amendment dated December 31,
1993 which amendment is identical to that filed with Exhibit
10(x)(1).
(5) Employment Agreement dated as of September 11, 1992 by and between
Robert J. Grey and Long Island Lighting Company and related Trust
Agreement as amended by an amendment dated as of December 31, 1992
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1992 and incorporated herein by reference) and as
amended by an amendment dated December 31, 1993 which amendment is
identical to that filed with Exhibit 10(x)(1).
(6) Employment Agreement dated as of March 20, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Robert X. Kelleher
and Long Island Lighting Company and related Trust Agreement (filed
as Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference) as amended by an amendment dated
as of December 31, 1992 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1992 and incorporated herein
by reference) and as amended by an amendment dated December 31,
1993 which amendment is identical to that filed with Exhibit
10(x)(1).
(7) Employment Agreement dated as of March 20, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between John D. Leonard,
Jr. and Long Island Lighting Company and related Trust Agreement
(filed as Exhibit 10(q) to the Company's Form 10-K for the Year
Ended December 31, 1989 and incorporated herein by reference) as
amended by an amendment dated December 2, 1991 (filed as Exhibit
10(w) to the Company's Form 10-K for the Year Ended December 31,
1991 and incorporated herein by reference) as amended by an
amendment dated as of December 31, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
<PAGE> 139
Exhibit
No. Description
- ------- -----------
(8) Employment Agreement dated as of March 20, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Adam M. Madsen and
Long Island Lighting Company and related Trust Agreement (filed as
Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference) as amended by an amendment dated
as of December 31, 1992 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1992 and incorporated herein
by reference) and as amended by an amendment dated December 31,
1993 which amendment is identical to that filed with Exhibit
10(x)(1).
(9) Employment Agreement dated as of May 30, 1990 by and between
Kathleen A. Marion and Long Island Lighting Company and related
Trust Agreement as amended by an amendment dated December 2, 1991
as amended by an amendment dated as of December 31, 1992 (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1992 and incorporated herein by reference) and as amended by an
amendment dated December 31, 1993 which amendment is identical to
that filed with Exhibit 10(x)(1).
(10) Employment Agreement dated as of January 21, 1991 by and between
Arthur C. Marquardt and Long Island Lighting Company and related
Trust Agreement (filed as an Exhibit to the Company's Form 10-K for
the Year Ended December 31, 1990 and incorporated herein by
reference) as amended by an amendment dated December 2, 1991 (filed
as Exhibit 10(w) to the Company's Form 10-K for the Year Ended
December 31, 1991 and incorporated herein by reference) as amended
by an amendment dated as of December 31, 1992 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
(11) Employment Agreement dated as of April 16, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1987 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Brian R. McCaffrey
and Long Island Lighting Company and related Trust Agreement (filed
as Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991
incorporated herein by reference) and as amended by an amendment
dated as of December 31, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
<PAGE> 140
Exhibit
No. Description
- ------- -----------
(12) Employment Agreement dated as of March 18, 1988 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1988 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Joseph W.
McDonnell and Long Island Lighting Company and related Trust
Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for
the Year Ended December 31, 1989 and incorporated herein by
reference) as amended by an amendment dated December 2, 1991 (filed
as Exhibit 10(w) to the Company's Form 10-K for the Year Ended
December 31, 1991 and incorporated herein by reference) as amended
by an amendment dated as of December 31, 1992 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
(13) Employment Agreement dated as of July 29, 1992 by and between
Anthony Nozzolillo and Long Island Lighting Company and related
Trust Agreement and as amended by an amendment dated as of December
31, 1992 (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1992 and incorporated herein by reference)
and as amended by an amendment dated December 31, 1993 which
amendment is identical to that filed with Exhibit 10(x)(1).
(14) Employment Agreement dated as of July 29, 1987 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1987 and
incorporated herein by reference) as amended by an amendment dated
November 30, 1989 by and between William G. Schiffmacher and Long
Island Lighting Company and related Trust Agreement (filed as
Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference) as amended by an amendment dated
as of December 31, 1992 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1992 and incorporated herein
by reference) and as amended by an amendment dated December 31,
1993 which amendment is identical to that filed with Exhibit
10(x)(1).
(15) Employment Agreement dated as of February 20, 1990 by and between
Robert B. Steger and Long Island Lighting Company and related Trust
Agreement (filed as an Exhibit to the Company's Form 10-K for the
Year Ended December 31, 1989 and incorporated herein by reference)
as amended by an amendment dated December 2, 1991 (filed as Exhibit
10(w) to the Company's Form 10-K for the Year Ended December 31,
1991 and incorporated herein by reference) as amended by an
amendment dated as of December 31, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
<PAGE> 141
Exhibit
No. Description
- ------- -----------
(16) Employment Agreement dated as of March 9, 1989 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1990 and
incorporated herein by reference) as amended by an amendment dated
November 30, 1989 by and between William E. Steiger, Jr. and Long
Island Lighting Company and related Trust Agreement (filed as
Exhibit 10(q) to the Company's Form 10-K for the Year Ended
December 31, 1989 and incorporated herein by reference) as amended
by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to
the Company's Form 10-K for the Year Ended December 31, 1991 and
incorporated herein by reference) as amended by an amendment dated
as of December 31, 1992 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1992 and incorporated herein
by reference) and as amended by an amendment dated December 31,
1993 which amendment is identical to that filed with Exhibit
10(x)(1).
(17) Employment Agreement dated as of April 17, 1991 by and between
Thomas J. Vallely, III and Long Island Lighting Company and related
Trust Agreement as amended by an amendment dated December 2, 1991
(filed as Exhibit 10(w) to the Company's Form 10-K for the Year
Ended December 31, 1991 and incorporated herein by reference) as
amended by an amendment dated as of December 31, 1992 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1992 and incorporated herein by reference) and as amended by an
amendment dated December 31, 1993 which amendment is identical to
that filed with Exhibit 10(x)(1).
(18) Employment Agreement dated as of March 20, 1987 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1986 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Walter F. Wilm,
Jr. and Long Island Lighting Company and related Trust Agreement
(filed as Exhibit 10(q) to the Company's Form 10-K for the Year
Ended December 31, 1989 and incorporated herein by reference) as
amended by an amendment dated December 2, 1991 (filed as Exhibit
10(w) to the Company's Form 10-K for the Year Ended December 31,
1991 and incorporated herein by reference) as amended by an
amendment dated as of December 31, 1992 (filed as an Exhibit to the
Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
(19) Employment Agreement dated as of November 4, 1988 (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1988 and incorporated herein by reference) as amended by an
amendment dated November 30, 1989 by and between Edward J.
Youngling and Long Island Lighting Company and related Trust
Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for
the Year Ended December 31, 1989 and incorporated herein by
reference) as amended by an amendment dated December 2, 1991 (filed
as Exhibit 10(w) to the Company's Form 10-K for the Year Ended
December 31, 1991 and incorporated herein by reference) as amended
by an amendment dated as of December 31, 1992 (filed as an Exhibit
to the Company's Form 10-K for the Year Ended December 31, 1992 and
incorporated herein by reference) and as amended by an amendment
dated December 31, 1993 which amendment is identical to that filed
with Exhibit 10(x)(1).
<PAGE> 142
Exhibit
No. Description
- ------- -----------
(20) Retirement Agreement dated as of January 7, 1987 by and between
George J. Sideris and Long Island Lighting Company, as amended
March 20, 1987, and related Trust Agreement (filed as an Exhibit to
the Company's Form 10-K for the Year Ended December 31, 1986 and
incorporated herein by reference).
*(21) Indemnification Agreement dated as of February 23, 1994 by and
between Theodore A. Babcock and Long Island Lighting Company.
(22) Indemnification Agreement dated as of January 31, 1992 by and
between A. James Barnes and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1991 and incorporated herein by reference).
(23) Indemnification Agreement dated as of May 30, 1990 by and between
George Bugliarello and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1990 and incorporated herein by reference).
(24) Indemnification Agreement dated as of April 17, 1992 by and between
Renso L. Caporali and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1992 and incorporated herein by reference).
(25) Indemnification Agreement dated as of November 19, 1987 by and
between William J. Catacosinos and Long Island Lighting Company
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(26) Indemnification Agreement dated as of April 23, 1992 by and between
Peter O. Crisp and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1992 and incorporated herein by reference).
(27) Indemnification Agreement dated as of May 14, 1990 by and between
William N. Dimoulas and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1990 and incorporated herein by reference).
(28) Indemnification Agreement dated as of November 25, 1987 by and
between James T. Flynn and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1987 and incorporated herein by reference).
(29) Indemnification Agreement dated as of November 19, 1987 by and
between Winfield E. Fromm and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
- -----------------------
* Filed herewith.
<PAGE> 143
Exhibit
No. Description
- ------- -----------
*(30) Indemnification Agreement dated as of January 3, 1994 by and
between Vicki L. Fuller and Long Island Lighting Company.
(31) Indemnification Agreement dated as of September 11, 1992 by and
between Robert J. Grey and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1992 and incorporated herein by reference).
(32) Indemnification Agreement dated as of November 25, 1987 by and
between Robert X. Kelleher and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(33) Indemnification Agreement dated as of November 25, 1987 by and
between John D. Leonard, Jr. and Long Island Lighting Company
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(34) Indemnification Agreement dated as of November 25, 1987 by and
between Adam M. Madsen and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1987 and incorporated herein by reference).
(35) Indemnification Agreement dated as of May 30, 1990 by and between
Kathleen A. Marion and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1990 and incorporated herein by reference).
(36) Indemnification Agreement dated as of January 21, 1991 by and
between Arthur C. Marquardt and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1990 and incorporated herein by reference).
(37) Indemnification Agreement dated as of November 25, 1987 by and
between Brian R. McCaffrey and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(38) Indemnification Agreement dated as of March 18, 1988 by and between
Joseph W. McDonnell and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1988 and incorporated herein by reference).
(39) Indemnification Agreement dated as of July 29, 1992 by and between
Anthony Nozzolillo and Long Island Lighting Company (filed as an
Exhibit to the Company's Form 10-K for the Year Ended December 31,
1992 and incorporated herein by reference).
- ---------------------
* Filed herewith.
<PAGE> 144
Exhibit
No. Description
- ------- -----------
*(40) Indemnification Agreement dated as of April 20, 1993 by and between
Katherine D. Ortega and Long Island Lighting Company.
(41) Indemnification Agreement dated as of November 19, 1987 by and
between Basil A. Paterson and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(42) Indemnification Agreement dated as of November 25, 1987 by and
between William Schiffmacher and Long Island Lighting Company
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(43) Indemnification Agreement dated as of February 8, 1992 by and
between Richard L. Schmalensee and Long Island Lighting Company
(filed as an Exhibit to the Company Form 10- K for the Year Ended
December 31, 1991 and incorporated herein by reference).
(44) Indemnification Agreement dated as of November 30, 1987 by and
between George J. Sideris and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(45) Indemnification Agreement dated as of February 20, 1990 by and
between Robert B. Steger and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1989 and incorporated herein by reference).
(46) Indemnification Agreement dated as of March 1, 1989 by and between
William E. Steiger, Jr. and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1990 and incorporated herein by reference).
(47) Indemnification Agreement dated as of November 19, 1987 by and
between John H. Talmage and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1987 and incorporated herein by reference).
(48) Indemnification Agreement dated as of April 17, 1991 by and between
Thomas J. Vallely, III and Long Island Lighting Company (filed as
an Exhibit to the Company's Form 10-K for the Year Ended December
31, 1991 and incorporated herein by reference).
(49) Indemnification Agreement dated as of November 19, 1987 by and
between Phyllis A. Vineyard and Long Island Lighting Company
(filed as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
- ---------------------
* Filed herewith.
<PAGE> 145
Exhibit
No. Description
- ------- -----------
(50) Indemnification Agreement dated as of November 25, 1987 by and
between Walter F. Wilm, Jr. and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1987 and incorporated herein by reference).
(51) Indemnification Agreement dated as of November 4, 1988 by and
between Edward J. Youngling and Long Island Lighting Company (filed
as an Exhibit to the Company's Form 10-K for the Year Ended
December 31, 1988 and incorporated herein by reference).
(52) Long Island Lighting Company Officers' and Directors' Protective
Trust dated as of April 18, 1988 by and between the Company and
Clarence Goldberg, as Trustee (filed as an Exhibit to the Company's
Form 10-K for the Year Ended December 31, 1988 and incorporated
herein by reference).
(53) Long Island Lighting Company's Retirement Plan for Directors dated
as of February 2, 1990 (filed as an Exhibit to the Company's Form
10-K for the Year Ended December 31, 1989 and incorporated herein
by reference).
*(54) Agreement dated as of April 20, 1993 by and between the Company and
Lionel M. Goldberg.
*(55) Agreement dated as of April 20, 1993 by and between the Company and
Eben W. Pyne.
*23 Consent of Ernst & Young, Independent Auditors.
*24(a) Powers of Attorney executed by the Directors and Officers of the
Company.
*24(b) Certificate as to Corporate Power of Attorney.
*24(c) Certified copy of Resolution of Board of Directors authorizing
signature pursuant to Power of Attorney.
Financial Statements of subsidiary companies accounted for by the
equity method have been omitted because such subsidiaries do not constitute
significant subsidiaries.
- ----------------------
* Filed herewith.
<PAGE> 1
Exhibit 3(a)
RESTATED CERTIFICATE OF INCORPORATION
OF
LONG ISLAND LIGHTING COMPANY
PURSUANT TO SECTION 807 OF THE BUSINESS CORPORATION LAW
We, Anthony F. Earley, Jr. and Kathleen A. Marion, being respectively
the President and Secretary of LONG ISLAND LIGHTING COMPANY, pursuant to
Section 807 of the Business Corporation Law, do hereby certify:
1. The name of the Corporation is Long Island Lighting Company.
2. The Certificate of Incorporation was filed in the office of the
Secretary of State on December 31, 1910. A Restated and Amended Certificate of
Incorporation under Section 807 of the Business Corporation Law was filed by
the Department of State on October 9, 1980.
3. The text of the Certificate of Incorporation of the Corporation,
as amended and supplemented by all certificates heretofore filed pursuant to
law, as now in force and effect, is hereby restated in a single certificate,
without further change or amendment thereto, except for the necessary inclusion
of identifying headings and cross-references for amendments to said certificate
which are now incorporated herein.
4. The entire text of the Certificate of Incorporation of Long Island
Lighting Company, as amended and supplemented by all certificates heretofore
filed pursuant to law is hereby restated to read as follows:
CERTIFICATE OF INCORPORATION
OF
LONG ISLAND LIGHTING COMPANY
UNDER SECTION 3 OF THE NEW YORK TRANSPORTATION CORPORATIONS LAW
FIRST: The name of the Corporation is LONG ISLAND LIGHTING COMPANY.
SECOND: The office of the Corporation is to be located in Hicksville,
Town of Oyster Bay, County of Nassau, State of New York; and the address to
which the Secretary of State shall mail a copy of process in any action or
proceeding against the Corporation which may be served upon him is 175 East Old
Country Road, Hicksville, New York, 11801.
<PAGE> 2
THIRD: The purposes of the Corporation shall be as follows:
Manufacturing, using and supplying gas (herein defined, and intended
throughout this Restated Certificate of Incorporation to include, gas either
manufactured, natural or mixed) and electricity, for producing light, heat or
power, and in lighting streets, avenues, public parks and places, and public
and private buildings, in the Counties of Suffolk, Nassau and Queens, in the
State of New York.
Engaging in any lawful act or activity for which corporations may be
formed under the Business Corporation Law but not in any act or activity for
which the consent or approval of any state department, official, board, agency
or other body is required without such consent or approval first being
obtained.
In furtherance of the foregoing purposes, the Corporation shall have the
following powers:
To manufacture, use, acquire, purchase, store, transport, sell and deal
in gas and electricity.
To manufacture, use, acquire, purchase, store, sell and deal in
derivatives of gas or electricity; by-products of the manufacture, use and
storage of gas or electricity; water, and by-products of water, produced,
treated, processed, purified or desalinized in conjunction with the manufacture
of gas or electricity; instruments and devices for the production, conversion
or utilization of energy; energy produced or converted as a by-product or
derivative of or convenient adjunct to the manufacture and storage of gas or
electricity.
To purchase, acquire, make, sell, finance, and lease any and all
machines, instruments, substances, apparatus and equipment in furtherance of or
convenient to the sale of gas or electricity.
To purchase, take, receive, subscribe for, or otherwise acquire, own,
hold, vote, employ, sell, lend, lease, exchange, transfer or otherwise dispose
of, mortgage, pledge, use or otherwise deal in and with bonds and other
obligations, shares, or other securities or interests issued by others, whether
engaged in similar or different business, governmental, or other activities,
all as more fully set forth in Section 202 of the Business Corporation Law of
New York State.
To exercise the aforesaid powers for any and all lawful purposes, and
generally to exercise all of the rights and powers conferred by the statutes of
the State of New York on corporations incorporated for the purpose of supplying
gas or electricity, or both, for light, heat and power, or by any other
statutes which are or may hereafter become applicable to such corporations.
In addition, to have and exercise all powers necessary or convenient to
effect any or all of the purposes for which the corporation is formed.
2
<PAGE> 3
FOURTH: The total number of shares which the Corporation is
authorized to issue, with an aggregate par value of two billion two hundred
seven million five hundred thousand dollars ($2,207,500,000), is one hundred
ninety-four million five hundred thousand (194,500,000) shares, divided into
classes as follows: one hundred fifty million (150,000,000) shares of Common
Stock of the par value of Five Dollars ($5) each, seven million five hundred
thousand (7,500,000) shares of Preference Stock of the par value of One Dollar
($1) each, seven million (7,000,000) shares of Preferred Stock of the par value
of One Hundred Dollars ($100) each, and thirty million (30,000,000) shares of
Preferred Stock of the par value of Twenty-five Dollars ($25) each.
FIFTH: I. The capital of the Corporation shall be at least equal to
the sum of the aggregate par value of all issued shares having par value, plus
the sum of $8,533,344 transferred to capital by resolution of the Board of
Directors, and such additional amount as from time to time, by resolution of
the Board of Directors, may be transferred thereto.
II. Shares of the Corporation, including without limitation shares of
"Preferred Stock, 5-3/4%, Series I", which have been heretofore or may be
hereafter purchased, redeemed or otherwise reacquired and cancelled by the
Corporation, may be reissued from time to time as shares of the Corporation of
the same class as any such shares so purchased, redeemed or otherwise
reacquired and cancelled by the Corporation, provided that no shares of
Preferred Stock or Preference Stock so purchased, redeemed or otherwise
reacquired and cancelled by the Corporation shall be reissued as shares of the
same series of Preferred Stock or Preference Stock theretofore issued.
III. The designations, preferences, privileges, and voting powers of
the shares of each class, and the restrictions or qualifications thereof, are
as follows:
A. PREFERRED STOCK
1. The Preferred Stock may be issued from time to time in one or more
series, the shares of each such series to have such designations, preferences,
privileges and voting powers, and restrictions or qualifications thereof, as
are provided herein or as may be fixed prior to the issuance of such series by
the Board of Directors; and the Board of Directors is hereby expressly
authorized to fix from time to time before issuance the designations,
preferences, privileges and voting powers of each such series which are not
fixed herein, and the restrictions or qualifications thereof.
2. The following designations, preferences, privileges and voting
powers, and restrictions or qualifications thereof, shall apply to all shares
of Preferred Stock authorized by this certificate, provided, however, that the
Corporation may in the manner provided by law authorize and issue additional
shares of Preferred Stock:
(a) The holders of each series of Preferred Stock shall be
entitled to receive, if and when declared payable by the Board of
Directors out of
3
<PAGE> 4
assets legally available for the payment of dividends, cumulative cash
dividends at such rate per share and payable quarterly on such dates
as shall be fixed by resolution adopted by the Board of Directors
prior to the issuance of such series. Dividends on each share of
Preferred Stock shall commence to accrue on and be cumulative from the
first day of the current dividend period within which such share was
issued. If for any past dividend period or periods dividends shall
not have been paid or declared and set apart for payment upon all
outstanding shares of Preferred Stock at the rate per annum applicable
thereto, the deficiency shall be fully paid or declared and set apart
for payment (at any time without reference to any payment date) before
any dividend shall be declared or paid or set apart for the Common
Stock or any other class of stock ranking junior to the Preferred
Stock. Accumulations of dividends shall not bear interest. In case
the stated dividends are not paid in full, the shares of all series of
the Preferred Stock shall share ratably in the payment of dividends,
including accumulations, if any, in accordance with the sums which
would be payable on said shares if all dividends were declared and
paid in full.
(b) The holders of the Preferred Stock shall not be entitled
to receive any dividends thereon other than the dividends referred to
in paragraph (a) hereof.
(c) Upon any involuntary dissolution, liquidation, or winding
up of the Corporation, the holders of shares of Preferred Stock shall
be entitled to receive out of the assets of the Corporation, the par
value of their shares, plus, in the case of each share, an amount
equal to all dividends on such share accrued and unpaid thereon to the
date of payment upon such dissolution, liquidation or winding up of
the Corporation, before any distribution of the assets to be
distributed shall be made to the holders of the Common Stock or any
other class of stock ranking junior to the Preferred Stock.
Upon any voluntary dissolution, liquidation, or winding up of
the Corporation, the holders of shares of Preferred Stock shall be
entitled to receive out of the assets of the Corporation the then
applicable redemption price of their shares, plus, in the case of each
share, an amount equal to all dividends on such share accrued and
unpaid thereon to the date of payment upon such dissolution,
liquidation or winding up of the Corporation, before any distribution
of the assets to be distributed shall be made to the holders of the
Common Stock or any other class of stock ranking junior to the
Preferred Stock.
In case the amounts payable on liquidation are not paid in
full, the shares of all series shall share ratably in any distribution
of assets other than by way of dividends in accordance with the sums
which would be payable on such distribution if all sums payable were
discharged in full.
After payment to the holders of Preferred Stock of the
preferential amounts to which they are entitled upon an involuntary or
upon a voluntary dissolution, liquidation or winding up, as the case
may be, as hereinabove provided, the holders of Preferred Stock, as
such, shall have no right or claim to any of the remaining assets of
the Corporation, either upon any
4
<PAGE> 5
distribution of surplus assets, or upon involuntary or upon voluntary
dissolution, liquidation or winding up.
The sale, lease, exchange, assignment, transfer or conveyance
of all or substantially all the property of the Corporation to, or the
merger or consolidation of the Corporation into or with, any other
corporation shall not be deemed to be an involuntary or a voluntary
dissolution, liquidation or winding up for the purposes of this
paragraph (c).
(d) At the option of the Board of Directors of the
Corporation, the Corporation may redeem the whole or any part of the
Preferred Stock at any time outstanding, or the whole or any part of
any series thereof, at any time or from time to time, at the then
applicable redemption price thereof as may be fixed by resolution
adopted by the Board of Directors prior to the issuance of such
series, plus accrued and unpaid dividends to the date of redemption;
provided, however, that upon redemption of any outstanding shares of
Preferred Stock not less than thirty (30) nor more than sixty (60)
days previous to the date fixed for redemption, notice of the time and
place thereof shall be given to the holders of record of Preferred
Stock so to be redeemed, by mail and publication in a newspaper,
printed in the English language and customarily published on each
business day, of general circulation in the Borough of Manhattan, City
and State of New York, in such manner as may be prescribed by the
By-laws of the Corporation or by resolution of the Board of Directors;
and, provided further, that the accidental failure to mail any such
notice to one or more of such holders shall not affect the validity of
such redemption as to the other holders, and that such notice shall be
deemed to have been duly given to any holder of the Preferred Stock
within the meaning of the foregoing provision when the same shall have
been published as aforesaid and a copy deposited in the United States
mails, postage prepaid, addressed to such holder at his last-known
address as it appears on the books of the Corporation; and, provided
further, that such notice shall include a statement to the effect that
privileges of conversion or exchange, if any, not theretofore
expiring, will expire at the close of business on the full business
day next preceding the date fixed for redemption; and, provided
further, that in every case of redemption of less than all of the
outstanding shares of any one series of Preferred Stock, such
redemption shall be made pro rata, or the shares of such series to be
redeemed shall be chosen by lot in such manner as may be prescribed by
resolution of the Board of Directors. At any time after notice of
redemption has been given in the manner prescribed by the By-laws of
the Corporation or by resolution of the Board of Directors to the
holders of stock so to be redeemed, the Corporation may deposit funds
sufficient for such redemption with a solvent bank or trust company
having its principal office in the Borough of Manhattan, City and
State of New York and having a combined capital and surplus of at
least $5,000,000 named in such notice payable on the date fixed for
redemption, as aforesaid, and in the amounts aforesaid, to the
respective orders of the holders of the shares so to be redeemed, on
endorsement to the Corporation or otherwise, as may be required, and
upon surrender of the certificates for such shares. Upon the deposit
of said money as aforesaid, or, if no such deposit is made, upon said
redemption date (unless the Corporation defaults in making payment of
the redemption price) such holders shall
5
<PAGE> 6
cease to be stockholders with respect to said shares, and from and
after the making of said deposit, or, if no such deposit is made,
after the redemption date (the Corporation not having defaulted in
making the payment of the redemption price), the said holders shall
have no interest in or claims against the Corporation with respect to
said shares except only the right to receive said moneys on the date
fixed for redemption, as aforesaid, from said bank or trust company,
or from the Corporation, as the case may be, without interest thereon,
upon endorsement, if required, and surrender of the certificates as
aforesaid and the right to exercise, on or before the close of
business on the full business day next preceding the date fixed for
redemption, privileges of conversion or exchange, if any, not
theretofore expiring.
Any moneys deposited by the Corporation as aforesaid which
shall not be required for such redemption because of the exercise of
any such right of conversion or exchange subsequent to the date of
such deposit shall be repaid to the Corporation forthwith. In case
the holder of any Preferred Stock redeemed as aforesaid shall not,
within six (6) years after said deposit, claim the amount deposited as
above stated for the redemption thereof, the depositary shall, upon
demand, pay over to the Corporation such amount so deposited and the
depositary thereupon shall be relieved from all responsibility to such
holder.
Subject to the provisions hereof, the Board of Directors shall
have authority to prescribe from time to time the manner in which
Preferred Stock shall be redeemed and cancelled.
Nothing herein contained shall limit or deprive the
Corporation of the right to redeem or purchase any shares of Preferred
Stock in any other manner now or hereafter permitted by law.
(e) Except as hereinafter provided and except as some
provision of law expressly confers a right to vote regardless of any
provision to the contrary in this Certificate or other certificate
filed pursuant to law, the holders of Preferred Stock shall not be
entitled to any notice of meetings of stockholders of the Corporation,
or to vote, or to any voting rights whatsoever as stockholders of the
Corporation, and are hereby specifically excluded from the right to
vote in a proceeding for authorizing any guaranty pursuant to Section
908 of the Business Corporation Law, for sale of the franchises and
property pursuant to Section 909 of the Business Corporation Law, for
establishing priorities or creating preferences among the various
classes of stock pursuant to Section 801 of the Business Corporation
Law, for consolidation or merger pursuant to Section 901 of the
Business Corporation Law, for voluntary dissolution pursuant to
Section 1001 of the Business Corporation Law, or for change of name
pursuant to the Business Corporation Law, or in the election of
directors or in any other proceeding or at any stockholders' meeting.
The foregoing provisions are subject to the following:
(1) So long as any shares of Preferred Stock are
outstanding, the Corporation shall not without authorization
(given in person or by proxy, in writing or at a meeting duly
called for that purpose in accordance with Section 605 of the
Business
6
<PAGE> 7
Corporation Law of the State of New York or as otherwise
permitted by law) by at least two-thirds of the votes entitled
to be cast by the holders of the total number of shares of
Preferred Stock then outstanding:
(A) amend, alter, change or repeal any of
the express terms of the Preferred Stock then
outstanding in a manner to affect the holders of such
shares adversely otherwise than to increase the
authorized number of shares of Preferred Stock,
provided, however, that if such amendment,
alteration, change or repeal would adversely affect
the holders of one or more, but not all, of the
series of Preferred Stock at the time outstanding,
authorization by at least two-thirds of the votes
entitled to be cast by the holders of the total
number of shares of all such series so affected shall
be required in lieu of authorization by at least
two-thirds of the votes entitled to be cast by the
holders of the total number of shares of Preferred
Stock then outstanding; or
(B) create or authorize any class of stock
having a preference superior to the preferences of
the Preferred Stock as to assets or dividends, or
create or authorize any security convertible into
shares of stock of any such kind; or
(C) issue any shares of, or ranking on a
parity with, the Preferred Stock under this
Certificate, unless for any twelve (12) consecutive
calendar months within the fifteen (15) calendar
months immediately preceding the calendar month
within which such additional shares shall be issued,
the net earnings of the Corporation available for the
payment of interest charges on the Corporation's
interest bearing indebtedness, determined after
provision for depreciation and all taxes, and in
accordance with sound accounting practice, shall have
been at least one and one-half (1-1/2) times the
aggregate of the annual interest charges on the
interest bearing indebtedness of the Corporation and
annual dividend requirements on all shares of, or
ranking on a parity with, Preferred Stock to be
outstanding immediately after the proposed issue of
such shares of, or ranking on a parity with, the
Preferred Stock. There shall be excluded from the
foregoing computation, interest charges on all such
indebtedness and dividends on all stock which is to
be retired in connection with the issue of such
shares of, or ranking on a parity with, the Preferred
Stock. Where such shares of, or ranking on a parity
with, the Preferred Stock are to be issued in
connection with the acquisition of new property, the
net earnings of the property so acquired may be
included on a pro forma basis in the foregoing
computation, computed on the same basis as the net
earnings of the Corporation.
Nothing in this subparagraph (C) however
shall prevent the Corporation from issuing shares of,
or ranking on a parity with, the Preferred Stock in
connection with the purchase,
7
<PAGE> 8
redemption or other acquisition of or any exchange
for shares of, or ranking on a parity with, the
Preferred Stock, if the aggregate amount of annual
dividends payable on the shares to be issued and the
aggregate amount payable on such shares in case of
voluntary dissolution shall not exceed said
respective amounts payable on the shares of, or
ranking on a parity with, the Preferred Stock which
are to be purchased, redeemed or otherwise acquired.
(2) So long as any shares of Preferred Stock are
outstanding, the Corporation shall not without authorization
(given in person or by proxy, in writing or at a meeting duly
called for that purpose in accordance with Section 605 of the
Business Corporation Law of the State of New York or as
otherwise permitted by law) by a majority of the votes
entitled to be cast by the holders of the total number of
shares of Preferred Stock then outstanding:
(A) sell, lease, exchange, assign, transfer
or convey all or substantially all of the property or
business of the Corporation or merge or consolidate
into or with any other company; provided, however,
that nothing herein contained shall require such
authorization in respect of the merger or
consolidation of the Corporation into or with any
other company if the company resulting from such
merger or consolidation will, immediately after such
merger or consolidation, have only such authorized
classes of stock and such outstanding shares of stock
as would have been permitted immediately prior to
such merger or consolidation under the provisions
hereof without any further consent of the holders of
the Preferred Stock, and if each holder of the
Preferred Stock immediately preceding such merger or
consolidation shall receive the same number of
shares, with the same rights and preferences, of the
resulting company. For the purposes of this clause
insofar as any earnings test may be applicable, the
earnings, interest charges on debt and dividend
requirements of the merging or consolidating
companies shall be determined on a combined basis.
No consent of the holders of the Preferred Stock
shall be required under the provisions hereof if, at
or prior to the time when the act is to take effect
with respect to which consent would otherwise be
required, provision is made for the redemption of all
shares of Preferred Stock at the time outstanding; or
(B) increase the authorized number of shares
of Preferred Stock.
(3) If and when dividends payable on any shares
of Preferred Stock shall be in default in an amount equivalent
to or exceeding four (4) full quarterly dividends, thereafter
and until all dividends on the shares of Preferred Stock in
default shall have been paid or declared and set aside for
payment, the holders of the shares of Preferred Stock, voting
separately as a class and
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<PAGE> 9
regardless of series, shall be entitled to elect the smallest
number of directors necessary to constitute a majority of the
full Board of Directors, and, subject to the provisions of
Paragraph "FIFTH" Section "III," Subdivision "B," Subparagraph
"2(f)(3)," hereof, the holders of the shares of the Common
Stock, voting separately as a class, shall be entitled to
elect the remaining directors of the Corporation, anything
herein or in the By-laws to the contrary notwithstanding.
The terms of office of all persons who may be directors of the
Corporation shall terminate upon the election of a majority of
the Board of Directors by the holders of the shares of
Preferred Stock, whether or not the holders of the shares of
the Common Stock shall then have elected the remaining
directors of the Corporation.
(4) If and when all dividends then in default on
the shares of Preferred Stock then outstanding shall be paid
or declared and set aside for payment (and such dividends
shall be declared and paid out of any funds legally available
therefor as soon as reasonably practicable), the holders of
shares of Preferred Stock shall be divested of the special
right with respect to the election of directors provided in
Paragraph "FIFTH," Section "III," Subdivision "A,"
Subparagraph "2(e)(3)" hereof, and the voting power, with
respect thereto, shall, subject to the provisions of Paragraph
"FIFTH," Section "III," Subdivision "B," Subparagraph
"2(f)(3)" hereof, revert to the holders of the shares of the
Common Stock; but always subject to the same provisions for
vesting such special right in the holders of the shares of
Preferred Stock in case of further like default or defaults in
dividends thereon as provided in Paragraph "FIFTH," Section
"III," Subdivision "A," Subparagraph "2(e)(3)" hereof. Upon
the termination of any such special right upon payment or
setting aside for payment of all accumulated and defaulted
dividends on the shares of Preferred Stock, the terms of
office of all persons who may have been elected directors of
the Corporation by vote of the holders of the shares of
Preferred Stock, as a class, pursuant to such special right
shall forthwith terminate, and the resulting vacancies shall
be filled by the vote of a majority of the remaining
directors.
(5) In the case of any vacancy in the office of a
director occurring among the directors elected by the holders
of the shares of Preferred Stock, as a class, pursuant to the
foregoing provisions hereof, the remaining directors elected
by such holders, by affirmative vote of a majority thereof, or
the remaining director so elected if there be but one, may
elect a successor or successors to hold office for the
unexpired terms of the director or directors whose place or
places shall be vacant, and such successor or successors shall
be deemed to have been elected by such holders. Likewise,
subject to the provisions of Paragraph "FIFTH," Section "III,"
Subdivision "B," Subparagraph "2(f)(3)" hereof, in case of any
vacancy in the office of a director occurring among the
directors elected by the holders of the shares of the Common
Stock pursuant to the foregoing provisions hereof, the
remaining directors elected by the holders of the Common
Stock, by affirmative vote of
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<PAGE> 10
a majority thereof, or the remaining director so elected if
there be but one, may elect a successor or successors to hold
office for the unexpired term of the director or directors
whose place or places shall be vacant, and such successor or
successors shall be deemed to have been elected by such
holders.
(6) Whenever under the provisions hereof, the
right shall have accrued to the holders of the shares of
Preferred Stock to elect directors, the Board of Directors
shall within ten (10) days after delivery to the Corporation
at its principal office of a request to such effect signed by
any holder of shares of any series of Preferred Stock entitled
to vote, call a special meeting of the stockholders to be held
within fifty (50) days from the delivery of such request for
the purpose of electing directors (unless under the provisions
of the By-laws of the Corporation as then in effect, an annual
meeting of stockholders of the Corporation is to be held
within sixty (60) days after the vesting in the holders of the
Preferred Stock of the right to elect directors). At all
meetings of stockholders held for the purpose of electing
directors during such time as the holders of the shares of
Preferred Stock shall have the special right, voting
separately and as a class, to elect directors pursuant hereto,
the presence in person or by proxy of the holders of a
majority of the outstanding shares of any other class entitled
to vote at such meeting shall be required to constitute a
quorum of that other class for the election of directors, and
the presence in person or by proxy of the holders of shares
representing a majority of the votes entitled to be cast by
the holders of the total number of shares of Preferred Stock
then outstanding shall be required to constitute a quorum of
such class for the election of directors; provided, however,
that the absence of a quorum of the holders of stock of any
such class shall not prevent the election of directors at any
such meeting (or at any adjournment thereof) by the other such
class or classes if the necessary quorum of the holders of
stock of such class or classes is present in person or by
proxy at such meeting; in the absence of a quorum of the
holders of stock of any class of stock a majority of those
holders of the stock of such class who are present in person
or by proxy shall have power to adjourn the meeting for the
election of the directors to be elected by such class from
time to time without notice other than announcement at the
meeting until a quorum shall be present in person or by proxy,
but such adjournment shall not be made to a date beyond the
date for the mailing of notice of the next annual meeting of
the Corporation or special meeting in lieu thereof.
(7) Whenever the holders of Preferred Stock shall
be entitled, as a class, to vote, authorize, consent or
otherwise act, they shall be entitled to cast one-quarter of
one vote for each share of Preferred Stock of the par value of
Twenty-five Dollars ($25) each, and one vote for each share of
Preferred Stock of the par value of One Hundred Dollars ($100)
each, held by them respectively.
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<PAGE> 11
(f) The holders of shares of Preferred Stock at any time
outstanding shall have no preemptive or preferential right to
subscribe for or purchase any shares of stock, or rights or options to
purchase shares of stock whether now or hereafter authorized, or any
securities convertible into or exchangeable for shares of stock or
into rights or options to purchase shares of stock of the Corporation
of any class.
3. The designations, preferences, privileges and voting powers,
and the restrictions or qualifications thereof, of each series of Preferred
Stock are as follows:
(a) Series B Preferred Stock. A series consisting
initially of 100,000 shares of the Preferred Stock of the par value of
$100 per share is designated "Preferred Stock, 5%, Series B"
(hereinafter called "Series B Preferred Stock"). The dividend rate
per annum of the shares of Series B Preferred Stock is $5.00 per
share. The dividend payment dates for the shares of Series B
Preferred Stock are the first days of January, April, July and
October; and the dividend periods for such shares are the quarterly
periods beginning on such dates commencing April 1, 1952. The price
at which the shares of Series B Preferred Stock shall be redeemable is
$102.00 per share if redeemed on or before March 31, 1967, and $101.00
per share if redeemed thereafter.
(b) Series D Preferred Stock. A series consisting
initially of 70,000 shares of the Preferred Stock of the par value of
$100 per share is designated "Preferred Stock, 4.25%, Series D"
(hereinafter called "Series D Preferred Stock"). The dividend rate
per annum of the shares of Series D Preferred Stock is $4.25 per
share. The dividend payment dates from the shares of Series D
Preferred Stock are the first days of January, April, July and
October; and the dividend periods for such shares are the quarterly
periods beginning on such dates commencing January 1, 1954. The price
at which the shares of Series D Preferred Stock shall be redeemable is
$102.25 per share if redeemed on or before December 31, 1968, and
$102.00 per share if redeemed thereafter.
(c) Series E Preferred Stock. A series consisting
initially of 200,000 shares of the Preferred Stock of the par value of
$100 per share is designated "Preferred Stock, 4.35%, Series E"
(hereinafter called "Series E Preferred Stock"). The dividend rate
per annum of the shares of Series E Preferred Stock is $4.35 per
share. The dividend payment dates for the shares of Series E
Preferred Stock are the first days of January, April, July and
October; and the dividend periods for such shares are the quarterly
periods beginning on such dates commencing April 1, 1954. The price
at which the shares of Series E Preferred Stock shall be redeemable is
$102.25 per share if redeemed on or before March 31, 1969, and $102.00
per share if redeemed thereafter.
(d) Series F Preferred Stock. A series consisting
initially of 50,000 shares of the Preferred Stock of the par value of
$100 per share is designated "Preferred Stock, 4.35%, Series F"
(hereinafter called "Series F Preferred Stock"). The dividend rate
per annum of the shares of Series F Preferred Stock is $4.35 per
share. The dividend payment dates for the shares of Series F
Preferred Stock are the first days of January, April,
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<PAGE> 12
July and October; and the dividend periods for such shares are the
quarterly periods beginning on such dates commencing April 1, 1955.
The price at which the shares of Series F Preferred Stock shall be
redeemable is $102.25 per share if redeemed on or before March 31,
1970, and $102.00 per share if redeemed thereafter.
(e) Series H Preferred Stock. A series consisting
initially of 200,000 shares of the Preferred Stock of the par value of
$100 per share is designated "Preferred Stock, 5-1/8%, Series H"
(hereinafter called "Series H Preferred Stock"). The dividend rate
per annum of the shares of Series H Preferred Stock is $5.125 per
share. The dividend payment dates for the shares of Series H
Preferred Stock are the first days of January, April, July and
October; and the dividend periods for such shares are the quarterly
periods beginning on such dates commencing October 1, 1960. The price
at which the shares of Series H Preferred Stock shall be redeemable is
$107.50 per share if redeemed on or before September 30, 1970, $103.00
per share if redeemed thereafter and on or before September 30, 1975,
and $102.00 per share if redeemed thereafter.
(f) Series I Preferred Stock
(1) Number and Designation of Series. A series
consisting initially of 301,994 shares of the authorized
Preferred Stock of the Corporation of the par value of $100 is
designated "Convertible Preferred Stock, 5-3/4%, Series I"
(hereinafter called the "Series I Preferred Stock").
(2) Dividend Rate. The dividend rate per annum
of the shares of Series I Preferred Stock is $5.75 per share.
(3) Dividend Payment Dates. The dividend payment
dates for the shares of Series I Preferred Stock are the tenth
days of February, May, August and November; and the dividend
periods for such shares are the quarterly periods beginning on
such dates commencing November 10, 1967.
(4) Redemption Price. The price at which the
shares of Series I Preferred Stock shall be redeemable is $105
per share if redeemed on or before November 30, 1968, $104 per
share if redeemed thereafter and on or before November 30,
1969, $103 per share if redeemed thereafter and on or before
November 30, 1970, $102 per share if redeemed thereafter and
on or before November 30, 1971, and $101 per share if redeemed
thereafter and on or before November 30, 1972, and $100 per
share if redeemed thereafter.
(5) Conversion. The holder of any shares of
Series I Preferred Stock, at his option, at any time and from
time to time (or as to any share of Series I Preferred Stock
called for redemption, then up to the close of business on the
third full business day next preceding the date fixed for
redemption), may convert all or any part of the Series I
Preferred Stock held by him into shares of the Common Stock of
the Corporation (hereinafter
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<PAGE> 13
called the "Common Stock") at the rate, and upon the other
terms, hereinafter set forth.
In order to convert said shares of Series I Preferred
Stock, such holder shall surrender the certificates for said
shares (properly endorsed or assigned for transfer, if the
Board of Directors of the Corporation shall so require) to the
Corporation at the office of any transfer agent for the shares
of Common Stock.
For all purposes of this section (5), the "date of
conversion" of such shares of Series I Preferred Stock shall
be deemed to be the date of the surrender of the certificates
for such shares for conversion notwithstanding the stock
transfer books are at the time closed; and for the purpose of
receiving dividends, the converting holder of Series I
Preferred Stock shall be deemed to have become, on the date of
conversion, the record holder of the Commons Stock deliverable
upon such conversion.
(A) General Provisions Governing Issuance of
Common Stock. Upon receipt by the Corporation of any
certificates for Series I Preferred Stock surrendered for
conversion, the Corporation shall, as soon as practicable,
execute and deliver to such holder a certificate or
certificates for the number of full shares of Common Stock
sufficient for the conversion of said Series I Preferred Stock
as aforesaid. The stock certificates so delivered shall be in
the name of the record holder of the Series I Preferred Stock
certificates so surrendered for conversion, or in such other
name or names as he may direct, in which latter case he shall
pay all stock transfer taxes that may be payable in respect
thereof. The Corporation shall pay the amount of any and all
taxes which may be imposed in respect of any issue or delivery
of stock certificates under this section (5) and which shall
be payable in order that such stock may be issued in the name
of the record holder of the Series I Preferred Stock
certificates so surrendered for conversion. The Corporation
shall not be required to deliver certificates for shares of
Common Stock upon conversion while its stock transfer books
are closed, but such certificates shall be delivered as soon
as practicable after the stock transfer books shall be opened.
The Corporation shall not be required upon any such
conversion to issue a certificate representing any fraction of
a share of Common Stock, but in lieu thereof will pay a cash
adjustment based on the market price.
All shares of Common Stock issued upon conversion of
Series I Preferred Stock pursuant to the provisions of this
section (5) shall be fully paid and nonassessable.
(B) Initial Rate Conversion; Adjustments. The
initial rate of conversion of Series I Preferred Stock under
this section (5) shall be 3.5714 shares of Common Stock for
each share of Series I Preferred Stock, or (for the purpose of
the adjustment hereinafter mentioned, and treating each share
of Series I Preferred Stock as
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<PAGE> 14
the equivalent of $100) at the initial conversion price of $28
per share of Common Stock. The conversion price and the rate
of conversion shall be subject to adjustment from time to time
as provided in the next following subdivisions [1] to [3],
inclusive, the number of shares deliverable in respect of each
share of Series I Preferred Stock upon any conversion being
determined by dividing $100 by the conversion price in effect
at that time.
[1] Issuance of Additional Shares of Common
Stock. In case the Corporation shall at any time or
from time to time issue any additional shares of
Common Stock in excess of the 18,119,661 shares
outstanding on October 25, 1967 (other than shares of
Common Stock issued upon conversion of Series I
Preferred Stock as herein provided and shares of
Common Stock referred to in subdivision (g) of this
subdivision [1] without consideration or for a
consideration per share less than the conversion
price in effect immediately prior to the time of such
issue, then forthwith upon such issuance, the
conversion price shall be adjusted (calculated to the
nearest cent) by the following process:
To the sum of $507,350,508, being the
aggregate value of the 18,119,661 shares of Common
Stock outstanding on October 25, 1967, taken at the
initial conversion price of $28 per share, shall be
added the aggregate consideration (determined as
hereinafter provided) received by the Corporation for
all additional shares of Common Stock issued after
October 25, 1967 (including shares of Common Stock
issued upon conversion of Series I Preferred Stock
under this section (5) but excluding shares of Common
Stock referred to in subdivision (g) of this
subdivision [1]); and such total shall be divided by
the total number of shares of Common Stock
outstanding immediately after such issuance
(excluding shares of Common Stock referred to in
subdivision (g) of this subdivision [1]), and the
quotient resulting from such division (if less than
the conversion price in effect immediately prior to
such issuance) shall be the adjusted conversion price
to be thereafter in effect until again adjusted as
provided herein; provided, however, that the
conversion price in effect from time to time shall
not be reduced, and the number of shares of Common
Stock deliverable upon conversion shall not be
increased, pursuant to this subdivision [1], unless
and until, by reason of the happening of any one or
more of the events specified in this subdivision [1],
the adjusted conversion price shall be reduced by 25
cents or more per share, but any adjustment which
would otherwise be required to be made shall be
carried forward and made at the time of and together
with any subsequent adjustment which, together with
any adjustment or adjustments so carried forward
shall amount to 25 cents or more per share of Common
Stock; and provided further, that such conversion
price having at any time been reduced by adjustment
under this subdivision [1] shall never thereafter be
increased under this subdivision [1], notwithstanding
any
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<PAGE> 15
subsequent issue of shares of Common Stock. For the
purpose of this subdivision [1], the following
provisions shall be applicable with respect to the
issuance of additional shares of Common Stock:
[a] Rights or Options below Prevailing
Conversion Price. In case the Corporation shall
grant any rights or options to subscribe for or to
purchase such additional shares (other than rights or
options granted to stockholders of the Corporation in
satisfaction of their statutory preemptive rights),
at a price per share less than the conversion price
in effect immediately prior to the time of the
granting of such rights or options, all such
additional shares shall be deemed to have been issued
as of the date of the granting of such rights or
options and the minimum aggregate consideration
called for upon the exercise of such rights or
options, plus the consideration, if any, received by
the Corporation for such rights or options, shall be
deemed to be the consideration received by the
Corporation (as of the date of the granting of such
rights or options) for the issuance of such
additional shares.
[b] Securities Convertible below
Prevailing Conversion Price. In case
(i) the Corporation shall issue any
obligations or any stock (other than Series I
Preferred Stock), convertible into or
exchangeable for such additional shares, and
(ii) the price per share for which
such additional shares are deliverable upon
such conversion or exchange (determined by
dividing (I) the total amount received or
receivable by the Corporation as
consideration for the issuance of such
convertible obligations or stock, plus the
minimum aggregate amount of any additional
consideration payable to the Corporation upon
conversion or exchange, by (II) the total
maximum number of such additional shares
necessary to effect the conversion or
exchange of all such convertible obligations
or stock), shall be less than the conversion
price in effect immediately prior to the time
of such issuance.
then such issuance shall be deemed to be an issuance
(as of the date of issuance of such convertible
obligations or stock) of the total maximum number of
such additional shares necessary to effect the
conversion or exchange of all such convertible
obligations or stock, and the price determined as
provided in the next preceding paragraph (ii) shall
be deemed to be the consideration actually received
(as of the date of the issuance of such convertible
obligations or stock) for the issuance of such
additional shares.
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<PAGE> 16
[c] Purchase Rights and Securities
Convertible at or above Prevailing Conversion Price
and Preemptive Rights. In case
(i) the Corporation shall grant any
rights or options to subscribe for or to
purchase such additional shares or shall
issue any obligations or any stock (other
than Series I Preferred Stock) convertible
into or exchangeable for such additional
shares, and the price per share at which such
additional shares may be subscribed for or
purchased pursuant to such rights or options,
or are deliverable upon such conversion or
exchange (determined as provided in the next
preceding subdivision [b], shall be equal to
or greater than the conversion price in
effect immediately prior to the time of such
issuance, or
(ii) the Corporation shall grant to
its stockholders, in satisfaction of their
statutory preemptive rights, any rights or
options to subscribe for or to purchase such
additional shares,
such additional shares shall not be deemed to have
been issued until the exercise of such rights or
options or the conversion or exchange of such
obligations or stock (in whole or in part), and the
consideration received by the Corporation for the
issuance of such additional shares shall be the
consideration received upon the exercise of the
rights or options so exercised, plus the
consideration, if any, received by the Corporation
for such rights or options, or the consideration
received by the Corporation for the issuance of the
obligations or stock so converted or exchanged, plus
the amount of any additional consideration paid to
the Corporation upon such conversion or exchange.
[d] Stock Dividends. In case any such
additional shares shall be issued as a stock dividend
on any class of capital stock, such shares shall be
deemed to have been issued without consideration and
to have been issued and to be outstanding on the day
next succeeding the record date for the determination
of stockholders entitled to such dividend. In the
event of the declaration of a dividend without the
fixing of a record date for the determination of the
stockholders entitled thereto, the first business day
during which the stock transfer books of the
Corporation shall be closed for the purpose of such
determination shall be deemed to be the record date.
[e] Computation of Consideration. In
case any such additional shares, or any obligations
or stock convertible into or exchangeable for any
such additional shares, shall be issued or sold for
cash, the consideration received by the Corporation
therefor shall be deemed to be the net amount of
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<PAGE> 17
cash received therefor, before deducting any
commissions and expenses paid by the Corporation for
any underwriting of, or otherwise in connection with,
the issue or sale thereof; and, if such issue or sale
be for a consideration other than cash (in whole or
in part), then, for the purposes of this subdivision
[1], the consideration actually received therefor
shall be deemed to be such amount as shall be
determined in a resolution of the Board of Directors
of the Corporation as the fair value of such
consideration at the time of such issue or sale,
provided, however, that no value shall be attributed
to services performed for the Corporation by its
officers and employees. The reclassification of
securities other than Common Stock into securities
including Common Stock shall be deemed to involve the
issuance for a consideration other than cash of such
Common Stock immediately prior to the close of
business on the record date for the determination of
stockholders entitled to such Common Stock, or, if no
record date is fixed, on the first business day
during which the stock transfer books of the
Corporation shall be closed for the purpose of such
determination.
[f] Consideration upon Conversion. The
consideration received for any such additional shares
issued upon conversion of Series I Preferred Stock
under this section (5) shall be deemed to be $100 for
each share of Series I Preferred Stock so converted.
[g] Common Stock Issued to Officers or
Employees. For purposes of computations made
pursuant to this subdivision [1], there shall be
excluded from consideration such shares of Common
Stock (and any rights or options to subscribe for
such shares) up to an aggregate of 500,000 such
shares, and the consideration received by the
Corporation therefor, issued after October 25, 1967
to officers or employees pursuant to a plan approved
by vote of the holders of Common Stock, such number
of shares to be adjusted from time to time to
proportionately reflect any subdivision or
combination of the outstanding shares of Common Stock
or any stock dividend that would have been payable on
such number of shares if outstanding.
[h] In case the Corporation shall at any
time subdivide or combine the outstanding shares of
Common Stock, the amount of 25 cents referred to
above in this subdivision [1] (or the amount to which
such amount may have been previously adjusted
pursuant to this paragraph) shall be proportionately
decreased in the case of a subdivision or increased
in the case of a combination, effective at the close
of business on the date of such subdivision or
combination.
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<PAGE> 18
[i] Outstanding Common Stock. The
number of shares of Common Stock at any time
outstanding include all shares of Common Stock held
in the treasury of the Corporation, and all shares of
Common Stock issuable in respect of scrip
certificates issued in lieu of fractions of shares of
Common Stock. The resale or exchange of shares of
Common Stock held in the treasury of the Corporation
shall not be deemed to be an issuance thereof.
[2] Subdivisions and Combinations. In case the
Corporation shall at any time or from time to time subdivide
or combine, by reclassification or otherwise, the outstanding
shares of Common Stock, the conversion price then in effect
shall be proportionately reduced in the case of a subdivision
or increased in the case of a combination, effective at the
close of business on the date of such subdivision or
combination.
[3] Reorganization and Reclassification. In case
of any capital reorganization or any reclassification of the
capital stock of the Corporation (except as provided in the
next preceding paragraph [2] and except a change in par value,
or from par value to no par value, or from no par value to par
value), any holder of Series I Preferred Stock, whether
theretofore or thereafter issued, upon conversion thereof,
shall be entitled to receive, in lieu of the shares of Common
Stock to which he would have become entitled upon conversion
but for such reorganization or reclassification, the shares of
stock (of any class or classes) or other securities or
property of the Corporation to which such shares of Common
Stock would have been entitled upon such reorganization or
reclassification; and, in any such case, appropriate provision
(as determined by a resolution of the Board of Directors of
the Corporation) shall be made for the application of this
section (5) with respect to the rights and interests
thereafter of the holders of Series I Preferred Stock, to the
end that this section (5) (including the specified changes in
and other adjustments of the conversion rate and price) shall
thereafter be applicable, as nearly as reasonably practicable,
to any shares of stock or securities or other property
thereafter deliverable upon the conversion of Series I
Preferred Stock.
[4] Statement of Adjusted Conversion Rate.
Whenever the rate of conversion or the conversion price is
required to be adjusted as aforesaid, the Corporation shall
forthwith prepare a written statement signed by the President
or a Vice President and the Treasurer or an Assistant
Treasurer of the Corporation (which, unless one of the
officers signing the same is an accountant and shall so state,
shall be signed also by an accountant), setting forth the
adjusted rate and price determined as provided in this
subdivision (B) and in reasonable detail the facts requiring
such adjustment. Such statement shall at all reasonable times
during business hours be open to inspection by the holders of
Series I Preferred Stock. In addition, the Corporation shall
forthwith cause a notice setting forth the adjusted conversion
rate and price and
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<PAGE> 19
the reason for such adjustment to be mailed, first class
postage prepaid, to all holders of record of outstanding
Series I Preferred Stock, at their last known addresses as the
same appear on the books of the Corporation, and to be
published once in a newspaper, printed in the English language
and customarily published on each business day, of general
circulation in the Borough of Manhattan, City and State of New
York.
(C) No Adjustment of Dividends. Upon conversion of
Series I Preferred Stock under this section (5), no adjustment shall
be made in respect of dividends upon the Series I Preferred Stock
converted or upon the Common Stock issued in exchange therefor.
(D) Termination. In case of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary,
all conversion rights of the holders of the Series I Preferred Stock
shall terminate on a date fixed by resolution of the Board of
Directors of the Corporation, such date so fixed to be not earlier
than 10 days prior to the effective date of such liquidation,
dissolution or winding up.
(E) Consolidation and Merger. In case the Corporation
shall, while any shares of Series I Preferred Stock remain
outstanding, consolidate with or merge into any other corporation,
proper provision shall be made that, on the terms and in the manner
provided in this section (5), the holder of any Series I Preferred
Stock may thereafter convert the same into the same kind and amount of
securities as may be issuable by the terms of such consolidation or
merger with respect to the number of shares of Common Stock into which
such Series I Preferred Stock is convertible at the time of such
consolidation or merger; and proper provision shall also be made for
the application after such consolidation or merger of this section (5)
with respect to the rights and interests thereafter of the holders of
Series I Preferred Stock, to the end that this section (5) (including
the specified changes in and other adjustments of the conversion rate
and price) shall thereafter be applicable, as nearly as reasonably
practicable, to any shares of stock or securities thereafter
deliverable upon the conversion of Series I Preferred Stock.
(F) Notice of Certain Transactions. In case
[1] the Corporation shall pay any dividend payable
in stock (of any class or classes) upon Common Stock or make
any distribution (other than ordinary cash dividends) to the
holders of Common Stock;
[2] the Corporation shall grant to the holders of
Common Stock any rights or options;
[3] of any capital reorganization or
reclassification of the capital stock of the Corporation;
[4] the Corporation shall consolidate with or merge
into any other corporation or sell or transfer all or
substantially all of its assets; or
19
<PAGE> 20
[5] of the liquidation, dissolution or winding up of
the Corporation,
then the Corporation shall cause notice of any such intended
action, and of the date of any termination of the conversion
rights of holders of Series I Preferred Stock incident to any
liquidation, dissolution or winding up, to be mailed, first
class postage prepaid, not less than 20 nor more than 40 days
prior to the date on which the transfer books of the
Corporation shall close or a record be taken for such stock
dividend, distribution or granting of rights or options, or
such capital reorganization, reclassification, consolidation,
merger, sale, liquidation, dissolution or winding up shall be
effective, as the case may be, to all holders of record of
outstanding Series I Preferred Stock, at their last known
addresses as the same appear on the books of the Corporation,
and to be published once in a newspaper, printed in the
English language and customarily published on each business
day, of general circulation in the Borough of Manhattan, City
and State of New York, not less than 20 nor more than 40 days
prior to such date.
(G) Reservation of Stock. The Corporation shall
reserve and set apart a number of shares of authorized but
unissued Common Stock sufficient to enable it at any time to
fulfill all its obligations with respect to the conversion of
Series I Preferred Stock under this section (5). Whenever any
shares of Common Stock required to be reserved for the
purposes of conversion of Series I Preferred Stock require
registration with or approval of any governmental authority
under any Federal or state law, or listing with any securities
exchange, before such shares may be issued upon conversion,
the Corporation shall promptly cause such shares to be
registered, approved or listed, as the case may be.
(H) For purpose of this section (5), the term
"Common Stock" shall include any stock of any class of the
Corporation which has no preference in respect of dividends or
of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, and which is not subject to redemption by the
Corporation. However, shares issuable on conversion of shares
of the Series I Preferred Stock shall include only shares of
the class designated as Common Stock of the Corporation as of
October 25, 1967, or shares of any class or classes resulting
from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation and
which are not subject to redemption by the Corporation.
(g) Series L Preferred Stock
(1) Number and Designation of Series. A series
consisting initially of 350,000 shares of the Preferred Stock
of the par value of $100 per share is designated "Preferred
Stock, 7.40%, Series L" (hereinafter called the "Series L
Preferred Stock").
20
<PAGE> 21
(2) Dividend Rate. The dividend rate per annum
of the shares of Series L Preferred Stock is $7.40 per share.
Dividends shall be calculated on the basis of a 30-day month
and a year of 360 days.
(3) Dividend Payment Dates. The dividend payment
dates for the shares of Series L Preferred Stock are the last
days of January, April, July and October; and the dividend
periods for such shares are the quarterly periods beginning on
such dates commencing July 31, 1973.
(4) Optional Redemption. Subject to the
restrictions set forth in section (6) of this subdivision (g),
at the option of the Board of Directors of the Corporation,
the Corporation may redeem the whole or any part of the Series
L Preferred Stock at any time outstanding, at any time or from
time to time, at the then applicable optional redemption price
(hereinafter called the "optional redemption price"), plus
accrued and unpaid dividends to the date of redemption. The
optional redemption price at which Series L Preferred Stock
shall be redeemable is $115 per share if redeemed on or before
July 30, 1978, $110 per share if redeemed thereafter and on or
before July 30, 1983, the price per share specified below if
redeemed thereafter and on or before July 30, 2006:
<TABLE>
<CAPTION>
If Redeemed If Redeemed
During the During the
12-Month Optional 12-Month Optional
Period Ending Redemption Period Ending Redemption
July 30 Price July 30 Price
------- ----- ------- -----
<S> <C> <C> <C>
1984............... $105.20 1996.............. $102.53
1985............... 104.98 1997.............. 102.30
1986............... 104.76 1998.............. 102.07
1987............... 104.54 1999.............. 101.84
1988............... 104.32 2000.............. 101.61
1989............... 104.10 2001.............. 101.38
1990............... 103.88 2002.............. 101.15
1991............... 103.66 2003.............. 100.92
1992............... 103.44 2004.............. 100.69
1993............... 103.22 2005.............. 100.46
1994............... 102.99 2006.............. 100.23
1995............... 102.76
</TABLE>
and $100 per share if redeemed thereafter. The applicable
optional redemption price at which the shares of Series L
Preferred Stock shall be redeemable as specified in this
section (4) shall be deemed to be the "applicable redemption
price" of Series L Preferred Stock payable to the holders
thereof upon any voluntary dissolution, liquidation, or
winding up of the Corporation as specified in the second
paragraph of paragraph (c) of Subparagraph "2" of Subdivision
21
<PAGE> 22
"A" of Section "III" of Paragraph "FIFTH" of the Certificate
of Incorporation.
(5) Sinking Fund. As a sinking fund for the
redemption of Series L Preferred Stock, subject to the
provisions of section (6) of this subdivision (g), on July 31,
1979, and on each July 31 thereafter to and including July 31,
2010, the Corporation shall redeem 10,500 shares of the Series
L Preferred Stock (or the number of shares of the Series L
Preferred Stock then outstanding if less than 10,500), and on
July 31, 2011 (if any of the Series L Preferred Stock remains
outstanding) the Corporation shall redeem all the Series L
Preferred Stock then outstanding, in each case at a price of
$100 per share, plus, in each case, accrued and unpaid
dividends to the date of redemption; provided that, if the
Corporation shall purchase any shares of Series L Preferred
Stock pursuant to section (10) below, the number of shares
otherwise required by this section (5) to be redeemed on each
July 31 thereafter (after giving effect to any prior reduction
pursuant to this proviso) shall be reduced by a number which
bears (to the nearest full number) the same relation to the
number of shares otherwise required to be redeemed as
aforesaid as the aggregate number of shares so purchased
(since the then most recent reduction) bears to the aggregate
number of shares outstanding immediately prior to giving
effect to such purchase. No redemption of Series L Preferred
Stock pursuant to section (4) of this subdivision (g) shall
constitute a redemption of such shares in lieu of or as a
credit against any sinking fund redemption required by this
section (5).
(6) Restrictions on Optional Redemption and
Sinking Fund Redemption. Less than all of the shares of
Series L Preferred Stock shall not be redeemed pursuant to
section (4) or (5) above unless full cumulative dividends for
all past dividend periods and for the then current dividend
period shall have been paid or declared and set apart for
payment on the then outstanding Series L Preferred Stock,
other than shares of Series L Preferred Stock previously or
then to be called for redemption. The obligation of the
Corporation to redeem shares for the sinking fund at any time
as provided in section (5) of this subdivision (g) shall be
subject to any restrictions now existing in the Corporation's
Indenture of Mortgage and Deed of Trust dated as of September
1, 1951, as heretofore supplemented (including any extension
of said existing restrictions in said Indenture of Mortgage
and Deed of Trust for the benefit of any series of Bonds
hereafter issued thereunder) and in the Corporation's 5-1/2%
Promissory Notes due 1973-1982 and to any applicable
restrictions of law. Notwithstanding the foregoing provisions
of this section (6), the obligation of the Corporation to
redeem Series L Preferred Stock annually commencing on July
31, 1979, pursuant to section (5) of this subdivision (g)
above, shall be cumulative.
(7) Restrictions on Payments on Junior Stock.
The Corporation shall not declare or pay or set apart any
dividend for the Common Stock or any other class of stock
ranking junior to the
22
<PAGE> 23
Series L Preferred Stock, or make any payment on account of,
or set apart money for a sinking or analogous fund for, the
purchase, redemption or other retirement of the Common Stock
or any other class of stock ranking junior to the Series L
Preferred Stock, or make any distribution in respect thereof,
either directly or indirectly, and whether in cash or property
or obligations or stock of the Corporation, unless at the date
of declaration in the case of any such dividend, or at the
date of any such other payment, setting apart or distribution,
(a) full cumulative sinking fund redemptions required by
section (5) of this subdivision (g) shall have been made and
(b) full cumulative dividends for all past dividend periods
and for the then current dividend period shall have been paid
or declared and set apart for payment on the then outstanding
Series L Preferred Stock, other than shares of Series L
Preferred Stock previously or then to be called for
redemption.
(8) Restriction on Sinking Fund Payments on Other
Stock. The Corporation shall not redeem or purchase any
shares ranking on a parity with the Series L Preferred Stock
as to assets or dividends, pursuant to any sinking fund (which
term shall include any analogous requirement) for the
redemption or purchase of such shares, and shall not set apart
money for any such fund, at any time when the sinking fund
redemption required by section (5) of this subdivision (g)
shall be in arrears; except that, at any time when the sinking
fund redemption required by section (5) of this subdivision
(g) shall be in arrears and when arrears exist in any sinking
or analogous fund retirement required for any shares ranking
as aforesaid on a parity with the Series L Preferred Stock,
the Corporation may redeem or purchase for the respective
funds shares of Series L Preferred Stock and such other
shares, pro rata, as nearly as practicable, according to the
amounts in dollars of the arrears in the redemptions or
purchases required for the respective funds.
(9) Provisions Applicable to Redemption. Not
less than thirty (30) nor more than sixty (60) days previous
to a date fixed for redemption pursuant to section (4) or (5)
of this subdivision (g), notice of the time and place thereof
shall be given by mail to the holders of record of the Series
L Preferred Stock so to be redeemed. Such notice shall be
deemed to have been duly given to any holder of the Series L
Preferred Stock within the meaning of the foregoing provision
when the same shall have been deposited in the United States
mails, postage prepaid, addressed to such holder at his
last-known address as it appears on the books of the
Corporation. In every case of redemption of less than all of
the Series L Preferred Stock pursuant to section (4) or (5) of
this subdivision (g), such redemption shall be made pro rata.
At any time after notice of redemption has been given in the
manner prescribed above to the holders of the shares so to be
redeemed, the Corporation may deposit funds sufficient for
such redemption with a solvent bank or trust company named in
such notice having its principal office in the Borough of
Manhattan, City and State of New York, and having a combined
capital and surplus of at least
23
<PAGE> 24
$5,000,000, and payable on the date fixed for redemption, as
aforesaid, to the respective orders of the holders of the
shares so to be redeemed, on endorsement of the certificates
for such shares, and upon surrender thereof, to the
Corporation, or otherwise as may be required. Upon the
deposit of said money as aforesaid, or if no such deposit is
made, upon said redemption date (unless the Corporation
defaults in making payment of the redemption price plus
accrued and unpaid dividends as aforesaid) such holders shall
cease to be stockholders with respect to said shares, and from
and after the making of said deposit, or, if no such deposit
is made, after the redemption date (the Corporation not having
defaulted in making the payment of the redemption price plus
accrued and unpaid dividends as aforesaid), the said holders
shall have no interest in or claims against the Corporation
with respect to said shares except only the right to receive
said moneys on the date fixed for redemption, as aforesaid,
from said bank or trust company, or from the Corporation, as
the case may be, without interest thereon, upon endorsement,
if required, and surrender of the certificates as aforesaid.
In case the holder of any shares of the Series L
Preferred Stock redeemed as aforesaid shall not, within six
(6) years after said deposit, claim the amount deposited as
above stated for the redemption thereof, the depositary shall,
upon demand, pay over to the Corporation such amount so
deposited and the depositary thereupon shall be relieved from
all responsibility to such holder.
(10) Limitation on Retirement of Series L Preferred
Stock. The Corporation shall not purchase, redeem or
otherwise retire any Series L Preferred Stock except by a
redemption thereof pursuant to section (4) and (5) of this
subdivision (g) or by a purchase thereof pursuant to an offer
to purchase made upon the same terms to all holders of Series
L Preferred Stock, which offer shall require the Corporation
to purchase pro rata among the shares tendered, shall remain
open for a period of at least thirty (30) days after copies
thereof have been mailed as set forth below and may contain
such other terms as the Corporation elects. A copy of such
offer shall be deemed to have been duly mailed to any holder
of Series L Preferred Stock within the meaning of this section
(10) when the same shall have been deposited in the United
States mails, postage prepaid, addressed to such holder at his
last-known address as it appears on the books of the
Corporation. No Series L Preferred Stock shall be purchased
pursuant to any such offer between the date of the giving of
notice of any redemption made pursuant to sections (4) or (5)
of this subdivision (g) and the date fixed for such
redemption.
(11) Reissuance of Redeemed Series L Preferred
Stock. No shares of Series L Preferred Stock purchased,
redeemed or otherwise reacquired by the Corporation shall be
reissued, resold or otherwise transferred by the Corporation
as Series L Preferred Stock.
24
<PAGE> 25
(h) Series R Preferred Stock
(1) Number and Designation of Series. A series
consisting initially of 600,000 shares of the Preferred Stock
of the par value of $100 per share is designated "Preferred
Stock, 8.50%, Series R" (hereinafter called the "Series R
Preferred Stock").
(2) Dividend Rate. The dividend rate per annum
of the shares of Series R Preferred Stock is $8.50 per share.
Dividends shall be calculated on the basis of a 30-day month
and a year of 360 days.
(3) Dividend Payment Dates. The dividend payment
dates for the shares of Series R Preferred Stock are the
fifteenth days of March, June, September and December; and the
dividend periods for such shares are the quarterly periods
beginning on such dates commencing December 15, 1977.
(4) Optional Redemption. Subject to the
restrictions set forth in section (6) of this subdivision (h),
at the option of the Board of Directors of the Corporation,
the Corporation may redeem the whole or any part of the Series
R Preferred Stock at any time outstanding, at any time or from
time to time, at the then applicable optional redemption price
(hereinafter called the "optional redemption price"), plus
accrued and unpaid dividends to the date of redemption. The
optional redemption price at which Series R Preferred Stock
shall be redeemable is $115 per share if redeemed on or before
December 14, 1987, and the price per share specified below if
redeemed thereafter and on or before December 14, 1994:
<TABLE>
<CAPTION>
If Redeemed If Redeemed
During the During the
12-Month Optional 12-Month Optional
Period Ending Redemption Period Ending Redemption
December 14 Price December 14 Price
----------- ----- ----------- -----
<S> <C> <C> <C>
1988............... $103.50 1992.............. $101.50
1989............... 103.00 1993.............. 101.00
1990............... 102.50 1994.............. 100.50
1991............... 102.00
</TABLE>
and $100 per share if redeemed thereafter. The applicable
optional redemption price at which the shares of Series R
Preferred Stock shall be redeemable as specified in this
section (4) shall be deemed to be the "applicable redemption
price" of Series R Preferred Stock payable to the holders
thereof upon any voluntary dissolution, liquidation, or
winding up of the Corporation as specified in the second
paragraph of paragraph (c) of Subparagraph "2" of Subdivision
"A" of Section "III" of Paragraph "FIFTH" of the Certificate
of Incorporation.
25
<PAGE> 26
(5) Sinking Fund. As a sinking fund for the
redemption of Series R Preferred Stock, subject to the
provisions of section (6) of this subdivision (h), on December
15, 1982, and on each December 15 thereafter through December
15, 1997, the Corporation shall redeem a number of shares of
the Series R Preferred Stock equal to 6-1/4% of the number of
shares thereof originally issued (or the number of shares of
the Series R Preferred Stock then outstanding if less than
6-1/4% of the number of shares thereof originally issued), in
each case at a price of $100 per share, plus, in each case,
accrued and unpaid dividends to the date of redemption;
provided that, if the Corporation shall purchase any shares of
Series R Preferred Stock pursuant to section (10) of this
subdivision (h), the number of shares otherwise required by
this section (5) to be redeemed on each December 15 thereafter
(after giving effect to any prior reduction pursuant to this
proviso) shall be reduced by a number which bears (to the
nearest full number) the same relation to the number of shares
otherwise required to be redeemed as aforesaid as the
aggregate number of shares so purchased (since the then most
recent reduction) bears to the aggregate number of shares
outstanding immediately prior to giving effect to such
purchase. The Corporation shall have the noncumulative option
on December 15, 1982 or any December 15 thereafter through
December 15, 1996, to increase by up to 100% the number of
shares of Series R Preferred Stock otherwise required by this
section (5) to be redeemed on such December 15; provided that
the aggregate number of shares of Series R Preferred Stock
redeemed pursuant to this option shall not exceed 25% of the
number of shares of the Series R Preferred Stock originally
issued. No redemption of Series R Preferred Stock pursuant to
section (4) of this subdivision (h) or pursuant to the next
preceding sentence shall constitute a redemption of such
shares in lieu of or as a credit against any sinking fund
redemption required by this section (5).
(6) Restrictions on Optional Redemption and
Sinking Fund Redemption. Less than all of the shares of
Series R Preferred Stock shall not be redeemed pursuant to
section (4) or (5) of this subdivision (h) unless full
cumulative dividends for all past dividend periods and for the
then current dividend period shall have been paid or declared
and set apart for payment on the then outstanding Series R
Preferred Stock, other than shares of Series R Preferred Stock
previously or then to be called for redemption. Prior to
December 15, 1982, the shares of Series R Preferred Stock
shall not be redeemed pursuant to section (4) of this
subdivision (h) as a part of, or in anticipation of, a
refunding operation involving the application, directly or
indirectly, of the proceeds (a) from the incurring of
indebtedness or the sale and lease back of property or the
incurring of other obligations, in any case having an interest
rate or an effective cost of money to the Corporation of less
than 8.50% per annum, (b) from the sale of any shares of stock
ranking ahead of the Common Stock as to assets or dividends,
in any case having a dividend rate or an effective cost of
money to the Corporation of less than 8.50% per annum, or (c)
from the sale of Common Stock. The obligation of the
Corporation to redeem shares
26
<PAGE> 27
for the sinking fund at any time as provided in section (5) of
this subdivision (h) shall be subject to any restrictions now
existing in the Corporation's Indenture of Mortgage and Deed
of Trust dated as of September 1, 1951, as heretofore
supplemented, and to any applicable restrictions of law.
Notwithstanding the foregoing provisions of this section (6),
the obligation of the Corporation to redeem Series R Preferred
Stock annually commencing on December 15, 1982, pursuant to
section (5) of this subdivision (h), shall be cumulative.
(7) Restrictions on Payments on Junior Stock.
The Corporation shall not declare or pay or set apart any
dividend for the Common Stock or any other class of stock
ranking junior to the Series R Preferred Stock, or make any
payment on account of, or set apart money for a sinking or
analogous fund for, the purchase, redemption or other
retirement of the Common Stock or any other class of stock
ranking junior to the Series R Preferred Stock, or make any
distribution in respect thereof, either directly or
indirectly, and whether in cash or property or obligations or
stock of the Corporation, unless at the date of declaration in
the case of any such dividend, or at the date of any such
other payment, setting apart or distribution, (a) full
cumulative sinking fund redemptions required by section (5) of
this subdivision (h) shall have been made and (b) full
cumulative dividends for all past dividend periods and for the
then current dividend period shall have been paid or declared
and set apart for payment on the then outstanding Series R
Preferred Stock, other than shares of Series R Preferred Stock
previously or then to be called for redemption.
(8) Restriction on Sinking Fund Payments on Other
Stock. The Corporation shall not redeem or purchase any
shares ranking on a parity with the Series R Preferred Stock
as to assets or dividends, pursuant to any sinking fund (which
term shall include any analogous requirements) for the
redemption or purchase of such shares, and shall not set apart
money for any such fund, at any time when the sinking fund
redemption required by section (5) of this subdivision (h)
shall be in arrears; except that, at any time when the sinking
fund redemption required by section (5) of this subdivision
(h) shall be in arrears and when arrears exist in any sinking
or analogous fund retirement required for any shares ranking
as aforesaid on a parity with the Series R Preferred Stock,
the Corporation may redeem or purchase for the respective
funds shares of Series R Preferred Stock and such other
shares, pro rata, as nearly as practicable, according to the
amounts in dollars of the arrears in the redemptions or
purchases required for the respective funds.
(9) Provisions Applicable to Redemption. Not
less than thirty (30) nor more than sixty (60) days previous
to a date fixed for redemption pursuant to section (4) or (5)
of this subdivision (h), notice of the time and place thereof
shall be given by mail to the holders of record of the Series
R Preferred Stock so to be redeemed. Such notice shall be
deemed to have been duly given to
27
<PAGE> 28
any holder of the Series R Preferred Stock within the meaning
of the foregoing provision when the same shall have been
deposited in the United States mails, postage prepaid,
addressed to such holder at his last-known address as it
appears on the books of the Corporation. In every case of
redemption of less than all of the Series R Preferred Stock
pursuant to section (4) or (5) of this subdivision (h), such
redemption shall be made pro rata. At any time after notice
of redemption has been given in the manner prescribed above to
the holders of the shares so to be redeemed, the Corporation
may deposit funds sufficient for such redemption with a
solvent bank or trust company named in such notice having its
principal office in the Borough of Manhattan, City and State
of New York, and having a combined capital and surplus of at
least $5,000,000, and payable on the date fixed for
redemption, as aforesaid, to the respective orders of the
holders of the shares so to be redeemed, on endorsement of the
certificates for such shares, and upon surrender thereof, to
the Corporation, or otherwise as may be required. Upon the
deposit of said money as aforesaid, or if no such deposit is
made, upon said redemption date (unless the Corporation
defaults in making payment of the redemption price plus
accrued and unpaid dividends as aforesaid) such holders shall
cease to be stockholders with respect to said shares, and from
and after the making of said deposit, or, if no such deposit
is made, after the redemption date (the Corporation not having
defaulted in making the payment of the redemption price plus
accrued and unpaid dividends as aforesaid), the said holders
shall have no interest in or claims against the Corporation
with respect to said shares except only the right to receive
said moneys on the date fixed for redemption, as aforesaid,
from said bank or trust company, or from the Corporation, as
the case may be, without interest thereon, upon endorsement,
if required, and surrender of the certificates as aforesaid.
In case the holder of any shares of the Series R
Preferred Stock redeemed as aforesaid shall not, within six
(6) years after said deposit, claim the amount deposited as
above stated for the redemption thereof, the depositary shall,
upon demand, pay over to the Corporation such amount so
deposited and the depositary thereupon shall be relieved from
all responsibility to such holder.
(10) Limitation on Retirement of Series R
Preferred Stock. The Corporation shall not purchase, redeem
or otherwise retire any Series R Preferred Stock except by a
redemption thereof pursuant to section (4) or (5) of this
subdivision (h) or by a purchase thereof pursuant to an offer
to purchase made upon the same terms to all holders of Series
R Preferred Stock, which offer shall require the Corporation
to purchase pro rata among the shares tendered, shall remain
open for a period of at least thirty (30) days after copies
thereof have been mailed as set forth below and may contain
such other terms as the Corporation elects. A copy of such
offer shall be deemed to have been duly mailed to any holder
of Series R Preferred Stock within the meaning of this section
(10) when the same shall have been deposited in the United
States mails, postage
28
<PAGE> 29
prepaid, addressed to such holder at his last-known address as
it appears on the books of the Corporation. No Series R
Preferred Stock shall be purchased pursuant to any such offer
between the date of the giving of notice of any redemption
made pursuant to section (4) or (5) of this subdivision (h)
and the date fixed for such redemption.
(11) Reissuance of Redeemed Series R Preferred
Stock. No shares of Series R Preferred Stock purchased,
redeemed or otherwise reacquired by the Corporation shall be
reissued, resold or otherwise transferred by the Corporation
as Series L, M or R Preferred Stock.
(i) Series AA Preferred Stock
(1) Number and Designation of Series. A series
consisting initially of 14,520,000 shares of the Preferred
Stock of the par value of $25 per share is designated
"Preferred Stock, 7.95%, Series AA" (hereinafter called the
"Series AA Preferred Stock").
(2) Dividend Rate. The dividend rate per annum
of the shares of Series AA Preferred Stock is $1.9875 per
share. Dividends shall be calculated on the basis of a 30-day
month and a year of 360 days.
(3) Dividend Payment Dates. The dividend payment
dates for the shares of Series AA Preferred Stock are the
first days of March, June, September and December; the initial
dividend period for such shares shall commence on the day when
such shares are issued and thereafter the dividend periods for
such shares shall be the quarterly periods beginning on such
dates commencing September 1, 1992.
(4) Optional Redemption. The Series AA Preferred
Stock will not be subject to optional redemption.
(5) Mandatory Redemption. Subject to the
restrictions set forth in section (6) of this subdivision (i),
the Corporation shall redeem on June 1, 2000, all of the
outstanding shares of Series AA Preferred Stock at $25 per
share, plus accrued and unpaid dividends to the date of
redemption. In the case of a redemption of Series AA
Preferred Stock as specified in this section (5), the Company
shall take the action and provide the notice specified in
paragraph (d) of Subparagraph "2" of Subdivision "A" of
Section "III" of Paragraph "FIFTH" of the Restated Certificate
of Incorporation, with respect to optional redemption of
Preferred Stock.
(6) Restrictions on Mandatory Redemption. Unless
full cumulative dividends for all past dividend periods and
for the then current dividend period shall have been paid or
declared and set apart for payment on the then outstanding
Series AA Preferred Stock, the Corporation shall not redeem
pursuant to section (5) of this subdivision (i) less than all
of the then outstanding shares of Series AA Preferred Stock.
29
<PAGE> 30
The obligation of the Corporation to redeem shares as
provided in section (5) of this subdivision (i) shall be
subject to any restrictions now existing in the Corporation's
Indenture of Mortgage and Deed of Trust dated as of September
1, 1951, as heretofore supplemented (including any extension
of said existing restrictions in said Indenture of Mortgage
and Deed of Trust for the benefit of any series of Bonds
hereafter issued thereunder) and to any applicable
restrictions of law.
(7) Restrictions on Payments on Junior Stock.
The Corporation shall not declare or pay or set apart any
dividend for the Common Stock or any other class of stock
ranking junior to the Series AA Preferred Stock, or make any
payment on account of, or set apart money for a sinking or
analogous fund for, the purchase, redemption or other
retirement of the Common Stock or any other class of stock
ranking junior to the Series AA Preferred Stock, or make any
distribution in respect thereof, either directly or
indirectly, and whether in cash or property or obligations or
stock of the Corporation, unless at the date of declaration in
the case of any such dividend, or at the date of any such
other payment, setting apart or distribution, full cumulative
dividends for all past dividend periods and for the then
current dividend period shall have been paid or declared and
set apart for payment on the then outstanding Series AA
Preferred Stock, other than shares of Series AA Preferred
Stock previously or then to be called for redemption.
(8) Restrictions on Sinking Fund Payments on
Other Stock. The Corporation shall not redeem or purchase any
shares ranking on a parity with the Series AA Preferred Stock
as to assets or dividends, pursuant to any sinking fund
requirement (which terms shall include any analogous
requirement) for the redemption or purchase of such shares,
and shall not set apart money for any such requirement, at any
time when the redemption required by section (5) of this
subdivision (i) shall be in arrears; except that, at any time
when the redemption required by section (5) of this
subdivision (i) shall be in arrears and when arrears exist in
respect of any sinking fund or analogous requirement for any
shares ranking as aforesaid on a parity with the Series AA
Preferred Stock, the Corporation may redeem or purchase for
the respective requirements shares of Series AA Preferred
Stock and such other shares, pro rata, as nearly as
practicable, according to the amounts in dollars of the
arrears in the redemptions or purchases required for the
respective requirements.
(9) Acquisition of Series AA Preferred Stock.
Except as hereinbefore provided, the Corporation may, at its
option, purchase, redeem or otherwise acquire any shares of
Series AA Preferred Stock.
(10) Redemption Upon Voluntary Dissolution,
Liquidation, or Winding Up of the Corporation. The applicable
redemption price payable upon any voluntary dissolution,
liquidation, or winding up of the Corporation as specified in
the second paragraph of paragraph (c) of Subparagraph "2" of
Subdivision "A" of Section "III" of
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<PAGE> 31
Paragraph "FIFTH" of the Restated Certificate of
Incorporation shall be the par value of the Series AA
Preferred Stock.
(j) Series CC Preferred Stock
(1) Number and Designation of Series. A series
consisting initially of 570,000 shares of the Preferred Stock
of the par value of $100 per share is designated "Preferred
Stock, 7.66%, Series CC" (hereinafter called the "Series CC
Preferred Stock").
(2) Dividend Rate. The dividend rate per annum
of the shares of Series CC Preferred Stock is $7.66 per share.
Dividends shall be calculated on the basis of a 30-day month
and a year of 360 days.
(3) Dividend Payment Dates. The dividend payment
dates for the shares of Series CC Preferred Stock are the
first days of February, May, August and November; the initial
dividend period for such shares shall commence on the day when
such shares are issued and thereafter the dividend periods for
such shares shall be the quarterly periods beginning on such
dates commencing November 1, 1992.
(4) Optional Redemption. The Series CC Preferred
Stock will not be subject to optional redemption.
(5) Mandatory Redemption. Subject to the
restrictions set forth in section (6) of this subdivision (j),
the Corporation shall redeem on August 1, 2002, all of the
outstanding shares of Series CC Preferred Stock at $100 per
share, plus accrued and unpaid dividends to the date of
redemption. In the case of a redemption of Series CC
Preferred Stock as specified in this section (5), the Company
shall take the action and provide the notice specified in
paragraph (d) of Subparagraph "2" of Subdivision "A" of
Section "III" of Paragraph "FIFTH" of the Restated Certificate
of Incorporation, with respect to optional redemption of
Preferred Stock.
(6) Restrictions on Mandatory Redemption. Unless
full cumulative dividends for all past dividend periods and
for the then current dividend period shall have been paid or
declared and set apart for payment on the then outstanding
Series CC Preferred Stock, the Corporation shall not redeem
pursuant to section (5) of this subdivision (j) less than all
of the then outstanding shares of Series CC Preferred Stock.
The obligation of the Corporation to redeem shares as
provided in section (5) of this subdivision (j) shall be
subject to any restrictions now existing in the Corporation's
Indenture of Mortgage and Deed of Trust dated as of September
1, 1951, as heretofore supplemented (including any extension
of said existing restrictions in said Indenture of Mortgage
and Deed of Trust for the benefit of any series of Bonds
hereafter issued thereunder) and to any applicable
restrictions of law.
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<PAGE> 32
(7) Restrictions on Payments on Junior Stock.
The Corporation shall not declare or pay or set apart any
dividend for the Common Stock or any other class of stock
ranking junior to the Series CC Preferred Stock, or make any
payment on account of, or set apart money for a sinking or
analogous fund for, the purchase, redemption or other
retirement of the Common Stock or any other class of stock
ranking junior to the Series CC Preferred Stock, or make any
distribution in respect thereof, either directly or
indirectly, and whether in cash or property or obligations or
stock of the Corporation, unless at the date of declaration in
the case of any such dividend, or at the date of any such
other payment, setting apart or distribution, full cumulative
dividends for all past dividend periods and for the then
current dividend period shall have been paid or declared and
set apart for payment on the then outstanding Series CC
Preferred Stock, other than shares of Series CC Preferred
Stock previously or then to be called for redemption.
(8) Restrictions on Sinking Fund Payments on
Other Stock. The Corporation shall not redeem or purchase any
shares ranking on a parity with the Series CC Preferred Stock
as to assets or dividends, pursuant to any sinking fund
requirement (which terms shall include any analogous
requirement) for the redemption or purchase of such shares,
and shall not set apart money for any such requirement, at any
time when the redemption required by section (5) of this
subdivision (j) shall be in arrears; except that, at any time
when the redemption required by section (5) of this
subdivision (j) shall be in arrears and when arrears exist in
respect of any sinking fund or analogous requirement for any
shares ranking as aforesaid on a parity with the Series CC
Preferred Stock, the Corporation may redeem or purchase for
the respective requirements shares of Series CC Preferred
Stock and such other shares, pro rata, as nearly as
practicable, according to the amounts in dollars of the
arrears in the redemptions or purchases required for the
respective requirements.
(9) Acquisition of Series CC Preferred Stock.
Except as hereinbefore provided, the Corporation may, at its
option, purchase, redeem or otherwise acquire any shares of
Series CC Preferred Stock.
(10) Redemption Upon Voluntary Dissolution,
Liquidation, or Winding Up of the Corporation. The applicable
redemption price payable upon any voluntary dissolution,
liquidation, or winding up of the Corporation as specified in
the second paragraph of paragraph (c) of Subparagraph "2" of
Subdivision "A" of Section "III" of Paragraph "FIFTH" of the
Restated Certificate of Incorporation shall be the par value
of the Series CC Preferred Stock.
(k) Series GG Preferred Stock
(1) Number and Designation of Series. A series
consisting initially of 880,000 shares of the Preferred Stock
of the par value of $25 per share is designated "Preferred
Stock, $1.67, Series GG" (hereinafter called the "Series GG
Preferred Stock").
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<PAGE> 33
(2) Dividend Rate. The dividend rate per annum
of the shares of Series GG Preferred Stock is $1.67 per share.
Dividends shall be calculated on the basis of a 30-day month
and a year of 360 days.
(3) Dividend Payment Dates. The dividend payment
dates for the shares of Series GG Preferred Stock are the
first days of March, June, September and December; the initial
dividend period for such shares shall commence on the day when
such shares are issued and thereafter the dividend periods for
such shares shall be the quarterly periods beginning on such
dates commencing June 1, 1993.
(4) Optional Redemption. The Series GG Preferred
Stock will not be subject to optional redemption.
(5) Mandatory Redemption. Subject to the
restrictions set forth in section (6) of this subdivision (k),
the Corporation shall redeem on March 1, 1999, all of the
outstanding shares of Series GG Preferred Stock at $25 per
share, plus accrued and unpaid dividends to the date of
redemption. In the case of a redemption of Series GG
Preferred Stock as specified in this section (5), the Company
shall take the action and provide the notice specified in
paragraph (d) of Subparagraph "2" of Subdivision "A" of
Section "III" of Paragraph "FIFTH" of the Restated Certificate
of Incorporation, with respect to optional redemption of
Preferred Stock.
(6) Restrictions on Mandatory Redemption. Unless
full cumulative dividends for all past dividend periods and
for the then current dividend period shall have been paid or
declared and set apart for payment on the then outstanding
Series GG Preferred Stock, the Corporation shall not redeem
pursuant to section (5) of this subdivision (k) less than all
of the then outstanding shares of Series GG Preferred Stock.
The obligation of the Corporation to redeem shares as
provided in section (5) of this subdivision (k) shall be
subject to any restrictions now existing in the Corporation's
Indenture of Mortgage and Deed of Trust dated as of September
1, 1951, as heretofore supplemented (including any extension
of said existing restrictions in said Indenture of Mortgage
and Deed of Trust for the benefit of any series of Bonds
hereafter issued thereunder) and to any applicable
restrictions of law.
(7) Restrictions on Payments on Junior Stock.
The Corporation shall not declare or pay or set apart any
dividend for the Common Stock or any other class of stock
ranking junior to the Series GG Preferred Stock, or make any
payment on account of, or set apart money for a sinking or
analogous fund for, the purchase, redemption or other
retirement of the Common Stock or any other class of stock
ranking junior to the Series GG Preferred Stock, or make any
distribution in respect thereof, either directly or
indirectly, and whether in cash or property or obligations or
stock of the Corporation, unless at the date of declaration in
the case of
33
<PAGE> 34
any such dividend, or at the date of any such other payment,
setting apart or distribution, full cumulative dividends for
all past dividend periods and for the then current dividend
period shall have been paid or declared and set apart for
payment on the then outstanding Series GG Preferred Stock,
other than shares of Series GG Preferred Stock previously or
then to be called for redemption.
(8) Restrictions on Sinking Fund Payments on
Other Stock. The Corporation shall not redeem or purchase any
shares ranking on a parity with the Series GG Preferred Stock
as to assets or dividends, pursuant to any sinking fund
requirement (which terms shall include any analogous
requirement) for the redemption or purchase of such shares,
and shall not set apart money for any such requirement, at any
time when the redemption required by section (5) of this
subdivision (k) shall be in arrears; except that, at any time
when the redemption required by section (5) of this
subdivision (k) shall be in arrears and when arrears exist in
respect of any sinking fund or analogous requirement for any
shares ranking as aforesaid on a parity with the Series GG
Preferred Stock, the Corporation may redeem or purchase for
the respective requirements shares of Series GG Preferred
Stock and such other shares, pro rata, as nearly as
practicable, according to the amounts in dollars of the
arrears in the redemptions or purchases required for the
respective requirements.
(9) Acquisition of Series GG Preferred Stock.
Except as hereinbefore provided, the Corporation may, at its
option, purchase, redeem or otherwise acquire any shares of
Series GG Preferred Stock.
(10) Redemption Upon Voluntary Dissolution,
Liquidation, or Winding Up of the Corporation. The applicable
redemption price payable upon any voluntary dissolution,
liquidation, or winding up of the Corporation as specified in
the second paragraph of paragraph (c) of Subparagraph "2" of
Subdivision "A" of Section "III" of Paragraph "FIFTH" of the
Restated Certificate of Incorporation shall be the par value
of the Series GG Preferred Stock.
(l) Series NN Preferred Stock
(1) Number and Designation of Series. A series
consisting initially of 1,554,000 shares of the Preferred
Stock of the par value of $25 per share is designated
"Preferred Stock, $1.95, Series NN" (hereinafter called the
"Series NN Preferred Stock").
(2) Dividend Rate. The dividend rate per annum
of the shares of Series NN Preferred Stock is $1.95 per share.
Dividends shall be calculated on the basis of a 30-day month
and a year of 360 days.
(3) Dividend Payment Dates. The dividend payment
dates for the shares of Series NN Preferred Stock are the
first days of March, June, September and December; the initial
dividend period for such shares shall commence on the day when
such shares are issued and
34
<PAGE> 35
thereafter the dividend periods for such shares shall be the
quarterly periods beginning on such dates commencing June 1,
1993.
(4) Optional Redemption. Subject to the
restrictions set forth in section (6) of this subdivision (l),
at the option of the Board of Directors of the Corporation,
the Corporation may, on or after March 1, 1998, redeem the
whole or any part of the Series NN Preferred Stock at any time
outstanding, at any time or from time to time, at the then
applicable optional redemption price (hereinafter called the
"optional redemption price"), plus accrued and unpaid
dividends to the date of redemption. The optional redemption
price at which Series NN Preferred Stock shall be redeemable
is $26.95 per share if redeemed on or after March 1, 1998 and
on or before February 28, 1999; $26.56 per share if redeemed
thereafter and on or before February 29, 2000; $26.17 per
share if redeemed thereafter and on or before February 28,
2001; $25.78 per share if redeemed thereafter and on or before
February 28, 2002; $25.39 per share if redeemed thereafter and
on or before February 28, 2003; and $25 per share if redeemed
thereafter. The applicable optional redemption price at which
the shares of Series NN Preferred Stock shall be redeemable as
specified in this section (4) shall be deemed to be the
"applicable redemption price" of Series NN Preferred Stock
payable to the holders thereof for the purposes of optional
redemptions, as specified in paragraph (d) of Subparagraph "2"
of Subdivision "A" of Section "III" of Paragraph "FIFTH" of
the Restated Certificate of Incorporation.
(5) Sinking Fund. As a sinking fund for the
redemption of Series NN Preferred Stock, subject to the
provisions of section (6) of this subdivision (l), on March 1,
1999, and on each March 1 thereafter, the Corporation shall
redeem 77,700 shares of the Series NN Preferred Stock (or the
number of shares of the Series NN Preferred Stock then
outstanding if less than 77,700), in each case at a price of
$25 per share, plus, in each case, accrued and unpaid
dividends to the date of redemption. Notwithstanding the
provisions of section (6) of this subdivision (l), the
foregoing obligation of the Corporation to redeem Series NN
Preferred Stock annually shall be cumulative. In addition,
the Corporation shall have the noncumulative option on March
1, 1999 or any March 1 thereafter, to increase by up to 77,700
the number of shares of Series NN Preferred Stock otherwise
required by this section (5) of this subdivision (l) to be
redeemed on such March 1. At its option, the Corporation may
credit against any sinking fund redemption required by this
section (5) of this subdivision (l) any shares of Series NN
Preferred Stock redeemed pursuant to Section (4) of this
subdivision (l), redeemed pursuant to the next preceding
sentence or acquired pursuant to section (9) of this
subdivision (l) below. All shares of Series NN Preferred
Stock redeemed pursuant to section (4) of this subdivision (l)
or this section (5) of this subdivision (l) and all shares of
Series NN Preferred Stock credited against any sinking fund
redemption obligation pursuant to this section (5) of this
subdivision (l) shall be cancelled.
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<PAGE> 36
(6) Restrictions on Optional Redemption and
Sinking Fund Redemption. Unless full cumulative dividends for
all past dividend periods and for the then current dividend
period shall have been paid or declared and set apart for
payment on the then outstanding Series NN Preferred Stock
other than shares of Series NN Preferred Stock previously or
then to be called for redemption, the Corporation shall not
redeem pursuant to sections (4) or (5) of this subdivision (l)
less than all of the then outstanding shares of Series NN
Preferred Stock.
The obligation of the Corporation to redeem shares
for the sinking fund as provided in section (5) of this
subdivision (l) shall be subject to any restrictions now
existing in the Corporation's Indenture of Mortgage and Deed
of Trust dated as of September 1, 1951, as heretofore
supplemented (including any extension of said existing
restrictions in said Indenture of Mortgage and Deed of Trust
for the benefit of any series of Bonds hereafter issued
thereunder) and to any applicable restrictions of law.
(7) Restrictions on Payments on Junior Stock.
The Corporation shall not declare or pay or set apart any
dividend for the Common Stock or any other class of stock
ranking junior to the Series NN Preferred Stock, or make any
payment on account of, or set apart money for a sinking or
analogous fund for, the purchase, redemption or other
retirement of the Common Stock or any other class of stock
ranking junior to the Series NN Preferred Stock, or make any
distribution in respect thereof, either directly or
indirectly, and whether in cash or property or obligations or
stock of the Corporation, unless at the date of declaration in
the case of any such dividend, or at the date of any such
other payment, setting apart or distribution, full cumulative
dividends for all past dividend periods and for the then
current dividend period shall have been paid or declared and
set apart for payment on the then outstanding Series NN
Preferred Stock, other than shares of Series NN Preferred
Stock previously or then to be called for redemption.
(8) Restrictions on Sinking Fund Payments on
Other Stock. The Corporation shall not redeem or purchase any
shares ranking on a parity with the Series NN Preferred Stock
as to assets or dividends, pursuant to any sinking fund (which
term shall include any analogous requirement) for the
redemption or purchase of such shares, and shall not set apart
money for any such fund, at any time when the sinking fund
redemption required by section (5) of this subdivision (l)
shall be in arrears; except that, at any time when the sinking
fund redemption required by section (5) of this subdivision
(l) shall be in arrears and when arrears exist in respect of
any sinking fund or analogous fund retirement required for any
shares ranking as aforesaid on a parity with the Series NN
Preferred Stock, the Corporation may redeem or purchase for
the respective funds shares of Series NN Preferred Stock and
such other shares, pro rata, as nearly as practicable,
according to the amounts
36
<PAGE> 37
in dollars of the arrears in the redemptions or purchases
required for the respective funds.
(9) Acquisition of Series NN Preferred Stock.
Except as hereinbefore provided, the Corporation may, at its
option, purchase, redeem or otherwise acquire any shares of
Series NN Preferred Stock.
(10) Redemption Upon Voluntary Dissolution,
Liquidation, or Winding Up of the Corporation. The applicable
redemption price payable upon any voluntary dissolution,
liquidation, or winding up of the Corporation as specified in
the second paragraph of paragraph (c) of Subparagraph "2" of
Subdivision "A" of Section "III" of Paragraph "FIFTH" of the
Restated Certificate of Incorporation shall be the par value
of the Series NN Preferred Stock."
(m) Series QQ Preferred Stock
(1) Number and Designation of Series. A series
consisting initially of 3,464,000 shares of the Preferred
Stock of the par value of $25 per share is designated
"Preferred Stock, 7.05%, Series QQ" (hereinafter called the
"Series QQ Preferred Stock").
(2) Dividend Rate. The dividend rate per annum
of the shares of Series QQ Preferred Stock is $1.7625 per
share. Dividends shall be calculated on the basis of a 30-day
month and a year of 360 days.
(3) Dividend Payment Dates. The dividend payment
dates for the shares of Series QQ Preferred Stock are the
first days of May, August, November and February, commencing
August 1, 1993; the initial dividend period for such shares
shall commence on the day when such shares are issued and
thereafter the dividend periods for such shares shall be the
quarterly periods beginning on such dates, commencing August
1, 1993.
(4) Optional Redemption. The Series QQ Preferred
Stock will not be subject to optional redemption.
(5) Mandatory Redemption. Subject to the
restrictions set forth in section (6) of this subdivision (m),
the Corporation shall redeem on May 1, 2001, all of the
outstanding shares of Series QQ Preferred Stock at $25 per
share, plus accrued and unpaid dividends to the date of
redemption. In the case of a redemption of Series QQ
Preferred Stock as specified in this section (5), the Company
shall take the action and provide the notice specified in
paragraph (d) of Subparagraph "2" of Subdivision "A" of
Section "III" of Paragraph "FIFTH" of the Restated Certificate
of Incorporation, with respect to optional redemption of
Preferred Stock.
(6) Restrictions on Mandatory Redemption. Unless
full cumulative dividends for all past dividend periods and
for the then current dividend period shall have been paid or
declared and set apart for payment on the then outstanding
Series QQ Preferred Stock,
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<PAGE> 38
the Corporation shall not redeem pursuant to section (5) of
this subdivision (m) less than all of the then outstanding
shares of Series QQ Preferred Stock.
The obligation of the Corporation to redeem shares as
provided in section (5) of this subdivision (m) shall be
subject to any restrictions now existing in the Corporation's
Indenture of Mortgage and Deed of Trust dated as of September
1, 1951, as heretofore supplemented (including any extension
of said existing restrictions in said Indenture of Mortgage
and Deed of Trust for the benefit of any series of Bonds
hereafter issued thereunder) and to any applicable
restrictions of law.
(7) Restrictions on Payments on Junior Stock.
The Corporation shall not declare or pay or set apart any
dividend for the Common Stock or any other class of stock
ranking junior to the Series QQ Preferred Stock, or make any
payment on account of, or set apart money for a sinking or
analogous fund for, the purchase, redemption or other
retirement of the Common Stock or any other class of stock
ranking junior to the Series QQ Preferred Stock, or make any
distribution in respect thereof, either directly or
indirectly, and whether in cash or property or obligations or
stock of the Corporation, unless at the date of declaration in
the case of any such dividend, or the date of any such other
payment, setting apart or distribution, full cumulative
dividends for all past dividend periods and for the then
current dividend period shall have been paid or declared and
set apart for payment on the then outstanding Series QQ
Preferred Stock, other than shares of Series QQ Preferred
Stock previously or then to be called for redemption.
(8) Restrictions on Sinking Fund Payments on
Other Stock. The Corporation shall not redeem or purchase any
shares ranking on a parity with the Series QQ Preferred Stock
as to assets or dividends, pursuant to any sinking fund
requirement (which terms shall include any analogous
requirement) for the redemption or purchase of such shares,
and shall not set apart money for any such requirement, at any
time when the redemption required by section (5) of this
subdivision (m) shall be in arrears; except that, at any time
when the redemption required by section (5) of this
subdivision (m) shall be in arrears and when arrears exist in
respect of any sinking fund or analogous requirement for any
shares ranking as aforesaid on a parity with the Series QQ
Preferred Stock, the Corporation may redeem or purchase for
the respective requirements shares of Series QQ Preferred
Stock and such other shares, pro rata, as nearly as
practicable, according to the amounts in dollars of the
arrears in the redemptions or purchases required for the
respective requirements.
(9) Acquisition of Series QQ Preferred Stock.
Except as hereinbefore provided, the Corporation may, at its
option, purchase, redeem or otherwise acquire any shares of
Series QQ Preferred Stock.
38
<PAGE> 39
(10) Redemption Upon Voluntary Dissolution,
Liquidation, or Winding Up of the Corporation. The applicable
redemption price payable upon any voluntary dissolution,
liquidation, or winding up of the Corporation as specified in
the second paragraph of paragraph (c) of Subparagraph "2" of
Subdivision "A" of Section "III" of Paragraph "FIFTH" of the
Restated Certificate of Incorporation shall be the par value
of the Series QQ Preferred Stock.
(n) Series UU PREFERRED STOCK
(1) Number and Designation of Series. A series
consisting initially of 2,240,000 shares of the Preferred
Stock of the par value of $25 per share is designated
`Preferred Stock, 6.875%, Series UU' (hereinafter called the
`Series UU Preferred Stock').
(2) Dividend Rate. The dividend rate per annum
of the shares of Series UU Preferred Stock is $1.71875 per
share. Dividends shall be calculated on the basis of a 30-day
month and a year of 360 days.
(3) Dividend Payment Dates. The dividend payment
dates for the shares of Series UU Preferred Stock are the
fifteenth days of January, April, July and October, commencing
January 15, 1994; the initial dividend period for such shares
shall commence on the day when such shares are issued and
thereafter the dividend periods for such shares shall be the
quarterly periods beginning on such dates, commencing January
15, 1994.
(4) Optional Redemption. Subject to the
restrictions set forth in section (6) of this subdivision (n),
at the option of the Board of Directors of the Corporation,
the Corporation may, on or after October 15, 2003, redeem the
whole or any part of the Series UU Preferred Stock at any time
outstanding, at any time or from time to time, at $25 per
share (hereinafter called the "optional redemption price"),
plus accrued and unpaid dividends to the date of redemption.
The optional redemption price at which the shares of Series UU
Preferred Stock shall be redeemable as specified in this
section (4) shall be deemed to be the "applicable redemption
price" of Series UU Preferred Stock payable to the holders
thereof for the purposes of optional redemptions, as specified
in paragraph (d) of Subparagraph "2" of Subdivision "A" of
Section "III" of Paragraph "FIFTH" of the Restated Certificate
of Incorporation.
(5) Sinking Fund. As a sinking fund for the
redemption of Series UU Preferred Stock, subject to the
provisions of section (6) of this subdivision (n), on October
15, 1999, and on each October 15 thereafter, the Corporation
shall redeem 112,000 shares of the Series UU Preferred Stock
(or the number of shares of the Series UU Preferred Stock then
outstanding if less than 112,000), in each case at a price of
$25 per share, plus, in each case, accrued and unpaid
dividends to the date of redemption. Notwithstanding the
provisions of section (6) of this subdivision (n), the
foregoing obligation of the Corporation to redeem Series UU
Preferred Stock annually shall
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<PAGE> 40
be cumulative. In addition, the Corporation shall have the
noncumulative option on October 15, 1999 or any October 15
thereafter, to increase by up to 112,000 the number of shares
of Series UU Preferred Stock otherwise required by this
section (5) of this subdivision (n) to be redeemed on such
October 15. At its option, the Corporation may credit against
any sinking fund redemption required by this section (5) of
this subdivision (n) any shares of Series UU Preferred Stock
redeemed pursuant to section (4) of this subdivision (n),
redeemed pursuant to the next preceding sentence or acquired
pursuant to section (9) of this subdivision (n) below. All
shares of Series UU Preferred Stock redeemed pursuant to
section (4) of this subdivision (n) or this section (5) of
this subdivision (n) and all shares of Series UU Preferred
Stock credited against any sinking fund redemption obligation
pursuant to this section (5) of this subdivision (n) shall be
cancelled.
(6) Restrictions on Optional Redemption and
Sinking Fund Redemption. Unless full cumulative dividends for
all past dividend periods and for the then current dividend
period shall have been paid or declared and set apart for
payment on the then outstanding Series UU Preferred Stock
other than shares of Series UU Preferred Stock previously or
then to be called for redemption, the Corporation shall not
redeem pursuant to sections (4) or (5) of this subdivision (n)
less than all of the then outstanding shares of Series UU
Preferred Stock.
The obligation of the Corporation to redeem shares
for the sinking fund as provided in section (5) of this
subdivision (n) shall be subject to any restrictions now
existing in the Corporation's Indenture of Mortgage and Deed
of Trust dated as of September 1, 1951, as heretofore
supplemented (including any extension of said existing
restrictions in said Indenture of Mortgage and Deed of Trust
for the benefit of any series of Bonds hereafter issued
thereunder) and to any applicable restrictions of law.
(7) Restrictions on Payments on Junior Stock.
The Corporation shall not declare or pay or set apart any
dividend for the Common Stock or any other class of stock
ranking junior to the Series UU Preferred Stock, or make any
payment on account of, or set apart money for a sinking or
analogous fund for, the purchase, redemption or other
retirement of the Common Stock or any other class of stock
ranking junior to the Series UU Preferred Stock, or make any
distribution in respect thereof, either directly or
indirectly, and whether in cash or property or obligations or
stock of the Corporation, unless at the date of declaration in
the case of any such dividend, or at the date of any such
other payment, setting apart or distribution, full cumulative
dividends for all past dividend periods and for the then
current dividend period shall have been paid or declared and
set apart for payment on the then outstanding Series UU
Preferred Stock, other than shares of Series UU Preferred
Stock previously or then to be called for redemption.
40
<PAGE> 41
(8) Restrictions on Sinking Fund Payments on
Other Stock. The Corporation shall not redeem or purchase any
shares ranking on a parity with the Series UU Preferred Stock
as to assets or dividends, pursuant to any sinking fund
requirement (which terms shall include any analogous
requirement) for the redemption or purchase of such shares,
and shall not set apart money for any such requirement, at any
time when the sinking fund redemption required by section (5)
of this subdivision (n) shall be in arrears; except that, at
any time when the sinking fund redemption required by section
(5) of this subdivision (n) shall be in arrears and when
arrears exist in respect of any sinking fund or analogous
requirement for any shares ranking as aforesaid on a parity
with the Series UU Preferred Stock, the Corporation may redeem
or purchase for the respective requirements shares of Series
UU Preferred Stock and such other shares, pro rata, as nearly
as practicable, according to the amounts in dollars of the
arrears in the redemptions or purchases required for the
respective requirements.
(9) Acquisition of Series UU Preferred Stock.
Except as hereinbefore provided, the Corporation may, at its
option, purchase, redeem or otherwise acquire any shares of
Series UU Preferred Stock.
(10) Redemption Upon Voluntary Dissolution,
Liquidation, or Winding up of the Corporation. The applicable
redemption price payable upon any voluntary dissolution,
liquidation, or winding up of the Corporation as specified in
the second paragraph of paragraph (c) of Subparagraph "2" of
Subdivision "A" of Section "III" of Paragraph "FIFTH" of the
Restated Certificate of Incorporation shall be the par value
of the Series UU Preferred Stock."
B. PREFERENCE STOCK
1. The Preference Stock may be issued from time to time in one or
more series, the shares of each such series to have such designations,
preferences, privileges and voting powers, and restrictions or qualifications
thereof, as are provided herein or as may be fixed from time to time prior to
the issuance of such series by the Board of Directors; subject, however, to the
prior rights of the holders of Preferred Stock set forth in Subdivision "A" of
Section "III" of Paragraph "FIFTH" hereof, as to the payment of dividends and
as to distributions upon any voluntary or involuntary dissolution, liquidation
or winding up of the Corporation and in the provisions for particular series of
Preferred Stock as to the retirement of shares pursuant to a sinking fund or
fund of a similar nature, if any; and the Board of Directors is hereby
expressly authorized to fix from time to time before issuance, the
designations, preferences, privileges and voting powers of each such series
which are not fixed herein, and the restrictions or qualifications thereof.
2. The following designations, preferences, privileges and voting
powers, and restrictions or qualifications thereof, shall apply to all shares
of Preference Stock authorized by this certificate, provided, however, that the
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<PAGE> 42
Corporation may in the manner provided by law authorize and issue additional
shares of Preference Stock:
(a) The holders of each series of Preference Stock shall
be entitled to receive, if and when declared payable by the Board of
Directors out of assets legally available for the payment of
dividends, cumulative cash dividends at such rate per share and
payable quarterly on such dates as shall be fixed by resolution
adopted by the Board of Directors prior to the issuance of such
series. Dividends on shares of each series of Preference Stock shall
commence to accrue on and be cumulative from such day as shall be
fixed by resolution of the Board of Directors at the time of, or prior
to, the issuance of said series. If for any past dividend period or
periods dividends shall not have been paid or declared and set apart
for payment, upon all outstanding shares of Preference Stock at the
rate per annum applicable thereto, the deficiency shall be fully paid
or declared and payment thereof shall be provided therefor (at any
time without reference to any payment date) before any dividends shall
be declared or paid or any amount provided therefor with respect to
the Common Stock or any other class of stock ranking junior to the
Preference Stock. Accumulations of dividends shall not bear interest.
In case the stated dividends are not paid in full, the shares of all
series of the Preference Stock shall share ratably in the payment of
dividends, including accumulations, if any, in accordance with the
sums which would be payable on said shares if all dividends were
declared and paid in full.
(b) The holders of Preference Stock shall not be entitled
to receive any dividends thereon other than the dividends referred to
in paragraph (a) hereof.
(c) Upon any involuntary dissolution, liquidation, or
winding up of the Corporation, the holders of shares of Preference
Stock shall be entitled to receive out of the assets of the
Corporation the involuntary liquidating value of their shares, which,
with respect to any series of Preference Stock, shall be such amount
not in excess of the consideration therefor as may be determined by
the Board of Directors, prior to issuance of each series of Preference
Stock, plus, in the case of each share, an amount equal to all
dividends on such share accrued and unpaid thereon to the date of
payment upon such dissolution, liquidation or winding up of the
Corporation, before any distribution of the assets to be distributed
shall be made to the holders of the Common Stock or any other class of
stock ranking junior to the Preference Stock.
Upon any voluntary dissolution, liquidation, or winding up of
the Corporation, the holders of shares of Preference Stock shall be
entitled to receive out of the assets of the Corporation the then
applicable redemption price, if any, of their shares, plus, in the
case of each share, an amount equal to all dividends on such share
accrued and unpaid thereon to the date of payment upon such
dissolution, liquidation or winding up of the Corporation, before any
distribution of assets to be distributed shall be made to the holders
of the Common Stock or any other class of stock ranking junior to the
Preference Stock.
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<PAGE> 43
In case the amounts payable on liquidation are not paid in
full, the shares of all series shall share ratably in any distribution
of assets other than by way of dividends in accordance with the sums
which would be payable on such distribution if all sums payable were
discharged in full.
After payment to the holders of Preference Stock of the
preferential amounts to which they are entitled upon an involuntary or
upon a voluntary dissolution, liquidation or winding up, as the case
may be, as hereinabove provided, the holders of Preference Stock, as
such, shall have no right or claim to any of the remaining assets of
the Corporation, either upon any distribution of surplus assets, or
upon involuntary or upon voluntary dissolution, liquidation or winding
up.
The sale, lease, exchange, assignment, transfer or conveyance
of all or substantially all the property of the Corporation to, or the
merger or consolidation of the Corporation into or with, any other
corporation shall not be deemed to be an involuntary or voluntary
dissolution, liquidation or winding up for the purposes of this
paragraph (c).
(d) The Board of Directors of the Corporation, at its
option, may establish for one or more series of Preference Stock,
prior to the issuance of each series of Preference Stock by the Board
of Directors, limitations on the issuance of additional shares of
Preference Stock based upon the net earnings of the Corporation. The
Board of Directors shall, when establishing such limitation, provide
the method of computation therefor.
(e) The Board of Directors of the Corporation may reserve
the right to redeem the whole or any part of any series of the
Preference Stock at any time outstanding, at any time or times, at the
then applicable redemption price thereof, upon such conditions as may
be fixed by resolution adopted by the Board of Directors prior to the
issuance of such series, plus payment of accrued and unpaid dividends
to the date of redemption; provided, however, that upon redemption of
any outstanding shares of Preference Stock, not less than thirty (30)
nor more than sixty (60) days previous to the date fixed for
redemption, notice of the time and place thereof shall be given to the
holders of record of Preference Stock so to be redeemed, either by
mail and publication in a newspaper, printed in the English language
and customarily published on each business day, of general circulation
in the Borough of Manhattan, City and State of New York, in such
manner as may be prescribed by the By-laws of the Corporation or by
resolution of the Board of Directors; and, provided further, that the
accidental failure to mail any such notice to one or more of such
holders shall not affect the validity of such redemption as to the
other holders, and that such notice shall be deemed to have been duly
given to any holder of the Preference Stock within the meaning of the
foregoing provision when the same shall have been published as
aforesaid and a copy deposited in the United States mails, postage
prepaid, addressed to such holder at his last known address as it
appears on the books of the Corporation; and, provided further, that
such notice shall include a statement to the effect that privileges of
conversion or exchange, if any, not theretofore expiring, will expire
at the close of business on the full business day next preceding the
date fixed for
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<PAGE> 44
redemption; and, provided further, that in every case of the
redemption of less than all of the outstanding shares of any one
series of Preference Stock, such redemption shall be made in such
manner as may be prescribed by resolution adopted by the Board of
Directors prior to the issuance of such series. At any time after
notice of redemption has been given in the manner prescribed by the
By-laws of the Corporation or by resolution of the Board of Directors
to the holders of stock so to be redeemed, the Corporation may deposit
funds sufficient for such redemption with a solvent bank or trust
company having its principal office in the Borough of Manhattan, City
and State of New York and having a combined capital and surplus of at
least $5,000,000 named in such notice payable on the date fixed for
redemption as aforesaid, and in the amounts aforesaid, to the
respective orders of the holders of the shares so to be redeemed, on
endorsement to the Corporation or otherwise, as may be required and
upon surrender of the certificates for such shares. Upon the deposit
of said money as aforesaid, or, if no such deposit is made, upon said
redemption date, (unless the Corporation defaults in making payment of
the redemption price) such holders shall cease to be stockholders with
respect to said shares, and from and after the making of said deposit,
or if no such deposit is made, after the redemption date (the
Corporation not having defaulted in making the payment of the
redemption price), the said holders shall have no interest in or
claims against the Corporation with respect to said shares except only
the right to receive said moneys as of the date fixed for redemption,
as aforesaid, from said bank or trust company, or from the
Corporation, as the case may be, without interest thereon, upon
endorsement, if required, and surrender of the certificates as
aforesaid and the right to exercise, on or before the close of
business on the full business day next preceding the date fixed for
redemption, privileges of conversion or exchange, if any, not
theretofore expiring.
Any moneys deposited by the Corporation as aforesaid which
shall not be required for such redemption because of the exercise of
any such right of conversion or exchange subsequent to the date of
such deposit shall be repaid to the Corporation forthwith.
Subject to the provisions hereof, the Board of Directors shall
have authority to prescribe from time to time the manner in which
Preference Stock shall be redeemed and cancelled.
Nothing herein contained shall limit or deprive the
Corporation of the right to redeem or purchase any shares of
Preference Stock in any other manner now or hereafter permitted by
law.
(f) Except as hereinafter provided and except as some
provision of law expressly confers a right to vote regardless of any
provision to the contrary in this Certificate or other Certificates
filed pursuant to law, the holders of Preference Stock shall not be
entitled to any notice of meetings of stockholders of the Corporation,
or to vote, or to any voting rights whatsoever as stockholders of the
Corporation, and are hereby specifically excluded from the right to
vote in a proceeding for authorizing any guaranty pursuant to Section
908 of the Business Corporation Law, for sale of the franchises and
property pursuant to Section 909 of the Business Corporation Law, for
establishing priorities
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<PAGE> 45
or creating preferences among the various classes of stock pursuant to
Section 801 of the Business Corporation Law, for consolidation or
merger pursuant to Section 901 of the Business Corporation Law, for
voluntary dissolution pursuant to Section 1001 of the Business
Corporation Law, or in the election of directors or in any other
proceeding or at any stockholders' meeting; subject to the following:
(1) So long as any shares of Preference Stock are
outstanding, the Corporation shall not without the consent
(given in person or by proxy, in writing or at a meeting duly
called for that purpose in accordance with Section 605 of the
Business Corporation Law of the State of New York or as
otherwise permitted by law) of the holders of at least
two-thirds of the total number of shares of Preference Stock
then outstanding:
(A) amend, alter, change or repeal any
of the express terms of the Preference Stock then
outstanding in a manner to affect the holders of such
shares adversely otherwise than to increase the
authorized number of shares of Preference Stock,
provided, however, that if such amendment,
alteration, change or repeal would adversely affect
the holders of one or more, but not all, of the
series of Preference Stock at the time outstanding,
consent of the holders of at least two-thirds of the
total number of shares of all such series so affected
shall be required in lieu of the consent of the
holders of at least two-thirds of the total number of
shares of Preference Stock then outstanding, or:
(B) create or authorize any class of
stock having a preference superior to the preferences
of the Preference Stock as to assets or dividends, or
create or authorize any security convertible into
shares of stock of any such kind; provided, however,
that the holders of the Preference Stock shall have
no voting rights with respect to an increase in the
authorized number of shares of the Preferred Stock or
with respect to the issuance of any series of the
Preferred Stock.
(2) So long as any shares of Preference Stock are
outstanding, the Corporation shall not without the consent
(given in person or by proxy, in writing or at a meeting duly
called for that purpose in accordance with Section 605 of the
Business Corporation Law of the State of New York or as
otherwise permitted by law) of the holders of a majority of
the total number of shares of Preference Stock then
outstanding, increase the authorized number of shares of
Preference Stock.
(3) If and when dividends payable on any shares
of Preference Stock shall be in default in an amount
equivalent to or exceeding six (6) full quarterly dividends,
thereafter and until all dividends on the shares of Preference
Stock in default shall have been paid or declared and set
aside for payment, the holders of the shares of Preference
Stock, voting separately as a class and regardless of series
shall be entitled to elect two (2) directors of
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<PAGE> 46
the Corporation, and subject to the provisions of Paragraph
"FIFTH", Section "III", Subdivision "A", and Subparagraph
"2(e)(3)" hereof, the holders of the shares of Common Stock,
voting separately as a class, shall be entitled to elect the
remaining directors of the Corporation, anything herein or in
the By-laws to the contrary notwithstanding. The term of
office of any director of the Corporation shall not be
affected by the special rights of the holders of the
Preference Stock to elect directors as herein described; and
the term of office of each director then serving shall
continue until a successor has been duly elected and shall
qualify.
(4) If and when all dividends then in default on
the shares of Preference Stock then outstanding shall be paid
or declared and set aside for payment (and such dividends
shall be declared and paid out of any funds legally available
therefor as soon as reasonably practicable), the holders of
shares of Preference Stock shall be divested of the special
right with respect to the election of directors provided in
Paragraph "FIFTH", Section "III", Subdivision "B",
Subparagraphs "2(f)(3)" to "2(f)(6)", inclusive, hereof, and
the voting power with respect thereto, shall revert to the
holders of the shares of the Common Stock; but always subject
to the same provisions for vesting such special right in the
holders of the shares of Preference Stock in case of further
like default or defaults in dividends thereon as provided in
Paragraph "FIFTH", Section "III", Subdivision "B",
Subparagraphs "2(f)(3)" to "2(f)(6)", inclusive, hereof. Upon
the termination of any such special right upon payment or
setting aside for payment of all accumulated and defaulted
dividends on the shares of Preference Stock, the terms of
office of all persons who may have been elected directors of
the Corporation by vote of the holders of the shares of
Preference Stock, as a class, pursuant to such special right
shall forthwith terminate, and the resulting vacancies shall
be filled by the vote of a majority of the remaining
directors.
(5) In the case of any vacancy in the office of a
director occurring among the directors elected by the holders
of the shares of Preference Stock voting as a class, pursuant
to the foregoing provisions hereof, the remaining director so
elected may elect a successor to hold office for the unexpired
term of the director whose place shall be vacant, and such
successor shall be deemed to have been elected by such
holders.
(6) Whenever under the provisions hereof, the
right shall have accrued to the holders of the shares of
Preference Stock to elect directors, the Board of Directors
shall within ten (10) days after delivery to the Corporation
at its principal office of a request to such effect signed by
any holder of shares of any series of Preference Stock
entitled to vote, call a special meeting of the stockholders
to be held within fifty (50) days from the delivery of such
request for the purpose of electing directors (unless under
the provisions of the By-laws of the Corporation as then in
effect, an annual meeting of stockholders of the Corporation
is to be held
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<PAGE> 47
within sixty (60) days after the vesting in the holders of the
Preference Stock of the right to elect directors). At all
meetings of stockholders held for the purpose of electing
directors during such time as the holders of the shares of
Preference Stock shall have the special right to elect
directors pursuant hereto, the presence in person or by proxy
of the holders of a majority of the outstanding shares of the
Preference Stock shall be required to constitute a quorum of
such class for the election of directors and the presence in
person or by proxy of the holders of a majority of the votes
entitled to be cast by the holders of the total number of the
outstanding shares of any other class entitled to vote at such
meeting shall be required to constitute a quorum of that other
class; provided, however, that the absence of a quorum of the
holders of stock of any such class shall not prevent the
election of directors at any such meeting (or at any
adjournment thereof) by the other such class or classes if the
necessary quorum of the holders of stock of such class or
classes is present in person or by proxy at such meeting; in
the absence of a quorum of the holders of stock of any class
of stock with general or special rights of voting at such
meeting, a majority of those holders of the stock of such
class who are present in person or by proxy shall have power
to adjourn the meeting for the election of the directors to be
elected by such class from time to time without notice other
than announcement at the meeting, until a quorum shall be
present in person or by proxy, but such adjournment shall not
be made to a date beyond the date for the mailing of notice of
the next annual meeting of the Corporation or special meeting
in lieu thereof.
(7) At all meetings of the stockholders of the
Corporation at which the holders of Preference Stock are
entitled to vote they shall be entitled to one vote for each
share of such Preference Stock held by them respectively.
(g) Except as may be authorized by resolution of the
Board of Directors of the Corporation prior to the issuance of a
series of Preference Stock, the holders of shares of such series of
Preference Stock at any time outstanding shall have no preemptive or
preferential right to subscribe for or purchase any shares of stock,
or rights or options to purchase shares of stock whether now or
hereafter authorized, or any securities convertible into or
exchangeable for shares of stock or into rights or options to purchase
shares of stock of the Corporation of any class.
C. COMMON STOCK
1. At all meetings of the Stockholders of the Corporation, the
holders of the Common Stock shall be entitled to one vote for each share of
Common Stock held by them respectively, provided, however, that at all
elections of directors of the Corporation, subject to the powers of the holders
of Preferred Stock set forth in Paragraph "FIFTH", Section
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<PAGE> 48
"III", Subdivision "A" hereof and to the powers of the holders of Preference
Stock set forth in Paragraph "FIFTH", Section "III", Subdivision "B" hereof,
each holder of Common Stock shall be entitled to as many votes as shall equal
the number of votes which (except for this proviso as to cumulative voting) he
would be entitled to cast for the election of directors with respect to his
shares of Common Stock multiplied by the number of directors to be elected, and
he may cast all such votes for a single director or may distribute them among
the number to be voted for, or any two or more of them as he may see fit.
2. Whenever full cumulative dividends for all past dividend
periods and for the then current dividend period shall have been paid or
declared and set apart for payment on the then outstanding Preferred Stock,
Preference Stock and other stock having priority as to dividends over the
Common Stock and all obligations, if any, of the Company to retire shares of
the Preferred Stock or Preference Stock pursuant to a sinking fund or fund of a
similar nature shall have been met in full, the Board of Directors may, but
only out of assets legally available for the payment of dividends, declare and
pay dividends on the Common Stock.
3. In the event of any liquidation, dissolution or winding up of
the Corporation or any other proceeding resulting in any distribution of all
its assets to its stockholders, after there shall have been paid to or set
apart for holders of all then outstanding stock having priority over the Common
Stock the full preferential amounts to which they are respectively entitled,
the holders of the Common Stock shall be entitled to receive pro rata all of
the remaining assets of the Corporation available for distribution to its
stockholders.
4. Authorized shares of Common Stock may be sold for such
consideration as, from time to time, may be fixed by the Board of Directors.
5. The holders of shares of Common Stock at any time outstanding
shall have no preemptive or preferential right to subscribe for or purchase any
shares of stock, or rights or options to purchase shares of stock whether now
or hereafter authorized, or any securities convertible into or exchangeable for
shares of stock or into rights or options to purchase shares of stock of the
Corporation of any class.
SIXTH: The duration of the Corporation is to be perpetual.
SEVENTH: The Secretary of State is designated as the Agent of the
Corporation upon whom process in any action or proceeding against the
Corporation may be served.
EIGHTH: The Board of Directors of the Corporation, none of whom need
be stockholders, shall be not less than seven (7), nor more than fifteen (15).
NINTH: I. The Board of Directors shall have the power from time to
time to fix and determine and to vary the amount to be reserved as working
capital of the Corporation and, before the payment of any dividends or making
any distribution of profits, it may set aside out of the surplus or net profits
of the Corporation such sum or sums as it may from time to time in its absolute
discretion think proper whether as a reserve fund to meet contingencies or for
the equalizing of dividends or for repairing or maintaining any property of the
Corporation or for such corporate purposes as the Board shall think conducive
to
48
<PAGE> 49
the interests of the Corporation, subject only to such limitations as the
By-laws may from time to time impose.
II. The Board of Directors shall also have power, except as otherwise
provided by law, to make, alter, amend and repeal the By-laws of the
Corporation; and to make and determine the use and disposition of any surplus
or net profits over and above the capital of the Corporation.
III. The Board of Directors shall have the power to appoint an
Executive Committee from among their number, which Committee, to the extent and
in the manner provided in the By-laws of the Corporation, shall have and may
exercise all of the powers of the Board of Directors, so far as may be
permitted by law, in the management of the business and affairs of the
Corporation whenever the Board of Directors is not in session.
TENTH: No director of the Corporation shall have personal liability
to the Corporation or its shareholders for damages for any breach of duty as a
director except for liability if a judgment or other final adjudication adverse
to such director establishes that the acts or omissions of the director were in
bad faith or involved intentional misconduct or a knowing violation of law or
that the director personally gained in fact a financial profit or other
advantage to which such director was not legally entitled or that the acts of
such director violated Section 719 of the New York Business Corporation Law.
Notwithstanding the foregoing, nothing in this Paragraph TENTH shall
eliminate or limit the liability of a director for any act or omission which
occurred prior to the date of the adoption of the Certificate of Amendment to
the Restated Certificate of Incorporation that includes this Article. No
amendment to or repeal of this Article nor the adoption of any provision of the
Restated Certificate of Incorporation inconsistent with this Article shall
apply to or have any adverse effect on any right or protection of any director
of the Corporation for or with respect to any acts or omissions of such
director which had occurred prior to the adoption of a Certificate of Amendment
to the Restated Certificate of Incorporation that includes such amendment,
repeal or adoption of an inconsistent provision.
If the Business Corporation Law of New York is amended hereafter to
expand or further limit the liability of a director, then the liability of a
director of the Corporation shall be expanded to the extent required or limited
to the extent permitted by the Business Corporation Law of New York, as so
amended.
ELEVENTH: The Corporation is a gas and electric corporation, subject
to the jurisdiction of the Public Service Commission of the State of New York,
and is presently engaged in supplying gas and electric service in Suffolk and
Nassau Counties, and in the Fifth Ward of the Borough and County of Queens,
City of New York.
49
<PAGE> 50
6. This Restated Certificate of Incorporation has been duly
authorized by the Board of Directors of Long Island Lighting Company pursuant
to Section 807 of the New York Business Corporation Law.
IN WITNESS WHEREOF, we have made and subscribed this Certificate and
affirm the same as true under the penalties of perjury, this 11th day of
November, 1993.
/s/ ANTHONY F. EARLEY, JR.
----------------------
ANTHONY F. EARLEY, JR.
President
/s/ KATHLEEN A. MARION
---------------------
KATHLEEN A. MARION
Secretary
50
<PAGE> 1
Exhibit 4(c)
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LONG ISLAND LIGHTING COMPANY
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
--------------------
DEBENTURES
7.125% Series Due 2005
--------------------
Sixth Supplemental Indenture
Dated as of June 1, 1993
-------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
<PAGE> 2
SIXTH SUPPLEMENTAL INDENTURE, dated as of June 1, 1993 (herein
called the "Sixth Supplemental Indenture"), between LONG ISLAND LIGHTING
COMPANY, a corporation duly organized and existing under the laws of the State
of New York (hereinafter called the "Company"), party of the first part, and
STATE STREET BANK AND TRUST COMPANY, a corporation duly organized and existing
under the laws of the State of Massachusetts (the successor in interest to The
Connecticut Bank and Trust Company, National Association), as Trustee under the
Original Indenture referred to below (hereinafter called the "Trustee"), party
of the second part.
WITNESSETH:
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an Indenture, dated as of November 1, 1986 (hereinafter called the
"Original Indenture"; the Original Indenture, as supplemented or amended from
time to time, including by this Sixth Supplemental Indenture, is hereinafter
sometimes referred to as the "Indenture"), to provide for the issuance from
time to time of certain of its unsecured debentures, notes or other evidences
of indebtedness (hereinafter called the "Securities"), the form and terms of
which are to be established as set forth in Sections 201 and 301 of the
Original Indenture; and
WHEREAS, Section 901 of the Original Indenture provides, among
other things, that the Company and the Trustee
<PAGE> 3
2
may enter into indentures supplemental to the Original Indenture for, among
other things, the purpose of establishing the form and terms of the Securities
of any series as permitted in Sections 201 and 301 of the Original Indenture;
and
WHEREAS, the Company desires to create a series of Securities
in an aggregate principal amount of up to $200,000,000 to be designated the
"Debentures, 7.125% Series Due 2005" (the "Debentures") and all action on the
part of the Company necessary to authorize the issuance of the Debentures under
the Original Indenture and this Sixth Supplemental Indenture has been duly
taken; and
WHEREAS, all acts and things necessary to make the Debentures
when executed by the Company and completed, authenticated and delivered by the
Trustee as in the Original Indenture and this Sixth Supplemental Indenture
provided, the valid and binding obligations of the Company and to constitute
these presents a valid and binding supplemental indenture and agreement
according to its terms, have been done and performed;
NOW, THEREFORE, THIS SIXTH SUPPLEMENTAL INDENTURE WITNESSETH:
That in consideration of the premises and of the acceptance
and purchase of the Debentures by the holders thereof, and of the acceptance of
this trust by the Trustee, the Company covenants and agrees with the Trustee,
for the equal benefit of holders of the Debentures, as follows:
<PAGE> 4
3
ARTICLE ONE
DEFINITIONS
The use of the terms and expressions herein is in accordance
with the definitions, uses and constructions contained in the Original
Indenture and the form of Debenture attached hereto as Exhibit A.
ARTICLE TWO
TERMS AND ISSUANCE OF THE DEBENTURES
Section 201. Issue of Debentures. A series of Securities
which shall be designated the "Debentures, 7.125% Series Due 2005" shall be
executed, authenticated and delivered in accordance with the provisions of, and
shall in all respects be subject to, the terms, conditions and covenants of the
Original Indenture and this Sixth Supplemental Indenture (including the form of
Debenture set forth in Exhibit A hereto). The aggregate principal amount of
Debentures which may be authenticated and delivered under the Indenture shall
not, except as permitted by the provisions of the Indenture, exceed
$200,000,000.
Section 202. Form of Debentures; Incorporation of Terms.
The form of the Debentures shall be substantially in the form of Exhibit A
attached hereto, the terms of which are herein incorporated by reference and
which are part of this Sixth Supplemental Indenture.
<PAGE> 5
4
Section 203. Place of Payment. The Place of Payment for
the Debentures will be initially the office of State Street Bank and Trust
Company, National Association in New York City which, at the date hereof, is
located at 61 Broadway, Concourse Level, New York, New York 10006.
ARTICLE THREE
MISCELLANEOUS
Section 301. Execution as Supplemental Indenture. This
Sixth Supplemental Indenture is executed and shall be construed as an indenture
supplemental to the Original Indenture and, as provided in the Original
Indenture, this Sixth Supplemental Indenture forms a part thereof.
Section 302. Conflict With Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
which is required to be included in this Sixth Supplemental Indenture by any of
the provisions of the Trust Indenture Act of 1939, as amended, such required
provision shall control.
Section 303. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.
Section 304. Successors and Assigns. All covenants and
agreements in this Sixth Supplemental Indenture by the
<PAGE> 6
5
Company shall bind its successors and assigns, whether so expressed or not.
Section 305. Separability Clause. In case any provision
in this Sixth Supplemental Indenture or in the Debentures shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 306. Benefits of Sixth Supplemental Indenture.
Nothing in this Sixth Supplemental Indenture or in the Debentures, express or
implied, shall give to any person, other than the parties hereto and their
successors hereunder and the holders of the Debentures, any benefit or any
legal or equitable right, remedy or claim under this Sixth Supplemental
Indenture.
Section 307. Governing Law. This Sixth Supplemental
Indenture and each Debenture shall be deemed to be a contract made under the
laws of the State of New York, and for all purposes shall be governed by and
construed in accordance with the laws of said State.
Section 308. Execution and Counterparts. This Sixth
Supplemental Indenture may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
<PAGE> 7
6
IN WITNESS WHEREOF, the parties hereto have caused this Sixth
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
[Corporate Seal] LONG ISLAND LIGHTING COMPANY
By: /s/ Ralph T. Brandifino
----------------------------
Ralph T. Brandifino
Senior Vice President-Finance
Attest:
/s/ Herbert M. Leiman
- ---------------------
Assistant Secretary
[Corporate Seal] STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ W. Jeffrey Kramer
-----------------------
W. Jeffrey Kramer
Assistant Vice President
Attest:
/s/ Sheree Mailhot
- ------------------------
Assistant Vice President
<PAGE> 8
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On the 24th day of May, 1993, before me personally came Ralph T.
Brandifino, to me known, who, being by me duly sworn, did depose and say that
he is a Senior Vice President of Long Island Lighting Company, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/s/ Joanne S. Carr
------------------
Notary Public
Joanne S. Carr
Notary Public, State of New York
No. 4881993
Qualified in Suffolk County
Commission Expires Dec. 29th, 1994
STATE OF CONNECTICUT )
) ss.:
COUNTY OF HARTFORD )
On the 25th day of May, 1993, before me personally came W.
Jeffrey Kramer, to me known, who, being by me duly sworn, did depose and say
that he is an Assistant Vice President of State Street Bank and Trust Company,
one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by authority
of the Board of Directors of said corporation, and that he signed his name
thereto by like authority.
/s/ Maryanne Y. Dufresne
------------------------
Notary Public
MARYANNE Y. DUFRESNE
NOTARY PUBLIC
MY COMMISSION EXPIRES JULY 31, 1997
<PAGE> 9
EXHIBIT A
[Form of Face of Debenture]
LONG ISLAND LIGHTING COMPANY
DEBENTURE
7.125% Series Due 2005
No. __________ $__________
LONG ISLAND LIGHTING COMPANY, a corporation duly organized and
existing under the laws of the State of New York (herein called the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
___________________________________, or registered assigns, the principal sum
of __________________________________ Dollars on June 1, 2005 and to pay
interest thereon from the date of the initial issuance or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on June 1 and December 1 in each year, commencing December 1,
1993, at the rate per annum provided in the title hereof, until the principal
hereof is paid or made available for payment, and, subject to the terms of the
Indenture, at the rate per annum provided in the title hereof on any overdue
principal and (to the extent that the payment of such interest shall be legally
enforceable) on any overdue installment of interest. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest payment, which shall be the May 15
or November 15 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, in which event notice whereof shall be given to
Holders of Securities of this series not less than ten days prior to such
Special Record Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
<PAGE> 10
2
Payment of the principal of and interest on this Security will
be made at the office or agency of the Company maintained for that purpose in
the Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature
of one of its authorized officers, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
<PAGE> 11
3
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: _____________
[Seal] LONG ISLAND LIGHTING COMPANY
By:
-------------------------
[Title:]
By:
-------------------------
[Title:]
[Form of Trustee's Certificate of Authentication]
This is one of the Securities of the series designated herein
and referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
--------------------------
Authorized Signature
<PAGE> 12
4
[Form of Reverse of Debenture]
LONG ISLAND LIGHTING COMPANY
DEBENTURE
7.125% Series Due 2005
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of November 1, 1986, as
supplemented (herein collectively called the "Indenture"), between the Company
and State Street Bank and Trust Company (the successor in interest to The
Connecticut Bank and Trust Company, National Association), as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and the terms upon which the Securities are, and are
to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, limited in aggregate principal amount to
$200,000,000.
The Securities of this series are not subject to any sinking
fund. The Securities of this series may not be redeemed prior to Maturity.
Interest payments for this Security will be computed on the
basis of a 360-day year of twelve 30-day months. If an Interest Payment Date
falls on a day that is not a Business Day, such Interest Payment Date will be
the following day that is a Business Day.
In certain circumstances described in the Indenture, the
Company's obligations in respect of the Securities of this series or in respect
of certain covenants made for the benefit of Securities of this series, may be
discharged prior to payment, upon the deposit with the Trustee of cash and/or
U.S. Government Obligations in the required amount and upon compliance with
certain other provisions of the Indenture.
If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the
<PAGE> 13
5
Indenture at any time by the Company and the Trustee with the consent of the
Holders of 66-2/3% in principal amount of the Securities at the time
Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal of and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities
of this series, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes,
<PAGE> 14
6
whether or not this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.
No recourse for the payment of the principal of or interest on
this Security, or for any claim based hereon or otherwise in respect hereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in the Indenture or any indenture supplemental thereto or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
This Security shall be governed by and construed in accordance
with the laws of the State of New York.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
<PAGE> 15
[CONFORMED COPY]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LONG ISLAND LIGHTING COMPANY
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
----------------------
DEBENTURES
6.25% Series Due 2001
----------------------
Seventh Supplemental Indenture
Dated as of July 1, 1993
----------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE> 16
SEVENTH SUPPLEMENTAL INDENTURE, dated as of July 1, 1993
(herein called the "Seventh Supplemental Indenture"), between LONG ISLAND
LIGHTING COMPANY, a corporation duly organized and existing under the laws of
the State of New York (hereinafter called the "Company"), party of the first
part, and STATE STREET BANK AND TRUST COMPANY, a corporation duly organized and
existing under the laws of the State of Massachusetts (the successor in
interest to The Connecticut Bank and Trust Company, National Association), as
Trustee under the Original Indenture referred to below (hereinafter called the
"Trustee"), party of the second part.
WITNESSETH:
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an Indenture, dated as of November 1, 1986 (hereinafter called the
"Original Indenture"; the Original Indenture, as supplemented or amended from
time to time, including by this Seventh Supplemental Indenture, is hereinafter
sometimes referred to as the "Indenture"), to provide for the issuance from
time to time of certain of its unsecured debentures, notes or other evidences
of indebtedness (hereinafter called the "Securities"), the form and terms of
which are to be established as set forth in Sections 201 and 301 of the
Original Indenture; and
<PAGE> 17
2
WHEREAS, Section 901 of the Original Indenture provides, among
other things, that the Company and the Trustee may enter into indentures
supplemental to the Original Indenture for, among other things, the purpose of
establishing the form and terms of the Securities of any series as permitted in
Sections 201 and 301 of the Original Indenture; and
WHEREAS, the Company desires to create a series of Securities
in an aggregate principal amount of up to $145,000,000 to be designated the
"Debentures, 6.25% Series Due 2001" (the "Debentures") and all action on the
part of the Company necessary to authorize the issuance of the Debentures under
the Original Indenture and this Seventh Supplemental Indenture has been duly
taken; and
WHEREAS, all acts and things necessary to make the Debentures
when executed by the Company and completed, authenticated and delivered by the
Trustee as in the Original Indenture and this Seventh Supplemental Indenture
provided, the valid and binding obligations of the Company and to constitute
these presents a valid and binding supplemental indenture and agreement
according to its terms, have been done and performed;
<PAGE> 18
3
NOW, THEREFORE, THIS SEVENTH SUPPLEMENTAL INDENTURE WITNESSETH:
That in consideration of the premises and of the acceptance
and purchase of the Debentures by the holders thereof, and of the acceptance of
this trust by the Trustee, the Company covenants and agrees with the Trustee,
for the equal benefit of holders of the Debentures, as follows:
ARTICLE ONE
DEFINITIONS
The use of the terms and expressions herein is in accordance
with the definitions, uses and constructions contained in the Original
Indenture and the form of Debenture attached hereto as Exhibit A.
ARTICLE TWO
TERMS AND ISSUANCE OF THE DEBENTURES
Section 201. Issue of Debentures. A series of Securities
which shall be designated the "Debentures, 6.25% Series Due 2001" shall be
executed, authenticated and delivered in accordance with the provisions of, and
shall in all respects be subject to, the terms, conditions and covenants of the
Original Indenture and this Seventh Supplemental Indenture (including the form
of Debenture set forth in Exhibit A hereto).
<PAGE> 19
4
The aggregate principal amount of Debentures which may be authenticated and
delivered under the Indenture shall not, except as permitted by the provisions
of the Indenture, exceed $145,000,000.
Section 202. Form of Debentures; Incorporation of Terms.
The form of the Debentures shall be substantially in the form of Exhibit A
attached hereto, the terms of which are herein incorporated by reference and
which are part of this Seventh Supplemental Indenture.
Section 203. Place of Payment. The Place of Payment for
the Debentures will be initially the office of State Street Bank and Trust
Company, National Association in New York City which, at the date hereof, is
located at 61 Broadway, Concourse Level, New York, New York 10006.
ARTICLE THREE
MISCELLANEOUS
Section 301. Execution as Supplemental Indenture. This
Seventh Supplemental Indenture is executed and shall be construed as an
indenture supplemental to the Original Indenture and, as provided in the
Original Indenture, this Seventh Supplemental Indenture forms a part thereof.
<PAGE> 20
5
Section 302. Conflict With Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
which is required to be included in this Seventh Supplemental Indenture by any
of the provisions of the Trust Indenture Act of 1939, as amended, such required
provision shall control.
Section 303. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.
Section 304. Successors and Assigns. All covenants and
agreements in this Seventh Supplemental Indenture by the Company shall bind its
successors and assigns, whether so expressed or not.
Section 305. Separability Clause. In case any provision
in this Seventh Supplemental Indenture or in the Debentures shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 306. Benefits of Seventh Supplemental Indenture.
Nothing in this Seventh Supplemental Indenture or in the Debentures, express or
implied, shall give to any person, other than the parties hereto and their
successors hereunder and
<PAGE> 21
6
the holders of the Debentures, any benefit or any legal or equitable right,
remedy or claim under this Seventh Supplemental Indenture.
Section 307. Governing Law. This Seventh Supplemental
Indenture and each Debenture shall be deemed to be a contract made under the
laws of the State of New York, and for all purposes shall be governed by and
construed in accordance with the laws of said State.
Section 308. Execution and Counterparts. This Seventh
Supplemental Indenture may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
<PAGE> 22
7
IN WITNESS WHEREOF, the parties hereto have caused this
Seventh Supplemental Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, all as of the day and year
first above written.
[Corporate Seal] LONG ISLAND LIGHTING COMPANY
By: /s/ Ralph T. Brandifino
-----------------------
Ralph T. Brandifino
Senior Vice President-Finance
Attest:
/s/ Herbert M. Leiman
- ---------------------
Assistant Secretary
[Corporate Seal] STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ W. Jeffrey Kramer
---------------------
W. Jeffrey Kramer
Assistant Vice President
Attest:
/s/ V. Glunt
- ------------------------
Assistant Vice President
<PAGE> 23
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On the 8th day of July, 1993, before me personally came Ralph T.
Brandifino, to me known, who, being by me duly sworn, did depose and say that
he is a Senior Vice President of Long Island Lighting Company, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/s/ Joanne S. Carr
------------------
Notary Public
Joanne S. Carr
Notary Public, State of New York
No. 4881993
Qualified in Suffolk County
Commission Expires Dec. 29th, 1994
STATE OF CONNECTICUT )
) ss.:
COUNTY OF HARTFORD )
On the 12th day of July, 1993, before me personally came W. Jeffrey
Kramer, to me known, who, being by me duly sworn, did depose and say that he is
an Assistant Vice President of State Street Bank and Trust Company, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/s/ Maryanne Y. Dufresne
------------------------
Notary Public
MARYANNE Y. DUFRESNE
NOTARY PUBLIC
MY COMMISSION EXPIRES JULY 31, 1997
<PAGE> 24
EXHIBIT A
[Form of Face of Debenture]
LONG ISLAND LIGHTING COMPANY
DEBENTURE
6.25% Series Due 2001
No. __________ $__________
LONG ISLAND LIGHTING COMPANY, a corporation duly organized and
existing under the laws of the State of New York (herein called the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
___________________________________, or registered assigns, the principal sum
of __________________________________ Dollars on July 15, 2001 and to pay
interest thereon from the date of the initial issuance or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on January 15 and July 15 in each year, commencing January 15,
1994, at the rate per annum provided in the title hereof, until the principal
hereof is paid or made available for payment, and, subject to the terms of the
Indenture, at the rate per annum provided in the title hereof on any overdue
principal and (to the extent that the payment of such interest shall be legally
enforceable) on any overdue installment of interest. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest payment, which shall be the
January 1 or July 1 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, in which event notice whereof shall be given to
Holders of Securities of this series not less than ten days prior to such
<PAGE> 25
2
Special Record Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of and interest on this Security will
be made at the office or agency of the Company maintained for that purpose in
the Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature
of one of its authorized officers, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
<PAGE> 26
3
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: ____________
[Seal] LONG ISLAND LIGHTING COMPANY
By:
------------------------------
[Title:]
By:
------------------------------
[Title:]
[Form of Trustee's Certificate of Authentication]
This is one of the Securities of the series designated herein
and referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
----------------------------------
Authorized Signature
<PAGE> 27
4
[Form of Reverse of Debenture]
LONG ISLAND LIGHTING COMPANY
DEBENTURE
6.25% Series Due 2001
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of November 1, 1986, as
supplemented (herein collectively called the "Indenture"), between the Company
and State Street Bank and Trust Company (the successor in interest to The
Connecticut Bank and Trust Company, National Association), as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and the terms upon which the Securities are, and are
to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, limited in aggregate principal amount to
$145,000,000.
The Securities of this series are not subject to any sinking
fund. The Securities of this series may not be redeemed prior to Maturity.
Interest payments for this Security will be computed on the
basis of a 360-day year of twelve 30-day months. If an Interest Payment Date
falls on a day that is not a Business Day, such Interest Payment Date will be
the following day that is a Business Day.
In certain circumstances described in the Indenture, the
Company's obligations in respect of the Securities of this series or in respect
of certain covenants made for the benefit of Securities of this series, may be
discharged prior to payment, upon the deposit with the Trustee of cash and/or
U.S. Government Obligations in the required amount and upon compliance with
certain other provisions of the Indenture.
If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.
<PAGE> 28
5
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of 66-2/3% in principal amount of
the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal of and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities
of this series, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
<PAGE> 29
6
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse for the payment of the principal of or interest on
this Security, or for any claim based hereon or otherwise in respect hereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in the Indenture or any indenture supplemental thereto or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
This Security shall be governed by and construed in accordance
with the laws of the State of New York.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
<PAGE> 1
Exhibit 10(e)
NINE MILE POINT NUCLEAR STATION UNIT 2
OPERATING AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
STATEMENT OF INTENT
ARTICLE 1 - EFFECTIVE DATE OF AGREEMENT
1.1 Effective Date of Agreement
1.2 Operating Period; Deactivation; Purchase Option
1.3 Amending the Agreement
ARTICLE 2 - GENERAL ORGANIZATION
2.1 Commitment to Safe Operation
2.2 Unit Goals
2.3 Policies and Plans
2.4 Operational Control
2.3 Informational Responsibility
ARTICLE 3 - MANAGEMENT COMMITTEE
3.1 Establishment of Management Committee
3.2 Meetings, Agendas and Voting, Etc.
3.3 Responsibilities of the Management Committee
3.4 Annual Plan and Budget
3.5 Variances
3.6 Circumstances Requiring Immediate Action
3.7 Owners' Representative On-site
3.8 Representation on Unit Committees, Task Forces
and SRAB
3.9 Rights and Responsibilities of On-Site Representative
and Other Owner Personnel
ARTICLE 4 - SERVICES TO BE PROVIDED
4.1 List of Services
ARTICLE 5 - PAYMENTS
5.1 Operating Costs
5.2 Operating Account
5.3 Failure to Advance Funds
ARTICLE 6 - AUDITS
6.1 Audit Committee; Inspection of Records
6.2 Inspection Costs; Inspection Report
6.3 Adjustments or Corrective Action
<PAGE> 3
ARTICLE 7 - FUEL
7.1 Fuel Committee; Meetings, Agenda and Minutes
7.2 Fuel Supply
7.3 Fuel Pricing Accounts
7.4 Spent Fuel
7.5 Separate Activities for Units 1 and 2
ARTICLE 8 - ACCOUNTING
8.1 Accounting Committee; Meetings and Agenda
ARTICLE 9 - INSURANCE AND INDEMNITY
9.1 Compensation Withholdings
9.2 Workers' Compensation and Employers'
Liability Insurance
9.3 Comprehensive General Liability Insurance Policy
9.4 Property Insurance
9.5 Employees' Fidelity Bond
9.6 Liability for Loss, Expense or Damage Not Covered
by Insurance
9.7 Amount of Coverage; Modifications
9.8 Insurance Premiums
9.9 Sharing of Regulatory Penalty and Breach of
This Agreement
9.10 Meaning of Section 6 in September 22, 1975
Operating Agreement Among the Parties
(the 1975 Operating Agreement)
ARTICLE 10 - MEASUREMENT
10.1 Output Measurement
10.2 Periodic Testing of Meters
ARTICLE 11 - GENERAL
11.1 Non-Waiver of Provisions
11.2 Procedure for Appeal of Management Committee Decision
11.3 Procedure for Resolution of Appeal
11.4 Conflict with Basic Agreement
11.5 Independence of Settlement Agreement
ARTICLE 12 - FORMATION AND EFFECTIVENESS OF OPERATING COMPANY
12.1 Formation and Effectiveness of Operating Company
<PAGE> 4
NINE MILE POINT NUCLEAR STATION UNIT 2
OPERATING AGREEMENT
Pursuant to Section 6.01 of the Basic Agreement, Niagara Mohawk Power
Corporation (Niagara Mohawk), Long Island Lighting Company (LILCO), New York
State Electric & Gas Corporation (NYSEG), Rochester Gas and Electric
Corporation (RG&E), and Central Hudson Gas & Electric Corporation (Central
Hudson) agree as follows with respect to the operation and maintenance of the
Nine Mile Point Unit 2, and all activities and facilities supporting or
otherwise relating to the plant (sometimes hereinafter collectively referred to
as the "Unit" or the "Plant").
The term "Parties" as used herein shall refer to all the parties to
this Agreement. The term "Non-Operating Owners" as used herein shall refer to
LILCO, NYSEG, RG&E and Central Hudson collectively.
STATEMENT OF INTENT
It is the intent of the Parties to assure the safe, efficient and
reliable operation of the Unit consistent with the goals and commitments
specified in Sections 2.1 and 2.2 herein. It is the intent hereof that Niagara
Mohawk shall have exclusive operational control of the operation and
maintenance of the Unit. It is the further intent of the Parties to establish
a framework for oversight by the Management Committee of the policy making,
planning, budgeting, and operational decisions of Niagara Mohawk related to the
Unit. In addition, as more fully explained in Section 2.3 and Article 3, the
Non-Operating Owners shall have
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the right to approve or disapprove the annual budgets and annual plans (which
shall include annual operating goals and objectives for the Unit) and any
significant changes in either of them. To the extent any ambiguity arises as to
the roles and responsibilities of Niagara Mohawk, the Non-Operating Owners, and
the Management Committee hereunder, the provisions of this Agreement shall be
construed consistent with the intent herein expressed.
ARTICLE 1 - EFFECTIVE DATE OF AGREEMENT
1.1 Effective Date of Agreement
This Agreement shall be effective as of the first date upon which
all Parties have executed it and shall inure to, bind, and be for the benefit
of the Parties, their successors, and assigns.
1.2 Operating Period; Deactivation; Purchase Option
The Parties agree to operate the Plant for the applicable license
period granted by the United States Nuclear Regulatory Commission (the "NRC" or
the "Commission") or any successor agency having jurisdiction over the
operation of nuclear power plants. The Parties shall meet five years prior to
the expiration of an operating license, or sooner if required by any inability
to operate the Plant on a permanent basis, to agree upon any further operating
period, or upon a schedule for deactivation and decommissioning of the Plant.
Niagara Mohawk, as agent for and on behalf of the Parties, shall maintain the
Plant to the date that the Plant has been fully decommissioned inaccordance
with all applicable laws or regulations then in effect.
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The cost of deactivation, discontinuance, dismantling, and continuing
surveillance of the Plant shall be shared by the Parties in accordance with
their Respective Percentages and the Parties each agree to establish
appropriate reserves and/or take such other action as may be necessary to
provide for the cost of such deactivation, discontinuance and dismantling.
Prior to, or upon completion of deactivation, discontinuance and dismantling of
the Plant, the Nuclear Plant Site may, at Niagara Mohawk's election, be
conveyed to Niagara Mohawk at a price to be established by a recognized
independent appraiser of land selected by all the Parties.
Unless all the Parties, their successors and assigns, determine to
retain their Respective Percentages and to continue to operate and maintain the
Plant as is herein provided, Niagara Mohawk shall have the option to purchase
the Nuclear Plant Site and the Plant at a price to be agreed to by the Parties,
and if they are unable to agree, at a price to be established by a recognized
independent firm of appraisers with substantial experience in appraising the
value of utility plants selected by all the Parties.
The Parties contemplate that, in any disposition of the Nuclear
Plant Site and Plant, the operation and maintenance thereof as is herein
provided, subject to the provisions of Section 1.3 hereof, may require the
authority and consent of governmental bodies then having jurisdiction.
Accordingly, it shall be a condition to the completion of any disposition or
continued operation and maintenance, agreed to by the Parties hereto, that such
authority and consent be first obtained.
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Any conveyance of a Respective Percentage contemplated by this
Section 1.2 shall follow the relevant procedures for the original conveyance
set forth in Article II of the Basic Agreement, and an appropriate release in
form for recording from any indenture of mortgage of the Party making the
conveyance which is a lien on the Nuclear Plant Site must be obtained and
delivered by that Party to the acquiring Party or Parties.
The costs of any appraisals accomplished under this Section 1.2
shall be shared by the Parties in accordance with their Respective Percentages.
1.3 Amending the Agreement
This Agreement shall be revised from time to time if necessary so
that it will not be in conflict with any rule, regulation, or order of any
regulatory or governmental body having jurisdiction. Such amendment shall not
be required during the pendency of any legal action which any Party hereto has
commenced in good faith to contest the validity of any such rule, regulation or
order, provided that the operation of the Plant will not be curtailed by such
action.
ARTICLE 2 - GENERAL ORGANIZATION
2.1 Commitment to Safe Operation
Activities in relation to the Unit shall be conducted in such a way
as to assure safe operation in accordance with all applicable nuclear safety
requirements. To that end, the Unit shall be operated in strict compliance
with the technical specifications and other terms and conditions of the
operating license issued by the NRC, the regulations of the Commission and
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any applicable orders or directives issued by it. The parties further
recognize that the Party licensed by the NRC to operate the Plant is
responsible for safe operation of the Plant in accordance with these
requirements. Niagara Mohawk, as agent for and on behalf of the Parties, shall
operate the facility for the mutual benefit of the Parties in full accordance
with that responsibility. Accordingly, the Parties agree and declare that no
other provision of this Operating Agreement may be interpreted as contrary to,
or in conflict with, this fundamental principle.
2.2 Unit Goals
Within the requirements specified in Section 2.1, Unit operation
and maintenance plans shall be designed to achieve these basic goals:
(a) uniformly high standards of safety for the protection of
workers at the Unit as well as for the welfare of the general
public;
(b) consistently reliable performance with a superior level of
availability and minimal outage incidents and duration;
(c) conformity with all applicable regulatory requirements and
industry standards; and
(d) consistent with goals (a), (b) and (c), a busbar cost as low
as reasonably possible through careful control of operating
and maintenance expenses and restraint in the commitment of
capital funds to necessary projects with clearly positive
benefit/cost relationships.
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<PAGE> 9
2.3 Policies and Plans
Niagara Mohawk shall develop and, as necessary, update its annual
budgets and annual plans, which shall include unit operating goals and
objectives, to guide its management of the Unit. All such plans and budgets
shall be shared with the Non-Operating Cotenants and subject to their critical
review to which Niagara Mohawk shall make reasonable response. Such plans and
budgets shall be subject to the approval of the Non-Operating Cotenants, as set
forth in Article 3.
2.4 Operational Control
Niagara Mohawk shall have exclusive control of the operation and
maintenance of the Unit. That control shall be exercised in a manner
consistent with the requirements, goals, policies, plans and budgets it has
developed as modified in light of the critical review of the Non-Operating
Cotenants and in the interest of all the Parties.
2.5 Informational Responsibility
Through committees and other groups established under Article 3,
Niagara Mohawk shall keep the Parties regularly and fully advised of the manner
in which it discharges its responsibilities under Section 2.4.
ARTICLE 3 - MANAGEMENT COMMITTEE
3.1 Establishment of Management Committee
a. Each Chief Executive Officer of a Party shall designate a member
and an alternate to serve on the Management Committee at the pleasure of such
Chief Executive Officer. Each Chief Executive Officer shall notify the others
of the names of
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<PAGE> 10
the individuals so appointed and of any chance in appointments.
b. The Chief Executive Officers shall select a member of the
Management Committee as its Chair. The Chair shall be rotated among the
Non-Operating Parties annually unless the Chief Executive Officers shall
otherwise determine by unanimous vote.
c. Each non-operating party shall bear the salaries and expenses
of its member and alternate on the Management Committee, unless the Management
Committee shall otherwise determine. Niagara Mohawk shall be responsible for
the salaries and expenses of its member or alternate on the Management
Committee except to the extent such members or alternates are ordinarily
dedicated to the operations of the Unit. If the Management Committee
determines that a salary or an expense should be shared by the Parties in
proportion to their Respective Percentages, the Party incurring such salary or
expense in the first instance shall, at the end of each calendar month in which
such salary or expense is so incurred, furnish to Niagara Mohawk a statement
thereof in reasonable detail. Any such amount shall be paid to the appropriate
Party as provided in Article 5.
3.2 Meetings, Agendas and Voting, Etc.
a. Meetings. The Management Committee shall meet monthly, normally
in person, according to a schedule established by the Chair. Any member may
call a meeting to convene sooner than the next regularly scheduled meeting.
Such a meeting may be in person, by conference call or partly in person and
partly by conference call.
b. Notice. Notice of regularly scheduled meetings shall be deemed
given when circulation is made of minutes
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<PAGE> 11
containing the meeting schedule. For any other meeting, all other members and
alternates shall receive notice from the member calling the meeting at least
five business days prior to the meeting, which notice the Management Committee
may waive by unanimous consent of its members.
c. Agendas. The agenda for a regularly scheduled meeting of the
Management Committee shall be prepared by the Chair and received by members not
fewer than five business days before the meeting, unless waived by the
unanimous consent of the members of the Management Committee. The purpose of
any other meeting shall be made known with the notice of meeting; its agenda
shall be prepared by the member calling the meeting and received as much in
advance of the meeting as is practical.
d. Quorum. A quorum shall be deemed present when at least four
owners are represented, in person or by conference call, either by a member or
by an alternate, except no quorum shall be deemed present in the absence of a
member or alternate from Niagara Mohawk. Niagara Mohawk shall use its best
efforts to attend any meeting of the Management Committee.
e. Voting. The Management Committee shall endeavor to conduct its
business upon unanimous consent, but the Committee may take action if members
representing Respective Percentages totaling in excess of 50 percent concur.
f. Minutes. The Management Committee shall provide for the
preparation of minutes of its meetings and the retention of any reports,
reviews or evaluations prepared for it by any team, subcommittee or task force.
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3.3 Responsibilities of the Management Committee
a. Consistent with the commitment of the Parties in Section 2.1 to
safe operation, the goals stated in Section 2.2, and Niagara Mohawk's
operational control provided in Section 2.4, Niagara Mohawk shall operate and
maintain the Unit and shall report the status thereof to the Management
Committee.
b. The Management Committee shall critically review as appropriate
the annual budgets and plans, which shall include annual operating goals and
objectives for operation and maintenance of the Unit, developed by Niagara
Mohawk. Niagara Mohawk will respond to any such critical review either with an
appropriate modification of any of the above or with a reasonable explanation
of why a modification is not appropriate. The Management Committee shall
review and, when satisfied, approve the annual plans and the overall levels of
the annual budgets for the Unit. The Management Committee, if it reasonably
believes that the annual budgets or annual plans are not being met, may
require Niagara Mohawk's senior nuclear officer to develop and implement
appropriate corrective action.
c. Niagara Mohawk shall inform and consult with the CEOs before
appointing, relieving or declining to reappoint its senior nuclear officer.
Niagara Mohawk's senior nuclear officer will be relieved by Niagara Mohawk if
it is requested to do so in writing by the CEOs of all four of the
Non-Operating Cotenants.
d. When useful to the discharge of its responsibilities under
Article 3, the Management Committee may review any developments of significance
concerning cost, operations, scheduling, performance objectives, work force
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<PAGE> 13
organization, regulatory concerns and other matters affecting or affected by
Unit operation and maintenance. These matters may come to the Management
Committee's attention from various sources including, but not limited to,
Niagara Mohawk or the Owners' Representative On-site described in Section 3.7.
e. Niagara Mohawk shall keep the Management Committee informed of
regulatory proceedings regarding operation of the Unit, especially those which
may result in any penalty, fine or assessment being imposed on the Unit or on
any of the Parties. With respect to State regulatory proceedings involving a
potential penalty, fine or assessment for imprudent management, whether to
defend against such imposition, the overall defense to be mounted and any
settlement thereof shall be decisions made by the Management Committee.
However, it is the intent of the parties that Niagara Mohawk shall have the
primary responsibility for the conduct of all regulatory proceedings.
Representation by counsel of any Party in any regulatory proceeding involving
the Unit will not be used by any other Party as the basis to seek
disqualification of that counsel in any action brought by one Party against
another.
f. The Management Committee shall annually review the performance of
key executives (including salary levels), as designated by Niagara Mohawk's
senior nuclear officer, who are responsible for the operation of the Unit.
This review shall be conducted in executive session before the principal
executive members of the Management Committee.
g. The Management Committee shall require the preparation of a
charter by each of the Audit, Fuel, and Finance
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<PAGE> 14
Committees specifying, among other things, the function, responsibilities and
reporting requirements of the Committee. Said charters shall be reviewed and
approved by the Management Committee. The Management Committee may from time
to time require the amendment or modification of the committee charters to
address changing needs and requirements.
3.4 Annual Plan and Budget
a. Niagara Mohawk shall annually prepare, on or before August 1,
i. a proposed plan, which shall include annual Unit operating
goals and objectives, as well as budgets for the succeeding
year (Year I) and
ii. a preliminary plan and financial forecasts for the two
following years (Years 2 and 3).
Each annual budget or financial forecast, to the extent feasible, shall
comprehensively address all expenditures for the Unit in the following
categories: Fuel, Capital, Operations and Maintenance and Other.
b. On or before September 15 of each year, the Management Committee
shall complete preliminary review of the documents submitted to it under
subsection (a) and provide Niagara Mohawk with its comments.
c. Following timely revision by Niagara Mohawk responsive to the
comments of the Management Committee, the Management Committee shall, on or
before October 15 of each year,
i) approve plans, which shall include annual Unit operating goals
and annual objectives, and the
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overall level of the budgets for the following year and
ii) give preliminary approval to the preliminary plan and
financial forecasts for Years 2 and 3.
d. The Management Committee may from time to time review the
planning and budget process and Niagara Mohawk will respond to any comments or
criticisms of that process.
3.5 Variances
a. The approved plans, which shall include annual operating goals
and annual objectives, and budget shall form the basis upon which Unit
operation and maintenance are conducted during the plan and budget year. The
Management Committee may from time to time approve revisions in the plan and
budget, whereupon Unit operation and maintenance shall conform to revised plan
and budget.
b. Niagara Mohawk shall report at each regularly scheduled meeting
of the Management Committee on the status of current and projected spending in
relation to the capital and operating budgets. As part of this report (but
sooner if circumstances require), Niagara Mohawk shall identify:
i) significant expenditures it proposes to make not within the
approved budget,
ii) withholding of significant expenditures within the approved
budget it proposes to make, or
iii) if it has reason to believe that spending associated with a
budgeted amount is (or will be) exceeding or underrunning the
budget by a significant amount.
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c. Niagara Mohawk shall provide a detailed budget variance and
forecast report on a monthly basis including explanation for each budget item
exhibiting significant variance.
d. If the total level of expenditures for any budget category
(Fuel, Capital, Operation and Maintenance, and Other) is expected to exceed the
budget by more than $1.0 million, Niagara Mohawk will inform the Management
Committee and seek approval from the Management Committee for such increase in
the total budgets; such approval shall not be unreasonably withheld.
e. Notwithstanding the preceding paragraph, the Parties shall be
liable to the extent of their Respective Percentages
i) for any expenditure which Niagara Mohawk reasonably believes
is required for compliance with the terms and conditions of
the NRC Facility Operating License, its Technical
Specifications and Environmental Protection Plan, the
regulations of the Commission and any applicable orders or
directives issued by it, and
ii) for any expenditure which, in Niagara Mohawk's judgment, is
essential for safe operation of the Plant.
f. If the level of expenditure, or expenditures, described in the
preceding paragraph is expected to result in the exceeding of an approved
budget, Niagara Mohawk shall promptly so inform the Management Committee. Time
permitting, Niagara Mohawk will review such expenditures with the Management
Committee in advance. In any event, Niagara Mohawk will make every reasonable
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effort to offset such expenditures, and avoid increases in the currently
approved budget amounts, through reduction or elimination of corresponding
amounts of discretionary expenditures.
3.6 Circumstances Requiring Immediate Action
a. Whenever circumstances require that action normally subject to
Management Committee review and approval be taken before that Committee can be
convened in person or telephonically, Niagara Mohawk shall (1) make reasonable
efforts to so inform both the Owners' Representative On-site and Management
Committee members or their alternates and (2) take such action as it deems
appropriate having due regard for (a) the safeguarding of personnel and
equipment, (b) the maintaining of the Unit in operable condition, (c) the
ensuring of regulatory compliance, and (d) the interests of all the Parties.
b. As soon as possible but not later than 24 hours after so
acting, Niagara Mohawk shall report and explain its action to the Management
Committee and shall recommend any follow-up action it deems appropriate.
3.7 Owners' Representative On-site
a. Those members of the Management Committee designated by Chief
Executive Officers of Non-Operating Owners may collectively retain a person or
an organization (the Owners' Representative On-site) to monitor activities
related to the Unit and to provide them with assessments thereof. The Owners'
Representative On-site shall report to the Chair of the Management Committee or
the Chair's designee.
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b. The Owners' Representative On-site shall coordinate the
on-site activities of employees and agents of the Non-Operating Owners and
shall, should the Non-Operating Owner members of the Management Committee so
designate, represent the interests of those owners to Niagara Mohawk management
and to those Niagara Mohawk managers exercising operational control under
Section 2.4. In addition, the Owners' Representative On-Site shall inform in a
timely fashion the Niagara Mohawk officer who directs operational control of
the operation and maintenance of the Unit as to his observations and
assessments concerning the operation and maintenance of the Unit.
c. Niagara Mohawk may designate an individual for assignment as
part of the Owners' Representative On-site.
3.8 Representation on Unit Committees, Task Forces and SRAB
The Non-Operating Owners may have representation on all operation and
engineering committees as well as task forces which are established from time
to time by Niagara Mohawk to inquire into various questions and/or problems
relating to the Unit. Niagara Mohawk shall make reasonable efforts to keep
Owners' Representative On-Site informed regarding dates and times for regularly
or periodically scheduled meeting of such committees and task forces so as to
facilitate the representation provided for in this Section 3.8. The
Non-Operating Owner members of the Management Committee may collectively
designate one individual to be a member of the Safety Review and Audit Board
and one individual to be a member of the Capital Review Committee.
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3.9 Rights and Responsibilities of On-site Representative
and Other Owner Personnel
a. The Owners' Representative On-site shall have reasonable
access to Niagara Mohawk corporate management and to those Niagara Mohawk
managers exercising operational control under Section 2.4. The Owners'
Representative On-site and all other employees and agents of the Non-Operating
Owners whose activities on-site are coordinated by the Owners' Representative
On-site shall have reasonable access to all Unit-related correspondence,
records, reports, and other information within the control of Niagara Mohawk
wherever located, and shall have access to the Unit at all times subject to
security and safety requirements comparable to those applied to Niagara Mohawk
personnel. Niagara Mohawk shall provide the organization of the Owners'
Representative On-site with suitable and sufficient office space at the Plant
Site, facilities, equipment and supplies.
b. The On-site Representative will be responsible to the Chair
of the Management Committee for reporting on the operation and maintenance of
the Unit. Such reports will have the purpose of providing oversight and
assessment as determined by the Management Committee and of helping Niagara
Mohawk achieve all of the goals for operation and maintenance of the Unit set
forth in Article 2. To that end, both the On-site Representative and the
appropriate Niagara Mohawk personnel responsible for operation and maintenance
of the Unit will seek to achieve a cooperative working relationship, and will
among other things, inform each other at the earliest practical time of any
perceived
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deficiencies in the operation or maintenance of the Unit and of any suggested
solutions.
ARTICLE 4 - SERVICES TO BE PROVIDED
4.1 List of Services
Niagara Mohawk agrees, subject to the provisions of Article 3, that
it will:
a. Make decisions respecting the operation and maintenance of the
Unit and carry out improvements to the Unit;
b. Select, hire, control and (when it deems such action
appropriate) discharge personnel as required in the performance of this
Agreement, such personnel to be employees solely of Niagara Mohawk and subject
to the terms of any labor agreements to which Niagara Mohawk is a party
pertaining to such employees and to such standards relating to compensation,
benefits and terms of employment specified for Niagara Mohawk employees;
c. purchase operating and maintenance materials, supplies, and
services;
d. perform or contract for maintenance, renewals and
replacements required to protect the Unit and to keep it in safe and efficient
operating condition and prepare and submit to the other Parties normal
operating schedules for the Unit;
e. engage legal, engineering, auditing and other consulting
services related to the Unit;
f. perform such accounting as is required for the Unit and furnish
reports with respect thereto to the other Parties which will enable each Party
to meet its accounting and
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statistical requirements, including the requirements of any regulatory bodies
having jurisdiction over such Party;
g. appoint, as Niagara Mohawk's member of the Management Committee,
one of its two most senior officers or an officer who has authority, either in
that officer's position or delegated from another officer with such authority,
to direct both Unit operations and such engineering, licensing and other
services as are necessary to support those operations;
h. place all orders and contracts pertaining to operation and
maintenance of the Unit in the name of Niagara Mohawk on behalf of the Parties
hereto. The Parties hereto authorize Niagara Mohawk to sign such orders and
contracts on their behalf. No party hereto will assume any liability under or
by reason of any such orders or contracts except to the extent of its
Respective Percentage;
i. prepare bills in reasonable detail to the Parties for costs
incurred hereunder;
j. assist the Parties in regulatory proceedings and other contested
matters (including, but not limited to, any action by any shareholders of any
of the Parties) relative to the Unit, including the provision of witnesses and
current and accurate Unit data; and
k. support the timely preparation of Unit plans and budgets, as
described in Section 3.4, with sufficient supervision, staffing and
organization.
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ARTICLE 5 - PAYMENTS
5.1 Operating Costs
Subject to the provisions of Article 3, it is agreed that the Parties
shall share in the costs of operation, maintenance and replacements including
Niagara Mohawk's overhead (including services and expenses of regular
personnel, executive officers and supervisors, to the extent that such services
pertain to operations and maintenance of the Unit) applicable to the
performance of this Agreement, in their respective Percentages.
5.2 Operating Account
Niagara Mohawk shall establish and maintain for purposes of this
Agreement a special bank account or accounts, in a New York State bank
designated by Niagara Mohawk, entitled "Niagara Mohawk Power Corporation, as
Agent - Nine Mile Point Nuclear Station Unit 2 Nuclear Operating Account", with
funds supplied by the Parties in accordance with their Respective Percentages.
Each Party pursuant to written notice by Niagara Mohawk and in accordance with
its Respective Percentage will deliver to Niagara Mohawk funds for the
replenishment of the bank account or accounts by the Parties. In determining
the dates and amounts of such replenishments, the Parties shall endeavor to
avoid carrying in the bank account or accounts funds ill excess of a reasonable
minimum balance for periods of time longer than necessary to provide for the
orderly payment of invoices and payroll and other charges. Any income
resulting from the investment of excess funds and the cost of funds required to
be borrowed will accrue to the account of each co-tenant in their
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respective ownership percentages. All invoices or charges in connection with
the performance of this Agreement shall be paid by Niagara Mohawk from the
aforesaid account or accounts.
5.3 Failure to Advance Funds
If at any time any party fails to advance funds owing under this
Agreement when Niagara Mohawk requests it to do so, Niagara Mohawk may (unless
it is clear that the failure will be promptly remedied) require all Parties to
advance funds in proportion to their Respective Percentages to cover the
shortfall for as long as may be required, but not longer than three months. A
Party failing to advance funds whenever so required shall remain fully liable
therefore under the Basic Agreement and this Operating Agreement and shall
promptly tender the delinquent funds together with interest at the prime rate
or an equivalent reference rate as may be established from time to time by The
Chase Manhattan Bank N.A., at New York, New York. Niagara Mohawk shall accept
and apply such tendered sums to eliminate or reduce the next succeeding request
or requests for funds from those Parties covering the shortfall.
Promptly upon the occurrence of the event described in the
preceding paragraph, Niagara Mohawk shall notify all Parties of it and a
meeting shall be convened to decide as promptly as possible on a longer-term
course of action responsive to the particular circumstances.
This Section shall not in any way restrict or limit the right of
the non-defaulting Party (Parties) against the defaulting Party (Parties).
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ARTICLE 6 - AUDITS
6.1 Audit Committee; Inspection of Records
The Audit Committee, consisting of a representative of each of the
Parties, has previously been organized by the Parties and shall continue to
exist. The members of such Committee shall consist of one representative
appointed by each of the Chief Executive Officers of the Parties. The Chair of
the Audit Committee shall be appointed by the Chief Executive Officers voting
in accordance with their companies' Respective Shares. A vote representing
more than 50 percent of the ownership interest in the Unit is required to
appoint a Chair. The Audit Committee shall:
a. report to the Chief Executive Officers collectively;
b. plan the amount of audit effort to be expended on the Plant; the
Audit Committee will also determine how the manpower will be provided in order
to meet its commitments;
c. determine specific areas for audit and develop the scope and
objectives for each audit;
d. perform the audits and discuss preliminary findings/ corrective
actions with Niagara Mohawk Management;
e. review audit results and submit draft reports to the Management
Committee for comments and report final audit results to the Chief Executive
Officers; and
f. review the results of any Niagara Mohawk Internal Audit Reports of
Unit Two activities.
The scope of the Audit Committee shall be understood to include all
costs relating to the Plant. The costs of all audits by the Audit Committee or
by any independent certified public
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accountants retained by it shall be borne by the Owners in accord with their
Respective Percentages.
The correspondence, records, vouchers and books of account of
Niagara Mohawk pertaining to all costs incurred for the account of the Parties
under this Agreement shall be examined annually by a firm of independent
certified public accountants in connection with the annual examination of
Niagara Mohawk's accounts and records, and such firm will report to the Parties
with respect to operation under this Agreement. The costs of such examination
shall be borne by the Owners in accord with their Respective Percentages.
The Parties or any individual Party shall have the right, during
the term of this Agreement and for a period of two years after final payment,
to inspect all correspondence, records, vouchers and books of account of
Niagara Mohawk pertaining to work done or disbursements made for the account of
the Party or Parties under this Agreement. This review may be performed by the
Party's auditors, or a firm of independent certified public accountants
retained by any Party or Parties.
6.2 Inspection Costs; Inspection Report
If an inspection or review is requested or undertaken by fewer than
four of the Parties, the Party or Parties requesting or undertaking such
inspection or audit shall be responsible for the cost thereof. The reports of
inspection, review or audits pursuant to this section shall be provided to the
Audit Committee. The Party or Parties undertaking the audit shall report the
results to the Chief Executive Officers of all the Parties who shall in turn
advise Niagara Mohawk within three
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(3) months of receipt of such report, of any items that require adjustment or
corrective action.
6.3 Adjustments or Corrective Action
Niagara Mohawk shall permit such inspection, reviews or audits and
make appropriate adjustments or take corrective action as may be required to
reflect the results thereof.
ARTICLE 7 - FUEL
7.1 Fuel Committee; Meetings, Agenda and Minutes
A Fuel Committee has previously been organized and shall continue
to exist. Each member of the Management Committee shall designate a
representative to serve at the member's pleasure. The Chair shall be appointed
by the Management Committee voting in accordance with their companies'
Respective Shares. A vote representing more than SO percent of the ownership
interest in the Unit is required to appoint a Chair. The Committee shall meet
on a quarterly basis, or upon the request of any Party. The Chair shall, at
least ten (lO) days in advance of each such regular meeting, provide each Party
with a written agenda of the pertinent items to be discussed at the meeting
relevant or material to nuclear fuel provisions for the Unit. Minutes of such
meetings shall be prepared by the Chair and distributed to the Parties for
correction or clarification. Comments of the Parties at a meeting or with
regard to the minutes shall be considered and addressed by Niagara Mohawk.
7.2 Fuel Supply
Subject to approvals of the Management Committee as provided in
Article 3, Niagara Mohawk, as agent, shall continue
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<PAGE> 27
to manage the fuel supply and make decisions in connection therewith, keeping
the Parties informed of its actions. Each Party may elect to provide its own
share of uranium and/or conversion services on the condition that such share
will be made available pursuant to an agreed upon schedule for reload and to
the extent that such commitments have not already been made by Niagara Mohawk
as agent. However, Niagara Mohawk, acting as an individual Party, shall be
limited to providing no more than seventy-five percent of its individual share
for any one reload. The remaining amount required for Niagara Mohawk as an
individual Party shall be provided as part of its overall procurement strategy
acting as agent for all the Parties. (Niagara Mohawk controlled sources shall
not be eligible to bid these latter procurements.)
7.3 Fuel Pricing Accounts.
Each Party will maintain its own separate nuclear fuel pricing
accounts, but all individual accounts shall be merged as a composite for New
York Power Pool (NYPP) dispatch purposes.
7.4 Spent Fuel
Subject to the approval of the Management Committee as provided in
Article 3, Niagara Mohawk will continue to operate and manage all on-site and
off-site spent fuel storage, reprocessing or permanent disposal of recovered
fuel and waste products, as agent of the parties, with all costs, benefits and
liabilities distributed among the Parties in accordance with the Respective
Percentages.
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7.5 Separate Activities for Units 1 and 2
It is agreed that Niagara Mohawk will maintain entirely separate
procurement, inventory accounting and disposal actions for Units 1 and 2.
ARTICLE 8 - FINANCE AND ACCOUNTING
The Finance Committee, consisting of a representative of each of
the Parties, has been previously organized by the Parties and shall continue to
exist. Each member of the Management Committee shall designate a
representative to serve at the member's pleasure. The Parties may designate
additional Finance Committee meeting attendees; however, only the designated
representative or a designated alternate shall vote on behalf of the Party.
The Chair of the Finance Committee shall be appointed by the Management
Committee voting in accordance with their companies' Respective Shares. A vote
representing more than 50 percent of the ownership interest in the unit is
required to appoint a Chair. The Committee shall meet at the request of any
Party for the purpose of addressing common financial issues related to the
operation of NMP2. In addition, the Finance Committee shall oversee and direct
the activities of the Accounting Committee which has been previously formed to
establish and review accounting policy and procedures as they relate to the
Unit.
ARTICLE 9 - INSURANCE AND INDEMNITY
9.1 Compensation Withholdings
Niagara Mohawk shall have sole responsibility for
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<PAGE> 29
withholding from the compensation of its employees engaged in performing the
services under this Agreement any taxes or contributions which are required by
law to be withheld, and sole responsibility for paying such withheld amount and
taxes applicable to the compensation of such employees imposed by law upon
Niagara Mohawk to the proper governmental authority, and shall defend,
indemnify and save harmless the Parties hereto from and against any liability
on account thereof.
9.2 Workers' Compensation and Employers' Liability
Insurance
Niagara Mohawk shall provide workers' compensation and employers'
liability insurance for its employees engaged in performing the services under
this Agreement in accordance with the laws of the State of New York. The
policy shall contain a subrogation waiver to the effect that the insurance
company shall not proceed against any of the Parties hereto for recovery of any
loss or losses paid under the policy even though due to the negligence of any
Party or Parties. With respect to any claims made or any suits brought by
Niagara Mohawk employees engaged in performing the services under this
Agreement against LILCO, NYSEG, RG&E, or Central Hudson or any of them, and
such claims or suits do not arise out of acts or omissions of LILCO, NYSEG,
RG&E, or Central Hudson, and are not covered by insurance provided under
Section 9.3 hereof, Niagara Mohawk agrees to defend, indemnify, and hold
harmless LILCO, NYSEG, RG&E, or Central Hudson.
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<PAGE> 30
9.3 Comprehensive General Liability Insurance Policy
Through the life of this Agreement, Niagara Mohawk shall maintain
liability insurance for the account and in the name of the Parties hereto by
securing a standard Comprehensive General Liability Insurance Policy on a
primary coverage basis toinsure the Parties and their agents against liability
except for the nuclear risk, for bodily injury including personal injury to or
death of any one or more persons and damage to property arising out of the
operation of the Unit. Such insurance shall include a waiver of the insurer's
right of subrogation against any of the Parties for such loss or damage even
though due to the negligence of any of the Parties.
Niagara Mohawk shall also maintain insurance in accord with the
requirements of the United States Nuclear Regulatory Commission pursuant to the
Commission's authority under 42 U.S.C. Section 2210 et seq. and the license
issued by the United States Nuclear Regulatory Commission for the Unit. In the
event the requirements of 42 U.S.C. Section 2210 et seq. are revised or
terminated, Niagara Mohawk shall obtain and maintain such insurance and
indemnification as is available for the nuclear risk on reasonable terms,
subject to the consent of the Parties hereto.
9.4 Property Insurance
Niagara Mohawk shall maintain for the account of the Parties in the
name and on behalf of the Parties, property insurance as shall normally be
provided by nuclear property insurance underwriters. Such insurance shall
include a waiver of the insurer's right of subrogation against any of the
Parties for
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<PAGE> 31
such loss or damage even though due to the negligence of any of the Parties.
Niagara Mohawk shall arrange with the insurers for any inspections necessitated
thereby and shall promptly reportany losses to each Party, and shall assist and
cooperate in the adjustment and settlement thereof.
9.5 Employees' Fidelity Bond
Niagara Mohawk shall maintain such employee's fidelity bond
coverage as it deems necessary.
9.6 Liability for Loss, Expense or Damage Not Covered by Insurance
It is the intent of this Agreement that, insofar as practicable,
all liabilities or losses in favor of third parties shall be covered by
insurance; nonetheless, the Parties hereto hereby agree to share (including
deductibles and retainages under policies of insurance as well as attorney's
fees) in any loss, liability, expense, or damage (including personal injury,
death or damage to property) of any kind whatsoever arising out of or connected
with the design, construction, maintenance and operation of the Nine Mile Point
Nuclear Station Unit 2, in accordance with their Respective Percentages
(hereafter referred to as "Shared Liability") and hereby agree to indemnify and
hold each other harmless with respect to any excess amount beyond the share
contributed by each in accordance with their Respective Percentages, provided
that no Party is required to participate in Shared Liability for any claim,
loss, expense, or damage that is payable as a result of any settlement or
compromise thereof unless all the Parties hereto shall have consented to such
settlement or compromise. Shared Liability as to third parties,
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<PAGE> 32
as set forth above, shall apply irrespective of the nature of the allegations
of wrongdoing on the part of the Party(ies) hereto against whom recovery is
being sought, whether pertaining to non-feasance, misfeasance, malfeasance or
violations of statute or regulation, including, but not limited to (to the
extent not prohibited by law) all claims and judgments against any such
Party(ies). In no event shall any of the Parties be liable to any other Party,
except to the extent of its Shared Liability, for consequential damages to
third parties (including, but not limited to, loss of profits or revenue, loss
of use of equipment, cost of capital, cost of substitute equipment, facilities,
or services, down-time costs, cost of replacement or purchased power, or claims
of customers) or punitive damages to third parties resulting from uninsured
losses occurring as aforesaid.
9.7 Amount of Coverage; Modifications
Any insurance arranged for or placed by Niagara Mohawk hereunder
shall be for such amounts and with such deductibles as Niagara Mohawk,
considering the nature of the risks and current insurance practices, shall
determine. Such coverage and deductibles, however, shall satisfy the
requirements of each Party hereto. To the extent that Niagara Mohawk places or
arranges for insurance for the Parties as herein provided, the Parties will not
obtain or provide such insurance, except that any Party may for its own account
and at its own expense obtain or provide separate or excess liability coverage.
During the life of this Agreement, from time to time, Niagara Mohawk
may modify insurance coverages both as to type and amount and deductibles to
conform to its own corporate practices
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and practices generally accepted in the utility industry. All Parties shall be
notified of any change.
Copies of any insurance policies placed or arranged for hereunder
shall be furnished to all Parties.
Notwithstanding any provision of this Article 9, Niagara Mohawk
shall secure and maintain for the Unit an insruance program affording liability
and property damage coverage which meets regulatory requirements.
9.8 Insurance Premiums
All premiums for insurance maintained by Niagara Mohawk hereunder
with respect to the Unit shall be included in the cost of operations and
maintenance.
9.9 Sharing of Regulatory Penalty and Breach of
This Agreement
a. Except as this Section otherwise provides, each Party does
hereby release each of the other Parties from all liability, causes of action,
claims and judgments (hereinafter collectively referred to in this Section 9.9
as "Claims") in excess of each Party's Respective Percentage for actions or
omissions occurring subsequent to the effective date of this Agreement and
arising out of operation, maintenance, modification (including design thereof),
or ownership of the Unit.
b. Unless otherwise directed by the regulatory agency, the
Parties shall share in accordance with their Respective Percentages any
penalty, fine or assessment (hereinafter "Regulatory Penalty") imposed by a
regulatory agency for actions or omissions
i) arising from operation, maintenance, modification
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(including design thereof), or ownership of the Unit and
ii) occurring subsequent to the effective date of this Agreement.
In such circumstances, no Party will advocate any sharing of a Regulatory
Penalty in any manner other than in accordance with the Respective Percentages
before any regulatory body or court in which the manner of sharing of a
Regulatory Penalty is at issue, including in an appeal from a regulatory body
or court. If the Regulatory Penalty results directly from acts, omissions or
circumstances constituting a Party's breach of this Agreement, that portion of
the penalty that results directly from such acts, omissions or circumstances
shall be borne by the Party in breach and the balance shall be allocated
according to the Parties' Respective Percentages. As used in this Section 9.9,
the term breach of this Agreement excludes circumstances described in (1)
through (4) of paragraph (e) below so long as conditions (i) through (ii)
therein are met.
c. A party shall not be entitled to the release provided in
paragraph (a) above for those Claims based upon acts, omissions or
circumstances for which it is responsible that both (1) result directly in the
Claims for which it seeks release and (2) constitute a breach of this Agreement
which breach is not cured.
d. A Party in breach of this Agreement shall have a continuing
obligation to cure it. If a Claim for monetary damages does not lie under
paragraph (c) above, any other Party may insist that the obligation be honored,
may demand specific
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<PAGE> 35
performance and may seek to enjoin any act or omission constituting the breach.
e. It is not the intent of this Agreement to hold any Party
responsible beyond its Respective Percentage for the economic or financial
consequences of the failures of performance or achievement described in (1)
through (4) below so long as conditions (i) through (ii) below are met. A
Party shall not be deemed in breach of this Agreement by reason of
1) any failure of the Unit to perform to a generally accepted
industry standard,
2) any failure of the Unit to achieve (despite Unit's plans being
designed to attain them) specific goal or objective outlined
in this Agreement or in Unit operation and maintenance plans
and budgets,
3) any failure by the Party to achieve conformance with the
approved annual operating plan or
4) any failure to comply with the technical specifications and
other terms and conditions of the operating license issued by
the NRC, the regulations of the Commission and any applicable
orders or directives issued by it
so long as
i) such failure is not willful and
ii) the Party has acted in good faith in all respects, including
with respect to its obligations under this Agreement.
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9.10 Meaning of Section 6 in September 22, 1975
Operating Agreement Among the Parties
(the 1975 Operating Agreement)
The Parties agree that in any action before any court or
administrative agency, or any appeal thereof, in which the meaning of Section 6
in the 1975 Operating Agreement is at issue no Party will use or cite the
language of Sections 9.9 and 9.6 herein in any explication of, or argument as
to, the meaning of Section 6 in the 1975 Operating Agreement, nor shall the
current Sections 9.6 and 9.9 be construed to have any bearing on the meaning of
Section 6 of the 1975 Operating Agreement.
ARTICLE 10 - MEASUREMENT
10.1 Output Measurement
Net output of the Unit shall be measured by suitable meters located
at the Unit. Hourly production for Niagara Mohawk, LILCO, NYSEG, RG&E and
Central Hudson shall be metered at Scriba Station and allocated to the nearest
MWH in accordance with each Party's Respective Percentage or each Party's
scheduled requirement for that hour. The Scriba Station meter shall also be
used as the basis for cotenant energy accounting.
10.2 Periodic Testing of Meters
Niagara Mohawk shall test the meters at regular intervals and at
other times when any Party hereto has reason to believe that any meter is not
registering accurately, and will notify LILCO, NYSEG, RG&E and Central Hudson
when such tests are to be made in order that they may have a representative
present during the test.
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ARTICLE 11 - GENERAL
11.1 Non-Waiver of Provisions
The failure of the Parties to insist in any one or more instances
upon strict performance of any of the provisions of this Agreement, or to take
advantage of any rights hereunder, shall not be construed as a waiver of any
such provisions or the relinquishment of any such rights, but the same shall
continue and remain in full force and effect.
11.2 Procedure for Appeal of Management Committee Decision
Any member may appeal a decisions of the Management committee to
the Chief Executive Officers collectively within 10 days of the meeting at
which such decisions is made. The member appealing shall describe the issue to
be decided and submit a short, objective statement of the facts and reasoning
supporting the member's positions and that of the Management Committee. Any
non-appealing member of the Management Committee may supplement or respond to
the statement within 10 days.
In the event a matter is referred to the Chief Executive Officers
after inability of the Management Committee to resolve a questions under
Section 3.2, the Chair of the Management Committee shall describe the issue to
be decided and submit a short, objective statement supporting alternative
resolutions of that issue. Any other member of the Management Committee may
supplement that statement within 10 days.
11.3 Procedure for Resolution of Appeal
The Chief Executive Officers shall resolve any issue appealed or
referred from the Management Committee by a vote representing greater than 50
percent of the interest in the Unit
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within 60 days after receipt of the appeal and any responding or supplementary
statements.
11.4 Conflict with Basic Agreement
To the extent any provision of the Basic Agreement conflicts with
provisions of this Operating Agreement, notwithstanding the provisions of
Article XIV of the Basic Agreement, the provisions of this Agreement shall
control.
11.5 Independence of Settlement Agreement
This Agreement does not supersede paragraph 6 or any other
provision of the September 3, 1985 document entitled "Specification of Terms
and Conditions of Offer of Settlement" to which representatives of Niagara
Mohawk and Staff of the PSC subscribed and to which the non-operating owners
later consented.
ARTICLE 12 - EFFECTIVE DATE, TERM AND TERMINATION
12.1 Effective Date
This Agreement shall be effective on January 1, 1993, upon the
expiration of the most recent extension of the Interim Operating Agreement,
dated February 21, 1992. It being the intention of the Parties that there be
no lapse between the expiration of the Interim Operating Agreement and the
effectiveness of this Agreement.
12.2 Term
The term of this Agreement shall be 24 months from its effective
date. Thereafter, this Agreement shall be extended and remain in full force
and effect until terminated pursuant to Section 12.3.
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12.3 Termination
Any Party may terminate this Agreement by providing to all of the
other Parties a written Notice of Termination at any time after expiration of
18 months of the term set forth in Section 12.2. Such Notice of Termination
shall take effect 6 months after it has been received by all Parties.
ARTICLE 13 - OPERATING COMPANY FORMATION
13.1 Evaluation
The Parties have been evaluating the possibility of creating a
corporate entity ("Operating Company") to operate and maintain the Unit.
Although they have decided not to create an Operating Company at this time, the
Parties agree to vigorously pursue and complete the evaluation during the term
of this Agreement.
The operating agreement among the parties dated September 22, 1975,
comprising Appendix B to the Basic Agreement of the same date, is hereby
amended in its entirety with, and replaced by, this Nine Mile Point Nuclear
Station Unit 2 Operating Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Operating
Agreement by their duly authorized officers as of the date written opposite
their names.
<TABLE>
<S> <C>
NIAGARA MOHAWK POWER CORPORATION
BY: /s/ John Endries DATED: December 22, 1992
---------------------------- -----------------
ITS: President
---------------------------
LONG ISLAND LIGHTING COMPANY
BY: /s/ Anthony F. Earley, Jr. DATED: December 20, 1992
---------------------------- -----------------
ITS: President
---------------------------
NEW YORK STATE ELECTRIC & GAS CORPORATION
BY: /s/ Jack H. Roskoz DATED: December 22, 1992
---------------------------- -----------------
ITS: Sr. Vice President
Electric Business Unit
---------------------------
ROCHESTER GAS AND ELECTRIC CORPORATION
BY: /s/ Roger W. Kober DATED: December 28, 1992
---------------------------- -----------------
ITS: Chairman, Pres., CEO
---------------------------
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
BY: /s/ Paul J. Ganci DATED: December 21, 1992
---------------------------- -----------------
ITS: President
---------------------------
</TABLE>
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<PAGE> 1
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-----------------------------------------------------------------
NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY
AND
LONG ISLAND LIGHTING COMPANY
-------------------------
PARTICIPATION AGREEMENT
-------------------------
Dated as of November 1, 1993
-----------------------------------------------------------------
-----------------------------------------------------------------
- relating to -
Electric Facilities Revenue Bonds
(Long Island Lighting Company Project), 1993 Series A
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; EFFECTIVE DATE
AND DURATION OF PARTICIPATION AGREEMENT
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . 3
Section 1.02. Rules of Construction. . . . . . . . . . . . . 3
Section 1.03. Effective Date of Participation Agreement;
Duration of Participation Agreement. . . . . . . . . . . . 3
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations and Warranties by the
Authority. . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.02. Representations and Warranties by the
Company. . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
CONSTRUCTION OF THE PROJECT;
ISSUANCE OF BONDS
Section 3.01. Construction of the Project . . . . . . . . . 6
Section 3.02. Sale of Bonds and Deposit of Proceeds;
Liability Under Bonds. . . . . . . . . . . . . . . . . . . 6
Section 3.03. Disbursements from Project Fund and Rebate
Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.04. Revision of Construction Plans . . . . . . . . 7
Section 3.05. Certification of Completion of Project . . . . 8
Section 3.06. Payment of Cost of Construction of the Project
in Event Project Fund Inadequate . . . . . . . . . . . . . 9
Section 3.07. No Interest in Project Conferred. . . . . . . 9
Section 3.08. Operation, Maintenance and Repair. . . . . . . 9
Section 3.09. Investment of Moneys in Funds Under the
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.10. Agreement not to Exercise Option to Convert to
Fixed Rate Absent Specified Rating . . . . . . . . . . . . 10
Section 3.11. Securities Depository. . . . . . . . . . . . . 10
</TABLE>
(i)
<PAGE> 3
<TABLE>
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ARTICLE IV
COMPANY NOTE AND PAYMENTS; LETTER OF CREDIT
Section 4.01. Execution and Delivery of Company Note to
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.02. Redemption of Bonds. . . . . . . . . . . . . . 11
Section 4.03. Obligation for Payment Absolute; Deficiencies. 11
Section 4.04. Administration Fees; Expenses, Etc. . . . . . 12
Section 4.05. Compensation of Trustee, Paying Agent,
Remarketing Agents, Indexing Agent and Tender Agent. . . . 12
Section 4.06. Project Not Security for Bonds. . . . . . . . 13
Section 4.07. Payment of Taxes and Assessments; No Liens or
Charges. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.08. Indemnification of Authority, Trustee, Tender
Agent, Paying Agent, Remarketing Agents and Indexing
Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.09. Company to Pay Attorneys' Fees and
Disbursements . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.10. No Abatement of Administration Fees and Other
Charges . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.11. Payment to Tender Agent . . . . . . . . . . . 15
Section 4.12. The Letter of Credit . . . . . . . . . . . . . 15
ARTICLE V
SPECIAL COVENANTS
Section 5.01. No Warranty as to Suitability of Project . . . 17
Section 5.02. Authority's Rights to Inspect Project and
Plans and Specifications . . . . . . . . . . . . . . . . . 17
Section 5.03. Company Consent to Amendment of Indenture . . 17
Section 5.04. Tax Covenant . . . . . . . . . . . . . . . . . 17
Section 5.05. Company Agrees to Perform Obligations Imposed
by Indenture . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.06. Maintenance of Office or Agency of Company . . 18
Section 5.07. Further Assurances . . . . . . . . . . . . . . 18
Section 5.08. Payment of Taxes and Other Charges . . . . . . 18
Section 5.09. Maintenance of Properties . . . . . . . . . . 18
Section 5.10. Insurance . . . . . . . . . . . . . . . . . . 19
Section 5.11. Proper Books of Record and Account . . . . . . 19
Section 5.12. Certificates as to Defaults . . . . . . . . . 19
Section 5.13. Company Not to Permit Hindrance or Delay of
Payment of Company Note . . . . . . . . . . . . . . . . . 20
Section 5.14. Corporate Existence, Consolidation, Merger or
Sale of Assets . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.15. Financial Statements of Company . . . . . . . 21
</TABLE>
(ii)
<PAGE> 4
<TABLE>
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Section 5.16. Compliance with Laws . . . . . . . . . . . . . 21
ARTICLE VI
DEFAULTS BY COMPANY; REMEDIES
Section 6.01. Events of Default; Acceleration . . . . . . . 22
Section 6.02. Certain Events of Default; Authority or
Trustee May Take Certain Actions . . . . . . . . . . . . . 24
Section 6.03. Judicial Proceedings by Trustee . . . . . . . 24
ARTICLE VII
MISCELLANEOUS
Section 7.01. Disposition of Amounts After Payment of Bonds . 25
Section 7.02. Notices . . . . . . . . . . . . . . . . . . . . 25
Section 7.03. Successors and Assigns . . . . . . . . . . . . 25
Section 7.04. Amendment of Participation Agreement . . . . . 26
Section 7.05. Assignment by Authority . . . . . . . . . . . . 26
Section 7.06. Participation Agreement Supersedes Any Prior
Agreements . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.07. Counterparts . . . . . . . . . . . . . . . . . 26
Section 7.08. Severability . . . . . . . . . . . . . . . . . 26
SECTION 7.09. NEW YORK LAW TO GOVERN . . . . . . . . . . . . 27
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
(iii)
<PAGE> 5
This PARTICIPATION AGREEMENT, dated as of November 1, 1993, between
NEW YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY, a body corporate and
politic, constituting a public benefit corporation, established and existing
under and by virtue of the laws of the State of New York (the "Authority"), and
LONG ISLAND LIGHTING COMPANY, a corporation duly organized and existing and
qualified to do business as a public utility under the laws of the State of New
York (the "Company"),
W I T N E S S E T H :
WHEREAS, pursuant to special act of the Legislature of the State of
New York (Title 9 of Article 8 of the Public Authorities Law of New York, as
from time to time amended and supplemented, herein called the "Act"), the
Authority has been established, as a body corporate and politic, constituting a
public benefit corporation; and
WHEREAS, pursuant to the Act, the Authority is empowered to contract
with any power company to participate in the construction of facilities for the
furnishing of electricity to the extent required by the public interest in
development, health, recreation, safety, conservation of natural resources and
aesthetics; and
WHEREAS, pursuant to the Act, the Authority has also been empowered
to extend credit and make loans from bond and note proceeds to any person for
the construction, acquisition and installation of, or for the reimbursement to
any person for costs in connection with, any special energy project, including,
but not limited to, any land, works, system, building or other improvement, and
all real and personal properties of any nature or any interest in any of them
which are suitable for or related to the furnishing, generation or production
of energy; and
WHEREAS, the Authority is also authorized under the Act to borrow
money and issue its negotiable bonds and notes to provide sufficient moneys for
achieving its corporate purposes; and
WHEREAS, the Authority is also authorized under the Act to enter into
any contracts and to execute all instruments necessary or convenient for the
exercise of its corporate powers and the fulfillment of its corporate purposes;
and
WHEREAS, the Company is a public utility corporation doing business
in the State of New York and operates power plants in the State of New York;
and
WHEREAS, the Company has requested that the Authority participate in
financing the acquisition, construction and
<PAGE> 6
2.
installation of certain facilities for the furnishing of electric energy within
the Company's service area (such facilities for the furnishing of electric
energy being hereinafter referred to as the "Project") and, as part of such
participation, that the Authority issue bonds pursuant to the Act to provide
funds to finance the cost to the Company of the Project and the expenses
incurred in connection with the authorization, issuance and sale of such bonds;
and
WHEREAS, the Authority, pursuant to Resolution No. 801, adopted
January 25, 1993, has determined to issue its Electric Facilities Revenue Bonds
(Long Island Lighting Company Project), bearing the series designation set
forth on the first page of this Participation Agreement in an aggregate
principal amount of $50,000,000 (the "Bonds"), for the purpose of financing a
portion of such costs and expenses, all such Bonds to be issued under and
secured by an Indenture of Trust relating to the Bonds dated as of November 1,
1993, between the Authority and Chemical Bank, as Trustee (the "Indenture");
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, it is hereby agreed by
and between the parties as follows:
<PAGE> 7
3.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; EFFECTIVE DATE
AND DURATION OF PARTICIPATION AGREEMENT
Section 1.01. Definitions. The terms used in this Participation
Agreement which are defined in Section 1.01 of the Indenture shall have the
meanings, respectively, herein, which such terms are given in said Section 1.01
of the Indenture.
Section 1.02. Rules of Construction. Unless the context clearly
indicates to the contrary, the following rules shall apply to the construction
of the Participation Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa;
(b) All references herein to particular articles or sections are
references to articles or sections of the Participation Agreement;
(c) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of the Participation Agreement
nor shall they affect its meaning, construction or effect;
(d) The terms "hereby," "hereof," "hereto," "herein," "hereunder" and
any similar terms, as used in the Participation Agreement, refer to the
Participation Agreement in its entirety and not to the particular article
or section of the Participation Agreement in which they appear, and the
term "hereafter" means after, and the term "heretofore" means before, the
date of the Participation Agreement; and
(e) In the event that there is any conflict between the provisions of
the Participation Agreement and those of the Indenture, the provisions of
the Indenture shall govern the disposition of such conflict.
Section 1.03. Effective Date of Participation Agreement; Duration of
Participation Agreement. This Participation Agreement shall become effective
upon its execution and delivery, and shall continue in full force and effect
until the principal of, and premium, if any, and interest on, the Company Note
and Bonds have been fully paid (or provision for their payment has been made in
accordance with the provisions of the Indenture) and all sums to which the
Authority or the Trustee are entitled hereunder have been fully paid.
<PAGE> 8
4.
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations and Warranties by the Authority. The
Authority represents and warrants as follows:
(a) The Authority is a body corporate and politic, constituting a
public benefit corporation, established and existing under the laws of the
State of New York;
(b) The Authority has full power and authority to execute and deliver
this Participation Agreement, the Indenture and the Tax Regulatory
Agreement and to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder;
(c) The Authority is not in default under any of the provisions of
the laws of the State of New York which would affect its existence or its
powers referred to in the preceding paragraph (b);
(d) The Authority has determined that its participation in the
financing of the Project, as contemplated by this Participation Agreement,
is in the public interest;
(e) The Authority has duly authorized the execution and delivery of
this Participation Agreement, the Indenture and the Tax Regulatory
Agreement and the execution and delivery of the other documents incidental
to this transaction, and all necessary authorizations therefor or in
connection with the performance by the Authority of its obligations
hereunder or thereunder have been obtained and are in full force and
effect; and
(f) The execution and delivery by the Authority of this Participation
Agreement, the Indenture and the Tax Regulatory Agreement and the
consummation of the transactions herein or therein contemplated will not
violate any indenture, mortgage, loan agreement or other contract or
instrument to which the Authority is a party or by which it is bound, or to
the best of the Authority's knowledge, any judgment, decree, order,
statute, rule or regulation applicable to the Authority.
Section 2.02. Representations and Warranties by the Company. The
Company represents and warrants as follows:
(a) The Company is a corporation duly incorporated and in good
standing under the laws of the State of New York, is duly
<PAGE> 9
5.
qualified and authorized to engage in business as a public utility in the
State of New York, has power to enter into, execute and deliver this
Participation Agreement, the Tax Regulatory Agreement and the Company Note
by proper corporate action and has duly authorized the execution and
delivery by it of this Participation Agreement, the Tax Regulatory
Agreement and the Company Note;
(b) The execution and delivery by the Company of this Participation
Agreement, the Tax Regulatory Agreement and the Company Note and the
consummation of the transactions herein contemplated do not conflict with
or constitute a breach of or a default under the Company's Certificate of
Incorporation, By-Laws or any indenture, mortgage, loan agreement or other
contract or instrument to which the Company is a party or by which it is
bound, or to the best of the Company's knowledge, any judgment, decree,
order, statute, rule or regulation applicable to the Company;
(c) This Participation Agreement, the Tax Regulatory Agreement and
the Company Note constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their
respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other laws, judicial
decisions or principles of equity relating to or affecting the enforcement
of creditors' rights or contractual obligations generally;
(d) The execution and delivery by the Company of this Participation
Agreement and the Company Note in the manner and for the purposes herein
set forth have been duly authorized by an order of the Public Service
Commission of the State of New York;
(e) No additional authorizations for or approvals of the execution
and delivery by the Company of this Participation Agreement, the Tax
Regulatory Agreement and the Company Note need be obtained by the Company
or if any such authorization or approval is necessary it has been
obtained; and
(f) The representations of the Company set forth in the Tax
Regulatory Agreement are hereby incorporated by reference as though fully
set forth herein.
<PAGE> 10
6.
ARTICLE III
CONSTRUCTION OF THE PROJECT;
ISSUANCE OF BONDS
Section 3.01. Construction of the Project. 1. The Company will
construct and complete or cause construction and completion of the Project with
reasonable dispatch and in accordance with the Company's construction plans
therefor. The Project shall belong to and be the property of the Company. In
order to effectuate the purposes of this Participation Agreement, the Company
will do or cause to be done all things requisite or proper for the construction
of the Project and the fulfillment of the obligations of the Company under this
Participation Agreement.
2. Notwithstanding any other provision of this Participation
Agreement to the contrary, the Company shall not be required to complete the
construction of any component of the Project with respect to which funds have
not been disbursed from the Project Fund if in the Company's business judgment
it is not necessary or advisable to do so, provided that failure to complete
the construction of such component will not affect the character or intended
purpose of any other component of such Project and provided further that the
estimated Cost of Construction of the components of the Project yet to be
completed (as estimated by the Company at the time it determines not to
complete any component) is at least equal to the amount of moneys remaining in
the Project Fund.
Notwithstanding any other provision of this Participation Agreement to
the contrary, the Company shall not be required to complete the construction of
any component of the Project if in the Company's business judgment it is not
necessary or advisable to do so and the Company shall have delivered to the
Authority an opinion of Bond Counsel to the effect that failure to complete
such component of such Project will not adversely affect the qualification of
any other component of such Project for financing under the Act or the
exclusion from gross income for Federal income tax purposes of interest on the
Bonds.
Section 3.02. Sale of Bonds and Deposit of Proceeds; Liability Under
Bonds. 1. In order to provide funds for payment of a portion of the Cost of
Construction of the Project, the Authority, as soon as practicable after the
execution of this Participation Agreement will issue, sell and deliver the
Bonds to the initial purchasers thereof, all pursuant to and as provided in the
Purchase Contract for the Bonds among the Authority, the Company, Lehman
Brothers Inc., Dillon, Read & Co. Inc., M.R. Beal & Company and WR Lazard,
Laidlaw & Mead, Inc. and will deposit the
<PAGE> 11
7.
proceeds of such sale of the Bonds with the Trustee, as follows: (i) in the
Bond Fund, a sum equal to the accrued interest, if any, paid by the initial
purchasers of the Bonds and (ii) in the Construction Account of the Project
Fund, the balance of the proceeds received from such sale.
2. The Bonds shall not be general obligations of the Authority, and
shall not constitute an indebtedness of, or a charge against the general credit
of, the Authority or give rise to any pecuniary liability of the Authority.
The liability of the Authority under the Bonds shall be enforceable only to the
extent provided in the Indenture, and the Bonds shall be payable solely from
the Company Note Payments, funds drawn under the Letter of Credit and any other
funds held by the Trustee under the Indenture and available for such payment.
The Bonds shall not be a debt of the State of New York, and the State of New
York shall not be liable thereon.
Section 3.03. Disbursements from Project Fund and Rebate Fund. 1.
The Authority has, in the Indenture, authorized and directed the Trustee to
make payments from the Project Fund, in accordance with and subject to the
provisions of Section 5.03 of the Indenture, to pay the Cost of Construction of
the Project upon receipt from time to time of requisitions signed by an
Authorized Company Representative, stating with respect to each payment to be
made for the Project the information required by Section 5.03 of the Indenture.
The Company will cause such requisitions to be submitted to the
Trustee as may be necessary to effect payments out of the Project Fund in
accordance with the provisions of the Indenture. Concurrently with the
delivery by the Company of each requisition to the Trustee, the Company will
deliver to the Authority a copy of such requisition and any attachments
thereto. The Authority and the Trustee may rely on the Company as to the
completeness and accuracy of all statements in such requisition, and the
Company will indemnify and save harmless the Authority and the Trustee from any
liability incurred in connection with any requisition so delivered and the
payment of funds in reliance thereon.
2. All moneys remaining in the Project Fund after the certificate
referred to in Section 5.05 of the Indenture is furnished shall, at the written
direction of an Authorized Company Representative, be applied in accordance
with Section 5.06 of the Indenture.
Section 3.04. Revision of Construction Plans. The Company may revise
the construction plans for the Project at any time and from time to time;
provided, however, that no such
<PAGE> 12
8.
revision shall be made prior to the Completion Date with respect to such
Project which would render the description of such Project inaccurate in any
material respect, except in accordance with the following procedure:
(a) Prior to any such revision the Company shall deliver to the
Trustee and the Authority (1) a certificate of an Authorized Company
Representative, setting forth the text of the change in the description of
such Project which would be necessary to reflect accurately the proposed
revision in plans and specifications, and certifying that, notwithstanding
such revision, such Project will still be designed to serve the purposes
which would have been served by such Project in the absence of such
revision, and (2) an opinion of Bond Counsel that such revision of such
Project description and the expenditure of moneys from the Project Fund
under the provisions of the Indenture to pay the Cost of Construction of
such Project in accordance with the revised description of such Project will
not impair the exclusion of interest on any of the Bonds then outstanding
from gross income for Federal income tax purposes.
(b) Ten (10) days after the receipt by the Authority and the Trustee
of the certificate and opinion referred to in paragraph (a) above, such
Project description shall be deemed amended to include such revision for all
purposes of this Participation Agreement and the Indenture. Upon the
request of either party or the Trustee, the Authority and the Company shall
enter into an appropriate instrument reflecting such amendment.
Section 3.05. Certification of Completion of Project. When the
Project has been completed (except for components that the Company has
determined not to complete in accordance with Section 3.01), the Company shall
promptly deliver to the Trustee and the Authority a certificate of an
Authorized Company Representative to the effect that, as of a specified date,
the Project has been completed (except as aforesaid). Such certificate shall
specify the components of the Project, if any, the completion of which has been
excused pursuant to Section 3.01. The certificate delivered pursuant to this
Section 3.05 shall also contain an appropriate direction to the Trustee with
respect to any amount in the Project Fund which is to be retained or thereupon
disposed of as provided in Section 5.06 of the Indenture. The Trustee may rely
as to the accuracy and completeness of all statements in such certificate.
Notwithstanding the foregoing, such certificate shall be given and may
state that it is given without prejudice to any
<PAGE> 13
9.
rights against third parties which exist at the date thereof or which may
subsequently come into being.
Section 3.06. Payment of Cost of Construction of the Project in Event
Project Fund Inadequate. If the moneys in the Project Fund available therefor
shall not be sufficient to pay the Cost of Construction of the Project in full
(whether due to investment losses or otherwise), the Company shall, subject to
the provisions of Section 3.01, complete the Project and pay (whether through
financing or otherwise) all that portion of the Cost of Construction thereof in
excess of the moneys available therefor in the Project Fund. The Authority
does not make any warranty, either express or implied, that the moneys which
will be paid into the Project Fund will be sufficient to pay the Cost of
Construction of the Project. If the Company shall pay any portion of the Cost
of Construction of the Project pursuant to the provisions of this Section,
except to the extent it may submit requisitions pursuant to Section 5.03 of the
Indenture, it shall not be entitled to any reimbursement therefor from the
Authority, the Trustee or the owners of any of the Bonds, nor shall it be
entitled to any diminution in or postponement of the payments required to be
paid by the Company pursuant to this Participation Agreement or the Company
Note.
Section 3.07. No Interest in Project Conferred. Neither the Authority
nor the Trustee shall be entitled to any interest in the Project by reason of
the advance of Bond proceeds pursuant to this Participation Agreement.
Section 3.08. Operation, Maintenance and Repair. The Authority and the
Company recognize that the Project will constitute integrated portions of the
electric energy production, transmission, and distribution facilities of the
Company and that it is not feasible to administer the Project separately from
such facilities. The Company shall operate the Project (with such changes,
improvements or additions as the Company may deem desirable) as part of such
facilities for the joint useful life of the Project and such facilities and
shall maintain and repair the Project in conformity with the Company's normal
maintenance and repair programs for such facilities provided that the Company
shall have no obligation to operate, maintain or repair any element or item of
the Project the operation, maintenance, or repair of which becomes uneconomic
to the Company because of damage or destruction or obsolescence (including
physical, functional and economic obsolescence), or change in government
standards and regulations, or the termination of the operation of the
facilities to which the element or item of the Project is an adjunct; and
provided further that,in any event, the Company is proceeding in good faith to
<PAGE> 14
10.
maintain the availability of the Project for use as an authorized project under
the Act.
Section 3.09. Investment of Moneys in Funds Under the Indenture. Any
moneys held as a part of any fund created under the Indenture shall be invested
or reinvested by the Trustee as provided in Article VII of the Indenture. Any
such investment shall be consistent with the provisions of the Tax Regulatory
Agreement.
Section 3.10. Agreement not to Exercise Option to Convert to Fixed
Rate Absent Specified Rating. The Company agrees not to direct that a Fixed Rate
become effective pursuant to Section 2.04(b) of the Indenture unless the
Company shall have delivered to the Authority evidence satisfactory to the
Authority that upon conversion to a Fixed Rate the Bonds are expected to be
rated in at least the third highest rating category of Moody's or S&P
(currently "A" in the case of Moody's and "A" in the case of S&P).
Section 3.11. Securities Depository. The Company acknowledges that the
Authority and the Trustee, at the request of the Company, have arranged for the
initial deposit of the Bonds with The Depository Trust Company ("DTC") which
will act as Securities Depository in order to effectuate a book-entry-only
system and that this system may be discontinued or, if discontinued,
reinstituted (with DTC or another Securities Depository) in accordance with the
Indenture. The Company agrees to take all actions necessary, and to refrain
from taking actions contrary to the effectuation of a book-entry-only system
established pursuant to the Indenture and any arrangements among the Authority,
the Trustee and any Securities Depository. The Authority shall not enter into
any written agreements with a Securities Depository without receipt and
acceptance of such agreements by the Company. The Company agrees that, absent
subsequent agreement among the Authority, the Trustee, the Company and a
Securities Depository, the Bonds shall not be held in a book-entry-only system
during any Money Market Municipal Rate Period.
<PAGE> 15
11.
ARTICLE IV
COMPANY NOTE AND PAYMENTS; LETTER OF CREDIT
Section 4.01. Execution and Delivery of Company Note to Trustee. 1.
Concurrently with the authentication by the Trustee and delivery by the
Authority of the Bonds and in order to evidence the obligation of the Company
to the Authority to repay the advance of the proceeds of the Bonds, the
Authority hereby directs the Company, and the Company hereby agrees, to execute
and deliver to the Trustee its Company Note and to duly and punctually pay the
principal of, premium, if any, and interest on, the Company Note at the place,
the times and in the manner provided therein. The Company Note shall be
substantially in the form attached hereto as EXHIBIT C.
2. The obligation of the Company to make any payment of principal of,
and premium, if any, and interest on, the Company Note shall be deemed
satisfied and discharged to the extent of the corresponding payment made by the
Bank under the Letter of Credit.
Section 4.02. Redemption of Bonds. Whenever Bonds are redeemable in
whole or in part, the Authority will redeem the same at the written direction
of an Authorized Company Representative given in accordance with Section 8.01
of the Indenture.
Section 4.03. Obligation for Payment Absolute; Deficiencies. The
Company agrees that its obligation to make the Company Note Payments and
payments under Section 4.11 at the times and in the amounts provided in the
Company Note and this Participation Agreement shall be absolute, irrevocable
and unconditional and shall not be subject to any defense (other than payment)
or any right of set-off, counterclaim or recoupment for any reason, including,
without limitation, the unenforceability (because of judicial decision or
otherwise) or the impossibility of performance of the Company Note obligations,
or any breach by the Authority of any obligation to the Company, whether under
this Participation Agreement or otherwise, or inaccuracy of any representation
by the Authority to the Company under this Participation Agreement or in any
other instrument, or any indebtedness or liability at any time owing to the
Company by the Authority, or any failure to complete the Project, or the
destruction by fire or other casualty of the Project or any portion thereof, or
the taking of title thereto or the use thereof by the exercise of the power of
eminent domain. If for any reason Company Note Payments, together with other
moneys held by the Trustee and then available for such purpose (including
moneys paid by the Bank under the Letter of Credit), would not be sufficient to
make the corresponding payments of principal of, and premium, if any, and
<PAGE> 16
12.
interest on, the Bonds when such payments are due, the Company will pay the
amounts required from time to time to make up any such deficiency. If for any
reason payments under Section 4.11, together with other moneys held by the
Trustee and the Tender Agent and then available for such purpose (including
moneys paid by the Bank under the Letter of Credit), would not be sufficient to
make the corresponding payments of the purchase price of the Bonds when such
payments are due, the Company will pay the amounts required from time to time
to make up any such deficiency.
Section 4.04. Administration Fees; Expenses, Etc. In order to defray a
portion of the expenses incurred by the Authority in conducting and
administering its programs for the acquisition and construction of facilities
for the furnishing of electricity, special energy projects and the development
of advanced technologies, the Company shall pay to the Authority an initial
Administration Fee in the amount of $125,000 on the date of the delivery of the
Bonds to the initial purchasers thereof and an annual Administration Fee in the
amount of $6,500 on November 1 of each year commencing November 1, 1994, until
the Bonds are no longer outstanding. In addition, the Company shall pay to the
State of New York with respect to the Bonds a bond issuance charge in the
amount of $175,000 on the date of authentication and delivery of the Bonds to
the initial purchasers.
In addition to such Administration Fees, the Company will pay or
reimburse the Authority upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Authority (including
printing costs and the reasonable fees, expenses and disbursements of its
counsel, bond counsel and co-bond counsel) in connection with the Participation
Agreement, the Indenture or any transaction or event contemplated by the
Participation Agreement, the Tax Regulatory Agreement or the Indenture.
Section 4.05. Compensation of Trustee, Paying Agent, Remarketing
Agents, Indexing Agent and Tender Agent. The Company agrees:
(1) to pay to the Trustee from time to time upon its request
reasonable compensation for all services rendered by it in any capacity
under the Indenture (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as so otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred by it in any capacity under the Indenture (including the
reasonable
<PAGE> 17
13.
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith;
(3) to pay to the Paying Agent from time to time upon its request,
reasonable compensation for all services rendered by it as Paying Agent
under the Indenture and reimburse it for its reasonable expenses incurred
under the Indenture (including reasonable compensation and expenses and
disbursements of its agents and counsel), except any such expense as may be
attributable to its negligence or bad faith; and
(4) to pay to the Remarketing Agents, the Tender Agent and the
Indexing Agent their reasonable fees and expenses as and when the same
become due, except any such expense as may be attributable to such person's
negligence or bad faith.
Section 4.06. Project Not Security for Bonds. It is expressly
recognized by the parties that neither the Project nor any other property of
the Company will constitute any part of the security for the Bonds.
Section 4.07. Payment of Taxes and Assessments; No Liens or Charges.
The Company will (a) pay, when the same shall become due, all taxes and
assessments, including income, profits, property or excise taxes, if any, or
other municipal or governmental charges, imposed, levied or assessed by the
Federal, state or any municipal government upon the Authority, the Tender Agent
or the Trustee in respect of any payments (other than payments made pursuant to
Sections 4.04 and 4.05) made or to be made pursuant to this Participation
Agreement or the Company Note and (b) pay or cause to be discharged, within
sixty (60) days after the same shall accrue, any lien or charge upon any such
payment made or to be made under this Participation Agreement, provided that
the Company shall not be required to pay any such tax or assessment so long as
(i) the Company at its expense contests by appropriate legal proceedings
conducted in good faith and with due diligence the amount, validity or
application of any such tax, assessment or charge, (ii) such proceedings shall
have the effect of suspending the collection thereof from the Authority, the
Trustee and the Tender Agent, and (iii) the Company shall indemnify and hold
the Authority, the Trustee and the Tender Agent harmless from any losses,
costs, charges, expenses (including reasonable attorneys' fees and
disbursements), judgments and liabilities arising in respect of such tax,
assessment or charge and the nonpayment thereof.
<PAGE> 18
14.
Section 4.08. Indemnification of Authority, Trustee, Tender Agent,
Paying Agent, Remarketing Agents and Indexing Agent. Any obligation of the
Authority created by or arising out of this Participation Agreement shall be a
limited obligation of the Authority, payable solely from the Company Note
Payments, any payments by the Company under Section 4.11, funds drawn under the
Letter of Credit and any other funds held by the Trustee under the Indenture
and available for such payment, and shall not constitute an indebtedness of or
a charge against the general credit of the Authority and shall not constitute
or give rise to any pecuniary liability of the Authority; nevertheless, if the
Authority shall incur any such pecuniary liability, then in such event the
Company shall indemnify and hold the Authority harmless by reason thereof. The
Company releases the Authority, the Trustee, any Paying Agent, the Remarketing
Agents, the Tender Agent and the Indexing Agent from, agrees that the
Authority, the Trustee, the Remarketing Agents, the Tender Agent, any Paying
Agent and the Indexing Agent shall not be liable for, and agrees to indemnify
and hold the Authority, the Trustee, any Paying Agent, the Remarketing Agents,
the Tender Agent and the Indexing Agent harmless from, any liability for any
loss or damage to property or any injury to or death of any person that may be
occasioned by any cause whatsoever arising out of the construction or operation
of the Project or the financing thereof. The Company agrees to indemnify and
hold the Authority, its members, officers and employees, the Trustee, the
Tender Agent, any Paying Agent and the Indexing Agent harmless from any losses,
costs, charges, expenses (including reasonable attorneys' fees and
disbursements), judgments and liabilities incurred by it or them, as the case
may be, in connection with any claims made, any action, suit or proceeding
instituted or threatened, in connection with the transactions contemplated by
this Participation Agreement or the Indenture so long as, in the case of the
Authority, its members, officers and employees, it or they, as the case may be,
have acted in good faith to carry out the transactions contemplated by this
Participation Agreement, the Remarketing Agreement or the Indenture and,
except, in the case of the Trustee, the Tender Agent, any Paying Agent and the
Indexing Agent, the Trustee's, the Tender Agent's, the Paying Agent's and the
Indexing Agent's willful misconduct or negligence.
Section 4.09. Company to Pay Attorneys' Fees and Disbursements. If the
Company shall default under any of the provisions of this Participation
Agreement and the Authority or the Trustee or both of them shall employ
attorneys or incur other expenses for the collection of payments due under this
Participation Agreement or for the enforcement of performance or observance of
any obligation or agreement on the part of the Company contained in this
Participation Agreement, the Company will
<PAGE> 19
15.
on demand therefor reimburse the reasonable fees of such attorneys and such
other reasonable disbursements so incurred.
Section 4.10. No Abatement of Administration Fees and Other Charges.
It is understood and agreed that so long as any Bonds are outstanding under the
Indenture, Administration Fees and other charges payable to the Authority
pursuant to this Participation Agreement shall continue to be payable at the
times and in the amounts herein specified, whether or not the Project, or any
portion thereof, shall have been destroyed by fire or other casualty, or title
thereto or the use thereof shall have been taken by the exercise of the power
of eminent domain, and that there shall be no abatement of any such
Administration Fees and other charges by reason thereof.
Section 4.11. Payment to Tender Agent. The Company shall pay, or
cause to be paid, to the Tender Agent amounts equal to the amounts to be paid
pursuant to Section 2.05 of the Indenture in respect of Bonds tendered for
purchase or deemed to be so tendered pursuant to the terms of Section 2.05 of
the Indenture, such amounts to be paid by the Company to the Tender Agent on
the dates such payments pursuant to Section 2.05 of the Indenture are to be
made; provided, however, that the obligation of the Company to make any such
payment shall be reduced by the amount of any moneys available for such payment
under clauses (i) through (iii) of Section 2.05(h) of the Indenture and
provided, further, that the obligation of the Company to make any such payment
shall be deemed satisfied and discharged to the extent of the corresponding
payment made by the Bank under the Letter of Credit.
Section 4.12. The Letter of Credit. At all times on or prior to the
Fixed Rate Conversion Date except during any period when all the Bonds then
outstanding are held by or for the account of the Company, a Letter of Credit
meeting the requirements of this Section 4.12 shall be in effect and, in the
event that an Alternate Credit Facility is to replace an expiring Letter of
Credit, the requirements of Section 2.05(j) and Section 6.07 of the Indenture
will be fulfilled. A Letter of Credit shall be an obligation of a bank or
banks, insurance company or companies, other financial institution or
institutions, or any combination of the foregoing, entitling the Trustee to
draw up to (a) an amount equal to the principal amount of the Bonds then
outstanding to pay (i) the principal of the Bonds when due, or (ii) the portion
of the Purchase Price of Bonds corresponding to principal, plus (b) an amount
equal to 210 days' accrued interest on the Bonds then outstanding computed at
the maximum rate specified in such Letter of Credit, which shall in no event
exceed fifteen percent (15%), on the basis of a 360-day year. A Letter of
Credit shall expire (1) at its stated expiration date, which shall be no
earlier
<PAGE> 20
16.
than two (2) days after the next succeeding Optional Tender Date or Purchase
Date not less than six months from its effective date, (2) when all available
amounts have been drawn, (3) one (1) day after the Fixed Rate Conversion Date,
(4) on the effective date of any Alternate Credit Facility that replaces the
then effective Letter of Credit, (5) the earliest date on which no Bonds are
outstanding, whichever shall occur first and (6) twelve (12) days after the
Trustee receives notice from the Bank that it is terminating the Letter of
Credit and directing the Trustee to cause a mandatory tender and purchase of or
to accelerate the Bonds. A Letter of Credit shall provide that when there is a
drawing to pay interest on scheduled payment dates, if the Trustee does not
receive from the Bank by the close of business on a day specified therein,
which shall not be later than the tenth (10th) day following such a drawing in
respect of interest, notice by telephone confirmed in writing (or by other
means acceptable to the Trustee and the Authority) that the amount available to
be drawn has not been reinstated by the amount of the drawing for interest
(except on principal of a Bond being paid or purchased and cancelled), the
amount available to be drawn will automatically be reinstated by the amount of
the drawing on such specified day.
<PAGE> 21
17.
ARTICLE V
SPECIAL COVENANTS
Section 5.01. No Warranty as to Suitability of Project. The
Authority makes no warranty, either express or implied, with respect to actual
or designed capacity of the Project, as to the suitability of the Project for
the purposes specified in this Participation Agreement, as to the condition of
the Project, or as to the suitability of the Project for the Company's purposes
or needs.
Section 5.02. Authority's Rights to Inspect Project and Plans and
Specifications. The Authority shall have the right at all reasonable times to
examine and inspect the Project and, to the extent reasonably available, the
plans and specifications therefor and such other information and records
relating to the Project as may be reasonably necessary to establish the
qualification of the Project for financing under the Act and compliance with
this Participation Agreement.
Section 5.03. Company Consent to Amendment of Indenture. The
Authority shall not enter into any indenture supplemental to or amendatory of
the Indenture without the prior consent of the Company as evidenced by a
certificate in writing signed by an Authorized Company Representative.
Section 5.04. Tax Covenant. Notwithstanding any other provision
hereof, the Company covenants and agrees that it will not take or authorize or
permit any action to be taken with respect to the Project, or the proceeds of
Bonds, including any amounts treated as proceeds of the Bonds for any purpose
of Section 103 of the Code, which will result in the loss of the exclusion of
interest on the Bonds from gross income for Federal income tax purposes under
Section 103 of the Code (except for any Bond during any period while any such
Bond is held by a person referred to in Section 147(a) of the Code). This
provision shall control in case of conflict or ambiguity with any other
provision of this Participation Agreement. In furtherance of such covenant and
agreement, the Authority and the Company have entered into the Tax Regulatory
Agreement and the Company hereby agrees to comply with the provisions thereof
insofar as the Tax Regulatory Agreement relates to the Bonds.
Section 5.05. Company Agrees to Perform Obligations Imposed by
Indenture. The Company agrees to perform such obligations as may be required
of it by the provisions of the Indenture.
<PAGE> 22
18.
Section 5.06. Maintenance of Office or Agency of Company. The
Company will at all times keep in Hicksville, New York, or another location in
the State of New York an office or agency where notices and demands with
respect to the Company Note and this Participation Agreement may be served, and
will, from time to time, give written notice to the Trustee and the Authority
of the location of such office or agency; and, in case the Company shall fail
so to do, notices may be served and demands may be made at the principal office
of the Trustee.
Section 5.07. Further Assurances. The Company will make, execute,
acknowledge and deliver, or cause to be made, executed, acknowledged and
delivered, to the Trustee any and all such further acts, instruments or
assurances as may be reasonably required for effectuating the intention of this
Participation Agreement and the Company Note.
Section 5.08. Payment of Taxes and Other Charges. The Company will
promptly pay and discharge, or cause to be paid and discharged, as the same
become due and payable, any and all taxes, rates, levies, assessments, and
governmental liens, claims and other charges at any time lawfully imposed or
accruing upon or against the Company or upon or against its properties or any
part thereof, or upon the income derived therefrom or from the operations of
the Company, provided that the Company shall not be required to pay or
discharge, or cause to be paid or discharged, any such obligation, tax, rate,
levy, assessment, lien, claim or other charge so long as in good faith and by
appropriate legal proceedings the validity thereof shall be contested.
Section 5.09. Maintenance of Properties. The Company will at all
times make or cause to be made such expenditures for repairs, maintenance and
renewals, or otherwise, as shall be necessary to maintain its properties in
good repair, working order and condition as an operating system or systems to
the extent necessary to meet the Company's obligations under the Public Service
Law of the State of New York and the Participation Agreement; provided,
however, that nothing herein contained shall be construed to prevent the
Company from ceasing to operate any of its plants or any other property, if, in
the judgment of the Company, it is advisable not to operate the same and the
operation thereof shall not be essential to the maintenance and continued
operation of the rest of the operating system or systems, and the security
under the Indenture afforded by the Company Note will not be substantially
impaired by the termination of such operation. It is understood that the
Company has agreed pursuant to a settlement with the State of New York,
approved by the Company's shareholders on June 28, 1989, not to operate the
Shoreham Nuclear Power Station.
<PAGE> 23
19.
Section 5.10. Insurance. The Company will keep or cause to be kept
such parts of its properties as, in the opinion of an Authorized Company
Representative (as defined in the Indenture and who shall be a licensed
professional engineer), are of an insurable nature, insured against loss or
damage by fire or other casualties, the risk of which is customarily insured
against by companies similarly situated and operating like properties, to the
extent that property of similar character is customarily insured against by
such companies, either (a) by reputable insurers or (b) in whole or in part in
the form of reserves or of one or more insurance funds created by the Company,
whether alone or with other corporations, provided that the plan of each such
insurance fund shall have been or shall be approved by the Board of Directors
of the Company. Notwithstanding the foregoing, the Company may carry a lesser
amount of insurance with respect to Shoreham Nuclear Generating Station to the
extent that the Company has received an exemption from the Nuclear Regulatory
Commission permitting it to carry such lesser amount.
Section 5.11. Proper Books of Record and Account. The Company will
at all times keep or cause to be kept proper books of record and account, in
which full, true and correct entry will be made of all dealings, business and
affairs of the Company, including proper and complete entries to capital or
property accounts covering property worn out, obsolete, abandoned or sold, all
in accordance with the requirements of any system of accounting or keeping
accounts or the rules, regulations or orders prescribed by a regulatory
commission with jurisdiction over the rates of the Company giving rise to at
least fifty-one percent (51%) of the Company's gross revenues, or if there are
no such requirements or rules, regulations or orders, then in compliance with
generally accepted accounting principles.
Section 5.12. Certificates as to Defaults. The Company shall file
with the Trustee, on or before April 30 of each year, a certificate signed by
an Authorized Company Representative (as defined in the Indenture) stating
that, to the best of his knowledge, information and belief, the Company has
kept, observed, performed and fulfilled each and every one of its covenants and
obligations contained in this Participation Agreement and in the Company Note
and, to the best of his knowledge, information and belief, there does not exist
at the date of such certificate any default by the Company under this
Participation Agreement or any event of default hereunder or other event which,
with notice or the lapse of time specified in Section 6.01, or both, would
become an event of default or, if any such default or event of default or other
event shall so exist, specifying the same and the nature and status thereof.
<PAGE> 24
20.
Section 5.13. Company Not to Permit Hindrance or Delay of Payment of
Company Note. The Company will not voluntarily do, suffer or permit any act or
thing intended to hinder or delay the payment of the indebtedness evidenced by
the Company Note.
Section 5.14. Corporate Existence, Consolidation, Merger or Sale of
Assets. The Company will maintain its corporate existence, will not
consolidate with or permit itself to be merged into any other corporation or
corporations, or sell, transfer or otherwise dispose of all or substantially
all of its properties and assets, except in the manner and upon the terms and
conditions set forth in this Section 5.14.
Nothing contained in this Participation Agreement shall prevent (and
this Participation Agreement shall be construed as permitting and authorizing)
any lawful consolidation or merger of the Company with or into any other
corporation or corporations lawfully authorized to acquire and operate the
properties of the Company, or a series of consolidations or mergers, in which
the Company or its successor or successors shall be a party, or any sale of all
or substantially all the properties of the Company as an entirety to a
corporation lawfully authorized to acquire and operate the same; provided that,
upon any consolidation, merger or sale, the corporation formed by such
consolidation, or into which such merger may be made, or making such purchase
shall execute and deliver to the Trustee an instrument, in form satisfactory to
the Trustee, whereby such corporation shall effectually assume the due and
punctual payment of the principal of, and premium, if any, and interest on, the
Company Note according to its tenor and the due and punctual performance and
observance of all covenants and agreements to be performed by the Company
pursuant to this Participation Agreement, the Tax Regulatory Agreement and the
Company Note.
Every such successor corporation shall possess, and may exercise, from
time to time, each and every right and power hereunder of the Company, in its
name or otherwise; and any act, proceeding, resolution or certificate by any of
the terms of this Participation Agreement, the Tax Regulatory Agreement and the
Company Note required or provided to be done, taken and performed or made,
executed or verified by any board or officer of the Company shall and may be
done, taken and performed or made, executed or verified with like force and
effect by the corresponding board or officer of any such successor corporation.
If consolidation, merger or sale or other transfer is made as
permitted by this Section, the provisions of this Section shall continue in
full force and effect and no further consolidation,
<PAGE> 25
21.
merger or sale or other transfer shall be made except in compliance with the
provisions of this Section.
Section 5.15. Financial Statements of Company. The Company agrees to
furnish the Trustee with a copy of its annual report to stockholders for each
year, beginning with the year 1994, on or before March 31 of the subsequent
year or as soon thereafter as it is reasonably available. The Company further
agrees to furnish to the Trustee, and to any owner of the Bonds if requested in
writing by such owner, all financial statements which it sends to its
shareholders generally.
Section 5.16. Compliance with Laws. The Company agrees to comply in
all material respects with all applicable laws, rules and regulations and
orders of any governmental authority, non-compliance with which would adversely
affect the Company's ability to perform its obligations hereunder or under the
Tax Regulatory Agreement or the Company Note, except laws, rules, regulations
or orders being contested in good faith or laws, rules, regulations or orders
which the Company has applied for variances from, or exceptions to.
<PAGE> 26
22.
ARTICLE VI
DEFAULTS BY COMPANY; REMEDIES
Section 6.01. Events of Default; Acceleration. In case one or more
of the following events of default shall have occurred and be continuing:
(a) failure by the Company to pay when due any amount required to be
paid under this Participation Agreement or the Company Note, which failure
causes a default in the payment when due of the interest on any of the Bonds
and continuance of such default for five (5) days; or
(b) failure by the Company to pay when due any amount required to be
paid under this Participation Agreement or the Company Note, which failure
causes a default in the payment when due of the principal of, or premium, if
any, on any of the Bonds; or
(c) failure by the Company to pay when due any amount required to be
paid under Section 4.11, which failure causes a default in the payment when due
of any amount payable pursuant to Section 2.05 of the Indenture and continuance
of such default for five (5) days; or
(d) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company contained in
this Participation Agreement (other than failure to pay amounts required to be
paid under Sections 4.04, 4.05, 4.08, 4.09 or 4.10) or in the Company Note for
a period of ninety (90) days after the date on which written notice of such
failure, requiring the Company to remedy the same, shall have been given to the
Company by the Authority or the Trustee; or
(e) an Act of Bankruptcy relating to the Company; or
(f) the occurrence and continuance of an "event of default" as
defined in the Company Indenture;
then, and in any such event, the Trustee, may, and upon the written request of
the owners of at least twenty-five percent (25%) in aggregate principal amount
of the Bonds then outstanding shall, by notice in writing to the Company and
provided that the default has not theretofore been cured, declare the Company
Note to be due and payable immediately, and upon any such declaration the same
shall become and shall be immediately due and payable, anything contained in
this Participation Agreement or in the Company Note to the contrary
notwithstanding. Any amounts collected by the Trustee
<PAGE> 27
23.
pursuant to action taken under this Section 6.01 shall be applied in accordance
with the Indenture. In addition, if at any time the principal of the Bonds
shall have been declared to be due and payable by acceleration pursuant to the
terms of the Indenture, the Company Note shall thereupon become and be
immediately due and payable, subject to such declaration with respect to the
Bonds being annulled pursuant to Section 10.01 of the Indenture.
The right or obligation of the Trustee to make any such declaration as
aforesaid, however, is subject to the condition that if, at any time after
declaration, but before all the Bonds shall have matured by their terms, the
principal of, premium, if any, and interest on, the Company Note which shall
have become due and payable otherwise than by such declaration, and all other
sums payable hereunder, except the principal of, and interest on, the Company
Note which shall have become due and payable by such declaration, shall have
been paid or provision satisfactory to the Trustee shall have been made for
such payment, and the reasonable expenses of the Trustee and of the owners of
the Bonds shall have been paid, including reasonable attorneys' fees paid or
incurred, and all defaults hereunder and under the Bonds or under the
Indenture, except as to the payment of principal and interest due and payable
solely by reason of such declaration, shall be made good or be secured to the
satisfaction of the Trustee or provision deemed by the Trustee to be adequate
shall be made therefor, then and in every such case the owners of a majority in
aggregate principal amount of the Bonds then outstanding, by written notice to
the Authority and to the Trustee, may rescind such declaration and annul such
default in its entirety, or, if the Trustee shall have acted in the absence of
a written request of the owners of at least twenty-five percent (25%) in
aggregate principal amount of the outstanding Bonds, and if there shall not
have been theretofore delivered to the Trustee written direction to the
contrary by the owners of at least twenty-five percent (25%) in aggregate
principal amount of the outstanding Bonds, then any such declaration shall ipso
facto be deemed to be rescinded and any such default and its consequences shall
ipso facto be deemed to be annulled, but no such rescission and annulment shall
extend to or affect any subsequent default or impair or exhaust any right or
power consequent thereon.
In case the Trustee shall have proceeded to enforce any right under
this Participation Agreement or the Company Note and such proceedings shall
have been discontinued or abandoned for any reason or shall have been
determined adversely to the Trustee, then and in every such case the Company,
the Authority and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Company, the Authority and the Trustee shall continue as though no such
proceedings had been taken.
<PAGE> 28
24.
Section 6.02. Certain Events of Default; Authority or Trustee May
Take Certain Actions. In case the Company shall have failed to comply with its
obligations under Article III or under Sections 4.04, 4.08, 4.09, 4.10 or 5.16,
which event shall have continued for a period of ninety (90) days after the
date on which written notice of such failure, requiring the Company to remedy
the same, shall have been given to the Company by the Authority or the Trustee,
the Authority or the Trustee may take whatever action at law or in equity as
may appear necessary or desirable to enforce performance or observance of any
obligations or agreements of the Company under said Article or Sections. In
case the Company shall have failed to comply with its obligations under Section
4.05, which event shall have continued for a period of ninety (90) days after
the date on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the Trustee, the
Trustee may take whatever action at law or in equity as may appear necessary or
desirable to the Trustee to enforce performance or observance of any
obligations or agreements of the Company under said section.
Section 6.03. Judicial Proceedings by Trustee. Upon the occurrence
and continuance of an event of default (as defined in Section 6.01) the Trustee
may, and upon the written request of the owners of at least twenty-five percent
(25%) in aggregate principal amount of the Bonds then outstanding and receipt
by the Trustee of indemnity satisfactory to it shall, institute any actions or
proceedings at law or in equity for the collection of any amounts then due and
unpaid on the Company Note, and may prosecute any such action or proceeding to
judgment or final decree, and may collect in the manner provided by law the
moneys adjudged or decreed to be payable.
<PAGE> 29
25.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Disposition of Amounts After Payment of Bonds. Any
amounts determined by the Trustee to be remaining in the funds created under
the Indenture after payment in full, or provision for payment in full, of
principal of, and premium, if any, and interest on, all of the Bonds, in
accordance with the provisions of the Indenture, and payment of all the fees,
charges and expenses of the Authority, the Trustee, the Tender Agent, the
Indexing Agent, the Remarketing Agents and the Paying Agents in accordance with
the Indenture and this Participation Agreement and any amounts required to be
paid to the United States of America pursuant to the Tax Regulatory Agreement,
shall be paid to the Bank; provided, however, that on or after the Fixed Rate
Conversion Date and solely with respect to moneys not resulting from a draw on
the Letter of Credit and not constituting remarketing proceeds, such amounts
that would be payable to the Bank pursuant to this Section 7.01 shall be paid
to the Company if the Bank has been paid in full under the Reimbursement
Agreement.
Section 7.02. Notices. All notices, certificates, requests or other
communications between the Authority, the Company and the Trustee required to
be given under this Participation Agreement or under the Indenture (except as
otherwise provided therein) shall be sufficiently given and shall be deemed
given when delivered or mailed by first class mail, postage prepaid, addressed
as follows if to the Authority, at 2 Empire State Plaza, Albany, New York
12223, Attention: President; if to the Company, at 175 East Old Country Road,
Hicksville, New York 11801, Attention: Treasurer; and if to the Trustee, at
450 West 33rd Street, 15th Floor, New York, New York 10001 Attention:
Corporate Trustee Administration Department and if to the Tender Agent,
Remarketing Agents or the Indexing Agent to the addresses set forth for such
persons in Section 16.05 of the Indenture. A duplicate copy of each notice,
certificate, request or other communication given hereunder to the Authority,
the Company or the Trustee shall also be given to the others. The Company, the
Authority and the Trustee may, by notice given hereunder, designate any further
or different addresses to which subsequent notices, certificates, requests or
other communications shall be sent.
Section 7.03. Successors and Assigns. This Participation Agreement
shall inure to the benefit of and shall be binding upon the Authority, the
Company, the Bank, the Trustee and their respective successors and assigns.
<PAGE> 30
26.
Section 7.04. Amendment of Participation Agreement. This
Participation Agreement may not be amended except by an instrument in writing
signed by the parties and, if such amendment occurs after the issuance of the
Bonds, upon compliance with the provisions of Sections 4.01 and 4.02 of the
Indenture.
Section 7.05. Assignment by Authority. The Authority shall assign
its rights under and interest in this Participation Agreement (except the
rights and interest of the Authority under Article III and Sections 4.04, 4.08,
4.09, 4.10 and 5.16), subject to the provisions of this Participation Agreement
relating to the amendment thereof, to the Trustee pursuant to the Indenture, as
security for payment of the principal of, and premium, if any, and interest on,
the Bonds. In addition, the Trustee shall have the same power as the Authority
to enforce from time to time the rights of the Authority set forth in Article
III and Section 5.16, subject to the provisions of this Participation Agreement
relating to the amendment hereof. Except as provided in this Section 7.05, the
Authority will not sell, assign, transfer, convey or otherwise dispose of its
interest in this Participation Agreement during the term of this Participation
Agreement.
Section 7.06. Participation Agreement Supersedes Any Prior
Agreements. This Participation Agreement supersedes any other prior agreements
or understandings, written or oral, between the parties with respect to the
transactions contemplated hereby.
Section 7.07. Counterparts. This Participation Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be an original, but such counterparts shall together constitute
but one and the same Participation Agreement.
Section 7.08. Severability. If any clause, provision or section of
this Participation Agreement is held illegal, invalid or unenforceable by any
court or administrative body, such Participation Agreement shall be construed
and enforced as if such illegal or invalid or unenforceable clause, provision
or section had not been contained in this Participation Agreement. In case any
agreement or obligation contained in this Participation Agreement shall be held
to be in violation of law, then such agreement or obligation shall be deemed to
be the agreement or obligation of the Authority or the Company, as the case may
be, to the full extent permitted by law.
<PAGE> 31
SECTION 7.09. NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION OF THIS PARTICIPATION AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed as of the day and year first written above.
NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY
By /s/ FRANCIS J. MURRAY, JR.
--------------------------------
FRANCIS J. MURRAY, JR.
(SEAL) Chair
ATTEST:
/s/ HOWARD A. JACK
- ------------------
HOWARD A. JACK
Secretary
LONG ISLAND LIGHTING COMPANY
By
--------------------------------
(SEAL) Treasurer
ATTEST:
- ---------------------
Assistant Secretary
<PAGE> 32
SECTION 7.09. NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION OF THIS PARTICIPATION AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed as of the day and year first written above.
NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY
By
--------------------------------
(SEAL) Chair
ATTEST:
- ------------------
Secretary
LONG ISLAND LIGHTING COMPANY
By /s/ ANTHONY NOZZOLILLO
--------------------------------
ANTHONY NOZZOLILLO
(SEAL) Treasurer
ATTEST:
/s/ HERBERT M. LEIMAN
- ---------------------
HERBERT M. LEIMAN
Assistant Secretary
<PAGE> 33
EXHIBIT A
(To Participation Agreement dated as
of November 1, 1993, between New York
State Energy Research and Development
Authority and Long Island Lighting Company)
DESCRIPTION OF
ELECTRIC FACILITIES
The Project will consist of the following facilities which are to
be acquired, constructed and installed by Long Island Lighting Company (the
"Utility") as part of the Utility's electric system:
1. Production Facilities;
2. Transmission Facilities including interconnections and subtransmission;
3. Distribution Facilities, including stations, lines, transformers and
meters;
4. Certain Common Facilities.
All such facilities are as further described in the Tax Regulatory
Agreement between the Authority and the Company dated the date of the initial
delivery of the Bonds.
The Project shall also include (i) such instrumentation, controls,
structures and all other facilities, equipment, devices and the like necessary
to support the facilities herein described, (ii) such necessary land
improvements, and (iii) subject to Section 3.04 of the Participation Agreement,
such additional or substituted facilities for the furnishing of electric energy
which, because of changes in technology, environmental standard, cost or the
like, the Utility determines shall be added or substituted for said facilities.
<PAGE> 34
EXHIBIT B
(To Participation Agreement dated as of
November 1, 1993, between New York State
Energy Research and Development Authority
and Long Island Lighting Company)
DESCRIPTION OF OTHER FACILITIES
Any portion of the Electric Facilities described in Exhibit A as
shall have been placed in service more than one year prior to the date of the
original issuance and delivery of the Bonds.
<PAGE> 35
EXHIBIT C
(To Participation Agreement dated as of November 1, 1993,
between New York State Energy Research and Development
Authority and Long Island Lighting Company)
LONG ISLAND LIGHTING COMPANY
$50,000,000
PROMISSORY NOTE
FOR
ELECTRIC FACILITIES REVENUE BONDS
(LONG ISLAND LIGHTING COMPANY PROJECT), 1993 Series A
Long Island Lighting Company (the "Corporation"), a New York
corporation, for value received, hereby promises to pay, on or before the dates
set forth below, the amounts set forth below, to Chemical Bank, New York, New
York, as trustee or its successor or successors as trustee (the "Trustee")
under the Indenture of Trust relating to the above-referenced Bonds dated as of
November 1, 1993, between the New York State Energy Research and Development
Authority (the "Authority"), a body corporate and politic, constituting a
public benefit corporation, established and existing under and by virtue of the
laws of the State of New York, and the Trustee. Such Indenture of Trust, as it
may be amended or supplemented from time to time, is herein called the
"Indenture." Unless otherwise defined herein, the terms used in this promissory
note (the "Company Note") which are defined in Section 1.01 of the Indenture
shall have the meanings, respectively, herein which such terms are given in
said Section 1.01 of the Indenture.
This Company Note is issued pursuant to the Participation Agreement
in order to evidence the obligation of the Company to the Authority to repay
the advance of the proceeds of the Bonds. In accordance with the Participation
Agreement, the Authority has authorized and directed the Company to issue this
Company Note payable to the order of the Trustee as security for the payment of
principal of, premium, if any, and interest on, the Bonds. The rights and
interest of the Authority under the Participation Agreement (except the rights
and interest of the Authority under Article III and Sections 4.04, 4.08, 4.09
and 4.10 and 5.16 thereof), subject to the provisions of the Participation
Agreement relating to the amendment thereof, have been assigned to the Trustee
pursuant to the Indenture. In addition, the Authority has granted the Trustee
the same power as the Authority to enforce from time to time the rights of the
Authority set forth in said Article III and Section 5.16, subject to the
provisions of the Participation Agreement relating to the amendment thereof.
All of
<PAGE> 36
C-2
the terms, conditions and provisions of the Participation Agreement are, by
this reference thereto, incorporated herein as part of this Company Note.
This Company Note shall be payable as to principal, premium, if any, and
interest as follows:
(a) On or before each Interest Payment Date, commencing December 1, 1993,
a sum which together with other moneys then available for such purpose in
the Bond Fund will enable the Trustee to pay the interest on the Bonds
coming due on such date;
(b) On or before any redemption date for the Bonds (other than a
redemption date pursuant to Section 8.05 of the Indenture), a sum which
together with other moneys then available for such purpose in the Bond Fund
will enable the Trustee to pay the principal of, premium, if any, and
interest on the Bonds which are to be redeemed on such date; and
(c) On or before November 1, 2023, a sum which together with other moneys
then available for such purpose in the Bond Fund will enable the Trustee to
pay the outstanding principal amount of the Bonds;
provided that, if the Bonds are redeemed pursuant to Section 8.05 of the
Indenture, the amounts that would otherwise have been payable on this Company
Note if not for such redemption, shall continue to be payable at the times and
in the amounts set forth above as if such redemption had not occurred; and
provided further that if the Bonds are redeemed pursuant to Section 8.05 of the
Indenture the Company shall have the right at any time thereafter to prepay
this Company Note by paying the amount due on this Company Note at the time of
such prepayment together with unpaid interest accrued thereon to the date of
such prepayment.
The obligation of the Company to make any payment of principal of,
and premium, if any, and interest on, this Company Note shall be deemed
satisfied and discharged to the extent of the corresponding payment made by the
Bank under the Letter of Credit.
All payments of principal of, and premium, if any, and interest on,
this Company Note shall be made in immediately available funds to the Trustee
at its corporate trust office, 450 West 33rd Street, 15th Floor, New York, New
York 10001, Attention: Corporate Trustee Administration Department, Wire
Transfer Number: 967-0-22461, or to such different address or wire transfer
number as the Trustee may from time to time designate, on or before each date
on which such principal, premium, if any, or interest is due in such coin or
currency of the United States of America as at
<PAGE> 37
C-3
the time of payment shall be legal tender for the payment of public and private
debts.
The Company has agreed in the Participation Agreement that if for any
reason Company Note Payments, together with other moneys held by the Trustee
and then available for such purpose (including moneys paid by the Bank under
the Letter of Credit), would not be sufficient to make the corresponding
payments of principal of, and premium, if any, and interest on, the Bonds when
such payments are due, the Company will pay the amounts required from time to
time to make up any such deficiency.
In the event that payment has been made in respect of the principal
of and premium, if any, and interest on, all of the Bonds, or provision
therefor has been made in accordance with Article XIV of the Indenture, then
this Company Note shall be deemed paid in full and shall be cancelled and
returned to the Company; provided that this Company Note shall not be deemed
paid in full if the Bonds are redeemed pursuant to Section 8.05 of the
Indenture.
No reference herein to the Participation Agreement shall impair the
obligation of the Company to pay the principal of and premium, if any, and
interest on this Company Note at the time and place and in the amounts herein
prescribed, which obligation is absolute, irrevocable and unconditional and is
not subject to any defense (other than payment) or any right of set-off,
counterclaim or recoupment for any reason, including, without limitation, any
breach by the Authority of any obligation to the Company, whether under the
Participation Agreement or otherwise, or inaccuracy of any representation by
the Authority to the Company under the Participation Agreement, or any
indebtedness or liability at any time owing to the Company by the Authority or
any failure to complete the Project or the destruction by fire or other
casualty of the Project or any portion thereof, or the taking of title thereto
or the use thereof by the exercise of the power of eminent domain.
In case of an event of default (as defined in Section 6.01 of the
Participation Agreement), the principal of and interest to the date of payment
of this Company Note may be declared immediately due and payable as provided in
the Participation Agreement. In addition, if at any time the principal of the
Bonds shall have been declared to be due and payable by acceleration pursuant
to the terms of the Indenture, this Company Note shall thereupon become and be
immediately due and payable, subject to such declaration with respect to the
Bonds being annulled pursuant to Section 10.01 of the Indenture.
<PAGE> 38
C-4
This Company Note may not be amended except by an instrument in
writing signed by the Company, by the Authority and by the Trustee, on behalf
of the owners of the Bonds, in the manner and subject to the conditions
provided in Section 4.03 of the Indenture.
This Company Note may not be transferred by the Trustee except to
effect an assignment to a successor Trustee under the Indenture or pursuant to
Section 8.05 of the Indenture.
THIS COMPANY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK.
Presentment, demand, protest and notice of dishonor are hereby
expressly waived.
IN WITNESS WHEREOF, the Company has caused this Company Note to be
duly executed and delivered as of November __, 1993.
LONG ISLAND LIGHTING COMPANY
(SEAL) By:
-----------------------------
Treasurer
ATTEST:
- ------------------------
Assistant Secretary
<PAGE> 39
Exhibit 10(u)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INDENTURE OF TRUST
BETWEEN
NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY
AND
Chemical Bank,
as Trustee
Dated as of November 1, 1993
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-relating to-
Electric Facilities Revenue Bonds
(Long Island Lighting Company Project), 1993 Series A
<PAGE> 40
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS; LIABILITY UNDER BONDS;
INDENTURE TO CONSTITUTE CONTRACT
<S> <C> <C>
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 1.02. Rules of construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 1.03. Liability under Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
<TABLE>
<CAPTION>
ARTICLE II
DESCRIPTION; AUTHORIZATION; MANNER OF EXECUTION;
AUTHENTICATION; REGISTRATION AND TRANSFER OF BONDS
<S> <C> <C>
Section 2.01. Issuance of Bonds; Designation of Bonds; Certain Particulars and Form of Bonds . . 45
Section 2.02. Additional Particulars of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 2.03. Interest Rates on Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 2.04. Conversion of Interest Rate on Bonds . . . . . . . . . . . . . . . . . . . . . . . 54
Section 2.05. Optional and Mandatory Tender of Bonds for Purchase . . . . . . . . . . . . . . . . 59
Section 2.06. Remarketing of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 2.07. Delivery of Purchased Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 2.08. Mutilated, Lost, Stolen or Destroyed Bonds . . . . . . . . . . . . . . . . . . . . 70
Section 2.09. Temporary Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 2.10. Execution of Bonds; Effect of Change of Officers . . . . . . . . . . . . . . . . . 71
Section 2.11. Registration of Bonds; Transfers; Securities Depository . . . . . . . . . . . . . . 71
Section 2.12. Persons Treated as Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 2.13. Exchange of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 2.14. Payment For and Limitations on Exchanges and Transfers . . . . . . . . . . . . . . 75
Section 2.15. Endorsement of Certificate of Authentication on Bonds . . . . . . . . . . . . . . . 75
Section 2.16. Cancellation of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 2.17. Redemption of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
</TABLE>
(i)
<PAGE> 41
<TABLE>
<CAPTION>
Page
----
ARTICLE III
SECURITY FOR BONDS; ISSUANCE OF BONDS
<S> <C> <C>
Section 3.01. Pledge and Assignment Effected by Indenture; Bonds Equally and Ratably Secured . . 77
Section 3.02. Issuance of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
</TABLE>
<TABLE>
<CAPTION>
ARTICLE IV
PARTICIPATION AGREEMENT AND COMPANY NOTE
<S> <C> <C>
Section 4.01. Amendments to Participation Agreement not Requiring Consent of Bondowners . . . . . 79
Section 4.02. Amendments to Participation Agreement Requiring Consent of Bondowners . . . . . . . 79
Section 4.03. Amendments to Company Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 4.04. Amendments to Tax Regulatory Agreement . . . . . . . . . . . . . . . . . . . . . . 80
</TABLE>
<TABLE>
<CAPTION>
ARTICLE V
PROJECT FUND; REBATE FUND
<S> <C> <C>
Section 5.01. Creation and Custody of Project Fund . . . . . . . . . . . . . . . . . . . . . . . 81
Section 5.02. Application of Moneys in the Project Fund . . . . . . . . . . . . . . . . . . . . . 81
Section 5.03. Construction Account Requisitions . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 5.04. Retention of Requisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 5.05. Certification of Completion of the Project . . . . . . . . . . . . . . . . . . . . 83
Section 5.06. Disposition of Balance Remaining in Project Fund . . . . . . . . . . . . . . . . . 83
Section 5.07. Creation and Custody of Rebate Fund . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 5.08. Application of Moneys in the Rebate Fund . . . . . . . . . . . . . . . . . . . . . 83
</TABLE>
(ii)
<PAGE> 42
<TABLE>
<CAPTION>
Page
----
ARTICLE VI
BOND FUND; LETTER OF CREDIT
<S> <C> <C>
Section 6.01. Creation and Custody of the Bond Fund . . . . . . . . . . . . . . . . . . . . . . . 85
Section 6.02. Payments into the Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 6.03. Application of Moneys in the Bond Fund . . . . . . . . . . . . . . . . . . . . . . 86
Section 6.04. Non-presentment of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 6.05. (Intentionally Deleted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 6.06. Trustee to Notify Authority and Company of Funds in Bond Fund . . . . . . . . . . . 88
Section 6.07. Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
</TABLE>
<TABLE>
<CAPTION>
ARTICLE VII
SECURITY FOR AND INVESTMENT OF MONEYS
<S> <C> <C>
Section 7.01. Moneys Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 7.02. Uninvested Moneys Held by the Trustee. . . . . . . . . . . . . . . . . . . . . . . 91
Section 7.03. Investment of, and Payment of Interest on, Moneys . . . . . . . . . . . . . . . . . 91
Section 7.04. Disposition of Amounts After Payment of Bonds . . . . . . . . . . . . . . . . . . . 93
Section 7.05. Compliance with Tax Regulatory Agreement in the Event of Partial Redemption of
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
</TABLE>
<TABLE>
<CAPTION>
ARTICLE VIII
REDEMPTION OF BONDS
<S> <C> <C>
Section 8.01. Bonds to be Redeemed Only in Manner Provided in Article VIII . . . . . . . . . . . 95
Section 8.02. Redemption of Less Than all Bonds . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 8.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 8.04. Rights of Owners of Bonds Called for Redemption Limited to Redemption Price and
Accrued Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 8.05. Redemption at Demand of the State . . . . . . . . . . . . . . . . . . . . . . . . . 97
</TABLE>
(iii)
<PAGE> 43
<TABLE>
<CAPTION>
Page
ARTICLE IX ----
PARTICULAR COVENANTS
<S> <C> <C>
Section 9.01. Payment of Principal of and Interest and Redemption Premium of Bonds . . . . . . . 99
Section 9.02. Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.03. Further Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.04. Inspection of Project Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.05. No Extension of Time of Payment of Interest . . . . . . . . . . . . . . . . . . . . 99
Section 9.06. Trustee's, Paying Agent's, Indexing Agent's, Tender Agent's and Remarketing
Agents's Fees, Charges and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 9.07. Agreement of the State of New York . . . . . . . . . . . . . . . . . . . . . . . . 100
</TABLE>
<TABLE>
<CAPTION>
ARTICLE X
DEFAULTS AND REMEDIES
<S> <C> <C>
Section 10.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 10.02. Judicial Proceedings by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 10.03. Effect of Discontinuance or Abandonment of Proceedings . . . . . . . . . . . . . . 104
Section 10.04. Power of Bondowners to Direct Proceedings . . . . . . . . . . . . . . . . . . . . . 104
Section 10.05. Limitation on Actions by Bondowners . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 10.06. Trustee's Right to Enforce Rights in Respect of Bonds in Own Name and Without
Possession of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 10.07. No Remedy herein Conferred upon or Reserved Exclusive . . . . . . . . . . . . . . . 105
Section 10.08. No Delay or Omission to be Deemed Waiver of Default . . . . . . . . . . . . . . . . 105
Section 10.09. Application of Moneys Received by Trustee Pursuant to Article X . . . . . . . . . . 106
Section 10.10. Entirety of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 10.11. Notice of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
</TABLE>
(iv)
<PAGE> 44
<TABLE>
<CAPTION>
Page
----
ARTICLE XI
CONCERNING THE TRUSTEE AND PAYING AGENT
<S> <C> <C>
Section 11.01. Appointment of Trustee; Paying Agents . . . . . . . . . . . . . . . . . . . . . . . 109
Section 11.02. No Responsibility for Correctness of Statements in Indenture . . . . . . . . . . . 109
Section 11.03. No Responsibility for Default of Agents Selected with Due Care, nor for Own Acts
Save Willful Misconduct or Negligence . . . . . . . . . . . . . . . . . . . . . . . 109
Section 11.04. No Duty to Take Enforcement Action Unless so Requested by Owners of 25% of the
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 11.05. Right to Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 11.06. Right to Own and Deal in Bonds and Engage in Other Transactions with Authority
and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 11.07. Construction of Provisions of Indenture by Trustee . . . . . . . . . . . . . . . . 111
Section 11.08. Right to Resign Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 11.09. Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Section 11.10. Appointment of Successor Trustee by Bondowners or Authority . . . . . . . . . . . . 112
Section 11.11. Qualifications of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 11.12. Court Appointment of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . 113
Section 11.13. Acceptance of Appointment by, and Transfer of Trust Estate to, Successor Trustee . 113
Section 11.14. Successor Trustee by Merger or Consolidation . . . . . . . . . . . . . . . . . . . 113
Section 11.15. Exercise of Rights and Powers During Event of Default . . . . . . . . . . . . . . . 114
Section 11.16. Trustee may Intervene in Judicial Proceedings Involving Authority or the Company . 114
Section 11.17. Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 11.18. Appointment of Co-Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
</TABLE>
(v)
<PAGE> 45
<TABLE>
<CAPTION>
Page
----
ARTICLE XII
EXECUTION OF INSTRUMENTS BY BONDOWNERS
AND PROOF OF OWNERSHIP OF BONDS
<S> <C> <C>
Section 12.01. Execution of Instruments; Proof of Ownership of Bonds . . . . . . . . . . . . . . . 117
</TABLE>
<TABLE>
<CAPTION>
ARTICLE XIII
INDENTURES SUPPLEMENTAL HERETO
<S> <C> <C>
Section 13.01. Supplemental Indentures not Requiring Consent of Bondowners . . . . . . . . . . . . 118
Section 13.02. Supplemental Indentures Requiring Consent of Bondowners . . . . . . . . . . . . . . 119
Section 13.03. Company and Bank Consent to Amendment of Indenture . . . . . . . . . . . . . . . . 120
</TABLE>
<TABLE>
<CAPTION>
ARTICLE XIV
DEFEASANCE
<S> <C> <C>
Section 14.01. Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
</TABLE>
<TABLE>
<CAPTION>
ARTICLE XV
REMARKETING AGENTS; REMARKETING OF BONDS; INDEXING AGENT;
TENDER AGENT
<S> <C> <C>
Section 15.01. Appointment and Duties of Remarketing Agents . . . . . . . . . . . . . . . . . . . 125
Section 15.02. Qualifications of a Remarketing Agent . . . . . . . . . . . . . . . . . . . . . . . 125
Section 15.03. Appointment and Duties of Indexing Agents . . . . . . . . . . . . . . . . . . . . . 126
Section 15.04. Qualifications of Indexing Agents . . . . . . . . . . . . . . . . . . . . . . . . . 127
Section 15.05. Dealings With the Authority and the Company . . . . . . . . . . . . . . . . . . . . 127
Section 15.06. Tender Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Section 15.07. Qualifications of Tender Agent; Resignation; Removal . . . . . . . . . . . . . . . 128
</TABLE>
(vi)
<PAGE> 46
<TABLE>
<CAPTION>
ARTICLE XVI
MISCELLANEOUS
<S> <C> <C>
Section 16.01. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Section 16.02. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Section 16.03. No Individual Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Section 16.04. Payment Due on Saturdays, Sundays and Holidays . . . . . . . . . . . . . . . . . . 130
Section 16.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
SECTION 16.06. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Section 16.07. Effective Date; Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Section 16.08. References to the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Section 16.09. Date for Identification Purposes Only . . . . . . . . . . . . . . . . . . . . . . . 132
</TABLE>
(vii)
<PAGE> 47
THIS INDENTURE OF TRUST, made and dated as of the first day of
November, 1993, by and between New York State Energy Research and Development
Authority (the "Authority"), a body corporate and politic, constituting a
public benefit corporation, and Chemical Bank (the "Trustee"), a banking
corporation organized under the laws of the State of New York, with its
principal corporate trust office located in New York, New York, as trustee,
W I T N E S S E T H T H A T:
WHEREAS, pursuant to special act of the Legislature of the
State of New York (Title 9 of Article 8 of the Public Authorities Law of New
York, as from time to time amended and supplemented, herein called the "Act"),
the Authority has been established as a body corporate and politic,
constituting a public benefit corporation; and
WHEREAS, pursuant to the Act, the Authority is empowered to
contract with any power company to participate in the construction of
facilities to be used for the furnishing of electric energy to the extent
required by the public interest in development, health, recreation, safety,
conservation of natural resources and aesthetics; and
WHEREAS, pursuant to the Act, the Authority has also been
empowered to extend credit and make loans from bond and note proceeds to any
Person for the construction, acquisition and installation of, or for the
reimbursement to any Person for costs in connection with, any special energy
project, including, but not limited to, any land, works, system, building or
other improvement, and all real and personal properties of any nature or any
interest in any of them which are suitable for or related to the furnishing,
generation or production of energy; and
WHEREAS, the Authority is also authorized under the Act to
borrow money and issue its negotiable bonds and notes to provide sufficient
moneys for achieving its corporate purposes; and
WHEREAS, the Authority is also authorized under the Act to
enter into any contracts and to execute all instruments necessary or convenient
for the exercise of its corporate powers and the fulfillment of its corporate
purposes; and
WHEREAS, contemporaneously with the execution hereof, Long
Island Lighting Company (the "Company") and the Authority have entered into a
Participation Agreement of even date herewith (herein referred to as the
"Participation Agreement"), providing for the acquisition, construction and
installation of certain facilities (the "Project") for the furnishing of
electric energy within the Company's service area; and
<PAGE> 48
2.
WHEREAS, the Participation Agreement provides that the
Authority will issue its bonds and make the proceeds of such bonds available to
the Company to finance the cost of the Project; and
WHEREAS, pursuant to Resolution No. 801 adopted January 25,
1993, the Authority has determined to issue $50,000,000 aggregate principal
amount of revenue bonds initially bearing the designation set forth on the
title page of the Indenture of Trust (the "Bonds") for the purpose of financing
the cost of the Project; and
WHEREAS, in order to provide an inducement to the Authority to
issue the Bonds, the Company has entered into a Letter of Credit and
Reimbursement Agreement relating to the Bonds dated as of November 1, 1993,
with The Toronto-Dominion Bank, Houston Agency, (the "Bank") and certain other
parties, pursuant to which the Bank has agreed to issue an irrevocable letter
of credit in favor of the Trustee, which letter of credit expires by its terms
on November 17, 1996, unless extended or unless earlier terminated in
accordance with its terms, to provide for the payment of such amounts as are
specified therein with respect to the principal of, premium, if any, and
interest on, the Bonds and certain other payments with respect to the Bonds;
and
WHEREAS, all acts, conditions and things necessary or required
by the Constitution and statutes of the State of New York or otherwise, to
exist, happen, and be performed as prerequisites to the execution and delivery
of the Indenture, do exist, have happened, and have been performed; and
WHEREAS, the Authority has determined that the Bonds issuable
hereunder and the certificate of authentication by the Trustee to be endorsed
on such Bonds shall be, respectively, substantially in the following forms with
such variations, omissions and insertions as are required or permitted by the
Indenture:
<PAGE> 49
3.
[Form of Bonds]
[MONEY MARKET MUNICIPAL RATE LEGEND
Last Day of Money Market
Interest Rate Municipal Rate Period
----- -----
Interest due at
end of Money Market Number of
Municipal Rate Period Days
----- -----]*
NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY
Electric Facilities Revenue Bond
(Long Island Lighting Company Project)
1993 Series A
<TABLE>
<CAPTION>
No. NYAR-1 $50,000,000*
Maturity Date Original Issue Date CUSIP
- ------------- ------------------- -----
<S> <C> <C>
November 1, 2023 November 17, 1993 649841 BV4
Registered Owner: Cede & Co.
Principal Amount: Fifty Million Dollars
</TABLE>
NEW YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY (the
"Authority"), a body corporate and politic, constituting a public benefit
corporation, organized and existing under and by virtue of the laws of the
State of New York, for value received, hereby promises to pay solely from the
sources hereinafter provided, to the Registered Owner specified above, or
registered assigns, on the Maturity Date specified above, unless redeemed prior
thereto as hereinafter provided, upon the presentation and surrender hereof,
the Principal Amount specified above and to pay solely from such sources
interest on said Principal Amount from the date hereof at the rates and at the
times provided herein, until said Principal Amount is paid. This bond shall be
subject to mandatory purchase by the Tender Agent as hereinafter described.
The principal of and premium, if any, on this bond are payable at
- ---------------------
*Such legend to appear only on face of Bonds bearing interest at a Money
Market Municipal Rate.
<PAGE> 50
4.
the corporate trust office of Chemical Bank, New York, New York, the Trustee
hereinafter mentioned and as paying agent. The interest on this bond, when due
and payable, shall be paid to the Registered Owner hereof (or of any bond or
bonds previously outstanding in exchange, transfer or substitution for which
this bond was issued) as of the close of business on the Record Date
(hereinafter referred to) for each interest payment date by check, mailed to
such Person at such Person's address appearing as of the close of business on
such Record Date on the Bond Register (hereinafter referred to). On and prior
to the date a Fixed Rate (as hereinafter defined) becomes effective as
hereinafter provided, in the event that less than all of the Bonds are held
under a book-entry-only system, any owner of not less than $1,000,000 (or
$100,000 during any Money Market Municipal Rate Period) aggregate principal
amount of Bonds not held under a book-entry-only system may request that
interest on the Bonds be paid by wire transfer within the continental United
States; provided, however, that during a Money Market Municipal Rate Period,
interest on a Bond is payable only upon presentation and surrender thereof to
the Tender Agent upon purchase thereof pursuant to the Indenture, and if such
presentation and surrender is made by 12:00 noon (New York City time) such
payment shall be by wire transfer. Interest not so paid shall be paid in
accordance with the provisions of Article X of the Indenture (as hereinafter
defined). All such payments shall be made in such coin or currency of the
United States of America, which at the respective times of payment, are legal
tender for payment of public and private debts.
This bond is one of a duly authorized issue of bonds of the
Authority designated as "Electric Facilities Revenue Bonds (Long Island
Lighting Company Project), 1993 Series A" (the "Bonds"), issued in the
aggregate principal amount of $50,000,000 pursuant to the Constitution and laws
of the State of New York, particularly the New York State Energy Research and
Development Authority Act, Title 9 of Article 8 of the Public Authorities Law
of the State of New York, as amended (the "Act"), and a resolution adopted by
the Authority on January 25, 1993. The Bonds are issued and secured under and
pursuant to an Indenture of Trust dated as of November 1, 1993, between the
Authority and Chemical Bank, as Trustee (the "Indenture"). The Bonds are
issued for the purpose of financing a portion of the cost of acquisition,
construction and installation of certain facilities of Long Island Lighting
Company (the "Company") to be used for the local furnishing of electric energy
(the "Project") pursuant to a Participation Agreement dated as of November 1,
1993, between the Authority and the Company (hereinafter, as it may be amended
or supplemented from time to time, called the "Participation Agreement"). All
terms used but not defined herein are used as defined in the Indenture.
<PAGE> 51
5.
*1. Copies of the Indenture are on file at the corporate
trust office of Chemical Bank, New York, New York, as Trustee under the
Indenture or its successor as Trustee (the "Trustee"), and reference is made to
the Indenture for the provisions relating, among other things, to the terms and
security of the Bonds, the rights and remedies of the owners of the Bonds, and
the terms and conditions upon which Bonds are issued thereunder.
*2. The Bonds are not general obligations of the
Authority, and shall not constitute an indebtedness of or a charge against the
general credit of the Authority or give rise to any pecuniary liability of the
Authority. The liability of the Authority under the Bonds shall be enforceable
only to the extent provided in the Indenture, and the Bonds shall be payable
solely from payments to be made by the Company to the Trustee and any other
funds held by the Trustee under the Indenture (including, but not limited to,
funds drawn under the Letter of Credit) and available for such payment. In
order to provide security for the payment of the principal of and premium, if
any, and interest on all the Bonds in accordance with their terms and the terms
of the Indenture, the Authority has in the Participation Agreement directed the
Company to execute and deliver its Company Note to the Trustee as evidence of
the obligation of the Company to the Authority to repay the advance of the
proceeds of the Bonds by the Authority and the Authority has under the
Indenture pledged and assigned all its right, title and interest in and to the
payments under such Company Note to the Trustee for the benefit of the owners
from time to time of the Bonds. The Bonds are further secured by a pledge and
assignment of (i) the rights and interest of the Authority under the
Participation Agreement (except the rights and interest of the Authority under
Article III and Sections 4.04, 4.08, 4.09, 4.10 and 5.16 thereof and subject to
the provisions of the Participation Agreement relating to the amendment
thereof), (ii) the rights and interest of the Authority under the Tax
Regulatory Agreement, dated the date of the original issuance of the Bonds,
between the Authority and the Company (subject to a reservation by the
Authority of the right to independently enforce the obligations of the Company
thereunder and to the provisions of the Tax Regulatory Agreement relating to
the amendment thereof) (iii) the proceeds of sale of the Bonds and (iv) all
funds held by the Trustee under the Indenture and available for the payment of
the Bonds under the terms of the Indenture (expressly not including in such
funds, the Rebate Fund) and the income earned by the investment of such funds
held under the Indenture. In addition, the Authority has granted the Trustee
the same power as the Authority to enforce from time to time the rights of the
Authority set forth in Article III and Section 5.16 of the Participation
Agreement, subject to the provisions of the Participation Agreement relating to
the amendment thereof.
<PAGE> 52
6.
*3. Interest Rate. Interest on the Bonds will initially be
payable at a Weekly Rate of two and thirty-five one hundredths per centum
(2.35%) per annum from the initial delivery date to and including November 23,
1993 (the "First Interest Period"). Subsequent to such period and prior to the
Fixed Rate Conversion Date, interest on this Bond will be paid at the lowest of
(a) a Weekly Rate, a Money Market Municipal Rate, a Semi-Annual Rate or a
Medium-Term Rate as from time to time selected and determined in accordance
with the Indenture, (b) 15% and (c) the maximum interest rate specified in the
Letter of Credit with respect to coverage for the payment of interest or the
interest component of Purchase Price; thereafter, interest will be paid at the
Fixed Rate, determined in accordance with the Indenture, which shall not exceed
18%. Each such rate will be set by the Remarketing Agents in accordance with
the applicable standards provided in the Indenture; provided that each such
rate will not be greater than 110% of the rate index for such rate (the "Rate
Index"). The Rate Index will be selected by an Indexing Agent for such rate,
appointed pursuant to the Indenture. If such rate is not established by the
Remarketing Agents, no Remarketing Agent shall be serving or the rate so
established is held to be invalid or unenforceable by a final judgment of a
court of law, then such rate will be 100% of the related Rate Index. Interest
will continue to be payable at a Weekly Rate determined in accordance with the
Indenture, unless and until a different Interest Rate Determination Method is
selected in accordance with the Indenture. The Company may change the Interest
Rate Determination Method from time to time in accordance with the Indenture;
provided, however, that if the Company changes the Interest Rate Determination
Method to a Fixed Rate, it may not thereafter change the Interest Rate
Determination Method and the Fixed Rate shall be the rate of interest on the
Bonds from the Fixed Rate Conversion Date to the Maturity Date. The Company
may direct the Trustee to change the Interest Rate Determination Method
applicable to all or a portion of the Bonds. Except as specifically provided
otherwise in the Indenture, the conditions and procedures for such change in
the Interest Rate Determination Method for a portion of the Bonds shall be the
same as the conditions and procedures for a change in the Interest Rate
Determination Method for the entire series of Bonds. If the Company directs
the Trustee to change the Interest Rate Determination Method from one Rate to
another for less than all of the Bonds then outstanding, the Trustee shall
select Bonds to be converted by lot or by such other method as the Trustee
shall deem appropriate. In the event the Company wishes to convert less than
all the Bonds then outstanding, the Company shall notify the Trustee of such
decision not less than 40 days or more than 60 days before the effective date
of the proposed conversion. On the Conversion Date the portion of the Bonds
which are being converted shall be redesignated in such a way as to identify a
separate
<PAGE> 53
7.
Subseries and thereby to avoid confusion of such Subseries with any other
Subseries. The Company may also determine to similarly redesignate the portion
of the Bonds which are not being converted on the Conversion Date. The holders
of Bonds which are being redesignated may be required to deliver such Bonds to
the Trustee in order to receive a new Bond of the applicable designation, in
the same principal amount. In the event holders are not required to surrender
such Bonds, the Trustee shall appropriately designate any Bonds subsequently
issued in exchange therefor. If less than all of the Bonds are to be
converted, all references herein to the Bonds shall be deemed to refer to the
Bonds of each Subseries separately.
*Interest on this Bond will accrue and will be payable as
provided in the Indenture. Except as otherwise provided in the Indenture, the
Interest Payment Dates are: (i) during any Weekly Rate Period, the first
Business Day of each calendar month; (ii) each Conversion Date; (iii) during
any Semi-Annual Rate Period or Medium-Term Rate Period, the first day of each
of two months which are six months apart, as specified in a certificate of an
Authorized Officer delivered to the Trustee prior to the Conversions to a
Semi-Annual Rate Period or Medium-Term Rate Period, provided, however, if the
last such day occurring in any Semi-Annual Rate Period is not a Business Day
then the first Business Day thereafter shall be the Interest Payment Date,
provided, further, however, if any Interest Payment Date in a Semi-Annual Rate
Period, determined as set forth above, would cause such Semi-Annual Rate
Period to extend for a period in excess of 182 days, the Interest Payment Date
for such Semi-Annual Rate Period shall be the last Business Day occurring
within such Semi-Annual Rate Period that does not cause such Semi-Annual Rate
Period to exceed 182 days in duration; (iv) during the Fixed Rate Period, each
May 1 and November 1; (v) during each Money Market Municipal Rate Period, the
first Business Day after any Calculation Period; and (vi) the Maturity Date.
The first Interest Payment Date shall be December 1, 1993. If prior to the
conversion to a Semi-Annual Rate Period, Medium-Term Rate Period or Fixed Rate
Period, an Officer's Certificate shall be delivered to the Trustee specifying
different Interest Payment Dates for such Rate Period together with an Opinion
of Bond Counsel to the effect that such adjustment will not adversely affect
the exclusion of interest on the Bonds from gross income for federal income tax
purposes, then the Interest Payment Dates for such Rate Period shall be so
adjusted; provided, however, that no such adjustment shall result in the
establishment of Interest Payment Dates between which more than six months
would pass.
*The Record Dates with respect to the various Interest Payment
Dates are: (i) during any Weekly Rate Period or Money
<PAGE> 54
8.
Market Municipal Rate Period, the day next preceding such Interest Payment
Date, regardless of whether such day is a Business Day; and (ii) during any
Semi-Annual Rate Period, Medium-Term Rate Period or Fixed Rate Period, the
Trustee's close of business on the fifteenth day of the calendar month next
preceding such Interest Payment Date, regardless of whether such day is a
Business Day.
*During any Weekly Rate Period or Money Market Municipal Rate
Period, interest on the Bonds will be computed on the basis of a 365 or 366-day
year, as the case may be, for the actual number of days elapsed. During any
Semi-Annual Rate Period, Medium-Term Rate Period or Fixed Rate Period, interest
on the Bonds will be computed on the basis of a 360-day year of twelve 30-day
months.
*4. Letter of Credit. The Bonds are initially supported by a
letter of credit issued by The Toronto-Dominion Bank, Houston Agency (such bank
or any issuer of any alternate credit facility as described herein being
hereinafter referred to as the "Bank"), in favor of the Trustee. This letter
of credit expires on November 17, 1996, unless extended in accordance with its
terms, or on the earlier occurrence of events specified in it. The initial
letter of credit or any alternate credit facility meeting the requirements of
Section 6.07 of the Indenture and Section 4.12 of the Participation Agreement
during the time it is in effect is hereinafter called the "Letter of Credit."
The Letter of Credit shall be in effect at all times prior to the Fixed Rate
Conversion Date, except any period during which all of the outstanding Bonds
are owned by the Company. The Letter of Credit shall entitle the Trustee to
draw up to (a) an amount equal to the principal amount of the Bonds then
outstanding to pay the principal amount of the Bonds (or the portion of the
Purchase Price of the Bonds corresponding to principal); plus (b) an amount
equal to 210 days' accrued interest on the Bonds at a maximum rate specified
therein, which shall in no event exceed 15%, to pay interest on the Bonds.
Such maximum rate for the initial letter of credit is 15%. If the Bonds shall
be redeemable at a premium during a period during which a Letter of Credit is
in effect, no redemption may be made unless the Letter of Credit or other
Available Moneys are available to pay such premium.
*Except as otherwise provided herein, the Bonds shall become
subject to mandatory tender for purchase (see "Mandatory Tender for Purchase"
below) on the twentieth calendar day next preceding the scheduled expiration
date of the Letter of Credit. Within five calendar days after the Bonds become
subject to such mandatory tender for purchase, the Trustee shall notify the
owners of the Bonds by first class mail of the expiration of the Letter of
Credit and the name of the issuer of the successor Letter of Credit, if
applicable.
<PAGE> 55
9.
*5. Tender of Bonds for Purchase.
*Optional Tender. During any Weekly Rate Period or any
Semi-Annual Rate Period the owners of the Bonds shall have the right to tender
any Bond (or portion thereof in an authorized denomination) to the Tender Agent
for purchase on any Optional Tender Date prior to the Conversion Date, but only
upon:
(1) giving or delivery to the Tender Agent at its principal
office, during the times specified below, of a telephonic or facsimile
confirmed in writing notice which states (i) the aggregate principal
amount of the Bond to be purchased and (ii) that such Bond (or portion
thereof in an authorized denomination) shall be purchased on such
Optional Tender Date pursuant to the Indenture; and
(2) delivery of such Bond (with an appropriate instrument of
transfer duly executed in blank) to the Tender Agent at its principal
office at or prior to 12:00 noon, New York City time, on such Optional
Tender Date; provided, however, that no Bond (or portion thereof in an
authorized denomination) shall be purchased unless the Bond so
delivered to the Tender Agent shall conform in all respects to the
description thereof in the aforesaid notice.
During any Weekly Rate Period, irrevocable notice must be given on a Business
Day not later than the close of business on the seventh calendar day prior to
the Optional Tender Date; and during any Semi-Annual Rate Period irrevocable
notice must be given not earlier than the thirtieth calendar day and not later
than the close of business on the fifteenth calendar day next preceding the
Optional Tender Date.
*Any election of a Bondowner to tender a Bond (or portion
thereof as aforesaid) for purchase on the Optional Tender Date in accordance
with the Indenture shall be irrevocable and shall be binding on the Bondowner
making such election and on any transferee of such Bondowner.
*Mandatory Tender for Purchase. All Bonds are subject to
mandatory tender and purchase, with no right of owners to retain Bonds, as more
fully provided in the Indenture on each Conversion Date and each Medium-Term
Adjustment Date.
*Any Bond bearing a Money Market Municipal Rate shall be
subject to mandatory tender for purchase in accordance with the Indenture on
the Business Day immediately following each Calculation Period for such Bond at
a price equal to the principal amount thereof and owners of any Bond bearing
interest at a Money
<PAGE> 56
10.
Market Municipal Rate shall have no right to elect to retain such Bond
subsequent to such Business Day.
*Each Bond shall be subject to mandatory tender and purchase
on each Mandatory Purchase Date established pursuant to Section 2.05(e) of the
Indenture.
*Upon the Bonds becoming subject to mandatory tender for
purchase on a Mandatory Purchase Date, the Trustee shall give telephonic notice
to the Remarketing Agents, the Authority and the Tender Agent and give notice
by mail to the Bondowners in accordance with Section 2.05(e)(2) of the
Indenture.
*Failure to mail the notice described in Section 2.05(e)(2) of
the Indenture or any defect therein, shall not extend the period for tendering
any of the Bonds for purchase, and the Trustee shall not be liable to any
Bondowner by reason of its failure to mail such notice or any defect therein.
*The Bonds shall be tendered for purchase as provided in
Section 2.05(e) of the Indenture.
*All Bonds (or portion thereof in an authorized denomination)
which are not delivered to the Tender Agent shall be deemed to have been
properly tendered to the Tender Agent (such Bond being hereinafter referred to
as an "Untendered Bond"), and, to the extent that there shall be on deposit
with the Tender Agent on the applicable Purchase Date, an amount sufficient to
pay the Purchase Price thereof, such Untendered Bond shall cease to constitute
or represent a right to payment of principal or interest thereon and shall
constitute and represent only the right to the payment of Purchase Price
payable on such date. The foregoing shall not limit the entitlement of any
Bondowner on any Record Date to receipt of interest due on such date unless
such interest is paid as part of the Purchase Price.
*Purchase of Tendered Bonds. On each Optional Tender Date and
Purchase Date there shall be purchased (but solely from funds received by the
Tender Agent in accordance with the terms of the Indenture) the Bond or Bonds
(or portions thereof in authorized denominations) tendered (or deemed to have
been tendered) to the Tender Agent for purchase in accordance with Section 2.05
of the Indenture at the applicable Purchase Price. Funds for the payment of
the Purchase Price of such Bond or Bonds (or portions thereof in authorized
denominations) shall be paid by the Tender Agent solely from the sources and in
the order of priority specified in Section 2.05(h) of the Indenture. Bonds (or
portions thereof in authorized denominations) purchased as provided above shall
be delivered as provided in Section 2.07 of the Indenture.
<PAGE> 57
11.
*The owners of the Bonds shall not have the right or be
required, as the case may be, to tender any Bond or Bonds (or portions thereof
in authorized denominations) for purchase on any Optional Tender Date or the
Purchase Date, if on any such date an Event of Default under Section 10.01(f)
or (g) of the Indenture shall have occurred and be continuing thereunder with
respect to the Bonds.
*All Bonds shall be subject to mandatory tender and purchase,
with no right of owners to retain Bonds, upon a date established by the Trustee
after receipt by the Trustee of a written notice from the Bank of the
occurrence and continuance of an event that would constitute an Event of
Default pursuant to Section 10.01(f) or (g) of the Indenture except that the
Bank shall have directed mandatory tender and purchase pursuant to Section
2.05(j) of the Indenture rather than acceleration of the Bonds.
*6. Redemptions.
*Optional Redemption. At any time during a Weekly Rate Period
or Money Market Municipal Rate Period, the Bonds will be subject to redemption,
by the Authority at the direction of the Company, in whole on any Business Day
or in part on any Interest Payment Date at a redemption price equal to the
principal amount thereof plus accrued interest, if any, to the redemption date.
During a Semi-Annual Rate Period or during a Medium-Term Rate Period equal to
one calendar year (or, in the case of the First Interest Period, of less than
one calendar year), each Bond is subject to redemption, by the Authority at the
direction of the Company, in whole or in part on the last Business Day of such
Rate Period in effect on the applicable redemption date, at a redemption price
equal to the principal amount of the Bond or Bonds to be redeemed plus accrued
and unpaid interest thereon to the redemption date. During a Medium-Term Rate
Period of greater than one calendar year but less than or equal to three
calendar years, each Bond will be subject to optional redemption by the
Authority at the direction of the Company on the dates and at the redemption
prices set forth in the following table plus accrued and unpaid interest to the
redemption date:
<PAGE> 58
12.
<TABLE>
<CAPTION>
Redemption Date Redemption Prices
--------------- -----------------
<S> <C>
Earliest Optional Redemption Date 100.5%
through the last day prior to the
First Anniversary of the Earliest
Optional Redemption Date
First Anniversary of the Earliest 100
Optional Redemption Date, if applicable,
and thereafter
</TABLE>
As used in the immediately preceding table "Earliest Optional Redemption Date"
means the anniversary of the Conversion Date occurring in the year which is one
year after the commencement of any such Medium-Term Rate Period. During a
Medium-Term Rate Period of greater than three calendar years but less than or
equal to five calendar years, each Bond will be subject to optional redemption
by the Authority at the direction of the Company on the dates and at the
redemption prices set forth in the following table plus accrued and unpaid
interest to the redemption date:
<TABLE>
<CAPTION>
Redemption Date Redemption Prices
--------------- -----------------
<S> <C>
Earliest Optional Redemption Date 101%
through the last day prior to the
First Anniversary of the Earliest
Optional Redemption Date
First Anniversary of the Earliest 100.5
Optional Redemption Date through
the last day prior to the Second
Anniversary of the Earliest Optional
Redemption Date
Second Anniversary of the Earliest 100
Optional Redemption Date
and thereafter
</TABLE>
As used in the preceding table "Earliest Optional Redemption Date" means the
anniversary of the Conversion Date occurring in the year which is two years
after the commencement of any such Medium-Term Rate Period. During a
Medium-Term Rate Period of greater than five but less than or equal to ten
calendar years, the Bonds will be subject to optional redemption by the
Authority at the direction of the Company on the dates and at the redemption
prices set forth in the following table plus accrued and unpaid interest to the
redemption date:
<PAGE> 59
13.
<TABLE>
<CAPTION>
Redemption Date Redemption Prices
--------------- -----------------
<S> <C>
Earliest Optional Redemption 101.5%
Date through the last day prior to
the First Anniversary of the
Earliest Optional Redemption Date
First Anniversary of the Earliest 101
Optional Redemption Date through
the last day prior to the Second
Anniversary of the Earliest
Optional Redemption Date
Second Anniversary of the Earliest 100.5
Optional Redemption Date through
the last day prior to the Third
Anniversary of the Earliest
Optional Redemption Date
Third Anniversary of the Earliest 100
Optional Redemption Date and thereafter
</TABLE>
As used in the immediately preceding table "Earliest Optional Redemption Date"
means the anniversary of the Conversion Date occurring in the year which is
four years after the commencement of any such Medium-Term Rate Period.
*During a Medium-Term Rate Period of greater than ten calendar
years, the Bonds will be subject to optional redemption by the Authority at the
direction of the Company on the dates and at the redemption prices set forth in
the next succeeding table; provided that, with respect to such a Medium-Term
Rate Period, "Earliest Optional Redemption Date" means the anniversary of the
Conversion Date occurring in the year which is eight years after the Conversion
Date or Medium-Term Adjustment Date.
*After the Fixed Rate Conversion Date, the Bonds will be
subject to optional redemption by the Authority at the direction of the Company
on or after the Earliest Optional Redemption Date (as defined below), in whole
on any Business Day or in part on any Interest Payment Date, during the periods
and at the respective redemption prices (expressed as a percentage of principal
amount) set forth in the following table plus accrued and unpaid interest to
the redemption date:
<PAGE> 60
14.
<TABLE>
<CAPTION>
Redemption Date Redemption Prices
--------------- -----------------
<S> <C>
Earliest Optional Redemption 102%
Date through the last day
prior to the First Anniversary
of the Earliest Optional
Redemption Date
First Anniversary of the 101
Earliest Optional Redemption
Date through the last day
prior to the Second Anniversary
of the Earliest Optional
Redemption Date
Second Anniversary of the 100
Earliest Optional Redemption
Date and thereafter
</TABLE>
*As used in the preceding table, "Earliest Optional Redemption
Date" means the anniversary of the Conversion Date occurring in the year which
is ten years after the Fixed Rate Conversion Date.
*Subject to the provisions of the Indenture, if prior to a
Medium-Term Rate Conversion Date or the Fixed Rate Conversion Date the
Remarketing Agents certify to the Trustee, the Authority and the Company in
writing that any of the foregoing redemption schedules are not consistent with
then prevailing market conditions, with the approval of the Authority and the
Company, the foregoing Earliest Optional Redemption Dates or premiums may be
revised in accordance with the best professional judgment of the Remarketing
Agents to reflect then prevailing market conditions; provided, that the Company
causes to be delivered to the Trustee an Opinion of Bond Counsel stating to the
effect that such revision is permitted by the Indenture and will not cause the
interest on the Bonds to be includible in gross income for federal income tax
purposes.
*Mandatory Redemption Upon State Furnishing Funds. The Bonds
are subject to redemption as a whole, at a redemption price equal to the
applicable optional redemption price described herein or, if no such optional
redemption price shall be applicable, 105% of the principal amount thereof
during the Fixed Rate Period or 100% of the principal amount thereof prior to
the Fixed Rate Conversion Date, together with unpaid interest accrued thereon
to the date fixed for redemption, on any Interest Payment Date not less than
twenty years after the date of the original issuance of
<PAGE> 61
15.
the Bonds if the State of New York furnishes funds therefor, all as more fully
described in the Indenture.
*Extraordinary Optional Redemption. The Bonds may be redeemed
at the option of the Authority exercised at the direction of the Company, as a
whole or in part at any time, at a redemption price equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon to the date
fixed for redemption, upon the occurrence of any of the following events:
(i) All or substantially all of the Project shall
have been damaged or destroyed or title to, or the temporary use of,
all or a substantial portion of the Project shall have been taken
under the exercise of the power of eminent domain by any governmental
authority, or Person, firm or corporation acting under governmental
authority, as in each case renders the Project unsatisfactory to the
Company for its intended use;
(ii) Unreasonable burdens or excessive liabilities
shall have been imposed upon the Authority or the Company with respect
to all or substantially all of the Project, including without
limitation the imposition of federal, state or other ad valorem
property, income or other taxes other than taxes in effect on the date
of original issuance of the Bonds levied upon privately owned property
used for the same general purpose as the Project; or
(iii) Any court or regulatory or administrative body
shall enter or adopt, or fail to enter or adopt, a judgment, order,
approval, decree, rule or regulation, as a result of which the Company
elects to cease operation of all or substantially all of the Project.
*Special Optional Redemptions. The Bonds will also be subject
to redemption at the option of the Authority exercised at the direction of the
Company, in whole at a redemption price equal to the principal amount thereof
plus accrued and unpaid interest thereon to the redemption date if the Company
reasonably concludes and certifies to the Trustee that the business,
properties, condition (financial or otherwise), operations or business
prospects of the Company will be materially and adversely affected unless the
Company takes or omits to take a specified action and that the Company has been
advised in writing by Bond Counsel that either (x) the specified action or
omission would adversely affect the exclusion from gross income for federal
income tax purposes of interest on the Bonds afforded by Section 103 of the
Code, or (y) that the matter is subject to such doubt that such Bond Counsel is
unable to advise the Company that the specified action or omission
<PAGE> 62
16.
would not adversely affect such exclusion. Such conclusion and certification
shall be evidenced by delivery to the Trustee of a written certificate of an
Authorized Company Representative to the effect that the Company has reached
such conclusion, together with a copy of such advice of Bond Counsel.
*During any Medium-Term Rate or the Fixed Rate Period, the
Bonds will also be subject to redemption at the option of the Authority
exercised at the direction of the Company at a redemption price equal to the
principal amount thereof plus accrued and unpaid interest thereon to the
redemption date if the Company reasonably concludes and certifies to the
Trustee that the business, properties, condition (financial or otherwise),
operations or business prospects of the Company will be materially and
adversely affected unless the Company takes or omits to take a specified action
and that the specified action or omission would cause the use of the Project to
be such that, pursuant to Section 150 of the Code, the Company would not be
entitled to deduct the interest on the Bonds for purposes of determining the
Company's federal taxable income, for a period of not less than ninety
consecutive or nonconsecutive days during a twelve-month period. Such
conclusion and certification shall be evidenced by delivery to the Trustee of a
written certificate of an Authorized Company Representative to the effect that
the Company has reached such conclusion, together with a copy of written advice
of Bond Counsel. In the event that the Bonds become subject to redemption as
provided in this paragraph, the Bonds will be redeemed in whole unless
redemption of a portion of the Bonds outstanding would, in the opinion of Bond
Counsel, have the result that interest payable on the Bonds remaining
outstanding after such redemption would be deductible for purposes of
determining the federal taxable income of the Company, and, in such event, the
Bonds shall be redeemed (in the principal amount equal to the current minimum
authorized denomination or an integral multiple thereof) from time to time by
lot or in such other manner as the Trustee shall in its discretion deem proper
in order to assure each owner of Bonds a fair opportunity to have such owner's
Bond or Bonds or portions thereof selected, in such amount as is necessary to
accomplish that result.
*Mandatory Redemption on Determination of Taxability. The
Bonds will be redeemed in whole (or in part as provided below), at a redemption
price equal to the principal amount thereof plus accrued and unpaid interest
accrued thereon to the redemption date, on the first day of a month selected by
the Authority at the direction of the Company (such direction also being
delivered to the Trustee) within 180 days after the Company receives written
notice from a Bondowner or former Bondowner or the Trustee of a final
determination by the Internal Revenue Service or a court of competent
jurisdiction that, as a result of a failure by the
<PAGE> 63
17.
Company to perform any of its agreements in the Participation Agreement or the
inaccuracy, the failure to perform or breach of any of the representations,
warranties, covenants or agreements of the Company in the Tax Regulatory
Agreement or any requisition submitted pursuant to the Indenture, the interest
paid or to be paid on any Bond (except to a "substantial user" of the Project
or a "related person" within the meaning of Section 147(a) of the Internal
Revenue Code of 1986, as amended) is or was included in the gross income of the
Bond's owner for federal income tax purposes. No such determination will be
considered final unless the Bondowner or former Bondowner involved in the
determination gives the Company, the Authority and the Trustee prompt written
notice of the commencement of the proceedings resulting in the determination
and offers the Company, subject to the Company's agreeing to pay all expenses
of the proceeding and to indemnify the owner against all liabilities that might
result from it, including additional income tax liabilities as a result of
interest accruing on the Bonds following commencement of such proceedings, the
opportunity to control the defense of the proceeding and either the Company
does not agree within 30 days to pay the expenses, indemnify the owner and
control the defense or the Company exhausts or chooses not to exhaust available
procedures to contest or obtain review of the result of the proceedings. Fewer
than all the Bonds may be redeemed if, in the opinion of Bond Counsel,
redemption of fewer than all would result in the interest payable on the Bonds
remaining outstanding being not included in the gross income for federal income
tax purposes of any owner other than a "substantial user" of the Project or a
"related person." If fewer than all of the Bonds are redeemed, the Trustee
will select the Bonds to be redeemed as provided in the Indenture. IF THE LIEN
OF THE INDENTURE IS DISCHARGED AS DESCRIBED IN SECTION 10 BELOW PRIOR TO THE
OCCURRENCE OF A FINAL DETERMINATION OF TAXABILITY AS DESCRIBED ABOVE, THE BONDS
WILL NOT BE REDEEMED AS DESCRIBED IN THIS PARAGRAPH.
*Notice of Redemption. At least 30 days before each
redemption, the Trustee will mail a notice of redemption by first-class mail to
each Bondowner at the owner's registered address. Failure to give any required
notice of redemption as to any particular Bonds will not affect the validity of
the call for redemption of any Bonds in respect of which no such failure
occurs. Any notice mailed as provided in this paragraph will be conclusively
presumed to have been given whether or not actually received by the addressee.
*Effect of Notice of Redemption. When notice of redemption is
required and given, Bonds called for redemption become due and payable on the
redemption date at the applicable redemption price, except as otherwise
provided herein; in such case
<PAGE> 64
18.
when funds are deposited with the Trustee sufficient for redemption or for the
purchase of Bonds otherwise subject to redemption, interest on the Bonds to be
redeemed or purchased ceases to accrue as of the date of redemption or purchase
whether or not such Bond is delivered to the Trustee on such date.
*7. Denominations, Transfer, Exchange. The Bonds are issued
in registered form without coupons in denominations of $100,000 or any integral
multiple of $100,000, except that during any Semi-Annual Rate Period, any
Medium-Term Rate Period or the Fixed Rate Period, Bonds may be authenticated
and delivered in denominations of $5,000 or any integral multiple of $5,000.
Notwithstanding the foregoing, prior to the commencement of any Semi-Annual
Rate Period or Medium-Term Rate Period or the Fixed Rate Period, the Authority
at the request of the Company may direct the Trustee to authenticate Bonds only
in denominations of $100,000 or any integral multiple of $100,000 during such
Rate Period in accordance with the Indenture. An owner may register the
transfer of or exchange Bonds in accordance with the Indenture. The Trustee
may require an owner, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. After the Fixed Rate Conversion Date, the Trustee
need not register the transfer of or exchange any Bond for the period beginning
15 days before mailing a notice of redemption of such Bond and ending on the
redemption date.
*The Depository Trust Company, New York, New York ("DTC")
initially will act as Securities Depository for the Bonds. The ownership of
one fully registered Bond in the aggregate principal amount of the Bonds will
be registered in the name of Cede & Co., as nominee of DTC. Such Bond will be
held in trust until its redemption or until such time as DTC or its nominee is
no longer the registered owner of the Bonds. So long as Cede & Co. is the
registered owner of the Bonds, as nominee of DTC, references herein to the
Bondowners or registered owners of the Bonds, shall mean Cede & Co. and shall
not mean the beneficial owners of the Bonds. In the event that the
book-entry-only system through DTC (or a successor securities depository) is
discontinued as provided in the Indenture and the beneficial owners become
registered owners of the Bonds, the provisions applicable to such registered
owners, as set forth herein and in the Indenture, will apply. In the event
that a book-entry-only system is reinstituted after discontinuance, Registered
Owners will not be able to register the transfer of or tender their Bonds
without first registering such Bonds in the book-entry-only system.
*8. Persons Deemed Owners. The Registered Owner of this Bond
may be treated by the Authority, the Company, the Trustee, the
<PAGE> 65
19.
Tender Agent and the Paying Agents as the owner of this Bond for all purposes.
*9. Unclaimed Money. On or after the Fixed Rate Conversion
Date and solely with respect to moneys not resulting from a draw on the Letter
of Credit and not constituting remarketing proceeds, if money for the payment
of principal, premium, interest or Purchase Price remains unclaimed for two
years, the Trustee will, upon request of the Company, pay the money to or for
the account of the Company. After that, owners entitled to the money must look
only to the Company and not to the Trustee or the Bank for payment unless an
applicable abandoned property law designates another person.
*10. Discharge Before Redemption or Maturity. If at any time
there shall have been delivered to the Trustee for cancellation all the Bonds
(other than any Bonds which have been mutilated, lost, stolen or destroyed and
which shall have been replaced or paid as provided in the Indenture, except for
any such Bonds as are shown by proof satisfactory to the Trustee to be held by
bona fide owners), or with respect to all the Bonds not theretofore delivered
to the Trustee for cancellation, the whole amount of the principal and the
interest and the premium, if any, due and payable on such Bonds then
outstanding shall be paid or deemed to be paid as set forth in the Indenture,
and provision shall also be made for paying all other sums payable thereunder,
including the Authority's, the Indexing Agent's, Remarketing Agents', Paying
Agent's, Trustee's and Tender Agent's fees and expenses, then the Bonds shall
be deemed paid and the Trustee, in such case, on demand of the Authority or the
Company, shall acknowledge the discharge of the Authority's obligations under
the Indenture with respect to such Bonds and under the Bonds and deliver to the
Company the Company Note and deliver to the Bank the Letter of Credit, and
shall execute such documents as may be reasonably required by the Authority and
the Company to evidence such discharge, all as more fully set forth in Article
XIV of the Indenture. If the Company at any time deposits with the Trustee
money or Investment Obligations sufficient to pay at redemption or maturity
principal of and interest on or the Purchase Price of the outstanding Bonds,
and if the Company also pays all other sums then payable by the Company under
the Indenture, the Indenture (except for the Rebate Fund established pursuant
to the Indenture) will be discharged. After discharge, Bondowners may look
only to the deposited money and securities for payment. Investment Obligations
are securities backed by the full faith and credit of the United States or
securities evidencing ownership interest in such full-faith-and-credit
securities.
<PAGE> 66
20.
*11. Amendment, Supplement, Waiver. Subject to certain
exceptions, the Indenture, the Participation Agreement or the Bonds may be
amended or supplemented with the consent of the owners of not less than
two-thirds in aggregate principal amount of the Bonds, and any past default or
noncompliance with any provision may be waived with the consent of the owners
of a majority in aggregate principal amount of the Bonds. Without the consent
of any Bondowner, the Authority may amend or supplement the Indenture, the
Participation Agreement or the Bonds as described in the Indenture in order to,
among other things, cure any ambiguity, omission, defect or inconsistency,
provide for uncertificated Bonds in addition to or in place of certificated
Bonds, to the extent permitted by law, or make any change that does not
materially adversely affect the rights of any Bondowner.
*12. Defaults and Remedies. The Indenture provides that the
occurrences of certain events constitute Events of Default. An Event of
Default and its consequences may be waived as provided in the Indenture.
Bondowners may not enforce the Indenture or the Bonds except as provided in the
Indenture. The Trustee may refuse to enforce the Indenture or the Bonds unless
it receives indemnity satisfactory to it. Subject to certain limitations,
owners of a majority in principal amount of the Bonds may direct the Trustee in
its exercise of any trust or power.
*13. Abbreviations. Customary abbreviations may be used in
the name of a Bondowner or an assignee, such as TEN COM (= tenants in common),
TEN ENT (= Tenants by the entireties), JT WROS (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
*14. Remarketing Agents; Indexing Agent; Tender Agent.
The Authority has appointed Lehman Brothers Inc. and Dillon, Read & Co. Inc.,
as the initial Remarketing Agents under the Indenture. The Authority may from
time to time, at the request of the Company, remove or replace one or more of
the Remarketing Agents. The Authority has appointed Kenny Information Systems
Inc. as Indexing Agent under the Indenture. The Authority may from time to
time, at the request of the Company, remove the Indexing Agent and appoint a
different nationally recognized municipal securities evaluation service to
serve as Indexing Agent. The Authority has appointed Chemical Bank as Tender
Agent under the Indenture. The Authority may from time to time, at the request
of the Company, remove or replace the Tender Agent.
This Bond shall not be entitled to any benefit under the
Indenture or be valid or become obligatory for any purpose until
<PAGE> 67
21.
this Bond shall have been authenticated by the execution by the Trustee or the
Tender Agent of the Certificate of Authentication hereon.
No covenant or agreement contained in this Bond or the
Indenture shall be deemed to be a covenant or agreement of any member or
employee of the Authority in his or her individual capacity, and neither the
members of the Authority nor any officer thereof executing this Bond shall be
liable personally on this Bond or be subject to any personal liability or
accountability by reason of the issuance of this Bond.
The Bonds are not a debt of the State of New York and the
State of New York shall not be liable thereon.
It is hereby certified and recited that all conditions, acts
and things required by law and the Indenture to exist, to have happened and to
have been performed precedent to and for the issuance of this Bond, exist, have
happened and have been performed, and that the issuance of this Bond and the
issue of which it forms a part are within every debt and other limit prescribed
by the laws of the State of New York.
<PAGE> 68
22.
IN WITNESS WHEREOF, the Authority has caused this Bond to be
signed in its name and on its behalf by the manual or facsimile signature of
its Chair, Vice-Chair, President or Treasurer and its seal or a facsimile
thereof to be impressed, imprinted or otherwise reproduced hereon and attested
by the manual or facsimile signature of its Secretary or an Assistant
Secretary, as of the date set forth below.
NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY
By
----------------------------
Chair
Attest:
- ---------------------
Secretary
Dated:
[Form of Trustee's or Tender Agent's Authentication on Bonds]
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Electric Facilities Revenue Bonds
(Long Island Lighting Company Project), 1993 Series A, described in the
within-mentioned Indenture.
Chemical Bank Chemical Bank
as Trustee as Tender Agent
By By
------------------------ ------------------------
<PAGE> 69
23.
The Authority may, in its discretion, cause any or all of the
paragraphs preceded by the symbol "*" to be printed on the reverse of the
Bonds, in which event the face of the Bonds shall state the following:
THE TERMS AND PROVISIONS OF THIS BOND ARE CONTINUED ON THE
REVERSE SIDE HEREOF AND SUCH CONTINUED TERMS AND CONDITIONS
SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT
THIS PLACE.
In the event that some but not all of such paragraphs are printed on the
reverse of the Bonds, the numbering of such paragraphs may be revised
accordingly.
The language contained in the preceding paragraph and the
paragraphs preceded by the symbol "*" may be deleted for Bonds issued in
temporary form or delivered to a Securities Depository for book-entry-only
registration and the language to be contained on the reverse side of definitive
Bonds and Bonds not in book-entry-only form may be incorporated by reference,
in which event the Bonds shall state the following after the second paragraph
of the Bonds:
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET
FORTH IN THE FORM OF BONDS IN THE INDENTURE, WHICH PROVISIONS
COMPRISE THE PARAGRAPHS IDENTIFIED BY THE INDENTURE AS
APPEARING ON THE REVERSE OF THE BONDS AND SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT
THIS PLACE.
[END OF BOND FORM]
<PAGE> 70
24.
WHEREAS, the Trustee has accepted the trusts created by the
Indenture and in evidence thereof has joined in the execution hereof;
GRANTING CLAUSE
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in
consideration of the premises, of the acceptance by the Trustee of the trusts
hereby created, and of the purchase and acceptance of the Bonds by the owners
thereof, and also for and in consideration of the sum of One Dollar ($1.00) to
the Authority in hand paid by the Trustee at or before the execution and
delivery of the Indenture, the receipt of which is hereby acknowledged, and for
the purpose of fixing and declaring the terms and conditions upon which the
Bonds are to be issued, authenticated, delivered, secured and accepted by all
Persons who shall from time to time be or become owners thereof, and in order
to secure the payment of all the Bonds at any time issued and outstanding
hereunder and the interest and the redemption premiums, if any, thereon
according to their tenor, purport and effect, and in order to secure the
performance and observance of all the covenants, agreements and conditions
therein or herein contained, the Authority has executed and delivered the
Indenture, has caused the Company to deliver to the Trustee the Company Note
executed by the Company pursuant to the Participation Agreement and the Company
has caused the Bank (hereinafter referred to) to deliver the Letter of Credit
(hereinafter referred to) to the Trustee, and the Authority does hereby assign
and pledge to the Trustee, for the benefit of such Bondowners, as security for
the payment of the principal of and premium, if any, and interest on the Bonds
in accordance with their terms and the provisions of the Indenture, subject
only to the provisions of the Indenture, permitting the application thereof for
the purposes and on the terms and conditions set forth in the Indenture, (i)
the rights and interest of the Authority under the Participation Agreement
(except the rights and interest of the Authority under Article III and Sections
4.04, 4.08, 4.09, 4.10 and 5.16 of the Participation Agreement and subject to
the provisions of the Participation Agreement relating to the amendment
thereof), (ii) the rights and interest of the Authority under the Tax
Regulatory Agreement (as defined herein), subject to a reservation by the
Authority of a right to independently enforce the obligations of the Company
thereunder and to the provisions of the Tax Regulatory Agreement relating to
the amendment thereof, (iii) the proceeds of sale of the Bonds and (iv) all
funds held by the Trustee under the Indenture and available for the payment of
Bonds under the terms of the Indenture (expressly not including in such Funds
the Rebate Fund) and the income earned by the investment of such funds held
under the Indenture; in addition, the Authority hereby grants the Trustee the
same power as the Authority to enforce from time to
<PAGE> 71
25.
time the rights of the Authority set forth in Article III and Section 5.16 of
the Participation Agreement, subject to the provisions of the Participation
Agreement relating to the amendment thereof.
THIS INDENTURE FURTHER WITNESSETH, and it is expressly
declared, that all Bonds from time to time issued and secured hereunder are to
be issued, authenticated and delivered, and all said property, rights and
interest, including, without limitation, the amounts hereby assigned and
pledged, are to be dealt with and disposed of subject to the terms of the
Indenture, and the Authority agrees with the Trustee and with the respective
owners, from time to time, of said Bonds or any part thereof as follows:
<PAGE> 72
26.
ARTICLE I
DEFINITIONS; LIABILITY UNDER BONDS;
INDENTURE TO CONSTITUTE CONTRACT
Section 1.01. Definitions. The terms defined in this
Section 1.01 shall for all purposes of the Indenture have the meanings herein
specified, unless the context clearly otherwise requires:
Act shall mean the New York State Energy Research and
Development Authority Act, Title 9 of Article 8 of the Public Authorities Law
of the State of New York, as from time to time amended and supplemented.
Act of Bankruptcy shall mean the filing of a petition
commencing a case by or against the Company or any of its Affiliates or the
Authority under the United States Bankruptcy Code, Title 11, United States
Code, as the same may be amended from time to time, or any successor law, or
the filing of a petition or the seeking of relief by or against the Company or
the Authority under any state bankruptcy or insolvency law.
Administration Fees shall mean the amounts payable by the
Company to the Authority pursuant to Section 4.04 of the Participation
Agreement to defray a portion of the expenses incurred by the Authority in
conducting and administering its special energy project programs and the amount
payable to the State of New York as a bond issuance charge in connection with
the Bonds.
Affiliate of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Alternate Credit Facility shall mean any instrument
satisfactory to the Authority, such as a letter of credit, committed line of
credit, insurance policy, surety bond or standby bond purchase agreement, or
any combination of the foregoing, and issued by a bank or banks, insurance
company or companies, other financial institution or institutions, or any
combination of the foregoing, which Alternate Credit Facility provides for the
payment of (i) the purchase price equal to the principal of and accrued
interest on Bonds delivered to the Remarketing Agents or any
<PAGE> 73
27.
depository or other party pursuant to the provisions hereof or of a Remarketing
Agreement and discount, if any, incurred in remarketing such Bonds, and/or (ii)
principal of and interest on all Bonds coming due and payable during the term
thereof, and is issued in substitution for and having, in all material
respects, the same terms as the Letter of Credit in accordance with, and
pursuant to, Section 4.12 of the Participation Agreement.
Authority shall mean New York State Energy Research and
Development Authority, the public benefit corporation created by the Act, and
its successors and assigns.
Authorized Company Representative shall mean any officer or
other employee of the Company at the time designated to act on behalf of the
Company by written certificate furnished to the Authority and the Trustee
containing the specimen signature of such person and signed on behalf of the
Company by its President or a Vice President and its Treasurer, Assistant
Treasurer, Secretary or an Assistant Secretary.
authorized denomination means (a) during any Weekly Rate
Period or any Money Market Municipal Rate Period, $100,000 or any larger
integral multiple of $100,000, and (b) during any Semi-Annual Rate Period, any
Medium-Term Rate Period or the Fixed Rate Period, $5,000 or any integral
multiple thereof. Notwithstanding the foregoing, at the time of any conversion
to a Semi-Annual Rate Period, Medium-Term Rate Period or the Fixed Rate Period,
the Authority at the request of the Company may direct the Trustee to
authenticate and deliver Bonds only in denominations of $100,000 or any larger
integral multiple of $100,000 during such Rate Period.
Authorized Officer means the Chair, Vice-Chair, President,
Treasurer, Assistant Treasurer or Secretary of the Authority.
Available Moneys shall mean (a) with respect to any date for
the payment of principal, premium, interest or Purchase Price on the Bonds
occurring during the term of the Letter of Credit, moneys which have been on
deposit with the Trustee, the Tender Agent or the Paying Agent in the Bond Fund
or in a separate and segregated account for the purpose of purchasing or
redeeming Bonds for at least 123 days during and prior to which no Act of
Bankruptcy, as evidenced by a certificate of the Company and the Authority
respectively, shall have occurred unless the proceeding arising from such Act
of Bankruptcy shall have been dismissed and such dismissal shall be final and
not subject to appeal, and the proceeds from the investment thereof, and (b)
with respect to any date for the payment of principal, interest or premium, if
any, on the Bonds not occurring during the term of the Letter of Credit,
<PAGE> 74
28.
any moneys furnished to the Trustee and the proceeds from the investment
thereof.
Bank means The Toronto-Dominion Bank, Houston Agency, the
issuer of the initial Letter of Credit, in its capacity as issuer of the Letter
of Credit, the issuer of any Alternate Credit Facility and each of their
successors in such capacity.
Bond or Bonds shall mean any bond or bonds or all the bonds,
as the case may be, of the Authority executed, authenticated and delivered
under the Indenture.
Bond Counsel shall mean an attorney or firm or firms of
attorneys, satisfactory to the Authority and the Trustee, experienced in laws
relating to tax exemption of interest on bonds of states and their political
subdivisions.
Bond Fund shall mean the Bond Fund created in Section 6.01.
Bond Register shall have the meanings specified in Section
2.11.
Bond Year shall mean each one-year period (or shorter period
from the issue date) that ends at the close of business each November 1.
Business Day means any day other than (1) Saturday or Sunday,
(2) a day of the year on which banks located in (i) The City of New York, New
York, (ii) the city in which the Corporate Trust Office of the Trustee is
located are authorized or obligated by law or executive order to remain closed,
or (3) any other day not defined as a "business day" under the Letter of
Credit.
Calculation Period shall mean during any Money Market
Municipal Rate Period, any period or periods from and including a Business Day
to and including any day not more than 364 (during any year other than a "leap
year") or 365 (during any "leap year") days, as the case may be, thereafter
which is a day immediately preceding a Business Day established by the
Remarketing Agents pursuant to Section 2.03(d).
Code shall mean the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder or officially proposed to
be promulgated thereunder.
Company shall mean Long Island Lighting Company, or any
corporation which is the surviving, resulting or transferee
<PAGE> 75
29.
corporation in any merger, consolidation or transfer of assets permitted under
the Participation Agreement.
Company Indenture shall mean collectively, (i) the Indenture
of Mortgage and Deed of Trust, dated as of September 1, 1951, from the Company
to IBJ Schroder Bank and Trust Company (formerly J. Henry Schroder Bank & Trust
Company) as trustee, as amended and supplemented and (ii) the General and
Refunding Indenture dated as of June 1, 1975, from the Company to United States
Bank & Trust Company of New York (as successor trustee), as amended and
supplemented.
Company Note shall mean the promissory note of the Company
executed and delivered to the Trustee as provided in Section 4.01 of the
Participation Agreement.
Company Note Payments shall mean the amounts payable by the
Company under the Company Note.
completed or completion, when used with reference to the
Project as of a stated date, shall mean that the Project has been constructed
substantially in accordance with the description thereof (notwithstanding that
substantial additions or modifications thereto are planned, and notwithstanding
that additional licensing or testing may be required with respect to the
Project), and that the Company does not intend to submit any further
requisitions pursuant to Section 3.03 of the Participation Agreement with
respect to the Project.
Completion Date shall mean the date specified by an Authorized
Company Representative pursuant to Section 3.05 of the Participation Agreement.
Component Issuers means issuers of securities, the interest on
which is excluded from gross income for federal income tax purposes, selected
by the Indexing Agent in accordance with the Indenture.
Computation Period shall have the meaning ascribed to such
term in the Tax Regulatory Agreement.
construction, when used with respect to the Project, shall
include, without limitation, the construction, acquisition and installation of
the Project.
Conversion Date means each day on which the Interest Rate
Determination Method applicable to the Bonds shall be converted from one
Interest Rate Determination Method to a different Interest Rate Determination
Method or each day on which the interest rate on
<PAGE> 76
30.
the Bonds shall be converted from a Medium-Term Rate applicable for a
Medium-Term Rate Period of one duration to a Medium-Term Rate applicable for a
Medium-Term Rate Period of a different duration, as the case may be, in
accordance with Section 2.04. With respect to notices, time periods and
requirements in connection with the proceedings for such conversion,
"Conversion Date" means the day on which it is proposed that such conversion
occur.
Conversion Notice shall have the meaning set forth in Section
2.04(a)(1).
Corporate Trust Office, when used in connection with the
Trustee, shall mean the office of the Trustee at which at any particular time
its corporate trust business shall be principally administered, which office at
the date hereof is located at 450 West 33rd Street, 15th Floor, New York, New
York 10001, Attention: Corporate Trustee Administration Department and when
used in connection with the Tender Agent shall mean its principal office
located at 55 Water Street, Room 234, North Building, New York, New York 10041,
Attention: Corporate Tellers.
Cost of Construction shall mean all costs incurred by the
Company at any time prior to or after delivery of the Bonds for or in
connection with the construction of the Project and shall include, but not be
limited to, (a) obligations of the Company incurred for labor, services,
materials and other expenses and to contractors, builders and materialmen in
connection with the construction of the Project; (b) the cost of acquiring
necessary land or rights in land and any costs incidental thereto; (c) the cost
of contract bonds and of insurance of all kinds that may be required or
necessary prior to the Completion Date which is not paid by the contractor or
contractors or otherwise provided for; (d) expenses of the Company (including
overhead charges) in connection with the preparation of plans and
specifications for the Project (including any architectural, engineering or
other professional fees or the cost of any preliminary investigations for the
Project), and for supervising construction, as well as for the performance of
all other duties required by or appropriate to the construction of the Project;
(e) the fees, compensation and expenses (including reasonable counsel fees) of
the Trustee, the Tender Agent, any Paying Agent, the Bank, the Indexing Agent
and the Remarketing Agents incurred prior to the Completion Date of the Project
and the legal, accounting, financial (including compensation to underwriters),
printing, bond rating and other fees and expenses incurred in connection with
the issuance, purchase and sale of the Bonds or any other obligations issued or
incurred by the Authority pursuant to an agreement with the Company in
connection with the Project, including, but not limited to, the Administration
Fees or any other fees of the Authority; (f) taxes,
<PAGE> 77
31.
assessments and other charges, if any, payable in connection with the
construction and owning of the Project prior to the Completion Date; (g)
interest due and payable on the Bonds or any other obligations issued or
incurred by the Authority pursuant to an agreement with the Company or by the
Company in connection with the Project from the date of issuance thereof to the
Completion Date of the Project; (h) the costs of testing the Project and
obtaining any required permit, consent, license or approval for the Project, to
the extent such costs shall have been incurred prior to the Completion Date;
(i) any amount payable to the United States of America in connection with the
Bonds pursuant to Section 148(f) of the Code; and (j) any sums required to
reimburse the Company for advances and payments made by it at any time prior to
or after delivery of the Bonds for any of the above items, or for any other
cost incurred or work done by the Company with respect to the Project.
Debt Service Account shall mean the account in the Bond Fund
so designated and created pursuant to Section 6.01.
description, when used with reference to the Project, shall
mean the description of the Project set forth in Exhibits A and B to the
Participation Agreement, as such description may be amended in accordance with
the Participation Agreement.
Determination Date shall mean the first day of each
Calculation Period.
Electric Facilities shall mean facilities of the Company for
the furnishing of electric energy which are required by the public interest in
development, health, recreation, safety, conservation of natural resources or
aesthetics or which constitute "special energy projects" within the meaning of
the Act and which constitute facilities for the local furnishing of electric
energy or other "exempt facilities" within the meaning of Section 142(a)(8) of
the Code.
Event of Default shall mean any event of default specified in
Section 10.01.
First Interest Period means the period described as such in
Section 2.03(a).
Fixed Rate means the Fixed Rate established in accordance with
Section 2.03(f).
Fixed Rate Period means the period from and including the
Fixed Rate Conversion Date to and including the date of maturity of the Bonds.
<PAGE> 78
32.
Fixed Rate Conversion Date means the Conversion Date on which
the interest rate on the Bonds shall be converted to the Fixed Rate.
Fixed Rate Index means the average of the yield evaluations
(on the basis of full coupon securities trading at par with a term
approximately equal to the Fixed Rate Period) of securities (whether or not
actually issued), the interest on which is not included in gross income for
federal income tax purposes, of not fewer than twenty component issues, which
shall be issues of bonds selected by the Indexing Agent and which have a rating
by a Rating Agency in the same rating category as the bonds of the Authority
secured by unsecured promissory notes of the Company are rated at the time by
such rating agency (or if the Bonds are to be supported by some form of credit
enhancement, which have a rating by a Rating Agency in the same rating category
as the Bonds of the Authority supported by such credit enhancement are rated at
the time by such Rating Agency) or, if no such bonds are so rated, shall be
debt which, in the judgment of the Indexing Agent, is of credit quality
comparable to that of such bonds, computed by the Indexing Agent on the day
described in Section 2.03(f). In the event that the Indexing Agent fails to
compute the Fixed Rate Index and no other qualified municipal securities
evaluation service can be appointed Indexing Agent by the Authority, the Fixed
Rate Index shall be determined by the Remarketing Agents and shall be 90% of
the average yield shown for the most recent calendar month for United States
Treasury Notes or Bonds having the same number of years to maturity as the
number of 12-month periods (or months if the Fixed Rate Period is less than one
year) in the Fixed Rate Period, as published in the Federal Reserve Bulletin in
the last issue before the Computation Date. If that issue does not contain
such a yield, the Fixed Rate Index will be determined by linear interpolation
between the yields shown in that issue for United States Treasury Notes and
Bonds having the next shorter and next longer number of years (or months) to
maturity. In addition, at the request of the Company and upon delivery to the
Trustee of an Opinion of Bond Counsel that such action will not adversely
affect the exclusion of interest on the Bonds from gross income of the owners
thereof for federal income tax purposes, the Authority may designate a new
method of setting the Fixed Rate Index in the event any of the above-described
methods are unavailable, impracticable or unrealistic in the market place.
Indenture shall mean the Indenture of Trust, as from time to
time amended or supplemented in accordance with the terms hereof.
<PAGE> 79
33.
Indexing Agent shall mean the indexing agent appointed in
accordance with Section 15.03, and its successor or successors appointed
pursuant to the provisions of the Indenture.
Interest Payment Date means (i) during any Weekly Rate
Period, the first Business Day of each calendar month; (ii) each Conversion
Date; (iii) during any Semi-Annual Rate Period or Medium-Term Rate Period the
first day of each of two months which are six months apart, as specified in a
certificate of an Authorized Officer delivered to the Trustee prior to the
Conversions to a Semi-Annual Rate Period or Medium-Term Rate Period, provided,
however, if the last such day occurring in any Semi-Annual Rate Period is not a
Business Day then the first Business Day thereafter shall be the Interest
Payment Date, provided, further, however, if any Interest Payment Date in a
Semi-Annual Rate Period, determined as set forth above, would cause such
Semi-Annual Rate Period to extend for a period in excess of 182 days, the
Interest Payment Date for such Semi-Annual Rate Period shall be the last
Business Day occurring within such Semi-Annual Rate Period that does not cause
such Semi-Annual Rate Period to exceed 182 days in duration; (iv) during the
Fixed Rate Period, each May 1 and November 1; (v) during each Money Market
Municipal Rate Period, the first Business Day after any Calculation Period; and
(vi) the Maturity Date. The first Interest Payment Date shall be December 1,
1993. If prior to the conversion to a Semi-Annual Rate Period, Medium-Term
Rate Period or Fixed Rate Period, an Officer's Certificate shall be delivered
to the Trustee specifying different Interest Payment Dates for such Rate Period
together with an Opinion of Bond Counsel to the effect that such adjustment
will not adversely affect the exclusion of interest on the Bonds from gross
income for federal income tax purposes, then the Interest Payment Dates for
such Rate Period shall be so adjusted; provided, however, that no such
adjustment shall result in the establishment of Interest Payment Dates between
which more than six months would pass.
Interest Period means the period from and including any
Interest Payment Date to and including the day next preceding the following
Interest Payment Date.
Interest Rate Determination Method means any of the methods of
determining the interest rate on the Bonds described in Section 2.03.
Issue Date means the date on which the Bonds are delivered to
the purchaser or purchasers thereof upon original issuance.
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34.
Investment Obligations shall have the meaning assigned to
that term in Section 14.01.2.
Letter of Credit shall mean that irrevocable letter of credit
issued and delivered to the Trustee pursuant to, and in the form of Exhibit A
to, the Reimbursement Agreement (including any extensions of such letter of
credit) and, upon the issuance and delivery of an Alternate Credit Facility,
"Letter of Credit" shall mean such Alternate Credit Facility.
Letter of Credit Account shall mean the account in the Bond
Fund so designated and created pursuant to Section 6.01.
Mandatory Purchase Date means a date on which the Bonds are
required to be purchased in accordance with Section 2.05(e).
Maturity Date shall mean November 1, 2023.
Medium-Term Adjustment Date means the first day of each
Medium-Term Rate Period that does not occur on a Conversion Date and as of
which a new interest rate is established pursuant to Section 2.03(e).
Medium-Term Rate means the interest rate on the Bonds
established from time to time under Section 2.03(e).
Medium-Term Rate Index means the average of the yield
evaluations at par, determined by the Indexing Agent, of securities (whether or
not actually issued), having a term approximately equal to the Medium-Term Rate
Period or which are subject to optional or mandatory tender by the owner
thereof at the end of a term approximately equal to the Medium-Term Rate
Period, the interest on which is not included in gross income for federal
income tax purposes, of at least twenty Component Issuers selected by the
Indexing Agent, computed by the Indexing Agent as of the Business Day preceding
each date on which the Medium-Term Rate is determined by the Remarketing
Agents. When the Bonds are rated by a Rating Agency or shall be subject to the
benefits of a Letter of Credit and the Bank has issued letters of credit to
support other debt obligations rated by a Rating Agency in one of its two
highest long-term debt rating categories, each Component Issuer must have
outstanding securities rated by a Rating Agency in one of its two highest
long-term debt rating categories. If the Bonds or other debt obligations
supported by letters of credit issued by the Bank are rated by a Rating Agency
in a rating category that is lower than its two highest long-term debt rating
categories (and the Bonds or other debt obligations supported by letters of
credit issued by the Bank are not rated in one of the two highest such
categories by the other Rating Agency), each Component Issuer must
<PAGE> 81
35.
have outstanding securities rated by a Rating Agency in the same long-term debt
rating category as the Bonds or other debt obligations supported by letters of
credit issued by the Bank are rated by that Rating Agency. The Indexing Agent
may change the Component Issuers from time to time in its discretion, subject
to the foregoing requirements. In addition, at the request of the Company and
upon delivery to the Trustee of an Opinion of Bond Counsel that such action
will not adversely affect the exclusion of interest on the Bonds from gross
income of the owners thereof for federal income tax purposes, the Authority may
designate a new method of setting the Medium-Term Rate Index in the event any
of the above-described methods are unavailable, impracticable or unrealistic in
the market place.
Medium-Term Rate Period means Medium-Term Rate Period as
defined in Section 2.03(e).
Money Market Municipal Rate shall mean an interest rate
established pursuant to Section 2.03(d).
Money Market Municipal Rate Index shall mean with respect to
the first day of each Calculation Period during a Money Market Municipal Rate
Period, the average of yield evaluations at par, determined by the Indexing
Agent, of securities (whether or not actually issued) all of which shall have a
term as near as practicable to such Calculation Period or which are subject to
optional or mandatory tender by the owner thereof at the end of a term as near
as practicable to such Calculation Period, the interest on which is not
included in gross income for federal income tax purposes, of no fewer than
twenty Component Issuers selected by the Indexing Agent, including issuers of
commercial paper, project notes, bond anticipation notes and tax anticipation
notes, computed by the Indexing Agent on and as of such day. If the Bonds are
rated by a Rating Agency or are subject to the benefits of a Letter of Credit
and the issuer of such Letter of Credit has issued letters of credit to support
other debt obligations rated by a Rating Agency in its highest note or
commercial paper rating category or one of its two highest long-term debt
rating categories, each Component Issuer must (a) have outstanding securities
rated by a Rating Agency in its highest note or commercial paper rating
category or (b) not have outstanding notes or commercial paper rated by a
Rating Agency but have outstanding securities rated by a Rating Agency in one
of its two highest long-term debt rating categories. If the Bonds or other
debt obligations supported by letters of credit issued by the Bank are rated by
a Rating Agency in a rating category that is lower than its highest note or
commercial paper rating category or its two highest long-term debt rating
categories (and the Bonds or other debt obligations supported by letters of
credit issued by the
<PAGE> 82
36.
Bank are not rated in one of such categories by the other Rating Agency), each
Component Issuer must (a) have outstanding securities rated by a Rating Agency
in its note or commercial paper rating category which is the same or
correlative, in the Indexing Agent's judgment, to the note or commercial paper
rating category or the long-term debt rating category of the Bonds or the other
debt obligations supported by letters of credit issued by the Bank or (b) have
outstanding securities rated by a Rating Agency in the same long-term debt
rating category as the Bonds or the other debt obligations supported by letters
of credit issued by the Bank are rated by that Rating Agency and not have any
outstanding notes or commercial paper rated by such Rating Agency. The
Indexing Agent may change the Component Issuers from time to time in its
discretion, subject to the foregoing requirements. In addition, at the request
of the Company and upon delivery to the Trustee of an Opinion of Bond Counsel
that, under then-existing statutes and court decisions, such action will not
adversely affect the exclusion of interest on the Bonds from gross income of
the owners thereof for federal income tax purposes, the Authority, with the
consent of the Company, may designate a new method of setting the Money Market
Municipal Rate Index in the event any of the above-described methods are
determined by the Authority to be unavailable, impracticable or unrealistic in
the market place.
Money Market Municipal Rate Period means Money Market
Municipal Rate Period as defined in Section 2.03(d).
Money Market Municipal Rate Period Record Date shall mean,
with respect to each Interest Payment Date during a Money Market Municipal Rate
Period, the Business Day next preceding such Interest Payment Date.
Moody's shall mean Moody's Investors Service, Inc., a
corporation organized and existing under the laws of the State of Delaware, its
successors and their assigns, and, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating
agency, "Moody's" shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Authority, with the approval of the
Company, by written notice to the Trustee, the Company, the Remarketing Agents
and the Indexing Agent.
Officer's Certificate shall mean a certificate signed by an
Authorized Officer.
Opinion of Bond Counsel shall mean a written opinion of Bond
Counsel.
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37.
Optional Retention Date means each day which is one Business
Day prior to each Mandatory Purchase Date established pursuant to Section
2.05(e). Nothing in the Indenture shall be deemed to provide any Bondowner the
right contrary to Section 2.05(e)(4) to retain Bonds subject to mandatory
purchase under Section 2.05(e).
Optional Retention Notice Date means the fifth Business Day
prior to a Mandatory Purchase Date.
Optional Tender Date means (i) during any Weekly Rate Period,
any Business Day; provided that such Business Day is at least seven days after
notice of such tender is delivered in accordance with Section 2.05(a), and (ii)
during any Semi-Annual Rate Period, each Interest Payment Date; provided that
notice of such tender has been given in accordance with Section 2.05(b).
Other Facilities shall mean the facilities described in
Exhibit B to the Participation Agreement.
outstanding, when used with reference to Bonds, shall mean, as
of any particular date, the aggregate of all Bonds authenticated and delivered
under the Indenture, except
(a) Bonds cancelled by the Trustee or delivered
to the Trustee for cancellation at or prior to such date;
(b) Bonds for the payment or redemption of which
Available Moneys in the necessary amount have been theretofore
deposited with the Trustee or any Paying Agent for the owners
of such Bonds, provided that if such Bonds are to be redeemed,
notice of such redemption has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Trustee
has been made;
(c) Bonds paid or deemed to be paid as provided
in Section 14.01;
(d) Bonds in lieu of or in substitution for which
other Bonds shall have been authenticated and delivered
pursuant to the Indenture, unless proof satisfactory to the
Trustee shall be presented that any such Bond shall be held by
a bona fide purchaser (as such term is defined in the Uniform
Commercial Code of the State of New York); and
(e) Bonds deemed to be tendered for purchase
pursuant to Section 2.03(h) and not delivered to the Trustee
(but not Bonds issued in replacement thereof and
<PAGE> 84
38.
remarketed or delivered in respect thereof pursuant to Section 2.07);
provided, however, that in determining whether the owners of the requisite
principal amount of Bonds outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Bonds held by
the Tender Agent or held by or for the account of the Company shall be
disregarded and deemed not to be outstanding, except, that in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Bonds which a
Responsible Officer of the Trustee knows to be so held shall be so disregarded.
Bonds so held which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Bonds and that the pledgee is
not the Company and that the pledgee is not holding for the account of the
Company.
Owner or Bondowner or, when used with respect to an owner of
Bonds, owner shall mean the Registered Owner of any Bond.
Participation Agreement shall mean the Participation Agreement
dated as of November 1, 1993, between the Authority and the Company, as amended
and supplemented by Supplemental Participation Agreements from time to time.
Paying Agent shall mean any paying agent or co-paying agent
for the Bonds (and may include the Trustee) and its successor or successors
appointed pursuant to the provisions of the Indenture.
Person shall mean an individual, a corporation, a partnership,
an association, a joint stock company, a trust, any unincorporated organization
or a government or political subdivision thereof.
Project shall mean the Electric Facilities described in
Exhibit A to the Participation Agreement and the Other Facilities.
Project Fund shall mean the Project Fund created in Section
5.01.
Purchase Date means any Mandatory Purchase Date, Conversion
Date, Medium-Term Adjustment Date or any date on which Bonds are subject to
mandatory tender for purchase pursuant to Section 2.05(g) or Section 2.05(j).
<PAGE> 85
39.
Purchase Price means an amount equal to 100% of the principal
amount of any Bond tendered or deemed tendered to the Tender Agent for purchase
pursuant to Section 2.05 (or an amount equal to any applicable optional
redemption price on such date if such Bonds are to be purchased on a Conversion
Date occurring during a Medium-Term Rate Period in accordance with Section
2.04), plus accrued and unpaid interest thereon to the date of purchase;
provided, however, if the date of such purchase occurs after the Record Date
applicable to the interest accrued on such Bond from the last occurring
Interest Payment Date, then the Purchase Price shall not include accrued and
unpaid interest, which shall be paid to the owner of record on the applicable
Record Date.
Rate means the Weekly Rate, Money Market Municipal Rate,
Semi-Annual Rate, Medium-Term Rate or Fixed Rate.
Rate Index means the Weekly Rate Index, the Semi-Annual Rate
Index, the Medium-Term Rate Index, the Money Market Municipal Rate Index or the
Fixed Rate Index.
Rate Period means any Weekly Rate Period, Semi-Annual Rate
Period, Medium-Term Rate Period, Money Market Municipal Rate Period or Fixed
Rate Period.
Rating Agency means Moody's or S&P.
Rating Category shall mean one of the generic rating
categories of a Rating Agency, without regard to any refinement or gradation of
such rating category by a numerical modifier, plus or minus sign, or otherwise.
Rebate Amount shall have the meaning ascribed to such term in
the Tax Regulatory Agreement.
Rebate Fund shall mean the Rebate Fund created in Section 5.07.
Record Date means with respect to each Interest Payment Date
(i) during any Weekly Rate Period or Money Market Municipal Rate Period, the
Business Day next preceding such Interest Payment Date, and (ii) during any
Semi-Annual Rate Period or Medium-Term Rate Period or Fixed Rate Period, the
Trustee's close of business on the fifteenth day of the calendar month next
preceding such Interest Payment Date.
Registered Owner shall mean the Person or Persons in whose
name or names the particular Bond shall be registered on the Bond Register.
<PAGE> 86
40.
Reimbursement Agreement means the Letter of Credit and
Reimbursement Agreement dated as of November 1, 1993, between the Company, and
The Toronto-Dominion Bank, Houston Agency, and any and all modifications,
alterations, amendments and supplements thereto and, upon the issuance and
delivery of an Alternate Credit Facility, "Reimbursement Agreement" shall mean
the letter of credit and reimbursement agreement (or other document performing
a similar function) relating to such Alternate Credit Facility.
Remarketing Agents means the remarketing agent or agents
appointed in accordance with Section 15.01, and any successor or successors
appointed pursuant to the provisions of the Indenture.
Remarketing Agreement shall mean the Remarketing Agreement
with respect to a particular Interest Rate Determination Method then in effect
between the Company and the Remarketing Agents.
Responsible Officer, when used with respect to the Trustee,
means an officer of the Trustee assigned to the Corporate Trustee
Administration Department of the Trustee to whom any matter is referred because
of his or her knowledge of and familiarity with the particular subject.
S&P shall mean Standard & Poor's Corporation, a corporation
organized and existing under the laws of the State of New York, its successors
and their assigns, and, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "S&P"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Authority, with the approval of the Company, by notice
to the Trustee, the Company, the Remarketing Agents and the Indexing Agent.
Securities Depository means a Bondowner acting as a central
securities depository as provided in Section 2.11(b).
Semi-Annual Adjustment Date means Semi-Annual Adjustment Date
as defined in Section 2.03(c).
Semi-Annual Rate means the interest rate on the Bonds
established from time to time pursuant to Section 2.03(c).
Semi-Annual Rate Index means the average of six-month yield
evaluations at par, determined by the Indexing Agent, of securities (whether or
not actually issued), the interest on which is not included in gross income for
federal income tax purposes, of at least twenty Component Issuers selected by
the Indexing Agent, including issuers of commercial paper, project notes, bond
<PAGE> 87
41.
anticipation notes and tax anticipation notes, computed by the Indexing Agent
as of the Business Day next preceding each date on which the Semi-Annual Rate
is determined by the Remarketing Agents. When the Bonds are rated by a Rating
Agency or shall be subject to the benefits of a Letter of Credit and the Bank
has issued letters of credit to support other debt obligations rated by a
Rating Agency in its highest note or commercial paper rating category or one of
its two highest long-term debt rating categories, each Component Issuer must
(a) have outstanding securities rated by a Rating Agency in its highest note or
commercial paper rating category or (b) not have outstanding notes or
commercial paper rated by a Rating Agency but have outstanding securities rated
by a Rating Agency in one of its two highest long-term debt rating categories.
If the Bonds or other debt obligations supported by letters of credit issued by
the Bank are rated by a Rating Agency in a rating category that is lower than
its highest note or commercial paper rating category or its two highest
long-term debt rating categories (and the Bonds or other debt obligations
supported by letters of credit issued by the Bank are not rated in one of such
categories by the other Rating Agency), each Component Issuer must (a) have
outstanding securities rated by a Rating Agency in its note or commercial paper
rating category which is the same or correlative, in the Indexing Agent's
judgment, to the note or commercial paper rating category or the long-term debt
rating category of the Bonds or other debt obligations supported by letters of
credit issued by the Bank or (b) have outstanding securities rated by a Rating
Agency in the same long-term debt rating category as the Bonds or the other
debt obligations supported by letters of credit issued by the Bank are rated by
that Rating Agency and not have any outstanding notes or commercial paper rated
by such Rating Agency. The Indexing Agent may change the Component Issuers
from time to time in its discretion, subject to the foregoing requirements. In
addition, at the request of the Company and upon delivery to the Trustee of an
Opinion of Bond Counsel that such action will not adversely affect the
exclusion of interest on the Bonds from gross income of the owners thereof for
federal income tax purposes, the Authority may designate a new method of
setting the Semi-Annual Rate Index in the event any of the above-described
methods are unavailable, impracticable or unrealistic in the market place.
Semi-Annual Rate Period means Semi-Annual Rate Period as
defined in Section 2.03(c).
Subseries means any Subseries of Bonds established pursuant to
Section 2.01 and references to the Bonds of any Subseries shall include all
Bonds at any particular point in time designated as the Bonds of such Subseries
in accordance with the provisions of the Indenture.
<PAGE> 88
42.
Supplemental Indenture shall mean any indenture supplementary
or amendatory to the Indenture now or hereafter duly executed and delivered in
accordance with the provisions hereof.
Supplemental Participation Agreement shall mean an agreement
supplementing or amending the Participation Agreement.
Tax Regulatory Agreement shall mean the Tax Regulatory
Agreement dated the date of the original issuance of the Bonds between the
Authority and the Company and any and all modifications, alterations,
amendments and supplements thereto.
Tender Agent shall mean Chemical Bank, a banking corporation
organized under the laws of the State of New York, having its principal office
in The City of New York, New York, and its successor or successors as Tender
Agent under the Indenture.
Trustee shall mean Chemical Bank, a banking corporation
organized under the laws of the State of New York, having its principal
corporate trust office in New York, New York, in its capacity as trustee under
the Indenture, and its successor or successors as trustee under the Indenture.
Untendered Bond means any Untendered Bond as defined in
Section 2.05(f).
Weekly Rate means the interest rate on the Bonds established
pursuant to Section 2.03(b).
Weekly Rate Index means the average of 30-day yield
evaluations at par, determined by the Indexing Agent, of securities (whether or
not actually issued), the interest on which is not included in gross income for
federal income tax purposes, of at least twenty Component Issuers selected by
the Indexing Agent, including issuers of commercial paper, project notes, bond
anticipation notes and tax anticipation notes, computed by the Indexing Agent
as of the Business Day next preceding each day a Weekly Rate is determined by
the Remarketing Agents. When the Bonds are rated by a Rating Agency or shall
be subject to the benefits of a letter of credit and the Bank has issued
letters of credit to support other debt obligations rated by a Rating Agency in
its highest note or commercial paper rating category or one of its two highest
long-term debt rating categories, each Component Issuer must (a) have
outstanding securities rated by a Rating Agency in its highest note or
commercial paper rating category or (b) not have outstanding notes or
commercial paper rated by a Rating Agency but have outstanding securities rated
by a Rating Agency in one of its two highest long-term debt rating categories.
If the Bonds or other debt obligations supported by letters of
<PAGE> 89
43.
credit issued by the Bank are rated by a Rating Agency in a rating category
that is lower than its highest note or commercial paper rating category or its
two highest long-term debt rating categories (and the Bonds or other debt
obligations supported by letters of credit issued by the Bank are not rated in
one of such categories by the other Rating Agency), each Component Issuer must
(a) have outstanding securities rated by a Rating Agency in its note or
commercial paper rating category which is the same or correlative, in the
Indexing Agent's judgment, to the note or commercial paper rating category or
the long-term debt rating category of the Bonds or other debt obligations
supported by letters of credit issued by the Bank or (b) have outstanding
securities rated by a Rating Agency in the same long-term debt rating category
as the Bonds or other debt obligations supported by letters of credit issued by
the Bank are rated by that Rating Agency and not have any outstanding notes or
commercial paper rated by such Rating Agency. The Indexing Agent may change
the Component Issuers from time to time in its discretion, subject to the
foregoing requirements. In addition, at the request of the Company and upon
delivery to the Trustee of an Opinion of Bond Counsel that, under then existing
statutes and court decisions, such action will not adversely affect the
exclusion of interest on the Bonds from gross income of the owners thereof for
federal income tax purposes, the Authority may designate a new method of
setting the Weekly Rate Index in the event any of the above-described methods
are unavailable, impracticable or unrealistic in the market place.
Weekly Rate Period means Weekly Rate Period as defined in
Section 2.03(b).
Section 1.02. Rules of construction. Unless the context
clearly indicates to the contrary, the following rules shall apply to the
construction of the Indenture:
(a) Words importing the singular number shall
include the plural number and vice versa.
(b) Words importing the redemption or calling for
redemption of Bonds shall not be deemed to refer to or connote
the payment of Bonds at their stated maturity or upon the
acceleration of the principal thereof by the Trustee under
Article X.
(c) All references herein to particular articles
or sections are references to articles or sections of the
Indenture.
(d) The captions and headings herein are solely
for convenience of reference and shall not constitute a part
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44.
of the Indenture nor shall they affect its meaning, construction or
effect.
(e) The terms "hereby," "hereof," "hereto,"
"herein," "hereunder" and any similar terms, as used in the
Indenture refer to the Indenture in its entirety and not the
particular article or section of the Indenture in which they
appear, and the term "hereafter" means after, and the term
"heretofore" means before, the date of the Indenture.
(f) All references to Medium-Term Rate Period of
"similar duration" refer to Medium-Term Rate Periods of equal
duration as measured in months taking into account any portion
of a month as the entire month.
Section 1.03. Liability under Bonds. The Bonds shall not
be general obligations of the Authority, and shall not constitute an
indebtedness of or a charge against the general credit of the Authority or give
rise to any pecuniary liability of the Authority. The liability of the
Authority under the Bonds shall be enforceable only to the extent provided in
the Indenture, and the Bonds shall be payable solely from the Company Note
Payments and any other funds held by the Trustee under the Indenture and
available for such payment (including, but not limited to any funds drawn under
the Letter of Credit). The Bonds shall not be a debt of the State of New York
and the State of New York shall not be liable thereon.
<PAGE> 91
45.
ARTICLE II
DESCRIPTION; AUTHORIZATION; MANNER OF EXECUTION;
AUTHENTICATION; REGISTRATION AND TRANSFER OF BONDS
Section 2.01. Issuance of Bonds; Designation of Bonds;
Certain Particulars and Form of Bonds. The Bonds shall be issued in one series
in the aggregate principal amount of $50,000,000 and shall be designated as
"Electric Facilities Revenue Bonds (Long Island Lighting Company Project), 1993
Series A." In order to distinguish between Bonds which are subject to different
Interest Rate Determination Methods, Bonds may be designated and redesignated
(as herein provided) in such a way as to identify several Subseries. Such
Subseries may be designated as Subseries A-1, Subseries A-2, and so forth.
Each Bond shall bear upon the face thereof such designation or redesignation,
if any.
The Bonds shall be issuable in the form of registered bonds
without coupons in authorized denominations except as provided in Section 2.08
with respect to lost, stolen, destroyed or undelivered Bonds. The Bonds shall
be numbered consecutively from NYAR-1 upwards bearing numbers not then
contemporaneously outstanding (in order of issuance) according to the records
of the Trustee. If the Bonds are redesignated to identify several Subseries,
the Bonds shall be numbered in accordance with their Subseries designation,
i.e. NYA1R-1, NYA2R-2, and so forth.
Bonds shall be substantially in the form set forth in the
recitals to the Indenture, with such appropriate variations, omissions and
insertions as are permitted or required by the Indenture and may have endorsed
thereon such legends or text as may be necessary or appropriate to conform with
the Indenture or to any applicable rules and regulations of any governmental
authority or any usage or requirement of law with respect thereto.
Section 2.02. Additional Particulars of Bonds. The Bonds
initially shall be dated the Issue Date but, thereafter, each Bond shall be
dated the date of its authentication. Each Bond shall bear interest from the
last Interest Payment Date on which interest on such Bond has been paid or, if
no interest has been paid, from the Issue Date. The Bonds will mature (subject
to the right of prior redemption at the prices and dates and upon the terms and
conditions hereinafter set forth) on the Maturity Date.
Only such Bonds as shall have endorsed thereon a certificate
of authentication substantially in the form set forth in the Form of Bond duly
executed by the Trustee or the Tender Agent shall be entitled to any right or
benefit under the Indenture. No Bond shall be valid or obligatory for any
purpose
<PAGE> 92
46.
unless and until such certificate of authentication shall have been duly
executed by the Trustee or the Tender Agent, and such executed certificate of
the Trustee or the Tender Agent upon any such Bonds shall be conclusive
evidence that such Bond has been authenticated and delivered under the
Indenture. The certificate of authentication of the Trustee or the Tender
Agent on any Bond shall be deemed to have been executed by it, respectively, if
signed with an authorized signature of the Trustee or the Tender Agent, but it
shall not be necessary that the same party or the same person sign the
certificate of authentication on all of the Bonds issued hereunder.
The principal and the Purchase Price of and the redemption
premium, if any, and the interest on the Bonds shall be payable in lawful money
of the United States of America. The principal and the Purchase Price of and
the redemption premium, if any, on all Bonds shall be payable at the principal
office of the Paying Agent upon the presentation and surrender of the Bonds as
the same become due and payable. The interest on the Bonds shall be paid by
check or draft drawn upon the Paying Agent and mailed to the persons in whose
names the Bonds are registered on the registration books maintained by the
Trustee at the close of business on the Record Date next preceding each
Interest Payment Date; provided, that in the event that less than all of the
Bonds are held under a book-entry-only system any Registered Owner of a Bond or
Bonds not held under a book-entry-only system in an aggregate principal amount
of not less than $1,000,000 (or $100,000 during any Money Market Municipal Rate
Period) may, by prior written instructions filed with the Paying Agent (which
instructions shall remain in effect until revoked by subsequent written
instructions), request that interest payments for any period prior to the Fixed
Rate Conversion Date be made by wire transfer or other means acceptable to the
Paying Agent to an address in the continental United States; and provided,
further, that during a Money Market Municipal Rate Period, interest on a Bond
is payable only upon presentation and surrender thereof to the Tender Agent
upon purchase thereof pursuant to the Indenture, and if such presentation and
surrender is made by 12:00 noon (New York City time) such payment shall be by
wire transfer.
If any payment of interest or principal or redemption premium
on the Bonds is due on a date which is not a Business Day, payment shall be
made on the next succeeding Business Day with the same force and effect as if
made on the date which is fixed for such payment, and no interest shall accrue
on such amount for the period after such due date.
<PAGE> 93
47.
Section 2.03. Interest Rates on Bonds.
[2.03] (a) Generally; Initial Rates. Interest accrued on the
Bonds shall be paid on each Interest Payment Date. The interest rate on the
Bonds will be determined as provided in this Section, provided, that in any
event (i) no Weekly Rate, Money Market Municipal Rate, Semi-Annual Rate or
Medium-Term Rate shall exceed the lesser of: (a) fifteen per centum (15%) per
annum and (b) the maximum interest rate specified in the Letter of Credit with
respect to coverage for the payment of interest or the interest component of
Purchase Price and (ii) the Fixed Rate shall not exceed eighteen per centum
(18%) per annum and, provided, further, no rate as so determined shall exceed
the maximum rate permitted by applicable law. Interest on the Bonds will
initially be payable at a Weekly Rate of two and thirty-five one-hundredths per
centum (2.35%) per annum for the period from November 17, 1993, to and
including November 23, 1993 (the "First Interest Period"). Thereafter, unless
and until the Interest Rate Determination Method is changed as described in
Section 2.04, the Bonds will bear interest at a Weekly Rate.
The Company may direct the Remarketing Agents to change the
Interest Rate Determination Method applicable to all or a portion of the Bonds,
except that no Bonds may be converted to bear interest at a Fixed Rate unless
all Bonds are converted to bear interest at a Fixed Rate. Except as
specifically provided otherwise herein, the conditions and procedures for such
change in the Interest Rate Determination Method for a portion of the Bonds
shall be the same as the conditions and procedures for a change in the Interest
Rate Determination Method for the entire series of Bonds. If less than all of
the Bonds are to be converted, the Bonds which are being converted shall,
pursuant to Section 2.01, be redesignated in such a way as to identify a
separate Subseries, and, in such event, all references herein to the Bonds
shall be deemed to refer to the Bonds of each Subseries separately.
During any Weekly Rate Period or Money Market Municipal Rate
Period, interest on the Bonds will be computed on the basis of a 365 or 366-day
year, as the case may be, for the actual number of days elapsed. During any
Semi-Annual Rate Period, Medium-Term Rate Period or Fixed Rate Period, interest
on the Bonds will be computed on the basis of a 360-day year of twelve 30-day
months.
[2.03] (b) Weekly Rate. During any period commencing on the
date that the Interest Rate Determination Method is converted to a mode where
the Bonds bear interest at a Weekly Rate pursuant to Section 2.04 to, but not
including, the next Conversion Date (a "Weekly Rate Period"), the Bonds will
bear interest at the Weekly Rate. With respect to any Weekly Rate Period, the
Remarketing
<PAGE> 94
48.
Agents will set a rate (a "Weekly Rate") by 12:00 noon New York City time: (i)
on the first Business Day before any Conversion Date immediately after which
the Bonds will bear interest at a Weekly Rate for the period commencing on the
Conversion Date through and including the next Tuesday that is at least six
days from such Conversion Date and (ii) on each Wednesday thereafter (or the
first Business Day before such Wednesday, if such Wednesday is not a Business
Day) for the seven day period from such Wednesday through and including the
next Tuesday. Each Weekly Rate shall be the rate of interest which, if borne
by the Bonds, would, in the judgment of the Remarketing Agents, having due
regard to the prevailing financial market conditions for tax-exempt revenue
bonds or other tax-exempt securities of the same general nature as the Bonds or
tax-exempt securities which are competitive as to credit and maturity (or
period for tender) with the credit and maturity (or period for tender) of the
Bonds, be the interest rate necessary, but would not exceed the interest rate
necessary, to enable the Remarketing Agents to remarket the Bonds at a price of
par (plus accrued interest, if any) on such Wednesday; provided that the Weekly
Rate shall not be greater than 110% of the Weekly Rate Index. If for any
reason the Weekly Rate for any Weekly Rate Period is not established as
aforesaid by the Remarketing Agents, no Remarketing Agent shall be serving as
such hereunder or the rate so established is held to be invalid or
unenforceable by a final judgment of a court of law with respect to any day,
then the Weekly Rate for such Weekly Rate Period shall be 100% of the Weekly
Rate Index on the date such interest rate was (or would have been) determined
as provided above.
The Indexing Agent shall establish the Weekly Rate Index on
the Business Day next preceding each day on which a Weekly Rate is determined
by the Remarketing Agents. Notwithstanding the foregoing, in the event that
the Remarketing Agents, in their judgment, shall determine that the Weekly Rate
Index so established is sufficiently non-representative of current market
conditions that the Bonds may not be remarketed at par if the Weekly Rate is
set at a rate not greater than 110% of the applicable Weekly Rate Index, the
Remarketing Agents may establish a new Weekly Rate Index in accordance with the
procedures and standards set forth in this paragraph and in the preceding
paragraph and for purposes of the Weekly Rate Index so established, all
references to Indexing Agent in the Indenture shall be deemed to refer to the
Remarketing Agents; provided that the Remarketing Agents shall select
securities (whether or not actually issued) having a term equal to the Weekly
Rate Period or which are subject to optional or mandatory tender by the owner
thereof at the end of a term equal to the Weekly Rate Period.
<PAGE> 95
49.
[2.03] (c) Semi-Annual Rate. During any period
commencing on the date that the Interest Rate Determination Method is converted
to a mode where the Bonds bear interest at a Semi-Annual Rate pursuant to
Section 2.04 to, but not including, the next Conversion Date (a "Semi-Annual
Rate Period"), the Bonds will bear interest at the Semi-Annual Rate. With
respect to any Semi-Annual Rate Period, the Remarketing Agents will set a rate
(a "Semi-Annual Rate") not later than 5:00 p.m. New York City time: (i) on or
before the first Business Day before any Conversion Date immediately after
which the Bonds will bear interest at a Semi-Annual Rate for the period
commencing on the Conversion Date through but not including the next Interest
Payment Date (each such date occurring during a Semi-Annual Rate Period being
referred to herein as a "Semi-Annual Adjustment Date") and (ii) on or before
the first Business Day before each Semi-Annual Adjustment Date for the period
commencing on such Semi-Annual Adjustment Date through but not including the
next Semi-Annual Adjustment Date. Each Semi-Annual Rate shall be the rate of
interest which, if borne by the Bonds, would, in the judgment of the
Remarketing Agents, having due regard for the prevailing financial market
conditions for tax-exempt revenue bonds or other tax-exempt securities of the
same general nature as the Bonds or tax-exempt securities which are competitive
as to credit and maturity (or period for tender) with the credit and maturity
(or period for tender) of the Bonds, be the interest rate necessary, but would
not exceed the interest rate necessary to enable the Remarketing Agents to
remarket the Bonds at a price of par (plus accrued interest, if any) on the
next succeeding Interest Payment Date (or, if any such day is not a Business
Day, on the next succeeding Business Day); provided that the Semi-Annual Rate
shall not be greater than 110% of the Semi-Annual Rate Index. If for any
reason the Semi-Annual Rate for any Semi-Annual Rate Period is not established
as aforesaid by the Remarketing Agents, no Remarketing Agent shall be serving
as such hereunder or the rate so established is held to be invalid or
unenforceable by a final judgment of a court of law with respect to any
Semi-Annual Period, then the Semi-Annual Rate for such Semi-Annual Rate Period
shall be 100% of the Semi-Annual Rate Index on the date such interest rate was
(or would have been) determined as provided above.
The Indexing Agent shall establish the Semi-Annual Rate Index
during the Semi-Annual Rate Period on the Business Day next preceding each day
on which a Semi-Annual Rate is determined by the Remarketing Agents.
[2.03] (d) Money Market Municipal Rates. During any
period commencing on the date that the Interest Rate Determination Method is
converted to a mode where the Bonds bear interest at Money Market Municipal
Rates pursuant to Section 2.04 to, but not
<PAGE> 96
50.
including, the next Conversion Date (a "Money Market Municipal Rate Period"),
the Bonds will bear interest at the various Money Market Municipal Rates for
the various Calculation Periods established herein. During any Money Market
Municipal Rate Period, any Bond may have a different Calculation Period and a
different Money Market Municipal Rate from any other Bond, all as established
by the Remarketing Agents as provided below.
[2.03 (d)] (i) Establishment of Calculation Periods. During
any Money Market Municipal Rate Period, at or prior to 12:00 noon New
York City time on any Conversion Date immediately after which the
Bonds will bear interest at the Money Market Municipal Rate and each
day immediately after the end of a Calculation Period, the Remarketing
Agents shall establish Calculation Periods with respect to Bonds for
which no Calculation Period is currently in effect. In determining
Calculation Periods, the Remarketing Agents shall take the following
factors into account: (1) existing short-term taxable and tax-exempt
market rates and indices of such short-term rates, (2) the existing
market supply and demand for short-term tax-exempt securities, (3)
existing yield curves for short-term and long-term tax-exempt
securities or obligations having a credit rating that is comparable to
the Bonds, (4) general economic conditions, (5) economic and financial
factors present in the securities industry that may affect or that may
be relevant to the Bonds and (6) any information available to the
Remarketing Agents pertaining to the Bank or the Company regarding any
events or anticipated events which could have a direct impact on the
marketability of or interest rates on the Bonds. The Remarketing
Agents shall select the Calculation Periods and the applicable Money
Market Municipal Rates that, together with all other Calculation
Periods and related Money Market Municipal Rates, in the sole judgment
of the Remarketing Agents, will result in the lowest overall borrowing
cost on the Bonds or are otherwise in the best financial interests of
the Company, as determined in consultation with the Company. Any
Calculation Period established hereunder may not extend beyond any
Conversion Date, the second Business Day next preceding the scheduled
expiration date of the Letter of Credit or the day prior to the
maturity date of the Bonds, and the maximum length of the Calculation
Period shall not exceed the number of days of interest coverage under
the Letter of Credit minus 30 days of interest coverage.
[2.03 (d)] (ii) Setting of Rates. On the first day of each
Calculation Period, the Remarketing Agents shall set rates ("Money
Market Municipal Rates") by 12:00 noon New York City time for each
Calculation Period. With respect to Bonds
<PAGE> 97
51.
for each Calculation Period, the Money Market Municipal Rate shall be
the rate of interest which, if borne by such Bonds, would, in the
judgment of the Remarketing Agents, having due regard to the
prevailing financial market conditions for tax-exempt revenue bonds
or other tax-exempt securities which are competitive as to credit and
maturity (or period of tender) with the credit and maturity (or period
of tender) of such Bond, be the interest rate necessary, but would not
exceed the interest rate necessary, to enable the Remarketing Agents
to remarket such Bond at a price of par on the date such rate is set;
provided that the Money Market Municipal Rates shall not be greater
than 110% of the Money Market Municipal Rate Index.
The Authority, at the request of the Company, may place such
limitations upon the establishment of Calculation Periods pursuant to the
preceding paragraph (i) as may be set forth in a written direction from the
Authority, which direction must be received by the Trustee and the Remarketing
Agents prior to 10:00 a.m. (New York City time) on the day prior to any
Determination Date to be effective on such date, but only if the Trustee
receives an Opinion of Bond Counsel to the effect that such action is
authorized by the Indenture, is permitted under the Act, and will not have an
adverse effect on the exclusion of interest on the Bonds from gross income for
federal income tax purposes.
The Indexing Agent shall establish the Money Market Municipal
Rate Index.
[2.03] (e) Medium-Term Rate. During any period (a
"Medium-Term Rate Period") commencing on the date that the Interest Rate
Determination Method is converted to a method where the Bonds bear interest at
a Medium-Term Rate pursuant to Section 2.04 to, but not including the earliest
to occur of, the next Conversion Date or the next Medium-Term Adjustment Date
and any period commencing on a Medium-Term Adjustment Date, to but not
including, the earliest to occur of the next Conversion Date or the next
Medium-Term Adjustment Date, the Bonds shall bear interest at the Medium-Term
Rate.
[2.03(e)] (i) Selection of Period. The length of
each Medium-Term Rate Period shall be selected by the Company with the
intention of yielding the lowest overall interest expense on the Bonds
over the term of such Medium-Term Rate Period, taking into account (1)
general economic conditions and economic and market conditions
relevant to the Bonds and (2) such other facts, circumstances and
conditions as the Company determines to be relevant. The Company
shall select a Medium-Term Rate Period so that: (1) such period ends
on the day preceding an Interest Payment Date, (2) the Medium-Term
<PAGE> 98
52.
Period (other than the First Interest Period) is at least one year in
duration, and (3) such period will end not later than two Business
Days prior to the expiration of the Letter of Credit then in effect.
In addition, if the Company is converting from a Weekly Rate Period, a
Money Market Municipal Rate Period or a Semi-Annual Rate Period, the
Company shall not select a Medium-Term Period that ends after the
Interest Payment Date immediately preceding final maturity of the
Bonds unless it has provided an Opinion of Bond Counsel that, under
then existing statutes and court decisions, such conversion of
interest on the Bonds will not cause interest on the Bonds to be
included in gross income for federal income tax purposes.
The Company shall give written notice of the term of any
Medium-Term Rate Period to the Trustee, the Tender Agent, the
Authority, the Indexing Agent and the Remarketing Agents not later
than 35 days prior to the commencement of any Medium-Term Rate Period.
In the event that no specific term of a Medium-Term Rate Period shall
have been so specified by the Company, the term of a subsequent
Medium-Term Rate Period shall be the same as the term of the
Medium-Term Rate Period immediately preceding it.
[2.03(e)] (ii) Setting of Rate. With respect to any
Medium-Term Rate Period, the Remarketing Agents will set a rate no
later than 10:00 a.m. New York City time on or before the first
Business Day before any Conversion Date immediately after which the
Bonds will bear interest at a Medium-Term Rate and the first Business
Day before any Medium- Term Adjustment Date for the applicable
Medium-Term Rate Period. Each Medium-Term Rate shall be the rate of
interest which, if borne by the Bonds, would, in the judgment of the
Remarketing Agents, having due regard for prevailing market conditions
for tax-exempt revenue bonds or other tax-exempt securities which are
competitive as to credit and maturity, with the credit and maturity of
the Bonds, be the interest rate necessary, but would not exceed the
interest rate necessary, to enable the Remarketing Agents to remarket
the Bond(s) or portion(s) thereof as aforesaid tendered (or deemed to
have been tendered) for purchase at a price of par (plus accrued
interest, if any) on the first day of such Medium-Term Period;
provided that the Medium-Term Rate shall not be greater than 110% of
the Medium-Term Rate Index.
If for any reason the applicable Medium-Term Rate is not
established as aforesaid by the Remarketing Agents, no Remarketing
Agent shall be serving as such hereunder or the rate so established is
held to be invalid or unenforceable by a final judgment of a court of
law with respect to any Medium-
<PAGE> 99
53.
Term Rate Period, the interest rate to be borne by all Bonds
outstanding under the Indenture from the first day of the applicable
Medium-Term Rate Period to the last day of the applicable Medium-Term
Rate Period shall be equal to 100% of the Medium-Term Rate Index
calculated for such Medium-Term Rate Period.
The Indexing Agent shall establish the Medium-Term Rate Index
on the Business Day next preceding each day on which a Medium-Term Rate is
determined by the Remarketing Agents.
[2.03] (f) Fixed Rate. During the period commencing on the
date that the Interest Rate Determination Method is converted to a method where
the Bonds bear interest at the Fixed Rate pursuant to Section 2.04 to (subject
to the right of prior redemption at the prices and dates and upon the terms and
conditions hereinafter set forth) the Maturity Date of the Bonds (the "Fixed
Rate Period"), the Bonds shall bear interest at the Fixed Rate.
With respect to the Fixed Rate Period, the Remarketing Agents
will set a rate (the "Fixed Rate") not later than 10:00 a.m. New York City time
one Business Day prior to any Fixed Rate Conversion Date. The Fixed Rate shall
be the interest rate which, if borne by the Bonds, would, in the judgment of
the Remarketing Agents having due regard for prevailing financial market
conditions for tax-exempt revenue bonds or other tax-exempt securities which
are competitive as to credit and maturity with the credit and maturity of the
Bonds, be the interest rate necessary, but would not exceed the interest rate
necessary, to enable the Remarketing Agents to remarket the Bonds(s) or
portion(s) thereof as aforesaid tendered (or deemed to have been tendered) for
purchase at a price of par (plus accrued interest, if any) on the Fixed Rate
Conversion Date, provided that the Fixed Rate shall not be greater than 110% of
the Fixed Rate Index. If for any reason the applicable Fixed Rate is not
established as aforesaid by the Remarketing Agents, no Remarketing Agent shall
be serving as such hereunder or the rate so established is held to be invalid
or unenforceable by a final judgment of a court of law, the interest rate to be
borne by all Bonds outstanding under the Indenture from the Fixed Rate
Conversion Date to the date of payment in full of the Bonds shall be equal to
100% of the Fixed Rate Index as of such Computation Date.
The Indexing Agent shall establish the Fixed Rate Index on or
before the Business Day next preceding the Fixed Rate Conversion Date.
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54.
[2.03] (g) Notice of Rates. Promptly following the
determination of any Weekly Rate, Semi-Annual Rate, Medium-Term Rate, Money
Market Municipal Rate or Fixed Rate, the Remarketing Agents shall give notice
to the Trustee, the Authority, the Company and the Tender Agent in writing and,
promptly thereafter, except in the case of the Semi-Annual Rate and Weekly
Rate, the Trustee shall give each Bondowner notice of the new rate.
[2.03] (h) [Intentionally Omitted.]
[2.03] (i) Absence of Remarketing Agents. If no Remarketing
Agent shall be serving hereunder at the time of the determination of the Weekly
Rate, Semi-Annual Rate, Medium-Term Rate, the Fixed Rate or the Money Market
Municipal Rate, the Rate shall be the Weekly Rate Index, Semi-Annual Rate
Index, Medium-Term Rate Index, the Fixed Rate Index or Money Market Manual Rate
Index, as the case may be, then in effect until a new Remarketing Agent is
selected by the Company to make such Rate determination. Any determination of
the Weekly Rate, Semi-Annual Rate, the Medium-Term Rate, the Fixed Rate or the
Money Market Municipal Rate by the Remarketing Agents, or pursuant to the
preceding sentence, shall be conclusive and binding upon the Authority, the
Company, the Tender Agent, the Trustee, the Paying Agent, the Remarketing
Agents and the Bondowners.
[2.03] (j) No Liability. In determining the interest rate
that the Bonds shall bear as provided in this Section, the Remarketing Agents
and, as aforesaid, the Trustee shall have no liability to the Authority, the
Company, the Tender Agent, the Trustee, the Paying Agent or any Bondowner
except for its willful misconduct.
[2.03] (k) Legend Authorized. Any Bond issued upon
registration of transfer or exchange on or after any Fixed Rate Conversion Date
shall contain a prominent legend on the face thereof, to be specified by the
Authority and placed thereon by the Trustee, to the effect that the Letter of
Credit has expired, that the Bonds are no longer entitled to the benefit of any
Letter of Credit, that the Bonds are not subject to mandatory purchase by the
Tender Agent and that the interest rate on the Bonds has been converted to
another Interest Rate Determination Method, in which case such method shall be
specified.
Section 2.04. Conversion of Interest Rate on Bonds. (a)(1)
During any Rate Period other than the Fixed Rate Period, at any time, subject
to the conditions set forth below, the Company may direct a change in the
Interest Rate Determination Method from one Rate to another by so directing the
Trustee in writing (such being hereinafter referred to as a "Conversion
Notice") with copies
<PAGE> 101
55.
to the Remarketing Agents, the Tender Agent, the Authority, the Indexing Agent
and, during the term of the Letter of Credit, the Bank, delivered at least
thirty (30) days (where the Bonds bear interest at a Weekly Rate, Money Market
Rate or Semi-Annual Rate) or thirty-five (35) days (where the Bonds bear
interest at a Medium-Term Rate) but, in either case, not more than sixty (60)
days prior to the Conversion Date, accompanied by an Opinion of Bond Counsel
stating that, under then existing statutes and court decisions, such conversion
of interest on the Bonds to the other Rate will not cause the interest on the
Bonds to be included in gross income for federal income tax purposes. The
Company's notice must specify (i) the Conversion Date, (ii) the new Interest
Rate Determination Method to take effect, (iii) if the new Interest Rate
Determination Method is a Medium-Term Rate Period, the length of the
Medium-Term Rate Period, (iv) if the new Interest Rate Determination Method is
a Money Market Municipal Rate Period, the maximum length of Calculation
Periods, and (v) if the new Interest Rate Determination Method is to apply to
less than all of the Bonds then outstanding, the aggregate principal amount of
Bonds to which the new Interest Rate Determination Method is to apply.
If the Company directs the Trustee to change the Interest Rate
Determination Method from one Rate to another for less than all of the Bonds
then outstanding, the Trustee shall select Bonds to be converted by lot or by
such other method as the Trustee may select. In the event the Company wishes
to convert less than all the Bonds then outstanding, the Company shall notify
the Trustee of such decision not less than 40 days or more than 60 days before
the effective date of the proposed conversion. On the Conversion Date the
portion of the Bonds which are being converted shall be redesignated in such a
way as to identify a separate Subseries and thereby to avoid confusion of such
Subseries with any other Subseries. The Company may also determine to
similarly redesignate the portion of the Bonds which are not being converted on
the Conversion Date. The holders of Bonds which are being redesignated may be
required to deliver such Bonds to the Trustee in order to receive a new Bond of
the applicable designation, in the same principal amount. In the event holders
are not required to surrender such Bonds, the Trustee shall appropriately
designate any Bonds subsequently issued in exchange therefor. The Trustee
shall not be liable to any Bondholder for the method selected and employed by
the Trustee or by the Company's selection of a partial redemption.
[2.04(a)] (2) Any change in the Interest Rate Determination
Method must comply with the following to the extent applicable:
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56.
(i) Except in the case of a change in the Interest Rate
Determination Method from a Medium-Term Rate Period to another Rate
Period, all Conversion Dates shall occur on Business Days.
(ii) If the Semi-Annual Rate or a Medium-Term Rate is then in
effect, the Conversion Date shall be an Interest Payment Date (or if
the Semi-Annual Rate is then in effect the immediately succeeding
Business Day, if such Interest Payment Date is not a Business Day) or
any Business Day on which the Bonds are subject to optional
redemption.
(iii) If a Medium-Term Rate is then in effect, the Conversion
Date shall occur only during the period during which the Bonds are
subject to optional redemption at a redemption price of 100% of the
principal amount thereof unless the Letter of Credit then in effect
provides for payment of Purchase Price equal to such redemption price
above par or Available Moneys have been provided in an amount
sufficient, together with any amounts available under the Letter of
Credit, to pay such Purchase Price in full; provided, that if the
Bonds are subject to optional redemption at a redemption price above
par, the Purchase Price on the Conversion Date shall include the
optional redemption premium.
(iv) No conversion of the interest rate on the Bonds shall
occur under this Section if at the time of such conversion an Event of
Default shall have occurred hereunder and be continuing with respect
to the Bonds.
(v) No Rate Period other than the Fixed Rate Period shall
extend to a date later than the first Business Day next preceding the
scheduled expiration of the Letter of Credit in effect at the
beginning of such Rate Period.
(vi) If the Rate Period in effect after the conversion is a
Money Market Municipal Rate Period, the maximum length of the
Calculation Period shall not exceed the number of days of interest
coverage under the Letter of Credit minus 30 days of interest
coverage.
[2.04(a)] (3) Any change in the Interest Rate Determination
Method shall not be effective unless by 10:00 a.m., New York City time, on the
Conversion Date the Company delivers a supplemental Opinion of Bond Counsel to
the Trustee stating that under the laws existing on the Conversion Date the
conversion to the other Rate will not cause the interest on the Bonds to be
included in gross income for federal income tax purposes.
<PAGE> 103
57.
[2.04(a)] (4) Notwithstanding any other provision of the
Indenture, after the Interest Rate Determination Method is changed to the Fixed
Rate, such method may not thereafter be changed and such Fixed Rate shall be
the rate of interest on the Bonds from the Fixed Rate Conversion Date until the
Maturity Date.
(b) Upon receipt of a Conversion Notice from the Company, the
Trustee shall no later than twenty-five (25) days (if the Bonds then bear
interest at a Weekly Rate, Money Market Rate or Semi-Annual Rate) or thirty
(30) days (if the Bonds then bear interest at a Medium-Term Rate) prior to the
Conversion Date give notice by mail to the Bondowners, which notice shall state
in substance:
[2.04(b)] (1) that the interest rate on the Bonds shall be
converted to a Weekly Rate, a Semi-Annual Rate, a Medium-Term Rate, a
Money Market Municipal Rate or the Fixed Rate, as the case may be;
[2.04(b)] (2) the Conversion Date;
[2.04(b)] (3) if applicable, that the Company has delivered
to the Trustee an Opinion of Bond Counsel stating that under the
statutes and court decisions existing on the date of the Conversion
Notice, the conversion of the interest rate on the Bonds to the
applicable rate will not cause the interest on the Bonds to be
included in gross income for federal income tax purposes;
[2.04(b)] (4) if applicable, that the interest rate on the
Bonds shall not be converted unless the Company delivers to the
Trustee on the applicable Conversion Date a supplemental Opinion of
Bond Counsel stating that under the statutes and court decisions
existing on the Conversion Date, (A) the conversion of the interest
rate on the Bonds will not cause the interest on the Bonds to be
included in gross income for federal income tax purposes; and (B) the
rate to be in effect after the conversion does not exceed the maximum
rate permitted by the Indenture and by applicable law; provided,
however, that if the Company fails to deliver such supplemental
Opinion of Bond Counsel on such date, the interest rate on the Bonds
shall not be converted on the applicable Conversion Date, and all
Bonds tendered (or deemed to have been tendered) for purchase shall
not be purchased on the applicable Conversion Date as provided herein
and the Bonds shall continue to bear interest in accordance with the
Interest Rate Determination Method in effect prior to the proposed
Conversion Date;
<PAGE> 104
58.
[2.04(b)] (5) that all Bonds (or portions thereof in
authorized denominations) tendered (or deemed to have been tendered)
for purchase by the owners thereof shall be purchased on the
applicable Conversion Date at the Purchase Price;
[2.04(b)] (6) that, to the extent that there shall be on
deposit with the Tender Agent, the Paying Agent or the Trustee on or
before the applicable Conversion Date an amount of money sufficient to
pay the Purchase Price thereof, all Bonds, whether or not actually
delivered for purchase on such date, shall be deemed to have been
properly tendered for purchase and shall cease to constitute or
represent a right on behalf of the owner thereof to the payment of
principal and/or interest thereon and shall represent and constitute
only the right to payment of the Purchase Price thereof, without
interest accruing thereon, on deposit with the Tender Agent, the
Paying Agent or the Trustee;
[2.04(b)] (7) the name of the Tender Agent and the address of
the principal office of the Tender Agent;
[2.04(b)] (8) that, if the conversion is to a Fixed Rate, the
Letter of Credit will expire no later than the close of business on
the first Business Day following the applicable Fixed Rate Conversion
Date;
[2.04(b)] (9) that, in the case of conversion to the Fixed
Rate, the rating assigned by the Rating Agency then rating the Bonds,
if any, to the Bonds, either may be or is expected to be lowered or
eliminated as a result of such conversion;
[2.04(b)] (10) that, if the conversion is to the Fixed Rate,
from and after the Fixed Rate Conversion Date, the Bonds will no
longer be subject to purchase as provided in Section 2.05 or, if the
conversion is to a Medium-Term Rate, the Bonds will not be subject to
tender until the expiration of the applicable Rate Period; and
[2.04(b)] (11) that, if the conversion is to a Medium-Term
Rate Period of greater than three years duration, the short term
rating, if any, assigned by any Rating Agency to the Bonds will be
withdrawn as a result of such conversion.
[2.04] (c) If the Company fails to deliver to the Trustee by
10:00 a.m. New York City time on the Conversion Date, the supplemental Opinion
of Bond Counsel as and if required by subsection (a) of this Section, the
interest rate on the Bonds
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shall not be converted to the Weekly Rate, Semi-Annual Rate, Medium-Term Rate,
Money Market Municipal Rate or Fixed Rate on the Conversion Date, as the case
may be, and Bonds tendered (or deemed to have been tendered) for purchase on
the Conversion Date shall not be purchased on the Conversion Date and the Bonds
shall continue to bear interest at the rate determined in accordance with the
Interest Rate Determination Method in effect prior to the proposed Conversion
Date. In such event, all rights of the Authority, the Trustee and the Company
hereunder shall continue as if no such proceedings for the conversion of the
interest rate on the Bonds had been taken and the Bonds shall be available for
remarketing under Section 2.06. The Trustee shall promptly notify the
Authority and the Bondowners by mail (and shall promptly notify the Tender
Agent, the Paying Agent, the Bank and the Remarketing Agents by telephone) in
the event that the interest rate on the Bonds is not converted on the
Conversion Date as provided herein.
[2.04] (d) Failure to mail the notice described in subsection
(a) or (b), or any defect therein, shall not affect the validity of any
interest rate or change in the Interest Rate Determination Method on any of the
Bonds or extend the period for tendering any of the Bonds for purchase, and the
Trustee shall not be liable to any Bondowner by reason of its failure to mail
such notice or any defect therein.
[2.04] (e) The Letter of Credit shall not be available
to pay the principal or Purchase Price of or interest on any Bonds after the
earlier of the first Business Day following the Fixed Rate Conversion Date or
the date a drawing is made under the Letter of Credit in connection therewith.
The Letter of Credit shall be returned to the Bank for cancellation promptly
upon the expiration thereof on or after such Fixed Rate Conversion Date.
Section 2.05. Optional and Mandatory Tender of Bonds for
Purchase. (a) During any Weekly Rate Period, the owners of the Bonds shall
have the right to tender any Bond (or portion thereof in an authorized
denomination) to the Tender Agent for purchase on any Optional Tender Date, but
only upon:
(1) giving or delivery to the Tender Agent at its principal
office, on a Business Day, not later than the seventh calendar day
prior to the Optional Tender Date, of a written or telephonic notice,
confirmed in writing, which states (i) the number and aggregate
principal amount of each Bond to be purchased and (ii) that such Bond
(or portion thereof in an authorized denomination) shall be purchased
on such Optional Tender Date pursuant to the Indenture; and
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(2) delivery of such Bond (with an appropriate instrument of
transfer duly executed in blank) to the Tender Agent at its principal
office at or prior to 12:00 noon, New York City time, on such Optional
Tender Date; provided, however, that no Bond (or portion thereof in an
authorized denomination) shall be purchased unless the Bond so
delivered to the Tender Agent shall conform in all respects to the
description thereof in the aforesaid notice.
Any election of a Bondowner to tender a Bond (or portion thereof as aforesaid)
for purchase on the Optional Tender Date in accordance with this subsection (a)
shall be irrevocable and shall be binding on the Bondowner making such election
and on any transferee of such Bondowner and any Bond with respect to which such
an election has been made which is not properly delivered by the owner thereof
to the Tender Agent shall be deemed to have been properly tendered to the
Tender Agent, and, to the extent that there shall be on deposit with the Tender
Agent on or before the Optional Tender Date, an amount sufficient to pay the
Purchase Price thereof, such Bond shall cease to constitute or represent a
right to payment of principal or interest thereon and shall constitute and
represent only the right to payment of the Purchase Price payable on such date.
[2.05] (b) During any Semi-Annual Rate Period, the owners of
the Bonds shall have the right to tender any Bond (or portion thereof in an
authorized denomination) to the Tender Agent for purchase on any Optional
Tender Date prior to a Conversion Date, but only upon:
(1) giving or delivery to the Tender Agent at its principal
office, not earlier than the thirtieth calendar day and not later than
the fifteenth calendar day next preceding such Optional Tender Date of
a written or telephonic notice confirmed in writing which states (i)
the number and aggregate principal amount of each Bond to be purchased
and (ii) that such Bond (or portion thereof in an authorized
denomination) shall be purchased on such Optional Tender Date pursuant
to the Indenture; and
(2) the delivery of such Bond (with an appropriate instrument
of transfer duly executed in blank) to the Tender Agent at its
principal office at or prior to 12:00 noon, New York City time, on
such Optional Tender Date; provided, however, that no Bond (or portion
thereof in an authorized denomination) shall be purchased unless the
Bond so delivered to the Tender Agent shall conform in all respects to
the description thereof in the aforesaid notice.
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61.
Any election of a Bondowner to tender a Bond (or portion
thereof as aforesaid) for purchase on the Optional Tender Date in accordance
with this subsection (b) shall be irrevocable and shall be binding on the
Bondowner making such election and on any transferee of such Bondowner and any
Bond with respect to which such an election has been made which is not properly
delivered by the owner thereof to the Tender Agent shall be deemed to have been
properly tendered to the Tender Agent, and, to the extent, that there shall be
on deposit with the Tender Agent on or before the Optional Tender Date, an
amount sufficient to pay the Purchase Price thereof, such Bond shall cease to
constitute or represent a right to payment of principal or interest thereon and
shall constitute and represent only the right to payment of the Purchase Price
payable on such date.
[2.05] (c) The Tender Agent shall give the Trustee, the
Company, the Remarketing Agents, the Paying Agent and the Bank prompt notice by
telephone confirmed promptly in writing of the receipt of any notice in
accordance with clause (1) of subsection (a) or (b) above. During any
Semi-Annual Rate Period, the Trustee shall give notice by mail to Bondowners
not more than forty-five or less than thirty calendar days before each Optional
Tender Date, which notice shall state in substance: (i) the next Optional
Tender Date, and (ii) that the Bonds are subject to tender at the option of
the owner thereof in the manner set forth in subsection (b) of this section.
[2.05] (d) All Bonds are subject to mandatory tender and
purchase on each Conversion Date and each Medium-Term Adjustment Date.
[2.05] (e) All Bonds shall be subject to mandatory tender and
purchase on each Mandatory Purchase Date unless the owner exercises his or her
right to retain the Bonds (in certain circumstances) pursuant to this
subsection (e) as hereinafter provided:
[2.05(e)] (1) The owners of the Bonds shall tender all
Bonds (with appropriate instruments of transfer duly executed in blank) to the
Tender Agent at its principal office for purchase on the applicable Mandatory
Purchase Date, which date shall be established pursuant to clause (iii) of
paragraph (2) of this subsection (e), at the Purchase Price due on such
Mandatory Purchase Date. A Mandatory Purchase Date shall be established for
the Bonds if:
(A) The Company fails to deliver to the Trustee on or
prior to the thirty-seventh calendar day next preceding
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the effective date of an Alternate Credit Facility (including, without
limitation, any Alternate Credit Facility issued as contemplated by
(B) below) (i) such Alternate Credit Facility, (ii) an Opinion of
Bond Counsel as described in Section 6.07.2(b) and (iii) if
applicable, written evidence as described in Section 6.07.2(c); or
(B) The Company fails to deliver to the Trustee on or prior
to the thirty-seventh calendar day next preceding the
scheduled expiration date of the Letter of Credit then in
effect either (i) written evidence that the Letter of Credit
then in effect will be extended or renewed for a period of at
least one year beyond such expiration date and will end not
sooner than the second Business Day following the Interest
Payment Date for such Interest Period or (ii) the items set
forth in Section 6.07.2(a), (b) and, if applicable, (c).
[2.05(e)] (2) Upon the Bonds becoming subject to mandatory
tender for purchase as provided in clause (1) above, the Trustee shall within
five (5) calendar days give telephonic notice to the Remarketing Agents, the
Authority and the Tender Agent and give notice by mail to the Bondowners, which
notice shall state in substance:
(i) the name of the bank issuing the Alternate Credit
Facility, if any, and the effective date thereof;
(ii) the Optional Retention Date, if applicable;
(iii) the Mandatory Purchase Date, which in the case of
(1)(A) above shall be the effective date of the Alternate Credit Facility, or,
if no Alternate Credit Facility is delivered to the Trustee, the twentieth
calendar day next preceding the scheduled expiration date of the Letter of
Credit and in the case of (1)(B) above shall be a date that is two Business
Days prior to such expiration date;
(iv) in the case of (1)(A) above, that in connection with the
issuance of the Alternate Credit Facility, the Trustee has not received a
letter from the Rating Agency then rating the Bonds stating that such Rating
Agency has reviewed the terms of the Alternate Credit Facility and the bank
issuing the same and that issuance of the Alternate Credit Facility for the
benefit of the Bondowners will not result in a lowering of the rating then
assigned by such Rating Agency to the Bonds;
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(v) in the case of (1)(B) above, that the Letter of Credit
will expire no later than the close of business on the second Business Day
following the Mandatory Purchase Date;
(vi) if the Bonds are then rated, that the rating assigned by
the Rating Agency to the Bonds may be lowered or eliminated as a result of the
issuance of the Alternate Credit Facility, in the case of (1)(A) above, or as a
result of the expiration of the Letter of Credit, in the case of (1)(B) above;
(vii) that all Bonds (or portions thereof in authorized
denominations) tendered shall be purchased on the Mandatory Purchase Date at
the applicable Purchase Price;
(viii) that, to the extent that there shall be on deposit
with the Tender Agent, the Paying Agent or the Trustee on or before the
Mandatory Purchase Date an amount of money sufficient to pay the Purchase Price
thereof, all Bonds, whether or not actually delivered for purchase on such
date, (or portions thereof in authorized denominations) not delivered to the
Tender Agent on the Optional Retention Date shall be deemed to have been
properly tendered for purchase and shall cease to constitute or represent a
right on behalf of the owner thereof to the payment of principal and/or
interest thereon and shall represent and constitute only the right to payment
of the Purchase Price thereof, without interest accruing thereon, on deposit
with the Tender Agent, the Paying Agent or the Trustee; provided that Bonds (or
portions thereof in authorized denominations) the owner of which shall have
elected to retain and not to tender in accordance with clause (4) below shall
not be deemed to have been tendered for purchase and shall constitute and
continue to represent the right of the owner thereof to payment of principal
and interest, if any, thereon in accordance with the terms of such Bond; and
(ix) the name of the Tender Agent and the address of the
principal office of the Tender Agent.
[2.05(e)] (3) Failure to mail the notice described in clause
(2) or any defect therein, shall not extend the period for tendering any of the
Bonds for purchase, and the Trustee shall not be liable to any Bondowner by
reason of its failure to mail such notice or any defect therein.
[2.05(e)] (4) The Bonds shall be tendered for purchase as
provided in this subsection (e), except for any Bond or Bonds (or portions
thereof in authorized denominations) the owner of which shall deliver to the
Tender Agent at its principal office no later than the applicable Optional
Retention Notice Date, a written notice, substantially in the form of EXHIBIT B
to the Indenture,
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64.
appropriately completed; provided that such owners shall have the right to
retain only those Bonds to be secured by a Letter of Credit meeting the
requirements of Section 4.12 of the Participation Agreement following the
Mandatory Purchase Date and any Bonds not meeting those requirements shall be
deemed tendered and shall be subject to subsection (f) of this Section
notwithstanding any election to retain such Bonds.
[2.05] (f) Any election by a Bondowner to retain any Bond (or
portion thereof in an authorized denomination) and not to tender such Bond (or
portion thereof in an authorized denomination) for purchase on an Optional
Retention Date in accordance with subsection (e), shall be irrevocable and
shall be binding on the Bondowner making such election and on any transferee of
such Bondowner. If a Bondowner fails to give notice of such an election with
respect to any Bond (or portion thereof in an authorized denomination) on the
applicable Optional Retention Notice Date and thereafter fails to deliver such
Bond to the Tender Agent on or before the applicable Optional Retention Date,
such Bond (or portion thereof in an authorized denomination) which is not
delivered to the Tender Agent shall be deemed to have been properly tendered to
the Tender Agent (such Bond being hereinafter referred to as an "Untendered
Bond"), and, to the extent that there shall be on deposit with the Tender Agent
on or before the Purchase Date, an amount sufficient to pay the Purchase Price
thereof, such Untendered Bond shall cease to constitute or represent a right to
payment of principal or interest thereon and shall constitute and represent
only the right to the payment of Purchase Price payable on such date. The
foregoing shall not limit the entitlement of any Bondowner on any Record Date
to receipt of interest due on such date unless such interest is paid as part of
Purchase Price. The Tender Agent will inform the Remarketing Agents and the
Trustee by telephone promptly after the applicable Optional Retention Notice
Date of the principal amount of Bonds which will be tendered or deemed to have
been tendered on the applicable Optional Retention Date.
[2.05] (g) During any Money Market Municipal Rate Period, each
Bond shall be subject to mandatory tender for purchase on the Business Day
immediately following each Calculation Period, at a price equal to the
principal amount thereof. Owners of such Bonds shall have no right to elect to
retain such Bonds.
[2.05] (h) On each Optional Tender Date and Purchase Date,
there shall be purchased (but solely from funds received by the Tender Agent in
accordance with the terms hereof) the Bond or Bonds (or portions thereof in
authorized denominations) tendered (or deemed to have been tendered) to the
Tender Agent for purchase in accordance with this Section at the applicable
Purchase Price.
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65.
Funds for the payment of the Purchase Price of such Bond or Bonds (or portions
thereof in authorized denominations) shall be paid by the Tender Agent solely
from the following sources and in the following order of priority:
(i) moneys drawn under the Letter of Credit by the Trustee
pursuant to Section 6.07.1;
(ii) proceeds of the remarketing of such Bond or Bonds (or
portions thereof in authorized denominations) pursuant to Section 2.06
which have been transferred to the Tender Agent pursuant to said
Section; and
(iii) any other moneys furnished by the Company for purchase
of Bonds.
The Trustee shall draw moneys under the Letter of Credit for the payment of
Purchase Price to the extent that moneys are obtainable thereunder, and moneys
described under clauses (ii) and (iii) above shall be used for payment of
Purchase Price only to the extent that sufficient moneys are not obtainable
under the Letter of Credit. To the extent that moneys drawn under the Letter
of Credit have been used for payment of Purchase Price, moneys described under
clause (ii) above may be paid to the Bank upon reinstatement of the related
amount under the Letter of Credit.
Bonds (or portions thereof in authorized denominations)
purchased as provided above shall be delivered as provided in Section 2.07.
The Tender Agent shall hold any such moneys, uninvested, in trust for the
purposes set forth in the Indenture.
[2.05] (i) The owners of the Bonds shall not have the right or
be required, as the case may be, to tender any Bond or Bonds (or portions
thereof in authorized denominations) for purchase on any Optional Tender Date
or the Optional Retention Date, if on any such date an Event of Default under
Section 10.01(f) or (g) shall have occurred and be continuing hereunder with
respect to the Bonds.
[2.05] (j) All Bonds shall be subject to mandatory tender and
purchase, with no right of owners to retain Bonds, upon a date established by
the Trustee after receipt by the Trustee and the Tender Agent of a written
notice from the Bank of the occurrence and continuance of an event that would
constitute an Event of Default pursuant to Section 10.01(f) or (g) except that
the Bank shall have directed mandatory tender and purchase pursuant to this
provision rather than acceleration of the Bonds; provided, however, that in the
case of any event that would constitute an Event of Default pursuant to Section
10.01(g) such notice must have been
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received on or before the tenth calendar day after a drawing under the Letter
of Credit in respect of interest on the Bonds. Upon receipt of such notice,
the Trustee (i) within two Business Days shall give notice thereof to the
Authority, the Company, the Tender Agent, the Remarketing Agents, and the Bank,
(ii) within two Business Days shall select a date (occurring on or before the
tenth day next succeeding the Trustee's receipt of such notice, which date
shall be a Business Day) for the mandatory tender and purchase of the Bonds,
and (iii) within three Business Days shall give notice by mail to all
Bondowners, which shall include the circumstances leading to mandatory tender
and purchase, the absence of any right to retain Bonds, the date set therefor
and directions for the tender and purchase of such Bonds; provided, however,
that the expiry of the Letter of Credit shall be automatically extended until
such date as all Bonds are tendered by the owners thereof (or deemed tendered
hereunder) and a Redemption/Mandatory Purchase Drawing (as defined in the
Letter of Credit) has been made under the Letter of Credit.
On the date selected by the Trustee, all Bonds shall be
tendered by the owners thereof in exchange for the Purchase Price thereof. Any
Bonds not tendered by the owners thereof shall be deemed tendered and interest
shall cease to accrue on such Bonds.
[2.05] (k) In the event that any Bond is subject at any time
to tender and purchase pursuant to more than one provision of the Indenture,
provisions relating to the timing of notices of options to retain Bonds and
options to tender Bonds and the irrevocability of certain actions and notices
shall be interpreted as though only one such tender and purchase provision
applied to such Bond to the extent that such interpretation will prevent a
conflict between such provisions. For purposes of the foregoing sentence, a
mandatory tender provision without a right of owners to retain Bonds shall take
precedence over all other tender provisions, and a mandatory tender provision
shall take precedence over any optional tender provision.
[2.05] (l) If an agreement with a Securities Depository as
described in Section 2.11 hereof is then in effect, tenders of Bonds shall be
governed by the procedures of such Securities Depository as may be set forth in
or described in an agreement between the Authority and such Securities
Depository. The Depository Trust Company ("DTC") shall act as Securities
Depository for the Bonds upon the initial issuance of the Bonds. So long as the
Bonds are held in the DTC book-entry-only system, tenders of Bonds shall be
governed by the DTC procedures described in the DTC Letter of Representations,
which is hereby incorporated by reference.
<PAGE> 113
67.
Section 2.06. Remarketing of Bonds. (a) Upon receipt of
any notice given pursuant to Section 2.05 that any Bonds will be or are
required to be tendered for purchase in accordance with Section 2.05, the
Remarketing Agents shall use their best efforts to remarket such Bonds (or
portions thereof in authorized denominations) on any Optional Tender Date or
Purchase Date at the Purchase Price. By 2:00 p.m., New York City time, on the
Business Day prior to each Optional Tender Date or Purchase Date, the
Remarketing Agents shall give notice by telecopy or telephone (confirmed in
writing) of the principal amount of such Bonds (or portions thereof in
authorized denominations) and the registration information concerning the new
Bondowners, for which they have arranged a remarketing and for which the
Remarketing Agents hold remarketing proceeds on hand, to the Trustee, the
Tender Agent, the Paying Agent and the Bank and, by 12:00 noon, New York City
time, on each Optional Tender Date or Purchase Date shall transfer to the
Tender Agent the proceeds of the remarketing of such Bonds for delivery to the
Bank upon verification that sufficient amounts relating to such Bonds have
been paid under the Letter of Credit and upon reinstatement of the related
amount under the Letter of Credit.
[2.06] (b) In remarketing any Bonds tendered for purchase
pursuant to the Indenture, the Remarketing Agents shall determine, in
accordance with Section 2.03, the Semi-Annual Rate, the Weekly Rate, the
Medium-Term Rate, the Money Market Municipal Rate or the Fixed Rate, as the
case may be, on the Bonds.
[2.06] (c) The Remarketing Agents shall not remarket any
Bonds pursuant to this Section if they have received written notice from the
Trustee that an Event of Default (other than an Event of Default set forth in
Section 6.01(d) of the Participation Agreement) shall have occurred and be
continuing hereunder with respect to the Bonds.
[2.06] (d) The Remarketing Agents shall not knowingly
remarket any Bonds to the Company or any of its Affiliates or to the Authority
pursuant to this Section prior to the expiration or earlier termination of the
Letter of Credit unless, prior to such remarketing, the Trustee and the
Remarketing Agents shall have received an unqualified Opinion of Bond Counsel
experienced in bankruptcy matters and satisfactory to the Trustee and to
Moody's, if Moody's shall then be rating the Bonds, to the effect that such
remarketing would not result in a preferential payment pursuant to the
provisions of Section 547 of the United States Bankruptcy Code, 11 U.S.C.
Section Section 101, et seq.
[2.06] (e) The Remarketing Agents may remarket any Bonds
tendered for purchase as provided in Section 2.05(e) only if (1) the Company
delivers to the Trustee a Letter of Credit and the requirements of Section 4.12
of the Participation Agreement have
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been met or (2) the Company changes the Interest Rate Determination Method to
the Fixed Rate in accordance with Section 2.04. The Remarketing Agents may
remarket any Bonds tendered for purchase as provided in Section 2.05(j) only
if the Trustee and Remarketing Agents have received notice from the Bank that
the event referred to in the written notice from the Bank delivered under
Section 2.05(j) has been cured or waived and the Letter of Credit has been
reinstated in full.
[2.06] (f) The Remarketing Agents, with respect to any Bond
for which a redemption date has been established and which the Remarketing
Agents are attempting to remarket, shall provide to any purchaser notice of
the applicable redemption terms at the time of or before purchase by such
purchaser.
[2.06] (g) The Tender Agent, with respect to any Bond for
which the Tender Agent or Trustee has received notification from the
Remarketing Agent that it has found a purchaser or purchasers to whom the
Remarketing Agent can remarket Bonds tendered for purchase, shall so notify
the Bank in writing.
Section 2.07. Delivery of Purchased Bonds. (a) Bonds (or
portions thereof in authorized denominations) purchased pursuant to Section
2.05 (other than on a Fixed Rate Conversion Date) shall be delivered as
follows:
[2.07(a)] (i) Bonds (or portions thereof in authorized
denominations) purchased with moneys described in clause (i) (to the
extent that the Trustee has received notice of reinstatement of the
Letter of Credit in an amount equal to the Purchase Price of the Bonds
and has so notified the Tender Agent) and in clause (ii) of Section
2.05(h) shall be delivered by the Tender Agent to the purchasers there
of upon receipt of payment thereof. Prior to such delivery, the
Tender Agent shall surrender such Bonds, if so requested by the
purchasers thereof, to the Trustee for registration of transfer.
Bonds, portions of which in authorized denominations shall have been
purchased with such moneys, shall be surrendered by the Tender Agent
to the Trustee for registration of transfer with respect to principal
amounts thereof so purchased and for registration of transfer with
respect to the principal amounts thereof not so purchased as provided
in clause (ii) below or for cancellation as provided in clause (iii)
below;
[2.07(a)] (ii) Bonds (or portions thereof in authorized
denominations), any portion of the Purchase Price of which shall have
been paid with moneys drawn under the Letter of Credit, shall, if and
to the extent that the Trustee has not
<PAGE> 115
69.
received notice of reinstatement of the Letter of Credit in an amount
equal to the Purchase Price of the Bonds (or portion thereof), be
surrendered by the Tender Agent to the Trustee for registration of
transfer to the Company and upon such registration of transfer, the
Bonds issued in respect thereof shall be delivered to and held by the
Tender Agent for the account of the Company and shall not be released,
pledged or otherwise transferred or disposed of unless prior to or
simultaneously with the release of the Bonds by the Tender Agent to
the Remarketing Agents for remarketing, the amount to be drawn under
the Letter of Credit shall have been correspondingly reinstated and
written notice of such reinstatement shall have been delivered by the
Trustee or the Bank to the Tender Agent, or in the case of a purchase
pursuant to Section 2.05(e), an Alternate Credit Facility meeting the
requirements of Section 6.07 has been provided; provided, further,
that, upon receipt by the Tender Agent of either (A) notice of the
establishment of a Mandatory Purchase Date pursuant to Section 2.05(e)
or (B) notice from the Bank directing mandatory tender and purchase of
the Bonds pursuant to Section 2.05(j), then any Bonds theretofore or
thereafter purchased with such moneys drawn under the Letter of Credit
shall be surrendered by the Tender Agent to the Trustee for
registration of transfer to the Bank and upon such registration of
transfer, the Bonds issued in respect thereof shall be delivered to
and held by the Tender Agent for the account of the Bank and shall not
be released, pledged or otherwise transferred or disposed of (except
to the Bank) other than in accordance with the Remarketing Agreement,
and the Tender Agent shall notify the Bank that it is holding such
Bonds for the Bank's account; and
[2.07(a)] (iii) Bonds (or portions thereof in authorized
denominations) purchased with any other moneys pursuant to Section
2.05(h) shall be delivered to the Trustee for cancellation as to the
principal amount thereof so purchased and for registration of transfer
and delivery pursuant to (i) or (ii) above as to the remainder
thereof.
[2.07] (b) Bonds (or portions thereof in authorized
denominations) purchased pursuant to Section 2.05(d)(1) (only insofar as such
subsection relates to a Fixed Rate Conversion Date) shall be delivered to the
Trustee for cancellation and Bonds shall be issued in exchange therefor in
accordance with Section 2.03(k), which shall be delivered: (i) to the
purchasers thereof, with respect to the Bonds (or portions thereof in
authorized denominations) purchased with moneys described in Section
2.07(a)(i) or (ii) to the Tender Agent, with respect to Bonds (or portions
thereof in authorized denominations) purchased
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70.
with moneys as described in Section 2.07(a)(ii) and shall be held for the
account of the Company, except as otherwise provided in such Section
2.07(a)(ii), will not be entitled to the benefits of the Letter of Credit and
shall (x) have a legend stating "This Bond is not entitled to the benefits of
the Letter of Credit referred to herein", affixed thereto by the Tender Agent
until released and delivered pursuant to the following paragraph (c), and (y)
shall be held by the Tender Agent and shall be disposed of solely pursuant to
the terms of the following clause (c). Bonds so purchased with any other
moneys shall be delivered to the Trustee for cancellation and no replacement
Bonds shall be issued in respect thereof.
[2.07] (c) The Tender Agent shall authenticate and
deliver new Bonds in replacement of any Bonds held pursuant to the preceding
clause (ii) to or upon the order of the Remarketing Agents, only upon receipt
by the Tender Agent from any Person other than the Company following any
remarketing of such new Bonds of payment in immediately available funds in
respect of the principal amount of such Bonds (including accrued interest, if
any). Such funds shall be received by the Tender Agent solely for the account
of the Bank and shall be promptly transmitted to or upon the written order of
the Bank. Upon such delivery, such Bonds shall be entitled to the benefits of
the Letter of Credit.
Section 2.08. Mutilated, Lost, Stolen or Destroyed Bonds.
In the event any outstanding Bond, whether temporary or definitive, is
mutilated, lost, stolen or destroyed, the Authority may execute and, upon its
request, the Trustee may authenticate a new Bond oflike tenor as the mutilated,
lost, stolen or destroyed Bond; provided that, in the case of any mutilated
Bond, such mutilated Bond shall first be surrendered to the Trustee, and in the
case of any lost, stolen or destroyed Bond, there shall be first furnished to
the Trustee evidence of the ownership thereof and of such loss, theft or
destruction in form satisfactory to the Trustee, together with an indemnity
satisfactory to it which indemnity shall name the Authority as an additional
indemnified party. In the event any such Bond shall have matured, instead of
issuing a substitute Bond the Authority may authorize the payment of the same.
The Authority and the Trustee may charge the owner of such Bond with their
reasonable fees and expenses in this connection. Any Bond issued under the
provisions of this Section in lieu of any Bond alleged to be destroyed, lost or
stolen shall constitute an original additional contractual obligation on the
part of the Authority, whether or not the Bond so alleged to be destroyed, lost
or stolen be at any time enforceable by anyone, and shall be equally and
proportionately entitled to the benefits of the Indenture with all other Bonds
issued hereunder to the same extent as the Bonds in substitution for which such
Bonds were issued.
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71.
Section 2.09. Temporary Bonds. Until Bonds in definitive
form are ready for delivery, the Authority may execute, and upon its request in
writing, the Trustee shall authenticate and deliver in lieu of any thereof, and
subject to the same provisions, limitations, and conditions, one or more
printed, lithographed or typewritten Bonds in temporary form, substantially of
the tenor of the Bonds hereinbefore described, and with appropriate omissions,
variations and insertions. Bonds in temporary form will be for such principal
amounts as the Authority shall determine. Until exchanged for Bonds in
definitive form, such Bonds in temporary form shall be entitled to the security
and benefit of the Indenture. The Authority shall, without unreasonable delay,
prepare, execute and deliver to the Trustee, and thereupon, upon the
presentation and surrender of the Bond or Bonds in temporary form to the
Trustee at the Corporate Trust Office, the Trustee shall authenticate and
deliver, in exchange therefor, a Bond or Bonds, in definitive form in the
authorized denomination, and for the same principal amount, as the Bond or
Bonds in temporary form surrendered. Such exchange shall be made without
making any charge to the Bondowners therefor.
Section 2.10. Execution of Bonds; Effect of Change of
Officers. All the Bonds shall, from time to time, be executed on behalf of the
Authority by, or bear the facsimile signature of, its Chair, Vice Chair,
President or Treasurer, and its corporate seal (which may be facsimile) shall
be thereunto affixed (or imprinted or engraved if facsimile) and attested by
the signature of its Secretary or an Assistant Secretary (which may be
facsimile).
If any of the officers who shall have signed or sealed any of
the Bonds or whose facsimile signature shall be upon the Bonds shall cease to
be such officer of the Authority before the Bonds so signed and sealed shall
have been actually authenticated by the Trustee or delivered by the Authority,
such Bonds nevertheless may be authenticated, issued and delivered with the
same force and effect as though the person or persons who signed or sealed such
Bonds or whose facsimile signature shall be upon the Bonds had not ceased to be
such officer or officers of the Authority; and also any such Bond may be signed
and sealed on behalf of the Authority by those persons who at the actual date
of the execution of such Bond shall be the proper officers of the Authority,
although at the date of such Bond any such person shall not have been such
officer of the Authority.
Section 2.11. Registration of Bonds; Transfers; Securities
Depository. (a) All the Bonds issued under the Indenture shall be negotiable,
subject to the provisions for registration of transfer contained in the
Indenture and in the Bonds. The Trustee shall be the registrar for the Bonds.
So long
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as any of the Bonds shall remain outstanding, the Trustee shall maintain
and keep at its Corporate Trust Office the Bond Register for the
registration of transfer of Bonds. Upon presentation thereof for such purpose
at said office, the Trustee shall register or cause to be registered therein
under such reasonable regulations as it may prescribe, the transfer of any
Bond.
The registration of transfer of any Bond shall be made only
upon the Bond Register at such Corporate Trust Office at the written request of
the Registered Owner thereof or his or her representative duly authorized in
writing, upon surrender thereof, together with a written instrument of transfer
satisfactory to the Trustee duly executed by the Registered Owner or his or her
representative duly authorized in writing. Upon the registration of transfer of
any Bond, the Authority shall issue in the name of the transferee, in
authorized denominations, one or more Bonds of the same aggregate principal
amount as the surrendered Bonds.
The Trustee shall not register any transfer of any Bond
(or portion thereof), except pursuant to Bondowner tender, after notice calling
such Bond (or portion thereof) for redemption or partial redemption has been
given and prior to such redemption. In connection with any such transfer
pursuant to Bondowner tender, the Trustee shall deliver to the transferee a
copy of the applicable call for redemption.
The Trustee or the Tender Agent shall, in addition,
authenticate and register in the name and in the manner directed by the
recipient thereof Bonds in replacement for Bonds deemed to be tendered for
purchase pursuant to Section 2.05 for delivery in accordance therewith.
[2.11] (b) DTC shall act as Securities Depository for the
Bonds upon the initial issuance of the Bonds. The ownership of one fully
registered Bond in the aggregate principal amount of the Bonds shall be
registered in the name of Cede & Co., as nominee of DTC. Each such Bond shall
be held in trust until its redemption or until such time as DTC or its nominee
is no longer the Registered Owner of the Bonds, as provided below.
For so long as the Bonds are held in a book-entry-only
system and so long as a Securities Depository or its nominee is the Registered
Owner of the Bonds, references herein to the Bondowners or Registered Owners
of the Bonds shall mean such Securities Depository or its nominee and shall not
mean the beneficial owners ("Beneficial Owners") of the Bonds. For so long as
a Securities Depository or its nominee is the Registered Owner of the Bonds,
principal, Purchase Price, redemption price, including premium, if any, and
interest payments on the Bonds shall be made to such
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Securities Depository or its nominee, as Registered Owner of the Bonds, and the
Authority and the Trustee shall recognize such Securities Depository or its
nominee as the Bondowner for all purposes, and such Securities Depository or
its nominee shall be considered the only owner of such Bonds for all purposes,
including receipt of notice, voting and requesting or directing the Trustee,
the Remarketing Agents, the Paying Agent, the Tender Agent or any other
fiduciary to take or not to take any action under the Indenture. Conveyance
of notices and other communications by a Securities Depository to Beneficial
Owners will be governed by arrangements among them, subject to any statutory
and regulatory requirements as may be in effect from time to time.
THE AUTHORITY, THE COMPANY, THE TRUSTEE, THE PAYING AGENT
AND THE REMARKETING AGENTS WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO
ANY BENEFICIAL OWNER WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED
BY A SECURITIES DEPOSITORY; (II) THE PAYMENT BY A SECURITIES DEPOSITORY OF ANY
AMOUNT WITH RESPECT TO THE PRINCIPAL, PURCHASE PRICE, INCLUDING PREMIUM, IF
ANY, OR INTEREST ON THE BONDS; (III) ANY NOTICE WHICH IS PERMITTED OR REQUIRED
TO BE GIVEN TO BENEFICIAL OWNERS OR (IV) ANY CONSENT GIVEN OR OTHER ACTION
TAKEN BY A SECURITIES DEPOSITORY OR ITS NOMINEE AS BONDOWNER.
The Authority may elect to discontinue such book-entry-only
system and upon the discontinuance of such book-entry-only system, Bond
certificates are required to be delivered in physical and registered form to
the Bondowners or their designees, according to the terms of the Indenture.
Upon the institution of any Rate Period after such discontinuance, the
Authority upon the direction of the Company may direct that the Bonds shall be
held as book-entry-only Bonds by notification to the Trustee, the Paying Agent,
Tender Agent and the Remarketing Agents of its intention to reinstitute the
book-entry-only system. Upon receipt of such notice, the Trustee shall notify
owners of such Bonds that such Bonds shall be registered in a book-entry-only
system with DTC or its nominee or such alternative Securities Depository as the
Authority shall appoint. Upon or before the date specified in such notice,
such owners shall surrender their Bond certificates to the Trustee or Tender
Agent to have their beneficial ownership interest in the Bonds registered under
the book-entry-only system described herein. If any Bondowner fails to
surrender any such certificate to the Trustee or Tender Agent, such Bondowner
shall remain the Registered Owner of such Bond; provided, however, that such
Registered Owner shall have no right to transfer or tender such Bond without
first surrendering such Bond for registry in the book-entry-only system.
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74.
If, during any period that a Securities Depository,
including DTC or its nominee, is the Registered Owner of the Bonds, (a) such
Securities Depository determines to discontinue providing its service with
respect to the Bonds by giving notice to the Authority and the Trustee and
discharging its responsibilities with respect thereto under applicable laws,
and the Authority fails to appoint a successor Securities Depository for the
Bonds, or (b) the Authority at the direction of the Company determines to
discontinue the book-entry-only system through such Securities Depository, then
Bond certificates are required to be delivered in physical and registered form
to the Beneficial Owners or their designees, according to the terms of the
Indenture. Each Beneficial Owner, upon delivery of certificates held in the
Beneficial Owner's name, will become the Registered Owner of that portion of
the Bonds.
In the event that the book-entry-only system is discontinued
and the Beneficial Owners become Registered Owners of the Bonds, the provisions
applicable to such Registered Owners shall apply.
In connection with any notice or other communication to be
provided to Bondowners pursuant to the Indenture by the Authority or the
Trustee with respect to any consent or other action to be taken by Bondowners,
the Authority or the Trustee, as the case may be, shall establish a record date
for such consent or other action and give the nominee or Securities Depository
notice of such record date not less than fifteen calendar days in advance of
such record date to the extent possible.
The Authority and the Trustee are hereby authorized to enter
into any arrangements determined necessary or desirable with any Securities
Depository in order to effectuate this Section and both of them shall act in
accordance with the Indenture and any such agreement. Without limiting the
generality of the foregoing, any such arrangements may alter the manner of
effecting delivery of Bonds and the transfer of funds for the payment of Bonds
to the Securities Depository.
Section 2.12. Persons Treated as Owners. The Authority,
the Trustee, the Tender Agent and any Paying Agent may, for all purposes, deem
and treat the Registered Owner of any Bond as the absolute owner of such Bond
whether or not such Bond is overdue, and neither the Authority nor the Trustee
nor the Tender Agent nor any Paying Agent shall be affected by any notice to
the contrary.
Payment made to the Registered Owner of any Bond for the
purpose of such payment in accordance with the provisions of this Section 2.12
shall be valid and effectual, to the extent of the sum
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or sums so paid, to satisfy and discharge the liability upon such Bond in
respect of which such payment was made.
Section 2.13. Exchange of Bonds. So long as any of the
Bonds remain outstanding, the Authority shall make all necessary provisions to
permit the exchange of Bonds at the Corporate Trust Office of the Trustee.
Bonds, upon surrender thereof at the Corporate Trust Office
of the Trustee with a written instrument requesting such exchange satisfactory
to the Trustee duly executed by the Registered Owner or his or her
representative duly authorized in writing, may be exchanged for an equal
aggregate principal amount of Bonds of any other authorized denominations, in
an aggregate principal amount equal to the principal amount of the Bonds so
surrendered.
Section 2.14. Payment For and Limitations on Exchanges and
Transfers. In all cases in which the right of exchanging or registering the
transfer of Bonds is exercised, the Authority shall execute and the Trustee
shall authenticate and deliver Bonds in accordance with the provisions hereof.
All Bonds surrendered for registration of transfer or exchange shall forthwith
be cancelled by the Trustee. For every such registration of transfer or
exchange of Bonds, the Trustee may charge an amount sufficient to reimburse it
for any tax, fee or other governmental charge required to be paid with respect
to such registration of transfer or exchange which, if not resulting in a
change in Bondowner, shall be paid by the Company pursuant to the Participation
Agreement. The cost of preparing each new Bond upon each registration of
transfer or exchange, and any other expenses (except any applicable tax, fee or
other governmental charge) of the Authority or the Trustee incurred in
connection with such registration of transfer or exchange shall be paid by the
Company pursuant to the Participation Agreement.
Section 2.15. Endorsement of Certificate of Authentication
on Bonds. No Bond shall be secured hereby or entitled to the benefit of the
Indenture or be valid or obligatory for any purpose unless there shall be
endorsed on such Bond a certificate of authentication, substantially in the
form prescribed in the Indenture, executed by the Trustee or the Tender Agent;
and such certificate on any Bond issued by the Authority shall be conclusive
evidence and the only competent evidence that such Bond has been duly
authenticated and delivered hereunder. The Trustee's certificate of
authentication on any Bond shall be deemed to have been executed by it if
signed by an authorized officer of the Trustee or the Tender Agent, but it
shall not be necessary that the
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same officer sign the certificate of authentication on all of the Bonds issued
hereunder.
Section 2.16. Cancellation of Bonds. Upon the surrender
to the Trustee of any temporary or mutilated Bonds, or Bonds transferred or
exchanged for other Bonds, or Bonds paid at maturity or upon defeasance in
accordance with Article XIV or otherwise delivered to the Trustee for
cancellation, the same shall forthwith be cancelled and may be destroyed by the
Trustee in such manner as it deems appropriate and the Trustee shall, if such
Bonds are so destroyed, deliver its certificate as to such destruction to the
Authority.
Section 2.17. Redemption of Bonds. The Bonds shall be
subject to optional and mandatory redemption at the times and at the redemption
prices set forth in the form of Bonds in the preamble hereto.
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77.
ARTICLE III
SECURITY FOR BONDS; ISSUANCE OF BONDS
Section 3.01. Pledge and Assignment Effected by
Indenture; Bonds Equally and Ratably Secured. In accordance with the
provisions of subsection 8 of Section 1860 of the Act, the pledge and
assignment effected by the Indenture shall be valid and binding from the date
of execution and delivery of the Indenture, the moneys so pledged and assigned
and hereafter received by the Authority shall be subject to the lien of such
pledge and assignment without any physical delivery thereof or further act, and
such lien shall be a continuing, irrevocable and exclusive first lien and shall
be valid and binding as against all parties having claims of any kind in tort,
contract or otherwise against the Authority irrespective of whether such
parties have notice thereof. In addition to the pledges and assignments set
forth above, the Authority hereby further grants to the Trustee the same power
as the Authority to enforce from time to time the rights of the Authority set
forth in Article III and Section 5.16 of the Participation Agreement, subject
to the provisions of the Participation Agreement relating to the amendment
thereof.
All Bonds issued and to be issued hereunder are, and are to
be, to the extent provided in the Indenture, equally and ratably secured by the
Indenture without preference, priority or distinction on account of the actual
time or times of the authentication or delivery of the Bonds, or any of them,
so that, subject to the provisions of Section 9.05, all Bonds at any time
outstanding hereunder shall have the same right, lien and preference under and
by virtue of the Indenture and shall all be equally and ratably secured hereby
with like effect as if they had all been executed, authenticated and delivered
simultaneously on the date hereof; provided, however, that Bonds registered in
the name of the Company or held or required to be held by the Tender Agent
pursuant to Section 2.07 shall not be entitled to any benefit of the Letter of
Credit.
Section 3.02. Issuance of Bonds. The Bonds shall
forthwith be executed by the Authority and delivered to the Trustee for
authentication and upon the written request and authorization to the Trustee
signed by an Authorized Officer the Bonds shall be authenticated by the Trustee
or the Tender Agent and shall be delivered to or upon the written order of an
Authorized Officer, but only upon the receipt by the Trustee of proceeds
(including accrued interest, if any) of sale of the Bonds, of which (i) a sum
equal to the accrued interest, if any, paid by the initial purchasers of such
Bonds shall be deposited in the Bond Fund and (ii) the balance thereof shall be
deposited in the Construction Account of the Project Fund. Prior to, or
simultaneously with, the
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78.
authentication and delivery of the Bonds, the Trustee shall also receive the
following:
(a) A copy, certified by the Secretary of the Authority,
of the resolution or resolutions adopted by the Authority
authorizing the execution and delivery of the Indenture and the
Participation Agreement and the issuance, sale, execution and
delivery of the Bonds;
(b) An original executed counterpart of the Participation
Agreement and the Indenture;
(c) The Company Note;
(d) The Letter of Credit;
(e) A copy of resolutions authorizing the execution and
delivery of the Participation Agreement, and the issuance, execution
and delivery of the Company Note, by the Company, certified by the
Secretary or an Assistant Secretary of the Company, under its
corporate seal, to have been duly adopted by the Board of Directors of
the Company, or the Executive and Finance Committee thereof, and to be
in full force and effect on the date of such certification;
(f) A copy of the opinion of counsel to the Company
delivered to the initial purchasers of the Bonds, together with a
letter to the effect that the Trustee may rely on such opinion as if
it were addressed to it;
(g) An opinion of counsel, who shall be satisfactory to
the Trustee, experienced in laws relating to the issuance of bonds of
states and their political subdivisions, to the effect that the
issuance of the Bonds has been duly authorized and that all conditions
precedent to the issuance thereof have been fulfilled; and
(h) A copy of an opinion of counsel to the Bank to the
effect that the Letter of Credit has been duly authorized, executed
and delivered and is a valid and binding obligation of the Bank,
together with a letter to the effect that the Trustee may rely on such
opinion as if it were addressed to it.
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79.
ARTICLE IV
PARTICIPATION AGREEMENT AND COMPANY NOTE
Section 4.01. Amendments to Participation Agreement not
Requiring Consent of Bondowners. The Authority may, without the consent of the
Trustee and without notice to or consent of the Bondowners, enter into any
amendment or modification of the rights and interest of the Authority under
Article III of the Participation Agreement or Sections 4.04, 4.08, 4.09, 4.10
and 5.16 of the Participation Agreement upon the delivery to the Trustee of an
Opinion of Bond Counsel, satisfactory to the Trustee, to the effect that the
proposed amendment or modification will not impair the exclusion from gross
income for federal income tax purposes of interest on any of the Bonds
theretofore issued or otherwise adversely affect the rights and/or interests of
the Trustee or any of the owners of the Bonds. The Authority may, without the
consent of or notice to the Bondowners, amend or modify any other provision of
the Participation Agreement as may be required (i) for the purpose of curing
any ambiguity or formal defect or omission in the Participation Agreement; or
(ii) in connection with any other change therein which is not prejudicial to
the interests of the Trustee or the owners of the Bonds, including but not
limited to any change necessary to obtain or maintain a rating of the Bonds
from Moody's or S&P.
Prior to the expiration of the Letter of Credit, no amendment
modification of the Participation Agreement shall be effective without the
prior written consent of the Bank, which consent shall not be unreasonably
withheld.
Section 4.02. Amendments to Participation Agreement
Requiring Consent of Bondowners. Except for amendments or modifications as
provided in Section 4.01, the Authority shall not enter into any amendment or
modification of the Participation Agreement without the written consent of
Trustee and the owners of not less than two-thirds in aggregate principal
amount of the Bonds then outstanding and affected by such modification or
amendment.
Such consent of Bondowners shall be given and procured in the
same manner as provided in Section 13.02 with respect to Supplemental
Indentures.
No modification or amendment requiring the consent of
Bondowners shall be effective unless the required consent of Bondowners is
obtained and such modification is not prejudicial to the interests of the
Trustee.
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80.
Notwithstanding anything to the contrary contained in the
Indenture or the Participation Agreement, the Authority shall not agree to any
amendment, change or modification of, or any waiver, discharge or termination
of, any of the provisions of the Participation Agreement in any respect which
would impair the exclusion from gross income for federal income tax purposes of
interest on any of the Bonds.
Prior to the expiration of the Letter of Credit, no
amendment or modification of the Participation Agreement shall be effective
without the prior written consent of the Bank, which consent shall not be
unreasonably withheld.
Section 4.03. Amendments to Company Note. Except for
such amendments or modifications of the Company Note as may be required for the
purpose of curing any ambiguity or formal defect or omission in the Company
Note, or in connection with any other change therein which, in the judgment of
the Trustee, is not prejudicial to the interests of the Trustee or the
Bondowners, the Trustee shall not enter into any amendment or modification of
the Company Note without obtaining the prior written consent of the owners of
not less than two-thirds in aggregate principal amount of the Bonds then
outstanding. No such modification or amendment shall be made which will affect
the times, amounts and currency of payment of the principal of and premium, if
any, and interest on the Company Note without the consent of the owners of all
Bonds then outstanding.
The Trustee shall consent to any such proposed action
requiring the consent of the owners of the Bonds if the required consent of the
owners of the Bonds is obtained; provided that the Trustee may, but shall not
be obligated to consent to any such proposed action which affects its own
rights, powers, duties or obligations hereunder. Such consent of Bondowners
shall be given and procured in the same manner as provided in Section 13.02
with respect to Supplemental Indentures. Prior to the expiration of the Letter
of Credit, the Trustee shall not consent to any amendment or modification of
the Company Note without the prior written consent of the Bank, which consent
shall not be unreasonably withheld.
Section 4.04. Amendments to Tax Regulatory Agreement.
The Authority may, without the consent of the Trustee and without notice to or
consent of the Bondowners, enter into any amendment or modification of the Tax
Regulatory Agreement upon the delivery to the Trustee of an Opinion of Bond
Counsel to the effect that the proposed amendment or modification will not
adversely affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds.
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81.
ARTICLE V
PROJECT FUND; REBATE FUND
Section 5.01. Creation and Custody of Project Fund.
1. There is hereby created a Project Fund, which shall be held
by the Trustee. There shall be paid into the Project Fund the amount required
to be so paid by the provisions of Section 3.02.
2. There is hereby established within the Project Fund two
(2) separate trust accounts to be known as the "Construction Account" and the
"Investment Proceeds Account." All income or gain on moneys deposited in the
Construction Account or the Investment Proceeds Account shall be deposited in
the Investment Proceeds Account.
Section 5.02. Application of Moneys in the Project Fund.
1. The moneys in the Construction Account, until applied in
payment of any item of the Cost of Construction of the Project, shall be held
by the Trustee and, pending such application, shall be subject to a claim and
charge in favor of the owners of the Bonds and for the further security of such
owners until paid out as herein provided. The moneys in the Investment
Proceeds Account, until applied in accordance with the provisions of Section
5.02.2, shall be held by the Trustee, but shall not be subject to a claim or
charge in favor of the Bondowners and shall be applied solely in accordance
with the provisions of this Article and shall not be available for the payment
of Bonds within the meaning of the Indenture. Pending such application, such
moneys may be invested in accordance with the provisions of Article VII.
2. On the first Business Day following each Computation
Period, the Trustee shall withdraw from the Investment Proceeds Account and
deposit in the Rebate Fund an amount such that the amount held in the Rebate
Fund after such deposit, as certified to the Trustee by an Authorized Company
Representative, is equal to the Rebate Amount calculated as of the last day of
the Computation Period, as certified to the Trustee by an Authorized Company
Representative. Any remaining balance in the Investment Proceeds Account
shall be deposited in the Construction Account. In the event of any
deficiency, the balance required shall be provided by the Company pursuant to
Section 7.3 of the Tax Regulatory Agreement. Computations of the amounts on
deposit in each fund hereunder, descriptions of each investment held therein,
and computations of the Rebate Amount shall be furnished to the Trustee by the
Company in accordance with Section 7.3 of the Tax Regulatory Agreement.
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82.
Section 5.03. Construction Account Requisitions. The
Trustee is authorized and directed to make payments from the Construction
Account to pay the Cost of Construction of the Project, upon the written order
of the Company, but only upon receipt from time to time of requisitions
signed by an Authorized Company Representative in the form of EXHIBIT C
attached hereto upon which the Trustee may conclusively rely, stating with
respect to each payment to be made for the Project:
(a) the requisition number;
(b) the items of the Cost of Construction of the
Project to which the disbursement relates or has been
allocated and the nature of the disbursement;
(c) the payee, with address, which may be the
Company in the case of reimbursements for advances and
payments made or costs incurred or work done by the Company;
(d) the amount of such payment;
(e) that the disbursement will be used to pay, or
reimburse the Company for, a Cost of Construction of the
Project and that it is a proper charge against the
Construction Account;
(f) that none of the items for which the
disbursement is requested has formed the basis for any
disbursement theretofore made from the Construction Account;
(g) that the disbursement will not be used in a
manner that would result in a violation of any representation,
warranty or covenant contained in Article III of the Tax
Regulatory Agreement or Section 5.04 of the Participation
Agreement;
(h) that no event of default under the Participation
Agreement shall have occurred and be continuing and that no
event which with the lapse of time alone would become such a
default has occurred and is continuing; and
(i) that no event of default under the Indenture
shall have occurred and be continuing and that no event which
with the lapse of time alone would become such a default has
occurred and is continuing.
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83.
Section 5.04. Retention of Requisitions. For seven years
from the dates thereof the Trustee shall retain in its possession all
requisitions received by it as herein required, subject to the inspection
during normal banking hours, of the Authority, its agents and representatives
and the Company and, upon reasonable request, inspection during normal
banking hours of the Bondowners and their representatives, in any case, at
the Corporate Trust Office.
Section 5.05. Certification of Completion of the Project.
On the date when all Costs of Construction expected to be paid from the Project
Fund have been paid, the Trustee and the Authority shall be furnished promptly
with a certificate of an Authorized Company Representative, which certificate
shall contain an appropriate direction to the Trustee with respect to any
amount in the Project Fund which is to be disposed of as provided in Section
5.06.
Section 5.06. Disposition of Balance Remaining in Project
Fund. All moneys remaining in the Project Fund after the certificate referred
to in Section 5.05 is furnished shall, at the written direction of an
Authorized Company Representative, be deposited in segregated account in the
Bond Fund, or paid to the Bank to reimburse the Bank for any unreimbursed draw
under the Letter of Credit relating to the purchase of Bonds tendered or
deemed tendered pursuant to Section 2.05 (and, pending any such application, be
invested, in securities in accordance with the direction of an Authorized
Company Representative delivered pursuant to Article VII, which direction shall
confirm that such investment will not be in violation of the covenants and
warranties made to the Authority by the Company in Section 7.1 of the Tax
Regulatory Agreement), or deposited in the Rebate Fund.
Section 5.07. Creation and Custody of Rebate Fund. There
is hereby created a Rebate Fund, which shall be held by the Trustee. There
shall be paid into the Rebate Fund the amount required to be so paid under
Section 5.02.2. All income or gain on moneys deposited in the Rebate Fund
shall be deposited in the Rebate Fund. The Rebate Fund and the amounts
deposited therein shall not be subject to a claim and charge in favor of the
Trustee or any owners of Bonds and shall be applied solely in accordance with
the provisions of this Article and shall not be available for the payment of
Bonds within the meaning of the Indenture.
Section 5.08. Application of Moneys in the Rebate Fund.
1. Amounts deposited in the Rebate Fund shall be applied solely to pay Costs
of Construction described in clause (i) of the definition of Costs of
Construction in accordance with subsection 2 of this
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84.
Section 5.08 except to the extent otherwise permitted by subsection 3 of this
Section 5.08.
2. The Trustee, upon receipt of written instructions from an
Authorized Company Representative in accordance with Section 7.3 of the Tax
Regulatory Agreement, shall pay to the United States out of amounts in the
Rebate Fund (a) not later than thirty (30) days after the end of each five-year
period following the date of issuance of the Bonds, an amount certified to the
Trustee by an Authorized Company Representative such that, together with
amounts previously paid, the total amount paid to the United States is equal to
90% of the Rebate Amount calculated as of the end of the most recent
Computation Period, and (b) not later than 30 days after the date on which all
of the Bonds have been paid or redeemed, 100% of the Rebate Amount as of the
end of the final Computation Period as certified to the Trustee by an
Authorized Company Representative.
3. In the event that on the first day of any Bond Year the
amount on deposit in the Rebate Fund exceeds the Rebate Amount, the Trustee,
upon the receipt of written instructions from an Authorized Company
Representative specifying the amount of such excess, shall withdraw such excess
amount and prior to the Completion Date, deposit it in the Investment Proceeds
Account of the Project Fund, or, after the Completion Date, deposit it in the
Bond Fund.
Pending such application, such moneys may be invested in
accordance with instructions from the Company given in accordance with the
provisions of Article VII.
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85.
ARTICLE VI
BOND FUND; LETTER OF CREDIT
Section 6.01. Creation and Custody of the Bond Fund. There
is hereby created a Bond Fund, which shall be held in trust by the Trustee for
the benefit of the Bondowners and shall be subject to a lien and charge in
favor of the Bondowners. Neither the Company nor the Authority shall have
any interest in, or ability to withdraw funds from, the Bond Fund. There are
hereby created within the Bond Fund two separate trust accounts to be
designated as the Debt Service Account and the Letter of Credit Account. The
moneys in each such account shall not in any way be commingled with funds in
any other trust account maintained by the Trustee. The Trustee shall
maintain such records for deposits made into the Debt Service Account so that
the Trustee may at all times ascertain the source and dates of deposit of the
moneys in the Debt Service Account.
The Authority hereby authorizes and directs the Trustee to
withdraw in accordance with Section 6.03 sufficient funds from the Bond Fund
to pay the principal of and premium, if any, and interest on the Bonds as the
same become due and payable and to make such funds so withdrawn available to
the Paying Agents, if any, for the purpose of paying such principal, premium,
if any, and interest.
Section 6.02. Payments into the Bond Fund. The Trustee
shall deposit in the Bond Fund for credit to the Debt Service Account as and
when received (1) the amount, if any, of the proceeds of sale of the Bonds,
to the extent required by this Indenture, (2) all Company Note Payments,
(3) the amounts remaining in the Project Fund after the certificate referred
to in Section 5.05 is furnished, (4) all interest and other income received
on investments of moneys on deposit in the Bond Fund, as provided in Section
7.03, (5) any funds made available pursuant to Section 8.05, (6) any proceeds
of refunding obligations and (7) any amount paid into the Bond Fund pursuant
to Section 5.08.3.
There shall be deposited in the Letter of Credit Account
all moneys drawn by the Trustee under the Letter of Credit and received by the
Trustee for the purposes of paying principal of, premium, if any, and interest
on, the Bonds. In the event that the Bonds are held by a Securities
Depository, moneys drawn under the Letter of Credit may be paid directly to
the Securities Depository, in which event, proper notification concerning such
payment shall be sent to the Trustee and Paying Agent.
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Section 6.03. Application of Moneys in the Bond Fund.
Except as otherwise provided in Sections 6.04 and 14.01.3, moneys on deposit in
the Bond Fund shall be used solely for the payment of the principal of and
premium, if any, and interest on the Bonds as the same shall become due and
payable either at maturity, upon redemption, by declaration or otherwise.
Moneys for such payments of the principal of, premium, if any and interest on
the Bonds shall be derived from the following sources in the following order of
priority:
(i) moneys drawn under the Letter of Credit and either
deposited in the Letter of Credit Account or, if necessary during any
Rate Period when the Bonds are held by a Securities Depository, paid
to such Securities Depository;
(ii) moneys paid into the Bond Fund pursuant to clause (1)
of Section 6.02 in respect of accrued interest which constitute
Available Moneys and proceeds from the investment thereof that
constitute Available Moneys which moneys shall be used to pay interest
on the Bonds;
(iii) proceeds of the sale of refunding obligations which
constitute Available Moneys and proceeds from the investment thereof
that constitute Available Moneys;
(iv) moneys deposited into the Bond Fund pursuant to clause
(3) or clause (7) of Section 6.02 which constitute Available Moneys
and proceeds from the investment thereof that constitute Available
Moneys;
(v) Company Note Payments which constitute Available Moneys
and proceeds from the investment thereof that constitute Available
Moneys;
(vi) to the extent permitted by Section 8.05, moneys
deposited into the Bond Fund pursuant to clause (5) of Section 6.02,
and proceeds from the investment thereof that constitute Available
Moneys; and
(vii) Company Note Payments which do not constitute Available
Moneys and proceeds from the investment thereof.
The Trustee hereby agrees to draw moneys under the Letter of
Credit to be applied to the payment of principal of, premium, if any, or
interest on, the Bonds. If and to the extent moneys under clause (i) of the
preceding paragraph are insufficient or unobtainable therefor, the Trustee
shall apply any other moneys that are available therefor, in the preceding
order of priority, including moneys described in clauses (vi) and (vii) of the
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87.
preceding paragraph, to the payment of the principal of, premium, if any, and
interest on, the Bonds. After the Letter of Credit has expired, any moneys
held by the Trustee in the Bond Fund may be used to make any payment of the
principal of, premium, if any, and interest on, the Bonds.
Prior to the expiration of the Letter of Credit, moneys under
clauses (iii), (iv) and (v) of this Section 6.03 shall not be used to pay the
redemption price of any Bond redeemed pursuant to the direction of the Company,
unless the Trustee shall have received the written direction specified in
Section 8.01 providing for such redemption at least 123 days prior to such
redemption date.
If on the due date of principal and premium, if any, or
interest with respect to Bonds, the amounts on deposit in the Bond Fund (except
amounts held by the Trustee pursuant to Section 6.04) are not sufficient to pay
in full all such principal of and premium, if any, and interest on the Bonds,
such amounts shall be applied to the payment of such principal, premium and
interest in accordance with the provisions of Section 10.09.
Section 6.04. Non-presentment of Bonds. In the event any
Bonds (or any portion thereof) shall not be presented for payment when the
principal thereof and redemption premium, if any, thereon becomes due, either
at maturity or at the date fixed for redemption thereof (including, for such
purpose, any conversion to a Fixed Rate) or otherwise, if funds sufficient to
pay such Bonds (or portions thereof) and redemption premiums, if any, shall be
held by the Trustee for the benefit of the owner or owners thereof, all
liability of the Authority to the owner or owners thereof for the payment of
such Bonds (or portions thereof) and redemption premiums, if any, shall
forthwith cease, terminate and be completely discharged, and thereupon it
shall be the duty of the Trustee to hold such funds (without investment
thereof) in the Bond Fund for a period of at least two years, without liability
for interest thereon, for the benefit of the owner or owners of such Bonds who
shall thereafter be restricted exclusively to such funds for any claim of
whatever nature on such owner's or owners' part under the Indenture or on, or
with respect to, such Bonds. On November 1 in each year Bonds are outstanding,
the Trustee will pay any funds (other than moneys resulting from a draw on the
Letter of Credit) which it has then held in respect of Bonds not presented for
payment for two years or more to the Company, and thereafter the owners of such
Bonds shall look only to the Company for the payment thereof and then only to
the extent of the amount so received without any interest thereon, and the
Authority, the Trustee and the Paying Agent shall have no responsibility with
respect to such moneys.
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88.
Section 6.05. (Intentionally Deleted).
Section 6.06. Trustee to Notify Authority and Company of
Funds in Bond Fund. The Trustee, upon the written request of the Company or
the Authority, shall notify the Company and the Authority of the amount of
funds on deposit in the Bond Fund at the time of such request.
Section 6.07. Letter of Credit. (1) The Trustee shall
draw moneys under the Letter of Credit in accordance with the terms thereof as
shall be necessary to make timely payments of principal of, and interest on,
the Bonds required to be made from the Bond Fund and to make timely payments
required to be made pursuant to, and in accordance with, Section 2.05. In
connection with each such drawing, the Trustee shall timely prepare and present
all certificates, drafts and other documents which are required by the terms
of the Letter of Credit to effect payment thereunder. The Trustee shall give
immediate telephonic or facsimile (confirmed in writing) notice to the Company
of a draw under the Letter of Credit and the amount thereof. Nothing in this
Section 6.07 shall require the Trustee to draw moneys under the Letter of
Credit for the payment of Bonds registered in the name of, or held beneficially
for, the Company or the Bank or any Bonds held or required to be held by the
Tender Agent for the account of the Company or the Bank pursuant to the
Indenture to the extent not permitted by the Letter of Credit.
(2) If at any time on or prior to the thirty-seventh
calendar day next preceding the scheduled expiration date of a Letter of
Credit, there shall have been delivered to the Trustee (a) an Alternate Credit
Facility, (b) an Opinion of Bond Counsel stating that the delivery of such
Alternate Credit Facility to the Trustee is authorized under the Participation
Agreement and the Indenture and complies with the terms of the Participation
Agreement and the Indenture and (c) written evidence satisfactory to the
Trustee from Moody's, if the Bonds are then rated by Moody's, and from S&P, if
the Bonds are then rated by S&P, in each case to the effect that such Rating
Agency has reviewed the proposed Alternate Credit Facility and that the
substitution of the proposed Alternate Credit Facility for the Letter of Credit
will not, by itself, result in a reduction or withdrawal of its rating or
ratings of the Bonds from those which then prevail, then the Trustee shall
accept such Alternate Credit Facility and surrender the previously held Letter
of Credit to the Bank, in accordance with the terms ofsuch Letter of Credit,
for cancellation.
(3) The Company may substitute an Alternate Credit
Facility which has the effect of lowering any then prevailing rating on the
Bonds or with respect to which the Company will not
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89.
seek a rating from a Rating Agency then rating the Bonds only if (i) notice
of mandatory purchase pursuant to Section 2.05(e)(1) shall have been given and
such Alternate Credit Facility shall take effect on or prior to the date on
which the Bonds are purchased pursuant to Section 2.05(e)(1) and (ii) such
substitution will result in a rating of not less than the third highest rating
category of a Rating Agency. Upon delivery to the Trustee of: (a) such
Alternate Credit Facility, (b) an Opinion of Bond Counsel stating that the
delivery of such Alternate Credit Facility is authorized under the
Participation Agreement and the Indenture and complies with the terms thereof,
and (c) written evidence satisfactory to the Trustee from a Rating Agency that
delivery of such Alternate Credit Facility will not result in a rating of less
than the third highest rating category of such Rating Agency, currently "A" in
each case, the Trustee shall surrender the Letter of Credit previously in
effect, promptly following any drawing required to be made on such Letter of
Credit on the date the Bonds are so purchased.
(4) If at any time, the Letter of Credit shall expire
because there shall cease to be any Bonds outstanding hereunder, or because
the Fixed Rate Conversion Date shall have occurred, then the Trustee shall
surrender the Letter of Credit to the Bank for cancellation after having made
any necessary drawing in accordance with this Section 6.07 and with the terms
of the Letter of Credit. The Trustee shall comply with the procedures set
forth in the Letter of Credit relating to the termination thereof.
(5) Prior to the expiration of the Letter of Credit, the
Trustee shall give notice, in the name of the Authority, of such expiration,
which notice shall (a) specify the date of the expiration of the Letter of
Credit and (b) specify the last time and date prior to such expiration on which
Bonds must be delivered and the notice given for the purchase of Bonds pursuant
to tenders as provided in Section 2.05, and the places where such Bonds must be
delivered for such purchase, and (c) either (i) if the requirements of
subsection 2 of this Section 6.07 have not been met, state that the Bonds shall
be subject to mandatory tender for purchase at the Purchase Price thereof on
the Mandatory Purchase Date or (ii) state the name of the issuer of the
Alternate Credit Facility. Such notice shall be given by first class mail not
later than thirty (30) days prior to the Mandatory Purchase Date to the owners
of the Bonds.
(6) Notwithstanding anything in the Indenture to the
contrary, in the event the Bonds are held by a Securities Depository under
Section 2.11(b), the Trustee may instruct the Letter of Credit Bank to pay
amounts drawn thereunder directly to the Securities Depository, as Registered
Owner of the Bonds, in
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90.
which event, proper notification concerning such payment shall be sent to the
Trustee and the Paying Agent.
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91.
ARTICLE VII
SECURITY FOR AND INVESTMENT OF MONEYS
Section 7.01. Moneys Held in Trust. All moneys from time to
time received by the Trustee and held in any fund created under the Indenture
(other than the Rebate Fund), or otherwise held for the benefit of the owners,
shall, except as otherwise provided herein, be held in trust by the Trustee for
the benefit of the owners from time to time of the Bonds entitled to be paid
therefrom.
Section 7.02. Uninvested Moneys Held by the Trustee. All
moneys received by the Trustee hereunder and not invested by the Trustee
pursuant to the provisions of this Article VII, to the extent not insured by
the Federal Deposit Insurance Company or other federal agency, shall be
deposited with a member bank of the Federal Reserve System or with the Trustee,
or with a national or state bank or a trust company which has a combined
capital and surplus aggregating not less than $100,000,000; provided, however,
that any such moneys drawn under the Letter of Credit and any moneys held under
Section 6.04 shall be deposited with the Trustee or be fully insured by the
Federal Deposit Insurance Company.
Section 7.03. Investment of, and Payment of Interest on,
Moneys. Moneys on deposit to the credit of the Project Fund or the Rebate Fund
may be retained uninvested as trust funds. Such moneys shall, at the written
direction of an Authorized Company Representative, be invested by the Trustee
in (a) any obligation issued or guaranteed by, or backed by the full faith and
credit of, the United States of America (including any certificates or any
other evidence of an ownership interest in any such obligation or in specified
portions thereof, which may consist of specified portions of the principal
thereof or the interest thereon), (b) deposit accounts in, or certificates of
deposit issued by, and bankers' acceptances of, any bank, trust company or
national banking association which is a member of the Federal Reserve System
(which may include the Trustee), having capital stock and surplus aggregating
not less than $100,000,000, (c) obligations issued or guaranteed by any Person
controlled or supervised by and acting as an instrumentality of the United
States of America pursuant to the authority granted by the Congress of the
United States, (d) commercial paper rated in the highest investment grade or
next highest investment grade by Moody's or S&P, (e) obligations rated not
less than "A" or equivalent by Moody's or S&P issued or guaranteed by any state
of the United States of America or the District of Columbia, or any political
subdivision, agency or instrumentality of any such state or District, or issued
by any corporation, (f) obligations of a public housing authority fully
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92.
secured by contracts with the United States of America, rated at least "A" or
better by a Rating Agency, (g) shares of a money market fund, the sole assets
of which are comprised of obligations described in (a) above or (h) shares of a
money market fund which is rated "AAAm" or "AAAm-g" by S&P or "Prime-1" by
Moody's.
Moneys on deposit to the credit of the Bond Fund, other than
moneys on deposit in the Letter of Credit Account, subject to Section 6.04,
shall without any instruction from the Company or the Authority be invested
in shares of a money market fund, the sole assets of which are comprised of
obligations issued or guaranteed by, or backed by the full faith and credit of,
the United States of America (including any certificates or any other evidence
of an ownership interest in any such obligation or in specified portions
thereof, which may consist of specified portions of the principal thereof or
the interest thereon and which certificates or other evidence of an ownership
interest must be rated by the Rating Agency then rating the Bonds at least as
high as the obligations issued or guaranteed by, or backed by the full faith
and credit of, the United States of America); provided that to the extent that
such investments may be unavailable the Trustee may hold such funds uninvested.
Notwithstanding anything in the preceding paragraph, Available
Moneys held under the Indenture shall be invested by the Trustee, except to the
extent such Available Moneys are permitted to be held uninvested under the
Indenture, in any obligation issued or guaranteed by, or backed by the full
faith and credit of, the United States of America (including any certificates or
any other evidence of an ownership interest in any such obligation or in
specified portions thereof, which may consist of specified portions of the
principal thereof or the interest thereon and which certificates or other
evidence of an ownership interest must be rated by the Rating Agency then rating
the Bonds at least as high as the obligations issued or guaranteed by, or backed
by the full faith and credit of, the United States of America), which matures on
or prior to the redemption date.
In no event shall the Trustee invest moneys on deposit to the
credit of the Bond Fund in any obligation or security issued or guaranteed by
the Company or the Authority or any obligation or security issued or guaranteed
by any Person known to a Responsible Officer of the Trustee to be an Affiliate
of either the Company or the Authority.
Investments of moneys on deposit to the credit of the Project
Fund, the Bond Fund and the Rebate Fund pursuant to this Section 7.03 shall
have maturity dates, or shall be subject to redemption at the option of the
Trustee, on or prior to the
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93.
respective dates on which the moneys invested therein are payable for the
purposes of such Funds. The securities purchased with the moneys in each such
Fund or in any account or sub-account thereof shall be deemed a part of such
Fund or account or sub-account. The interest, including realized increment on
securities purchased at a discount, received on all such securities in any Fund
or any account or sub-account thereof shall be deposited by the Trustee to the
credit of such Fund or account or sub-account, except as otherwise provided in
Section 5.01.2. The Trustee shall not be liable or responsible for any loss
resulting from any such investment or resulting from the redemption, sale or
maturity of any such investment as herein authorized or for monitoring or
ensuring the Company's compliance with its covenants contained in the Tax
Regulatory Agreement. The Company shall be responsible for, and provide
additional funds as necessary in connection with, any and all losses on
investment of moneys on deposit in the Bond Fund. If at any time it shall
become necessary that some or all of the securities purchased with the moneys
in either such Fund be redeemed or sold in order to raise the moneys necessary
to comply with the provisions of the Indenture, the Trustee shall effect such
redemption or sale, employing in the case of a sale any commercially reasonable
method of effecting such sale.
Any direction to invest moneys given orally under the terms of the Indenture
shall be confirmed in writing.
Moneys drawn on the Letter of Credit shall be retained
uninvested by the Trustee or the Tender Agent, as appropriate, and shall not
bear interest.
Section 7.04. Disposition of Amounts After Payment of
Bonds. Any amounts determined by the Trustee to be remaining in the funds
created under the Indenture, other than amounts held in the Rebate Fund, after
payment in full, or provision for payment in full, of principal of and premium,
if any, and interest on all the Bonds, in accordance with the provisions of the
Indenture, and payment of all the fees, charges and expenses of the Authority,
the Trustee, the Tender Agent, the Indexing Agent, the Remarketing Agents and
Paying Agent in accordance with the Indenture and the Participation Agreement
and any amounts required to be paid to the United States of America pursuant to
the Tax Regulatory Agreement, shall be paid to the Bank; provided, however,
that on or after the Fixed Rate Conversion Date and solely with respect to
moneys not resulting from a draw on the Letter of Credit and not constituting
remarketing proceeds, such amounts that would be payable to the Bank pursuant
to this Section 7.04 shall, at the written direction of an Authorized Company
Representative, be paid to the Company or, if the Bank has not been paid in
full under the Reimbursement Agreement, to the Bank.
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94.
Section 7.05. Compliance with Tax Regulatory Agreement in
the Event of Partial Redemption of Bonds. Notwithstanding any provision of
the Indenture to the contrary, no later than twenty (20) days after any partial
redemption of Bonds, the Trustee shall reduce the aggregate amount of all
investments held under the Indenture which are subject to the 150 percent
limitation described in Section 7.7 of the Tax Regulatory Agreement to the
extent required by such Section, all in accordance with the written direction
received from an Authorized Company Representative. The Trustee shall act only
upon, and be entitled conclusively to rely upon, such written direction.
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95.
ARTICLE VIII
REDEMPTION OF BONDS
Section 8.01. Bonds to be Redeemed Only in Manner Provided
in Article VIII. Any redemption of all or any part of the Bonds which are
subject to redemption shall be made in the manner provided in this Article
VIII.
Bonds which are subject to redemption at the option of
the Authority exercised upon the direction of an Authorized Company
Representative, shall be called by the Trustee for redemption in the manner
provided in this Article VIII upon receipt by the Trustee, at least forty-five
(45) days prior to the redemption date, of an executed counterpart of the
written direction of an Authorized Company Representative to the Authority and
the Trustee providing for such redemption. Such written direction shall
specify the principal amount of such Bonds or portions thereof so to be called
for redemption, the applicable redemption price, the applicable redemption date
and the provision or provisions of the Indenture pursuant to which such Bonds
are to be called for redemption. The foregoing provisions of this paragraph
shall not apply in the case of any mandatory redemption of Bonds in accordance
with the Indenture.
The moneys necessary for any redemption of Bonds shall be
made available to the Trustee on or prior to the date fixed for redemption. The
Trustee is hereby authorized and directed to apply such moneys in accordance
with Section 6.03 to the payment of the Bonds or portions thereof called for
redemption, together with accrued interest thereon to the redemption date.
Upon the giving of notice and the deposit of funds for redemption, interest on
the Bonds or portions thereof thus called shall no longer accrue on and after
the date fixed for redemption. No payment shall be made by the Trustee upon any
Bond or portion thereof called for redemption until such Bond or portion thereof
shall have been delivered for payment or cancellation or the Trustee shall have
received the items required by Section 2.08 with respect to any mutilated, lost,
stolen or destroyed Bond.
Notwithstanding anything in the Indenture to the contrary,
no redemption at the option of the Authority which requires a redemption price
in excess of par to be payable shall be exercisable unless (i) a Letter of
Credit providing for payment of such premium together with other amounts owed as
part of redemption price shall be in effect and shall not be scheduled to expire
by its terms before the specified redemption date or (ii) other Available Moneys
shall be held by the Trustee under the Indenture and are available for payment
of such premium.
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96.
Section 8.02. Redemption of Less Than all Bonds. If less
than all of the Bonds shall be called for redemption, the particular Bonds
or portions of Bonds to be redeemed shall be selected by the Trustee by lot or
in such other manner as the Trustee in its discretion may deem proper in order
to assure each owner of Bonds a fair opportunity to have such owner's Bond or
Bonds or portions thereof selected; provided, however, that the portion to be
redeemed of any Bond of a denomination more than the then-applicable minimum
authorized denomination shall be such minimum authorized denomination or an
integral multiple thereof, and that in selecting portions of such Bonds for
redemption, the Trustee shall treat each such Bond as representing that number
of Bonds of such minimum authorized denomination obtained by dividing the
principal amount of such Bond by such minimum authorized denomination; provided
further that the Trustee shall first select any Bonds registered in the name of
the Company or the Bank and then the remaining Bonds.
Section 8.03. Notice of Redemption. In the case of any
redemption pursuant to Section 2.17, the Trustee shall give in its own name or
in the name of the Authority, notice mailed by first-class mail to the
Registered Owners of the Bonds to be redeemed, addressed to him or her at his
or her address as it appears on the Bond Register at least thirty (30) days
before the date fixed for redemption, which notice shall state that Bonds
properly identified have been called for redemption and, in the case of Bonds
to be redeemed in part only, the portion of the principal amount thereof that
has been called for redemption (or if all the outstanding Bonds are to be
redeemed, so stating, in which event such identification may be omitted), that
they will be due and payable on the date fixed for redemption (specifying such
date) upon surrender thereof at the Corporate Trust Office or, at the option of
the owner, at the corporate trust office of the Paying Agent, if any, for such
Bonds, at the applicable redemption price (specifying such price) together with
accrued interest to such date, and that all interest on the Bonds, or portions
thereof, so to be redeemed will cease to accrue on and after such date. Failure
to give any required notice of redemption as to any particular Bonds will not
affect the validity of the call for redemption of any Bonds in respect to which
no such failure occurs. Any notice mailed as provided in this Section shall be
conclusively presumed to have been duly given, whether or not the Registered
Owner actually receives the notice.
Section 8.04. Rights of Owners of Bonds Called for
Redemption Limited to Redemption Price and Accrued Interest. If notice of
redemption has been given as provided in Section 8.03, the Bonds or portions
thereof called for redemption shall be due and payable on the date fixed for
redemption at the redemption
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97.
price, together with accrued interest to the date fixed for redemption. Payment
of the redemption price, together with accrued interest, shall be made by the
Trustee upon surrender of such Bonds. If there shall be called for redemption
less than the entire principal amount of a Bond, the Authority shall execute
and deliver and the Trustee shall authenticate, upon surrender of such Bond,
and without charge to the owner thereof, Bonds for the unredeemed portion of
the principal amount of the Bond so surrendered.
Subject to the deposit with the Trustee of amounts necessary
for the redemption of such Bonds as provided in Section 8.01, from and after
the date fixed for redemption designated in such notice, notwithstanding that
any Bonds so called for redemption in whole or in part shall not have been
surrendered for cancellation, no further interest shall accrue upon the
principal of any of the Bonds or portions thereof so called for redemption; and
such Bonds or portions thereof so to be redeemed shall cease to be entitled to
any lien, benefit or security under the Indenture and the owners thereof shall
have no rights in respect of such Bonds or portions thereof except toreceive
payment of the redemption price thereof and unpaid interest accrued to the date
fixed for redemption from such amounts deposited with the Trustee which shall
be held uninvested by the Trustee in trust for the owner of such Bonds or
portions thereof.
Section 8.05. Redemption at Demand of the State. In
accordance with the provisions of Section 1864 of the Act, the State of New
York may, upon furnishing sufficient funds therefor, require the Authority to
redeem prior to maturity, as a whole, any issue of Bonds, on any Interest
Payment Date not less than twenty years after the date of the original issuance
of the Bonds of such issue. The Authority shall deposit any such funds
received by it with the Trustee. After the expiration of the Letter of Credit,
the Trustee shall deposit such funds in the Bond Fund and, upon notice given as
provided in Section 8.03, shall apply such funds to the redemption of such
Bonds, at a redemption price equal to the applicable optional redemption price
set forth in the Indenture or 105 percent of the principal amount of the Bonds
to be redeemed, whichever is less, together with accrued and unpaid interest to
the date fixed for redemption, all in the manner provided in this Article VIII.
Prior to the expiration of the Letter of Credit, the Trustee shall deposit any
such funds received by it in a segregated sub-account in the Debt Service
Account of the Bond Fund, and upon notice published in the manner provided in
Section 1864 of the Act, shall draw moneys under the Letter of Credit and apply
such moneys drawn under the Letter of Credit to the redemption of such Bonds at
a redemption price equal to 100 percent of the principal amount of the Bonds to
be redeemed, together with accrued and unpaid interest
<PAGE> 144
98.
to the date fixed for redemption in the manner specified in the preceding
sentence. Upon the application of such moneys drawn under the Letter of
Credit, the Trustee shall pay the funds furnished by the State to the Bank with
instructions to apply such funds to the reimbursement of the Bank for such
moneys drawn under the Letter of Credit. Upon such redemption, the Trustee
shall assign the Company Note to or as directed in writing by the Authority.
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99.
ARTICLE IX
PARTICULAR COVENANTS
Section 9.01. Payment of Principal of and Interest and
Redemption Premium of Bonds. The Authority will promptly pay from the Company
Note Payments and other funds held by the Trustee and available therefor the
principal of, and the interest on, every Bond issued under and secured by the
Indenture and any premium required to be paid for the retirement of said Bonds
by redemption, at the places, on the dates and in the manner specified in the
Indenture and in said Bonds according to the true intent and meaning thereof,
subject, however, to the provisions of Section 1.03.
Section 9.02. Performance of Covenants. The Authority
will faithfully perform at all times all covenants, undertakings, stipulations
and provisions contained in the Indenture, in any and every Bond and in all
proceedings of the Authority pertaining thereto.
Section 9.03. Further Instruments. The Authority will
from time to time execute and deliver such further instruments and take such
further action as may be reasonable and as may be required to carry out the
purpose of the Indenture; provided, however, that no such instruments or
actions shall pledge the credit of the Authority or the State of New York or
the taxing power of the State of New York or otherwise be inconsistent with the
provisions of Section 1.03.
Section 9.04. Inspection of Project Books. All books
and documents in the possession of the Authority relating to the Project or the
Participation Agreement shall at all times be open to inspection by such
accountants or other agents as the Trustee may from time to time designate.
Section 9.05. No Extension of Time of Payment of
Interest. In order to prevent any accumulation of claims for interest after
maturity, the Authority will not directly or indirectly extend or assent to the
extension of the time of payment of any claims for interest on any of the Bonds
and will not directly or indirectly be a party to or approve any such
arrangement by purchasing such claims for interest or in any other manner. In
case any such claim for interest shall be extended in violation hereof, such
claim for interest shall not be entitled, in case of any default hereunder, to
the benefit or security of the Indenture except subject to the prior payment in
full of the principal of, and premium, if any, on, all Bonds issued and
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100.
outstanding hereunder, and of all claims for interest which shall not have been
so extended or funded.
Section 9.06. Trustee's, Paying Agent's, Indexing
Agent's, Tender Agent's and Remarketing Agents's Fees, Charges and Expenses.
Pursuant to the provisions of Section 4.05 of the Participation Agreement, the
Company has agreed to pay the fees and the expenses of the Trustee, any Paying
Agent, the Indexing Agent, the Tender Agent and the Remarketing Agents, in the
amounts set forth more fully therein, and the Authority shall have no liability
for the payment of any fees or expenses of the Trustee, any Paying Agent, the
Indexing Agent, the Tender Agent and the Remarketing Agents.
Exclusive of the proceeds of any drawing under the Letter of
Credit and any other moneys within the meaning of subdivision (a) of the
definition of Available Moneys, the Trustee shall have a first lien with right
of payment prior to payment on account of principal of, premium, if any, and
interest on any Bond under the Indenture for the fees, charges and expenses of
the Trustee. When the Trustee incurs expenses or renders services after the
occurrence of an Act of Bankruptcy with respect to the Company, the expenses
and the compensation for services are intended to constitute expenses of
administration under any federal or state bankruptcy, insolvency, arrangement,
moratorium, reorganization or other debtor relief law. The Company shall have
no liability to pay any fees, charges or other expenses of the Trustee
hereinabove mentioned except from amounts pledged under the Indenture.
Section 9.07. Agreement of the State of New York. In
accordance with the provisions of subdivision 11 of Section 1860 of the Act,
the Authority, on behalf of the State of New York, does hereby pledge to and
agree with the owners of the Bonds that the State of New York will not limit or
alter the rights and powers vested by the Act in the Authority to fulfill the
terms of any contract made with Bondowners, or in any way impair the rights and
remedies of such owners, until the Bonds, together with the interest thereon,
with (to the extent permitted by law) interest on any unpaid installments of
interest, and all costs and expenses in connection with any action or
proceeding by or on behalf of such owners, are fully met and discharged.
<PAGE> 147
101.
ARTICLE X
DEFAULTS AND REMEDIES
Section 10.01. Events of Default. In case one or more of
the following Events of Default shall have occurred:
(a) default in the payment of any installment of
interest in respect of any Bond as the same shall become due
and payable which default continues for five days; or
(b) default in the payment of the principal of
or premium, if any, in respect of any Bond as the same shall
become due and payable either at maturity, upon redemption, by
acceleration or otherwise; or
(c) default in the payment of any amount due
pursuant to Section 2.05 as the same becomes due and payable
which default continues for five days; or
(d) an event of default specified in Article VI
of the Participation Agreement; or
(e) after the expiration of the Letter of
Credit, failure on the part of the Authority to duly observe
or perform any other of the covenants or agreements on the
part of the Authority contained in the Indenture or in any
Bond for a period of 90 days after the date on which written
notice of such failure, requiring the Authority to remedy the
same, shall have been given to the Authority and the Company
by the Trustee; or
(f) receipt by the Trustee of written notice
from the Bank of the occurrence and continuance of an event
of default under the Reimbursement Agreement, that the Bank is
terminating the Letter of Credit and that the Bank is
directing the Trustee to accelerate the Bonds; or
(g) receipt by the Trustee of written notice
from the Bank on or before the tenth day after a drawing
under the Letter of Credit in respect of interest on the
Bonds, to the effect that the Bank has not been reimbursed for
any such drawing and that the Bank is directing the Trustee to
accelerate the Bonds;
then, upon (a) the occurrence and continuance of any Event of Default
described in clause (a), (b), (c), (d) or (e) of this paragraph, the Trustee
may, and at the written request of owners of not less than 25% in aggregate
principal amount of Bonds then
<PAGE> 148
102.
outstanding shall, or (b) the occurrence of an Event of Default described in
clause (f) or (g) of this paragraph the Trustee shall immediately, by written
notice given to the Authority, the Governor, the Comptroller, the Attorney
General of the State of New York and the Company, declare the principal of all
Bonds then outstanding to be due and payable immediately, at which time (unless
a Fixed Rate Conversion Date has occurred and the Letter of Credit is no longer
in effect) interest shall cease to accrue, and upon such declaration the said
principal, together with interest accrued thereon, shall become due and payable
immediately at the place of payment provided therein, anything in the Indenture
or in the Bonds to the contrary notwithstanding and the Trustee shall give
notice thereof to the Authority, the Company, the Tender Agent, the Remarketing
Agents and the Bank, and shall give notice thereof by mail to all owners of
outstanding Bonds. Prior to the expiration of the Letter of Credit, the
Trustee shall draw immediately upon the Letter of Credit in the event the Bonds
shall have been declared immediately due and payable and immediately apply
amounts drawn under the Letter of Credit to payment of Bonds in accordance with
the Indenture.
The provisions of the preceding paragraph, however, are
subject, after the expiration of the Letter of Credit, to the condition that
if, after the principal of said Bonds has been so declared to be due and
payable, all arrears of interest upon the Bonds are paid, and the Authority has
performed all other things in respect to which it may have been in default
hereunder and the reasonable compensation and expenses of the Trustee, and the
Bondowners, including reasonable attorneys' fees, shall have been paid, or
provision satisfactory to the Trustee shall be made for such payments, then,
and in every such case, the owners of a majority in aggregate principal amount
of the Bonds then outstanding, by written notice to the Authority and to the
Trustee, may annul such declaration and its consequences, and such annulment
shall be binding upon the Trustee and upon all owners of Bonds issued
hereunder, or, if the Trustee shall have acted in the absence of a written
request of the owners of at least twenty-five percent (25%) in aggregate
principal amount of all outstanding Bonds, and if there shall not have been
theretofore delivered to the Trustee written direction to the contrary by the
owners of at least twenty-five percent (25%) in aggregate principal amount of
the Bonds then outstanding, then any such declaration shall ipso facto be
deemed to be rescinded and any such default and its consequences shall ipso
facto be deemed to be annulled and such annulment shall be binding upon the
Trustee and upon all owners of Bonds; but no such annulment shall extend to or
affect any subsequent default or impair any right or remedy consequent thereon.
The Trustee shall forward a copy of any notice from
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103.
Bondowners received by it pursuant to this paragraph to the Company.
The provisions of the second preceding paragraph are, further, subject
to the condition that any waiver by the Bank of any event of default under the
Reimbursement Agreement and a rescission and annulment of its consequences
shall constitute a waiver of the corresponding Event of Default under the
Indenture and a rescission and annulment of the consequences thereof; provided
that, the Trustee shall have received written notice from the Bank to the
effect that the Letter of Credit has been reinstated, if applicable, and is in
full force and effect (with respect to the principal of, premium, if any,
interest on, and the purchase price of, all Bonds then entitled to the benefits
of the Letter of Credit). If written notice of such event of default under the
Reimbursement Agreement shall have been given as provided herein and if the
Trustee shall thereafter have received written notice from the Bank that such
event of default shall have been waived, the Trustee shall promptly give
written notice of such waiver, rescission or annulment and of the corresponding
waiver, rescission and annulment of the Event of Default hereunder to the
Authority, the Governor, the Comptroller, the Attorney General of the State of
New York, the Company, the Bank, the Tender Agent and the Remarketing Agents,
and shall give written notice thereof by mail to all owners of outstanding
Bonds; but no such waiver, rescission and annulment shall extend to or affect
any subsequent Event of Default or impair any right or remedy consequent
thereon.
Section 10.02. Judicial Proceedings by Trustee. Upon the happening
and continuance of any Event of Default, then and in every such case the
Trustee in its discretion may, and upon the written request of the owners of at
least twenty-five percent (25%) in aggregate principal amount of the Bonds then
outstanding and receipt of indemnity to its satisfaction, shall:
(a) by suit, action or special proceeding,
enforce all rights of the Bondowners and require the
Authority, the Bank or the Company to perform its or their
duties under the Act, the Participation Agreement, the Bonds,
the Letter of Credit, the Company Note and the Indenture;
(b) bring suit upon the Bonds;
(c) by action or suit in equity require the
Authority to account as if it were the trustee of an express
trust for the Bondowners; or
<PAGE> 150
104.
(d) by action or suit in equity enjoin any acts
or things which may be unlawful or in violation of the rights
of the Bondowners.
Section 10.03. Effect of Discontinuance or Abandonment of
Proceedings. In case the Trustee shall have proceeded to enforce any right
under the Indenture and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Trustee, then and in every such case the Authority, the Trustee and the
Bondowners shall be restored respectively to their former positions and rights
hereunder, respectively, and all rights, remedies and powers of the Authority,
the Trustee and the Bondowners, respectively, shall continue as though no such
proceedings had been taken.
Section 10.04. Power of Bondowners to Direct Proceedings.
Anything in the Indenture to the contrary notwithstanding, the owners of a
majority in aggregate principal amount of the Bonds then outstanding hereunder
shall have the right, by an instrument in writing executed and delivered to the
Trustee, to direct the method and place of conducting all remedial proceedings
to be taken by the Trustee hereunder, subject, however, to the provisions of
Section 11.04, and provided, however, such direction shall not be in conflict
with any rule of law or with any provision of the Indenture (including, without
limitation, any provision requiring the Trustee to accelerate the Bonds and
draw on the Letter of Credit upon the occurrence of an Event of Default under
Section 10.01(f) or (g)) and shall not unduly prejudice the rights of the
Bondowners who are not in such majority. The Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the owners of a majority in aggregate
principal amount of the Bonds and which is not in conflict with the Trustee's
obligation to accelerate the Bonds and draw on the Letter of Credit upon the
occurrence of an Event of Default under Section 10.01(f) or (g).
Section 10.05. Limitation on Actions by Bondowners. No
owner of any of the Bonds shall have any right to institute any suit, action
or proceeding in equity or at law for the enforcement of any trust hereunder,
or any other remedy hereunder or under the Bonds, unless such owner previously
shall have given to the Trustee written notice of an Event of Default as
hereinabove provided and unless also the owners of not less than twenty-five
percent (25%) in aggregate principal amount of the Bonds then outstanding shall
have made written request of the Trustee so to do, after the right to exercise
such powers or rights of action, as the case may be, shall have accrued, and
shall have afforded the Trustee a reasonable opportunity either to proceed to
exercise the powers hereinabove granted, or to institute such action, suit or
<PAGE> 151
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proceeding in its or their name; nor unless there also shall have been offered
to the Trustee security and indemnity satisfactory to it against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee
shall not have complied with such request within a reasonable time; and such
notification, request and offer of indemnity are hereby declared in every such
case, at the option of the Trustee, to be conditions precedent to the execution
of the trusts of the Indenture or for any other remedy hereunder; it being
understood and intended that no one or more owners of the Bonds hereby secured
shall have any right in any manner whatever by such owner's or owners' action
to affect, disturb or prejudice the security of the Indenture, or to enforce
any right hereunder or under the Bonds, except in the manner herein provided,
and that all proceedings at law or in equity shall be instituted, had and
maintained in the manner herein provided and for the equal benefit of all
owners of outstanding Bonds, subject, however, to the provisions of Section
9.05. Nothing in the Indenture or in the Bonds contained shall affect or
impair the right of action, which is also absolute and unconditional, of any
owner of any Bond to enforce payment of the principal of and premium, if any,
and interest on such owner's Bond at the date of maturity and places therein
expressed.
Section 10.06. Trustee's Right to Enforce Rights in Respect
of Bonds in Own Name and Without Possession of Bonds. All rights of action
under the Indenture or under any of the Bonds which are enforceable by the
Trustee may be enforced by it without the possession of any of the Bonds, or
the production thereof at the trial or other proceedings relative thereto, and
any such suit, action or proceeding instituted by the Trustee shall be brought
in its name, as trustee, for the equal and ratable benefit of the owners of the
Bonds subject to the provisions of the Indenture.
Section 10.07. No Remedy herein Conferred upon or Reserved
Exclusive. No remedy herein conferred upon or reserved to the Trustee or to
the owners of the Bonds is intended to be exclusive of any other remedy or
remedies, except as provided in Section 10.10, and each and every such remedy
shall be cumulative, and shall be in addition to every other remedy given
hereunder.
Section 10.08. No Delay or Omission to be Deemed Waiver of
Default. No delay or omission of the Trustee or of any owner of the Bonds to
exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver of any such default, or an
acquiescence therein; and every power and remedy given by this Article X to the
Trustee and to the owners of the Bonds, respectively, may be exercised from
time to time and as often as may be deemed expedient.
<PAGE> 152
106.
Section 10.09. Application of Moneys Received by Trustee
Pursuant to Article X. Any moneys or other property or assets received by
the Trustee or by any receiver pursuant to this Article X (i) shall be applied
first to the payment of the costs and expenses of the proceedings resulting in
the collection of any moneys received by the Trustee or by any receiver
pursuant to this Article X and of the expenses, liabilities and advances
incurred or made and compensation for services rendered by or on behalf of the
Trustee, including reasonable counsel fees and expenses; provided that, moneys
drawn under the Letter of Credit shall not be appliedto any such payment, and
(ii) any remaining amounts shall then be applied as follows:
(a) Unless the principal of all Bonds shall have
become or shall have been declared due and payable, all such
moneys shall be applied:
First: To the payment to the Persons entitled thereto
of all installments of interest then due on the Bonds,
in the order of the maturity of the installments of
such interest including (to the extent permitted by
law) interest on overdue installments of interest at
the rate borne by the Bonds on which such interest
shall then be due, and, if the amount available shall
not be sufficient to pay in full any particular
installment or installments, then to the payment
ratably, according to the amounts due on such
installment or installments, to the Persons entitled
thereto, without any discrimination or preference; and
Second: To the payment to the Persons entitled
thereto of the unpaid principal of and premium, if
any, on any of the Bonds which shall have become due
(other than Bonds called for redemption for the
payment of which moneys are held pursuant to the
provisions of the Indenture) in the order of their due
dates, with interest on such Bonds from the respective
dates upon which they become due and, if the amount
available shall not be sufficient to pay in full Bonds
due on any particular date, together with such
interest, then to the payment ratably, according to
the amount of principal due on such date, to the
Persons entitled thereto without any discrimination or
preference.
(b) If the principal of all the Bonds shall have
become or shall have been declared due and payable, all
<PAGE> 153
107.
such moneys shall be applied to the payment of the principal,
premium, if any, and interest then due and unpaid upon the
Bonds, with interest on overdue principal, premium, if any,
and interest as aforesaid, without preference or priority of
principal and premium, if any, over interest or of interest
over principal and premium, if any, or of any installment of
interest over any other installment of interest or of any Bond
over any other Bond, ratably, according to the amounts due
respectively for principal, premium, if any, and interest, to
the Persons entitled thereto without any discrimination or
preference.
(c) If the principal of all the Bonds shall have been
declared due and payable, and if such declaration shall
thereafter have been rescinded and annulled under the
provisions of this Article X, then, subject to the provisions
of paragraph (b) of this Section which shall be applicable in
the event that the principal of all the Bonds shall later
become due or be declared due and payable, the moneys shall be
applied in accordance with the provisions of paragraph (a) of
this Section.
Moneys drawn under the Letter of Credit may not be applied to
effect any payment on any Bond not entitled to the benefits thereof as provided
in Section 3.01. Whenever moneys are to be applied pursuant to the provisions
of this Section, such moneys shall be applied at such times, and from time to
time, as the Trustee shall determine, having due regard to the amount of such
moneys available for application and the likelihood of additional moneys
becoming available for such application in the future. Whenever the Trustee
shall apply such funds, it shall fix the date (which shall be an Interest
Payment Date unless it shall deem another date more suitable) upon which such
application is to be made and upon such date interest on the amount of
principal to be paid on such date shall cease to accrue. Notwithstanding the
two preceding sentences any moneys drawn under the Letter of Credit under this
Article X shall be applied by the Trustee pursuant to the provisions of this
Section 10.09 within five days after such moneys have been drawn. For the
purpose of determining the Bondowners who are entitled to such application, the
Trustee may establish a record date not more than five days before such payment
date. The Trustee shall give such notice to Bondowners by mailing in the
manner it may deem appropriate of the deposit with it of any such moneys and of
the fixing of any such payment date, and shall not be required to make payment
to the owner of any Bond until such Bond shall be presented to the Trustee for
appropriate endorsement or for cancellation if fully paid.
<PAGE> 154
108.
Section 10.10. Entirety of Agreement. The rights and
remedies of the owners of the Bonds and of the Trustee set forth in this
Article X are in lieu of the rights and remedies of owners of bonds of the
Authority set forth in Section 1865 of the Act and the provisions of such
Section 1865 are hereby abrogated with respect to the Bonds.
Section 10.11. Notice of Event of Default. The Trustee
shall, within 30 days after the occurrence of an Event of Default becomes
known to a Responsible Officer, give notice thereof to all Bondowners by mail
in the manner provided in Section 16.05 unless such Event of Default shall have
been cured before the giving of such notice.
<PAGE> 155
109.
ARTICLE XI
CONCERNING THE TRUSTEE AND PAYING AGENT
Section 11.01. Appointment of Trustee; Paying Agents.
Chemical Bank is hereby appointed as Trustee and Paying Agent for the owners
from time to time of the Bonds. The Trustee hereby accepts the duties and
obligations of the Trustee and Paying Agent created by the Indenture for the
owners from time to time of the Bonds.
The provisions of this Article XI shall not affect the
Trustee's obligation to accelerate the Bonds upon the occurrence of an Event of
Default under Section 10.01(f) or (g), draw on the Letter of Credit or make any
payment of principal, premium or interest on the Bonds.
Subject to Article X and Section 11.04, and as and to the
extent provided in Sections 4.08 and 4.09 of the Participation Agreement, the
Trustee, the Paying Agent and the Tender Agent shall be entitled to
indemnification by the Company for any losses, costs, charges, expenses
(including reasonable attorneys' fees and disbursement), judgments and
liabilities incurred by the Trustee, the Paying Agent and the Tender Agent in
connection with any claims made, or any action, suit or proceeding instituted
or threatened, in connection with the transactions contemplated by the
Participation Agreement or the Indenture. The Trustee, Paying Agents and
Tender Agent, except as otherwise provided in Section 9.06, shall look solely
to the Company for such indemnification.
Section 11.02. No Responsibility for Correctness of
Statements in Indenture. The recitals, statements and representations in the
Indenture or in the Bonds contained, save only the Trustee's certificate of
authentication upon the Bonds, shall be taken and construed as made by and on
the part of the Authority, and not by the Trustee, and the Trustee does not
assume, and shall not have, any responsibility or obligation for the
correctness of any recitals, statements and representations hereof or thereof
or any other document delivered by the Authority or the Company in connection
with the issuance of the Bonds.
Section 11.03. No Responsibility for Default of Agents
Selected with Due Care, nor for Own Acts Save Willful Misconduct or Negligence.
The Trustee may execute such of the trusts or powers required of it hereunder
and perform the duties required of it hereunder as may be reasonably necessary
by or through attorneys, agents or receivers and the Trustee shall not be
answerable for the default, negligence or misconduct of any such attorney,
agent or
<PAGE> 156
110.
receiver selected by it with reasonable care. The Trustee may in all cases
pay such reasonable compensation to and receive reimbursement for all such
attorneys, agents, receivers, and employees as may reasonably be employed in
connection with the trusts hereof. The Trustee may act upon the opinion or
advice of any attorney (who may be the attorney or attorneys for the Authority
or the Company), approved by the Trustee in the exercise of reasonable care.
The Trustee shall not be responsible for any loss or damage resulting from
any action or non-action in good faith in reliance upon such opinion or
advice. The Trustee shall not be answerable for the exercise or non-exercise
of any discretion or power under the Indenture or for anything whatever in
connection with the trusts herein created, except only for its own willful
misconduct or negligence. No provision of the Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that such funds will not be repaid or if satisfactory indemnity
against such risk or liability is not provided to the Trustee.
Section 11.04. No Duty to Take Enforcement Action Unless so
Requested by Owners of 25% of the Bonds. Unless and until an Event of
Default shall have occurred and (i) written notice thereof shall have been
given to the Trustee or (ii) the occurrence thereof otherwise shall be known
to a Responsible Officer of the Trustee, the Trustee shall be under no
obligation to take any action in respect of any default or otherwise in
respect of or toward the execution or enforcement of any of the trusts hereby
created, or to institute, appear in or defend any suit or other proceeding in
connection therewith, unless requested in writing so to do by owners of at
least twenty-five percent (25%) in aggregate principal amount of the Bonds
then outstanding, and if in its opinion such action may tend to involve it
in expense or liability, unless furnished, from time to time as often as it
may require, with security and indemnity satisfactory to it; but the
foregoing provisions are intended only for the protection of the Trustee, and
shall not affect any discretion or power given by any provisions of the
Indenture to the Trustee to take action in respect of any default without
such notice or request from the Bondowners, or without such security or
indemnity.
Notwithstanding any other provision of the Indenture or
the Participation Agreement, no right of the Trustee to indemnification
shall prevent the Trustee from (a) making payments on the Bonds when due
from moneys available to it, (b) accelerating the Bonds as required pursuant
to Article X, or (c) drawing on the Letter of Credit to make payments on the
Bonds when due.
<PAGE> 157
111.
Section 11.05. Right to Rely. The Trustee shall be
protected and shall incur no liability in acting or proceeding in good faith
upon any resolution, notice, telegram, request, consent, waiver, certificate,
statement, affidavit, voucher, bond, requisition or other paper or document
which it shall in good faith believe to be genuine and to have been authorized
or signed by the proper board or person or to have been prepared and furnished
pursuant to any of the provisions of the Indenture and the Trustee may
require a written opinion from legal counsel who is reasonably acceptable to
the Trustee, which counsel may be an employee of or counsel to the Company or
the Trustee, confirming the accuracy of any such paper or document, and the
Trustee shall be under no duty to make any investigation or inquiry as to any
statements contained or matters referred to in any such instrument but may
accept and rely upon the same as conclusive evidence of the truth and
accuracy of such statements.
Section 11.06. Right to Own and Deal in Bonds and Engage in
Other Transactions with Authority and Company. The Trustee may in good faith
buy, sell, own, hold and deal in any of the Bonds issued hereunder and secured
by the Indenture, and may join in any action which any Bondowner may be
entitled to take with like effect as if the Trustee were not a party to the
Indenture. The Trustee, either as principal or agent, may also engage in or
be interested in any financial or other transaction with the Authority or
the Company, and may act as depository, trustee, or agent for any committee
or body of owners of the Bonds secured hereby or other obligations of the
Authority as freely as if it were not Trustee hereunder.
Section 11.07. Construction of Provisions of Indenture by
Trustee. The Trustee may construe any of the provisions of the Indenture
insofar as the same may appear to be ambiguous or inconsistent with any
other provision thereof, and any construction of any such provisions hereof by
the Trustee in good faith shall be binding upon the Bondowners.
Section 11.08. Right to Resign Trust. The Trustee may at
any time and for any reason resign and be discharged of the trusts created by
the Indenture by (a) executing an instrument in writing resigning such trusts
and specifying the date when such resignation shall take effect, (b) filing
the same with the Secretary of the Authority (c) giving notice thereof in
writing to the Company not less than 60 days before the date specified in such
instrument when such resignation shall take effect, and (d) giving notice of
such resignation to Bondowners by mail in the manner provided in Section
16.05, the mailing of said notice to occur not less than four weeks prior to
the date specified in such notice when such resignation shall take effect.
Such resignation shall take effect only upon
<PAGE> 158
112.
the appointment of a successor Trustee in accordance with the provisions of
Section 11.10.
Section 11.09. Removal of Trustee. (a)The Trustee at any
time and for any reason may be removed by an instrument in writing,
appointing a successor, filed with the Trustee so removed and executed by the
owners of a majority in aggregate principal amount of the Bonds then
outstanding; provided, however, that no such removal shall become effective
until the acceptance of appointment by a successor Trustee in accordance with
Section 11.13.
(b) The Trustee at any time other than during the
continuance of an Event of Default or the continuance of an event which but for
the passage of time would constitute an Event of Default and for any reason
may be removed by an instrument in writing, executed by an Authorized
Officer, appointing a successor, filed with the Trustee so removed; provided,
however, that no such removal shall become effective until the acceptance of
appointment by a successor Trustee in accordance with Section 11.13.
Section 11.10. Appointment of Successor Trustee by
Bondowners or Authority. In case at any time the Trustee shall resign, or
shall be removed, or be dissolved, or if its property or affairs shall be
taken under the control of any state or federal court or administrative
body because of insolvency or bankruptcy, or for any other reason, a vacancy
shall forthwith and ipso facto exist in the office of the Trustee, then a
successor may be appointed by the owners of a majority in aggregate principal
amount of the Bonds then outstanding, by an instrument or instruments in
writing filed with the Secretary of the Authority, signed by such Bondowners
or by their attorneys-in-fact duly authorized. Copies of each such
instrument shall be promptly delivered by the Authority to the predecessor
Trustee, to the Trustee so appointed and to the Company.
Until a successor Trustee shall be appointed by the
Bondowners as herein authorized, the Authority, by an instrument
authorized by resolution, shall appoint a Trustee to fill such vacancy. The
Authority shall not appoint a Trustee without the approval of the Company as
evidenced by a certificate in writing signed by an Authorized Company
Representative, which approval shall not be unreasonably withheld. After
any appointment by the Authority, it shall cause notice of such appointment
to be mailed to the Bondowners in the manner provided in Section 16.05. Any
new Trustee so appointed by the Authority shall immediately and without
further act be superseded by a Trustee appointed by the Bondowners in the
manner above provided.
<PAGE> 159
113.
Section 11.11. Qualifications of Successor Trustee.
Every successor in the trusts hereunder appointed pursuant to the foregoing
provision shall be a bank or trust company organized and doing business under
the laws of the United States or any state or territory thereof with trust
powers, shall have a combined capital and surplus of at least $100,000,000
and shall (or the parent corporation of such successor shall) be rated at
least Baa-3 and/or P-3 or an equivalent rating by Moody's or otherwise be
acceptable to Moody's and the Authority if such a bank or trust company willing
and able to accept the trusts on customary terms can, with reasonable effort,
be located.
Section 11.12. Court Appointment of Successor Trustee. In
case at any time the Trustee shall resign and no appointment of a successor
Trustee shall be made pursuant to the foregoing provisions of this Article XI
prior to the date specified in the notice of resignation as the date when such
resignation shall take effect, the Trustee, the Company or the owner of any
Bond may apply to any court of competent jurisdiction to appoint a successor
Trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor Trustee.
Section 11.13. Acceptance of Appointment by, and Transfer
of Trust Estate to, Successor Trustee. Any successor Trustee appointed
hereunder shall execute, acknowledge and deliver to the Authority an
instrument accepting such appointment hereunder as a fiduciary for the
owners from time to time of the Bonds and shall request the Bank to transfer
the Letter of Credit to it as successor Trustee, and thereupon such successor
Trustee, without any further act, deed or conveyance, shall become duly vested
with all the estates, property, rights, powers, trusts, duties and obligations
of its predecessor in the trust hereunder, with like effect as if originally
named Trustee herein and shall give notice thereof to the Company. Upon
request of such Trustee, the Trustee ceasing to act and the Authority shall
execute and deliver an instrument transferring to such successor Trustee all
the estates, property, rights, powers and trusts hereunder of the Trustee so
ceasing to act, and the Trustee so ceasing to act shall pay over to the
successor Trustee all moneys and other assets, including the Company Note at
the time held by it hereunder.
Section 11.14. Successor Trustee by Merger or Consolidation.
Any corporation into which any Trustee hereunder may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which any Trustee hereunder shall be a party, or any
corporation to which any Trustee hereunder may transfer all or substantially
all of its assets, shall be the successor Trustee under the Indenture,
without the execution or filing of any paper or any further act on the part
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of the parties hereto, anything herein to the contrary notwithstanding.
Section 11.15. Exercise of Rights and Powers During Event
of Default. Notwithstanding any other provisions of this Article XI, the
Trustee shall, during the existence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge, exercise such of the
rights and powers vested in it by the Indenture and use the same degree of
skill and care in their exercise as a prudent man would use and exercise under
the circumstances in the conduct of his own affairs.
Section 11.16. Trustee may Intervene in Judicial Proceedings
Involving Authority or the Company. In any judicial proceeding to which the
Authority or the Company is a party and which in the opinion of the Trustee
and its counsel has a substantial bearing on the interests of owners of the
Bonds, the Trustee may in its own name or as trustee of an express trust
intervene on behalf of the owners of the Bonds and shall, upon receipt of
indemnity satisfactory to it, do so if requested in writing by the owners
of at least twenty-five percent (25%) in aggregate principal amount of Bonds
then outstanding if permitted by the court having jurisdiction in the premises.
Section 11.17. Paying Agents. The Authority may, with the
approval of the Company as evidenced by a certificate in writing signed by an
Authorized Company Representative, at any time or from time to time appoint
one or more additional Paying Agents for the owners from time to time of the
Bonds in the manner and subject to the conditions set forth in this Section
11.17. Each Paying Agent shall signify its acceptance of the duties and
obligations imposed upon it by the Indenture by written instrument of
acceptance deposited with the Authority, the Trustee and the Company.
Each Paying Agent appointed in addition to the Trustee and
the Tender Agent shall be a bank or trust company duly organized under the laws
of the United States or any state or territory thereof, shall have a capital
stock and surplus aggregating at least $100,000,000 and shall (or the parent
corporation of such successor shall) be rated at least Baa-3 and/or P-3 or an
equivalent rating by Moody's or otherwise be acceptable to Moody's and the
Authority and shall be willing and able to accept the office on reasonable and
customary terms and shall be authorized by law to perform all the duties
imposed upon it by the Indenture.
Any Paying Agent may at any time resign and be discharged of
the duties and obligations created by the Indenture by giving at
<PAGE> 161
115.
least 60 days' prior written notice to the Authority, the Trustee and the
Company. Any Paying Agent may be removed at any time by an instrument
filed with such Paying Agent, the Company and the Trustee and signed by the
Authority.
In the event of the resignation or removal of any Paying
Agent, such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee. In the event that for any reason there shall be a vacancy in the
office of any Paying Agent, the Trustee shall act as such Paying Agent.
Each Paying Agent shall set aside, segregate and hold in a
trust account in trust solely for the benefit of the owners from time to time
of the Bonds moneys transferred to such Paying Agent for the payment of the
principal of, premium, if any, and interest on the Bonds.
Section 11.18. Appointment of Co-Trustee. It is the
purpose of the Indenture that there shall be no violation of any law of any
jurisdiction (including particularly the law of the State of New York)
denying or restricting the right of banking corporations or associations to
transact business as a trustee in such jurisdiction. It is recognized that
in case of litigation under the Indenture or the Participation Agreement and
in particular in case of the enforcement thereof upon an Event of Default, or
in the case the Trustee deems that by reason of any present or future law of
any jurisdiction it may not exercise any of the powers, rights or remedies
herein granted to the Trustee or hold title to the properties, in trust, as
herein granted, or take any action which may be desirable or necessary in
connection therewith, it may be necessary that the Trustee appoint an
additional individual or institution as a separate or co-trustee. The
following provisions of this Section are adapted to these ends.
In the event that the Trustee appoints an additional
individual or institution as a separate or co-trustee, each and every remedy,
power, right, claim, demand, cause of action, immunity, estate, title,
interest and lien expressed or intended by the Indenture to be exercised by
or vested in or conveyed to the Trustee with respect thereto shall be
exercisable by and vest in such separate or co-trustee but only to the extent
necessary to enable such separate or co-trustee to exercise such powers,
rights and remedies, and every covenant and obligation necessary to the
exercise thereof by such separate or co-trustee shall run to and be enforceable
by either of them.
Should any instrument in writing from the Authority be
required by the separate or co-trustee so appointed by the Trustee
<PAGE> 162
116.
for more fully and certainly vesting in and confirming to it such properties,
rights, powers, trusts, duties and obligations, any and all such instruments
in writing shall, on request, be executed, acknowledged and delivered by the
Authority. In case any separate or co-trustee or a successor to either shall
die, become incapable of acting, resign or be removed, all the estates,
properties, rights, powers, trusts, duties and obligations of such separate or
co-trustee, so far as permitted by law, shall vest in and be exercised by the
Trustee until the appointment of a new trustee or successor to such separate or
co-trustee.
<PAGE> 163
117.
ARTICLE XII
EXECUTION OF INSTRUMENTS BY BONDOWNERS
AND PROOF OF OWNERSHIP OF BONDS
Section 12.01. Execution of Instruments; Proof of Ownership
of Bonds. Any request, direction, consent, or other instrument in writing
required or permitted by the Indenture to be signed or executed by Bondowners
may be in any number of concurrent instruments of similar tenor and shall be
signed or executed by such Bondowners in person or by agent appointed by an
instrument in writing. Proof of the execution of any such instrument and of
the ownership of Bonds shall be sufficient for any purpose of the Indenture and
shall be conclusive in favor of the Trustee with regard to any action taken by
it under such instrument if made in the following manner:
(a) The fact and date of the execution by any
Person of any such instrument may be proved by the
certificate of any officer in any jurisdiction who, by the
laws thereof, has power to take acknowledgements within
such jurisdiction, to the effect that the Person signing
such instrument acknowledged before him or her the execution
thereof, or by an affidavit of a witness to such execution.
(b) The ownership of Bonds shall be proved by the
Bond Register.
Nothing contained in this Article XII shall be construed as
limiting the Trustee to such proof, it being intended that the Trustee may
accept any other evidence of the matters herein stated which to it may seem
sufficient. Any request or consent of the owner of any Bond shall bind every
future owner of the same Bond, or any Bond issued in exchange or substitution
therefor, in respect of anything done by the Trustee in pursuance of such
request or consent.
<PAGE> 164
118.
ARTICLE XIII
INDENTURES SUPPLEMENTAL HERETO
Section 13.01. Supplemental Indentures not Requiring
Consent of Bondowners. Subject to the conditions and restrictions herein
contained, the Authority and the Trustee may, without the consent of or notice
to the Bondowners, enter into an indenture or indentures supplemental hereto,
for any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or
omission in the Indenture;
(b) To grant to or confer upon the Trustee for the
benefit of the Bondowners any additional rights, remedies,
power or authority that may lawfully be granted to or
conferred upon the Bondowners or the Trustee or either of
them;
(c) To subject to the provisions of the Indenture
additional revenues, properties or collateral;
(d) To modify, amend or supplement the Indenture in
such manner as to permit the qualification of the Indenture
under any federal statute now or hereafter in effect or
under any state Blue Sky Law, and, in connection therewith,
if they so determine, to add to the Indenture, such other
terms, conditions and provisions as may be permitted or
required by said federal statute or Blue Sky Law;
(e) To modify, amend or supplement the Indenture
in such manner as to permit the qualification of the Bonds
for deposit with a Securities Depository, and, in connection
therewith, if they so determine, to add to the Indenture,
such other terms, conditions and provisions as may be required
to permit such qualification; or
(f) To provide for any change in the Indenture
which is not prejudicial to the interests of the Trustee
or the Bondowners, including but not limited to any change
necessary to obtain or maintain a rating on the Bonds from
Moody's or S&P.
<PAGE> 165
119.
Section 13.02. Supplemental Indentures Requiring Consent of
Bondowners. Except as otherwise provided in Section 13.01, any modification
or amendment of the Indenture may be made only with the consent of the owners
of not less than two-thirds in aggregate principal amount of the Bonds then
outstanding and shall be set forth in a Supplemental Indenture. No such
modification or amendment shall be made which will reduce the percentages of
aggregate principal amount of Bonds, the consent of the owners of which is
required for any such modification or amendment, or permit the creation by
the Authority of any lien prior to or on a parity with the lien of the
Indenture upon the Company Note Payments and other funds pledged hereunder,
or which will affect the times, amounts and currency of payment of the
principal of and premium, if any, and interest on the Bonds without the consent
of the owners of all Bonds then outstanding and affected thereby.
If at any time the Authority shall request the consent of
Bondowners to the execution of any such Supplemental Indenture for any of the
purposes of this Section, the Trustee shall, upon being satisfactorily
indemnified with respect to expenses, cause notice of the proposed execution
of such Supplemental Indenture to be given as shall be reasonably requested
by the Authority and in any event mailed to Bondowners in the manner
provided in Section 16.05. Such notice shall briefly set forth the nature of
the proposed Supplemental Indenture and shall state that copies thereof are on
file at the Corporate Trust Office of the Trustee for inspection by all
Bondowners. If, within 60 days or such longer period as shall be prescribed
by the Authority following the mailing of such notice, the required consent
and approval of Bondowners is obtained, no owner of any Bond shall have any
right to object to any of the terms and provisions contained therein, or
the operation thereof, or in any manner to question the propriety of the
execution thereof, or to enjoin or restrain the Authority or the Trustee from
executing the same or restrain the Authority or the Trustee from taking any
action pursuant to the provisions thereof. Upon the execution of any such
Supplemental Indenture as in this Section permitted and provided, the
Indenture shall be and be deemed to be modified and amended in accordance
therewith.
The Trustee shall consent to any such Supplemental Indenture
requiring the consent of Bondowners if the required consent of Bondowners is
obtained; provided that the Trustee may, but shall not be obligated to
consent to any Supplemental Indenture which affects its own rights, powers,
duties or obligations hereunder.
<PAGE> 166
120.
Section 13.03. Company and Bank Consent to Amendment of
Indenture. The Authority and the Trustee shall not enter into any indenture
supplemental to or amendatory of the Indenture without the prior consent of
the Company as evidenced by a certificate in writing signed by an
Authorized Company Representative and no such indenture supplemental to or
amendatory of the Indenture shall be or become effective until such consent
(as so evidenced) shall have been given by the Company. Prior to the
expiration of the Letter of Credit, the Trustee shall not enter into any
indenture supplemental to or amendatory of the Indenture without the prior
written consent of the Bank, which consent shall not be unreasonably withheld.
<PAGE> 167
121.
ARTICLE XIV
DEFEASANCE
Section 14.01. Defeasance. 1. If at any time:
(a) there shall have been delivered to the Trustee
for cancellation all the Bonds (other than any Bonds which
have been mutilated, lost, stolen or destroyed and which
shall have been replaced or paid as provided in the
Indenture, except for any such Bonds as are shown by proof
satisfactory to the Trustee to be held by bona fide owners),
or
(b) with respect to all the Bonds not theretofore
delivered to the Trustee for cancellation, the whole amount
of the principal and the interest and the premium, if any, due
and payable on such Bonds then outstanding shall be paid in
accordance with the terms thereof and the terms of the
Indenture (including but not limited to Section 6.03) or
deemed to be paid as set forth below,
and provision shall also be made for paying all other sums payable hereunder,
including the Authority's, Trustee's, Tender Agent's, Remarketing Agent's,
Indexing Agent's and Paying Agent's fees and expenses, then the Trustee, in
such case, on written demand of the Authority or the Company, shall release
the Indenture with respect to such Bonds and turn over to the Company the
Company Note and turn over to the Bank the Letter of Credit, and shall
execute such documents as may be reasonably required by the Authority and the
Company to evidence such release. If the Bank certifies to the Trustee that
any amount remains unpaid under the Reimbursement Agreement, the Trustee
shall pay to the Bank any balances remaining in any fund created under the
Indenture, other than (i) moneys and Investment Obligations retained for the
redemption or payment of principal, interest or Purchase Price of Bonds which
shall be held under the Indenture for the benefit of the Owners and (ii)
moneys held in the Rebate Fund which shall be paid to the Company.
Notwithstanding the foregoing, the Trustee shall not release the Project Fund
or Rebate Fund or any funds therein to the Company until it shall have
received an Opinion of Bond Counsel to the effect that such funds may be
transferred to the Company without adversely affecting the exclusion of
interest on any series of Bonds from gross income for federal income tax
purposes; and all rights and immunities of the Trustee, including its rights
to indemnification and to payment of fees and expenses under the Indenture or
the Participation Agreement, shall survive the satisfaction of the Indenture
under this Article XIV.
<PAGE> 168
122.
2. After the date that the interest rate on the Bonds is
converted to a Fixed Rate, Bonds shall be deemed to be paid whenever there
shall have been deposited with the Trustee (whether upon or prior to the
maturity or the redemption date of such Bonds) either moneys in an amount
which shall be sufficient, or noncallable obligations, not subject to
prepayment, issued or guaranteed as to full and timely payment by the United
States of America (including any certificates or any other evidence of an
ownership interest in such obligations or in specified portions thereof,
which may consist of specified portions of the principal thereof or the
interest thereon and which certificates or other evidence of an ownership
interest must be rated by the Rating Agency then rating the Bonds at least
as high as the obligations issued or guaranteed by, or backed by the full
faith and credit of, the United States of America, which obligations are
held by a custodian in safekeeping on behalf of the owners thereof) (such
noncallable obligations, certificates and other evidence are herein
referred to as "Investment Obligations") of such maturities and interest
payment dates and bearing such interest as will, without the necessity of
further investment or reinvestment of either the principal amount thereof or
interest therefrom, provide moneys which shall be sufficient, to pay when due
the principal of and premium, if any, and interest due and to become due on
all such Bonds on and prior to the redemption date or maturity date thereof, as
the case may be, or a combination of such moneys and Investment Obligations
which shall be sufficient for such purposes, and the Trustee shall have given
notice to the Registered Owners of such Bonds in the manner provided in
Section 16.05 that a deposit meeting the requirements of this paragraph has
been made and stating such maturity or redemption date upon which moneys are
to be available for the payment of the principal or redemption price, if
applicable, on such Bonds; provided, however, that neither Investment
Obligations nor moneys deposited with the Trustee pursuant to this paragraph
nor principal or interest payments on any Investment Obligations shall be
withdrawn, or used for any purpose other than, and shall be held in trust for,
the payment of the principal of and premium, if any, and interest on such
Bonds.
3. Prior to the date that the interest rate on the Bonds is
converted to a Fixed Rate, Bonds shall be deemed to be paid whenever (i) there
shall have been deposited with the Trustee in the Bond Fund, Available Moneys in
an amount which shall be sufficient, without the necessity of further investment
or reinvestment of either the principal amount thereof or interest therefrom, to
pay when due the principal of, premium, if any, and interest due and to become
due on the Bonds (computed at the maximum interest rate that may become
applicable to the Bonds) on and prior to the redemption date or maturity date
thereof, as the case may be, provided, however, if the Bonds are subject to
<PAGE> 169
123.
optional or mandatory tender for purchase prior to the redemption date or
maturity date thereof, as the case may be, such deposit also must be in an
amount which shall be sufficient, without the necessity of such further
investment or reinvestment, to pay when due the Purchase Price which may become
applicable to the Bonds prior to the redemption date or maturity date, as the
case may be, and (ii) any Rating Agency then rating the Bonds shall have
received both an opinion of a nationally recognized accounting firm as to the
sufficiency of the deposit in clause (i), without the necessity of further
investment or reinvestment, and an unqualified opinion of counsel experienced
in bankruptcy matters and satisfactory to the Trustee and to Moody's, if the
Bonds are then rated by Moody's, to the effect that the application of such
Available Moneys to the payment of principal of, premium, if any, and interest
on the Bonds would not result in a preferential payment pursuant to the
provisions of Section 547 of the United States Bankruptcy Code, 11 U.S.C.
##101, et seq.; and, if the Bonds are to be redeemed the Trustee shall have
given, or shall have received, in form satisfactory to it, irrevocable
instructions to give, on a date in accordance with the provisions of Article
VIII, notice of redemption of the Bonds to Bondowners; provided, however, that
if the Trustee shall not have given notice of redemption to the Bondowners
because such notice is not yet due, then the Trustee shall give notice to the
Registered Owners of such Bonds in the manner provided in Section 16.05 that a
deposit meeting the requirements of this paragraph has been made and stating
such maturity or redemption date upon which moneys are to be available for the
payment of principal or redemption price, if applicable, on such Bonds. Moneys
so deposited with the Trustee shall not be withdrawn or used for any purpose
other than, and shall be held in trust for, the payment of the principal of,
premium, if any, and interest on, the Bonds or for the payment of the Purchase
Price of Bonds or authorized denominations thereof, in accordance with Section
2.05; provided that such moneys, if not then needed for such purpose, shall, to
the extent practicable, upon written direction of the Company be invested and
reinvested in Investment Obligations maturing on or prior to the earlier of (i)
the date moneys may be required for the purchase of Bonds pursuant to Section
2.05 or (ii) the date moneys may be required to pay principal, premium, if any,
or interest on the Bonds as evidenced by an opinion of a nationally recognized
accounting firm or such other evidence as may be acceptable to the Trustee.
Subject to the provisions of the next succeeding sentence and the last sentence
of Section 14.01.1, neither the Company nor the Authority shall have any
interest in, or ability to withdraw amounts from, any moneys so deposited with
the Trustee. Amounts determined by the Trustee to be in excess of the amount
necessary to pay the principal of, premium, if any, and interest (computed at
the maximum interest rate that may become applicable to the Bonds on or prior
to the
<PAGE> 170
124.
redemption date or maturity date, as applicable) on, the Bonds or the Purchase
Price thereof (computed at the maximum interest rate that may become applicable
to the Bonds on or prior to the redemption date or Maturity Date, as
applicable) pursuant to Section 2.05 shall, upon a written direction of the
Company, be paid over to the Company, as received by the Trustee, free and
clear of any trust, lien or pledge.
<PAGE> 171
125.
ARTICLE XV
REMARKETING AGENTS; REMARKETING OF BONDS; INDEXING AGENT;
TENDER AGENT
Section 15.01. Appointment and Duties of Remarketing Agents.
The Authority has appointed, with the approval of the Company, Lehman Brothers
Inc. and Dillon, Read & Co. Inc. as the initial Remarketing Agents for the
Bonds. Each Remarketing Agent shall designate to the Trustee its principal
office and signify its acceptance of the duties and obligations imposed upon it
hereunder by a written instrument of acceptance delivered to the Authority, the
Company and the Trustee under which such Remarketing Agent will agree
particularly to (i) perform its obligations under Section 2.03 with respect to
the determination of the Weekly Rate, the Semi-Annual Rate, the Medium-Term
Rate, the Money Market Municipal Rate, and the Fixed Rate (ii) perform its
obligations under Section 2.06 with respect to any Bond delivered or deemed to
have been delivered to the Tender Agent for purchase pursuant to Section 2.05,
and (iii) keep books and records with respect to its activities hereunder as
shall be consistent with prudent industry practice and to make such books and
records available for inspection by the Authority, the Trustee, the Company
and the Bank at all reasonable times. Such acceptance shall include a
designation of one Remarketing Agent as the "Remarketing Representative" who
shall act on behalf of the other Remarketing Agent(s) and the acceptance by
each Remarketing Agent of the determinations of the Remarketing
Representative.
Each Remarketing Agent acts as an agent for the purchasers
of remarketed Bonds and not as an agent of the Authority or the Company in
connection with any moneys delivered to it for the purchase of Bonds.
The Authority shall cooperate with the Trustee, the Tender
Agent and the Company to cause the necessary arrangements to be made and to
be thereafter continued whereby funds from the sources specified herein and in
the Participation Agreement will be made available for the purchase of Bonds
presented at the Corporate Trust Office of the Tender Agent and whereby Bonds
executed by the Authority and authenticated by the Trustee shall be made
available to the Tender Agent to the extent necessary for delivery pursuant
to Section 2.07.
Section 15.02. Qualifications of a Remarketing Agent. Each
Remarketing Agent shall be a commercial bank or member of the National
Association of Securities Dealers, Inc., having a capitalization of at least
$25,000,000 and authorization by law to perform all the duties imposed upon it
by the Indenture (provided
<PAGE> 172
126.
that to qualify as a successor Remarketing Agent, such successor, or the parent
corporation of such successor, shall be rated at least Baa-3 and/or P-3 or an
equivalent rating by Moody's or otherwise be acceptable to Moody's and the
Authority). Subject to the provisions of the next succeeding paragraph, a
Remarketing Agent may at any time resign and be discharged of the duties and
obligations created by the Indenture by giving at least thirty (30) days'
notice to the Authority, the Company and the Trustee. A Remarketing Agent may
be removed upon 30 days' notice, upon written request of the Company, by an
instrument, signed by the Authority, filed with the Company, each Remarketing
Agent (if more than one), the Indexing Agent, the Bank, the Tender Agent and
the Trustee.
In the event that a Remarketing Agent shall resign or be
removed, and the Authority shall not have appointed a successor as Remarketing
Agent and there are no other Remarketing Agents continuing to serve hereunder,
then the last such Remarketing Agent or Remarketing Agent to resign or be
removed notwithstanding the provisions of the first paragraph of this Section
15.02, shall continue as the Remarketing Agent solely for the purpose of
determining the interest rate to be borne by the Bonds until the appointment
by the Authority of a successor Remarketing Agent.
Section 15.03. Appointment and Duties of Indexing Agents. The
Authority shall, with the approval of the Company, appoint the Indexing Agent
for the Bonds, subject to the conditions set forth in this Section. There may
be separate Indexing Agents for the purpose of calculating each of the interest
indices set forth in Section 1.01. The Indexing Agent shall designate to the
Trustee its principal office and signify its acceptance of the duties and
obligations imposed upon it hereunder by a written instrument of acceptance
delivered to the Authority, the Trustee, the Company and the Remarketing Agents
under which the Indexing Agent will agree, particularly:
(a) to compute the Weekly Rate Index, Semi-Annual Rate
Index, the Medium-Term Rate Index, the Money Market Municipal Rate
Index or the Fixed Rate Index, as the case may be, pursuant to and in
accordance with Section 2.03, and when the Bonds bear interest at the
related Rate, to give written notice to the Trustee, the Remarketing
Agents and the Company of such index on the date of the computation
thereof; and
(b) to keep such books and records as shall be consistent
with prudent industry practice and to make such books and records
available for inspection by the Authority, the Trustee, the
Remarketing Agents and the Company at all reasonable times.
<PAGE> 173
127.
The Indexing Agent will perform the duties provided for in
Section 2.03. Whenever the Indexing Agent makes a computation under that
Section, it will promptly notify in writing the Trustee, the Authority, the
Remarketing Agents and the Company of the results and date of computation.
The Indexing Agent will keep adequate records pertaining to the performance
of its duties and allow the Trustee, the Authority, the Remarketing Agents
and the Company to inspect the records at reasonable times.
Section 15.04. Qualifications of Indexing Agents. The
Indexing Agent shall be a commercial bank, a member of the National Association
of Securities Dealers, Inc. or a nationally recognized municipal securities
evaluation service authorized by law to perform all the duties imposed upon it
by the Indenture. The Indexing Agent may at any time resign and be discharged
of the duties and obligations created by the Indenture by giving at least sixty
(60) days' written notice to the Authority, the Company, the Remarketing Agents
and the Trustee. The Indexing Agent may be removed at any time, at the written
direction of the Company, by an instrument, signed by the Authority, filed with
the Company, the Indexing Agent, the Remarketing Agents, the Trustee and the
Bank.
In the event that the Authority shall fail to appoint an
Indexing Agent hereunder or the Indexing Agent shall resign or be removed, or
be dissolved, or if the property or affairs of the Indexing Agent shall be
taken under the control of any state or federal court or administrative body
because of bankruptcy or insolvency, or for any other reason, and the Authority
shall not have appointed its successor as Indexing Agent, the Remarketing
Representative, notwithstanding the provisions of the first paragraph of this
Section 15.04, shall ipso facto be deemed to be the Indexing Agent solely for
the purpose of determining the interest rate to be borne by the Bonds until the
appointment by the Authority of the Indexing Agent or successor Indexing Agent,
as the case may be.
Section 15.05. Dealings With the Authority and the Company.
The Remarketing Agents and the Indexing Agent may in good faith buy, sell, own,
hold and deal in any of the Bonds issued hereunder, and may join in any action
which any Bondowner may be entitled to take with like effect as if it did not
act in any capacity hereunder. The Remarketing Agents and the Indexing Agent,
either as principal or agent, may also engage in or be interested in any
financial or other transaction with the Authority or the Company, and may act
as depository, trustee or agent for any committee or body of Bondowners secured
hereby or other obligations of the Authority as freely as if it did not act in
any capacity hereunder.
<PAGE> 174
128.
Section 15.06. Tender Agent. The Authority shall, with the
approval of the Company and the Bank, appoint the Tender Agent for the Bonds,
subject to the conditions set forth in Section 15.07. The Tender Agent shall
designate its Corporate Trust Office and signify its acceptance of the duties
and obligations imposed upon it hereunder by a written instrument of
acceptance delivered to the Authority, the Trustee, the Remarketing Agents, the
Indexing Agent, the Bank and the Company under which the Tender Agent will
agree, particularly to perform its obligations under Article II and to request
the Trustee to draw on the Letter of Credit as provided in Section 6.07.1.
Notwithstanding anything to the contrary in the Indenture, the Tender Agent
shall not invest any moneys it receives from such a draw on the Letter of
Credit.
The Tender Agent may designate from time to time a different
Corporate Trust Office within The City of New York, New York, by a written
instrument delivered to the Authority, the Trustee, the Remarketing Agents, the
Indexing Agent, the Bank and the Company.
The Tender Agent undertakes to perform such duties, and only
such duties, as are specifically set forth in the Indenture and in any written
instrument of acceptance of duties hereunder and no implied covenants shall be
read into the Indenture against the Tender Agent.
Insofar as such provisions may be applicable, the Tender
Agent shall enjoy the same protective provisions in the performance of its
duties hereunder as are specified in Sections 11.03, 11.05, 11.06, 11.07 and
11.14 with respect to the Trustee.
Section 15.07. Qualifications of Tender Agent; Resignation;
Removal. Any successor Tender Agent shall be a bank or trust company or a
corporation duly organized under the laws of the United States of America or
any state or territory thereof, which has an office in The City of New York,
New York, and having a combined capital stock, surplus and undivided profits of
at least $100,000,000 and authorized by law to perform all the duties imposed
upon it by the Indenture. The Tender Agent may at any time resign and be
discharged of the duties and obligations created by the Indenture by giving at
least sixty (60) days' notice to the Authority, the Trustee, the Remarketing
Agents, the Indexing Agent and the Company. The Tender Agent may be removed at
any time, at the request of the Company, by an instrument, signed by the
Authority, delivered to the Tender Agent, and to the Trustee, the Remarketing
Agents, the Bank and the Indexing Agent. Any such resignation or removal of the
Tender Agent shall not take effect until the appointment of a successor Tender
Agent.
<PAGE> 175
129.
In the event of the resignation or removal of the Tender
Agent, the Tender Agent shall pay over, assign and deliver any moneys and Bonds
held by it in such capacity to its successor (provided that to qualify as a
successor Tender Agent, such successor, or the parent corporation of such
successor, shall be rated at least Baa-3 and/or P-3 or an equivalent rating by
Moody's or otherwise be acceptable to Moody's and the Authority) or, if there
be no successor, to the Trustee.
In the event that the Tender Agent shall resign or be
removed, or be dissolved, or if the property or affairs of the Tender Agent
shall be taken under the control of the state or federal court or
administrative body because of bankruptcy or insolvency, or for any other
reason, a successor may be appointed by the Authority with the prior written
approval of the Bank and the Trustee. Any such successor shall have an office
in The City of New York, New York, and shall be acceptable to the Trustee.
Written notice of such appointment shall immediately be given by the Company to
the Trustee and the Remarketing Agents and the Trustee shall cause written
notice of such appointment to be given to the owners of the Bonds. Any
successor Tender Agent shall execute and deliver an instrument accepting such
appointment and thereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all rights, powers, duties and
obligations of its predecessor, with like effect as if originally named as
Tender Agent, but such predecessor shall nevertheless, on the written request
of the Authority or the Trustee, or of the successor, execute and deliver such
instruments and do such other things as may reasonably be required to more
fully and certainly vest and confirm in such successor all rights, powers,
duties and obligations of such predecessor. If no successor Tender Agent has
accepted appointment in the manner provided above within 90 days after the
Tender Agent has given notice of its resignation as provided above, the Tender
Agent may petition any court of competent jurisdiction for the appointment of
a temporary successor Tender Agent; provided that any Tender Agent so
appointed shall immediately and without further act be superseded by a Tender
Agent appointed by the Authority as provided above. The Tender Agent shall not
be required to take or be deemed to have notice of any Event of Default or of
any event which the lapse of time or giving of notice, or both, would
constitute an Event of Default unless an officer in its Corporate Trust Office
shall have received written notice thereof from the Authority, the Bank or the
Trustee.
<PAGE> 176
130.
ARTICLE XVI
MISCELLANEOUS
Section 16.01. Parties in Interest. Except as herein
otherwise specifically provided, nothing in the Indenture expressed or implied
is intended or shall be construed to confer upon any Person other than the
Company, the Authority, the Trustee, the Tender Agent, the Bank and the owners
of the Bonds hereunder, any right, remedy or claim under or by reason of the
Indenture, the Indenture being intended to be for the sole and exclusive
benefit of the Company, the Authority, the Trustee, the Bank and the owners of
the Bonds.
Section 16.02. Severability. In case any one or more of the
provisions of the Indenture or of the Bonds issued hereunder shall, for any
reason, be held to be illegal or invalid, such illegality or invalidity shall
not affect any other provisions of the Indenture or of the Bonds, and the
Indenture and the Bonds shall be construed and enforced as if such illegal or
invalid provisions had not been contained therein.
Section 16.03. No Individual Liability. No covenant or
agreement contained in the Bonds or in the Indenture shall be deemed to be the
covenant or agreement of any member, agent or employee of the Authority in his
or her individual capacity, and neither the members of the Authority nor any
official executing the Bonds shall be liable personally on the Bonds or be
subject to any personal liability or accountability by reason of the issuance
thereof.
Section 16.04. Payment Due on Saturdays, Sundays and
Holidays. In any case where the date of maturity of interest on or principal
of the Bonds or the date fixed for redemption of any Bonds or any Mandatory
Purchase Date shall be on a day other than a Business Day, then payment of
interest or principal and premium, if any, or Purchase Price, need not be made
on such date but may be made (without additional interest) on the next
succeeding Business Day, with the same force and effect as if made on the date
of maturity or the date fixed for redemption or the Mandatory Purchase Date.
Section 16.05. Notices. (a) All notices, certificates,
requests or other communications hereunder shall be sufficiently given and
shall be deemed given, unless otherwise required by the Indenture, when mailed
by first class mail, postage prepaid, addressed as follows: If to the
Authority, at Empire State Plaza, Agency Building #2, Albany, New York 12223,
Attention: President; if to the Company, at 175 East Old Country Road,
Hicksville, New
<PAGE> 177
131.
York, Attention: Treasurer; if to the Trustee, at 450 West 33rd Street, 15th
Floor, New York, New York 10001, Attention: Corporate Trustee Administration
Department; if to the Tender Agent, at 55 Water Street, Room 234, North
Building, New York, New York 10041, Attention: Corporate Tellers; if to the
Bank, at its address specified in the Reimbursement Agreement; and, if to the
Indexing Agent or Remarketing Agents, at the address specified in their
respective acceptances delivered pursuant to Article XV. A duplicate copy of
each notice, certificate, request or other communication given hereunder to the
Authority, the Company, the Trustee, the Bank, the Indexing Agent, the Tender
Agent or the Remarketing Agents shall also be given to the Authority, the
Company and the Trustee. The Company, the Authority, the Trustee, the Bank, the
Remarketing Agents and the Indexing Agent may, by notice given hereunder,
designate any further or different addresses to which subsequent notices,
certificates, requests or other communications shall be sent. Any notice or
other communication to be mailed to Registered Owners of the Bonds hereunder
shall be mailed by first class mail in a sealed envelope, postage prepaid,
addressed to each such Bondowner as his or her address last appears on the Bond
Register. In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impractical to mail notice to the Registered Owners
of Bonds of any event when such notice is required to be given pursuant to any
provision of the Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
(b) So long as the Bonds shall be rated by Moody's, the
Trustee shall furnish to Moody's at 99 Church Street, New York, New York, Attn:
Structured Transactions Group or such other office as Moody's may designate to
the Trustee, and if the Bonds shall be rated by S&P, the Trustee shall furnish
to S&P, (i) a copy of each amendment to the Indenture, Participation Agreement,
Letter of Credit, and Reimbursement Agreement of which it has knowledge, (ii)
notice of the termination, extension or expiration of any Letter of Credit,
(iii) notice of the payment of all the Bonds, (iv) notice of conversion to a
Medium-Term Rate Period of greater than three years duration or a Fixed Rate,
and (v) notice of any successor Trustee, Paying Agent, Tender Agent or
Remarketing Agents; provided, however, that failure by the Trustee to notify
Moody's or S&P shall not result in any liability on the part of the Trustee or
affect the validity of such documents or actions.
SECTION 16.06. GOVERNING LAW. THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION OF THE INDENTURE AND OF THE BONDS.
<PAGE> 178
132.
Section 16.07. Effective Date; Counterparts. The Indenture
shall become effective on delivery. The Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 16.08. References to the Bank. After the
establishment of a Fixed Rate for the Bonds and upon receipt by the Trustee of
notice from the Bank that all amounts payable to the Bank with respect to draws
under the Letter of Credit have been received, all references in the Indenture
to the Bank shall be ineffective.
Section 16.09. Date for Identification Purposes Only. The
date of the Indenture shall be for identification purposes only and shall not
be construed to imply that the Indenture was delivered as of any date other
than the actual date of the delivery hereof by the parties hereto.
<PAGE> 179
IN WITNESS WHEREOF, the Authority has caused the Indenture to
be executed by its Chair and its corporate seal to be hereunto affixed and
attested by its Secretary, and the Trustee has caused the Indenture to be
executed by one of its Vice Presidents or Assistant Vice Presidents and
attested by one of its authorized officers or persons, all as of the date first
above written.
NEW YORK STATE ENERGY
RESEARCH AND DEVELOPMENT
AUTHORITY
By /s/ Francis J. Murray, Jr.
--------------------------
Chair
(SEAL)
Attest:
/s/ Howard A. Jack
- ------------------
Secretary
CHEMICAL BANK
AS TRUSTEE
By /s/ Glenn Booth
----------------
(SEAL) Assistant Vice President
Attest:
/s/ L. O'Brien
- ----------------------
Assistant Secretary
<PAGE> 180
135.
STATE OF NEW YORK )
: ss.:
CITY OF NEW YORK )
On the 17th day of November, 1993 before me personally came
Glenn Booth and L. O'Brien, to me known, who, being by me duly sworn, did
depose and say that they are a(n) Assistant Vice Presiident and a(n) Assistant
Secretary, respectively, of Chemical Bank, the Trustee, described in and which
executed the above instrument; that they know the seal of said Trustee; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Corporate Trust Committee of the Board of Directors
of said Trustee, and that they signed their names thereto by like authority.
/s/ Annabelle DeLuca
--------------------
Notary Public
Annabelle DeLuca
Notary Public, State of New York
No. 01DE5013759
Qualified in Kings County
Certificate Filed in New York County
Commission Expires July 15, 1995
<PAGE> 181
STATE OF NEW YORK )
: ss.:
COUNTY OF ALBANY )
On the 9th day of November, 1993, before me personally came
Francis J. Murray, Jr., to me known, who being by me duly sworn, did depose and
say that he is Chair of New York State Energy Research and Development
Authority, the Authority described in and which executed the above instrument
and that he signed his name thereto by authority of the members of said
Authority.
/s/ Jacquelyn L. Jerry
----------------------
Notary Public
Jacquelyn L. Jerry
Notary Public, State of New York
No. 4953824
Qualified in Albany County
Commission Expires July 31, 1995
STATE OF NEW YORK )
: ss.:
COUNTY OF ALBANY )
On the 9th day of November, 1993, before me personally
came Howard A. Jack, to me known, who being by me duly sworn, did depose and
say that he is Secretary of New York State Energy Research and Development
Authority, the Authority described in and which executed the above instrument;
that he knows the seal of said Authority, the Authority described in and which
executed the above instrument; that he knows the seal of said Authority; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the members of said Authority, and that he signed his
name thereto by like authority.
/s/ Jacquelyn L. Jerry
----------------------
Notary Public
Jacquelyn L. Jerry
Notary Public, State of New York
No. 4953824
Qualified in Albany County
Commission Expires July 31, 1995
<PAGE> 182
EXHIBIT A
[Intentionally Omitted]
<PAGE> 183
EXHIBIT B
NOTICE OF ELECTION TO RETAIN BOND*
FOLLOWING A MANDATORY PURCHASE DATE
[Name and Address
of Tender Agent]
Attention: Bond Tender Unit
Gentlemen:
This notice is being sent to you in your capacity as Tender
Agent under the Indenture of Trust (the "Indenture"), dated as of November 1,
1993, between New York State Energy Research and Development Authority (the
"Authority") and Chemical Bank as Trustee (the "Trustee"), relating to the
Authority's $___________ aggregate principal amount Electric Facilities Revenue
Bonds (Long Island Lighting Company Project), 1993 Series A (the "Bonds"). You
are hereby notified that:
1. The undersigned is the owner of Bond No.(s)____________
________________ outstanding under the Indenture in the principal amount(s) of
$__________.
2. The undersigned's address is _____________________
_______________________.
3. The undersigned has received a notice from the Trustee
that the Bonds are required to be tendered on the Mandatory Purchase Date for
purchase on the Mandatory Purchase Date as a result of the matters discussed in
such notices.
4. The undersigned elects to retain Bond No.(s)___________
______________ in the principal amount(s) of $________________ (or any
portion thereof in an authorized denomination) and will not tender such Bond(s)
(or portion thereof as aforesaid) on the Mandatory Purchase Date (or prior
thereto) for purchase pursuant to Section 2.05(e)(4) of the Indenture.
5. The undersigned agrees to surrender such Bond(s) to
be retained by the undersigned to [Name of Trustee], as Trustee, on the
Mandatory Purchase Date in exchange for a replacement Bond or
____________________
*Note: Owners of Bonds may not elect to retain (i) if the
Bonds currently bear interest at a Money Market Municipal Rate
and (ii) unless the Bonds continue to be secured by a Letter of
Credit after the Mandatory Purchase Date or have been converted
to a Fixed Rate, as more particularly set forth in Section 2.05(e)
of the Indenture.
<PAGE> 184
Bonds bearing the appropriate legend and in the following denomination(s):
______________________.
6. The undersigned acknowledges that this notice of
election is irrevocable and that the events specified in the notice from the
Trustee referred to in Paragraph 3 above are to occur.
7. The undersigned acknowledges that the rating assigned
by Moody's or S&P, if any, to the Bonds may be lowered or withdrawn as a
result of the matters described in the notice from the Trustee referred to in
Paragraph 3 above.
8. All capitalized terms not otherwise defined herein
shall have the meaning given to such terms in the Indenture.
Dated: __________, ____
_______________________ ______________________________
Witness Name of owner as it is written
on the face of the above-identified
Bonds, in every particular without
alteration, enlargement or any
change whatsoever.
B-2
<PAGE> 185
EXHIBIT C
REQUISITION CERTIFICATE
Long Island Lighting Company (the "Company") hereby requests
Chemical Bank, as Trustee, under the Indenture of Trust relating to New York
State Energy Research and Development Authority's (the "Authority") Electric
Facilities Revenue Bonds (Long Island Lighting Company Project), 1993 Series A
dated as of November 1, 1993 (the "Indenture"), to withdraw $____________ from
the Construction Account in the Project Fund established under the Indenture
for purposes permitted by Section 5.03 thereof. In connection with this
withdrawal, the Company states as follows:
1. This requisition relates to the Bond Proceeds
Sub-Account of the separate account in the Project Fund relating to the Project
(as defined in the Indenture).
2. The number of this requisition is No. _____.
3. Payments aggregating $_____________ are due to the
following persons in the following amounts for expenditures incurred in
connection with the Project:
Person Amount Item
------ ------ ----
4. Payment is due to the Company in the total amount of
$_____________ in reimbursement for amounts paid by the Company in connection
with the Project as shown on the Schedule attached hereto. Deposit such
payment by wire transfer to the ____________________________
________________________.
5. Each amount referred to in paragraphs 3 and 4 hereof
will be used to pay, or reimburse the Company for, a Cost of Construction of
such Project and is a proper charge against the separate account for such
Project in the Project Fund.
6. None of the items for which the disbursement is
requested has formed the basis for any disbursement heretofore made from the
Project Fund.
7. The disbursement will not be used in a manner that
would result in a violation of any representation, warranty or
<PAGE> 186
covenant contained in Section 5.04 of the Participation Agreement or in the Tax
Regulatory Agreement.
8. No "event of default" as defined in the Participation
Agreement has occurred and is continuing and no event which with the lapse of
time alone would become such a default has occurred and is continuing.
9. No "event of default" as defined in the Indenture has
occurred and is continuing and no event which with the lapse of time alone
would become such a default has occurred and is continuing.
Capitalized terms used in this requisition are used as defined
in the Indenture.
I am an Authorized Company Representative.
LONG ISLAND LIGHTING COMPANY
By:__________________________
Name:
Title:
C-2
<PAGE> 1
-----------------------------------------------------------------
-----------------------------------------------------------------
NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY
AND
LONG ISLAND LIGHTING COMPANY
-------------------------
PARTICIPATION AGREEMENT
-------------------------
Dated as of November 1, 1993
-----------------------------------------------------------------
-----------------------------------------------------------------
- relating to -
Electric Facilities Revenue Bonds
(Long Island Lighting Company Project), 1993 Series B
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; EFFECTIVE DATE
AND DURATION OF PARTICIPATION AGREEMENT
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.02. Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.03. Effective Date of Participation Agreement;
Duration of Participation Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations and Warranties by the
Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.02. Representations and Warranties by the
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
CONSTRUCTION OF THE PROJECT;
ISSUANCE OF BONDS
Section 3.01. Construction of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.02. Sale of Bonds and Deposit of Proceeds;
Liability Under Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.03. Disbursements from Project Fund and Rebate
Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.04. Revision of Construction Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.05. Certification of Completion of Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.06. Payment of Cost of Construction of the Project
in Event Project Fund Inadequate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.07. No Interest in Project Conferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.08. Operation, Maintenance and Repair. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.09. Investment of Moneys in Funds Under the
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.10. Agreement not to Exercise Option to Convert to
Fixed Rate Absent Specified Rating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.11. Securities Depository. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
(i)
<PAGE> 3
<TABLE>
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ARTICLE IV
COMPANY NOTE AND PAYMENTS; LETTER OF CREDIT
Section 4.01. Execution and Delivery of Company Note to
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.02. Redemption of Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.03. Obligation for Payment Absolute; Deficiencies. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.04. Administration Fees; Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.05. Compensation of Trustee, Paying Agent,
Remarketing Agents, Indexing Agent and Tender Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.06. Project Not Security for Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.07. Payment of Taxes and Assessments; No Liens or
Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.08. Indemnification of Authority, Trustee,
Tender Agent, Paying Agent, Remarketing Agents and Indexing
Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.09. Company to Pay Attorneys' Fees and
Disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.10. No Abatement of Administration Fees and Other
Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.11. Payment to Tender Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.12. The Letter of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V
SPECIAL COVENANTS
Section 5.01. No Warranty as to Suitability of Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.02. Authority's Rights to Inspect Project and
Plans and Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.03. Company Consent to Amendment of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.04. Tax Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.05. Company Agrees to Perform Obligations Imposed
by Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.06. Maintenance of Office or Agency of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.07. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.08. Payment of Taxes and Other Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.09. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.10. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.11. Proper Books of Record and Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.12. Certificates as to Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.13. Company Not to Permit Hindrance or Delay of
Payment of Company Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.14. Corporate Existence, Consolidation, Merger or
Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.15. Financial Statements of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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<TABLE>
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Section 5.16. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI
DEFAULTS BY COMPANY; REMEDIES
Section 6.01. Events of Default; Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.02. Certain Events of Default; Authority or
Trustee May Take Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.03. Judicial Proceedings by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VII
MISCELLANEOUS
Section 7.01. Disposition of Amounts After Payment of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.03. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.04. Amendment of Participation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.05. Assignment by Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.06. Participation Agreement Supersedes Any Prior
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.07. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.08. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7.09. NEW YORK LAW TO GOVERN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
(iii)
<PAGE> 5
This PARTICIPATION AGREEMENT, dated as of November 1, 1993, between NEW
YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY, a body corporate and
politic, constituting a public benefit corporation, established and existing
under and by virtue of the laws of the State of New York (the "Authority"), and
LONG ISLAND LIGHTING COMPANY, a corporation duly organized and existing and
qualified to do business as a public utility under the laws of the State of New
York (the "Company"),
W I T N E S S E T H :
WHEREAS, pursuant to special act of the Legislature of the State of New
York (Title 9 of Article 8 of the Public Authorities Law of New York, as from
time to time amended and supplemented, herein called the "Act"), the Authority
has been established, as a body corporate and politic, constituting a public
benefit corporation; and
WHEREAS, pursuant to the Act, the Authority is empowered to contract
with any power company to participate in the construction of facilities for the
furnishing of electricity to the extent required by the public interest in
development, health, recreation, safety, conservation of natural resources and
aesthetics; and
WHEREAS, pursuant to the Act, the Authority has also been empowered to
extend credit and make loans from bond and note proceeds to any person for the
construction, acquisition and installation of, or for the reimbursement to any
person for costs in connection with, any special energy project, including, but
not limited to, any land, works, system, building or other improvement, and all
real and personal properties of any nature or any interest in any of them which
are suitable for or related to the furnishing, generation or production of
energy; and
WHEREAS, the Authority is also authorized under the Act to borrow money
and issue its negotiable bonds and notes to provide sufficient moneys for
achieving its corporate purposes; and
WHEREAS, the Authority is also authorized under the Act to enter into
any contracts and to execute all instruments necessary or convenient for the
exercise of its corporate powers and the fulfillment of its corporate purposes;
and
WHEREAS, the Company is a public utility corporation doing business in
the State of New York and operates power plants in the State of New York; and
WHEREAS, the Company has requested that the Authority participate in
financing the acquisition, construction and
<PAGE> 6
2.
installation of certain facilities for the furnishing of electric energy within
the Company's service area (such facilities for the furnishing of electric
energy being hereinafter referred to as the "Project") and, as part of such
participation, that the Authority issue bonds pursuant to the Act to provide
funds to finance the cost to the Company of the Project and the expenses
incurred in connection with the authorization, issuance and sale of such bonds;
and
WHEREAS, the Authority, pursuant to Resolution No. 801, adopted January
25, 1993, has determined to issue its Electric Facilities Revenue Bonds (Long
Island Lighting Company Project), bearing the series designation set forth on
the first page of this Participation Agreement in an aggregate principal amount
of $50,000,000 (the "Bonds"), for the purpose of financing a portion of such
costs and expenses, all such Bonds to be issued under and secured by an
Indenture of Trust relating to the Bonds dated as of November 1, 1993, between
the Authority and Chemical Bank, as Trustee (the "Indenture");
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, it is hereby agreed by
and between the parties as follows:
<PAGE> 7
3.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; EFFECTIVE DATE
AND DURATION OF PARTICIPATION AGREEMENT
Section 1.01. Definitions. The terms used in this Participation
Agreement which are defined in Section 1.01 of the Indenture shall have the
meanings, respectively, herein, which such terms are given in said Section 1.01
of the Indenture.
Section 1.02. Rules of Construction. Unless the context clearly
indicates to the contrary, the following rules shall apply to the construction
of the Participation Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa;
(b) All references herein to particular articles or sections are
references to articles or sections of the Participation Agreement;
(c) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of the Participation Agreement
nor shall they affect its meaning, construction or effect;
(d) The terms "hereby," "hereof," "hereto," "herein," "hereunder" and
any similar terms, as used in the Participation Agreement, refer to the
Participation Agreement in its entirety and not to the particular article
or section of the Participation Agreement in which they appear, and the
term "hereafter" means after, and the term "heretofore" means before, the
date of the Participation Agreement; and
(e) In the event that there is any conflict between the provisions of
the Participation Agreement and those of the Indenture, the provisions of
the Indenture shall govern the disposition of such conflict.
Section 1.03. Effective Date of Participation Agreement; Duration of
Participation Agreement. This Participation Agreement shall become effective
upon its execution and delivery, and shall continue in full force and effect
until the principal of, and premium, if any, and interest on, the Company Note
and Bonds have been fully paid (or provision for their payment has been made in
accordance with the provisions of the Indenture) and all sums to which the
Authority or the Trustee are entitled hereunder have been fully paid.
<PAGE> 8
4.
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations and Warranties by the Authority. The
Authority represents and warrants as follows:
(a) The Authority is a body corporate and politic, constituting a
public benefit corporation, established and existing under the laws of the
State of New York;
(b) The Authority has full power and authority to execute and deliver
this Participation Agreement, the Indenture and the Tax Regulatory
Agreement and to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder;
(c) The Authority is not in default under any of the provisions of the
laws of the State of New York which would affect its existence or its
powers referred to in the preceding paragraph (b);
(d) The Authority has determined that its participation in the
financing of the Project, as contemplated by this Participation Agreement,
is in the public interest;
(e) The Authority has duly authorized the execution and delivery of
this Participation Agreement, the Indenture and the Tax Regulatory
Agreement and the execution and delivery of the other documents incidental
to this transaction, and all necessary authorizations therefor or in
connection with the performance by the Authority of its obligations
hereunder or thereunder have been obtained and are in full force and
effect; and
(f) The execution and delivery by the Authority of this Participation
Agreement, the Indenture and the Tax Regulatory Agreement and the
consummation of the transactions herein or therein contemplated will not
violate any indenture, mortgage, loan agreement or other contract or
instrument to which the Authority is a party or by which it is bound, or to
the best of the Authority's knowledge, any judgment, decree, order,
statute, rule or regulation applicable to the Authority.
Section 2.02. Representations and Warranties by the Company. The
Company represents and warrants as follows:
(a) The Company is a corporation duly incorporated and in good
standing under the laws of the State of New York, is duly
<PAGE> 9
5.
qualified and authorized to engage in business as a public utility in the
State of New York, has power to enter into, execute and deliver this
Participation Agreement, the Tax Regulatory Agreement and the Company Note
by proper corporate action and has duly authorized the execution and
delivery by it of this Participation Agreement, the Tax Regulatory
Agreement and the Company Note;
(b) The execution and delivery by the Company of this Participation
Agreement, the Tax Regulatory Agreement and the Company Note and the
consummation of the transactions herein contemplated do not conflict with
or constitute a breach of or a default under the Company's Certificate of
Incorporation, By-Laws or any indenture, mortgage, loan agreement or other
contract or instrument to which the Company is a party or by which it is
bound, or to the best of the Company's knowledge, any judgment, decree,
order, statute, rule or regulation applicable to the Company;
(c) This Participation Agreement, the Tax Regulatory Agreement and the
Company Note constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their
respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other laws, judicial
decisions or principles of equity relating to or affecting the enforcement
of creditors' rights or contractual obligations generally;
(d) The execution and delivery by the Company of this Participation
Agreement and the Company Note in the manner and for the purposes herein
set forth have been duly authorized by an order of the Public Service
Commission of the State of New York;
(e) No additional authorizations for or approvals of the execution and
delivery by the Company of this Participation Agreement, the Tax Regulatory
Agreement and the Company Note need be obtained by the Company or if any
such authorization or approval is necessary it has been obtained; and
(f) The representations of the Company set forth in the Tax Regulatory
Agreement are hereby incorporated by reference as though fully set forth
herein.
<PAGE> 10
6.
ARTICLE III
CONSTRUCTION OF THE PROJECT;
ISSUANCE OF BONDS
Section 3.01. Construction of the Project. 1. The Company will
construct and complete or cause construction and completion of the Project with
reasonable dispatch and in accordance with the Company's construction plans
therefor. The Project shall belong to and be the property of the Company. In
order to effectuate the purposes of this Participation Agreement, the Company
will do or cause to be done all things requisite or proper for the construction
of the Project and the fulfillment of the obligations of the Company under this
Participation Agreement.
2. Notwithstanding any other provision of this Participation Agreement
to the contrary, the Company shall not be required to complete the construction
of any component of the Project with respect to which funds have not been
disbursed from the Project Fund if in the Company's business judgment it is not
necessary or advisable to do so, provided that failure to complete the
construction of such component will not affect the character or intended
purpose of any other component of such Project and provided further that the
estimated Cost of Construction of the components of the Project yet to be
completed (as estimated by the Company at the time it determines not to
complete any component) is at least equal to the amount of moneys remaining in
the Project Fund.
Notwithstanding any other provision of this Participation Agreement to
the contrary, the Company shall not be required to complete the construction of
any component of the Project if in the Company's business judgment it is not
necessary or advisable to do so and the Company shall have delivered to the
Authority an opinion of Bond Counsel to the effect that failure to complete
such component of such Project will not adversely affect the qualification of
any other component of such Project for financing under the Act or the
exclusion from gross income for Federal income tax purposes of interest on the
Bonds.
Section 3.02. Sale of Bonds and Deposit of Proceeds; Liability Under
Bonds. 1. In order to provide funds for payment of a portion of the Cost of
Construction of the Project, the Authority, as soon as practicable after the
execution of this Participation Agreement will issue, sell and deliver the
Bonds to the initial purchasers thereof, all pursuant to and as provided in the
Purchase Contract for the Bonds among the Authority, the Company, Dillon, Read
& Co. Inc., Lehman Brothers Inc., Artemis Capital Group, Inc. and Samuel A.
Ramirez & Co. Inc. and will
<PAGE> 11
7.
deposit the proceeds of such sale of the Bonds with the Trustee, as follows:
(i) in the Bond Fund, a sum equal to the accrued interest, if any, paid by the
initial purchasers of the Bonds and (ii) in the Construction Account of the
Project Fund, the balance of the proceeds received from such sale.
2. The Bonds shall not be general obligations of the Authority, and
shall not constitute an indebtedness of, or a charge against the general credit
of, the Authority or give rise to any pecuniary liability of the Authority.
The liability of the Authority under the Bonds shall be enforceable only to the
extent provided in the Indenture, and the Bonds shall be payable solely from
the Company Note Payments, funds drawn under the Letter of Credit and any other
funds held by the Trustee under the Indenture and available for such payment.
The Bonds shall not be a debt of the State of New York, and the State of New
York shall not be liable thereon.
Section 3.03. Disbursements from Project Fund and Rebate Fund. 1.
The Authority has, in the Indenture, authorized and directed the Trustee to
make payments from the Project Fund, in accordance with and subject to the
provisions of Section 5.03 of the Indenture, to pay the Cost of Construction of
the Project upon receipt from time to time of requisitions signed by an
Authorized Company Representative, stating with respect to each payment to be
made for the Project the information required by Section 5.03 of the Indenture.
The Company will cause such requisitions to be submitted to the Trustee
as may be necessary to effect payments out of the Project Fund in accordance
with the provisions of the Indenture. Concurrently with the delivery by the
Company of each requisition to the Trustee, the Company will deliver to the
Authority a copy of such requisition and any attachments thereto. The
Authority and the Trustee may rely on the Company as to the completeness and
accuracy of all statements in such requisition, and the Company will indemnify
and save harmless the Authority and the Trustee from any liability incurred in
connection with any requisition so delivered and the payment of funds in
reliance thereon.
2. All moneys remaining in the Project Fund after the certificate
referred to in Section 5.05 of the Indenture is furnished shall, at the written
direction of an Authorized Company Representative, be applied in accordance
with Section 5.06 of the Indenture.
Section 3.04. Revision of Construction Plans. The Company may revise
the construction plans for the Project at any time and from time to time;
provided, however, that no such
<PAGE> 12
8.
revision shall be made prior to the Completion Date with respect to such
Project which would render the description of such Project inaccurate in any
material respect, except in accordance with the following procedure:
(a) Prior to any such revision the Company shall deliver to the
Trustee and the Authority (1) a certificate of an Authorized Company
Representative, setting forth the text of the change in the description of
such Project which would be necessary to reflect accurately the proposed
revision in plans and specifications, and certifying that, notwithstanding
such revision, such Project will still be designed to serve the purposes
which would have been served by such Project in the absence of such
revision, and (2) an opinion of Bond Counsel that such revision of such
Project description and the expenditure of moneys from the Project Fund
under the provisions of the Indenture to pay the Cost of Construction of
such Project in accordance with the revised description of such Project
will not impair the exclusion of interest on any of the Bonds then
outstanding from gross income for Federal income tax purposes.
(b) Ten (10) days after the receipt by the Authority and the Trustee
of the certificate and opinion referred to in paragraph (a) above, such
Project description shall be deemed amended to include such revision for
all purposes of this Participation Agreement and the Indenture. Upon the
request of either party or the Trustee, the Authority and the Company shall
enter into an appropriate instrument reflecting such amendment.
Section 3.05. Certification of Completion of Project. When the
Project has been completed (except for components that the Company has
determined not to complete in accordance with Section 3.01), the Company shall
promptly deliver to the Trustee and the Authority a certificate of an
Authorized Company Representative to the effect that, as of a specified date,
the Project has been completed (except as aforesaid). Such certificate shall
specify the components of the Project, if any, the completion of which has been
excused pursuant to Section 3.01. The certificate delivered pursuant to this
Section 3.05 shall also contain an appropriate direction to the Trustee with
respect to any amount in the Project Fund which is to be retained or thereupon
disposed of as provided in Section 5.06 of the Indenture. The Trustee may rely
as to the accuracy and completeness of all statements in such certificate.
Notwithstanding the foregoing, such certificate shall be given and may
state that it is given without prejudice to any
<PAGE> 13
9.
rights against third parties which exist at the date thereof or which may
subsequently come into being.
Section 3.06. Payment of Cost of Construction of the Project in Event
Project Fund Inadequate. If the moneys in the Project Fund available therefor
shall not be sufficient to pay the Cost of Construction of the Project in full
(whether due to investment losses or otherwise), the Company shall, subject to
the provisions of Section 3.01, complete the Project and pay (whether through
financing or otherwise) all that portion of the Cost of Construction thereof in
excess of the moneys available therefor in the Project Fund. The Authority
does not make any warranty, either express or implied, that the moneys which
will be paid into the Project Fund will be sufficient to pay the Cost of
Construction of the Project. If the Company shall pay any portion of the Cost
of Construction of the Project pursuant to the provisions of this Section,
except to the extent it may submit requisitions pursuant to Section 5.03 of the
Indenture, it shall not be entitled to any reimbursement therefor from the
Authority, the Trustee or the owners of any of the Bonds, nor shall it be
entitled to any diminution in or postponement of the payments required to be
paid by the Company pursuant to this Participation Agreement or the Company
Note.
Section 3.07. No Interest in Project Conferred. Neither the Authority
nor the Trustee shall be entitled to any interest in the Project by reason of
the advance of Bond proceeds pursuant to this Participation Agreement.
Section 3.08. Operation, Maintenance and Repair. The Authority and the
Company recognize that the Project will constitute integrated portions of the
electric energy production, transmission, and distribution facilities of the
Company and that it is not feasible to administer the Project separately from
such facilities. The Company shall operate the Project (with such changes,
improvements or additions as the Company may deem desirable) as part of such
facilities for the joint useful life of the Project and such facilities and
shall maintain and repair the Project in conformity with the Company's normal
maintenance and repair programs for such facilities provided that the Company
shall have no obligation to operate, maintain or repair any element or item of
the Project the operation, maintenance, or repair of which becomes uneconomic
to the Company because of damage or destruction or obsolescence (including
physical, functional and economic obsolescence), or change in government
standards and regulations, or the termination of the operation of the
facilities to which the element or item of the Project is an adjunct; and
provided further that,in any event, the Company is proceeding in good faith to
<PAGE> 14
10.
maintain the availability of the Project for use as an authorized project under
the Act.
Section 3.09. Investment of Moneys in Funds Under the Indenture. Any
moneys held as a part of any fund created under the Indenture shall be invested
or reinvested by the Trustee as provided in Article VII of the Indenture. Any
such investment shall be consistent with the provisions of the Tax Regulatory
Agreement.
Section 3.10. Agreement not to Exercise Option to Convert to Fixed
Rate Absent Specified Rating. The Company agrees not to direct that a Fixed
Rate become effective pursuant to Section 2.04(b) of the Indenture unless the
Company shall have delivered to the Authority evidence satisfactory to the
Authority that upon conversion to a Fixed Rate the Bonds are expected to be
rated in at least the third highest rating category of Moody's or S&P
(currently "A" in the case of Moody's and "A" in the case of S&P).
Section 3.11. Securities Depository. The Company acknowledges that the
Authority and the Trustee, at the request of the Company, have arranged for the
initial deposit of the Bonds with The Depository Trust Company ("DTC") which
will act as Securities Depository in order to effectuate a book-entry-only
system and that this system may be discontinued or, if discontinued,
reinstituted (with DTC or another Securities Depository) in accordance with the
Indenture. The Company agrees to take all actions necessary, and to refrain
from taking actions contrary to the effectuation of a book-entry-only system
established pursuant to the Indenture and any arrangements among the Authority,
the Trustee and any Securities Depository. The Authority shall not enter into
any written agreements with a Securities Depository without receipt and
acceptance of such agreements by the Company. The Company agrees that, absent
subsequent agreement among the Authority, the Trustee, the Company and a
Securities Depository, the Bonds shall not be held in a book-entry-only system
during any Money Market Municipal Rate Period.
<PAGE> 15
11.
ARTICLE IV
COMPANY NOTE AND PAYMENTS; LETTER OF CREDIT
Section 4.01. Execution and Delivery of Company Note to Trustee. 1.
Concurrently with the authentication by the Trustee and delivery by the
Authority of the Bonds and in order to evidence the obligation of the Company
to the Authority to repay the advance of the proceeds of the Bonds, the
Authority hereby directs the Company, and the Company hereby agrees, to execute
and deliver to the Trustee its Company Note and to duly and punctually pay the
principal of, premium, if any, and interest on, the Company Note at the place,
the times and in the manner provided therein. The Company Note shall be
substantially in the form attached hereto as EXHIBIT C.
2. The obligation of the Company to make any payment of principal of,
and premium, if any, and interest on, the Company Note shall be deemed
satisfied and discharged to the extent of the corresponding payment made by the
Bank under the Letter of Credit.
Section 4.02. Redemption of Bonds. Whenever Bonds are redeemable in
whole or in part, the Authority will redeem the same at the written direction
of an Authorized Company Representative given in accordance with Section 8.01
of the Indenture.
Section 4.03. Obligation for Payment Absolute; Deficiencies. The
Company agrees that its obligation to make the Company Note Payments and
payments under Section 4.11 at the times and in the amounts provided in the
Company Note and this Participation Agreement shall be absolute, irrevocable
and unconditional and shall not be subject to any defense (other than payment)
or any right of set-off, counterclaim or recoupment for any reason, including,
without limitation, the unenforceability (because of judicial decision or
otherwise) or the impossibility of performance of the Company Note obligations,
or any breach by the Authority of any obligation to the Company, whether under
this Participation Agreement or otherwise, or inaccuracy of any representation
by the Authority to the Company under this Participation Agreement or in any
other instrument, or any indebtedness or liability at any time owing to the
Company by the Authority, or any failure to complete the Project, or the
destruction by fire or other casualty of the Project or any portion thereof, or
the taking of title thereto or the use thereof by the exercise of the power of
eminent domain. If for any reason Company Note Payments, together with other
moneys held by the Trustee and then available for such purpose (including
moneys paid by the Bank under the Letter of Credit), would not be sufficient to
make the corresponding payments of principal of, and premium, if any, and
<PAGE> 16
12.
interest on, the Bonds when such payments are due, the Company will pay the
amounts required from time to time to make up any such deficiency. If for any
reason payments under Section 4.11, together with other moneys held by the
Trustee and the Tender Agent and then available for such purpose (including
moneys paid by the Bank under the Letter of Credit), would not be sufficient to
make the corresponding payments of the purchase price of the Bonds when such
payments are due, the Company will pay the amounts required from time to time
to make up any such deficiency.
Section 4.04. Administration Fees; Expenses, Etc. In order to defray a
portion of the expenses incurred by the Authority in conducting and
administering its programs for the acquisition and construction of facilities
for the furnishing of electricity, special energy projects and the development
of advanced technologies, the Company shall pay to the Authority an initial
Administration Fee in the amount of $125,000 on the date of the delivery of the
Bonds to the initial purchasers thereof and an annual Administration Fee in the
amount of $6,500 on November 1 of each year commencing November 1, 1994, until
the Bonds are no longer outstanding. In addition, the Company shall pay to the
State of New York with respect to the Bonds a bond issuance charge in the
amount of $175,000 on the date of authentication and delivery of the Bonds to
the initial purchasers.
In addition to such Administration Fees, the Company will pay or
reimburse the Authority upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Authority (including
printing costs and the reasonable fees, expenses and disbursements of its
counsel, bond counsel and co-bond counsel) in connection with the Participation
Agreement, the Indenture or any transaction or event contemplated by the
Participation Agreement, the Tax Regulatory Agreement or the Indenture.
Section 4.05. Compensation of Trustee, Paying Agent, Remarketing
Agents, Indexing Agent and Tender Agent. The Company agrees:
(1) to pay to the Trustee from time to time upon its request
reasonable compensation for all services rendered by it in any capacity
under the Indenture (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as so otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred by it in any capacity under the Indenture (including the
reasonable
<PAGE> 17
13.
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith;
(3) to pay to the Paying Agent from time to time upon its request,
reasonable compensation for all services rendered by it as Paying Agent
under the Indenture and reimburse it for its reasonable expenses incurred
under the Indenture (including reasonable compensation and expenses and
disbursements of its agents and counsel), except any such expense as may be
attributable to its negligence or bad faith; and
(4) to pay to the Remarketing Agents, the Tender Agent and the
Indexing Agent their reasonable fees and expenses as and when the same
become due, except any such expense as may be attributable to such person's
negligence or bad faith.
Section 4.06. Project Not Security for Bonds. It is expressly
recognized by the parties that neither the Project nor any other property of
the Company will constitute any part of the security for the Bonds.
Section 4.07. Payment of Taxes and Assessments; No Liens or Charges.
The Company will (a) pay, when the same shall become due, all taxes and
assessments, including income, profits, property or excise taxes, if any, or
other municipal or governmental charges, imposed, levied or assessed by the
Federal, state or any municipal government upon the Authority, the Tender Agent
or the Trustee in respect of any payments (other than payments made pursuant to
Sections 4.04 and 4.05) made or to be made pursuant to this Participation
Agreement or the Company Note and (b) pay or cause to be discharged, within
sixty (60) days after the same shall accrue, any lien or charge upon any such
payment made or to be made under this Participation Agreement, provided that
the Company shall not be required to pay any such tax or assessment so long as
(i) the Company at its expense contests by appropriate legal proceedings
conducted in good faith and with due diligence the amount, validity or
application of any such tax, assessment or charge, (ii) such proceedings shall
have the effect of suspending the collection thereof from the Authority, the
Trustee and the Tender Agent, and (iii) the Company shall indemnify and hold
the Authority, the Trustee and the Tender Agent harmless from any losses,
costs, charges, expenses (including reasonable attorneys' fees and
disbursements), judgments and liabilities arising in respect of such tax,
assessment or charge and the nonpayment thereof.
<PAGE> 18
14.
Section 4.08. Indemnification of Authority, Trustee, Tender Agent,
Paying Agent, Remarketing Agents and Indexing Agent. Any obligation of the
Authority created by or arising out of this Participation Agreement shall be a
limited obligation of the Authority, payable solely from the Company Note
Payments, any payments by the Company under Section 4.11, funds drawn under the
Letter of Credit and any other funds held by the Trustee under the Indenture
and available for such payment, and shall not constitute an indebtedness of or
a charge against the general credit of the Authority and shall not constitute
or give rise to any pecuniary liability of the Authority; nevertheless, if the
Authority shall incur any such pecuniary liability, then in such event the
Company shall indemnify and hold the Authority harmless by reason thereof. The
Company releases the Authority, the Trustee, any Paying Agent, the Remarketing
Agents, the Tender Agent and the Indexing Agent from, agrees that the
Authority, the Trustee, the Remarketing Agents, the Tender Agent, any Paying
Agent and the Indexing Agent shall not be liable for, and agrees to indemnify
and hold the Authority, the Trustee, any Paying Agent, the Remarketing Agents,
the Tender Agent and the Indexing Agent harmless from, any liability for any
loss or damage to property or any injury to or death of any person that may be
occasioned by any cause whatsoever arising out of the construction or operation
of the Project or the financing thereof. The Company agrees to indemnify and
hold the Authority, its members, officers and employees, the Trustee, the
Tender Agent, any Paying Agent and the Indexing Agent harmless from any losses,
costs, charges, expenses (including reasonable attorneys' fees and
disbursements), judgments and liabilities incurred by it or them, as the case
may be, in connection with any claims made, any action, suit or proceeding
instituted or threatened, in connection with the transactions contemplated by
this Participation Agreement or the Indenture so long as, in the case of the
Authority, its members, officers and employees, it or they, as the case may be,
have acted in good faith to carry out the transactions contemplated by this
Participation Agreement, the Remarketing Agreement or the Indenture and,
except, in the case of the Trustee, the Tender Agent, any Paying Agent and the
Indexing Agent, the Trustee's, the Tender Agent's, the Paying Agent's and the
Indexing Agent's willful misconduct or negligence.
Section 4.09. Company to Pay Attorneys' Fees and Disbursements. If the
Company shall default under any of the provisions of this Participation
Agreement and the Authority or the Trustee or both of them shall employ
attorneys or incur other expenses for the collection of payments due under this
Participation Agreement or for the enforcement of performance or observance of
any obligation or agreement on the part of the Company contained in this
Participation Agreement, the Company will
<PAGE> 19
15.
on demand therefor reimburse the reasonable fees of such attorneys and such
other reasonable disbursements so incurred.
Section 4.10. No Abatement of Administration Fees and Other Charges.
It is understood and agreed that so long as any Bonds are outstanding under the
Indenture, Administration Fees and other charges payable to the Authority
pursuant to this Participation Agreement shall continue to be payable at the
times and in the amounts herein specified, whether or not the Project, or any
portion thereof, shall have been destroyed by fire or other casualty, or title
thereto or the use thereof shall have been taken by the exercise of the power
of eminent domain, and that there shall be no abatement of any such
Administration Fees and other charges by reason thereof.
Section 4.11. Payment to Tender Agent. The Company shall pay, or cause
to be paid, to the Tender Agent amounts equal to the amounts to be paid
pursuant to Section 2.05 of the Indenture in respect of Bonds tendered for
purchase or deemed to be so tendered pursuant to the terms of Section 2.05 of
the Indenture, such amounts to be paid by the Company to the Tender Agent on
the dates such payments pursuant to Section 2.05 of the Indenture are to be
made; provided, however, that the obligation of the Company to make any such
payment shall be reduced by the amount of any moneys available for such payment
under clauses (i) through (iii) of Section 2.05(h) of the Indenture and
provided, further, that the obligation of the Company to make any such payment
shall be deemed satisfied and discharged to the extent of the corresponding
payment made by the Bank under the Letter of Credit.
Section 4.12. The Letter of Credit. At all times on or prior to the
Fixed Rate Conversion Date except during any period when all the Bonds then
outstanding are held by or for the account of the Company, a Letter of Credit
meeting the requirements of this Section 4.12 shall be in effect and, in the
event that an Alternate Credit Facility is to replace an expiring Letter of
Credit, the requirements of Section 2.05(j) and Section 6.07 of the Indenture
will be fulfilled. A Letter of Credit shall be an obligation of a bank or
banks, insurance company or companies, other financial institution or
institutions, or any combination of the foregoing, entitling the Trustee to
draw up to (a) an amount equal to the principal amount of the Bonds then
outstanding to pay (i) the principal of the Bonds when due, or (ii) the portion
of the Purchase Price of Bonds corresponding to principal, plus (b) an amount
equal to 210 days' accrued interest on the Bonds then outstanding computed at
the maximum rate specified in such Letter of Credit, which shall in no event
exceed fifteen percent (15%), on the basis of a 360-day year. A Letter of
Credit shall expire (1) at its stated expiration date, which shall be no
earlier than
<PAGE> 20
16.
two (2) days after the next succeeding Optional Tender Date or Purchase Date
not less than six months from its effective date, (2) when all available
amounts have been drawn, (3) one (1) day after the Fixed Rate Conversion Date,
(4) on the effective date of any Alternate Credit Facility that replaces the
then effective Letter of Credit, (5) the earliest date on which no Bonds are
outstanding, whichever shall occur first and (6) twelve (12) days after the
Trustee receives notice from the Bank that it is terminating the Letter of
Credit and directing the Trustee to cause a mandatory tender and purchase of or
to accelerate the Bonds. A Letter of Credit shall provide that when there is a
drawing to pay interest on scheduled payment dates, if the Trustee does not
receive from the Bank by the close of business on a day specified therein,
which shall not be later than the tenth (10th) day following such a drawing in
respect of interest, notice by telephone confirmed in writing (or by other
means acceptable to the Trustee and the Authority) that the amount available to
be drawn has not been reinstated by the amount of the drawing for interest
(except on principal of a Bond being paid or purchased and cancelled), the
amount available to be drawn will automatically be reinstated by the amount of
the drawing on such specified day.
<PAGE> 21
17.
ARTICLE V
SPECIAL COVENANTS
Section 5.01. No Warranty as to Suitability of Project. The Authority
makes no warranty, either express or implied, with respect to actual or
designed capacity of the Project, as to the suitability of the Project for the
purposes specified in this Participation Agreement, as to the condition of the
Project, or as to the suitability of the Project for the Company's purposes or
needs.
Section 5.02. Authority's Rights to Inspect Project and Plans and
Specifications. The Authority shall have the right at all reasonable times to
examine and inspect the Project and, to the extent reasonably available, the
plans and specifications therefor and such other information and records
relating to the Project as may be reasonably necessary to establish the
qualification of the Project for financing under the Act and compliance with
this Participation Agreement.
Section 5.03. Company Consent to Amendment of Indenture. The
Authority shall not enter into any indenture supplemental to or amendatory of
the Indenture without the prior consent of the Company as evidenced by a
certificate in writing signed by an Authorized Company Representative.
Section 5.04. Tax Covenant. Notwithstanding any other provision
hereof, the Company covenants and agrees that it will not take or authorize or
permit any action to be taken with respect to the Project, or the proceeds of
Bonds, including any amounts treated as proceeds of the Bonds for any purpose
of Section 103 of the Code, which will result in the loss of the exclusion of
interest on the Bonds from gross income for Federal income tax purposes under
Section 103 of the Code (except for any Bond during any period while any such
Bond is held by a person referred to in Section 147(a) of the Code). This
provision shall control in case of conflict or ambiguity with any other
provision of this Participation Agreement. In furtherance of such covenant and
agreement, the Authority and the Company have entered into the Tax Regulatory
Agreement and the Company hereby agrees to comply with the provisions thereof
insofar as the Tax Regulatory Agreement relates to the Bonds.
Section 5.05. Company Agrees to Perform Obligations Imposed by
Indenture. The Company agrees to perform such obligations as may be required
of it by the provisions of the Indenture.
<PAGE> 22
18.
Section 5.06. Maintenance of Office or Agency of Company. The Company
will at all times keep in Hicksville, New York, or another location in the
State of New York an office or agency where notices and demands with respect to
the Company Note and this Participation Agreement may be served, and will, from
time to time, give written notice to the Trustee and the Authority of the
location of such office or agency; and, in case the Company shall fail so to
do, notices may be served and demands may be made at the principal office of
the Trustee.
Section 5.07. Further Assurances. The Company will make, execute,
acknowledge and deliver, or cause to be made, executed, acknowledged and
delivered, to the Trustee any and all such further acts, instruments or
assurances as may be reasonably required for effectuating the intention of this
Participation Agreement and the Company Note.
Section 5.08. Payment of Taxes and Other Charges. The Company will
promptly pay and discharge, or cause to be paid and discharged, as the same
become due and payable, any and all taxes, rates, levies, assessments, and
governmental liens, claims and other charges at any time lawfully imposed or
accruing upon or against the Company or upon or against its properties or any
part thereof, or upon the income derived therefrom or from the operations of
the Company, provided that the Company shall not be required to pay or
discharge, or cause to be paid or discharged, any such obligation, tax, rate,
levy, assessment, lien, claim or other charge so long as in good faith and by
appropriate legal proceedings the validity thereof shall be contested.
Section 5.09. Maintenance of Properties. The Company will at all
times make or cause to be made such expenditures for repairs, maintenance and
renewals, or otherwise, as shall be necessary to maintain its properties in
good repair, working order and condition as an operating system or systems to
the extent necessary to meet the Company's obligations under the Public Service
Law of the State of New York and the Participation Agreement; provided,
however, that nothing herein contained shall be construed to prevent the
Company from ceasing to operate any of its plants or any other property, if, in
the judgment of the Company, it is advisable not to operate the same and the
operation thereof shall not be essential to the maintenance and continued
operation of the rest of the operating system or systems, and the security
under the Indenture afforded by the Company Note will not be substantially
impaired by the termination of such operation. It is understood that the
Company has agreed pursuant to a settlement with the State of New York,
approved by the Company's shareholders on June 28, 1989, not to operate the
Shoreham Nuclear Power Station.
<PAGE> 23
19.
Section 5.10. Insurance. The Company will keep or cause to be kept
such parts of its properties as, in the opinion of an Authorized Company
Representative (as defined in the Indenture and who shall be a licensed
professional engineer), are of an insurable nature, insured against loss or
damage by fire or other casualties, the risk of which is customarily insured
against by companies similarly situated and operating like properties, to the
extent that property of similar character is customarily insured against by
such companies, either (a) by reputable insurers or (b) in whole or in part in
the form of reserves or of one or more insurance funds created by the Company,
whether alone or with other corporations, provided that the plan of each such
insurance fund shall have been or shall be approved by the Board of Directors
of the Company. Notwithstanding the foregoing, the Company may carry a lesser
amount of insurance with respect to Shoreham Nuclear Generating Station to the
extent that the Company has received an exemption from the Nuclear Regulatory
Commission permitting it to carry such lesser amount.
Section 5.11. Proper Books of Record and Account. The Company will at
all times keep or cause to be kept proper books of record and account, in which
full, true and correct entry will be made of all dealings, business and affairs
of the Company, including proper and complete entries to capital or property
accounts covering property worn out, obsolete, abandoned or sold, all in
accordance with the requirements of any system of accounting or keeping
accounts or the rules, regulations or orders prescribed by a regulatory
commission with jurisdiction over the rates of the Company giving rise to at
least fifty-one percent (51%) of the Company's gross revenues, or if there are
no such requirements or rules, regulations or orders, then in compliance with
generally accepted accounting principles.
Section 5.12. Certificates as to Defaults. The Company shall file
with the Trustee, on or before April 30 of each year, a certificate signed by
an Authorized Company Representative (as defined in the Indenture) stating
that, to the best of his knowledge, information and belief, the Company has
kept, observed, performed and fulfilled each and every one of its covenants and
obligations contained in this Participation Agreement and in the Company Note
and, to the best of his knowledge, information and belief, there does not exist
at the date of such certificate any default by the Company under this
Participation Agreement or any event of default hereunder or other event which,
with notice or the lapse of time specified in Section 6.01, or both, would
become an event of default or, if any such default or event of default or other
event shall so exist, specifying the same and the nature and status thereof.
<PAGE> 24
20.
Section 5.13. Company Not to Permit Hindrance or Delay of Payment of
Company Note. The Company will not voluntarily do, suffer or permit any act or
thing intended to hinder or delay the payment of the indebtedness evidenced by
the Company Note.
Section 5.14. Corporate Existence, Consolidation, Merger or Sale of
Assets. The Company will maintain its corporate existence, will not
consolidate with or permit itself to be merged into any other corporation or
corporations, or sell, transfer or otherwise dispose of all or substantially
all of its properties and assets, except in the manner and upon the terms and
conditions set forth in this Section 5.14.
Nothing contained in this Participation Agreement shall prevent (and
this Participation Agreement shall be construed as permitting and authorizing)
any lawful consolidation or merger of the Company with or into any other
corporation or corporations lawfully authorized to acquire and operate the
properties of the Company, or a series of consolidations or mergers, in which
the Company or its successor or successors shall be a party, or any sale of all
or substantially all the properties of the Company as an entirety to a
corporation lawfully authorized to acquire and operate the same; provided that,
upon any consolidation, merger or sale, the corporation formed by such
consolidation, or into which such merger may be made, or making such purchase
shall execute and deliver to the Trustee an instrument, in form satisfactory to
the Trustee, whereby such corporation shall effectually assume the due and
punctual payment of the principal of, and premium, if any, and interest on, the
Company Note according to its tenor and the due and punctual performance and
observance of all covenants and agreements to be performed by the Company
pursuant to this Participation Agreement, the Tax Regulatory Agreement and the
Company Note.
Every such successor corporation shall possess, and may exercise, from
time to time, each and every right and power hereunder of the Company, in its
name or otherwise; and any act, proceeding, resolution or certificate by any of
the terms of this Participation Agreement, the Tax Regulatory Agreement and the
Company Note required or provided to be done, taken and performed or made,
executed or verified by any board or officer of the Company shall and may be
done, taken and performed or made, executed or verified with like force and
effect by the corresponding board or officer of any such successor corporation.
If consolidation, merger or sale or other transfer is made as permitted
by this Section, the provisions of this Section shall continue in full force
and effect and no further consolidation,
<PAGE> 25
21.
merger or sale or other transfer shall be made except in compliance with the
provisions of this Section.
Section 5.15. Financial Statements of Company. The Company agrees to
furnish the Trustee with a copy of its annual report to stockholders for each
year, beginning with the year 1994, on or before March 31 of the subsequent
year or as soon thereafter as it is reasonably available. The Company further
agrees to furnish to the Trustee, and to any owner of the Bonds if requested in
writing by such owner, all financial statements which it sends to its
shareholders generally.
Section 5.16. Compliance with Laws. The Company agrees to comply in
all material respects with all applicable laws, rules and regulations and
orders of any governmental authority, non-compliance with which would adversely
affect the Company's ability to perform its obligations hereunder or under the
Tax Regulatory Agreement or the Company Note, except laws, rules, regulations
or orders being contested in good faith or laws, rules, regulations or orders
which the Company has applied for variances from, or exceptions to.
<PAGE> 26
22.
ARTICLE VI
DEFAULTS BY COMPANY; REMEDIES
Section 6.01. Events of Default; Acceleration. In case one or more of
the following events of default shall have occurred and be continuing:
(a) failure by the Company to pay when due any amount required to be
paid under this Participation Agreement or the Company Note, which failure
causes a default in the payment when due of the interest on any of the Bonds
and continuance of such default for five (5) days; or
(b) failure by the Company to pay when due any amount required to be
paid under this Participation Agreement or the Company Note, which failure
causes a default in the payment when due of the principal of, or premium, if
any, on any of the Bonds; or
(c) failure by the Company to pay when due any amount required to be
paid under Section 4.11, which failure causes a default in the payment when due
of any amount payable pursuant to Section 2.05 of the Indenture and continuance
of such default for five (5) days; or
(d) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company contained in
this Participation Agreement (other than failure to pay amounts required to be
paid under Sections 4.04, 4.05, 4.08, 4.09 or 4.10) or in the Company Note for
a period of ninety (90) days after the date on which written notice of such
failure, requiring the Company to remedy the same, shall have been given to the
Company by the Authority or the Trustee; or
(e) an Act of Bankruptcy relating to the Company; or
(f) the occurrence and continuance of an "event of default" as defined
in the Company Indenture;
then, and in any such event, the Trustee, may, and upon the written request of
the owners of at least twenty-five percent (25%) in aggregate principal amount
of the Bonds then outstanding shall, by notice in writing to the Company and
provided that the default has not theretofore been cured, declare the Company
Note to be due and payable immediately, and upon any such declaration the same
shall become and shall be immediately due and payable, anything contained in
this Participation Agreement or in the Company Note to the contrary
notwithstanding. Any amounts collected by the Trustee
<PAGE> 27
23.
pursuant to action taken under this Section 6.01 shall be applied in accordance
with the Indenture. In addition, if at any time the principal of the Bonds
shall have been declared to be due and payable by acceleration pursuant to the
terms of the Indenture, the Company Note shall thereupon become and be
immediately due and payable, subject to such declaration with respect to the
Bonds being annulled pursuant to Section 10.01 of the Indenture.
The right or obligation of the Trustee to make any such declaration as
aforesaid, however, is subject to the condition that if, at any time after
declaration, but before all the Bonds shall have matured by their terms, the
principal of, premium, if any, and interest on, the Company Note which shall
have become due and payable otherwise than by such declaration, and all other
sums payable hereunder, except the principal of, and interest on, the Company
Note which shall have become due and payable by such declaration, shall have
been paid or provision satisfactory to the Trustee shall have been made for
such payment, and the reasonable expenses of the Trustee and of the owners of
the Bonds shall have been paid, including reasonable attorneys' fees paid or
incurred, and all defaults hereunder and under the Bonds or under the
Indenture, except as to the payment of principal and interest due and payable
solely by reason of such declaration, shall be made good or be secured to the
satisfaction of the Trustee or provision deemed by the Trustee to be adequate
shall be made therefor, then and in every such case the owners of a majority in
aggregate principal amount of the Bonds then outstanding, by written notice to
the Authority and to the Trustee, may rescind such declaration and annul such
default in its entirety, or, if the Trustee shall have acted in the absence of
a written request of the owners of at least twenty-five percent (25%) in
aggregate principal amount of the outstanding Bonds, and if there shall not
have been theretofore delivered to the Trustee written direction to the
contrary by the owners of at least twenty-five percent (25%) in aggregate
principal amount of the outstanding Bonds, then any such declaration shall ipso
facto be deemed to be rescinded and any such default and its consequences shall
ipso facto be deemed to be annulled, but no such rescission and annulment shall
extend to or affect any subsequent default or impair or exhaust any right or
power consequent thereon.
In case the Trustee shall have proceeded to enforce any right under
this Participation Agreement or the Company Note and such proceedings shall
have been discontinued or abandoned for any reason or shall have been
determined adversely to the Trustee, then and in every such case the Company,
the Authority and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Company, the Authority and the Trustee shall continue as though no such
proceedings had been taken.
<PAGE> 28
24.
Section 6.02. Certain Events of Default; Authority or Trustee May Take
Certain Actions. In case the Company shall have failed to comply with its
obligations under Article III or under Sections 4.04, 4.08, 4.09, 4.10 or 5.16,
which event shall have continued for a period of ninety (90) days after the
date on which written notice of such failure, requiring the Company to remedy
the same, shall have been given to the Company by the Authority or the Trustee,
the Authority or the Trustee may take whatever action at law or in equity as
may appear necessary or desirable to enforce performance or observance of any
obligations or agreements of the Company under said Article or Sections. In
case the Company shall have failed to comply with its obligations under Section
4.05, which event shall have continued for a period of ninety (90) days after
the date on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the Trustee, the
Trustee may take whatever action at law or in equity as may appear necessary or
desirable to the Trustee to enforce performance or observance of any
obligations or agreements of the Company under said section.
Section 6.03. Judicial Proceedings by Trustee. Upon the occurrence
and continuance of an event of default (as defined in Section 6.01) the Trustee
may, and upon the written request of the owners of at least twenty-five percent
(25%) in aggregate principal amount of the Bonds then outstanding and receipt
by the Trustee of indemnity satisfactory to it shall, institute any actions or
proceedings at law or in equity for the collection of any amounts then due and
unpaid on the Company Note, and may prosecute any such action or proceeding to
judgment or final decree, and may collect in the manner provided by law the
moneys adjudged or decreed to be payable.
<PAGE> 29
25.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Disposition of Amounts After Payment of Bonds. Any
amounts determined by the Trustee to be remaining in the funds created under
the Indenture after payment in full, or provision for payment in full, of
principal of, and premium, if any, and interest on, all of the Bonds, in
accordance with the provisions of the Indenture, and payment of all the fees,
charges and expenses of the Authority, the Trustee, the Tender Agent, the
Indexing Agent, the Remarketing Agents and the Paying Agents in accordance with
the Indenture and this Participation Agreement and any amounts required to be
paid to the United States of America pursuant to the Tax Regulatory Agreement,
shall be paid to the Bank; provided, however, that on or after the Fixed Rate
Conversion Date and solely with respect to moneys not resulting from a draw on
the Letter of Credit and not constituting remarketing proceeds, such amounts
that would be payable to the Bank pursuant to this Section 7.01 shall be paid
to the Company if the Bank has been paid in full under the Reimbursement
Agreement.
Section 7.02. Notices. All notices, certificates, requests or other
communications between the Authority, the Company and the Trustee required to
be given under this Participation Agreement or under the Indenture (except as
otherwise provided therein) shall be sufficiently given and shall be deemed
given when delivered or mailed by first class mail, postage prepaid, addressed
as follows if to the Authority, at 2 Empire State Plaza, Albany, New York
12223, Attention: President; if to the Company, at 175 East Old Country Road,
Hicksville, New York 11801, Attention: Treasurer; and if to the Trustee, at
450 West 33rd Street, 15th Floor, New York, New York 10001 Attention:
Corporate Trustee Administration Department and if to the Tender Agent,
Remarketing Agents or the Indexing Agent to the addresses set forth for such
persons in Section 16.05 of the Indenture. A duplicate copy of each notice,
certificate, request or other communication given hereunder to the Authority,
the Company or the Trustee shall also be given to the others. The Company, the
Authority and the Trustee may, by notice given hereunder, designate any further
or different addresses to which subsequent notices, certificates, requests or
other communications shall be sent.
Section 7.03. Successors and Assigns. This Participation Agreement
shall inure to the benefit of and shall be binding upon the Authority, the
Company, the Bank, the Trustee and their respective successors and assigns.
<PAGE> 30
26.
Section 7.04. Amendment of Participation Agreement. This
Participation Agreement may not be amended except by an instrument in writing
signed by the parties and, if such amendment occurs after the issuance of the
Bonds, upon compliance with the provisions of Sections 4.01 and 4.02 of the
Indenture.
Section 7.05. Assignment by Authority. The Authority shall assign its
rights under and interest in this Participation Agreement (except the rights
and interest of the Authority under Article III and Sections 4.04, 4.08, 4.09,
4.10 and 5.16), subject to the provisions of this Participation Agreement
relating to the amendment thereof, to the Trustee pursuant to the Indenture, as
security for payment of the principal of, and premium, if any, and interest on,
the Bonds. In addition, the Trustee shall have the same power as the Authority
to enforce from time to time the rights of the Authority set forth in Article
III and Section 5.16, subject to the provisions of this Participation Agreement
relating to the amendment hereof. Except as provided in this Section 7.05, the
Authority will not sell, assign, transfer, convey or otherwise dispose of its
interest in this Participation Agreement during the term of this Participation
Agreement.
Section 7.06. Participation Agreement Supersedes Any Prior Agreements.
This Participation Agreement supersedes any other prior agreements or
understandings, written or oral, between the parties with respect to the
transactions contemplated hereby.
Section 7.07. Counterparts. This Participation Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be an original, but such counterparts shall together constitute
but one and the same Participation Agreement.
Section 7.08. Severability. If any clause, provision or section of
this Participation Agreement is held illegal, invalid or unenforceable by any
court or administrative body, such Participation Agreement shall be construed
and enforced as if such illegal or invalid or unenforceable clause, provision
or section had not been contained in this Participation Agreement. In case any
agreement or obligation contained in this Participation Agreement shall be held
to be in violation of law, then such agreement or obligation shall be deemed to
be the agreement or obligation of the Authority or the Company, as the case may
be, to the full extent permitted by law.
<PAGE> 31
SECTION 7.09. NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION OF THIS PARTICIPATION AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed as of the day and year first written above.
NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY
By /s/ Francis J. Murray, Jr.
----------------------------
Francis J. Murray, Jr.
Chair
(SEAL)
ATTEST:
/s/ Howard A. Jack
- ----------------------
Howard A. Jack
Secretary
LONG ISLAND LIGHTING COMPANY
By
----------------------------
Treasurer
(SEAL)
ATTEST:
- ----------------------
Assistant Secretary
<PAGE> 32
SECTION 7.09. NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION OF THIS PARTICIPATION AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed as of the day and year first written above.
NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY
By
----------------------------
Chair
(SEAL)
ATTEST:
- ----------------------
Secretary
LONG ISLAND LIGHTING COMPANY
By /s/ Anthony Nozzolillo
----------------------------
Anthony Nozzolillo
Treasurer
(SEAL)
ATTEST:
/s/ Herbert M. Leiman
- ----------------------
Herbert M. Leiman
Assistant Secretary
<PAGE> 33
EXHIBIT A
(To Participation Agreement dated as
of November 1, 1993, between New York
State Energy Research and Development
Authority and Long Island Lighting Company)
DESCRIPTION OF
ELECTRIC FACILITIES
The Project will consist of the following facilities which are to be
acquired, constructed and installed by Long Island Lighting Company (the
"Utility") as part of the Utility's electric system:
1. Production Facilities;
2. Transmission Facilities including interconnections and subtransmission;
3. Distribution Facilities, including stations, lines, transformers and
meters;
4. Certain Common Facilities.
All such facilities are as further described in the Tax Regulatory
Agreement between the Authority and the Company dated the date of the initial
delivery of the Bonds.
The Project shall also include (i) such instrumentation, controls,
structures and all other facilities, equipment, devices and the like necessary
to support the facilities herein described, (ii) such necessary land
improvements, and (iii) subject to Section 3.04 of the Participation Agreement,
such additional or substituted facilities for the furnishing of electric energy
which, because of changes in technology, environmental standard, cost or the
like, the Utility determines shall be added or substituted for said facilities.
<PAGE> 34
EXHIBIT B
(To Participation Agreement dated as of November 1, 1993,
between New York State Energy Research and Development
Authority and Long Island Lighting Company)
DESCRIPTION OF OTHER FACILITIES
Any portion of the Electric Facilities described in Exhibit A as shall
have been placed in service more than one year prior to the date of the
original issuance and delivery of the Bonds.
<PAGE> 35
EXHIBIT C
(To Participation Agreement dated as of November 1, 1993,
between New York State Energy Research and Development
Authority and Long Island Lighting Company)
LONG ISLAND LIGHTING COMPANY
$50,000,000
PROMISSORY NOTE
FOR
ELECTRIC FACILITIES REVENUE BONDS
(LONG ISLAND LIGHTING COMPANY PROJECT), 1993 SERIES B
Long Island Lighting Company (the "Corporation"), a New York
corporation, for value received, hereby promises to pay, on or before the dates
set forth below, the amounts set forth below, to Chemical Bank, New York, New
York, as trustee or its successor or successors as trustee (the "Trustee")
under the Indenture of Trust relating to the above-referenced Bonds dated as of
November 1, 1993, between the New York State Energy Research and Development
Authority (the "Authority"), a body corporate and politic, constituting a
public benefit corporation, established and existing under and by virtue of the
laws of the State of New York, and the Trustee. Such Indenture of Trust, as it
may be amended or supplemented from time to time, is herein called the
"Indenture." Unless otherwise defined herein, the terms used in this promissory
note (the "Company Note") which are defined in Section 1.01 of the Indenture
shall have the meanings, respectively, herein which such terms are given in
said Section 1.01 of the Indenture.
This Company Note is issued pursuant to the Participation Agreement in
order to evidence the obligation of the Company to the Authority to repay the
advance of the proceeds of the Bonds. In accordance with the Participation
Agreement, the Authority has authorized and directed the Company to issue this
Company Note payable to the order of the Trustee as security for the payment of
principal of, premium, if any, and interest on, the Bonds. The rights and
interest of the Authority under the Participation Agreement (except the rights
and interest of the Authority under Article III and Sections 4.04, 4.08, 4.09
and 4.10 and 5.16 thereof), subject to the provisions of the Participation
Agreement relating to the amendment thereof, have been assigned to the Trustee
pursuant to the Indenture. In addition, the Authority has granted the Trustee
the same power as the Authority to enforce from time to time the rights of the
Authority set forth in said Article III and Section 5.16, subject to the
provisions of the Participation Agreement relating to the amendment thereof.
All of
<PAGE> 36
C-2
the terms, conditions and provisions of the Participation Agreement are, by
this reference thereto, incorporated herein as part of this Company Note.
This Company Note shall be payable as to principal, premium, if any, and
interest as follows:
(a) On or before each Interest Payment Date, commencing May 1, 1994, a sum
which together with other moneys then available for such purpose in the
Bond Fund will enable the Trustee to pay the interest on the Bonds coming
due on such date;
(b) On or before any redemption date for the Bonds (other than a redemption
date pursuant to Section 8.05 of the Indenture), a sum which together with
other moneys then available for such purpose in the Bond Fund will enable
the Trustee to pay the principal of, premium, if any, and interest on the
Bonds which are to be redeemed on such date; and
(c) On or before November 1, 2023, a sum which together with other moneys
then available for such purpose in the Bond Fund will enable the Trustee to
pay the outstanding principal amount of the Bonds;
provided that, if the Bonds are redeemed pursuant to Section 8.05 of the
Indenture, the amounts that would otherwise have been payable on this Company
Note if not for such redemption, shall continue to be payable at the times and
in the amounts set forth above as if such redemption had not occurred; and
provided further that if the Bonds are redeemed pursuant to Section 8.05 of the
Indenture the Company shall have the right at any time thereafter to prepay
this Company Note by paying the amount due on this Company Note at the time of
such prepayment together with unpaid interest accrued thereon to the date of
such prepayment.
The obligation of the Company to make any payment of principal of, and
premium, if any, and interest on, this Company Note shall be deemed satisfied
and discharged to the extent of the corresponding payment made by the Bank
under the Letter of Credit.
All payments of principal of, and premium, if any, and interest on,
this Company Note shall be made in immediately available funds to the Trustee
at its corporate trust office, 450 West 33rd Street, 15th Floor, New York, New
York 10001, Attention: Corporate Trustee Administration Department, Wire
Transfer Number: 967-0-22461, or to such different address or wire transfer
number as the Trustee may from time to time designate, on or before each date
on which such principal, premium, if any, or interest is due in such coin or
currency of the United States of America as at
<PAGE> 37
C-3
the time of payment shall be legal tender for the payment of public and private
debts.
The Company has agreed in the Participation Agreement that if for any
reason Company Note Payments, together with other moneys held by the Trustee
and then available for such purpose (including moneys paid by the Bank under
the Letter of Credit), would not be sufficient to make the corresponding
payments of principal of, and premium, if any, and interest on, the Bonds when
such payments are due, the Company will pay the amounts required from time to
time to make up any such deficiency.
In the event that payment has been made in respect of the principal of
and premium, if any, and interest on, all of the Bonds, or provision therefor
has been made in accordance with Article XIV of the Indenture, then this
Company Note shall be deemed paid in full and shall be cancelled and returned
to the Company; provided that this Company Note shall not be deemed paid in
full if the Bonds are redeemed pursuant to Section 8.05 of the Indenture.
No reference herein to the Participation Agreement shall impair the
obligation of the Company to pay the principal of and premium, if any, and
interest on this Company Note at the time and place and in the amounts herein
prescribed, which obligation is absolute, irrevocable and unconditional and is
not subject to any defense (other than payment) or any right of set-off,
counterclaim or recoupment for any reason, including, without limitation, any
breach by the Authority of any obligation to the Company, whether under the
Participation Agreement or otherwise, or inaccuracy of any representation by
the Authority to the Company under the Participation Agreement, or any
indebtedness or liability at any time owing to the Company by the Authority or
any failure to complete the Project or the destruction by fire or other
casualty of the Project or any portion thereof, or the taking of title thereto
or the use thereof by the exercise of the power of eminent domain.
In case of an event of default (as defined in Section 6.01 of the
Participation Agreement), the principal of and interest to the date of payment
of this Company Note may be declared immediately due and payable as provided in
the Participation Agreement. In addition, if at any time the principal of the
Bonds shall have been declared to be due and payable by acceleration pursuant
to the terms of the Indenture, this Company Note shall thereupon become and be
immediately due and payable, subject to such declaration with respect to the
Bonds being annulled pursuant to Section 10.01 of the Indenture.
<PAGE> 38
C-4
This Company Note may not be amended except by an instrument in writing
signed by the Company, by the Authority and by the Trustee, on behalf of the
owners of the Bonds, in the manner and subject to the conditions provided in
Section 4.03 of the Indenture.
This Company Note may not be transferred by the Trustee except to
effect an assignment to a successor Trustee under the Indenture or pursuant to
Section 8.05 of the Indenture.
THIS COMPANY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK.
Presentment, demand, protest and notice of dishonor are hereby
expressly waived.
IN WITNESS WHEREOF, the Company has caused this Company Note to be duly
executed and delivered as of November __, 1993.
LONG ISLAND LIGHTING COMPANY
(SEAL) By:
-----------------------------
Treasurer
ATTEST:
- ------------------------
Assistant Secretary
<PAGE> 39
Exhibit 10(v)
_______________________________________________________________________________
_______________________________________________________________________________
INDENTURE OF TRUST
BETWEEN
NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY
AND
Chemical Bank,
as Trustee
Dated as of November 1, 1993
_______________________________________________________________________________
_______________________________________________________________________________
-relating to-
Electric Facilities Revenue Bonds
(Long Island Lighting Company Project), 1993 Series B
<PAGE> 40
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS; LIABILITY UNDER BONDS;
INDENTURE TO CONSTITUTE CONTRACT
<S> <C> <C>
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 1.02. Rules of construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 1.03. Liability under Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
<TABLE>
<CAPTION>
ARTICLE II
DESCRIPTION; AUTHORIZATION; MANNER OF EXECUTION;
AUTHENTICATION; REGISTRATION AND TRANSFER OF BONDS
<S> <C> <C>
Section 2.01. Issuance of Bonds; Designation of Bonds; Certain Particulars and Form of
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 2.02. Additional Particulars of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 2.03. Interest Rates on Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 2.04. Conversion of Interest Rate on Bonds . . . . . . . . . . . . . . . . . . . . . . . 54
Section 2.05. Optional and Mandatory Tender of Bonds for Purchase . . . . . . . . . . . . . . . . 59
Section 2.06. Remarketing of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 2.07. Delivery of Purchased Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 2.08. Mutilated, Lost, Stolen or Destroyed Bonds . . . . . . . . . . . . . . . . . . . . 70
Section 2.09. Temporary Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 2.10. Execution of Bonds; Effect of Change of Officers . . . . . . . . . . . . . . . . . 71
Section 2.11. Registration of Bonds; Transfers; Securities Depository . . . . . . . . . . . . . . 71
Section 2.12. Persons Treated as Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 2.13. Exchange of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 2.14. Payment For and Limitations on Exchanges and Transfers . . . . . . . . . . . . . . 75
Section 2.15. Endorsement of Certificate of Authentication on Bonds . . . . . . . . . . . . . . . 75
Section 2.16. Cancellation of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 2.17. Redemption of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
</TABLE>
(i)
<PAGE> 41
<TABLE>
<CAPTION>
Page
----
ARTICLE III
SECURITY FOR BONDS; ISSUANCE OF BONDS
<S> <C> <C>
Section 3.01. Pledge and Assignment Effected by Indenture; Bonds Equally and Ratably
Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 3.02. Issuance of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
</TABLE>
<TABLE>
<CAPTION>
ARTICLE IV
PARTICIPATION AGREEMENT AND COMPANY NOTE
<S> <C> <C>
Section 4.01. Amendments to Participation Agreement not Requiring Consent of Bondowners . . . . . . . 79
Section 4.02. Amendments to Participation Agreement Requiring Consent of Bondowners . . . . . . . . . 79
Section 4.03. Amendments to Company Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 4.04. Amendments to Tax Regulatory Agreement . . . . . . . . . . . . . . . . . . . . . . . . 80
</TABLE>
<TABLE>
<CAPTION>
ARTICLE V
PROJECT FUND; REBATE FUND
<S> <C> <C>
Section 5.01. Creation and Custody of Project Fund . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 5.02. Application of Moneys in the Project Fund . . . . . . . . . . . . . . . . . . . . . . . 81
Section 5.03. Construction Account Requisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 5.04. Retention of Requisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 5.05. Certification of Completion of the Project . . . . . . . . . . . . . . . . . . . . . . 83
Section 5.06. Disposition of Balance Remaining in Project Fund . . . . . . . . . . . . . . . . . . . 83
Section 5.07. Creation and Custody of Rebate Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 5.08. Application of Moneys in the Rebate Fund . . . . . . . . . . . . . . . . . . . . . . . 83
</TABLE>
(ii)
<PAGE> 42
<TABLE>
<CAPTION>
Page
----
ARTICLE VI
BOND FUND; LETTER OF CREDIT
<S> <C> <C>
Section 6.01. Creation and Custody of the Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 6.02. Payments into the Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 6.03. Application of Moneys in the Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 6.04. Non-presentment of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 6.05. (Intentionally Deleted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 6.06. Trustee to Notify Authority and Company of Funds in Bond Fund . . . . . . . . . . . . . 88
Section 6.07. Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
</TABLE>
<TABLE>
<CAPTION>
ARTICLE VII
SECURITY FOR AND INVESTMENT OF MONEYS
<S> <C> <C>
Section 7.01. Moneys Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 7.02. Uninvested Moneys Held by the Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 7.03. Investment of, and Payment of Interest on, Moneys . . . . . . . . . . . . . . . . . . . 91
Section 7.04. Disposition of Amounts After Payment of Bonds . . . . . . . . . . . . . . . . . . . . . 93
Section 7.05. Compliance with Tax Regulatory Agreement in the Event of Partial Redemption
of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
</TABLE>
<TABLE>
<CAPTION>
ARTICLE VIII
REDEMPTION OF BONDS
<S> <C> <C>
Section 8.01. Bonds to be Redeemed Only in Manner Provided in Article VIII . . . . . . . . . . . . . 95
Section 8.02. Redemption of Less Than all Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 8.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 8.04. Rights of Owners of Bonds Called for Redemption Limited to Redemption Price
and Accrued Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 8.05. Redemption at Demand of the State . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
</TABLE>
(iii)
<PAGE> 43
<TABLE>
<CAPTION>
Page
----
ARTICLE IX
PARTICULAR COVENANTS
<S> <C> <C>
Section 9.01. Payment of Principal of and Interest and Redemption Premium of Bonds . . . . . . . . 99
Section 9.02. Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.03. Further Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.04. Inspection of Project Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.05. No Extension of Time of Payment of Interest . . . . . . . . . . . . . . . . . . . . . 99
Section 9.06. Trustee's, Paying Agent's, Indexing Agent's, Tender Agent's and Remarketing
Agents's Fees, Charges and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 9.07. Agreement of the State of New York . . . . . . . . . . . . . . . . . . . . . . . . . 100
</TABLE>
<TABLE>
<CAPTION>
ARTICLE X
DEFAULTS AND REMEDIES
<S> <C> <C>
Section 10.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 10.02. Judicial Proceedings by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 10.03. Effect of Discontinuance or Abandonment of Proceedings . . . . . . . . . . . . . . . 104
Section 10.04. Power of Bondowners to Direct Proceedings . . . . . . . . . . . . . . . . . . . . . . 104
Section 10.05. Limitation on Actions by Bondowners . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 10.06. Trustee's Right to Enforce Rights in Respect of Bonds in Own Name and
Without Possession of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 10.07. No Remedy herein Conferred upon or Reserved Exclusive . . . . . . . . . . . . . . . . 105
Section 10.08. No Delay or Omission to be Deemed Waiver of Default . . . . . . . . . . . . . . . . . 105
Section 10.09. Application of Moneys Received by Trustee Pursuant to Article X . . . . . . . . . . . 106
Section 10.10. Entirety of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 10.11. Notice of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
</TABLE>
(iv)
<PAGE> 44
<TABLE>
<CAPTION>
Page
----
ARTICLE XI
CONCERNING THE TRUSTEE AND PAYING AGENT
<S> <C> <C>
Section 11.01. Appointment of Trustee; Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 11.02. No Responsibility for Correctness of Statements in Indenture . . . . . . . . . . . . 109
Section 11.03. No Responsibility for Default of Agents Selected with Due Care, nor for Own
Acts Save Willful Misconduct or Negligence . . . . . . . . . . . . . . . . . . . . . 109
Section 11.04. No Duty to Take Enforcement Action Unless so Requested by Owners of 25% of
the Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 11.05. Right to Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 11.06. Right to Own and Deal in Bonds and Engage in Other Transactions with
Authority and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 11.07. Construction of Provisions of Indenture by Trustee . . . . . . . . . . . . . . . . . 111
Section 11.08. Right to Resign Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 11.09. Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Section 11.10. Appointment of Successor Trustee by Bondowners or Authority . . . . . . . . . . . . . 112
Section 11.11. Qualifications of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 11.12. Court Appointment of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . 113
Section 11.13. Acceptance of Appointment by, and Transfer of Trust Estate to, Successor
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 11.14. Successor Trustee by Merger or Consolidation . . . . . . . . . . . . . . . . . . . . 113
Section 11.15. Exercise of Rights and Powers During Event of Default . . . . . . . . . . . . . . . . 114
Section 11.16. Trustee may Intervene in Judicial Proceedings Involving Authority or the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 11.17. Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 11.18. Appointment of Co-Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
</TABLE>
(v)
<PAGE> 45
<TABLE>
<CAPTION>
Page
----
ARTICLE XII
EXECUTION OF INSTRUMENTS BY BONDOWNERS
AND PROOF OF OWNERSHIP OF BONDS
<S> <C> <C>
Section 12.01. Execution of Instruments; Proof of Ownership of Bonds . . . . . . . . . . . . . . . . 117
</TABLE>
<TABLE>
<CAPTION>
ARTICLE XIII
INDENTURES SUPPLEMENTAL HERETO
<S> <C> <C>
Section 13.01. Supplemental Indentures not Requiring Consent of Bondowners . . . . . . . . . . . . . 118
Section 13.02. Supplemental Indentures Requiring Consent of Bondowners . . . . . . . . . . . . . . . 119
Section 13.03. Company and Bank Consent to Amendment of Indenture . . . . . . . . . . . . . . . . . 120
</TABLE>
<TABLE>
<CAPTION>
ARTICLE XIV
DEFEASANCE
<S> <C> <C>
Section 14.01. Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
</TABLE>
<TABLE>
<CAPTION>
ARTICLE XV
REMARKETING AGENTS; REMARKETING OF BONDS; INDEXING AGENT;
TENDER AGENT
<S> <C> <C>
Section 15.01. Appointment and Duties of Remarketing Agents . . . . . . . . . . . . . . . . . . . . 125
Section 15.02. Qualifications of a Remarketing Agent . . . . . . . . . . . . . . . . . . . . . . . . 125
Section 15.03. Appointment and Duties of Indexing Agents . . . . . . . . . . . . . . . . . . . . . . 126
Section 15.04. Qualifications of Indexing Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Section 15.05. Dealings With the Authority and the Company . . . . . . . . . . . . . . . . . . . . . 127
Section 15.06. Tender Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Section 15.07. Qualifications of Tender Agent; Resignation; Removal . . . . . . . . . . . . . . . . 128
</TABLE>
(vi)
<PAGE> 46
<TABLE>
<CAPTION>
Page
----
ARTICLE XVI
MISCELLANEOUS
<S> <C> <C>
Section 16.01. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Section 16.02. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Section 16.03. No Individual Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Section 16.04. Payment Due on Saturdays, Sundays and Holidays . . . . . . . . . . . . . . . . . . . 130
Section 16.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
SECTION 16.06. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Section 16.07. Effective Date; Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Section 16.08. References to the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Section 16.09. Date for Identification Purposes Only . . . . . . . . . . . . . . . . . . . . . . . . 132
</TABLE>
(vii)
<PAGE> 47
THIS INDENTURE OF TRUST, made and dated as of the first day
of November, 1993, by and between New York State Energy Research and
Development Authority (the "Authority"), a body corporate and politic,
constituting a public benefit corporation, and Chemical Bank (the "Trustee"), a
banking corporation organized under the laws of the State of New York, with its
principal corporate trust office located in New York, New York, as trustee,
W I T N E S S E T H T H A T:
WHEREAS, pursuant to special act of the Legislature of the
State of New York (Title 9 of Article 8 of the Public Authorities Law of New
York, as from time to time amended and supplemented, herein called the "Act"),
the Authority has been established as a body corporate and politic,
constituting a public benefit corporation; and
WHEREAS, pursuant to the Act, the Authority is empowered to
contract with any power company to participate in the construction of
facilities to be used for the furnishing of electric energy to the extent
required by the public interest in development, health, recreation, safety,
conservation of natural resources and aesthetics; and
WHEREAS, pursuant to the Act, the Authority has also been
empowered to extend credit and make loans from bond and note proceeds to any
Person for the construction, acquisition and installation of, or for the
reimbursement to any Person for costs in connection with, any special energy
project, including, but not limited to, any land, works, system, building or
other improvement, and all real and personal properties of any nature or any
interest in any of them which are suitable for or related to the furnishing,
generation or production of energy; and
WHEREAS, the Authority is also authorized under the Act to
borrow money and issue its negotiable bonds and notes to provide sufficient
moneys for achieving its corporate purposes; and
WHEREAS, the Authority is also authorized under the Act to
enter into any contracts and to execute all instruments necessary or convenient
for the exercise of its corporate powers and the fulfillment of its corporate
purposes; and
WHEREAS, contemporaneously with the execution hereof, Long
Island Lighting Company (the "Company") and the Authority have entered into a
Participation Agreement of even date herewith (herein referred to as the
"Participation Agreement"), providing for the acquisition, construction and
installation of certain facilities (the "Project") for the furnishing of
electric energy within the Company's service area; and
<PAGE> 48
2.
WHEREAS, the Participation Agreement provides that the
Authority will issue its bonds and make the proceeds of such bonds available to
the Company to finance the cost of the Project; and
WHEREAS, pursuant to Resolution No. 801 adopted January 25,
1993, the Authority has determined to issue $50,000,000 aggregate principal
amount of revenue bonds initially bearing the designation set forth on the
title page of the Indenture of Trust (the "Bonds") for the purpose of financing
the cost of the Project; and
WHEREAS, in order to provide an inducement to the Authority
to issue the Bonds, the Company has entered into a Letter of Credit and
Reimbursement Agreement relating to the Bonds dated as of November 1, 1993,
with The Toronto-Dominion Bank, Houston Agency, (the "Bank") and certain other
parties, pursuant to which the Bank has agreed to issue an irrevocable letter
of credit in favor of the Trustee, which letter of credit expires by its terms
on November 17, 1996, unless extended or unless earlier terminated in
accordance with its terms, to provide for the payment of such amounts as are
specified therein with respect to the principal of, premium, if any, and
interest on, the Bonds and certain other payments with respect to the Bonds;
and
WHEREAS, all acts, conditions and things necessary or required
by the Constitution and statutes of the State of New York or otherwise, to
exist, happen, and be performed as prerequisites to the execution and delivery
of the Indenture, do exist, have happened, and have been performed; and
WHEREAS, the Authority has determined that the Bonds issuable
hereunder and the certificate of authentication by the Trustee to be endorsed
on such Bonds shall be, respectively, substantially in the following forms with
such variations, omissions and insertions as are required or permitted by the
Indenture:
<PAGE> 49
3.
[Form of Bonds]
[MONEY MARKET MUNICIPAL RATE LEGEND
Last Day of Money Market
Interest Rate Municipal Rate Period
----- -----
Interest due at
end of Money Market Number of
Municipal Rate Period Days ]*
----- -----
NEW YORK STATE ENERGY RESEARCH AND
DEVELOPMENT AUTHORITY
ELECTRIC FACILITIES REVENUE BOND
(LONG ISLAND LIGHTING COMPANY PROJECT)
1993 SERIES B
<TABLE>
<CAPTION>
NO. NYBR-1 $50,000,000*
MATURITY DATE ORIGINAL ISSUE DATE CUSIP
- ------------- ------------------- -----
<S> <C> <C>
NOVEMBER 1, 2023 NOVEMBER 17, 1993 649841 BU6
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: FIFTY MILLION DOLLARS
</TABLE>
NEW YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY (the
"Authority"), a body corporate and politic, constituting a public benefit
corporation, organized and existing under and by virtue of the laws of the
State of New York, for value received, hereby promises to pay solely from the
sources hereinafter provided, to the Registered Owner specified above, or
registered assigns, on the Maturity Date specified above, unless redeemed prior
thereto as hereinafter provided, upon the presentation and surrender hereof,
the Principal Amount specified above and to pay solely from such sources
interest on said Principal Amount from the date hereof at the rates and at the
times provided herein, until said Principal Amount is paid. This bond shall be
subject to mandatory purchase by the Tender Agent as hereinafter described.
The principal of and premium, if any, on this bond are payable at
- ----------------------------------
*Such legend to appear only on face of Bonds bearing interest at a Money Market
Municipal Rate.
<PAGE> 50
4.
the corporate trust office of Chemical Bank, New York, New York, the Trustee
hereinafter mentioned and as paying agent. The interest on this bond, when due
and payable, shall be paid to the Registered Owner hereof (or of any bond or
bonds previously outstanding in exchange, transfer or substitution for which
this bond was issued) as of the close of business on the Record Date
(hereinafter referred to) for each interest payment date by check, mailed to
such Person at such Person's address appearing as of the close of business on
such Record Date on the Bond Register (hereinafter referred to). On and prior
to the date a Fixed Rate (as hereinafter defined) becomes effective as
hereinafter provided, in the event that less than all of the Bonds are held
under a book-entry-only system, any owner of not less than $1,000,000 (or
$100,000 during any Money Market Municipal Rate Period) aggregate principal
amount of Bonds not held under a book-entry-only system may request that
interest on the Bonds be paid by wire transfer within the continental United
States; provided, however, that during a Money Market Municipal Rate Period,
interest on a Bond is payable only upon presentation and surrender thereof to
the Tender Agent upon purchase thereof pursuant to the Indenture, and if such
presentation and surrender is made by 12:00 noon (New York City time) such
payment shall be by wire transfer. Interest not so paid shall be paid in
accordance with the provisions of Article X of the Indenture (as hereinafter
defined). All such payments shall be made in such coin or currency of the
United States of America, which at the respective times of payment, are legal
tender for payment of public and private debts. This bond is one of a duly
authorized issue of bonds of the Authority designated as "Electric Facilities
Revenue Bonds (Long Island Lighting Company Project), 1993 Series B" (the
"Bonds"), issued in the aggregate principal amount of $50,000,000 pursuant to
the Constitution and laws of the State of New York, particularly the New York
State Energy Research and Development Authority Act, Title 9 of Article 8 of
the Public Authorities Law of the State of New York, as amended (the "Act"),
and a resolution adopted by the Authority on January 25, 1993. The Bonds are
issued and secured under and pursuant to an Indenture of Trust dated as of
November 1, 1993, between the Authority and Chemical Bank, as Trustee (the
"Indenture"). The Bonds are issued for the purpose of financing a portion of
the cost of acquisition, construction and installation of certain facilities of
Long Island Lighting Company (the "Company") to be used for the local
furnishing of electric energy (the "Project") pursuant to a Participation
Agreement dated as of November 1, 1993, between the Authority and the Company
(hereinafter, as it may be amended or supplemented from time to time, called
the "Participation Agreement"). All terms used but not defined herein are used
as defined in the Indenture.
<PAGE> 51
5.
*1. Copies of the Indenture are on file at the corporate
trust office of Chemical Bank, New York, New York, as Trustee under the
Indenture or its successor as Trustee (the "Trustee"), and reference is made to
the Indenture for the provisions relating, among other things, to the terms and
security of the Bonds, the rights and remedies of the owners of the Bonds, and
the terms and conditions upon which Bonds are issued thereunder.
1 *2. The Bonds are not general obligations of the Authority,
and shall not constitute an indebtedness of or a charge against the general
credit of the Authority or give rise to any pecuniary liability of the
Authority. The liability of the Authority under the Bonds shall be enforceable
only to the extent provided in the Indenture, and the Bonds shall be payable
solely from payments to be made by the Company to the Trustee and any other
funds held by the Trustee under the Indenture (including, but not limited to,
funds drawn under the Letter of Credit) and available for such payment. In
order to provide security for the payment of the principal of and premium, if
any, and interest on all the Bonds in accordance with their terms and the terms
of the Indenture, the Authority has in the Participation Agreement directed the
Company to execute and deliver its Company Note to the Trustee as evidence of
the obligation of the Company to the Authority to repay the advance of the
proceeds of the Bonds by the Authority and the Authority has under the
Indenture pledged and assigned all its right, title and interest in and to the
payments under such Company Note to the Trustee for the benefit of the owners
from time to time of the Bonds. The Bonds are further secured by a pledge and
assignment of (i) the rights and interest of the Authority under the
Participation Agreement (except the rights and interest of the Authority under
Article III and Sections 4.04, 4.08, 4.09, 4.10 and 5.16 thereof and subject to
the provisions of the Participation Agreement relating to the amendment
thereof), (ii) the rights and interest of the Authority under the Tax
Regulatory Agreement, dated the date of the original issuance of the Bonds,
between the Authority and the Company (subject to a reservation by the
Authority of the right to independently enforce the obligations of the Company
thereunder and to the provisions of the Tax Regulatory Agreement relating to
the amendment thereof) (iii) the proceeds of sale of the Bonds and (iv) all
funds held by the Trustee under the Indenture and available for the payment of
the Bonds under the terms of the Indenture (expressly not including in such
funds, the Rebate Fund) and the income earned by the investment of such funds
held under the Indenture. In addition, the Authority has granted the Trustee
the same power as the Authority to enforce from time to time the rights of the
Authority set forth in Article III and Section 5.16 of the Participation
Agreement, subject to the provisions of the Participation Agreement relating to
the amendment thereof.
<PAGE> 52
6.
*3. Interest Rate. Interest on the Bonds will initially
be payable at a Medium-Term Rate of two and eighty-five one-hundredths per
centum (2.85%) per annum from the initial delivery date to and including
October 31, 1994 (the "First Interest Period"). Subsequent to such period and
prior to the Fixed Rate Conversion Date, interest on this Bond will be paid at
the lowest of (a) a Weekly Rate, a Money Market Municipal Rate, a Semi-Annual
Rate or a Medium-Term Rate as from time to time selected and determined in
accordance with the Indenture, (b) 15% and (c) the maximum interest rate
specified in the Letter of Credit with respect to coverage for the payment of
interest or the interest component of Purchase Price; thereafter, interest will
be paid at the Fixed Rate, determined in accordance with the Indenture, which
shall not exceed 18%. Each such rate will be set by the Remarketing Agents in
accordance with the applicable standards provided in the Indenture; provided
that each such rate will not be greater than 110% of the rate index for such
rate (the "Rate Index"). The Rate Index will be selected by an Indexing Agent
for such rate, appointed pursuant to the Indenture. If such rate is not
established by the Remarketing Agents, no Remarketing Agent shall be serving or
the rate so established is held to be invalid or unenforceable by a final
judgment of a court of law, then such rate will be 100% of the related Rate
Index. Interest will continue to be payable at a Medium-Term Rate for a
one-year period commencing on November 1, 1994 and every November 1,
thereafter, determined in accordance with the Indenture, unless and until a
different Interest Rate Determination Method is selected or a different Length
of Medium-Term Rate Period is selected, in either case, in accordance with the
Indenture. The Company may change the Interest Rate Determination Method from
time to time in accordance with the Indenture; provided, however, that if the
Company changes the Interest Rate Determination Method to a Fixed Rate, it may
not thereafter change the Interest Rate Determination Method and the Fixed Rate
shall be the rate of interest on the Bonds from the Fixed Rate Conversion Date
to the Maturity Date. The Company may direct the Trustee to change the
Interest Rate Determination Method applicable to all or a portion of the Bonds.
Except as specifically provided otherwise in the Indenture, the conditions and
procedures for such change in the Interest Rate Determination Method for a
portion of the Bonds shall be the same as the conditions and procedures for a
change in the Interest Rate Determination Method for the entire series of
Bonds. If the Company directs the Trustee to change the Interest Rate
Determination Method from one Rate to another for less than all of the Bonds
then outstanding, the Trustee shall select Bonds to be converted by lot or by
such other method as the Trustee shall deem appropriate. In the event the
Company wishes to convert less than all the Bonds then outstanding, the Company
shall notify the Trustee of such decision not less than 40 days or more than 60
days
<PAGE> 53
7.
before the effective date of the proposed conversion. On the Conversion Date
the portion of the Bonds which are being converted shall be redesignated
in such a way as to identify a separate Subseries and thereby avoid confusion of
such Subseries with any other Subseries. The Company may also determine to
similarly redesignate the portion of the Bonds which are not being converted on
the Conversion Date. The holders of Bonds which are being redesignated may be
required to deliver such Bonds to the Trustee in order to receive a new Bond of
the applicable designation, in the same principal amount. In the event holders
are not required to surrender such Bonds, the Trustee shall appropriately
designate any Bonds subsequently issued in exchange therefor. If less than all
of the Bonds are to be converted, all references herein to the Bonds shall be
deemed to refer to the Bonds of each Subseries separately.
*Interest on this Bond will accrue and will be payable as
provided in the Indenture. Except as otherwise provided in the Indenture, the
Interest Payment Dates are: (i) during any Weekly Rate Period, the first
Business Day of each calendar month; (ii) each Conversion Date; (iii) during
any Semi-Annual Rate Period or Medium-Term Rate Period, the first day of each
of two months which are six months apart, as specified in a certificate of an
Authorized Officer delivered to the Trustee prior to the Conversions to a
Semi-Annual Rate Period or Medium-Term Rate Period, provided, however, if the
last such day occurring in any Semi-Annual Rate Period is not a Business Day
then the first Business Day thereafter shall be the Interest Payment Date,
provided, further, however, if any Interest Payment Date in a Semi-Annual Rate
Period, determined as set forth above, would cause such Semi-Annual Rate Period
to extend for a period in excess of 182 days, the Interest Payment Date for
such Semi-Annual Rate Period shall be the last Business Day occurring within
such Semi-Annual Rate Period that does not cause such Semi-Annual Rate Period
to exceed 182 days in duration; (iv) during the Fixed Rate Period, each May 1
and November 1; (v) during each Money Market Municipal Rate Period, the first
Business Day after any Calculation Period; and (vi) the Maturity Date. With
respect to the First Interest Period, interest will be payable on May 1, 1994
and November 1, 1994. If prior to the conversion to a Semi-Annual Rate Period,
Medium-Term Rate Period or Fixed Rate Period, an Officer's Certificate shall be
delivered to the Trustee specifying different Interest Payment Dates for such
Rate Period together with an Opinion of Bond Counsel to the effect that such
adjustment will not adversely affect the exclusion of interest on the Bonds
from gross income for federal income tax purposes, then the Interest Payment
Dates for such Rate Period shall be so adjusted; provided, however, that no
such adjustment shall result in the establishment of
<PAGE> 54
8.
Interest Payment Dates between which more than six months would pass.
*The Record Dates with respect to the various Interest
Payment Dates are: (i) during any Weekly Rate Period or Money Market Municipal
Rate Period, the day next preceding such Interest Payment Date, regardless of
whether such day is a Business Day; and (ii) during any Semi-Annual Rate
Period, Medium-Term Rate Period or Fixed Rate Period, the Trustee's close of
business on the fifteenth day of the calendar month next preceding such
Interest Payment Date, regardless of whether such day is a Business Day.
*During any Weekly Rate Period or Money Market Municipal
Rate Period, interest on the Bonds will be computed on the basis of a 365 or
366-day year, as the case may be, for the actual number of days elapsed.
During any Semi-Annual Rate Period, Medium-Term Rate Period or Fixed Rate
Period, interest on the Bonds will be computed on the basis of a 360-day year
of twelve 30-day months.
*4. Letter of Credit. The Bonds are initially supported
by a letter of credit issued by The Toronto-Dominion Bank, Houston Agency (such
bank or any issuer of any alternate credit facility as described herein being
hereinafter referred to as the "Bank"), in favor of the Trustee. This letter
of credit expires on November 17, 1996, unless extended in accordance with its
terms, or on the earlier occurrence of events specified in it. The initial
letter of credit or any alternate credit facility meeting the requirements of
Section 6.07 of the Indenture and Section 4.12 of the Participation Agreement
during the time it is in effect is hereinafter called the "Letter of Credit."
The Letter of Credit shall be in effect at all times prior to the Fixed Rate
Conversion Date, except any period during which all of the outstanding Bonds
are owned by the Company. The Letter of Credit shall entitle the Trustee to
draw up to (a) an amount equal to the principal amount of the Bonds then
outstanding to pay the principal amount of the Bonds (or the portion of the
Purchase Price of the Bonds corresponding to principal); plus (b) an amount
equal to 210 days' accrued interest on the Bonds at a maximum rate specified
therein, which shall in no event exceed 15%, to pay interest on the Bonds. Such
maximum rate for the initial letter of credit is 15%. If the Bonds shall be
redeemable at a premium during a period during which a Letter of Credit is in
effect, no redemption may be made unless the Letter of Credit or other
Available Moneys are available to pay such premium.
*Except as otherwise provided herein, the Bonds shall become
subject to mandatory tender for purchase (see "Mandatory Tender for Purchase"
below) on the twentieth calendar day next preceding the scheduled expiration
date of the Letter of Credit.
<PAGE> 55
9.
Within five calendar days after the Bonds become subject to such mandatory
tender for purchase, the Trustee shall notify the owners of the Bonds by first
class mail of the expiration of the Letter of Credit and the name of the issuer
of the successor Letter of Credit, if applicable.
*5. Tender of Bonds for Purchase.
*Optional Tender. During any Weekly Rate Period or any
Semi-Annual Rate Period the owners of the Bonds shall have the right to tender
any Bond (or portion thereof in an authorized denomination) to the Tender Agent
for purchase on any Optional Tender Date prior to the Conversion Date, but only
upon:
(1) giving or delivery to the Tender Agent at its
principal office, during the times specified below, of a telephonic or
facsimile confirmed in writing notice which states (i) the aggregate
principal amount of the Bond to be purchased and (ii) that such Bond
(or portion thereof in an authorized denomination) shall be purchased
on such Optional Tender Date pursuant to the Indenture; and
(2) delivery of such Bond (with an appropriate instrument
of transfer duly executed in blank) to the Tender Agent at its
principal office at or prior to 12:00 noon, New York City time, on
such Optional Tender Date; provided, however, that no Bond (or portion
thereof in an authorized denomination) shall be purchased unless the
Bond so delivered to the Tender Agent shall conform in all respects to
the description thereof in the aforesaid notice.
During any Weekly Rate Period, irrevocable notice must be given on a Business
Day not later than the close of business on the seventh calendar day prior to
the Optional Tender Date; and during any Semi-Annual Rate Period irrevocable
notice must be given not earlier than the thirtieth calendar day and not later
than the close of business on the fifteenth calendar day next preceding the
Optional Tender Date.
*Any election of a Bondowner to tender a Bond (or portion
thereof as aforesaid) for purchase on the Optional Tender Date in accordance
with the Indenture shall be irrevocable and shall be binding on the Bondowner
making such election and on any transferee of such Bondowner.
*Mandatory Tender for Purchase. All Bonds are subject to
mandatory tender and purchase, with no right of owners to retain Bonds, as more
fully provided in the Indenture on each Conversion Date and each Medium-Term
Adjustment Date.
<PAGE> 56
10.
*Any Bond bearing a Money Market Municipal Rate shall be
subject to mandatory tender for purchase in accordance with the Indenture on
the Business Day immediately following each Calculation Period for such Bond at
a price equal to the principal amount thereof and owners of any Bond bearing
interest at a Money Market Municipal Rate shall have no right to elect to
retain such Bond subsequent to such Business Day.
*Each Bond shall be subject to mandatory tender and purchase
on each Mandatory Purchase Date established pursuant to Section 2.05(e) of the
Indenture.
*Upon the Bonds becoming subject to mandatory tender for
purchase on a Mandatory Purchase Date, the Trustee shall give telephonic notice
to the Remarketing Agents, the Authority and the Tender Agent and give notice
by mail to the Bondowners in accordance with Section 2.05(e)(2) of the
Indenture.
*Failure to mail the notice described in Section 2.05(e)(2)
of the Indenture or any defect therein, shall not extend the period for
tendering any of the Bonds for purchase, and the Trustee shall not be liable to
any Bondowner by reason of its failure to mail such notice or any defect
therein.
*The Bonds shall be tendered for purchase as provided in
Section 2.05(e) of the Indenture.
*All Bonds (or portion thereof in an authorized denomination)
which are not delivered to the Tender Agent shall be deemed to have been
properly tendered to the Tender Agent (such Bond being hereinafter referred to
as an "Untendered Bond"), and, to the extent that there shall be on deposit
with the Tender Agent on the applicable Purchase Date, an amount sufficient to
pay the Purchase Price thereof, such Untendered Bond shall cease to constitute
or represent a right to payment of principal or interest thereon and shall
constitute and represent only the right to the payment of Purchase Price
payable on such date. The foregoing shall not limit the entitlement of any
Bondowner on any Record Date to receipt of interest due on such date unless
such interest is paid as part of the Purchase Price.
*Purchase of Tendered Bonds. On each Optional Tender Date
and Purchase Date there shall be purchased (but solely from funds received by
the Tender Agent in accordance with the terms of the Indenture) the Bond or
Bonds (or portions thereof in authorized denominations) tendered (or deemed to
have been tendered) to the Tender Agent for purchase in accordance with Section
2.05 of the Indenture at the applicable Purchase Price. Funds for the payment
of the Purchase Price of such Bond or Bonds (or portions thereof in
<PAGE> 57
11.
authorized denominations) shall be paid by the Tender Agent solely from the
sources and in the order of priority specified in Section 2.05(h) of the
Indenture. Bonds (or portions thereof in authorized denominations) purchased
as provided above shall be delivered as provided in Section 2.07 of the
Indenture.
*The owners of the Bonds shall not have the right or be
required, as the case may be, to tender any Bond or Bonds (or portions thereof
in authorized denominations) for purchase on any Optional Tender Date or the
Purchase Date, if on any such date an Event of Default under Section 10.01(f)
or (g) of the Indenture shall have occurred and be continuing thereunder with
respect to the Bonds.
*All Bonds shall be subject to mandatory tender and purchase,
with no right of owners to retain Bonds, upon a date established by the
Trustee after receipt by the Trustee of a written notice from the Bank of the
occurrence and continuance of an event that would constitute an Event of
Default pursuant to Section 10.01(f) or (g) of the Indenture except that the
Bank shall have directed mandatory tender and purchase pursuant to Section
2.05(j) of the Indenture rather than acceleration of the Bonds.
*6. Redemptions.
*Optional Redemption. At any time during a Weekly Rate
Period or Money Market Municipal Rate Period, the Bonds will be subject to
redemption, by the Authority at the direction of the Company, in whole on any
Business Day or in part on any Interest Payment Date at a redemption price
equal to the principal amount thereof plus accrued interest, if any, to the
redemption date. During a Semi-Annual Rate Period or during a Medium-Term Rate
Period equal to one calendar year (or, in the case of the First Interest
Period, of less than one calendar year), each Bond is subject to redemption, by
the Authority at the direction of the Company, in whole or in part on the last
Business Day of such Rate Period in effect on the applicable redemption date,
at a redemption price equal to the principal amount of the Bond or Bonds to be
redeemed plus accrued and unpaid interest thereon to the redemption date.
During a Medium-Term Rate Period of greater than one calendar year but less
than or equal to three calendar years, each Bond will be subject to optional
redemption by the Authority at the direction of the Company on the dates and at
the redemption prices set forth in the following table plus accrued and unpaid
interest to the redemption date:
<PAGE> 58
12.
<TABLE>
<CAPTION>
Redemption Date Redemption Prices
--------------- -----------------
<S> <C>
Earliest Optional Redemption Date 100.5%
through the last day prior to the
First Anniversary of the Earliest
Optional Redemption Date
First Anniversary of the Earliest 100
Optional Redemption Date, if
applicable, and thereafter
</TABLE>
As used in the immediately preceding table "Earliest Optional Redemption Date"
means the anniversary of the Conversion Date occurring in the year which is one
year after the commencement of any such Medium-Term Rate Period. During a
Medium-Term Rate Period of greater than three calendar years but less than or
equal to five calendar years, each Bond will be subject to optional redemption
by the Authority at the direction of the Company on the dates and at the
redemption prices set forth in the following table plus accrued and unpaid
interest to the redemption date:
<TABLE>
<CAPTION>
Redemption Date Redemption Prices
--------------- -----------------
<S> <C>
Earliest Optional Redemption Date through 101%
the last day prior to the First Anniversary
of the Earliest Optional Redemption Date
First Anniversary of the Earliest Optional 100.5
Optional Redemption Date through the last
day prior to the Second Anniversary of the
Earliest Optional Redemption Date
Second Anniversary of the Earliest 100
Optional Redemption Date
and thereafter
</TABLE>
As used in the preceding table "Earliest Optional Redemption Date" means the
anniversary of the Conversion Date occurring in the year which is two years
after the commencement of any such Medium-Term Rate Period. During a
Medium-Term Rate Period of greater than five but less than or equal to ten
calendar years, the Bonds will be subject to optional redemption by the
Authority at the direction of the Company on the dates and at the redemption
prices set forth in the following table plus accrued and unpaid interest to the
redemption date:
<PAGE> 59
13.
<TABLE>
<CAPTION>
Redemption Date Redemption Prices
--------------- -----------------
<S> <C>
Earliest Optional Redemption Date 101.5%
through the last day prior to the
First Anniversary of the Earliest
Optional Redemption Date
First Anniversary of the Earliest 101
Optional Redemption Date through the last
day prior to the Second Anniversary of
the Earliest Optional Redemption Date
Second Anniversary of the Earliest 100.5
Optional Redemption Date through
the last day prior to the Third
Anniversary of the Earliest Optional
Redemption Date
Third Anniversary of the Earliest 100
Optional Redemption Date and thereafter
</TABLE>
As used in the immediately preceding table "Earliest Optional Redemption Date"
means the anniversary of the Conversion Date occurring in the year which is
four years after the commencement of any such Medium-Term Rate Period.
*During a Medium-Term Rate Period of greater than ten
calendar years, the Bonds will be subject to optional redemption by the
Authority at the direction of the Company on the dates and at the redemption
prices set forth in the next succeeding table; provided that, with respect to
such a Medium-Term Rate Period, "Earliest Optional Redemption Date" means the
anniversary of the Conversion Date occurring in the year which is eight years
after the Conversion Date or Medium-Term Adjustment Date.
*After the Fixed Rate Conversion Date, the Bonds will be
subject to optional redemption by the Authority at the direction of the Company
on or after the Earliest Optional Redemption Date (as defined below), in whole
on any Business Day or in part on any Interest Payment Date, during the periods
and at the respective redemption prices (expressed as a percentage of principal
amount) set forth in the following table plus accrued and unpaid interest to
the redemption date:
<PAGE> 60
14.
<TABLE>
<CAPTION>
Redemption Date Redemption Prices
--------------- -----------------
<S> <C>
Earliest Optional Redemption 102%
Date through the last day
prior to the First Anniversary
of the Earliest Optional
Redemption Date
First Anniversary of the 101
Earliest Optional Redemption
Date through the last day
prior to the Second Anniversary
of the Earliest Optional
Redemption Date
Second Anniversary of the 100
Earliest Optional Redemption
Date and thereafter
</TABLE>
*As used in the preceding table, "Earliest Optional
Redemption Date" means the anniversary of the Conversion Date occurring in the
year which is ten years after the Fixed Rate Conversion Date.
*Subject to the provisions of the Indenture, if prior to a
Medium-Term Rate Conversion Date or the Fixed Rate Conversion Date the
Remarketing Agents certify to the Trustee, the Authority and the Company in
writing that any of the foregoing redemption schedules are not consistent with
then prevailing market conditions, with the approval of the Authority and the
Company, the foregoing Earliest Optional Redemption Dates or premiums may be
revised in accordance with the best professional judgment of the Remarketing
Agents to reflect then prevailing market conditions; provided, that the Company
causes to be delivered to the Trustee an Opinion of Bond Counsel stating to the
effect that such revision is permitted by the Indenture and will not cause the
interest on the Bonds to be includible in gross income for federal income tax
purposes.
*Mandatory Redemption Upon State Furnishing Funds. The
Bonds are subject to redemption as a whole, at a redemption price equal to the
applicable optional redemption price described herein or, if no such optional
redemption price shall be applicable, 105% of the principal amount thereof
during the Fixed Rate Period or 100% of the principal amount thereof prior to
the Fixed Rate Conversion Date, together with unpaid interest accrued thereon
to the date fixed for redemption, on any Interest Payment Date not less than
twenty years after the date of the original issuance of
<PAGE> 61
15.
the Bonds if the State of New York furnishes funds therefor, all as more fully
described in the Indenture.
*Extraordinary Optional Redemption. The Bonds may be redeemed
at the option of the Authority exercised at the direction of the Company, as a
whole or in part at any time, at a redemption price equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon to the date
fixed for redemption, upon the occurrence of any of the following events:
(i) All or substantially all of the Project shall
have been damaged or destroyed or title to, or the temporary use of,
all or a substantial portion of the Project shall have been taken
under the exercise of the power of eminent domain by any governmental
authority, or Person, firm or corporation acting under governmental
authority, as in each case renders the Project unsatisfactory to the
Company for its intended use;
(ii) Unreasonable burdens or excessive liabilities
shall have been imposed upon the Authority or the Company with
respect to all or substantially all of the Project, including without
limitation the imposition of federal, state or other ad valorem
property, income or other taxes other than taxes in effect on the date
of original issuance of the Bonds levied upon privately owned property
used for the same general purpose as the Project; or
(iii) Any court or regulatory or administrative
body shall enter or adopt, or fail to enter or adopt, a judgment,
order, approval, decree, rule or regulation, as a result of which
the Company elects to cease operation of all or substantially all
of the Project.
*Special Optional Redemptions. The Bonds will also be
subject to redemption at the option of the Authority exercised at the direction
of the Company, in whole at a redemption price equal to the principal amount
thereof plus accrued and unpaid interest thereon to the redemption date if the
Company reasonably concludes and certifies to the Trustee that the business,
properties, condition (financial or otherwise), operations or business
prospects of the Company will be materially and adversely affected unless the
Company takes or omits to take a specified action and that the Company has been
advised in writing by Bond Counsel that either (x) the specified action or
omission would adversely affect the exclusion from gross income for federal
income tax purposes of interest on the Bonds afforded by Section 103 of the
Code, or (y) that the matter is subject to such doubt that such Bond Counsel is
unable to advise the Company that the specified action or omission
<PAGE> 62
16.
would not adversely affect such exclusion. Such conclusion and certification
shall be evidenced by delivery to the Trustee of a written certificate of an
Authorized Company Representative to the effect that the Company has reached
such conclusion, together with a copy of such advice of Bond Counsel.
*During any Medium-Term Rate or the Fixed Rate Period,
the Bonds will also be subject to redemption at the option of the Authority
exercised at the direction of the Company at a redemption price equal to the
principal amount thereof plus accrued and unpaid interest thereon to the
redemption date if the Company reasonably concludes and certifies to the
Trustee that the business, properties, condition (financial or otherwise),
operations or business prospects of the Company will be materially and
adversely affected unless the Company takes or omits to take a specified action
and that the specified action or omission would cause the use of the Project to
be such that, pursuant to Section 150 of the Code, the Company would not be
entitled to deduct the interest on the Bonds for purposes of determining the
Company's federal taxable income, for a period of not less than ninety
consecutive or nonconsecutive days during a twelve-month period. Such
conclusion and certification shall be evidenced by delivery to the Trustee of a
written certificate of an Authorized Company Representative to the effect that
the Company has reached such conclusion, together with a copy of written advice
of Bond Counsel. In the event that the Bonds become subject to redemption as
provided in this paragraph, the Bonds will be redeemed in whole unless
redemption of a portion of the Bonds outstanding would, in the opinion of Bond
Counsel, have the result that interest payable on the Bonds remaining
outstanding after such redemption would be deductible for purposes of
determining the federal taxable income of the Company, and, in such event, the
Bonds shall be redeemed (in the principal amount equal to the current minimum
authorized denomination or an integral multiple thereof) from time to time by
lot or in such other manner as the Trustee shall in its discretion deem proper
in order to assure each owner of Bonds a fair opportunity to have such owner's
Bond or Bonds or portions thereof selected, in such amount as is necessary to
accomplish that result.
*Mandatory Redemption on Determination of Taxability. The
Bonds will be redeemed in whole (or in part as provided below), at a redemption
price equal to the principal amount thereof plus accrued and unpaid interest
accrued thereon to the redemption date, on the first day of a month selected by
the Authority at the direction of the Company (such direction also being
delivered to the Trustee) within 180 days after the Company receives written
notice from a Bondowner or former Bondowner or the Trustee of a final
determination by the Internal Revenue Service or a court of competent
jurisdiction that, as a result of a failure by the
<PAGE> 63
17.
Company to perform any of its agreements in the Participation Agreement or
the inaccuracy, the failure to perform or breach of any of the representations,
warranties, covenants or agreements of the Company in the Tax Regulatory
Agreement or any requisition submitted pursuant to the Indenture, the interest
paid or to be paid on any Bond (except to a "substantial user" of the Project
or a "related person" within the meaning of Section 147(a) of the Internal
Revenue Code of 1986, as amended) is or was included in the gross income of the
Bond's owner for federal income tax purposes. No such determination will be
considered final unless the Bondowner or former Bondowner involved in the
determination gives the Company, the Authority and the Trustee prompt written
notice of the commencement of the proceedings resulting in the determination
and offers the Company, subject to the Company's agreeing to pay all expenses
of the proceeding and to indemnify the owner against all liabilities that might
result from it, including additional income tax liabilities as a result of
interest accruing on the Bonds following commencement of such proceedings, the
opportunity to control the defense of the proceeding and either the Company
does not agree within 30 days to pay the expenses, indemnify the owner and
control the defense or the Company exhausts or chooses not to exhaust available
procedures to contest or obtain review of the result of the proceedings. Fewer
than all the Bonds may be redeemed if, in the opinion of Bond Counsel,
redemption of fewer than all would result in the interest payable on the Bonds
remaining outstanding being not included in the gross income for federal income
tax purposes of any owner other than a "substantial user" of the Project or a
"related person." If fewer than all of the Bonds are redeemed, the Trustee
will select the Bonds to be redeemed as provided in the Indenture. IF THE LIEN
OF THE INDENTURE IS DISCHARGED AS DESCRIBED IN SECTION 10 BELOW PRIOR TO THE
OCCURRENCE OF A FINAL DETERMINATION OF TAXABILITY AS DESCRIBED ABOVE, THE BONDS
WILL NOT BE REDEEMED AS DESCRIBED IN THIS PARAGRAPH.
*Notice of Redemption. At least 30 days before each
redemption, the Trustee will mail a notice of redemption by first-class mail to
each Bondowner at the owner's registered address. Failure to give any required
notice of redemption as to any particular Bonds will not affect the validity of
the call for redemption of any Bonds in respect of which no such failure
occurs. Any notice mailed as provided in this paragraph will be conclusively
presumed to have been given whether or not actually received by the addressee.
*Effect of Notice of Redemption. When notice of redemption
is required and given, Bonds called for redemption become due and payable
on the redemption date at the applicable redemption price, except as otherwise
provided herein; in such case
<PAGE> 64
18.
when funds are deposited with the Trustee sufficient for redemption or for
the purchase of Bonds otherwise subject to redemption, interest on the Bonds to
be redeemed or purchased ceases to accrue as of the date of redemption or
purchase whether or not such Bond is delivered to the Trustee on such date.
*7. Denominations, Transfer, Exchange. The Bonds are
issued in registered form without coupons in denominations of $5,000 or any
integral multiple of $5,000, except that when the Bonds bear interest at a
Weekly Rate Period or Money Market Municipal Rate Period, they will be issuable
in denominations of $100,000 or any integral multiples thereof.
Notwithstanding the foregoing, prior to the commencement of any Semi-Annual
Rate Period or Medium-Term Rate Period or the Fixed Rate Period, the Authority
at the request of the Company may direct the Trustee to authenticate Bonds only
in denominations of $100,000 or any integral multiple of $100,000 during such
Rate Period in accordance with the Indenture. An owner may register the
transfer of or exchange Bonds in accordance with the Indenture. The Trustee
may require an owner, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. After the Fixed Rate Conversion Date, the Trustee
need not register the transfer of or exchange any Bond for the period beginning
15 days before mailing a notice of redemption of such Bond and ending on the
redemption date.
*The Depository Trust Company, New York, New York ("DTC")
initially will act as Securities Depository for the Bonds. The ownership of
one fully registered Bond in the aggregate principal amount of the Bonds will
be registered in the name of Cede & Co., as nominee of DTC. Such Bond will be
held in trust until its redemption or until such time as DTC or its nominee is
no longer the registered owner of the Bonds. So long as Cede & Co. is the
registered owner of the Bonds, as nominee of DTC, references herein to the
Bondowners or registered owners of the Bonds, shall mean Cede & Co. and shall
not mean the beneficial owners of the Bonds. In the event that the
book-entry-only system through DTC (or a successor securities depository) is
discontinued as provided in the Indenture and the beneficial owners become
registered owners of the Bonds, the provisions applicable to such registered
owners, as set forth herein and in the Indenture, will apply. In the event
that a book-entry-only system is reinstituted after discontinuance, Registered
Owners will not be able to register the transfer of or tender their Bonds
without first registering such Bonds in the book-entry-only system.
*8. Persons Deemed Owners. The Registered Owner of this
Bond may be treated by the Authority, the Company, the Trustee, the
<PAGE> 65
19.
Tender Agent and the Paying Agents as the owner of this Bond for all
purposes.
*9. Unclaimed Money. On or after the Fixed Rate
Conversion Date and solely with respect to moneys not resulting from a
draw on the Letter of Credit and not constituting remarketing proceeds, if
money for the payment of principal, premium, interest or Purchase Price
remains unclaimed for two years, the Trustee will, upon request of the
Company, pay the money to or for the account of the Company. After that,
owners entitled to the money must look only to the Company and not to the
Trustee or the Bank for payment unless an applicable abandoned property
law designates another person.
*10. Discharge Before Redemption or Maturity. If at any
time there shall have been delivered to the Trustee for cancellation all
the Bonds (other than any Bonds which have been mutilated, lost, stolen or
destroyed and which shall have been replaced or paid as provided in the
Indenture, except for any such Bonds as are shown by proof satisfactory to
the Trustee to be held by bona fide owners), or with respect to all the
Bonds not theretofore delivered to the Trustee for cancellation, the whole
amount of the principal and the interest and the premium, if any, due and
payable on such Bonds then outstanding shall be paid or deemed to be paid
as set forth in the Indenture, and provision shall also be made for paying
all other sums payable thereunder, including the Authority's, the Indexing
Agent's, Remarketing Agents', Paying Agent's, Trustee's and Tender Agent's
fees and expenses, then the Bonds shall be deemed paid and the Trustee, in
such case, on demand of the Authority or the Company, shall acknowledge
the discharge of the Authority's obligations under the Indenture with
respect to such Bonds and under the Bonds and deliver to the Company the
Company Note and deliver to the Bank the Letter of Credit, and shall
execute such documents as may be reasonably required by the Authority and
the Company to evidence such discharge, all as more fully set forth in
Article XIV of the Indenture. If the Company at any time deposits with
the Trustee money or Investment Obligations sufficient to pay at
redemption or maturity principal of and interest on or the Purchase Price
of the outstanding Bonds, and if the Company also pays all other sums then
payable by the Company under the Indenture, the Indenture (except for the
Rebate Fund established pursuant to the Indenture) will be discharged.
After discharge, Bondowners may look only to the deposited money and
securities for payment. Investment Obligations are securities backed by
the full faith and credit of the United States or securities evidencing
ownership interest in such full-faith-and-credit securities.
<PAGE> 66
20.
*11. Amendment, Supplement, Waiver. Subject to certain
exceptions, the Indenture, the Participation Agreement or the Bonds may be
amended or supplemented with the consent of the owners of not less than
two-thirds in aggregate principal amount of the Bonds, and any past default or
noncompliance with any provision may be waived with the consent of the owners
of a majority in aggregate principal amount of the Bonds. Without the consent
of any Bondowner, the Authority may amend or supplement the Indenture, the
Participation Agreement or the Bonds as described in the Indenture in order to,
among other things, cure any ambiguity, omission, defect or inconsistency,
provide for uncertificated Bonds in addition to or in place of certificated
Bonds, to the extent permitted by law, or make any change that does not
materially adversely affect the rights of any Bondowner.
*12. Defaults and Remedies. The Indenture provides that the
occurrences of certain events constitute Events of Default. An Event of
Default and its consequences may be waived as provided in the Indenture.
Bondowners may not enforce the Indenture or the Bonds except as provided in the
Indenture. The Trustee may refuse to enforce the Indenture or the Bonds unless
it receives indemnity satisfactory to it. Subject to certain limitations,
owners of a majority in principal amount of the Bonds may direct the Trustee in
its exercise of any trust or power.
*13. Abbreviations. Customary abbreviations may be used in
the name of a Bondowner or an assignee, such as TEN COM (= tenants in common),
TEN ENT (= Tenants by the entireties), JT WROS (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
*14. Remarketing Agents; Indexing Agent; Tender Agent. The
Authority has appointed Dillon, Read & Co. Inc. and Lehman Brothers Inc., as
the initial Remarketing Agents under the Indenture. The Authority may from
time to time, at the request of the Company, remove or replace one or more of
the Remarketing Agents. The Authority has appointed Kenny Information Systems
Inc. as Indexing Agent under the Indenture. The Authority may from time to
time, at the request of the Company, remove the Indexing Agent and appoint a
different nationally recognized municipal securities evaluation service to
serve as Indexing Agent. The Authority has appointed Chemical Bank as Tender
Agent under the Indenture. The Authority may from time to time, at the request
of the Company, remove or replace the Tender Agent.
This Bond shall not be entitled to any benefit under the
Indenture or be valid or become obligatory for any purpose until
<PAGE> 67
21.
this Bond shall have been authenticated by the execution by the Trustee or the
Tender Agent of the Certificate of Authentication hereon.
No covenant or agreement contained in this Bond or the
Indenture shall be deemed to be a covenant or agreement of any member or
employee of the Authority in his or her individual capacity, and neither the
members of the Authority nor any officer thereof executing this Bond shall be
liable personally on this Bond or be subject to any personal liability or
accountability by reason of the issuance of this Bond.
The Bonds are not a debt of the State of New York and the
State of New York shall not be liable thereon.
It is hereby certified and recited that all conditions, acts
and things required by law and the Indenture to exist, to have happened and to
have been performed precedent to and for the issuance of this Bond, exist, have
happened and have been performed, and that the issuance of this Bond and the
issue of which it forms a part are within every debt and other limit prescribed
by the laws of the State of New York.
<PAGE> 68
22.
IN WITNESS WHEREOF, the Authority has caused this Bond to be
signed in its name and on its behalf by the manual or facsimile signature of
its Chair, Vice-Chair, President or Treasurer and its seal or a facsimile
thereof to be impressed, imprinted or otherwise reproduced hereon and attested
by the manual or facsimile signature of its Secretary or an Assistant
Secretary, as of the date set forth below.
NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY
By
---------------------------
Chair
Attest:
- ----------------------
Secretary
Dated:
[Form of Trustee's or Tender Agent's Authentication on Bonds]
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Electric Facilities Revenue Bonds
(Long Island Lighting Company Project), 1993 Series B, described in the
within-mentioned Indenture.
Chemical Bank Chemical Bank
as Trustee as Tender Agent
By By
------------------------ ------------------------
<PAGE> 69
23.
The Authority may, in its discretion, cause any or all of
the paragraphs preceded by the symbol "*" to be printed on the reverse of
the Bonds, in which event the face of the Bonds shall state the following:
THE TERMS AND PROVISIONS OF THIS BOND ARE CONTINUED ON
THE REVERSE SIDE HEREOF AND SUCH CONTINUED TERMS AND
CONDITIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS
IF SET FORTH AT THIS PLACE.
In the event that some but not all of such paragraphs are printed on the
reverse of the Bonds, the numbering of such paragraphs may be revised
accordingly.
The language contained in the preceding paragraph and the
paragraphs preceded by the symbol "*" may be deleted for Bonds issued in
temporary form or delivered to a Securities Depository for book-entry-only
registration and the language to be contained on the reverse side of
definitive Bonds and Bonds not in book-entry-only form may be incorporated
by reference, in which event the Bonds shall state the following after the
second paragraph of the Bonds:
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH IN THE FORM OF BONDS IN THE INDENTURE, WHICH
PROVISIONS COMPRISE THE PARAGRAPHS IDENTIFIED BY THE
INDENTURE AS APPEARING ON THE REVERSE OF THE BONDS AND
SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH
FULLY SET FORTH AT THIS PLACE.
[END OF BOND FORM]
<PAGE> 70
24.
WHEREAS, the Trustee has accepted the trusts created by
the Indenture and in evidence thereof has joined in the execution hereof;
GRANTING CLAUSE
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in
consideration of the premises, of the acceptance by the Trustee of the
trusts hereby created, and of the purchase and acceptance of the Bonds by
the owners thereof, and also for and in consideration of the sum of One
Dollar ($1.00) to the Authority in hand paid by the Trustee at or before
the execution and delivery of the Indenture, the receipt of which is
hereby acknowledged, and for the purpose of fixing and declaring the terms
and conditions upon which the Bonds are to be issued, authenticated,
delivered, secured and accepted by all Persons who shall from time to time
be or become owners thereof, and in order to secure the payment of all the
Bonds at any time issued and outstanding hereunder and the interest and
the redemption premiums, if any, thereon according to their tenor, purport
and effect, and in order to secure the performance and observance of all
the covenants, agreements and conditions therein or herein contained, the
Authority has executed and delivered the Indenture, has caused the Company
to deliver to the Trustee the Company Note executed by the Company
pursuant to the Participation Agreement and the Company has caused the
Bank (hereinafter referred to) to deliver the Letter of Credit
(hereinafter referred to) to the Trustee, and the Authority does hereby
assign and pledge to the Trustee, for the benefit of such Bondowners, as
security for the payment of the principal of and premium, if any, and
interest on the Bonds in accordance with their terms and the provisions of
the Indenture, subject only to the provisions of the Indenture, permitting
the application thereof for the purposes and on the terms and conditions
set forth in the Indenture, (i) the rights and interest of the Authority
under the Participation Agreement (except the rights and interest of the
Authority under Article III and Sections 4.04, 4.08, 4.09, 4.10 and 5.16
of the Participation Agreement and subject to the provisions of the
Participation Agreement relating to the amendment thereof), (ii) the
rights and interest of the Authority under the Tax Regulatory Agreement
(as defined herein), subject to a reservation by the Authority of a right
to independently enforce the obligations of the Company thereunder and to
the provisions of the Tax Regulatory Agreement relating to the amendment
thereof, (iii) the proceeds of sale of the Bonds and (iv) all funds held
by the Trustee under the Indenture and available for the payment of Bonds
under the terms of the Indenture (expressly not including in such Funds
the Rebate Fund) and the income earned by the investment of such funds
held under the Indenture; in addition, the Authority hereby grants the
Trustee the same power as the Authority to enforce from time to
<PAGE> 71
25.
time the rights of the Authority set forth in Article III and Section 5.16
of the Participation Agreement, subject to the provisions of the
Participation Agreement relating to the amendment thereof.
THIS INDENTURE FURTHER WITNESSETH, and it is expressly
declared, that all Bonds from time to time issued and secured hereunder
are to be issued, authenticated and delivered, and all said property,
rights and interest, including, without limitation, the amounts hereby
assigned and pledged, are to be dealt with and disposed of subject to the
terms of the Indenture, and the Authority agrees with the Trustee and with
the respective owners, from time to time, of said Bonds or any part
thereof as follows:
<PAGE> 72
26.
ARTICLE I
DEFINITIONS; LIABILITY UNDER BONDS;
INDENTURE TO CONSTITUTE CONTRACT
Section 1.01. Definitions. The terms defined in this
Section 1.01 shall for all purposes of the Indenture have the meanings
herein specified, unless the context clearly otherwise requires:
Act shall mean the New York State Energy Research and
Development Authority Act, Title 9 of Article 8 of the Public Authorities
Law of the State of New York, as from time to time amended and
supplemented.
Act of Bankruptcy shall mean the filing of a petition
commencing a case by or against the Company or any of its Affiliates or
the Authority under the United States Bankruptcy Code, Title 11, United
States Code, as the same may be amended from time to time, or any
successor law, or the filing of a petition or the seeking of relief by or
against the Company or the Authority under any state bankruptcy or
insolvency law.
Administration Fees shall mean the amounts payable by the
Company to the Authority pursuant to Section 4.04 of the Participation
Agreement to defray a portion of the expenses incurred by the Authority in
conducting and administering its special energy project programs and the
amount payable to the State of New York as a bond issuance charge in
connection with the Bonds.
Affiliate of any specified Person shall mean any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Alternate Credit Facility shall mean any instrument
satisfactory to the Authority, such as a letter of credit, committed line
of credit, insurance policy, surety bond or standby bond purchase
agreement, or any combination of the foregoing, and issued by a bank or
banks, insurance company or companies, other financial institution or
institutions, or any combination of the foregoing, which Alternate Credit
Facility provides for the payment of (i) the purchase price equal to the
principal of and accrued interest on Bonds delivered to the Remarketing
Agents or any
<PAGE> 73
27.
depository or other party pursuant to the provisions hereof or of a
Remarketing Agreement and discount, if any, incurred in remarketing such
Bonds, and/or (ii) principal of and interest on all Bonds coming due and
payable during the term thereof, and is issued in substitution for and
having, in all material respects, the same terms as the Letter of Credit
in accordance with, and pursuant to, Section 4.12 of the Participation
Agreement.
Authority shall mean New York State Energy Research and
Development Authority, the public benefit corporation created by the Act,
and its successors and assigns.
Authorized Company Representative shall mean any officer
or other employee of the Company at the time designated to act on behalf
of the Company by written certificate furnished to the Authority and the
Trustee containing the specimen signature of such person and signed on
behalf of the Company by its President or a Vice President and its
Treasurer, Assistant Treasurer, Secretary or an Assistant Secretary.
authorized denomination means (a) during any Weekly Rate
Period or any Money Market Municipal Rate Period, $100,000 or any larger
integral multiple of $100,000, and (b) during any Semi-Annual Rate Period,
any Medium-Term Rate Period or the Fixed Rate Period, $5,000 or any
integral multiple thereof. Notwithstanding the foregoing, at the time of
any conversion to a Semi-Annual Rate Period, Medium-Term Rate Period or
the Fixed Rate Period, the Authority at the request of the Company may
direct the Trustee to authenticate and deliver Bonds only in denominations
of $100,000 or any larger integral multiple of $100,000 during such Rate
Period.
Authorized Officer means the Chair, Vice-Chair,
President, Treasurer, Assistant Treasurer or Secretary of the Authority.
Available Moneys shall mean (a) with respect to any date
for the payment of principal, premium, interest or Purchase Price on the
Bonds occurring during the term of the Letter of Credit, moneys which have
been on deposit with the Trustee, the Tender Agent or the Paying Agent in
the Bond Fund or in a separate and segregated account for the purpose of
purchasing or redeeming Bonds for at least 123 days during and prior to
which no Act of Bankruptcy, as evidenced by a certificate of the Company
and the Authority respectively, shall have occurred unless the proceeding
arising from such Act of Bankruptcy shall have been dismissed and such
dismissal shall be final and not subject to appeal, and the proceeds from
the investment thereof, and (b) with respect to any date for the payment
of principal, interest or premium, if any, on the Bonds not occurring
during the term of the Letter of Credit,
<PAGE> 74
28.
any moneys furnished to the Trustee and the proceeds from the investment
thereof.
Bank means The Toronto-Dominion Bank, Houston Agency, the
issuer of the initial Letter of Credit, in its capacity as issuer of the
Letter of Credit, the issuer of any Alternate Credit Facility and each of
their successors in such capacity.
Bond or Bonds shall mean any bond or bonds or all the
bonds, as the case may be, of the Authority executed, authenticated and
delivered under the Indenture.
Bond Counsel shall mean an attorney or firm or firms of
attorneys, satisfactory to the Authority and the Trustee, experienced in
laws relating to tax exemption of interest on bonds of states and their
political subdivisions.
Bond Fund shall mean the Bond Fund created in Section
6.01.
Bond Register shall have the meanings specified in
Section 2.11.
Bond Year shall mean each one-year period (or shorter
period from the issue date) that ends at the close of business each
November 1.
Business Day means any day other than (1) Saturday or
Sunday, (2) a day of the year on which banks located in (i) The City of
New York, New York, (ii) the city in which the Corporate Trust Office of
the Trustee is located are authorized or obligated by law or executive
order to remain closed, or (3) any other day not defined as a "business
day" under the Letter of Credit.
Calculation Period shall mean during any Money Market
Municipal Rate Period, any period or periods from and including a Business
Day to and including any day not more than 364 (during any year other than
a "leap year") or 365 (during any "leap year") days, as the case may be,
thereafter which is a day immediately preceding a Business Day established
by the Remarketing Agents pursuant to Section 2.03(d).
Code shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder or
officially proposed to be promulgated thereunder.
Company shall mean Long Island Lighting Company, or any
corporation which is the surviving, resulting or transferee
<PAGE> 75
29.
corporation in any merger, consolidation or transfer of assets permitted
under the Participation Agreement.
Company Indenture shall mean collectively, (i) the
Indenture of Mortgage and Deed of Trust, dated as of September 1, 1951,
from the Company to IBJ Schroder Bank and Trust Company (formerly J. Henry
Schroder Bank & Trust Company) as trustee, as amended and supplemented and
(ii) the General and Refunding Indenture dated as of June 1, 1975, from
the Company to United States Bank & Trust Company of New York (as
successor trustee), as amended and supplemented.
Company Note shall mean the promissory note of the
Company executed and delivered to the Trustee as provided in Section 4.01
of the Participation Agreement.
Company Note Payments shall mean the amounts payable by
the Company under the Company Note.
completed or completion, when used with reference to the
Project as of a stated date, shall mean that the Project has been
constructed substantially in accordance with the description thereof
(notwithstanding that substantial additions or modifications thereto are
planned, and notwithstanding that additional licensing or testing may be
required with respect to the Project), and that the Company does not
intend to submit any further requisitions pursuant to Section 3.03 of the
Participation Agreement with respect to the Project.
Completion Date shall mean the date specified by an
Authorized Company Representative pursuant to Section 3.05 of the
Participation Agreement.
Component Issuers means issuers of securities, the
interest on which is excluded from gross income for federal income tax
purposes, selected by the Indexing Agent in accordance with the Indenture.
Computation Period shall have the meaning ascribed to
such term in the Tax Regulatory Agreement.
construction, when used with respect to the Project,
shall include, without limitation, the construction, acquisition and
installation of the Project.
Conversion Date means each day on which the Interest Rate
Determination Method applicable to the Bonds shall be converted from one
Interest Rate Determination Method to a different Interest Rate
Determination Method or each day on which the interest rate on
<PAGE> 76
30.
the Bonds shall be converted from a Medium-Term Rate applicable for a
Medium-Term Rate Period of one duration to a Medium-Term Rate applicable
for a Medium-Term Rate Period of a different duration, as the case may be,
in accordance with Section 2.04. With respect to notices, time periods
and requirements in connection with the proceedings for such conversion,
"Conversion Date" means the day on which it is proposed that such
conversion occur.
Conversion Notice shall have the meaning set forth in
Section 2.04(a)(1).
Corporate Trust Office, when used in connection with the
Trustee, shall mean the office of the Trustee at which at any particular
time its corporate trust business shall be principally administered, which
office at the date hereof is located at 450 West 33rd Street, 15th Floor,
New York, New York 10001, Attention: Corporate Trustee Administration
Department and when used in connection with the Tender Agent shall mean
its principal office located at 55 Water Street, Room 234, North Building,
New York, New York 10041, Attention: Corporate Tellers.
Cost of Construction shall mean all costs incurred by the
Company at any time prior to or after delivery of the Bonds for or in
connection with the construction of the Project and shall include, but not
be limited to, (a) obligations of the Company incurred for labor,
services, materials and other expenses and to contractors, builders and
materialmen in connection with the construction of the Project; (b) the
cost of acquiring necessary land or rights in land and any costs
incidental thereto; (c) the cost of contract bonds and of insurance of all
kinds that may be required or necessary prior to the Completion Date which
is not paid by the contractor or contractors or otherwise provided for;
(d) expenses of the Company (including overhead charges) in connection
with the preparation of plans and specifications for the Project
(including any architectural, engineering or other professional fees or
the cost of any preliminary investigations for the Project), and for
supervising construction, as well as for the performance of all other
duties required by or appropriate to the construction of the Project; (e)
the fees, compensation and expenses (including reasonable counsel fees) of
the Trustee, the Tender Agent, any Paying Agent, the Bank, the Indexing
Agent and the Remarketing Agents incurred prior to the Completion Date of
the Project and the legal, accounting, financial (including compensation
to underwriters), printing, bond rating and other fees and expenses
incurred in connection with the issuance, purchase and sale of the Bonds
or any other obligations issued or incurred by the Authority pursuant to
an agreement with the Company in connection with the Project, including,
but not limited to, the Administration Fees or any other fees of the
Authority; (f) taxes,
<PAGE> 77
31.
assessments and other charges, if any, payable in connection with the
construction and owning of the Project prior to the Completion Date; (g)
interest due and payable on the Bonds or any other obligations issued or
incurred by the Authority pursuant to an agreement with the Company or by
the Company in connection with the Project from the date of issuance
thereof to the Completion Date of the Project; (h) the costs of testing
the Project and obtaining any required permit, consent, license or
approval for the Project, to the extent such costs shall have been
incurred prior to the Completion Date; (i) any amount payable to the
United States of America in connection with the Bonds pursuant to Section
148(f) of the Code; and (j) any sums required to reimburse the Company for
advances and payments made by it at any time prior to or after delivery of
the Bonds for any of the above items, or for any other cost incurred or
work done by the Company with respect to the Project.
Debt Service Account shall mean the account in the Bond
Fund so designated and created pursuant to Section 6.01.
description, when used with reference to the Project,
shall mean the description of the Project set forth in Exhibits A and B to
the Participation Agreement, as such description may be amended in
accordance with the Participation Agreement.
Determination Date shall mean the first day of each
Calculation Period.
Electric Facilities shall mean facilities of the Company
for the furnishing of electric energy which are required by the public
interest in development, health, recreation, safety, conservation of
natural resources or aesthetics or which constitute "special energy
projects" within the meaning of the Act and which constitute facilities
for the local furnishing of electric energy or other "exempt facilities"
within the meaning of Section 142(a)(8) of the Code.
Event of Default shall mean any event of default
specified in Section 10.01.
First Interest Period means the period described as such
in Section 2.03(a).
Fixed Rate means the Fixed Rate established in accordance
with Section 2.03(f).
Fixed Rate Period means the period from and including the
Fixed Rate Conversion Date to and including the date of maturity of the
Bonds.
<PAGE> 78
32.
Fixed Rate Conversion Date means the Conversion Date on
which the interest rate on the Bonds shall be converted to the Fixed Rate.
Fixed Rate Index means the average of the yield
evaluations (on the basis of full coupon securities trading at par with a
term approximately equal to the Fixed Rate Period) of securities (whether
or not actually issued), the interest on which is not included in gross
income for federal income tax purposes, of not fewer than twenty component
issues, which shall be issues of bonds selected by the Indexing Agent and
which have a rating by a Rating Agency in the same rating category as the
bonds of the Authority secured by unsecured promissory notes of the
Company are rated at the time by such rating agency (or if the Bonds are
to be supported by some form of credit enhancement, which have a rating by
a Rating Agency in the same rating category as the Bonds of the Authority
supported by such credit enhancement are rated at the time by such Rating
Agency) or, if no such bonds are so rated, shall be debt which, in the
judgment of the Indexing Agent, is of credit quality comparable to that of
such bonds, computed by the Indexing Agent on the day described in Section
2.03(f). In the event that the Indexing Agent fails to compute the Fixed
Rate Index and no other qualified municipal securities evaluation service
can be appointed Indexing Agent by the Authority, the Fixed Rate Index
shall be determined by the Remarketing Agents and shall be 90% of the
average yield shown for the most recent calendar month for United States
Treasury Notes or Bonds having the same number of years to maturity as the
number of 12-month periods (or months if the Fixed Rate Period is less
than one year) in the Fixed Rate Period, as published in the Federal
Reserve Bulletin in the last issue before the Computation Date. If that
issue does not contain such a yield, the Fixed Rate Index will be
determined by linear interpolation between the yields shown in that issue
for United States Treasury Notes and Bonds having the next shorter and
next longer number of years (or months) to maturity. In addition, at the
request of the Company and upon delivery to the Trustee of an Opinion of
Bond Counsel that such action will not adversely affect the exclusion of
interest on the Bonds from gross income of the owners thereof for federal
income tax purposes, the Authority may designate a new method of setting
the Fixed Rate Index in the event any of the above-described methods are
unavailable, impracticable or unrealistic in the market place.
Indenture shall mean the Indenture of Trust, as from time
to time amended or supplemented in accordance with the terms hereof.
<PAGE> 79
33.
Indexing Agent shall mean the indexing agent appointed in
accordance with Section 15.03, and its successor or successors appointed
pursuant to the provisions of the Indenture.
Interest Payment Date means (i) during any Weekly Rate
Period, the first Business Day of each calendar month; (ii) each
Conversion Date; (iii) during any Semi-Annual Rate Period or Medium-Term
Rate Period the first day of each of two months which are six months
apart, as specified in a certificate of an Authorized Officer delivered to
the Trustee prior to the Conversions to a Semi-Annual Rate Period or
Medium-Term Rate Period, provided, however, if the last such day occurring
in any Semi-Annual Rate Period is not a Business Day then the first
Business Day thereafter shall be the Interest Payment Date, provided,
further, however, if any Interest Payment Date in a Semi-Annual Rate
Period, determined as set forth above, would cause such Semi-Annual Rate
Period to extend for a period in excess of 182 days, the Interest Payment
Date for such Semi-Annual Rate Period shall be the last Business Day
occurring within such Semi-Annual Rate Period that does not cause such
Semi-Annual Rate Period to exceed 182 days in duration; (iv) during the
Fixed Rate Period, each May 1 and November 1; (v) during each Money
Market Municipal Rate Period, the first Business Day after any Calculation
Period; and (vi) the Maturity Date. With respect to the First Interest
Period, interest will be payable on May 1, 1994 and November 1, 1994. If
prior to the conversion to a Semi-Annual Rate Period, Medium-Term Rate
Period or Fixed Rate Period, an Officer's Certificate shall be delivered
to the Trustee specifying different Interest Payment Dates for such Rate
Period together with an Opinion of Bond Counsel to the effect that such
adjustment will not adversely affect the exclusion of interest on the
Bonds from gross income for federal income tax purposes, then the Interest
Payment Dates for such Rate Period shall be so adjusted; provided,
however, that no such adjustment shall result in the establishment of
Interest Payment Dates between which more than six months would pass.
Interest Period means the period from and including any
Interest Payment Date to and including the day next preceding the
following Interest Payment Date.
Interest Rate Determination Method means any of the
methods of determining the interest rate on the Bonds described in Section
2.03.
Issue Date means the date on which the Bonds are
delivered to the purchaser or purchasers thereof upon original issuance.
<PAGE> 80
34.
Investment Obligations shall have the meaning assigned
to that term in Section 14.01.2.
Letter of Credit shall mean that irrevocable letter of
credit issued and delivered to the Trustee pursuant to, and in the form of
Exhibit A to, the Reimbursement Agreement (including any extensions of
such letter of credit) and, upon the issuance and delivery of an Alternate
Credit Facility, "Letter of Credit" shall mean such Alternate Credit
Facility.
Letter of Credit Account shall mean the account in the
Bond Fund so designated and created pursuant to Section 6.01.
Mandatory Purchase Date means a date on which the Bonds
are required to be purchased in accordance with Section 2.05(e).
Maturity Date shall mean November 1, 2023.
Medium-Term Adjustment Date means the first day of each
Medium-Term Rate Period that does not occur on a Conversion Date and as of
which a new interest rate is established pursuant to Section 2.03(e).
Medium-Term Rate means the interest rate on the Bonds
established from time to time under Section 2.03(e).
Medium-Term Rate Index means the average of the yield
evaluations at par, determined by the Indexing Agent, of securities
(whether or not actually issued), having a term approximately equal to the
Medium-Term Rate Period or which are subject to optional or mandatory
tender by the owner thereof at the end of a term approximately equal to
the Medium-Term Rate Period, the interest on which is not included in
gross income for federal income tax purposes, of at least twenty Component
Issuers selected by the Indexing Agent, computed by the Indexing Agent as
of the Business Day preceding each date on which the Medium-Term Rate is
determined by the Remarketing Agents. When the Bonds are rated by a
Rating Agency or shall be subject to the benefits of a Letter of Credit
and the Bank has issued letters of credit to support other debt
obligations rated by a Rating Agency in one of its two highest long-term
debt rating categories, each Component Issuer must have outstanding
securities rated by a Rating Agency in one of its two highest long-term
debt rating categories. If the Bonds or other debt obligations supported
by letters of credit issued by the Bank are rated by a Rating Agency in a
rating category that is lower than its two highest long-term debt rating
categories (and the Bonds or other debt obligations supported by letters
of credit issued by the Bank are not rated in one of the two highest such
categories by the other Rating Agency), each Component Issuer must
<PAGE> 81
35.
have outstanding securities rated by a Rating Agency in the same long-term
debt rating category as the Bonds or other debt obligations supported by
letters of credit issued by the Bank are rated by that Rating Agency. The
Indexing Agent may change the Component Issuers from time to time in its
discretion, subject to the foregoing requirements. In addition, at the
request of the Company and upon delivery to the Trustee of an Opinion of
Bond Counsel that such action will not adversely affect the exclusion of
interest on the Bonds from gross income of the owners thereof for federal
income tax purposes, the Authority may designate a new method of setting
the Medium-Term Rate Index in the event any of the above-described methods
are unavailable, impracticable or unrealistic in the market place.
Medium-Term Rate Period means Medium-Term Rate Period as
defined in Section 2.03(e).
Money Market Municipal Rate shall mean an interest rate
established pursuant to Section 2.03(d).
Money Market Municipal Rate Index shall mean with respect
to the first day of each Calculation Period during a Money Market
Municipal Rate Period, the average of yield evaluations at par, determined
by the Indexing Agent, of securities (whether or not actually issued) all
of which shall have a term as near as practicable to such Calculation
Period or which are subject to optional or mandatory tender by the owner
thereof at the end of a term as near as practicable to such Calculation
Period, the interest on which is not included in gross income for federal
income tax purposes, of no fewer than twenty Component Issuers selected by
the Indexing Agent, including issuers of commercial paper, project notes,
bond anticipation notes and tax anticipation notes, computed by the
Indexing Agent on and as of such day. If the Bonds are rated by a Rating
Agency or are subject to the benefits of a Letter of Credit and the issuer
of such Letter of Credit has issued letters of credit to support other
debt obligations rated by a Rating Agency in its highest note or
commercial paper rating category or one of its two highest long-term debt
rating categories, each Component Issuer must (a) have outstanding
securities rated by a Rating Agency in its highest note or commercial
paper rating category or (b) not have outstanding notes or commercial
paper rated by a Rating Agency but have outstanding securities rated by a
Rating Agency in one of its two highest long-term debt rating categories.
If the Bonds or other debt obligations supported by letters of credit
issued by the Bank are rated by a Rating Agency in a rating category that
is lower than its highest note or commercial paper rating category or its
two highest long-term debt rating categories (and the Bonds or other debt
obligations supported by letters of credit issued by the
<PAGE> 82
36.
Bank are not rated in one of such categories by the other Rating Agency),
each Component Issuer must (a) have outstanding securities rated by a
Rating Agency in its note or commercial paper rating category which is the
same or correlative, in the Indexing Agent's judgment, to the note or
commercial paper rating category or the long-term debt rating category of
the Bonds or the other debt obligations supported by letters of credit
issued by the Bank or (b) have outstanding securities rated by a Rating
Agency in the same long-term debt rating category as the Bonds or the
other debt obligations supported by letters of credit issued by the Bank
are rated by that Rating Agency and not have any outstanding notes or
commercial paper rated by such Rating Agency. The Indexing Agent may
change the Component Issuers from time to time in its discretion, subject
to the foregoing requirements. In addition, at the request of the Company
and upon delivery to the Trustee of an Opinion of Bond Counsel that, under
then-existing statutes and court decisions, such action will not adversely
affect the exclusion of interest on the Bonds from gross income of the
owners thereof for federal income tax purposes, the Authority, with the
consent of the Company, may designate a new method of setting the Money
Market Municipal Rate Index in the event any of the above-described
methods are determined by the Authority to be unavailable, impracticable
or unrealistic in the market place.
Money Market Municipal Rate Period means Money Market
Municipal Rate Period as defined in Section 2.03(d).
Money Market Municipal Rate Period Record Date shall
mean, with respect to each Interest Payment Date during a Money Market
Municipal Rate Period, the Business Day next preceding such Interest
Payment Date.
Moody's shall mean Moody's Investors Service, Inc., a
corporation organized and existing under the laws of the State of
Delaware, its successors and their assigns, and, if such corporation shall
be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "Moody's" shall be deemed to refer to any other
nationally recognized securities rating agency designated by the
Authority, with the approval of the Company, by written notice to the
Trustee, the Company, the Remarketing Agents and the Indexing Agent.
Officer's Certificate shall mean a certificate signed by
an Authorized Officer.
Opinion of Bond Counsel shall mean a written opinion of
Bond Counsel.
<PAGE> 83
37.
Optional Retention Date means each day which is one
Business Day prior to each Mandatory Purchase Date established pursuant to
Section 2.05(e). Nothing in the Indenture shall be deemed to provide any
Bondowner the right contrary to Section 2.05(e)(4) to retain Bonds subject
to mandatory purchase under Section 2.05(e).
Optional Retention Notice Date means the fifth Business
Day prior to a Mandatory Purchase Date.
Optional Tender Date means (i) during any Weekly Rate
Period, any Business Day; provided that such Business Day is at least
seven days after notice of such tender is delivered in accordance with
Section 2.05(a), and (ii) during any Semi-Annual Rate Period, each
Interest Payment Date; provided that notice of such tender has been given
in accordance with Section 2.05(b).
Other Facilities shall mean the facilities described in
Exhibit B to the Participation Agreement.
outstanding, when used with reference to Bonds, shall
mean, as of any particular date, the aggregate of all Bonds authenticated
and delivered under the Indenture, except
(a) Bonds cancelled by the Trustee or
delivered to the Trustee for cancellation at or prior to
such date;
(b) Bonds for the payment or redemption of
which Available Moneys in the necessary amount have been
theretofore deposited with the Trustee or any Paying
Agent for the owners of such Bonds, provided that if such
Bonds are to be redeemed, notice of such redemption has
been duly given pursuant to the Indenture or provision
therefor satisfactory to the Trustee has been made;
(c) Bonds paid or deemed to be paid as
provided in Section 14.01;
(d) Bonds in lieu of or in substitution for
which other Bonds shall have been authenticated and
delivered pursuant to the Indenture, unless proof
satisfactory to the Trustee shall be presented that any
such Bond shall be held by a bona fide purchaser (as such
term is defined in the Uniform Commercial Code of the
State of New York); and
(e) Bonds deemed to be tendered for purchase
pursuant to Section 2.03(h) and not delivered to the
Trustee (but not Bonds issued in replacement thereof and
<PAGE> 84
38.
remarketed or delivered in respect thereof pursuant to Section
2.07);
provided, however, that in determining whether the owners of the requisite
principal amount of Bonds outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Bonds held
by the Tender Agent or held by or for the account of the Company shall be
disregarded and deemed not to be outstanding, except, that in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Bonds
which a Responsible Officer of the Trustee knows to be so held shall be so
disregarded. Bonds so held which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Bonds and
that the pledgee is not the Company and that the pledgee is not holding
for the account of the Company.
Owner or Bondowner or, when used with respect to an owner
of Bonds, owner shall mean the Registered Owner of any Bond.
Participation Agreement shall mean the Participation
Agreement dated as of November 1, 1993, between the Authority and the
Company, as amended and supplemented by Supplemental Participation
Agreements from time to time.
Paying Agent shall mean any paying agent or co-paying
agent for the Bonds (and may include the Trustee) and its successor or
successors appointed pursuant to the provisions of the Indenture.
Person shall mean an individual, a corporation, a
partnership, an association, a joint stock company, a trust, any
unincorporated organization or a government or political subdivision
thereof.
Project shall mean the Electric Facilities described in
Exhibit A to the Participation Agreement and the Other Facilities.
Project Fund shall mean the Project Fund created in
Section 5.01.
Purchase Date means any Mandatory Purchase Date,
Conversion Date, Medium-Term Adjustment Date or any date on which Bonds
are subject to mandatory tender for purchase pursuant to Section 2.05(g)
or Section 2.05(j).
<PAGE> 85
39.
Purchase Price means an amount equal to 100% of the
principal amount of any Bond tendered or deemed tendered to the Tender
Agent for purchase pursuant to Section 2.05 (or an amount equal to any
applicable optional redemption price on such date if such Bonds are to be
purchased on a Conversion Date occurring during a Medium-Term Rate Period
in accordance with Section 2.04), plus accrued and unpaid interest thereon
to the date of purchase; provided, however, if the date of such purchase
occurs after the Record Date applicable to the interest accrued on such
Bond from the last occurring Interest Payment Date, then the Purchase
Price shall not include accrued and unpaid interest, which shall be paid
to the owner of record on the applicable Record Date.
Rate means the Weekly Rate, Money Market Municipal Rate,
Semi-Annual Rate, Medium-Term Rate or Fixed Rate.
Rate Index means the Weekly Rate Index, the Semi-Annual
Rate Index, the Medium-Term Rate Index, the Money Market Municipal Rate
Index or the Fixed Rate Index.
Rate Period means any Weekly Rate Period, Semi-Annual
Rate Period, Medium-Term Rate Period, Money Market Municipal Rate Period
or Fixed Rate Period.
Rating Agency means Moody's or S&P.
Rating Category shall mean one of the generic rating
categories of a Rating Agency, without regard to any refinement or
gradation of such rating category by a numerical modifier, plus or minus
sign, or otherwise.
Rebate Amount shall have the meaning ascribed to such
term in the Tax Regulatory Agreement.
Rebate Fund shall mean the Rebate Fund created in Section
5.07.
Record Date means with respect to each Interest Payment
Date (i) during any Weekly Rate Period or Money Market Municipal Rate
Period, the Business Day next preceding such Interest Payment Date, and
(ii) during any Semi-Annual Rate Period or Medium-Term Rate Period or
Fixed Rate Period, the Trustee's close of business on the fifteenth day of
the calendar month next preceding such Interest Payment Date.
Registered Owner shall mean the Person or Persons in
whose name or names the particular Bond shall be registered on the Bond
Register.
<PAGE> 86
40.
Reimbursement Agreement means the Letter of Credit and
Reimbursement Agreement dated as of November 1, 1993, between the Company,
and The Toronto-Dominion Bank, Houston Agency, and any and all
modifications, alterations, amendments and supplements thereto and, upon
the issuance and delivery of an Alternate Credit Facility, "Reimbursement
Agreement" shall mean the letter of credit and reimbursement agreement (or
other document performing a similar function) relating to such Alternate
Credit Facility.
Remarketing Agents means the remarketing agent or agents
appointed in accordance with Section 15.01, and any successor or
successors appointed pursuant to the provisions of the Indenture.
Remarketing Agreement shall mean the Remarketing
Agreement with respect to a particular Interest Rate Determination Method
then in effect between the Company and the Remarketing Agents.
Responsible Officer, when used with respect to the
Trustee, means an officer of the Trustee assigned to the Corporate Trustee
Administration Department of the Trustee to whom any matter is referred
because of his or her knowledge of and familiarity with the particular
subject.
S&P shall mean Standard & Poor's Corporation, a
corporation organized and existing under the laws of the State of New
York, its successors and their assigns, and, if such corporation shall be
dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any other
nationally recognized securities rating agency designated by the
Authority, with the approval of the Company, by notice to the Trustee, the
Company, the Remarketing Agents and the Indexing Agent.
Securities Depository means a Bondowner acting as a
central securities depository as provided in Section 2.11(b).
Semi-Annual Adjustment Date means Semi-Annual Adjustment
Date as defined in Section 2.03(c).
Semi-Annual Rate means the interest rate on the Bonds
established from time to time pursuant to Section 2.03(c).
Semi-Annual Rate Index means the average of six-month
yield evaluations at par, determined by the Indexing Agent, of securities
(whether or not actually issued), the interest on which is not included in
gross income for federal income tax purposes, of at least twenty Component
Issuers selected by the Indexing Agent, including issuers of commercial
paper, project notes, bond
<PAGE> 87
41.
anticipation notes and tax anticipation notes, computed by the Indexing
Agent as of the Business Day next preceding each date on which the
Semi-Annual Rate is determined by the Remarketing Agents. When the Bonds
are rated by a Rating Agency or shall be subject to the benefits of a
Letter of Credit and the Bank has issued letters of credit to support
other debt obligations rated by a Rating Agency in its highest note or
commercial paper rating category or one of its two highest long-term debt
rating categories, each Component Issuer must (a) have outstanding
securities rated by a Rating Agency in its highest note or commercial
paper rating category or (b) not have outstanding notes or commercial
paper rated by a Rating Agency but have outstanding securities rated by a
Rating Agency in one of its two highest long-term debt rating categories.
If the Bonds or other debt obligations supported by letters of credit
issued by the Bank are rated by a Rating Agency in a rating category that
is lower than its highest note or commercial paper rating category or its
two highest long-term debt rating categories (and the Bonds or other debt
obligations supported by letters of credit issued by the Bank are not
rated in one of such categories by the other Rating Agency), each
Component Issuer must (a) have outstanding securities rated by a Rating
Agency in its note or commercial paper rating category which is the same
or correlative, in the Indexing Agent's judgment, to the note or
commercial paper rating category or the long-term debt rating category of
the Bonds or other debt obligations supported by letters of credit issued
by the Bank or (b) have outstanding securities rated by a Rating Agency in
the same long-term debt rating category as the Bonds or the other debt
obligations supported by letters of credit issued by the Bank are rated by
that Rating Agency and not have any outstanding notes or commercial paper
rated by such Rating Agency. The Indexing Agent may change the Component
Issuers from time to time in its discretion, subject to the foregoing
requirements. In addition, at the request of the Company and upon
delivery to the Trustee of an Opinion of Bond Counsel that such action
will not adversely affect the exclusion of interest on the Bonds from
gross income of the owners thereof for federal income tax purposes, the
Authority may designate a new method of setting the Semi-Annual Rate Index
in the event any of the above-described methods are unavailable,
impracticable or unrealistic in the market place.
Semi-Annual Rate Period means Semi-Annual Rate Period as
defined in Section 2.03(c).
Subseries means any Subseries of Bonds established
pursuant to Section 2.01 and references to the Bonds of any Subseries
shall include all Bonds at any particular point in time designated as the
Bonds of such Subseries in accordance with the provisions of the
Indenture.
<PAGE> 88
42.
Supplemental Indenture shall mean any indenture
supplementary or amendatory to the Indenture now or hereafter duly
executed and delivered in accordance with the provisions hereof.
Supplemental Participation Agreement shall mean an
agreement supplementing or amending the Participation Agreement.
Tax Regulatory Agreement shall mean the Tax Regulatory
Agreement dated the date of the original issuance of the Bonds between the
Authority and the Company and any and all modifications, alterations,
amendments and supplements thereto.
Tender Agent shall mean Chemical Bank, a banking
corporation organized under the laws of the State of New York, having its
principal office in The City of New York, New York, and its successor or
successors as Tender Agent under the Indenture.
Trustee shall mean Chemical Bank, a banking corporation
organized under the laws of the State of New York, having its principal
corporate trust office in New York, New York, in its capacity as trustee
under the Indenture, and its successor or successors as trustee under the
Indenture.
Untendered Bond means any Untendered Bond as defined in
Section 2.05(f).
Weekly Rate means the interest rate on the Bonds
established pursuant to Section 2.03(b).
Weekly Rate Index means the average of 30-day yield
evaluations at par, determined by the Indexing Agent, of securities
(whether or not actually issued), the interest on which is not included in
gross income for federal income tax purposes, of at least twenty Component
Issuers selected by the Indexing Agent, including issuers of commercial
paper, project notes, bond anticipation notes and tax anticipation notes,
computed by the Indexing Agent as of the Business Day next preceding each
day a Weekly Rate is determined by the Remarketing Agents. When the Bonds
are rated by a Rating Agency or shall be subject to the benefits of a
letter of credit and the Bank has issued letters of credit to support
other debt obligations rated by a Rating Agency in its highest note or
commercial paper rating category or one of its two highest long-term debt
rating categories, each Component Issuer must (a) have outstanding
securities rated by a Rating Agency in its highest note or commercial
paper rating category or (b) not have outstanding notes or commercial
paper rated by a Rating Agency but have outstanding securities rated by a
Rating Agency in one of its two highest long-term debt rating categories.
If the Bonds or other debt obligations supported by letters of
<PAGE> 89
43.
credit issued by the Bank are rated by a Rating Agency in a rating
category that is lower than its highest note or commercial paper rating
category or its two highest long-term debt rating categories (and the
Bonds or other debt obligations supported by letters of credit issued by
the Bank are not rated in one of such categories by the other Rating
Agency), each Component Issuer must (a) have outstanding securities rated
by a Rating Agency in its note or commercial paper rating category which
is the same or correlative, in the Indexing Agent's judgment, to the note
or commercial paper rating category or the long-term debt rating category
of the Bonds or other debt obligations supported by letters of credit
issued by the Bank or (b) have outstanding securities rated by a Rating
Agency in the same long-term debt rating category as the Bonds or other
debt obligations supported by letters of credit issued by the Bank are
rated by that Rating Agency and not have any outstanding notes or
commercial paper rated by such Rating Agency. The Indexing Agent may
change the Component Issuers from time to time in its discretion, subject
to the foregoing requirements. In addition, at the request of the Company
and upon delivery to the Trustee of an Opinion of Bond Counsel that, under
then existing statutes and court decisions, such action will not adversely
affect the exclusion of interest on the Bonds from gross income of the
owners thereof for federal income tax purposes, the Authority may
designate a new method of setting the Weekly Rate Index in the event any
of the above-described methods are unavailable, impracticable or
unrealistic in the market place.
Weekly Rate Period means Weekly Rate Period as defined in
Section 2.03(b).
Section 1.02. Rules of construction. Unless the
context clearly indicates to the contrary, the following rules shall apply
to the construction of the Indenture:
(a) Words importing the singular number
shall include the plural number and vice versa.
(b) Words importing the redemption or
calling for redemption of Bonds shall not be deemed to
refer to or connote the payment of Bonds at their stated
maturity or upon the acceleration of the principal
thereof by the Trustee under Article X.
(c) All references herein to particular
articles or sections are references to articles or
sections of the Indenture.
(d) The captions and headings herein are
solely for convenience of reference and shall not
constitute a part
<PAGE> 90
44.
of the Indenture nor shall they affect its meaning,
construction or effect.
(e) The terms "hereby," "hereof," "hereto,"
"herein," "hereunder" and any similar terms, as used in
the Indenture refer to the Indenture in its entirety and
not the particular article or section of the Indenture in
which they appear, and the term "hereafter" means after,
and the term "heretofore" means before, the date of the
Indenture.
(f) All references to Medium-Term Rate
Period of "similar duration" refer to Medium-Term Rate
Periods of equal duration as measured in months taking
into account any portion of a month as the entire month.
Section 1.03. Liability under Bonds. The Bonds shall
not be general obligations of the Authority, and shall not constitute an
indebtedness of or a charge against the general credit of the Authority or
give rise to any pecuniary liability of the Authority. The liability of
the Authority under the Bonds shall be enforceable only to the extent
provided in the Indenture, and the Bonds shall be payable solely from the
Company Note Payments and any other funds held by the Trustee under the
Indenture and available for such payment (including, but not limited to
any funds drawn under the Letter of Credit). The Bonds shall not be a
debt of the State of New York and the State of New York shall not be
liable thereon.
<PAGE> 91
45.
ARTICLE II
DESCRIPTION; AUTHORIZATION; MANNER OF EXECUTION;
AUTHENTICATION; REGISTRATION AND TRANSFER OF BONDS
Section 2.01. Issuance of Bonds; Designation of Bonds;
Certain Particulars and Form of Bonds. The Bonds shall be issued in one
series in the aggregate principal amount of $50,000,000 and shall be
designated as "Electric Facilities Revenue Bonds (Long Island Lighting
Company Project), 1993 Series B." In order to distinguish between Bonds
which are subject to different Interest Rate Determination Methods, Bonds
may be designated and redesignated (as herein provided) in such a way as
to identify several Subseries. Such Subseries may be designated as
Subseries B-1, Subseries B-2, and so forth. Each Bond shall bear upon the
face thereof such designation or redesignation, if any.
The Bonds shall be issuable in the form of registered
bonds without coupons in authorized denominations except as provided in
Section 2.08 with respect to lost, stolen, destroyed or undelivered Bonds.
The Bonds shall be numbered consecutively from NYBR-1 upwards bearing
numbers not then contemporaneously outstanding (in order of issuance)
according to the records of the Trustee. If the Bonds are redesignated to
identify several Subseries, the Bonds shall be numbered in accordance with
their Subseries designation, i.e. NYB1R-1, NYB2R-2, and so forth.
Bonds shall be substantially in the form set forth in the
recitals to the Indenture, with such appropriate variations, omissions and
insertions as are permitted or required by the Indenture and may have
endorsed thereon such legends or text as may be necessary or appropriate
to conform with the Indenture or to any applicable rules and regulations
of any governmental authority or any usage or requirement of law with
respect thereto.
Section 2.02. Additional Particulars of Bonds. The
Bonds initially shall be dated the Issue Date but, thereafter, each Bond
shall be dated the date of its authentication. Each Bond shall bear
interest from the last Interest Payment Date on which interest on such
Bond has been paid or, if no interest has been paid, from the Issue Date.
The Bonds will mature (subject to the right of prior redemption at the
prices and dates and upon the terms and conditions hereinafter set forth)
on the Maturity Date.
Only such Bonds as shall have endorsed thereon a
certificate of authentication substantially in the form set forth in the
Form of Bond duly executed by the Trustee or the Tender Agent shall be
entitled to any right or benefit under the Indenture. No Bond shall be
valid or obligatory for any purpose
<PAGE> 92
46.
unless and until such certificate of authentication shall have been duly
executed by the Trustee or the Tender Agent, and such executed certificate
of the Trustee or the Tender Agent upon any such Bonds shall be conclusive
evidence that such Bond has been authenticated and delivered under the
Indenture. The certificate of authentication of the Trustee or the Tender
Agent on any Bond shall be deemed to have been executed by it,
respectively, if signed with an authorized signature of the Trustee or the
Tender Agent, but it shall not be necessary that the same party or the
same person sign the certificate of authentication on all of the Bonds
Jissued hereunder.
The principal and the Purchase Price of and the
redemption premium, if any, and the interest on the Bonds shall be payable
in lawful money of the United States of America. The principal and the
Purchase Price of and the redemption premium, if any, on all Bonds shall
be payable at the principal office of the Paying Agent upon the
presentation and surrender of the Bonds as the same become due and
payable. The interest on the Bonds shall be paid by check or draft drawn
upon the Paying Agent and mailed to the persons in whose names the Bonds
are registered on the registration books maintained by the Trustee at the
close of business on the Record Date next preceding each Interest Payment
Date; provided, that in the event that less than all of the Bonds are held
under a book-entry-only system any Registered Owner of a Bond or Bonds not
held under a book-entry-only system in an aggregate principal amount of
not less than $1,000,000 (or $100,000 during any Money Market Municipal
Rate Period) may, by prior written instructions filed with the Paying
Agent (which instructions shall remain in effect until revoked by
subsequent written instructions), request that interest payments for any
period prior to the Fixed Rate Conversion Date be made by wire transfer or
other means acceptable to the Paying Agent to an address in the
continental United States; and provided, further, that during a Money
Market Municipal Rate Period, interest on a Bond is payable only upon
presentation and surrender thereof to the Tender Agent upon purchase
thereof pursuant to the Indenture, and if such presentation and surrender
is made by 12:00 noon (New York City time) such payment shall be by wire
transfer.
If any payment of interest or principal or redemption
premium on the Bonds is due on a date which is not a Business Day, payment
shall be made on the next succeeding Business Day with the same force and
effect as if made on the date which is fixed for such payment, and no
interest shall accrue on such amount for the period after such due date.
<PAGE> 93
47.
Section 2.03. Interest Rates on Bonds.
[2.03] (a) Generally; Initial Rates. Interest accrued
on the Bonds shall be paid on each Interest Payment Date. The interest
rate on the Bonds will be determined as provided in this Section,
provided, that in any event (i) no Weekly Rate, Money Market Municipal
Rate, Semi-Annual Rate or Medium-Term Rate shall exceed the lesser of: (a)
fifteen per centum (15%) per annum and (b) the maximum interest rate
specified in the Letter of Credit with respect to coverage for the payment
of interest or the interest component of Purchase Price and (ii) the Fixed
Rate shall not exceed eighteen per centum (18%) per annum and, provided,
further, no rate as so determined shall exceed the maximum rate permitted
by applicable law. Interest on the Bonds will initially be payable at a
Medium-Term Rate of two and eighty-five one-hundredths per centum (2.85%)
per annum for the period from November 17, 1993, to and including October
31, 1994 (the "First Interest Period"). Thereafter, unless and until the
Interest Rate Determination Method is changed as described in Section
2.04, the Bonds will bear interest at a Medium-Term Rate.
The Company may direct the Remarketing Agents to change
the Interest Rate Determination Method applicable to all or a portion of
the Bonds, except that no Bonds may be converted to bear interest at a
Fixed Rate unless all Bonds are converted to bear interest at a Fixed
Rate. Except as specifically provided otherwise herein, the conditions
and procedures for such change in the Interest Rate Determination Method
for a portion of the Bonds shall be the same as the conditions and
procedures for a change in the Interest Rate Determination Method for the
entire series of Bonds. If less than all of the Bonds are to be
converted, the Bonds which are being converted shall, pursuant to Section
2.01, be redesignated in such a way as to identify a separate Subseries,
and, in such event, all references herein to the Bonds shall be deemed to
refer to the Bonds of each Subseries separately.
During any Weekly Rate Period or Money Market Municipal
Rate Period, interest on the Bonds will be computed on the basis of a 365
or 366-day year, as the case may be, for the actual number of days
elapsed. During any Semi-Annual Rate Period, Medium-Term Rate Period or
Fixed Rate Period, interest on the Bonds will be computed on the basis of
a 360-day year of twelve 30-day months.
[2.03] (b) Weekly Rate. During any period commencing on
the date that the Interest Rate Determination Method is converted to a
mode where the Bonds bear interest at a Weekly Rate pursuant to Section
2.04 to, but not including, the next Conversion Date (a "Weekly Rate
Period"), the Bonds will bear interest at the Weekly Rate. With respect
to any Weekly Rate Period, the Remarketing
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48.
Agents will set a rate (a "Weekly Rate") by 12:00 noon New York City time:
(i) on the first Business Day before any Conversion Date immediately after
which the Bonds will bear interest at a Weekly Rate for the period
commencing on the Conversion Date through and including the next Tuesday
that is at least six days from such Conversion Date and (ii) on each
Wednesday thereafter (or the first Business Day before such Wednesday, if
such Wednesday is not a Business Day) for the seven day period from such
Wednesday through and including the next Tuesday. Each Weekly Rate shall
be the rate of interest which, if borne by the Bonds, would, in the
judgment of the Remarketing Agents, having due regard to the prevailing
financial market conditions for tax-exempt revenue bonds or other
tax-exempt securities of the same general nature as the Bonds or
tax-exempt securities which are competitive as to credit and maturity (or
period for tender) with the credit and maturity (or period for tender) of
the Bonds, be the interest rate necessary, but would not exceed the
interest rate necessary, to enable the Remarketing Agents to remarket the
Bonds at a price of par (plus accrued interest, if any) on such Wednesday;
provided that the Weekly Rate shall not be greater than 110% of the Weekly
Rate Index. If for any reason the Weekly Rate for any Weekly Rate Period
is not established as aforesaid by the Remarketing Agents, no Remarketing
Agent shall be serving as such hereunder or the rate so established is
held to be invalid or unenforceable by a final judgment of a court of law
with respect to any day, then the Weekly Rate for such Weekly Rate Period
shall be 100% of the Weekly Rate Index on the date such interest rate was
(or would have been) determined as provided above.
The Indexing Agent shall establish the Weekly Rate Index
on the Business Day next preceding each day on which a Weekly Rate is
determined by the Remarketing Agents. Notwithstanding the foregoing, in
the event that the Remarketing Agents, in their judgment, shall determine
that the Weekly Rate Index so established is sufficiently
non-representative of current market conditions that the Bonds may not be
remarketed at par if the Weekly Rate is set at a rate not greater than
110% of the applicable Weekly Rate Index, the Remarketing Agents may
establish a new Weekly Rate Index in accordance with the procedures and
standards set forth in this paragraph and in the preceding paragraph and
for purposes of the Weekly Rate Index so established, all references to
Indexing Agent in the Indenture shall be deemed to refer to the
Remarketing Agents; provided that the Remarketing Agents shall select
securities (whether or not actually issued) having a term equal to the
Weekly Rate Period or which are subject to optional or mandatory tender by
the owner thereof at the end of a term equal to the Weekly Rate Period.
<PAGE> 95
49.
[2.03] (c) Semi-Annual Rate. During any period
commencing on the date that the Interest Rate Determination Method is
converted to a mode where the Bonds bear interest at a Semi-Annual Rate
pursuant to Section 2.04 to, but not including, the next Conversion Date
(a "Semi-Annual Rate Period"), the Bonds will bear interest at the
Semi-Annual Rate. With respect to any Semi-Annual Rate Period, the
Remarketing Agents will set a rate (a "Semi-Annual Rate") not later than
5:00 p.m. New York City time: (i) on or before the first Business Day
before any Conversion Date immediately after which the Bonds will bear
interest at a Semi-Annual Rate for the period commencing on the Conversion
Date through but not including the next Interest Payment Date (each such
date occurring during a Semi-Annual Rate Period being referred to herein
as a "Semi-Annual Adjustment Date") and (ii) on or before the first
Business Day before each Semi-Annual Adjustment Date for the period
commencing on such Semi-Annual Adjustment Date through but not including
the next Semi-Annual Adjustment Date. Each Semi-Annual Rate shall be the
rate of interest which, if borne by the Bonds, would, in the judgment of
the Remarketing Agents, having due regard for the prevailing financial
market conditions for tax-exempt revenue bonds or other tax-exempt
securities of the same general nature as the Bonds or tax-exempt
securities which are competitive as to credit and maturity (or period for
tender) with the credit and maturity (or period for tender) of the Bonds,
be the interest rate necessary, but would not exceed the interest rate
necessary to enable the Remarketing Agents to remarket the Bonds at a
price of par (plus accrued interest, if any) on the next succeeding
Interest Payment Date (or, if any such day is not a Business Day, on the
next succeeding Business Day); provided that the Semi-Annual Rate shall
not be greater than 110% of the Semi-Annual Rate Index. If for any reason
the Semi-Annual Rate for any Semi-Annual Rate Period is not established as
aforesaid by the Remarketing Agents, no Remarketing Agent shall be serving
as such hereunder or the rate so established is held to be invalid or
unenforceable by a final judgment of a court of law with respect to any
Semi-Annual Period, then the Semi-Annual Rate for such Semi-Annual Rate
Period shall be 100% of the Semi-Annual Rate Index on the date such
interest rate was (or would have been) determined as provided above.
The Indexing Agent shall establish the Semi-Annual Rate
Index during the Semi-Annual Rate Period on the Business Day next
preceding each day on which a Semi-Annual Rate is determined by the
Remarketing Agents.
[2.03] (d) Money Market Municipal Rates. During
any period commencing on the date that the Interest Rate Determination
Method is converted to a mode where the Bonds bear interest at Money
Market Municipal Rates pursuant to Section 2.04 to, but not
<PAGE> 96
50.
including, the next Conversion Date (a "Money Market Municipal Rate
Period"), the Bonds will bear interest at the various Money Market
Municipal Rates for the various Calculation Periods established herein.
During any Money Market Municipal Rate Period, any Bond may have a
different Calculation Period and a different Money Market Municipal Rate
from any other Bond, all as established by the Remarketing Agents as
provided below.
[2.03 (d)] (i) Establishment of Calculation Periods.
During any Money Market Municipal Rate Period, at or prior to
12:00 noon New York City time on any Conversion Date immediately
after which the Bonds will bear interest at the Money Market
Municipal Rate and each day immediately after the end of a
Calculation Period, the Remarketing Agents shall establish
Calculation Periods with respect to Bonds for which no
Calculation Period is currently in effect. In determining
Calculation Periods, the Remarketing Agents shall take the
following factors into account: (1) existing short-term taxable
and tax-exempt market rates and indices of such short-term rates,
(2) the existing market supply and demand for short-term
tax-exempt securities, (3) existing yield curves for short-term
and long-term tax-exempt securities or obligations having a
credit rating that is comparable to the Bonds, (4) general
economic conditions, (5) economic and financial factors present
in the securities industry that may affect or that may be
relevant to the Bonds and (6) any information available to the
Remarketing Agents pertaining to the Bank or the Company
regarding any events or anticipated events which could have a
direct impact on the marketability of or interest rates on the
Bonds. The Remarketing Agents shall select the Calculation
Periods and the applicable Money Market Municipal Rates that,
together with all other Calculation Periods and related Money
Market Municipal Rates, in the sole judgment of the Remarketing
Agents, will result in the lowest overall borrowing cost on the
Bonds or are otherwise in the best financial interests of the
Company, as determined in consultation with the Company. Any
Calculation Period established hereunder may not extend beyond
any Conversion Date, the second Business Day next preceding the
scheduled expiration date of the Letter of Credit or the day
prior to the maturity date of the Bonds, and the maximum length
of the Calculation Period shall not exceed the number of days of
interest coverage under the Letter of Credit minus 30 days of
interest coverage.
[2.03 (d)] (ii) Setting of Rates. On the first day of
each Calculation Period, the Remarketing Agents shall set rates
("Money Market Municipal Rates") by 12:00 noon New York City time
for each Calculation Period. With respect to Bonds
<PAGE> 97
51.
for each Calculation Period, the Money Market Municipal Rate
shall be the rate of interest which, if borne by such Bonds,
would, in the judgment of the Remarketing Agents, having due
regard to the prevailing financial market conditions for
tax-exempt revenue bonds or other tax-exempt securities which are
competitive as to credit and maturity (or period of tender) with
the credit and maturity (or period of tender) of such Bond, be
the interest rate necessary, but would not exceed the interest
rate necessary, to enable the Remarketing Agents to remarket such
Bond at a price of par on the date such rate is set; provided
that the Money Market Municipal Rates shall not be greater than
110% of the Money Market Municipal Rate Index.
The Authority, at the request of the Company, may place
such limitations upon the establishment of Calculation Periods pursuant to
the preceding paragraph (i) as may be set forth in a written direction
from the Authority, which direction must be received by the Trustee and
the Remarketing Agents prior to 10:00 a.m. (New York City time) on the day
prior to any Determination Date to be effective on such date, but only if
the Trustee receives an Opinion of Bond Counsel to the effect that such
action is authorized by the Indenture, is permitted under the Act, and
will not have an adverse effect on the exclusion of interest on the Bonds
from gross income for federal income tax purposes.
The Indexing Agent shall establish the Money Market
Municipal Rate Index.
[2.03] (e) Medium-Term Rate. During any period (a
"Medium-Term Rate Period") commencing on the date that the Interest Rate
Determination Method is converted to a method where the Bonds bear
interest at a Medium-Term Rate pursuant to Section 2.04 to, but not
including the earliest to occur of, the next Conversion Date or the next
Medium-Term Adjustment Date and any period commencing on a Medium-Term
Adjustment Date, to but not including, the earliest to occur of the next
Conversion Date or the next Medium-Term Adjustment Date, the Bonds shall
bear interest at the Medium-Term Rate.
[2.03(e)] (i) Selection of Period. The length
of each Medium-Term Rate Period shall be selected by the Company
with the intention of yielding the lowest overall interest
expense on the Bonds over the term of such Medium-Term Rate
Period, taking into account (1) general economic conditions and
economic and market conditions relevant to the Bonds and (2) such
other facts, circumstances and conditions as the Company
determines to be relevant. The Company shall select a
Medium-Term Rate Period so that: (1) such period ends on the day
preceding an Interest Payment Date, (2) the Medium-Term
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52.
Period (other than the First Interest Period) is at least one
year in duration, and (3) such period will end not later than two
Business Days prior to the expiration of the Letter of Credit
then in effect. In addition, if the Company is converting from a
Weekly Rate Period, a Money Market Municipal Rate Period or a
Semi-Annual Rate Period, the Company shall not select a
Medium-Term Period that ends after the Interest Payment Date
immediately preceding final maturity of the Bonds unless it has
provided an Opinion of Bond Counsel that, under then existing
statutes and court decisions, such conversion of interest on the
Bonds will not cause interest on the Bonds to be included in
gross income for federal income tax purposes.
The Company shall give written notice of the term of any
Medium-Term Rate Period to the Trustee, the Tender Agent, the
Authority, the Indexing Agent and the Remarketing Agents not
later than 35 days prior to the commencement of any Medium-Term
Rate Period. In the event that no specific term of a Medium-Term
Rate Period shall have been so specified by the Company, the term
of a subsequent Medium-Term Rate Period shall be the same as the
term of the Medium-Term Rate Period immediately preceding it.
[2.03(e)] (ii) Setting of Rate. With respect
to any Medium-Term Rate Period, the Remarketing Agents will set a
rate no later than 10:00 a.m. New York City time on or before the
first Business Day before any Conversion Date immediately after
which the Bonds will bear interest at a Medium-Term Rate and the
first Business Day before any Medium-Term Adjustment Date for the
applicable Medium-Term Rate Period. Each Medium-Term Rate shall
be the rate of interest which, if borne by the Bonds, would, in
the judgment of the Remarketing Agents, having due regard for
prevailing market conditions for tax-exempt revenue bonds or
other tax-exempt securities which are competitive as to credit
and maturity, with the credit and maturity of the Bonds, be the
interest rate necessary, but would not exceed the interest rate
necessary, to enable the Remarketing Agents to remarket the
Bond(s) or portion(s) thereof as aforesaid tendered (or deemed to
have been tendered) for purchase at a price of par (plus accrued
interest, if any) on the first day of such Medium-Term Period;
provided that the Medium-Term Rate shall not be greater than 110%
of the Medium-Term Rate Index.
If for any reason the applicable Medium-Term Rate is not
established as aforesaid by the Remarketing Agents, no
Remarketing Agent shall be serving as such hereunder or the rate
so established is held to be invalid or unenforceable by a final
judgment of a court of law with respect to any Medium-
<PAGE> 99
53.
Term Rate Period, the interest rate to be borne by all Bonds
outstanding under the Indenture from the first day of the
applicable Medium-Term Rate Period to the last day of the
applicable Medium-Term Rate Period shall be equal to 100% of the
Medium-Term Rate Index calculated for such Medium-Term Rate
Period.
The Indexing Agent shall establish the Medium-Term Rate
Index on the Business Day next preceding each day on which a Medium-Term
Rate is determined by the Remarketing Agents.
[2.03] (f) Fixed Rate. During the period commencing on
the date that the Interest Rate Determination Method is converted to a
method where the Bonds bear interest at the Fixed Rate pursuant to Section
2.04 to (subject to the right of prior redemption at the prices and dates
and upon the terms and conditions hereinafter set forth) the Maturity Date
of the Bonds (the "Fixed Rate Period"), the Bonds shall bear interest at
the Fixed Rate.
With respect to the Fixed Rate Period, the Remarketing
Agents will set a rate (the "Fixed Rate") not later than 10:00 a.m. New
York City time one Business Day prior to any Fixed Rate Conversion Date.
The Fixed Rate shall be the interest rate which, if borne by the Bonds,
would, in the judgment of the Remarketing Agents having due regard for
prevailing financial market conditions for tax-exempt revenue bonds or
other tax-exempt securities which are competitive as to credit and
maturity with the credit and maturity of the Bonds, be the interest rate
necessary, but would not exceed the interest rate necessary, to enable the
Remarketing Agents to remarket the Bonds(s) or portion(s) thereof as
aforesaid tendered (or deemed to have been tendered) for purchase at a
price of par (plus accrued interest, if any) on the Fixed Rate Conversion
Date, provided that the Fixed Rate shall not be greater than 110% of the
Fixed Rate Index. If for any reason the applicable Fixed Rate is not
established as aforesaid by the Remarketing Agents, no Remarketing Agent
shall be serving as such hereunder or the rate so established is held to
be invalid or unenforceable by a final judgment of a court of law, the
interest rate to be borne by all Bonds outstanding under the Indenture
from the Fixed Rate Conversion Date to the date of payment in full of the
Bonds shall be equal to 100% of the Fixed Rate Index as of such
Computation Date.
The Indexing Agent shall establish the Fixed Rate Index
on or before the Business Day next preceding the Fixed Rate Conversion
Date.
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54.
[2.03] (g) Notice of Rates. Promptly following the
determination of any Weekly Rate, Semi-Annual Rate, Medium-Term Rate,
Money Market Municipal Rate or Fixed Rate, the Remarketing Agents shall
give notice to the Trustee, the Authority, the Company and the Tender
Agent in writing and, promptly thereafter, except in the case of the
Semi-Annual Rate and Weekly Rate, the Trustee shall give each Bondowner
notice of the new rate.
[2.03] (h) [Intentionally Omitted.]
[2.03] (i) Absence of Remarketing Agents. If no
Remarketing Agent shall be serving hereunder at the time of the
determination of the Weekly Rate, Semi-Annual Rate, Medium-Term Rate, the
Fixed Rate or the Money Market Municipal Rate, the Rate shall be the
Weekly Rate Index, Semi-Annual Rate Index, Medium-Term Rate Index, the
Fixed Rate Index or Money Market Manual Rate Index, as the case may be,
then in effect until a new Remarketing Agent is selected by the Company to
make such Rate determination. Any determination of the Weekly Rate,
Semi-Annual Rate, the Medium-Term Rate, the Fixed Rate or the Money Market
Municipal Rate by the Remarketing Agents, or pursuant to the preceding
sentence, shall be conclusive and binding upon the Authority, the Company,
the Tender Agent, the Trustee, the Paying Agent, the Remarketing Agents
and the Bondowners.
[2.03] (j) No Liability. In determining the interest
rate that the Bonds shall bear as provided in this Section, the
Remarketing Agents and, as aforesaid, the Trustee shall have no liability
to the Authority, the Company, the Tender Agent, the Trustee, the Paying
Agent or any Bondowner except for its willful misconduct.
[2.03] (k) Legend Authorized. Any Bond issued upon
registration of transfer or exchange on or after any Fixed Rate Conversion
Date shall contain a prominent legend on the face thereof, to be specified
by the Authority and placed thereon by the Trustee, to the effect that the
Letter of Credit has expired, that the Bonds are no longer entitled to the
benefit of any Letter of Credit, that the Bonds are not subject to
mandatory purchase by the Tender Agent and that the interest rate on the
Bonds has been converted to another Interest Rate Determination Method, in
which case such method shall be specified.
Section 2.04. Conversion of Interest Rate on Bonds.
(a)(1) During any Rate Period other than the Fixed Rate Period, at any
time, subject to the conditions set forth below, the Company may direct a
change in the Interest Rate Determination Method from one Rate to another
by so directing the Trustee in writing (such being hereinafter referred to
as a "Conversion Notice") with copies
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55.
to the Remarketing Agents, the Tender Agent, the Authority, the Indexing
Agent and, during the term of the Letter of Credit, the Bank, delivered at
least thirty (30) days (where the Bonds bear interest at a Weekly Rate,
Money Market Rate or Semi-Annual Rate) or thirty-five (35) days (where the
Bonds bear interest at a Medium-Term Rate) but, in either case, not more
than sixty (60) days prior to the Conversion Date, accompanied by an
Opinion of Bond Counsel stating that, under then existing statutes and
court decisions, such conversion of interest on the Bonds to the other
Rate will not cause the interest on the Bonds to be included in gross
income for federal income tax purposes. The Company's notice must specify
(i) the Conversion Date, (ii) the new Interest Rate Determination Method
to take effect, (iii) if the new Interest Rate Determination Method is a
Medium-Term Rate Period, the length of the Medium-Term Rate Period, (iv)
if the new Interest Rate Determination Method is a Money Market Municipal
Rate Period, the maximum length of Calculation Periods, and (v) if the new
Interest Rate Determination Method is to apply to less than all of the
Bonds then outstanding, the aggregate principal amount of Bonds to which
the new Interest Rate Determination Method is to apply.
If the Company directs the Trustee to change the Interest
Rate Determination Method from one Rate to another for less than all of
the Bonds then outstanding, the Trustee shall select Bonds to be converted
by lot or by such other method as the Trustee may select. In the event
the Company wishes to convert less than all the Bonds then outstanding,
the Company shall notify the Trustee of such decision not less than 40
days or more than 60 days before the effective date of the proposed
conversion. On the Conversion Date the portion of the Bonds which are
being converted shall be redesignated in such a way as to identify a
separate Subseries and thereby to avoid confusion of such Subseries with
any other Subseries. The Company may also determine to similarly
redesignate the portion of the Bonds which are not being converted on the
Conversion Date. The holders of Bonds which are being redesignated may be
required to deliver such Bonds to the Trustee in order to receive a new
Bond of the applicable designation, in the same principal amount. In the
event holders are not required to surrender such Bonds, the Trustee shall
appropriately designate any Bonds subsequently issued in exchange
therefor. The Trustee shall not be liable to any Bondholder for the
method selected and employed by the Trustee or by the Company's selection
of a partial redemption.
[2.04(a)] (2) Any change in the Interest Rate
Determination Method must comply with the following to the extent
applicable:
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56.
(i) Except in the case of a change in the Interest Rate
Determination Method from a Medium-Term Rate Period to another
Rate Period, all Conversion Dates shall occur on Business Days.
(ii) If the Semi-Annual Rate or a Medium-Term Rate is
then in effect, the Conversion Date shall be an Interest Payment
Date (or if the Semi-Annual Rate is then in effect the
immediately succeeding Business Day, if such Interest Payment
Date is not a Business Day) or any Business Day on which the
Bonds are subject to optional redemption.
(iii) If a Medium-Term Rate is then in effect, the
Conversion Date shall occur only during the period during which
the Bonds are subject to optional redemption at a redemption
price of 100% of the principal amount thereof unless the Letter
of Credit then in effect provides for payment of Purchase Price
equal to such redemption price above par or Available Moneys have
been provided in an amount sufficient, together with any amounts
available under the Letter of Credit, to pay such Purchase Price
in full; provided, that if the Bonds are subject to optional
redemption at a redemption price above par, the Purchase Price on
the Conversion Date shall include the optional redemption
premium.
(iv) No conversion of the interest rate on the Bonds
shall occur under this Section if at the time of such conversion
an Event of Default shall have occurred hereunder and be
continuing with respect to the Bonds.
(v) No Rate Period other than the Fixed Rate Period
shall extend to a date later than the first Business Day next
preceding the scheduled expiration of the Letter of Credit in
effect at the beginning of such Rate Period.
(vi) If the Rate Period in effect after the conversion
is a Money Market Municipal Rate Period, the maximum length of
the Calculation Period shall not exceed the number of days of
interest coverage under the Letter of Credit minus 30 days of
interest coverage.
[2.04(a)] (3) Any change in the Interest Rate
Determination Method shall not be effective unless by 10:00 a.m., New York
City time, on the Conversion Date the Company delivers a supplemental
Opinion of Bond Counsel to the Trustee stating that under the laws
existing on the Conversion Date the conversion to the other Rate will not
cause the interest on the Bonds to be included in gross income for federal
income tax purposes.
<PAGE> 103
57.
[2.04(a)] (4) Notwithstanding any other provision of
the Indenture, after the Interest Rate Determination Method is changed to
the Fixed Rate, such method may not thereafter be changed and such Fixed
Rate shall be the rate of interest on the Bonds from the Fixed Rate
Conversion Date until the Maturity Date.
(b) Upon receipt of a Conversion Notice from the
Company, the Trustee shall no later than twenty-five (25) days (if the
Bonds then bear interest at a Weekly Rate, Money Market Rate or
Semi-Annual Rate) or thirty (30) days (if the Bonds then bear interest at
a Medium-Term Rate) prior to the Conversion Date give notice by mail to
the Bondowners, which notice shall state in substance:
[2.04(b)] (1) that the interest rate on the Bonds shall
be converted to a Weekly Rate, a Semi-Annual Rate, a Medium-Term
Rate, a Money Market Municipal Rate or the Fixed Rate, as the
case may be;
[2.04(b)] (2) the Conversion Date;
[2.04(b)] (3) if applicable, that the Company has
delivered to the Trustee an Opinion of Bond Counsel stating that
under the statutes and court decisions existing on the date of
the Conversion Notice, the conversion of the interest rate on the
Bonds to the applicable rate will not cause the interest on the
Bonds to be included in gross income for federal income tax
purposes;
[2.04(b)] (4) if applicable, that the interest rate on
the Bonds shall not be converted unless the Company delivers to
the Trustee on the applicable Conversion Date a supplemental
Opinion of Bond Counsel stating that under the statutes and court
decisions existing on the Conversion Date, (A) the conversion of
the interest rate on the Bonds will not cause the interest on the
Bonds to be included in gross income for federal income tax
purposes; and (B) the rate to be in effect after the conversion
does not exceed the maximum rate permitted by the Indenture and
by applicable law; provided, however, that if the Company fails
to deliver such supplemental Opinion of Bond Counsel on such
date, the interest rate on the Bonds shall not be converted on
the applicable Conversion Date, and all Bonds tendered (or deemed
to have been tendered) for purchase shall not be purchased on the
applicable Conversion Date as provided herein and the Bonds shall
continue to bear interest in accordance with the Interest Rate
Determination Method in effect prior to the proposed Conversion
Date;
<PAGE> 104
58.
[2.04(b)] (5) that all Bonds (or portions thereof in
authorized denominations) tendered (or deemed to have been
tendered) for purchase by the owners thereof shall be purchased
on the applicable Conversion Date at the Purchase Price;
[2.04(b)] (6) that, to the extent that there shall be on
deposit with the Tender Agent, the Paying Agent or the Trustee on
or before the applicable Conversion Date an amount of money
sufficient to pay the Purchase Price thereof, all Bonds, whether
or not actually delivered for purchase on such date, shall be
deemed to have been properly tendered for purchase and shall
cease to constitute or represent a right on behalf of the owner
thereof to the payment of principal and/or interest thereon and
shall represent and constitute only the right to payment of the
Purchase Price thereof, without interest accruing thereon, on
deposit with the Tender Agent, the Paying Agent or the Trustee;
[2.04(b)] (7) the name of the Tender Agent and the
address of the principal office of the Tender Agent;
[2.04(b)] (8) that, if the conversion is to a Fixed
Rate, the Letter of Credit will expire no later than the close of
business on the first Business Day following the applicable Fixed
Rate Conversion Date;
[2.04(b)] (9) that, in the case of conversion to the
Fixed Rate, the rating assigned by the Rating Agency then rating
the Bonds, if any, to the Bonds, either may be or is expected to
be lowered or eliminated as a result of such conversion;
[2.04(b)] (10) that, if the conversion is to the Fixed
Rate, from and after the Fixed Rate Conversion Date, the Bonds
will no longer be subject to purchase as provided in Section 2.05
or, if the conversion is to a Medium-Term Rate, the Bonds will
not be subject to tender until the expiration of the applicable
Rate Period; and
[2.04(b)] (11) that, if the conversion is to a
Medium-Term Rate Period of greater than three years duration, the
short term rating, if any, assigned by any Rating Agency to the
Bonds will be withdrawn as a result of such conversion.
[2.04] (c) If the Company fails to deliver to the
Trustee by 10:00 a.m. New York City time on the Conversion Date, the
supplemental Opinion of Bond Counsel as and if required by subsection (a)
of this Section, the interest rate on the Bonds
<PAGE> 105
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shall not be converted to the Weekly Rate, Semi-Annual Rate, Medium-Term
Rate, Money Market Municipal Rate or Fixed Rate on the Conversion Date, as
the case may be, and Bonds tendered (or deemed to have been tendered) for
purchase on the Conversion Date shall not be purchased on the Conversion
Date and the Bonds shall continue to bear interest at the rate determined
in accordance with the Interest Rate Determination Method in effect prior
to the proposed Conversion Date. In such event, all rights of the
Authority, the Trustee and the Company hereunder shall continue as if no
such proceedings for the conversion of the interest rate on the Bonds had
been taken and the Bonds shall be available for remarketing under Section
2.06. The Trustee shall promptly notify the Authority and the Bondowners
by mail (and shall promptly notify the Tender Agent, the Paying Agent, the
Bank and the Remarketing Agents by telephone) in the event that the
interest rate on the Bonds is not converted on the Conversion Date as
provided herein.
[2.04] (d) Failure to mail the notice described in
subsection (a) or (b), or any defect therein, shall not affect the
validity of any interest rate or change in the Interest Rate Determination
Method on any of the Bonds or extend the period for tendering any of the
Bonds for purchase, and the Trustee shall not be liable to any Bondowner
by reason of its failure to mail such notice or any defect therein.
[2.04] (e) The Letter of Credit shall not be
available to pay the principal or Purchase Price of or interest on any
Bonds after the earlier of the first Business Day following the Fixed Rate
Conversion Date or the date a drawing is made under the Letter of Credit
in connection therewith. The Letter of Credit shall be returned to the
Bank for cancellation promptly upon the expiration thereof on or after
such Fixed Rate Conversion Date.
Section 2.05. Optional and Mandatory Tender of Bonds
for Purchase. (a) During any Weekly Rate Period, the owners of the Bonds
shall have the right to tender any Bond (or portion thereof in an
authorized denomination) to the Tender Agent for purchase on any Optional
Tender Date, but only upon:
(1) giving or delivery to the Tender Agent at its
principal office, on a Business Day, not later than the seventh
calendar day prior to the Optional Tender Date, of a written or
telephonic notice, confirmed in writing, which states (i) the
number and aggregate principal amount of each Bond to be
purchased and (ii) that such Bond (or portion thereof in an
authorized denomination) shall be purchased on such Optional
Tender Date pursuant to the Indenture; and
<PAGE> 106
60.
(2) delivery of such Bond (with an appropriate
instrument of transfer duly executed in blank) to the Tender
Agent at its principal office at or prior to 12:00 noon, New York
City time, on such Optional Tender Date; provided, however, that
no Bond (or portion thereof in an authorized denomination) shall
be purchased unless the Bond so delivered to the Tender Agent
shall conform in all respects to the description thereof in the
aforesaid notice.
Any election of a Bondowner to tender a Bond (or portion thereof as
aforesaid) for purchase on the Optional Tender Date in accordance with
this subsection (a) shall be irrevocable and shall be binding on the
Bondowner making such election and on any transferee of such Bondowner and
any Bond with respect to which such an election has been made which is not
properly delivered by the owner thereof to the Tender Agent shall be
deemed to have been properly tendered to the Tender Agent, and, to the
extent that there shall be on deposit with the Tender Agent on or before
the Optional Tender Date, an amount sufficient to pay the Purchase Price
thereof, such Bond shall cease to constitute or represent a right to
payment of principal or interest thereon and shall constitute and
represent only the right to payment of the Purchase Price payable on such
date.
[2.05] (b) During any Semi-Annual Rate Period, the
owners of the Bonds shall have the right to tender any Bond (or portion
thereof in an authorized denomination) to the Tender Agent for purchase on
any Optional Tender Date prior to a Conversion Date, but only upon:
(1) giving or delivery to the Tender Agent at its
principal office, not earlier than the thirtieth calendar day and
not later than the fifteenth calendar day next preceding such
Optional Tender Date of a written or telephonic notice confirmed
in writing which states (i) the number and aggregate principal
amount of each Bond to be purchased and (ii) that such Bond (or
portion thereof in an authorized denomination) shall be purchased
on such Optional Tender Date pursuant to the Indenture; and
(2) the delivery of such Bond (with an appropriate
instrument of transfer duly executed in blank) to the Tender
Agent at its principal office at or prior to 12:00 noon, New York
City time, on such Optional Tender Date; provided, however, that
no Bond (or portion thereof in an authorized denomination) shall
be purchased unless the Bond so delivered to the Tender Agent
shall conform in all respects to the description thereof in the
aforesaid notice.
<PAGE> 107
61.
Any election of a Bondowner to tender a Bond (or portion
thereof as aforesaid) for purchase on the Optional Tender Date in
accordance with this subsection (b) shall be irrevocable and shall be
binding on the Bondowner making such election and on any transferee of
such Bondowner and any Bond with respect to which such an election has
been made which is not properly delivered by the owner thereof to the
Tender Agent shall be deemed to have been properly tendered to the Tender
Agent, and, to the extent, that there shall be on deposit with the Tender
Agent on or before the Optional Tender Date, an amount sufficient to pay
the Purchase Price thereof, such Bond shall cease to constitute or
represent a right to payment of principal or interest thereon and shall
constitute and represent only the right to payment of the Purchase Price
payable on such date.
[2.05] (c) The Tender Agent shall give the Trustee, the
Company, the Remarketing Agents, the Paying Agent and the Bank prompt
notice by telephone confirmed promptly in writing of the receipt of any
notice in accordance with clause (1) of subsection (a) or (b) above.
During any Semi-Annual Rate Period, the Trustee shall give notice by mail
to Bondowners not more than forty-five or less than thirty calendar days
before each Optional Tender Date, which notice shall state in substance:
(i) the next Optional Tender Date, and (ii) that the Bonds are subject to
tender at the option of the owner thereof in the manner set forth in
subsection (b) of this section.
[2.05] (d) All Bonds are subject to mandatory tender and
purchase on each Conversion Date and each Medium-Term Adjustment Date.
[2.05] (e) All Bonds shall be subject to mandatory tender
and purchase on each Mandatory Purchase Date unless the owner exercises
his or her right to retain the Bonds (in certain circumstances) pursuant
to this subsection (e) as hereinafter provided:
[2.05(e)] (1) The owners of the Bonds shall tender all
Bonds (with appropriate instruments of transfer duly executed in blank) to
the Tender Agent at its principal office for purchase on the applicable
Mandatory Purchase Date, which date shall be established pursuant to
clause (iii) of paragraph (2) of this subsection (e), at the Purchase
Price due on such Mandatory Purchase Date. A Mandatory Purchase Date
shall be established for the Bonds if:
(A) The Company fails to deliver to the Trustee on
or prior to the thirty-seventh calendar day next
preceding the effective date of an Alternate Credit
Facility
<PAGE> 108
62.
(including, without limitation, any Alternate Credit
Facility issued as contemplated by (B) below) (i) such
Alternate Credit Facility, (ii) an Opinion of Bond
Counsel as described in Section 6.07.2(b) and (iii) if
applicable, written evidence as described in Section
6.07.2(c); or
(B) The Company fails to deliver to the Trustee on
or prior to the thirty-seventh calendar day next
preceding the scheduled expiration date of the Letter of
Credit then in effect either (i) written evidence that
the Letter of Credit then in effect will be extended or
renewed for a period of at least one year beyond such
expiration date and will end not sooner than the second
Business Day following the Interest Payment Date for such
Interest Period or (ii) the items set forth in Section
6.07.2(a), (b) and, if applicable, (c).
[2.05(e)] (2) Upon the Bonds becoming subject to
mandatory tender for purchase as provided in clause (1) above, the Trustee
shall within five (5) calendar days give telephonic notice to the
Remarketing Agents, the Authority and the Tender Agent and give notice by
mail to the Bondowners, which notice shall state in substance:
(i) the name of the bank issuing the Alternate Credit
Facility, if any, and the effective date thereof;
(ii) the Optional Retention Date, if applicable;
(iii) the Mandatory Purchase Date, which in the case of
(1)(A) above shall be the effective date of the Alternate Credit Facility,
or, if no Alternate Credit Facility is delivered to the Trustee, the
twentieth calendar day next preceding the scheduled expiration date of the
Letter of Credit and in the case of (1)(B) above shall be a date that is
two Business Days prior to such expiration date;
(iv) in the case of (1)(A) above, that in connection
with the issuance of the Alternate Credit Facility, the Trustee has not
received a letter from the Rating Agency then rating the Bonds stating
that such Rating Agency has reviewed the terms of the Alternate Credit
Facility and the bank issuing the same and that issuance of the Alternate
Credit Facility for the benefit of the Bondowners will not result in a
lowering of the rating then assigned by such Rating Agency to the Bonds;
<PAGE> 109
63.
(v) in the case of (1)(B) above, that the Letter of
Credit will expire no later than the close of business on the second
Business Day following the Mandatory Purchase Date;
(vi) if the Bonds are then rated, that the rating
assigned by the Rating Agency to the Bonds may be lowered or eliminated as
a result of the issuance of the Alternate Credit Facility, in the case of
(1)(A) above, or as a result of the expiration of the Letter of Credit, in
the case of (1)(B) above;
(vii) that all Bonds (or portions thereof in authorized
denominations) tendered shall be purchased on the Mandatory Purchase Date
at the applicable Purchase Price;
(viii) that, to the extent that there shall be on
deposit with the Tender Agent, the Paying Agent or the Trustee on or
before the Mandatory Purchase Date an amount of money sufficient to pay
the Purchase Price thereof, all Bonds, whether or not actually delivered
for purchase on such date, (or portions thereof in authorized
denominations) not delivered to the Tender Agent on the Optional Retention
Date shall be deemed to have been properly tendered for purchase and shall
cease to constitute or represent a right on behalf of the owner thereof to
the payment of principal and/or interest thereon and shall represent and
constitute only the right to payment of the Purchase Price thereof,
without interest accruing thereon, on deposit with the Tender Agent, the
Paying Agent or the Trustee; provided that Bonds (or portions thereof in
authorized denominations) the owner of which shall have elected to retain
and not to tender in accordance with clause (4) below shall not be deemed
to have been tendered for purchase and shall constitute and continue to
represent the right of the owner thereof to payment of principal and
interest, if any, thereon in accordance with the terms of such Bond; and
(ix) the name of the Tender Agent and the address of the
principal office of the Tender Agent.
[2.05(e)] (3) Failure to mail the notice described in
clause (2) or any defect therein, shall not extend the period for
tendering any of the Bonds for purchase, and the Trustee shall not be
liable to any Bondowner by reason of its failure to mail such notice or
any defect therein.
[2.05(e)] (4) The Bonds shall be tendered for purchase
as provided in this subsection (e), except for any Bond or Bonds (or
portions thereof in authorized denominations) the owner of which shall
deliver to the Tender Agent at its principal office no later than the
applicable Optional Retention Notice Date, a written notice, substantially
in the form of EXHIBIT B to the Indenture,
<PAGE> 110
64.
appropriately completed; provided that such owners shall have the right to
retain only those Bonds to be secured by a Letter of Credit meeting the
requirements of Section 4.12 of the Participation Agreement following the
Mandatory Purchase Date and any Bonds not meeting those requirements shall
be deemed tendered and shall be subject to subsection (f) of this Section
notwithstanding any election to retain such Bonds; provided, however, that
the expiry of the Letter of Credit shall be automatically extended until
such date as all Bonds are tendered by the owners thereof (or deemed
tendered hereunder) and a Redemption/Mandatory Purchase Drawing (as
defined in the Letter of Credit) has been made under the Letter of Credit.
[2.05] (f) Any election by a Bondowner to retain any Bond
(or portion thereof in an authorized denomination) and not to tender such
Bond (or portion thereof in an authorized denomination) for purchase on an
Optional Retention Date in accordance with subsection (e), shall be
irrevocable and shall be binding on the Bondowner making such election and
on any transferee of such Bondowner. If a Bondowner fails to give notice
of such an election with respect to any Bond (or portion thereof in an
authorized denomination) on the applicable Optional Retention Notice Date
and thereafter fails to deliver such Bond to the Tender Agent on or before
the applicable Optional Retention Date, such Bond (or portion thereof in
an authorized denomination) which is not delivered to the Tender Agent
shall be deemed to have been properly tendered to the Tender Agent (such
Bond being hereinafter referred to as an "Untendered Bond"), and, to the
extent that there shall be on deposit with the Tender Agent on or before
the Purchase Date, an amount sufficient to pay the Purchase Price thereof,
such Untendered Bond shall cease to constitute or represent a right to
payment of principal or interest thereon and shall constitute and
represent only the right to the payment of Purchase Price payable on such
date. The foregoing shall not limit the entitlement of any Bondowner on
any Record Date to receipt of interest due on such date unless such
interest is paid as part of Purchase Price. The Tender Agent will inform
the Remarketing Agents and the Trustee by telephone promptly after the
applicable Optional Retention Notice Date of the principal amount of Bonds
which will be tendered or deemed to have been tendered on the applicable
Optional Retention Date.
[2.05] (g) During any Money Market Municipal Rate Period,
each Bond shall be subject to mandatory tender for purchase on the
Business Day immediately following each Calculation Period, at a price
equal to the principal amount thereof. Owners of such Bonds shall have no
right to elect to retain such Bonds.
<PAGE> 111
65.
[2.05] (h) On each Optional Tender Date and Purchase
Date, there shall be purchased (but solely from funds received by the
Tender Agent in accordance with the terms hereof) the Bond or Bonds (or
portions thereof in authorized denominations) tendered (or deemed to have
been tendered) to the Tender Agent for purchase in accordance with this
Section at the applicable Purchase Price. Funds for the payment of the
Purchase Price of such Bond or Bonds (or portions thereof in authorized
denominations) shall be paid by the Tender Agent solely from the following
sources and in the following order of priority:
(i) moneys drawn under the Letter of Credit by the
Trustee pursuant to Section 6.07.1;
(ii) proceeds of the remarketing of such Bond or Bonds
(or portions thereof in authorized denominations) pursuant to
Section 2.06 which have been transferred to the Tender Agent
pursuant to said Section; and
(iii) any other moneys furnished by the Company for
purchase of Bonds.
The Trustee shall draw moneys under the Letter of Credit for the payment
of Purchase Price to the extent that moneys are obtainable thereunder, and
moneys described under clauses (ii) and (iii) above shall be used for
payment of Purchase Price only to the extent that sufficient moneys are
not obtainable under the Letter of Credit. To the extent that moneys
drawn under the Letter of Credit have been used for payment of Purchase
Price, moneys described under clause (ii) above may be paid to the Bank
upon reinstatement of the related amount under the Letter of Credit.
Bonds (or portions thereof in authorized denominations)
purchased as provided above shall be delivered as provided in Section
2.07. The Tender Agent shall hold any such moneys, uninvested, in trust
for the purposes set forth in the Indenture.
[2.05] (i) The owners of the Bonds shall not have the
right or be required, as the case may be, to tender any Bond or Bonds (or
portions thereof in authorized denominations) for purchase on any Optional
Tender Date or the Optional Retention Date, if on any such date an Event
of Default under Section 10.01(f) or (g) shall have occurred and be
continuing hereunder with respect to the Bonds.
[2.05] (j) All Bonds shall be subject to mandatory tender
and purchase, with no right of owners to retain Bonds, upon a date
established by the Trustee after receipt by the Trustee and the Tender
Agent of a written notice from the Bank of the occurrence
<PAGE> 112
66.
and continuance of an event that would constitute an Event of Default
pursuant to Section 10.01(f) or (g) except that the Bank shall have
directed mandatory tender and purchase pursuant to this provision rather
than acceleration of the Bonds; provided, however, that in the case of any
event that would constitute an Event of Default pursuant to Section
10.01(g) such notice must have been received on or before the tenth
calendar day after a drawing under the Letter of Credit in respect of
interest on the Bonds. Upon receipt of such notice, the Trustee (i)
within two Business Days shall give notice thereof to the Authority, the
Company, the Tender Agent, the Remarketing Agents, and the Bank, (ii)
within two Business Days shall select a date (occurring on or before the
tenth day next succeeding the Trustee's receipt of such notice, which date
shall be a Business Day) for the mandatory tender and purchase of the
Bonds, and (iii) within three Business Days shall give notice by mail to
all Bondowners, which shall include the circumstances leading to mandatory
tender and purchase, the absence of any right to retain Bonds, the date
set therefor and directions for the tender and purchase of such Bonds.
On the date selected by the Trustee, all Bonds shall be
tendered by the owners thereof in exchange for the Purchase Price thereof.
Any Bonds not tendered by the owners thereof shall be deemed tendered and
interest shall cease to accrue on such Bonds.
[2.05] (k) In the event that any Bond is subject at any
time to tender and purchase pursuant to more than one provision of the
Indenture, provisions relating to the timing of notices of options to
retain Bonds and options to tender Bonds and the irrevocability of certain
actions and notices shall be interpreted as though only one such tender
and purchase provision applied to such Bond to the extent that such
interpretation will prevent a conflict between such provisions. For
purposes of the foregoing sentence, a mandatory tender provision without a
right of owners to retain Bonds shall take precedence over all other
tender provisions, and a mandatory tender provision shall take precedence
over any optional tender provision.
[2.05] (l) If an agreement with a Securities Depository
as described in Section 2.11 hereof is then in effect, tenders of Bonds
shall be governed by the procedures of such Securities Depository as may
be set forth in or described in an agreement between the Authority and
such Securities Depository. The Depository Trust Company ("DTC") shall
act as Securities Depository for the Bonds upon the initial issuance of
the Bonds. So long as the Bonds are held in the DTC book-entry-only
system, tenders of Bonds shall be governed by the DTC procedures described
in the DTC Letter of Representations, which is hereby incorporated by
reference.
<PAGE> 113
67.
Section 2.06. Remarketing of Bonds. (a) Upon receipt
of any notice given pursuant to Section 2.05 that any Bonds will be or are
required to be tendered for purchase in accordance with Section 2.05, the
Remarketing Agents shall use their best efforts to remarket such Bonds (or
portions thereof in authorized denominations) on any Optional Tender Date
or Purchase Date at the Purchase Price. By 2:00 p.m., New York City time,
on the Business Day prior to each Optional Tender Date or Purchase Date,
the Remarketing Agents shall give notice by telecopy or telephone
(confirmed in writing) of the principal amount of such Bonds (or portions
thereof in authorized denominations) and the registration information
concerning the new Bondowners, for which they have arranged a remarketing
and for which the Remarketing Agents hold remarketing proceeds on hand, to
the Trustee, the Tender Agent, the Paying Agent and the Bank and, by 12:00
noon, New York City time, on each Optional Tender Date or Purchase Date
shall transfer to the Tender Agent the proceeds of the remarketing of such
Bonds for delivery to the Bank upon verification that sufficient amounts
relating to such Bonds have been paid under the Letter of Credit and upon
reinstatement of the related amount under the Letter of Credit.
[2.06] (b) In remarketing any Bonds tendered for
purchase pursuant to the Indenture, the Remarketing Agents shall
determine, in accordance with Section 2.03, the Semi-Annual Rate, the
Weekly Rate, the Medium-Term Rate, the Money Market Municipal Rate or the
Fixed Rate, as the case may be, on the Bonds.
[2.06] (c) The Remarketing Agents shall not remarket any
Bonds pursuant to this Section if they have received written notice from
the Trustee that an Event of Default (other than an Event of Default set
forth in Section 6.01(d) of the Participation Agreement) shall have
occurred and be continuing hereunder with respect to the Bonds.
[2.06] (d) The Remarketing Agents shall not knowingly
remarket any Bonds to the Company or any of its Affiliates or to the
Authority pursuant to this Section prior to the expiration or earlier
termination of the Letter of Credit unless, prior to such remarketing, the
Trustee and the Remarketing Agents shall have received an unqualified
Opinion of Bond Counsel experienced in bankruptcy matters and satisfactory
to the Trustee and to Moody's, if Moody's shall then be rating the Bonds,
to the effect that such remarketing would not result in a preferential
payment pursuant to the provisions of Section 547 of the United States
Bankruptcy Code, 11 U.S.C. Section Section 101, et seq.
[2.06] (e) The Remarketing Agents may remarket any
Bonds tendered for purchase as provided in Section 2.05(e) only if
<PAGE> 114
68.
(1) the Company delivers to the Trustee a Letter of Credit and the
requirements of Section 4.12 of the Participation Agreement have been met
or (2) the Company changes the Interest Rate Determination Method to the
Fixed Rate in accordance with Section 2.04. The Remarketing Agents may
remarket any Bonds tendered for purchase as provided in Section 2.05(j)
only if the Trustee and Remarketing Agents have received notice from the
Bank that the event referred to in the written notice from the Bank
delivered under Section 2.05(j) has been cured or waived and the Letter of
Credit has been reinstated in full.
[2.06] (f) The Remarketing Agents, with respect to any
Bond for which a redemption date has been established and which the
Remarketing Agents are attempting to remarket, shall provide to any
purchaser notice of the applicable redemption terms at the time of or
before purchase by such purchaser.
[2.06] (g) The Tender Agent, with respect to any Bond for
which the Tender Agent or Trustee has received notification from the
Remarketing Agent that it has found a purchaser or purchasers to whom the
Remarketing Agent can remarket Bonds tendered for purchase, shall so
notify the Bank in writing.
Section 2.07. Delivery of Purchased Bonds. (a) Bonds
(or portions thereof in authorized denominations) purchased pursuant to
Section 2.05 (other than on a Fixed Rate Conversion Date) shall be
delivered as follows:
[2.07(a)] (i) Bonds (or portions thereof in authorized
denominations) purchased with moneys described in clause (i) (to
the extent that the Trustee has received notice of reinstatement
of the Letter of Credit in an amount equal to the Purchase Price
of the Bonds and has so notified the Tender Agent) and in clause
(ii) of Section 2.05(h) shall be delivered by the Tender Agent to
the purchasers thereof upon receipt of payment thereof. Prior to
such delivery, the Tender Agent shall surrender such Bonds, if so
requested by the purchasers thereof, to the Trustee for
registration of transfer. Bonds, portions of which in authorized
denominations shall have been purchased with such moneys, shall
be surrendered by the Tender Agent to the Trustee for
registration of transfer with respect to principal amounts
thereof so purchased and for registration of transfer with
respect to the principal amounts thereof not so purchased as
provided in clause (ii) below or for cancellation as provided in
clause (iii) below;
[2.07(a)] (ii) Bonds (or portions thereof in authorized
denominations), any portion of the Purchase Price of which
<PAGE> 115
69.
shall have been paid with moneys drawn under the Letter of
Credit, shall, if and to the extent that the Trustee has not
received notice of reinstatement of the Letter of Credit in an
amount equal to the Purchase Price of the Bonds (or portion
thereof), be surrendered by the Tender Agent to the Trustee for
registration of transfer to the Company and upon such
registration of transfer, the Bonds issued in respect thereof
shall be delivered to and held by the Tender Agent for the
account of the Company and shall not be released, pledged or
otherwise transferred or disposed of unless prior to or
simultaneously with the release of the Bonds by the Tender Agent
to the Remarketing Agents for remarketing, the amount to be drawn
under the Letter of Credit shall have been correspondingly
reinstated and written notice of such reinstatement shall have
been delivered by the Trustee or the Bank to the Tender Agent, or
in the case of a purchase pursuant to Section 2.05(e), an
Alternate Credit Facility meeting the requirements of Section
6.07 has been provided; provided, further, that, upon receipt by
the Tender Agent of either (A) notice of the establishment of a
Mandatory Purchase Date pursuant to Section 2.05(e) or (B) notice
from the Bank directing mandatory tender and purchase of the
Bonds pursuant to Section 2.05(j), then any Bonds theretofore or
thereafter purchased with such moneys drawn under the Letter of
Credit shall be surrendered by the Tender Agent to the Trustee
for registration of transfer to the Bank and upon such
registration of transfer, the Bonds issued in respect thereof
shall be delivered to and held by the Tender Agent for the
account of the Bank and shall not be released, pledged or
otherwise transferred or disposed of (except to the Bank) other
than in accordance with the Remarketing Agreement, and the Tender
Agent shall notify the Bank that it is holding such Bonds for the
Bank's account; and
[2.07(a)] (iii) Bonds (or portions thereof in authorized
denominations) purchased with any other moneys pursuant to
Section 2.05(h) shall be delivered to the Trustee for
cancellation as to the principal amount thereof so purchased and
for registration of transfer and delivery pursuant to (i) or (ii)
above as to the remainder thereof.
[2.07] (b) Bonds (or portions thereof in authorized
denominations) purchased pursuant to Section 2.05(d)(1) (only insofar as
such subsection relates to a Fixed Rate Conversion Date) shall be
delivered to the Trustee for cancellation and Bonds shall be issued in
exchange therefor in accordance with Section 2.03(k), which shall be
delivered: (i) to the purchasers thereof, with respect to the Bonds (or
portions thereof in authorized denominations) purchased with moneys
described in
<PAGE> 116
70.
Section 2.07(a)(i) or (ii) to the Tender Agent, with respect to Bonds (or
portions thereof in authorized denominations) purchased with moneys as
described in Section 2.07(a)(ii) and shall be held for the account of the
Company, except as otherwise provided in such Section 2.07(a)(ii), will
not be entitled to the benefits of the Letter of Credit and shall (x) have
a legend stating "This Bond is not entitled to the benefits of the Letter
of Credit referred to herein", affixed thereto by the Tender Agent until
released and delivered pursuant to the following paragraph (c), and (y)
shall be held by the Tender Agent and shall be disposed of solely pursuant
to the terms of the following clause (c). Bonds so purchased with any
other moneys shall be delivered to the Trustee for cancellation and no
replacement Bonds shall be issued in respect thereof.
[2.07] (c) The Tender Agent shall authenticate and
deliver new Bonds in replacement of any Bonds held pursuant to the
preceding clause (ii) to or upon the order of the Remarketing Agents, only
upon receipt by the Tender Agent from any Person other than the Company
following any remarketing of such new Bonds of payment in immediately
available funds in respect of the principal amount of such Bonds
(including accrued interest, if any). Such funds shall be received by the
Tender Agent solely for the account of the Bank and shall be promptly
transmitted to or upon the written order of the Bank. Upon such delivery,
such Bonds shall be entitled to the benefits of the Letter of Credit.
Section 2.08. Mutilated, Lost, Stolen or Destroyed
Bonds. In the event any outstanding Bond, whether temporary or
definitive, is mutilated, lost, stolen or destroyed, the Authority may
execute and, upon its request, the Trustee may authenticate a new Bond of
like tenor as the mutilated, lost, stolen or destroyed Bond; provided
that, in the case of any mutilated Bond, such mutilated Bond shall first
be surrendered to the Trustee, and in the case of any lost, stolen or
destroyed Bond, there shall be first furnished to the Trustee evidence of
the ownership thereof and of such loss, theft or destruction in form
satisfactory to the Trustee, together with an indemnity satisfactory to it
which indemnity shall name the Authority as an additional indemnified
party. In the event any such Bond shall have matured, instead of issuing
a substitute Bond the Authority may authorize the payment of the same.
The Authority and the Trustee may charge the owner of such Bond with their
reasonable fees and expenses in this connection. Any Bond issued under
the provisions of this Section in lieu of any Bond alleged to be
destroyed, lost or stolen shall constitute an original additional
contractual obligation on the part of the Authority, whether or not the
Bond so alleged to be destroyed, lost or stolen be at any time enforceable
by anyone, and shall be equally and proportionately entitled to the
benefits of the Indenture with all other Bonds issued hereunder to the
same
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extent as the Bonds in substitution for which such Bonds were issued.
Section 2.09. Temporary Bonds. Until Bonds in
definitive form are ready for delivery, the Authority may execute, and
upon its request in writing, the Trustee shall authenticate and deliver in
lieu of any thereof, and subject to the same provisions, limitations, and
conditions, one or more printed, lithographed or typewritten Bonds in
temporary form, substantially of the tenor of the Bonds hereinbefore
described, and with appropriate omissions, variations and insertions.
Bonds in temporary form will be for such principal amounts as the
Authority shall determine. Until exchanged for Bonds in definitive form,
such Bonds in temporary form shall be entitled to the security and benefit
of the Indenture. The Authority shall, without unreasonable delay,
prepare, execute and deliver to the Trustee, and thereupon, upon the
presentation and surrender of the Bond or Bonds in temporary form to the
Trustee at the Corporate Trust Office, the Trustee shall authenticate and
deliver, in exchange therefor, a Bond or Bonds, in definitive form in the
authorized denomination, and for the same principal amount, as the Bond or
Bonds in temporary form surrendered. Such exchange shall be made without
making any charge to the Bondowners therefor.
Section 2.10. Execution of Bonds; Effect of Change of
Officers. All the Bonds shall, from time to time, be executed on behalf
of the Authority by, or bear the facsimile signature of, its Chair, Vice
Chair, President or Treasurer, and its corporate seal (which may be
facsimile) shall be thereunto affixed (or imprinted or engraved if
facsimile) and attested by the signature of its Secretary or an Assistant
Secretary (which may be facsimile).
If any of the officers who shall have signed or sealed
any of the Bonds or whose facsimile signature shall be upon the Bonds
shall cease to be such officer of the Authority before the Bonds so signed
and sealed shall have been actually authenticated by the Trustee or
delivered by the Authority, such Bonds nevertheless may be authenticated,
issued and delivered with the same force and effect as though the person
or persons who signed or sealed such Bonds or whose facsimile signature
shall be upon the Bonds had not ceased to be such officer or officers of
the Authority; and also any such Bond may be signed and sealed on behalf
of the Authority by those persons who at the actual date of the execution
of such Bond shall be the proper officers of the Authority, although at
the date of such Bond any such person shall not have been such officer of
the Authority.
Section 2.11. Registration of Bonds; Transfers;
Securities Depository. (a) All the Bonds issued under the
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Indenture shall be negotiable, subject to the provisions for registration
of transfer contained in the Indenture and in the Bonds. The Trustee
shall be the registrar for the Bonds. So long as any of the Bonds shall
remain outstanding, the Trustee shall maintain and keep at its Corporate
Trust Office the Bond Register for the registration of transfer of Bonds.
Upon presentation thereof for such purpose at said office, the Trustee
shall register or cause to be registered therein under such reasonable
regulations as it may prescribe, the transfer of any Bond.
The registration of transfer of any Bond shall be made
only upon the Bond Register at such Corporate Trust Office at the written
request of the Registered Owner thereof or his or her representative duly
authorized in writing, upon surrender thereof, together with a written
instrument of transfer satisfactory to the Trustee duly executed by the
Registered Owner or his or her representative duly authorized in writing.
Upon the registration of transfer of any Bond, the Authority shall issue
in the name of the transferee, in authorized denominations, one or more
Bonds of the same aggregate principal amount as the surrendered Bonds.
The Trustee shall not register any transfer of any Bond
(or portion thereof), except pursuant to Bondowner tender, after notice
calling such Bond (or portion thereof) for redemption or partial
redemption has been given and prior to such redemption. In connection
with any such transfer pursuant to Bondowner tender, the Trustee shall
deliver to the transferee a copy of the applicable call for redemption.
The Trustee or the Tender Agent shall, in addition,
authenticate and register in the name and in the manner directed by the
recipient thereof Bonds in replacement for Bonds deemed to be tendered for
purchase pursuant to Section 2.05 for delivery in accordance therewith.
[2.11] (b) DTC shall act as Securities Depository for the
Bonds upon the initial issuance of the Bonds. The ownership of one fully
registered Bond in the aggregate principal amount of the Bonds shall be
registered in the name of Cede & Co., as nominee of DTC. Each such Bond
shall be held in trust until its redemption or until such time as DTC or
its nominee is no longer the Registered Owner of the Bonds, as provided
below.
For so long as the Bonds are held in a book-entry-only
system and so long as a Securities Depository or its nominee is the
Registered Owner of the Bonds, references herein to the Bondowners or
Registered Owners of the Bonds shall mean such Securities Depository or
its nominee and shall not mean the beneficial owners ("Beneficial Owners")
of the Bonds. For so long as a Securities
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Depository or its nominee is the Registered Owner of the Bonds, principal,
Purchase Price, redemption price, including premium, if any, and interest
payments on the Bonds shall be made to such Securities Depository or its
nominee, as Registered Owner of the Bonds, and the Authority and the Trustee
shall recognize such Securities Depository or its nominee as the Bondowner for
all purposes, and such Securities Depository or its nominee shall be considered
the only owner of such Bonds for all purposes, including receipt of notice,
voting and requesting or directing the Trustee, the Remarketing Agents, the
Paying Agent, the Tender Agent or any other fiduciary to take or not to take
any action under the Indenture. Conveyance of notices and other communications
by a Securities Depository to Beneficial Owners will be governed by
arrangements among them, subject to any statutory and regulatory requirements
as may be in effect from time to time.
THE AUTHORITY, THE COMPANY, THE TRUSTEE, THE PAYING AGENT AND
THE REMARKETING AGENTS WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY
BENEFICIAL OWNER WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY
A SECURITIES DEPOSITORY; (II) THE PAYMENT BY A SECURITIES DEPOSITORY OF ANY
AMOUNT WITH RESPECT TO THE PRINCIPAL, PURCHASE PRICE, INCLUDING PREMIUM, IF
ANY, OR INTEREST ON THE BONDS; (III) ANY NOTICE WHICH IS PERMITTED OR REQUIRED
TO BE GIVEN TO BENEFICIAL OWNERS OR (IV) ANY CONSENT GIVEN OR OTHER ACTION
TAKEN BY A SECURITIES DEPOSITORY OR ITS NOMINEE AS BONDOWNER.
The Authority may elect to discontinue such book-entry-only
system and upon the discontinuance of such book-entry-only system, Bond
certificates are required to be delivered in physical and registered form to
the Bondowners or their designees, according to the terms of the Indenture.
Upon the institution of any Rate Period after such discontinuance, the
Authority upon the direction of the Company may direct that the Bonds shall be
held as book-entry-only Bonds by notification to the Trustee, the Paying Agent,
Tender Agent and the Remarketing Agents of its intention to reinstitute the
book-entry-only system. Upon receipt of such notice, the Trustee shall notify
owners of such Bonds that such Bonds shall be registered in a book-entry-only
system with DTC or its nominee or such alternative Securities Depository as the
Authority shall appoint. Upon or before the date specified in such notice,
such owners shall surrender their Bond certificates to the Trustee or Tender
Agent to have their beneficial ownership interest in the Bonds registered under
the book-entry-only system described herein. If any Bondowner fails to
surrender any such certificate to the Trustee or Tender Agent, such Bondowner
shall remain the Registered Owner of such Bond; provided, however, that such
Registered Owner shall have no right to transfer or tender such
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Bond without first surrendering such Bond for registry in the
book-entry-only system.
If, during any period that a Securities Depository,
including DTC or its nominee, is the Registered Owner of the Bonds, (a)
such Securities Depository determines to discontinue providing its service
with respect to the Bonds by giving notice to the Authority and the
Trustee and discharging its responsibilities with respect thereto under
applicable laws, and the Authority fails to appoint a successor Securities
Depository for the Bonds, or (b) the Authority at the direction of the
Company determines to discontinue the book-entry-only system through such
Securities Depository, then Bond certificates are required to be delivered
in physical and registered form to the Beneficial Owners or their
designees, according to the terms of the Indenture. Each Beneficial
Owner, upon delivery of certificates held in the Beneficial Owner's name,
will become the Registered Owner of that portion of the Bonds.
In the event that the book-entry-only system is
discontinued and the Beneficial Owners become Registered Owners of the
Bonds, the provisions applicable to such Registered Owners shall apply.
In connection with any notice or other communication to
be provided to Bondowners pursuant to the Indenture by the Authority or
the Trustee with respect to any consent or other action to be taken by
Bondowners, the Authority or the Trustee, as the case may be, shall
establish a record date for such consent or other action and give the
nominee or Securities Depository notice of such record date not less than
fifteen calendar days in advance of such record date to the extent
possible.
The Authority and the Trustee are hereby authorized to
enter into any arrangements determined necessary or desirable with any
Securities Depository in order to effectuate this Section and both of them
shall act in accordance with the Indenture and any such agreement.
Without limiting the generality of the foregoing, any such arrangements
may alter the manner of effecting delivery of Bonds and the transfer of
funds for the payment of Bonds to the Securities Depository.
Section 2.12. Persons Treated as Owners. The
Authority, the Trustee, the Tender Agent and any Paying Agent may, for all
purposes, deem and treat the Registered Owner of any Bond as the absolute
owner of such Bond whether or not such Bond is overdue, and neither the
Authority nor the Trustee nor the Tender Agent nor any Paying Agent shall
be affected by any notice to the contrary.
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75.
Payment made to the Registered Owner of any Bond for the
purpose of such payment in accordance with the provisions of this Section
2.12 shall be valid and effectual, to the extent of the sum or sums so
paid, to satisfy and discharge the liability upon such Bond in respect of
which such payment was made.
Section 2.13. Exchange of Bonds. So long as any of
the Bonds remain outstanding, the Authority shall make all necessary
provisions to permit the exchange of Bonds at the Corporate Trust Office
of the Trustee.
Bonds, upon surrender thereof at the Corporate Trust
Office of the Trustee with a written instrument requesting such exchange
satisfactory to the Trustee duly executed by the Registered Owner or his
or her representative duly authorized in writing, may be exchanged for an
equal aggregate principal amount of Bonds of any other authorized
denominations, in an aggregate principal amount equal to the principal
amount of the Bonds so surrendered.
Section 2.14. Payment For and Limitations on Exchanges
and Transfers. In all cases in which the right of exchanging or
registering the transfer of Bonds is exercised, the Authority shall
execute and the Trustee shall authenticate and deliver Bonds in accordance
with the provisions hereof. All Bonds surrendered for registration of
transfer or exchange shall forthwith be cancelled by the Trustee. For
every such registration of transfer or exchange of Bonds, the Trustee may
charge an amount sufficient to reimburse it for any tax, fee or other
governmental charge required to be paid with respect to such registration
of transfer or exchange which, if not resulting in a change in Bondowner,
shall be paid by the Company pursuant to the Participation Agreement. The
cost of preparing each new Bond upon each registration of transfer or
exchange, and any other expenses (except any applicable tax, fee or other
governmental charge) of the Authority or the Trustee incurred in
connection with such registration of transfer or exchange shall be paid by
the Company pursuant to the Participation Agreement.
Section 2.15. Endorsement of Certificate of
Authentication on Bonds. No Bond shall be secured hereby or entitled to
the benefit of the Indenture or be valid or obligatory for any purpose
unless there shall be endorsed on such Bond a certificate of
authentication, substantially in the form prescribed in the Indenture,
executed by the Trustee or the Tender Agent; and such certificate on any
Bond issued by the Authority shall be conclusive evidence and the only
competent evidence that such Bond has been duly authenticated and
delivered hereunder. The Trustee's certificate of authentication on any
Bond shall be deemed to have
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been executed by it if signed by an authorized officer of the Trustee or
the Tender Agent, but it shall not be necessary that the same officer sign
the certificate of authentication on all of the Bonds issued hereunder.
Section 2.16. Cancellation of Bonds. Upon the
surrender to the Trustee of any temporary or mutilated Bonds, or Bonds
transferred or exchanged for other Bonds, or Bonds paid at maturity or
upon defeasance in accordance with Article XIV or otherwise delivered to
the Trustee for cancellation, the same shall forthwith be cancelled and
may be destroyed by the Trustee in such manner as it deems appropriate and
the Trustee shall, if such Bonds are so destroyed, deliver its certificate
as to such destruction to the Authority.
Section 2.17. Redemption of Bonds. The Bonds shall be
subject to optional and mandatory redemption at the times and at the
redemption prices set forth in the form of Bonds in the preamble hereto.
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77.
ARTICLE III
SECURITY FOR BONDS; ISSUANCE OF BONDS
Section 3.01. Pledge and Assignment Effected by
Indenture; Bonds Equally and Ratably Secured. In accordance with the
provisions of subsection 8 of Section 1860 of the Act, the pledge and
assignment effected by the Indenture shall be valid and binding from the
date of execution and delivery of the Indenture, the moneys so pledged and
assigned and hereafter received by the Authority shall be subject to the
lien of such pledge and assignment without any physical delivery thereof
or further act, and such lien shall be a continuing, irrevocable and
exclusive first lien and shall be valid and binding as against all parties
having claims of any kind in tort, contract or otherwise against the
Authority irrespective of whether such parties have notice thereof. In
addition to the pledges and assignments set forth above, the Authority
hereby further grants to the Trustee the same power as the Authority to
enforce from time to time the rights of the Authority set forth in Article
III and Section 5.16 of the Participation Agreement, subject to the
provisions of the Participation Agreement relating to the amendment
thereof.
All Bonds issued and to be issued hereunder are, and are
to be, to the extent provided in the Indenture, equally and ratably
secured by the Indenture without preference, priority or distinction on
account of the actual time or times of the authentication or delivery of
the Bonds, or any of them, so that, subject to the provisions of Section
9.05, all Bonds at any time outstanding hereunder shall have the same
right, lien and preference under and by virtue of the Indenture and shall
all be equally and ratably secured hereby with like effect as if they had
all been executed, authenticated and delivered simultaneously on the date
hereof; provided, however, that Bonds registered in the name of the
Company or held or required to be held by the Tender Agent pursuant to
Section 2.07 shall not be entitled to any benefit of the Letter of Credit.
Section 3.02. Issuance of Bonds. The Bonds shall
forthwith be executed by the Authority and delivered to the Trustee for
authentication and upon the written request and authorization to the
Trustee signed by an Authorized Officer the Bonds shall be authenticated
by the Trustee or the Tender Agent and shall be delivered to or upon the
written order of an Authorized Officer, but only upon the receipt by the
Trustee of proceeds (including accrued interest, if any) of sale of the
Bonds, of which (i) a sum equal to the accrued interest, if any, paid by
the initial purchasers of such Bonds shall be deposited in the Bond Fund
and (ii) the balance thereof shall be deposited in the Construction
Account of the Project Fund. Prior to, or simultaneously with, the
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authentication and delivery of the Bonds, the Trustee shall also receive
the following:
(a) A copy, certified by the Secretary of the
Authority, of the resolution or resolutions adopted by the
Authority authorizing the execution and delivery of the Indenture
and the Participation Agreement and the issuance, sale, execution
and delivery of the Bonds;
(b) An original executed counterpart of the
Participation Agreement and the Indenture;
(c) The Company Note;
(d) The Letter of Credit;
(e) A copy of resolutions authorizing the execution
and delivery of the Participation Agreement, and the issuance,
execution and delivery of the Company Note, by the Company,
certified by the Secretary or an Assistant Secretary of the
Company, under its corporate seal, to have been duly adopted by
the Board of Directors of the Company, or the Executive and
Finance Committee thereof, and to be in full force and effect on
the date of such certification;
(f) A copy of the opinion of counsel to the Company
delivered to the initial purchasers of the Bonds, together with a
letter to the effect that the Trustee may rely on such opinion as
if it were addressed to it;
(g) An opinion of counsel, who shall be satisfactory
to the Trustee, experienced in laws relating to the issuance of
bonds of states and their political subdivisions, to the effect
that the issuance of the Bonds has been duly authorized and that
all conditions precedent to the issuance thereof have been
fulfilled; and
(h) A copy of an opinion of counsel to the Bank to
the effect that the Letter of Credit has been duly authorized,
executed and delivered and is a valid and binding obligation of
the Bank, together with a letter to the effect that the Trustee
may rely on such opinion as if it were addressed to it.
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79.
ARTICLE IV
PARTICIPATION AGREEMENT AND COMPANY NOTE
Section 4.01. Amendments to Participation Agreement
not Requiring Consent of Bondowners. The Authority may, without the
consent of the Trustee and without notice to or consent of the Bondowners,
enter into any amendment or modification of the rights and interest of the
Authority under Article III of the Participation Agreement or Sections
4.04, 4.08, 4.09, 4.10 and 5.16 of the Participation Agreement upon the
delivery to the Trustee of an Opinion of Bond Counsel, satisfactory to the
Trustee, to the effect that the proposed amendment or modification will
not impair the exclusion from gross income for federal income tax purposes
of interest on any of the Bonds theretofore issued or otherwise adversely
affect the rights and/or interests of the Trustee or any of the owners of
the Bonds. The Authority may, without the consent of or notice to the
Bondowners, amend or modify any other provision of the Participation
Agreement as may be required (i) for the purpose of curing any ambiguity
or formal defect or omission in the Participation Agreement; or (ii) in
connection with any other change therein which is not prejudicial to the
interests of the Trustee or the owners of the Bonds, including but not
limited to any change necessary to obtain or maintain a rating of the
Bonds from Moody's or S&P.
Prior to the expiration of the Letter of Credit, no
amendment or modification of the Participation Agreement shall be
effective without the prior written consent of the Bank, which consent
shall not be unreasonably withheld.
Section 4.02. Amendments to Participation Agreement
Requiring Consent of Bondowners. Except for amendments or modifications
as provided in Section 4.01, the Authority shall not enter into any
amendment or modification of the Participation Agreement without the
written consent of the Trustee and the owners of not less than two-thirds
in aggregate principal amount of the Bonds then outstanding and affected
by such modification or amendment.
Such consent of Bondowners shall be given and procured in
the same manner as provided in Section 13.02 with respect to Supplemental
Indentures.
No modification or amendment requiring the consent of
Bondowners shall be effective unless the required consent of Bondowners is
obtained and such modification is not prejudicial to the interests of the
Trustee.
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80.
Notwithstanding anything to the contrary contained in the
Indenture or the Participation Agreement, the Authority shall not agree to
any amendment, change or modification of, or any waiver, discharge or
termination of, any of the provisions of the Participation Agreement in
any respect which would impair the exclusion from gross income for federal
income tax purposes of interest on any of the Bonds.
Prior to the expiration of the Letter of Credit, no
amendment or modification of the Participation Agreement shall be
effective without the prior written consent of the Bank, which consent
shall not be unreasonably withheld.
Section 4.03. Amendments to Company Note. Except for
such amendments or modifications of the Company Note as may be required
for the purpose of curing any ambiguity or formal defect or omission in
the Company Note, or in connection with any other change therein which, in
the judgment of the Trustee, is not prejudicial to the interests of the
Trustee or the Bondowners, the Trustee shall not enter into any amendment
or modification of the Company Note without obtaining the prior written
consent of the owners of not less than two-thirds in aggregate principal
amount of the Bonds then outstanding. No such modification or amendment
shall be made which will affect the times, amounts and currency of payment
of the principal of and premium, if any, and interest on the Company Note
without the consent of the owners of all Bonds then outstanding.
The Trustee shall consent to any such proposed action
requiring the consent of the owners of the Bonds if the required consent
of the owners of the Bonds is obtained; provided that the Trustee may, but
shall not be obligated to consent to any such proposed action which
affects its own rights, powers, duties or obligations hereunder. Such
consent of Bondowners shall be given and procured in the same manner as
provided in Section 13.02 with respect to Supplemental Indentures. Prior
to the expiration of the Letter of Credit, the Trustee shall not consent
to any amendment or modification of the Company Note without the prior
written consent of the Bank, which consent shall not be unreasonably
withheld.
Section 4.04. Amendments to Tax Regulatory Agreement.
The Authority may, without the consent of the Trustee and without notice
to or consent of the Bondowners, enter into any amendment or modification
of the Tax Regulatory Agreement upon the delivery to the Trustee of an
Opinion of Bond Counsel to the effect that the proposed amendment or
modification will not adversely affect the exclusion from gross income for
federal income tax purposes of interest on the Bonds.
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81.
ARTICLE V
PROJECT FUND; REBATE FUND
Section 5.01. Creation and Custody of Project Fund.
1. There is hereby created a Project Fund, which shall be held by the
Trustee. There shall be paid into the Project Fund the amount required to
be so paid by the provisions of Section 3.02.
2. There is hereby established within the Project Fund
two (2) separate trust accounts to be known as the "Construction Account"
and the "Investment Proceeds Account." All income or gain on moneys
deposited in the Construction Account or the Investment Proceeds Account
shall be deposited in the Investment Proceeds Account.
Section 5.02. Application of Moneys in the Project Fund.
1. The moneys in the Construction Account, until
applied in payment of any item of the Cost of Construction of the Project,
shall be held by the Trustee and, pending such application, shall be
subject to a claim and charge in favor of the owners of the Bonds and for
the further security of such owners until paid out as herein provided.
The moneys in the Investment Proceeds Account, until applied in accordance
with the provisions of Section 5.02.2, shall be held by the Trustee, but
shall not be subject to a claim or charge in favor of the Bondowners and
shall be applied solely in accordance with the provisions of this Article
and shall not be available for the payment of Bonds within the meaning of
the Indenture. Pending such application, such moneys may be invested in
accordance with the provisions of Article VII.
2. On the first Business Day following each Computation
Period, the Trustee shall withdraw from the Investment Proceeds Account
and deposit in the Rebate Fund an amount such that the amount held in the
Rebate Fund after such deposit, as certified to the Trustee by an
Authorized Company Representative, is equal to the Rebate Amount
calculated as of the last day of the Computation Period, as certified to
the Trustee by an Authorized Company Representative. Any remaining
balance in the Investment Proceeds Account shall be deposited in the
Construction Account. In the event of any deficiency, the balance
required shall be provided by the Company pursuant to Section 7.3 of the
Tax Regulatory Agreement. Computations of the amounts on deposit in each
fund hereunder, descriptions of each investment held therein, and
computations of the Rebate Amount shall be furnished to the Trustee by the
Company in accordance with Section 7.3 of the Tax Regulatory Agreement.
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82.
Section 5.03. Construction Account Requisitions. The
Trustee is authorized and directed to make payments from the Construction
Account to pay the Cost of Construction of the Project, upon the written
order of the Company, but only upon receipt from time to time of
requisitions signed by an Authorized Company Representative in the form of
EXHIBIT C attached hereto upon which the Trustee may conclusively rely,
stating with respect to each payment to be made for the Project:
(a) the requisition number;
(b) the items of the Cost of Construction of the
Project to which the disbursement relates or has been
allocated and the nature of the disbursement;
(c) the payee, with address, which may be the
Company in the case of reimbursements for advances and
payments made or costs incurred or work done by the
Company;
(d) the amount of such payment;
(e) that the disbursement will be used to pay,
or reimburse the Company for, a Cost of Construction of
the Project and that it is a proper charge against the
Construction Account;
(f) that none of the items for which the
disbursement is requested has formed the basis for any
disbursement theretofore made from the Construction
Account;
(g) that the disbursement will not be used in a
manner that would result in a violation of any
representation, warranty or covenant contained in Article
III of the Tax Regulatory Agreement or Section 5.04 of
the Participation Agreement;
(h) that no event of default under the
Participation Agreement shall have occurred and be
continuing and that no event which with the lapse of time
alone would become such a default has occurred and is
continuing; and
(i) that no event of default under the Indenture
shall have occurred and be continuing and that no event
which with the lapse of time alone would become such a
default has occurred and is continuing.
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Section 5.04. Retention of Requisitions. For seven years
from the dates thereof the Trustee shall retain in its possession all
requisitions received by it as herein required, subject to the inspection
during normal banking hours, of the Authority, its agents and
representatives and the Company and, upon reasonable request, inspection
during normal banking hours of the Bondowners and their representatives,
in any case, at the Corporate Trust Office.
Section 5.05. Certification of Completion of the
Project. On the date when all Costs of Construction expected to be paid
from the Project Fund have been paid, the Trustee and the Authority shall
be furnished promptly with a certificate of an Authorized Company
Representative, which certificate shall contain an appropriate direction
to the Trustee with respect to any amount in the Project Fund which is to
be disposed of as provided in Section 5.06.
Section 5.06. Disposition of Balance Remaining in
Project Fund. All moneys remaining in the Project Fund after the
certificate referred to in Section 5.05 is furnished shall, at the written
direction of an Authorized Company Representative, be deposited in a
segregated account in the Bond Fund, or paid to the Bank to reimburse the
Bank for any unreimbursed draw under the Letter of Credit relating to the
purchase of Bonds tendered or deemed tendered pursuant to Section 2.05
(and, pending any such application, be invested in securities in
accordance with the direction of an Authorized Company Representative
delivered pursuant to Article VII, which direction shall confirm that such
investment will not be in violation of the covenants and warranties made
to the Authority by the Company in Section 7.1 of the Tax Regulatory
Agreement), or deposited in the Rebate Fund.
Section 5.07. Creation and Custody of Rebate Fund.
There is hereby created a Rebate Fund, which shall be held by the Trustee.
There shall be paid into the Rebate Fund the amount required to be so paid
under Section 5.02.2. All income or gain on moneys deposited in the
Rebate Fund shall be deposited in the Rebate Fund. The Rebate Fund and
the amounts deposited therein shall not be subject to a claim and charge
in favor of the Trustee or any owners of Bonds and shall be applied solely
in accordance with the provisions of this Article and shall not be
available for the payment of Bonds within the meaning of the Indenture.
Section 5.08. Application of Moneys in the Rebate
Fund. 1. Amounts deposited in the Rebate Fund shall be applied solely to
pay Costs of Construction described in clause (i) of the definition of
Costs of Construction in accordance with subsection 2 of this
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Section 5.08 except to the extent otherwise permitted by subsection 3 of
this Section 5.08.
2. The Trustee, upon receipt of written instructions from
an Authorized Company Representative in accordance with Section 7.3 of the
Tax Regulatory Agreement, shall pay to the United States out of amounts in
the Rebate Fund (a) not later than thirty (30) days after the end of each
five-year period following the date of issuance of the Bonds, an amount
certified to the Trustee by an Authorized Company Representative such
that, together with amounts previously paid, the total amount paid to the
United States is equal to 90% of the Rebate Amount calculated as of the
end of the most recent Computation Period, and (b) not later than 30 days
after the date on which all of the Bonds have been paid or redeemed, 100%
of the Rebate Amount as of the end of the final Computation Period as
certified to the Trustee by an Authorized Company Representative.
3. In the event that on the first day of any Bond Year
the amount on deposit in the Rebate Fund exceeds the Rebate Amount, the
Trustee, upon the receipt of written instructions from an Authorized
Company Representative specifying the amount of such excess, shall
withdraw such excess amount and prior to the Completion Date, deposit it
in the Investment Proceeds Account of the Project Fund, or, after the
Completion Date, deposit it in the Bond Fund.
Pending such application, such moneys may be invested in
accordance with instructions from the Company given in accordance with the
provisions of Article VII.
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85.
ARTICLE VI
BOND FUND; LETTER OF CREDIT
Section 6.01. Creation and Custody of the Bond Fund.
There is hereby created a Bond Fund, which shall be held in trust by the
Trustee for the benefit of the Bondowners and shall be subject to a lien
and charge in favor of the Bondowners. Neither the Company nor the
Authority shall have any interest in, or ability to withdraw funds from,
the Bond Fund. There are hereby created within the Bond Fund two separate
trust accounts to be designated as the Debt Service Account and the Letter
of Credit Account. The moneys in each such account shall not in any way
be commingled with funds in any other trust account maintained by the
Trustee. The Trustee shall maintain such records for deposits made into
the Debt Service Account so that the Trustee may at all times ascertain
the source and dates of deposit of the moneys in the Debt Service Account.
The Authority hereby authorizes and directs the Trustee
to withdraw in accordance with Section 6.03 sufficient funds from the Bond
Fund to pay the principal of and premium, if any, and interest on the
Bonds as the same become due and payable and to make such funds so
withdrawn available to the Paying Agents, if any, for the purpose of
paying such principal, premium, if any, and interest.
Section 6.02. Payments into the Bond Fund. The
Trustee shall deposit in the Bond Fund for credit to the Debt Service
Account as and when received (1) the amount, if any, of the proceeds of
sale of the Bonds, to the extent required by this Indenture, (2) all
Company Note Payments, (3) the amounts remaining in the Project Fund after
the certificate referred to in Section 5.05 is furnished, (4) all interest
and other income received on investments of moneys on deposit in the Bond
Fund, as provided in Section 7.03, (5) any funds made available pursuant
to Section 8.05, (6) any proceeds of refunding obligations and (7) any
amount paid into the Bond Fund pursuant to Section 5.08.3.
There shall be deposited in the Letter of Credit Account
all moneys drawn by the Trustee under the Letter of Credit and received by
the Trustee for the purposes of paying principal of, premium, if any, and
interest on, the Bonds. In the event that the Bonds are held by a
Securities Depository, moneys drawn under the Letter of Credit may be paid
directly to the Securities Depository, in which event, proper notification
concerning such payment shall be sent to the Trustee and Paying Agent.
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86.
Section 6.03. Application of Moneys in the Bond Fund.
Except as otherwise provided in Sections 6.04 and 14.01.3, moneys on
deposit in the Bond Fund shall be used solely for the payment of the
principal of and premium, if any, and interest on the Bonds as the same
shall become due and payable either at maturity, upon redemption, by
declaration or otherwise. Moneys for such payments of the principal of,
premium, if any and interest on the Bonds shall be derived from the
following sources in the following order of priority:
(i) moneys drawn under the Letter of Credit and either
deposited in the Letter of Credit Account or, if necessary during
any Rate Period when the Bonds are held by a Securities
Depository, paid to such Securities Depository;
(ii) moneys paid into the Bond Fund pursuant to clause
(1) of Section 6.02 in respect of accrued interest which
constitute Available Moneys and proceeds from the investment
thereof that constitute Available Moneys which moneys shall be
used to pay interest on the Bonds;
(iii) proceeds of the sale of refunding obligations
which constitute Available Moneys and proceeds from the
investment thereof that constitute Available Moneys;
(iv) moneys deposited into the Bond Fund pursuant to
clause (3) or clause (7) of Section 6.02 which constitute
Available Moneys and proceeds from the investment thereof that
constitute Available Moneys;
(v) Company Note Payments which constitute Available
Moneys and proceeds from the investment thereof that constitute
Available Moneys;
(vi) to the extent permitted by Section 8.05, moneys
deposited into the Bond Fund pursuant to clause (5) of Section
6.02, and proceeds from the investment thereof that constitute
Available Moneys; and
(vii) Company Note Payments which do not constitute
Available Moneys and proceeds from the investment thereof.
The Trustee hereby agrees to draw moneys under the Letter
of Credit to be applied to the payment of principal of, premium, if any,
or interest on, the Bonds. If and to the extent moneys under clause (i)
of the preceding paragraph are insufficient or unobtainable therefor, the
Trustee shall apply any other moneys that are available therefor, in the
preceding order of priority, including moneys described in clauses (vi)
and (vii) of the
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87.
preceding paragraph, to the payment of the principal of, premium, if any,
and interest on, the Bonds. After the Letter of Credit has expired, any
moneys held by the Trustee in the Bond Fund may be used to make any
payment of the principal of, premium, if any, and interest on, the Bonds.
Prior to the expiration of the Letter of Credit, moneys
under clauses (iii), (iv) and (v) of this Section 6.03 shall not be used
to pay the redemption price of any Bond redeemed pursuant to the direction
of the Company, unless the Trustee shall have received the written
direction specified in Section 8.01 providing for such redemption at least
123 days prior to such redemption date.
If on the due date of principal and premium, if any, or
interest with respect to Bonds, the amounts on deposit in the Bond Fund
(except amounts held by the Trustee pursuant to Section 6.04) are not
sufficient to pay in full all such principal of and premium, if any, and
interest on the Bonds, such amounts shall be applied to the payment of
such principal, premium and interest in accordance with the provisions of
Section 10.09.
Section 6.04. Non-presentment of Bonds. In the event
any Bonds (or any portion thereof) shall not be presented for payment when
the principal thereof and redemption premium, if any, thereon becomes due,
either at maturity or at the date fixed for redemption thereof (including,
for such purpose, any conversion to a Fixed Rate) or otherwise, if funds
sufficient to pay such Bonds (or portions thereof) and redemption
premiums, if any, shall be held by the Trustee for the benefit of the
owner or owners thereof, all liability of the Authority to the owner or
owners thereof for the payment of such Bonds (or portions thereof) and
redemption premiums, if any, shall forthwith cease, terminate and be
completely discharged, and thereupon it shall be the duty of the Trustee
to hold such funds (without investment thereof) in the Bond Fund for a
period of at least two years, without liability for interest thereon, for
the benefit of the owner or owners of such Bonds who shall thereafter be
restricted exclusively to such funds for any claim of whatever nature on
such owner's or owners' part under the Indenture or on, or with respect
to, such Bonds. On November 1 in each year Bonds are outstanding, the
Trustee will pay any funds (other than moneys resulting from a draw on the
Letter of Credit) which it has then held in respect of Bonds not presented
for payment for two years or more to the Company, and thereafter the
owners of such Bonds shall look only to the Company for the payment
thereof and then only to the extent of the amount so received without any
interest thereon, and the Authority, the Trustee and the Paying Agent
shall have no responsibility with respect to such moneys.
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88.
Section 6.05. (Intentionally Deleted).
Section 6.06. Trustee to Notify Authority and Company
of Funds in Bond Fund. The Trustee, upon the written request of the
Company or the Authority, shall notify the Company and the Authority of
the amount of funds on deposit in the Bond Fund at the time of such
request.
Section 6.07. Letter of Credit. (1) The Trustee shall
draw moneys under the Letter of Credit in accordance with the terms
thereof as shall be necessary to make timely payments of principal of, and
interest on, the Bonds required to be made from the Bond Fund and to make
timely payments required to be made pursuant to, and in accordance with,
Section 2.05. In connection with each such drawing, the Trustee shall
timely prepare and present all certificates, drafts and other documents
which are required by the terms of the Letter of Credit to effect payment
thereunder. The Trustee shall give immediate telephonic or facsimile
(confirmed in writing) notice to the Company of a draw under the Letter of
Credit and the amount thereof. Nothing in this Section 6.07 shall require
the Trustee to draw moneys under the Letter of Credit for the payment of
Bonds registered in the name of, or held beneficially for, the Company or
the Bank or any Bonds held or required to be held by the Tender Agent for
the account of the Company or the Bank pursuant to the Indenture to the
extent not permitted by the Letter of Credit.
(2) If at any time on or prior to the thirty-seventh
calendar day next preceding the scheduled expiration date of a Letter of
Credit, there shall have been delivered to the Trustee (a) an Alternate
Credit Facility, (b) an Opinion of Bond Counsel stating that the delivery
of such Alternate Credit Facility to the Trustee is authorized under the
Participation Agreement and the Indenture and complies with the terms of
the Participation Agreement and the Indenture and (c) written evidence
satisfactory to the Trustee from Moody's, if the Bonds are then rated by
Moody's, and from S&P, if the Bonds are then rated by S&P, in each case to
the effect that such Rating Agency has reviewed the proposed Alternate
Credit Facility and that the substitution of the proposed Alternate Credit
Facility for the Letter of Credit will not, by itself, result in a
reduction or withdrawal of its rating or ratings of the Bonds from those
which then prevail, then the Trustee shall accept such Alternate Credit
Facility and surrender the previously held Letter of Credit to the Bank,
in accordance with the terms of such Letter of Credit, for cancellation.
(3) The Company may substitute an Alternate Credit
Facility which has the effect of lowering any then prevailing rating on
the Bonds or with respect to which the Company will not
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89.
seek a rating from a Rating Agency then rating the Bonds only if (i)
notice of mandatory purchase pursuant to Section 2.05(e)(1) shall have
been given and such Alternate Credit Facility shall take effect on or
prior to the date on which the Bonds are purchased pursuant to Section
2.05(e)(1) and (ii) such substitution will result in a rating of not less
than the third highest rating category of a Rating Agency. Upon delivery
to the Trustee of: (a) such Alternate Credit Facility, (b) an Opinion of
Bond Counsel stating that the delivery of such Alternate Credit Facility
is authorized under the Participation Agreement and the Indenture and
complies with the terms thereof, and (c) written evidence satisfactory to
the Trustee from a Rating Agency that delivery of such Alternate Credit
Facility will not result in a rating of less than the third highest rating
category of such Rating Agency, currently "A" in each case, the Trustee
shall surrender the Letter of Credit previously in effect, promptly
following any drawing required to be made on such Letter of Credit on the
date the Bonds are so purchased.
(4) If at any time, the Letter of Credit shall
expire because there shall cease to be any Bonds outstanding hereunder, or
because the Fixed Rate Conversion Date shall have occurred, then the
Trustee shall surrender the Letter of Credit to the Bank for cancellation
after having made any necessary drawing in accordance with this Section
6.07 and with the terms of the Letter of Credit. The Trustee shall comply
with the procedures set forth in the Letter of Credit relating to the
termination thereof.
(5) Prior to the expiration of the Letter of Credit,
the Trustee shall give notice, in the name of the Authority, of such
expiration, which notice shall (a) specify the date of the expiration of
the Letter of Credit and (b) specify the last time and date prior to such
expiration on which Bonds must be delivered and the notice given for the
purchase of Bonds pursuant to tenders as provided in Section 2.05, and the
places where such Bonds must be delivered for such purchase, and (c)
either (i) if the requirements of subsection 2 of this Section 6.07 have
not been met, state that the Bonds shall be subject to mandatory tender
for purchase at the Purchase Price thereof on the Mandatory Purchase Date
or (ii) state the name of the issuer of the Alternate Credit Facility.
Such notice shall be given by first class mail not later than thirty (30)
days prior to the Mandatory Purchase Date to the owners of the Bonds.
(6) Notwithstanding anything in the Indenture to the
contrary, in the event the Bonds are held by a Securities Depository under
Section 2.11(b), the Trustee may instruct the Letter of Credit Bank to pay
amounts drawn thereunder directly to the Securities Depository, as
Registered Owner of the Bonds, in
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90.
which event, proper notification concerning such payment shall be sent to
the Trustee and the Paying Agent.
<PAGE> 137
91.
ARTICLE VII
SECURITY FOR AND INVESTMENT OF MONEYS
Section 7.01. Moneys Held in Trust. All moneys from
time to time received by the Trustee and held in any fund created under
the Indenture (other than the Rebate Fund), or otherwise held for the
benefit of the owners, shall, except as otherwise provided herein, be held
in trust by the Trustee for the benefit of the owners from time to time of
the Bonds entitled to be paid therefrom.
Section 7.02. Uninvested Moneys Held by the Trustee.
All moneys received by the Trustee hereunder and not invested by the
Trustee pursuant to the provisions of this Article VII, to the extent not
insured by the Federal Deposit Insurance Company or other federal agency,
shall be deposited with a member bank of the Federal Reserve System or
with the Trustee, or with a national or state bank or a trust company
which has a combined capital and surplus aggregating not less than
$100,000,000; provided, however, that any such moneys drawn under the
Letter of Credit and any moneys held under Section 6.04 shall be deposited
with the Trustee or be fully insured by the Federal Deposit Insurance
Company.
Section 7.03. Investment of, and Payment of Interest
on, Moneys. Moneys on deposit to the credit of the Project Fund or the
Rebate Fund may be retained uninvested as trust funds. Such moneys shall,
at the written direction of an Authorized Company Representative, be
invested by the Trustee in (a) any obligation issued or guaranteed by, or
backed by the full faith and credit of, the United States of America
(including any certificates or any other evidence of an ownership interest
in any such obligation or in specified portions thereof, which may consist
of specified portions of the principal thereof or the interest thereon),
(b) deposit accounts in, or certificates of deposit issued by, and
bankers' acceptances of, any bank, trust company or national banking
association which is a member of the Federal Reserve System (which may
include the Trustee), having capital stock and surplus aggregating not
less than $100,000,000, (c) obligations issued or guaranteed by any Person
controlled or supervised by and acting as an instrumentality of the United
States of America pursuant to the authority granted by the Congress of the
United States, (d) commercial paper rated in the highest investment grade
or next highest investment grade by Moody's or S&P, (e) obligations rated
not less than "A" or equivalent by Moody's or S&P issued or guaranteed by
any state of the United States of America or the District of Columbia, or
any political subdivision, agency or instrumentality of any such state or
District, or issued by any corporation, (f) obligations of a public
housing authority fully
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92.
secured by contracts with the United States of America, rated at least "A"
or better by a Rating Agency, (g) shares of a money market fund, the sole
assets of which are comprised of obligations described in (a) above or (h)
shares of a money market fund which is rated "AAAm" or "AAAm-g" by S&P or
"Prime-1" by Moody's.
Moneys on deposit to the credit of the Bond Fund, other
than moneys on deposit in the Letter of Credit Account, subject to Section
6.04, shall without any instruction from the Company or the Authority be
invested in shares of a money market fund, the sole assets of which are
comprised of obligations issued or guaranteed by, or backed by the full
faith and credit of, the United States of America (including any
certificates or any other evidence of an ownership interest in any such
obligation or in specified portions thereof, which may consist of
specified portions of the principal thereof or the interest thereon and
which certificates or other evidence of an ownership interest must be
rated by the Rating Agency then rating the Bonds at least as high as the
obligations issued or guaranteed by, or backed by the full faith and
credit of, the United States of America); provided that to the extent that
such investments may be unavailable the Trustee may hold such funds
uninvested.
Notwithstanding anything in the preceding paragraph,
Available Moneys held under the Indenture shall be invested by the
Trustee, except to the extent such Available Moneys are permitted to be
held uninvested under the Indenture, in any obligation issued or
guaranteed by, or backed by the full faith and credit of, the United
States of America (including any certificates or any other evidence of an
ownership interest in any such obligation or in specified portions
thereof, which may consist of specified portions of the principal thereof
or the interest thereon and which certificates or other evidence of an
ownership interest must be rated by the Rating Agency then rating the
Bonds at least as high as the obligations issued or guaranteed by, or
backed by the full faith and credit of, the United States of America),
which matures on or prior to the redemption date.
In no event shall the Trustee invest moneys on deposit to
the credit of the Bond Fund in any obligation or security issued or
guaranteed by the Company or the Authority or any obligation or security
issued or guaranteed by any Person known to a Responsible Officer of the
Trustee to be an Affiliate of either the Company or the Authority.
Investments of moneys on deposit to the credit of the
Project Fund, the Bond Fund and the Rebate Fund pursuant to this Section
7.03 shall have maturity dates, or shall be subject to redemption at the
option of the Trustee, on or prior to the
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93.
respective dates on which the moneys invested therein are payable for the
purposes of such Funds. The securities purchased with the moneys in each
such Fund or in any account or sub-account thereof shall be deemed a part
of such Fund or account or sub-account. The interest, including realized
increment on securities purchased at a discount, received on all such
securities in any Fund or any account or sub-account thereof shall be
deposited by the Trustee to the credit of such Fund or account or
sub-account, except as otherwise provided in Section 5.01.2. The Trustee
shall not be liable or responsible for any loss resulting from any such
investment or resulting from the redemption, sale or maturity of any such
investment as herein authorized or for monitoring or ensuring the
Company's compliance with its covenants contained in the Tax Regulatory
Agreement. The Company shall be responsible for, and provide additional
funds as necessary in connection with, any and all losses on investment of
moneys on deposit in the Bond Fund. If at any time it shall become
necessary that some or all of the securities purchased with the moneys in
either such Fund be redeemed or sold in order to raise the moneys
necessary to comply with the provisions of the Indenture, the Trustee
shall effect such redemption or sale, employing in the case of a sale any
commercially reasonable method of effecting such sale.
Any direction to invest moneys given orally under the
terms of the Indenture shall be confirmed in writing.
Moneys drawn on the Letter of Credit shall be retained
uninvested by the Trustee or the Tender Agent, as appropriate, and shall
not bear interest.
Section 7.04. Disposition of Amounts After Payment of
Bonds. Any amounts determined by the Trustee to be remaining in the funds
created under the Indenture, other than amounts held in the Rebate Fund,
after payment in full, or provision for payment in full, of principal of
and premium, if any, and interest on all the Bonds, in accordance with the
provisions of the Indenture, and payment of all the fees, charges and
expenses of the Authority, the Trustee, the Tender Agent, the Indexing
Agent, the Remarketing Agents and Paying Agent in accordance with the
Indenture and the Participation Agreement and any amounts required to be
paid to the United States of America pursuant to the Tax Regulatory
Agreement, shall be paid to the Bank; provided, however, that on or after
the Fixed Rate Conversion Date and solely with respect to moneys not
resulting from a draw on the Letter of Credit and not constituting
remarketing proceeds, such amounts that would be payable to the Bank
pursuant to this Section 7.04 shall, at the written direction of an
Authorized Company Representative, be paid to the Company or, if the Bank
has not been paid in full under the Reimbursement Agreement, to the Bank.
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94.
Section 7.05. Compliance with Tax Regulatory Agreement
in the Event of Partial Redemption of Bonds. Notwithstanding any
provision of the Indenture to the contrary, no later than twenty (20) days
after any partial redemption of Bonds, the Trustee shall reduce the
aggregate amount of all investments held under the Indenture which are
subject to the 150 percent limitation described in Section 7.7 of the Tax
Regulatory Agreement to the extent required by such Section, all in
accordance with the written direction received from an Authorized Company
Representative. The Trustee shall act only upon, and be entitled
conclusively to rely upon, such written direction.
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95.
ARTICLE VIII
REDEMPTION OF BONDS
Section 8.01. Bonds to be Redeemed Only in Manner
Provided in Article VIII. Any redemption of all or any part of the Bonds
which are subject to redemption shall be made in the manner provided in
this Article VIII.
Bonds which are subject to redemption at the option of
the Authority exercised upon the direction of an Authorized Company
Representative, shall be called by the Trustee for redemption in the
manner provided in this Article VIII upon receipt by the Trustee, at least
forty-five (45) days prior to the redemption date, of an executed
counterpart of the written direction of an Authorized Company
Representative to the Authority and the Trustee providing for such
redemption. Such written direction shall specify the principal amount of
such Bonds or portions thereof so to be called for redemption, the
applicable redemption price, the applicable redemption date and the
provision or provisions of the Indenture pursuant to which such Bonds are
to be called for redemption. The foregoing provisions of this paragraph
shall not apply in the case of any mandatory redemption of Bonds in
accordance with the Indenture.
The moneys necessary for any redemption of Bonds shall be
made available to the Trustee on or prior to the date fixed for
redemption. The Trustee is hereby authorized and directed to apply such
moneys in accordance with Section 6.03 to the payment of the Bonds or
portions thereof called for redemption, together with accrued interest
thereon to the redemption date. Upon the giving of notice and the deposit
of funds for redemption, interest on the Bonds or portions thereof thus
called shall no longer accrue on and after the date fixed for redemption.
No payment shall be made by the Trustee upon any Bond or portion thereof
called for redemption until such Bond or portion thereof shall have been
delivered for payment or cancellation or the Trustee shall have received
the items required by Section 2.08 with respect to any mutilated, lost,
stolen or destroyed Bond.
Notwithstanding anything in the Indenture to the
contrary, no redemption at the option of the Authority which requires a
redemption price in excess of par to be payable shall be exercisable
unless (i) a Letter of Credit providing for payment of such premium
together with other amounts owed as part of redemption price shall be in
effect and shall not be scheduled to expire by its terms before the
specified redemption date or (ii) other Available Moneys shall be held by
the Trustee under the Indenture and are available for payment of such
premium.
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96.
Section 8.02. Redemption of Less Than all Bonds. If
less than all of the Bonds shall be called for redemption, the particular
Bonds or portions of Bonds to be redeemed shall be selected by the Trustee
by lot or in such other manner as the Trustee in its discretion may deem
proper in order to assure each owner of Bonds a fair opportunity to have
such owner's Bond or Bonds or portions thereof selected; provided,
however, that the portion to be redeemed of any Bond of a denomination
more than the then-applicable minimum authorized denomination shall be
such minimum authorized denomination or an integral multiple thereof, and
that in selecting portions of such Bonds for redemption, the Trustee shall
treat each such Bond as representing that number of Bonds of such minimum
authorized denomination obtained by dividing the principal amount of such
Bond by such minimum authorized denomination; provided further that the
Trustee shall first select any Bonds registered in the name of the Company
or the Bank and then the remaining Bonds.
Section 8.03. Notice of Redemption. In the case of
any redemption pursuant to Section 2.17, the Trustee shall give in its own
name or in the name of the Authority, notice mailed by first-class mail to
the Registered Owners of the Bonds to be redeemed, addressed to him or her
at his or her address as it appears on the Bond Register at least thirty
(30) days before the date fixed for redemption, which notice shall state
that Bonds properly identified have been called for redemption and, in the
case of Bonds to be redeemed in part only, the portion of the principal
amount thereof that has been called for redemption (or if all the
outstanding Bonds are to be redeemed, so stating, in which event such
identification may be omitted), that they will be due and payable on the
date fixed for redemption (specifying such date) upon surrender thereof at
the Corporate Trust Office or, at the option of the owner, at the
corporate trust office of the Paying Agent, if any, for such Bonds, at the
applicable redemption price (specifying such price) together with accrued
interest to such date, and that all interest on the Bonds, or portions
thereof, so to be redeemed will cease to accrue on and after such date.
Failure to give any required notice of redemption as to any particular
Bonds will not affect the validity of the call for redemption of any Bonds
in respect to which no such failure occurs. Any notice mailed as provided
in this Section shall be conclusively presumed to have been duly given,
whether or not the Registered Owner actually receives the notice.
Section 8.04. Rights of Owners of Bonds Called for
Redemption Limited to Redemption Price and Accrued Interest. If notice of
redemption has been given as provided in Section 8.03, the Bonds or
portions thereof called for redemption shall be due and payable on the
date fixed for redemption at the redemption
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97.
price, together with accrued interest to the date fixed for redemption.
Payment of the redemption price, together with accrued interest, shall be
made by the Trustee upon surrender of such Bonds. If there shall be
called for redemption less than the entire principal amount of a Bond, the
Authority shall execute and deliver and the Trustee shall authenticate,
upon surrender of such Bond, and without charge to the owner thereof,
Bonds for the unredeemed portion of the principal amount of the Bond so
surrendered.
Subject to the deposit with the Trustee of amounts
necessary for the redemption of such Bonds as provided in Section 8.01,
from and after the date fixed for redemption designated in such notice,
notwithstanding that any Bonds so called for redemption in whole or in
part shall not have been surrendered for cancellation, no further interest
shall accrue upon the principal of any of the Bonds or portions thereof so
called for redemption; and such Bonds or portions thereof so to be
redeemed shall cease to be entitled to any lien, benefit or security under
the Indenture and the owners thereof shall have no rights in respect of
such Bonds or portions thereof except to receive payment of the redemption
price thereof and unpaid interest accrued to the date fixed for redemption
from such amounts deposited with the Trustee which shall be held
uninvested by the Trustee in trust for the owner of such Bonds or portions
thereof.
Section 8.05. Redemption at Demand of the State. In
accordance with the provisions of Section 1864 of the Act, the State of
New York may, upon furnishing sufficient funds therefor, require the
Authority to redeem prior to maturity, as a whole, any issue of Bonds, on
any Interest Payment Date not less than twenty years after the date of the
original issuance of the Bonds of such issue. The Authority shall deposit
any such funds received by it with the Trustee. After the expiration of
the Letter of Credit, the Trustee shall deposit such funds in the Bond
Fund and, upon notice given as provided in Section 8.03, shall apply such
funds to the redemption of such Bonds, at a redemption price equal to the
applicable optional redemption price set forth in the Indenture or 105
percent of the principal amount of the Bonds to be redeemed, whichever is
less, together with accrued and unpaid interest to the date fixed for
redemption, all in the manner provided in this Article VIII. Prior to the
expiration of the Letter of Credit, the Trustee shall deposit any such
funds received by it in a segregated sub-account in the Debt Service
Account of the Bond Fund, and upon notice published in the manner provided
in Section 1864 of the Act, shall draw moneys under the Letter of Credit
and apply such moneys drawn under the Letter of Credit to the redemption
of such Bonds at a redemption price equal to 100 percent of the principal
amount of the Bonds to be redeemed, together with accrued and unpaid
interest
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98.
to the date fixed for redemption in the manner specified in the preceding
sentence. Upon the application of such moneys drawn under the Letter of
Credit, the Trustee shall pay the funds furnished by the State to the Bank
with instructions to apply such funds to the reimbursement of the Bank for
such moneys drawn under the Letter of Credit. Upon such redemption, the
Trustee shall assign the Company Note to or as directed in writing by the
Authority.
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99.
ARTICLE IX
PARTICULAR COVENANTS
Section 9.01. Payment of Principal of and Interest and
Redemption Premium of Bonds. The Authority will promptly pay from the
Company Note Payments and other funds held by the Trustee and available
therefor the principal of, and the interest on, every Bond issued under
and secured by the Indenture and any premium required to be paid for the
retirement of said Bonds by redemption, at the places, on the dates and in
the manner specified in the Indenture and in said Bonds according to the
true intent and meaning thereof, subject, however, to the provisions of
Section 1.03.
Section 9.02. Performance of Covenants. The Authority
will faithfully perform at all times all covenants, undertakings,
stipulations and provisions contained in the Indenture, in any and every
Bond and in all proceedings of the Authority pertaining thereto.
Section 9.03. Further Instruments. The Authority will
from time to time execute and deliver such further instruments and take
such further action as may be reasonable and as may be required to carry
out the purpose of the Indenture; provided, however, that no such
instruments or actions shall pledge the credit of the Authority or the
State of New York or the taxing power of the State of New York or
otherwise be inconsistent with the provisions of Section 1.03.
Section 9.04. Inspection of Project Books. All books
and documents in the possession of the Authority relating to the Project
or the Participation Agreement shall at all times be open to inspection by
such accountants or other agents as the Trustee may from time to time
designate.
Section 9.05. No Extension of Time of Payment of
Interest. In order to prevent any accumulation of claims for interest
after maturity, the Authority will not directly or indirectly extend or
assent to the extension of the time of payment of any claims for interest
on any of the Bonds and will not directly or indirectly be a party to or
approve any such arrangement by purchasing such claims for interest or in
any other manner. In case any such claim for interest shall be extended
in violation hereof, such claim for interest shall not be entitled, in
case of any default hereunder, to the benefit or security of the Indenture
except subject to the prior payment in full of the principal of, and
premium, if any, on, all Bonds issued and
<PAGE> 146
100.
outstanding hereunder, and of all claims for interest which shall not have
been so extended or funded.
Section 9.06. Trustee's, Paying Agent's, Indexing
Agent's, Tender Agent's and Remarketing Agents's Fees, Charges and
Expenses. Pursuant to the provisions of Section 4.05 of the Participation
Agreement, the Company has agreed to pay the fees and the expenses of the
Trustee, any Paying Agent, the Indexing Agent, the Tender Agent and the
Remarketing Agents, in the amounts set forth more fully therein, and the
Authority shall have no liability for the payment of any fees or expenses
of the Trustee, any Paying Agent, the Indexing Agent, the Tender Agent and
the Remarketing Agents.
Exclusive of the proceeds of any drawing under the Letter
of Credit and any other moneys within the meaning of subdivision (a) of
the definition of Available Moneys, the Trustee shall have a first lien
with right of payment prior to payment on account of principal of,
premium, if any, and interest on any Bond under the Indenture for the
fees, charges and expenses of the Trustee. When the Trustee incurs
expenses or renders services after the occurrence of an Act of Bankruptcy
with respect to the Company, the expenses and the compensation for
services are intended to constitute expenses of administration under any
federal or state bankruptcy, insolvency, arrangement, moratorium,
reorganization or other debtor relief law. The Company shall have no
liability to pay any fees, charges or other expenses of the Trustee
hereinabove mentioned except from amounts pledged under the Indenture.
Section 9.07. Agreement of the State of New York. In
accordance with the provisions of subdivision 11 of Section 1860 of the
Act, the Authority, on behalf of the State of New York, does hereby pledge
to and agree with the owners of the Bonds that the State of New York will
not limit or alter the rights and powers vested by the Act in the
Authority to fulfill the terms of any contract made with Bondowners, or in
any way impair the rights and remedies of such owners, until the Bonds,
together with the interest thereon, with (to the extent permitted by law)
interest on any unpaid installments of interest, and all costs and
expenses in connection with any action or proceeding by or on behalf of
such owners, are fully met and discharged.
<PAGE> 147
101.
ARTICLE X
DEFAULTS AND REMEDIES
Section 10.01. Events of Default. In case one or more
of the following Events of Default shall have occurred:
(a) default in the payment of any
installment of interest in respect of any Bond as the
same shall become due and payable which default continues
for five days; or
(b) default in the payment of the principal
of or premium, if any, in respect of any Bond as the same
shall become due and payable either at maturity, upon
redemption, by acceleration or otherwise; or
(c) default in the payment of any amount due
pursuant to Section 2.05 as the same becomes due and
payable which default continues for five days; or
(d) an event of default specified in Article VI
of the Participation Agreement; or
(e) after the expiration of the Letter of
Credit, failure on the part of the Authority to duly
observe or perform any other of the covenants or
agreements on the part of the Authority contained in the
Indenture or in any Bond for a period of 90 days after
the date on which written notice of such failure,
requiring the Authority to remedy the same, shall have
been given to the Authority and the Company by the
Trustee; or
(f) receipt by the Trustee of written notice
from the Bank of the occurrence and continuance of an
event of default under the Reimbursement Agreement, that
the Bank is terminating the Letter of Credit and that the
Bank is directing the Trustee to accelerate the Bonds; or
(g) receipt by the Trustee of written notice
from the Bank on or before the tenth day after a drawing
under the Letter of Credit in respect of interest on the
Bonds, to the effect that the Bank has not been
reimbursed for any such drawing and that the Bank is
directing the Trustee to accelerate the Bonds;
then, upon (a) the occurrence and continuance of any Event of Default
described in clause (a), (b), (c), (d) or (e) of this paragraph, the
Trustee may, and at the written request of owners of not less than 25% in
aggregate principal amount of Bonds then
<PAGE> 148
102.
outstanding shall, or (b) the occurrence of an Event of Default described
in clause (f) or (g) of this paragraph the Trustee shall immediately, by
written notice given to the Authority, the Governor, the Comptroller, the
Attorney General of the State of New York and the Company, declare the
principal of all Bonds then outstanding to be due and payable immediately,
at which time (unless a Fixed Rate Conversion Date has occurred and the
Letter of Credit is no longer in effect) interest shall cease to accrue,
and upon such declaration the said principal, together with interest
accrued thereon, shall become due and payable immediately at the place of
payment provided therein, anything in the Indenture or in the Bonds to the
contrary notwithstanding and the Trustee shall give notice thereof to the
Authority, the Company, the Tender Agent, the Remarketing Agents and the
Bank, and shall give notice thereof by mail to all owners of outstanding
Bonds. Prior to the expiration of the Letter of Credit, the Trustee shall
draw immediately upon the Letter of Credit in the event the Bonds shall
have been declared immediately due and payable and immediately apply
amounts drawn under the Letter of Credit to payment of Bonds in accordance
with the Indenture.
The provisions of the preceding paragraph, however, are
subject, after the expiration of the Letter of Credit, to the condition
that if, after the principal of said Bonds has been so declared to be due
and payable, all arrears of interest upon the Bonds are paid, and the
Authority has performed all other things in respect to which it may have
been in default hereunder and the reasonable compensation and expenses of
the Trustee, and the Bondowners, including reasonable attorneys' fees,
shall have been paid, or provision satisfactory to the Trustee shall be
made for such payments, then, and in every such case, the owners of a
majority in aggregate principal amount of the Bonds then outstanding, by
written notice to the Authority and to the Trustee, may annul such
declaration and its consequences, and such annulment shall be binding upon
the Trustee and upon all owners of Bonds issued hereunder, or, if the
Trustee shall have acted in the absence of a written request of the owners
of at least twenty-five percent (25%) in aggregate principal amount of all
outstanding Bonds, and if there shall not have been theretofore delivered
to the Trustee written direction to the contrary by the owners of at least
twenty-five percent (25%) in aggregate principal amount of the Bonds then
outstanding, then any such declaration shall ipso facto be deemed to be
rescinded and any such default and its consequences shall ipso facto be
deemed to be annulled and such annulment shall be binding upon the Trustee
and upon all owners of Bonds; but no such annulment shall extend to or
affect any subsequent default or impair any right or remedy consequent
thereon. The Trustee shall forward a copy of any notice from
<PAGE> 149
103.
Bondowners received by it pursuant to this paragraph to the Company.
The provisions of the second preceding paragraph are,
further, subject to the condition that any waiver by the Bank of any event
of default under the Reimbursement Agreement and a rescission and
annulment of its consequences shall constitute a waiver of the
corresponding Event of Default under the Indenture and a rescission and
annulment of the consequences thereof; provided that, the Trustee shall
have received written notice from the Bank to the effect that the Letter
of Credit has been reinstated, if applicable, and is in full force and
effect (with respect to the principal of, premium, if any, interest on,
and the purchase price of, all Bonds then entitled to the benefits of the
Letter of Credit). If written notice of such event of default under the
Reimbursement Agreement shall have been given as provided herein and if
the Trustee shall thereafter have received written notice from the Bank
that such event of default shall have been waived, the Trustee shall
promptly give written notice of such waiver, rescission or annulment and
of the corresponding waiver, rescission and annulment of the Event of
Default hereunder to the Authority, the Governor, the Comptroller, the
Attorney General of the State of New York, the Company, the Bank, the
Tender Agent and the Remarketing Agents, and shall give written notice
thereof by mail to all owners of outstanding Bonds; but no such waiver,
rescission and annulment shall extend to or affect any subsequent Event of
Default or impair any right or remedy consequent thereon.
Section 10.02. Judicial Proceedings by Trustee. Upon
the happening and continuance of any Event of Default, then and in every
such case the Trustee in its discretion may, and upon the written request
of the owners of at least twenty-five percent (25%) in aggregate
principal amount of the Bonds then outstanding and receipt of indemnity to
its satisfaction, shall:
(a) by suit, action or special proceeding,
enforce all rights of the Bondowners and require the
Authority, the Bank or the Company to perform its or
their duties under the Act, the Participation Agreement,
the Bonds, the Letter of Credit, the Company Note and the
Indenture;
(b) bring suit upon the Bonds;
(c) by action or suit in equity require the
Authority to account as if it were the trustee of an
express trust for the Bondowners; or
<PAGE> 150
104.
(d) by action or suit in equity enjoin any
acts or things which may be unlawful or in violation of
the rights of the Bondowners.
Section 10.03. Effect of Discontinuance or Abandonment
of Proceedings. In case the Trustee shall have proceeded to enforce any
right under the Indenture and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Trustee, then and in every such case the Authority, the
Trustee and the Bondowners shall be restored respectively to their former
positions and rights hereunder, respectively, and all rights, remedies and
powers of the Authority, the Trustee and the Bondowners, respectively,
shall continue as though no such proceedings had been taken.
Section 10.04. Power of Bondowners to Direct
Proceedings. Anything in the Indenture to the contrary notwithstanding,
the owners of a majority in aggregate principal amount of the Bonds then
outstanding hereunder shall have the right, by an instrument in writing
executed and delivered to the Trustee, to direct the method and place of
conducting all remedial proceedings to be taken by the Trustee hereunder,
subject, however, to the provisions of Section 11.04, and provided,
however, such direction shall not be in conflict with any rule of law or
with any provision of the Indenture (including, without limitation, any
provision requiring the Trustee to accelerate the Bonds and draw on the
Letter of Credit upon the occurrence of an Event of Default under Section
10.01(f) or (g)) and shall not unduly prejudice the rights of the
Bondowners who are not in such majority. The Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the owners of a majority in
aggregate principal amount of the Bonds and which is not in conflict with
the Trustee's obligation to accelerate the Bonds and draw on the Letter of
Credit upon the occurrence of an Event of Default under Section 10.01(f)
or (g).
Section 10.05. Limitation on Actions by Bondowners. No
owner of any of the Bonds shall have any right to institute any suit,
action or proceeding in equity or at law for the enforcement of any trust
hereunder, or any other remedy hereunder or under the Bonds, unless such
owner previously shall have given to the Trustee written notice of an
Event of Default as hereinabove provided and unless also the owners of not
less than twenty-five percent (25%) in aggregate principal amount of the
Bonds then outstanding shall have made written request of the Trustee so
to do, after the right to exercise such powers or rights of action, as the
case may be, shall have accrued, and shall have afforded the Trustee a
reasonable opportunity either to proceed to exercise the powers
hereinabove granted, or to institute such action, suit or
<PAGE> 151
105.
proceeding in its or their name; nor unless there also shall have been
offered to the Trustee security and indemnity satisfactory to it against
the costs, expenses and liabilities to be incurred therein or thereby, and
the Trustee shall not have complied with such request within a reasonable
time; and such notification, request and offer of indemnity are hereby
declared in every such case, at the option of the Trustee, to be
conditions precedent to the execution of the trusts of the Indenture or
for any other remedy hereunder; it being understood and intended that no
one or more owners of the Bonds hereby secured shall have any right in any
manner whatever by such owner's or owners' action to affect, disturb or
prejudice the security of the Indenture, or to enforce any right hereunder
or under the Bonds, except in the manner herein provided, and that all
proceedings at law or in equity shall be instituted, had and maintained in
the manner herein provided and for the equal benefit of all owners of
outstanding Bonds, subject, however, to the provisions of Section 9.05.
Nothing in the Indenture or in the Bonds contained shall affect or impair
the right of action, which is also absolute and unconditional, of any
owner of any Bond to enforce payment of the principal of and premium, if
any, and interest on such owner's Bond at the date of maturity and places
therein expressed.
Section 10.06. Trustee's Right to Enforce Rights in
Respect of Bonds in Own Name and Without Possession of Bonds. All rights
of action under the Indenture or under any of the Bonds which are
enforceable by the Trustee may be enforced by it without the possession of
any of the Bonds, or the production thereof at the trial or other
proceedings relative thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name, as trustee, for
the equal and ratable benefit of the owners of the Bonds subject to the
provisions of the Indenture.
Section 10.07. No Remedy herein Conferred upon or
Reserved Exclusive. No remedy herein conferred upon or reserved to the
Trustee or to the owners of the Bonds is intended to be exclusive of any
other remedy or remedies, except as provided in Section 10.10, and each
and every such remedy shall be cumulative, and shall be in addition to
every other remedy given hereunder.
Section 10.08. No Delay or Omission to be Deemed Waiver
of Default. No delay or omission of the Trustee or of any owner of the
Bonds to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver of any
such default, or an acquiescence therein; and every power and remedy given
by this Article X to the Trustee and to the owners of the Bonds,
respectively, may be exercised from time to time and as often as may be
deemed expedient.
<PAGE> 152
106.
Section 10.09. Application of Moneys Received by
Trustee Pursuant to Article X. Any moneys or other property or assets
received by the Trustee or by any receiver pursuant to this Article X (i)
shall be applied first to the payment of the costs and expenses of the
proceedings resulting in the collection of any moneys received by the
Trustee or by any receiver pursuant to this Article X and of the expenses,
liabilities and advances incurred or made and compensation for services
rendered by or on behalf of the Trustee, including reasonable counsel fees
and expenses; provided that, moneys drawn under the Letter of Credit shall
not be applied to any such payment, and (ii) any remaining amounts shall
then be applied as follows:
(a) Unless the principal of all Bonds shall
have become or shall have been declared due and payable,
all such moneys shall be applied:
First: To the payment to the Persons entitled
thereto of all installments of interest then due
on the Bonds, in the order of the maturity of
the installments of such interest including (to
the extent permitted by law) interest on overdue
installments of interest at the rate borne by
the Bonds on which such interest shall then be
due, and, if the amount available shall not be
sufficient to pay in full any particular
installment or installments, then to the payment
ratably, according to the amounts due on such
installment or installments, to the Persons
entitled thereto, without any discrimination or
preference; and
Second: To the payment to the Persons entitled
thereto of the unpaid principal of and premium,
if any, on any of the Bonds which shall have
become due (other than Bonds called for
redemption for the payment of which moneys are
held pursuant to the provisions of the
Indenture) in the order of their due dates, with
interest on such Bonds from the respective dates
upon which they become due and, if the amount
available shall not be sufficient to pay in full
Bonds due on any particular date, together with
such interest, then to the payment ratably,
according to the amount of principal due on such
date, to the Persons entitled thereto without
any discrimination or preference.
(b) If the principal of all the Bonds shall
have become or shall have been declared due and payable,
all
<PAGE> 153
107.
such moneys shall be applied to the payment of the
principal, premium, if any, and interest then due and
unpaid upon the Bonds, with interest on overdue
principal, premium, if any, and interest as aforesaid,
without preference or priority of principal and premium,
if any, over interest or of interest over principal and
premium, if any, or of any installment of interest over
any other installment of interest or of any Bond over any
other Bond, ratably, according to the amounts due
respectively for principal, premium, if any, and
interest, to the Persons entitled thereto without any
discrimination or preference.
(c) If the principal of all the Bonds shall
have been declared due and payable, and if such
declaration shall thereafter have been rescinded and
annulled under the provisions of this Article X, then,
subject to the provisions of paragraph (b) of this
Section which shall be applicable in the event that the
principal of all the Bonds shall later become due or be
declared due and payable, the moneys shall be applied in
accordance with the provisions of paragraph (a) of this
Section.
Moneys drawn under the Letter of Credit may not be
applied to effect any payment on any Bond not entitled to the benefits
thereof as provided in Section 3.01. Whenever moneys are to be applied
pursuant to the provisions of this Section, such moneys shall be applied
at such times, and from time to time, as the Trustee shall determine,
having due regard to the amount of such moneys available for application
and the likelihood of additional moneys becoming available for such
application in the future. Whenever the Trustee shall apply such funds,
it shall fix the date (which shall be an Interest Payment Date unless it
shall deem another date more suitable) upon which such application is to
be made and upon such date interest on the amount of principal to be paid
on such date shall cease to accrue. Notwithstanding the two preceding
sentences any moneys drawn under the Letter of Credit under this Article X
shall be applied by the Trustee pursuant to the provisions of this Section
10.09 within five days after such moneys have been drawn. For the purpose
of determining the Bondowners who are entitled to such application, the
Trustee may establish a record date not more than five days before such
payment date. The Trustee shall give such notice to Bondowners by mailing
in the manner it may deem appropriate of the deposit with it of any such
moneys and of the fixing of any such payment date, and shall not be
required to make payment to the owner of any Bond until such Bond shall be
presented to the Trustee for appropriate endorsement or for cancellation
if fully paid.
<PAGE> 154
108.
Section 10.10. Entirety of Agreement. The rights and
remedies of the owners of the Bonds and of the Trustee set forth in this
Article X are in lieu of the rights and remedies of owners of bonds of the
Authority set forth in Section 1865 of the Act and the provisions of such
Section 1865 are hereby abrogated with respect to the Bonds.
Section 10.11. Notice of Event of Default. The Trustee
shall, within 30 days after the occurrence of an Event of Default becomes
known to a Responsible Officer, give notice thereof to all Bondowners by
mail in the manner provided in Section 16.05 unless such Event of Default
shall have been cured before the giving of such notice.
<PAGE> 155
109.
ARTICLE XI
CONCERNING THE TRUSTEE AND PAYING AGENT
Section 11.01. Appointment of Trustee; Paying Agents.
Chemical Bank is hereby appointed as Trustee and Paying Agent for the
owners from time to time of the Bonds. The Trustee hereby accepts the
duties and obligations of the Trustee and Paying Agent created by the
Indenture for the owners from time to time of the Bonds.
The provisions of this Article XI shall not affect the
Trustee's obligation to accelerate the Bonds upon the occurrence of an
Event of Default under Section 10.01(f) or (g), draw on the Letter of
Credit or make any payment of principal, premium or interest on the Bonds.
Subject to Article X and Section 11.04, and as and to the
extent provided in Sections 4.08 and 4.09 of the Participation Agreement,
the Trustee, the Paying Agent and the Tender Agent shall be entitled to
indemnification by the Company for any losses, costs, charges, expenses
(including reasonable attorneys' fees and disbursement), judgments and
liabilities incurred by the Trustee, the Paying Agent and the Tender Agent
in connection with any claims made, or any action, suit or proceeding
instituted or threatened, in connection with the transactions contemplated
by the Participation Agreement or the Indenture. The Trustee, Paying
Agents and Tender Agent, except as otherwise provided in Section 9.06,
shall look solely to the Company for such indemnification.
Section 11.02. No Responsibility for Correctness of
Statements in Indenture. The recitals, statements and representations in
the Indenture or in the Bonds contained, save only the Trustee's
certificate of authentication upon the Bonds, shall be taken and construed
as made by and on the part of the Authority, and not by the Trustee, and
the Trustee does not assume, and shall not have, any responsibility or
obligation for the correctness of any recitals, statements and
representations hereof or thereof or any other document delivered by the
Authority or the Company in connection with the issuance of the Bonds.
Section 11.03. No Responsibility for Default of Agents
Selected with Due Care, nor for Own Acts Save Willful Misconduct or
Negligence. The Trustee may execute such of the trusts or powers required
of it hereunder and perform the duties required of it hereunder as may be
reasonably necessary by or through attorneys, agents or receivers and the
Trustee shall not be answerable for the default, negligence or misconduct
of any such attorney, agent or
<PAGE> 156
110.
receiver selected by it with reasonable care. The Trustee may in all
cases pay such reasonable compensation to and receive reimbursement for
all such attorneys, agents, receivers, and employees as may reasonably be
employed in connection with the trusts hereof. The Trustee may act upon
the opinion or advice of any attorney (who may be the attorney or
attorneys for the Authority or the Company), approved by the Trustee in
the exercise of reasonable care. The Trustee shall not be responsible for
any loss or damage resulting from any action or non-action in good faith
in reliance upon such opinion or advice. The Trustee shall not be
answerable for the exercise or non-exercise of any discretion or power
under the Indenture or for anything whatever in connection with the trusts
herein created, except only for its own willful misconduct or negligence.
No provision of the Indenture shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that such funds will not be repaid or if satisfactory indemnity against
such risk or liability is not provided to the Trustee.
Section 11.04. No Duty to Take Enforcement Action
Unless so Requested by Owners of 25% of the Bonds. Unless and until an
Event of Default shall have occurred and (i) written notice thereof shall
have been given to the Trustee or (ii) the occurrence thereof otherwise
shall be known to a Responsible Officer of the Trustee, the Trustee shall
be under no obligation to take any action in respect of any default or
otherwise in respect of or toward the execution or enforcement of any of
the trusts hereby created, or to institute, appear in or defend any suit
or other proceeding in connection therewith, unless requested in writing
so to do by owners of at least twenty-five percent (25%) in aggregate
principal amount of the Bonds then outstanding, and if in its opinion such
action may tend to involve it in expense or liability, unless furnished,
from time to time as often as it may require, with security and indemnity
satisfactory to it; but the foregoing provisions are intended only for the
protection of the Trustee, and shall not affect any discretion or power
given by any provisions of the Indenture to the Trustee to take action in
respect of any default without such notice or request from the Bondowners,
or without such security or indemnity.
Notwithstanding any other provision of the Indenture or
the Participation Agreement, no right of the Trustee to indemnification
shall prevent the Trustee from (a) making payments on the Bonds when due
from moneys available to it, (b) accelerating the Bonds as required
pursuant to Article X, or (c) drawing on the Letter of Credit to make
payments on the Bonds when due.
<PAGE> 157
111.
Section 11.05. Right to Rely. The Trustee shall be
protected and shall incur no liability in acting or proceeding in good
faith upon any resolution, notice, telegram, request, consent, waiver,
certificate, statement, affidavit, voucher, bond, requisition or other
paper or document which it shall in good faith believe to be genuine and
to have been authorized or signed by the proper board or person or to have
been prepared and furnished pursuant to any of the provisions of the
Indenture and the Trustee may require a written opinion from legal counsel
who is reasonably acceptable to the Trustee, which counsel may be an
employee of or counsel to the Company or the Trustee, confirming the
accuracy of any such paper or document, and the Trustee shall be under no
duty to make any investigation or inquiry as to any statements contained
or matters referred to in any such instrument but may accept and rely upon
the same as conclusive evidence of the truth and accuracy of such
statements.
Section 11.06. Right to Own and Deal in Bonds and
Engage in Other Transactions with Authority and Company. The Trustee may
in good faith buy, sell, own, hold and deal in any of the Bonds issued
hereunder and secured by the Indenture, and may join in any action which
any Bondowner may be entitled to take with like effect as if the Trustee
were not a party to the Indenture. The Trustee, either as principal or
agent, may also engage in or be interested in any financial or other
transaction with the Authority or the Company, and may act as depository,
trustee, or agent for any committee or body of owners of the Bonds secured
hereby or other obligations of the Authority as freely as if it were not
Trustee hereunder.
Section 11.07. Construction of Provisions of Indenture
by Trustee. The Trustee may construe any of the provisions of the
Indenture insofar as the same may appear to be ambiguous or inconsistent
with any other provision thereof, and any construction of any such
provisions hereof by the Trustee in good faith shall be binding upon the
Bondowners.
Section 11.08. Right to Resign Trust. The Trustee may
at any time and for any reason resign and be discharged of the trusts
created by the Indenture by (a) executing an instrument in writing
resigning such trusts and specifying the date when such resignation shall
take effect, (b) filing the same with the Secretary of the Authority (c)
giving notice thereof in writing to the Company not less than 60 days
before the date specified in such instrument when such resignation shall
take effect, and (d) giving notice of such resignation to Bondowners by
mail in the manner provided in Section 16.05, the mailing of said notice
to occur not less than four weeks prior to the date specified in such
notice when such resignation shall take effect. Such resignation shall
take effect only upon
<PAGE> 158
112.
the appointment of a successor Trustee in accordance with the provisions
of Section 11.10.
Section 11.09. Removal of Trustee. (a)The Trustee at
any time and for any reason may be removed by an instrument in writing,
appointing a successor, filed with the Trustee so removed and executed by
the owners of a majority in aggregate principal amount of the Bonds then
outstanding; provided, however, that no such removal shall become
effective until the acceptance of appointment by a successor Trustee in
accordance with Section 11.13.
(b) The Trustee at any time other than during the
continuance of an Event of Default or the continuance of an event which
but for the passage of time would constitute an Event of Default and for
any reason may be removed by an instrument in writing, executed by an
Authorized Officer, appointing a successor, filed with the Trustee so
removed; provided, however, that no such removal shall become effective
until the acceptance of appointment by a successor Trustee in accordance
with Section 11.13.
Section 11.10. Appointment of Successor Trustee by
Bondowners or Authority. In case at any time the Trustee shall resign, or
shall be removed, or be dissolved, or if its property or affairs shall be
taken under the control of any state or federal court or administrative
body because of insolvency or bankruptcy, or for any other reason, a
vacancy shall forthwith and ipso facto exist in the office of the Trustee,
then a successor may be appointed by the owners of a majority in aggregate
principal amount of the Bonds then outstanding, by an instrument or
instruments in writing filed with the Secretary of the Authority, signed
by such Bondowners or by their attorneys-in-fact duly authorized. Copies
of each such instrument shall be promptly delivered by the Authority to
the predecessor Trustee, to the Trustee so appointed and to the Company.
Until a successor Trustee shall be appointed by the
Bondowners as herein authorized, the Authority, by an instrument
authorized by resolution, shall appoint a Trustee to fill such vacancy.
The Authority shall not appoint a Trustee without the approval of the
Company as evidenced by a certificate in writing signed by an Authorized
Company Representative, which approval shall not be unreasonably withheld.
After any appointment by the Authority, it shall cause notice of such
appointment to be mailed to the Bondowners in the manner provided in
Section 16.05. Any new Trustee so appointed by the Authority shall
immediately and without further act be superseded by a Trustee appointed
by the Bondowners in the manner above provided.
<PAGE> 159
113.
Section 11.11. Qualifications of Successor Trustee.
Every successor in the trusts hereunder appointed pursuant to the
foregoing provision shall be a bank or trust company organized and doing
business under the laws of the United States or any state or territory
thereof with trust powers, shall have a combined capital and surplus of at
least $100,000,000 and shall (or the parent corporation of such successor
shall) be rated at least Baa-3 and/or P-3 or an equivalent rating by
Moody's or otherwise be acceptable to Moody's and the Authority if such a
bank or trust company willing and able to accept the trusts on customary
terms can, with reasonable effort, be located.
Section 11.12. Court Appointment of Successor Trustee.
In case at any time the Trustee shall resign and no appointment of a
successor Trustee shall be made pursuant to the foregoing provisions of
this Article XI prior to the date specified in the notice of resignation
as the date when such resignation shall take effect, the Trustee, the
Company or the owner of any Bond may apply to any court of competent
jurisdiction to appoint a successor Trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, appoint a
successor Trustee.
Section 11.13. Acceptance of Appointment by, and
Transfer of Trust Estate to, Successor Trustee. Any successor Trustee
appointed hereunder shall execute, acknowledge and deliver to the
Authority an instrument accepting such appointment hereunder as a
fiduciary for the owners from time to time of the Bonds and shall request
the Bank to transfer the Letter of Credit to it as successor Trustee, and
thereupon such successor Trustee, without any further act, deed or
conveyance, shall become duly vested with all the estates, property,
rights, powers, trusts, duties and obligations of its predecessor in the
trust hereunder, with like effect as if originally named Trustee herein
and shall give notice thereof to the Company. Upon request of such
Trustee, the Trustee ceasing to act and the Authority shall execute and
deliver an instrument transferring to such successor Trustee all the
estates, property, rights, powers and trusts hereunder of the Trustee so
ceasing to act, and the Trustee so ceasing to act shall pay over to the
successor Trustee all moneys and other assets, including the Company Note
at the time held by it hereunder.
Section 11.14. Successor Trustee by Merger or
Consolidation. Any corporation into which any Trustee hereunder may be
merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which any Trustee hereunder shall be a
party, or any corporation to which any Trustee hereunder may transfer all
or substantially all of its assets, shall be the successor Trustee under
the Indenture, without the execution or filing of any paper or any further
act on the part
<PAGE> 160
114.
of the parties hereto, anything herein to the contrary notwithstanding.
Section 11.15. Exercise of Rights and Powers During
Event of Default. Notwithstanding any other provisions of this Article
XI, the Trustee shall, during the existence of an Event of Default of
which a Responsible Officer of the Trustee has actual knowledge, exercise
such of the rights and powers vested in it by the Indenture and use the
same degree of skill and care in their exercise as a prudent man would use
and exercise under the circumstances in the conduct of his own affairs.
Section 11.16. Trustee may Intervene in Judicial
Proceedings Involving Authority or the Company. In any judicial
proceeding to which the Authority or the Company is a party and which in
the opinion of the Trustee and its counsel has a substantial bearing on
the interests of owners of the Bonds, the Trustee may in its own name or
as trustee of an express trust intervene on behalf of the owners of the
Bonds and shall, upon receipt of indemnity satisfactory to it, do so if
requested in writing by the owners of at least twenty-five percent (25%)
in aggregate principal amount of Bonds then outstanding if permitted by
the court having jurisdiction in the premises.
Section 11.17. Paying Agents. The Authority may, with
the approval of the Company as evidenced by a certificate in writing
signed by an Authorized Company Representative, at any time or from time
to time appoint one or more additional Paying Agents for the owners from
time to time of the Bonds in the manner and subject to the conditions set
forth in this Section 11.17. Each Paying Agent shall signify its
acceptance of the duties and obligations imposed upon it by the Indenture
by written instrument of acceptance deposited with the Authority, the
Trustee and the Company.
Each Paying Agent appointed in addition to the Trustee
and the Tender Agent shall be a bank or trust company duly organized under
the laws of the United States or any state or territory thereof, shall
have a capital stock and surplus aggregating at least $100,000,000 and
shall (or the parent corporation of such successor shall) be rated at
least Baa-3 and/or P-3 or an equivalent rating by Moody's or otherwise be
acceptable to Moody's and the Authority and shall be willing and able to
accept the office on reasonable and customary terms and shall be
authorized by law to perform all the duties imposed upon it by the
Indenture.
Any Paying Agent may at any time resign and be discharged
of the duties and obligations created by the Indenture by giving at
<PAGE> 161
115.
least 60 days' prior written notice to the Authority, the Trustee and the
Company. Any Paying Agent may be removed at any time by an instrument
filed with such Paying Agent, the Company and the Trustee and signed by
the Authority.
In the event of the resignation or removal of any Paying
Agent, such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor,
to the Trustee. In the event that for any reason there shall be a vacancy
in the office of any Paying Agent, the Trustee shall act as such Paying
Agent.
Each Paying Agent shall set aside, segregate and hold in
a trust account in trust solely for the benefit of the owners from time to
time of the Bonds moneys transferred to such Paying Agent for the payment
of the principal of, premium, if any, and interest on the Bonds.
Section 11.18. Appointment of Co-Trustee. It is the
purpose of the Indenture that there shall be no violation of any law of
any jurisdiction (including particularly the law of the State of New York)
denying or restricting the right of banking corporations or associations
to transact business as a trustee in such jurisdiction. It is recognized
that in case of litigation under the Indenture or the Participation
Agreement and in particular in case of the enforcement thereof upon an
Event of Default, or in the case the Trustee deems that by reason of any
present or future law of any jurisdiction it may not exercise any of the
powers, rights or remedies herein granted to the Trustee or hold title to
the properties, in trust, as herein granted, or take any action which may
be desirable or necessary in connection therewith, it may be necessary
that the Trustee appoint an additional individual or institution as a
separate or co-trustee. The following provisions of this Section are
adapted to these ends.
In the event that the Trustee appoints an additional
individual or institution as a separate or co-trustee, each and every
remedy, power, right, claim, demand, cause of action, immunity, estate,
title, interest and lien expressed or intended by the Indenture to be
exercised by or vested in or conveyed to the Trustee with respect thereto
shall be exercisable by and vest in such separate or co-trustee but only
to the extent necessary to enable such separate or co-trustee to exercise
such powers, rights and remedies, and every covenant and obligation
necessary to the exercise thereof by such separate or co- trustee shall
run to and be enforceable by either of them.
Should any instrument in writing from the Authority be
required by the separate or co-trustee so appointed by the Trustee
<PAGE> 162
116.
for more fully and certainly vesting in and confirming to it such
properties, rights, powers, trusts, duties and obligations, any and all
such instruments in writing shall, on request, be executed, acknowledged
and delivered by the Authority. In case any separate or co-trustee or a
successor to either shall die, become incapable of acting, resign or be
removed, all the estates, properties, rights, powers, trusts, duties and
obligations of such separate or co-trustee, so far as permitted by law,
shall vest in and be exercised by the Trustee until the appointment of a
new trustee or successor to such separate or co-trustee.
<PAGE> 163
117.
ARTICLE XII
EXECUTION OF INSTRUMENTS BY BONDOWNERS
AND PROOF OF OWNERSHIP OF BONDS
Section 12.01. Execution of Instruments; Proof of
Ownership of Bonds. Any request, direction, consent, or other instrument
in writing required or permitted by the Indenture to be signed or executed
by Bondowners may be in any number of concurrent instruments of similar
tenor and shall be signed or executed by such Bondowners in person or by
agent appointed by an instrument in writing. Proof of the execution of
any such instrument and of the ownership of Bonds shall be sufficient for
any purpose of the Indenture and shall be conclusive in favor of the
Trustee with regard to any action taken by it under such instrument if
made in the following manner:
(a) The fact and date of the execution by any
Person of any such instrument may be proved by the
certificate of any officer in any jurisdiction who, by
the laws thereof, has power to take acknowledgements
within such jurisdiction, to the effect that the Person
signing such instrument acknowledged before him or her
the execution thereof, or by an affidavit of a witness to
such execution.
(b) The ownership of Bonds shall be proved by
the Bond Register.
Nothing contained in this Article XII shall be construed
as limiting the Trustee to such proof, it being intended that the Trustee
may accept any other evidence of the matters herein stated which to it may
seem sufficient. Any request or consent of the owner of any Bond shall
bind every future owner of the same Bond, or any Bond issued in exchange
or substitution therefor, in respect of anything done by the Trustee in
pursuance of such request or consent.
<PAGE> 164
118.
ARTICLE XIII
INDENTURES SUPPLEMENTAL HERETO
Section 13.01. Supplemental Indentures not Requiring
Consent of Bondowners. Subject to the conditions and restrictions herein
contained, the Authority and the Trustee may, without the consent of or
notice to the Bondowners, enter into an indenture or indentures
supplemental hereto, for any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or
omission in the Indenture;
(b) To grant to or confer upon the Trustee for
the benefit of the Bondowners any additional rights,
remedies, power or authority that may lawfully be granted
to or conferred upon the Bondowners or the Trustee or
either of them;
(c) To subject to the provisions of the
Indenture additional revenues, properties or collateral;
(d) To modify, amend or supplement the
Indenture in such manner as to permit the qualification
of the Indenture under any federal statute now or
hereafter in effect or under any state Blue Sky Law, and,
in connection therewith, if they so determine, to add to
the Indenture, such other terms, conditions and
provisions as may be permitted or required by said
federal statute or Blue Sky Law;
(e) To modify, amend or supplement the
Indenture in such manner as to permit the qualification
of the Bonds for deposit with a Securities Depository,
and, in connection therewith, if they so determine, to
add to the Indenture, such other terms, conditions and
provisions as may be required to permit such
qualification; or
(f) To provide for any change in the Indenture
which is not prejudicial to the interests of the Trustee
or the Bondowners, including but not limited to any
change necessary to obtain or maintain a rating on the
Bonds from Moody's or S&P.
<PAGE> 165
119.
Section 13.02. Supplemental Indentures Requiring
Consent of Bondowners. Except as otherwise provided in Section 13.01, any
modification or amendment of the Indenture may be made only with the
consent of the owners of not less than two-thirds in aggregate principal
amount of the Bonds then outstanding and shall be set forth in a
Supplemental Indenture. No such modification or amendment shall be made
which will reduce the percentages of aggregate principal amount of Bonds,
the consent of the owners of which is required for any such modification
or amendment, or permit the creation by the Authority of any lien prior to
or on a parity with the lien of the Indenture upon the Company Note
Payments and other funds pledged hereunder, or which will affect the
times, amounts and currency of payment of the principal of and premium, if
any, and interest on the Bonds without the consent of the owners of all
Bonds then outstanding and affected thereby.
If at any time the Authority shall request the consent of
Bondowners to the execution of any such Supplemental Indenture for any of
the purposes of this Section, the Trustee shall, upon being satisfactorily
indemnified with respect to expenses, cause notice of the proposed
execution of such Supplemental Indenture to be given as shall be
reasonably requested by the Authority and in any event mailed to
Bondowners in the manner provided in Section 16.05. Such notice shall
briefly set forth the nature of the proposed Supplemental Indenture and
shall state that copies thereof are on file at the Corporate Trust Office
of the Trustee for inspection by all Bondowners. If, within 60 days or
such longer period as shall be prescribed by the Authority following the
mailing of such notice, the required consent and approval of Bondowners is
obtained, no owner of any Bond shall have any right to object to any of
the terms and provisions contained therein, or the operation thereof, or
in any manner to question the propriety of the execution thereof, or to
enjoin or restrain the Authority or the Trustee from executing the same or
restrain the Authority or the Trustee from taking any action pursuant to
the provisions thereof. Upon the execution of any such Supplemental
Indenture as in this Section permitted and provided, the Indenture shall
be and be deemed to be modified and amended in accordance therewith.
The Trustee shall consent to any such Supplemental
Indenture requiring the consent of Bondowners if the required consent of
Bondowners is obtained; provided that the Trustee may, but shall not be
obligated to consent to any Supplemental Indenture which affects its own
rights, powers, duties or obligations hereunder.
<PAGE> 166
120.
Section 13.03. Company and Bank Consent to Amendment of
Indenture. The Authority and the Trustee shall not enter into any
indenture supplemental to or amendatory of the Indenture without the prior
consent of the Company as evidenced by a certificate in writing signed by
an Authorized Company Representative and no such indenture supplemental to
or amendatory of the Indenture shall be or become effective until such
consent (as so evidenced) shall have been given by the Company. Prior to
the expiration of the Letter of Credit, the Trustee shall not enter into
any indenture supplemental to or amendatory of the Indenture without the
prior written consent of the Bank, which consent shall not be unreasonably
withheld.
<PAGE> 167
121.
ARTICLE XIV
DEFEASANCE
Section 14.01. Defeasance. 1. If at any time:
(a) there shall have been delivered to the
Trustee for cancellation all the Bonds (other than any
Bonds which have been mutilated, lost, stolen or
destroyed and which shall have been replaced or paid as
provided in the Indenture, except for any such Bonds as
are shown by proof satisfactory to the Trustee to be held
by bona fide owners), or
(b) with respect to all the Bonds not
theretofore delivered to the Trustee for cancellation,
the whole amount of the principal and the interest and
the premium, if any, due and payable on such Bonds then
outstanding shall be paid in accordance with the terms
thereof and the terms of the Indenture (including but not
limited to Section 6.03) or deemed to be paid as set
forth below,
and provision shall also be made for paying all other sums payable
hereunder, including the Authority's, Trustee's, Tender Agent's,
Remarketing Agent's, Indexing Agent's and Paying Agent's fees and
expenses, then the Trustee, in such case, on written demand of the
Authority or the Company, shall release the Indenture with respect to such
Bonds and turn over to the Company the Company Note and turn over to the
Bank the Letter of Credit, and shall execute such documents as may be
reasonably required by the Authority and the Company to evidence such
release. If the Bank certifies to the Trustee that any amount remains
unpaid under the Reimbursement Agreement, the Trustee shall pay to the
Bank any balances remaining in any fund created under the Indenture, other
than (i) moneys and Investment Obligations retained for the redemption or
payment of principal, interest or Purchase Price of Bonds which shall be
held under the Indenture for the benefit of the Owners and (ii) moneys
held in the Rebate Fund which shall be paid to the Company.
Notwithstanding the foregoing, the Trustee shall not release the Project
Fund or Rebate Fund or any funds therein to the Company until it shall
have received an Opinion of Bond Counsel to the effect that such funds may
be transferred to the Company without adversely affecting the exclusion of
interest on any series of Bonds from gross income for federal income tax
purposes; and all rights and immunities of the Trustee, including its
rights to indemnification and to payment of fees and expenses under the
Indenture or the Participation Agreement, shall survive the satisfaction
of the Indenture under this Article XIV.
<PAGE> 168
122.
2. After the date that the interest rate on the Bonds is
converted to a Fixed Rate, Bonds shall be deemed to be paid whenever there
shall have been deposited with the Trustee (whether upon or prior to the
maturity or the redemption date of such Bonds) either moneys in an amount
which shall be sufficient, or noncallable obligations, not subject to
prepayment, issued or guaranteed as to full and timely payment by the
United States of America (including any certificates or any other evidence
of an ownership interest in such obligations or in specified portions
thereof, which may consist of specified portions of the principal thereof
or the interest thereon and which certificates or other evidence of an
ownership interest must be rated by the Rating Agency then rating the
Bonds at least as high as the obligations issued or guaranteed by, or
backed by the full faith and credit of, the United States of America,
which obligations are held by a custodian in safekeeping on behalf of the
owners thereof) (such noncallable obligations, certificates and other
evidence are herein referred to as "Investment Obligations") of such
maturities and interest payment dates and bearing such interest as will,
without the necessity of further investment or reinvestment of either the
principal amount thereof or interest therefrom, provide moneys which shall
be sufficient, to pay when due the principal of and premium, if any, and
interest due and to become due on all such Bonds on and prior to the
redemption date or maturity date thereof, as the case may be, or a
combination of such moneys and Investment Obligations which shall be
sufficient for such purposes, and the Trustee shall have given notice to
the Registered Owners of such Bonds in the manner provided in Section
16.05 that a deposit meeting the requirements of this paragraph has been
made and stating such maturity or redemption date upon which moneys are to
be available for the payment of the principal or redemption price, if
applicable, on such Bonds; provided, however, that neither Investment
Obligations nor moneys deposited with the Trustee pursuant to this
paragraph nor principal or interest payments on any Investment Obligations
shall be withdrawn, or used for any purpose other than, and shall be held
in trust for, the payment of the principal of and premium, if any, and
interest on such Bonds.
3. Prior to the date that the interest rate on the Bonds
is converted to a Fixed Rate, Bonds shall be deemed to be paid whenever
(i) there shall have been deposited with the Trustee in the Bond Fund,
Available Moneys in an amount which shall be sufficient, without the
necessity of further investment or reinvestment of either the principal
amount thereof or interest therefrom, to pay when due the principal of,
premium, if any, and interest due and to become due on the Bonds (computed
at the maximum interest rate that may become applicable to the Bonds) on
and prior to the redemption date or maturity date thereof, as the case may
be, provided, however, if the Bonds are subject to
<PAGE> 169
123.
optional or mandatory tender for purchase prior to the redemption date or
maturity date thereof, as the case may be, such deposit also must be in an
amount which shall be sufficient, without the necessity of such further
investment or reinvestment, to pay when due the Purchase Price which may
become applicable to the Bonds prior to the redemption date or maturity
date, as the case may be, and (ii) any Rating Agency then rating the Bonds
shall have received both an opinion of a nationally recognized accounting
firm as to the sufficiency of the deposit in clause (i), without the
necessity of further investment or reinvestment, and an unqualified
opinion of counsel experienced in bankruptcy matters and satisfactory to
the Trustee and to Moody's, if the Bonds are then rated by Moody's, to the
effect that the application of such Available Moneys to the payment of
principal of, premium, if any, and interest on the Bonds would not result
in a preferential payment pursuant to the provisions of Section 547 of the
United States Bankruptcy Code, 11 U.S.C. Section Section 101, et seq.;
and, if the Bonds are to be redeemed the Trustee shall have given, or
shall have received, in form satisfactory to it, irrevocable instructions
to give, on a date in accordance with the provisions of Article VIII,
notice of redemption of the Bonds to Bondowners; provided, however, that
if the Trustee shall not have given notice of redemption to the Bondowners
because such notice is not yet due, then the Trustee shall give notice to
the Registered Owners of such Bonds in the manner provided in Section
16.05 that a deposit meeting the requirements of this paragraph has been
made and stating such maturity or redemption date upon which moneys are to
be available for the payment of principal or redemption price, if
applicable, on such Bonds. Moneys so deposited with the Trustee shall not
be withdrawn or used for any purpose other than, and shall be held in
trust for, the payment of the principal of, premium, if any, and interest
on, the Bonds or for the payment of the Purchase Price of Bonds or
authorized denominations thereof, in accordance with Section 2.05;
provided that such moneys, if not then needed for such purpose, shall, to
the extent practicable, upon written direction of the Company be invested
and reinvested in Investment Obligations maturing on or prior to the
earlier of (i) the date moneys may be required for the purchase of Bonds
pursuant to Section 2.05 or (ii) the date moneys may be required to pay
principal, premium, if any, or interest on the Bonds as evidenced by an
opinion of a nationally recognized accounting firm or such other evidence
as may be acceptable to the Trustee. Subject to the provisions of the
next succeeding sentence and the last sentence of Section 14.01.1, neither
the Company nor the Authority shall have any interest in, or ability to
withdraw amounts from, any moneys so deposited with the Trustee. Amounts
determined by the Trustee to be in excess of the amount necessary to pay
the principal of, premium, if any, and interest (computed at the maximum
interest rate that may become applicable to the Bonds on or prior to the
<PAGE> 170
124.
redemption date or maturity date, as applicable) on, the Bonds or the
Purchase Price thereof (computed at the maximum interest rate that may
become applicable to the Bonds on or prior to the redemption date or
Maturity Date, as applicable) pursuant to Section 2.05 shall, upon a
written direction of the Company, be paid over to the Company, as received
by the Trustee, free and clear of any trust, lien or pledge.
<PAGE> 171
125.
ARTICLE XV
REMARKETING AGENTS; REMARKETING OF BONDS; INDEXING AGENT;
TENDER AGENT
Section 15.01. Appointment and Duties of Remarketing
Agents. The Authority has appointed, with the approval of the Company,
Dillon, Read & Co. Inc. and Lehman Brothers Inc. as the initial
Remarketing Agents for the Bonds. Each Remarketing Agent shall designate
to the Trustee its principal office and signify its acceptance of the
duties and obligations imposed upon it hereunder by a written instrument
of acceptance delivered to the Authority, the Company and the Trustee
under which such Remarketing Agent will agree particularly to (i) perform
its obligations under Section 2.03 with respect to the determination of
the Weekly Rate, the Semi-Annual Rate, the Medium-Term Rate, the Money
Market Municipal Rate, and the Fixed Rate (ii) perform its obligations
under Section 2.06 with respect to any Bond delivered or deemed to have
been delivered to the Tender Agent for purchase pursuant to Section 2.05,
and (iii) keep books and records with respect to its activities hereunder
as shall be consistent with prudent industry practice and to make such
books and records available for inspection by the Authority, the Trustee,
the Company and the Bank at all reasonable times. Such acceptance shall
include a designation of one Remarketing Agent as the "Remarketing
Representative" who shall act on behalf of the other Remarketing Agent(s)
and the acceptance by each Remarketing Agent of the determinations of the
Remarketing Representative.
Each Remarketing Agent acts as an agent for the
purchasers of remarketed Bonds and not as an agent of the Authority or the
Company in connection with any moneys delivered to it for the purchase of
Bonds.
The Authority shall cooperate with the Trustee, the
Tender Agent and the Company to cause the necessary arrangements to be
made and to be thereafter continued whereby funds from the sources
specified herein and in the Participation Agreement will be made available
for the purchase of Bonds presented at the Corporate Trust Office of the
Tender Agent and whereby Bonds executed by the Authority and authenticated
by the Trustee shall be made available to the Tender Agent to the extent
necessary for delivery pursuant to Section 2.07.
Section 15.02. Qualifications of a Remarketing Agent.
Each Remarketing Agent shall be a commercial bank or member of the
National Association of Securities Dealers, Inc., having a capitalization
of at least $25,000,000 and authorization by law to perform all the duties
imposed upon it by the Indenture (provided
<PAGE> 172
126.
that to qualify as a successor Remarketing Agent, such successor, or the
parent corporation of such successor, shall be rated at least Baa-3 and/or
P-3 or an equivalent rating by Moody's or otherwise be acceptable to
Moody's and the Authority). Subject to the provisions of the next
succeeding paragraph, a Remarketing Agent may at any time resign and be
discharged of the duties and obligations created by the Indenture by
giving at least thirty (30) days' notice to the Authority, the Company and
the Trustee. A Remarketing Agent may be removed upon 30 days' notice,
upon written request of the Company, by an instrument, signed by the
Authority, filed with the Company, each Remarketing Agent (if more than
one), the Indexing Agent, the Bank, the Tender Agent and the Trustee.
In the event that a Remarketing Agent shall resign or be
removed, and the Authority shall not have appointed a successor as
Remarketing Agent and there are no other Remarketing Agents continuing to
serve hereunder, then the last such Remarketing Agent or Remarketing Agent
to resign or be removed notwithstanding the provisions of the first
paragraph of this Section 15.02, shall continue as the Remarketing Agent
solely for the purpose of determining the interest rate to be borne by the
Bonds until the appointment by the Authority of a successor Remarketing
Agent.
Section 15.03. Appointment and Duties of Indexing
Agents. The Authority shall, with the approval of the Company, appoint
the Indexing Agent for the Bonds, subject to the conditions set forth in
this Section. There may be separate Indexing Agents for the purpose of
calculating each of the interest indices set forth in Section 1.01. The
Indexing Agent shall designate to the Trustee its principal office and
signify its acceptance of the duties and obligations imposed upon it
hereunder by a written instrument of acceptance delivered to the
Authority, the Trustee, the Company and the Remarketing Agents under which
the Indexing Agent will agree, particularly:
(a) to compute the Weekly Rate Index, Semi-Annual
Rate Index, the Medium-Term Rate Index, the Money Market
Municipal Rate Index or the Fixed Rate Index, as the case may be,
pursuant to and in accordance with Section 2.03, and when the
Bonds bear interest at the related Rate, to give written notice
to the Trustee, the Remarketing Agents and the Company of such
index on the date of the computation thereof; and
(b) to keep such books and records as shall be
consistent with prudent industry practice and to make such books
and records available for inspection by the Authority, the
Trustee, the Remarketing Agents and the Company at all reasonable
times.
<PAGE> 173
127.
The Indexing Agent will perform the duties provided for
in Section 2.03. Whenever the Indexing Agent makes a computation under
that Section, it will promptly notify in writing the Trustee, the
Authority, the Remarketing Agents and the Company of the results and date
of computation. The Indexing Agent will keep adequate records pertaining
to the performance of its duties and allow the Trustee, the Authority, the
Remarketing Agents and the Company to inspect the records at reasonable
times.
Section 15.04. Qualifications of Indexing Agents. The
Indexing Agent shall be a commercial bank, a member of the National
Association of Securities Dealers, Inc. or a nationally recognized
municipal securities evaluation service authorized by law to perform all
the duties imposed upon it by the Indenture. The Indexing Agent may at
any time resign and be discharged of the duties and obligations created by
the Indenture by giving at least sixty (60) days' written notice to the
Authority, the Company, the Remarketing Agents and the Trustee. The
Indexing Agent may be removed at any time, at the written direction of the
Company, by an instrument, signed by the Authority, filed with the
Company, the Indexing Agent, the Remarketing Agents, the Trustee and the
Bank.
In the event that the Authority shall fail to appoint an
Indexing Agent hereunder or the Indexing Agent shall resign or be removed,
or be dissolved, or if the property or affairs of the Indexing Agent shall
be taken under the control of any state or federal court or administrative
body because of bankruptcy or insolvency, or for any other reason, and the
Authority shall not have appointed its successor as Indexing Agent, the
Remarketing Representative, notwithstanding the provisions of the first
paragraph of this Section 15.04, shall ipso facto be deemed to be the
Indexing Agent solely for the purpose of determining the interest rate to
be borne by the Bonds until the appointment by the Authority of the
Indexing Agent or successor Indexing Agent, as the case may be.
Section 15.05. Dealings With the Authority and the
Company. The Remarketing Agents and the Indexing Agent may in good faith
buy, sell, own, hold and deal in any of the Bonds issued hereunder, and
may join in any action which any Bondowner may be entitled to take with
like effect as if it did not act in any capacity hereunder. The
Remarketing Agents and the Indexing Agent, either as principal or agent,
may also engage in or be interested in any financial or other transaction
with the Authority or the Company, and may act as depository, trustee or
agent for any committee or body of Bondowners secured hereby or other
obligations of the Authority as freely as if it did not act in any
capacity hereunder.
<PAGE> 174
128.
Section 15.06. Tender Agent. The Authority shall, with
the approval of the Company and the Bank, appoint the Tender Agent for the
Bonds, subject to the conditions set forth in Section 15.07. The Tender
Agent shall designate its Corporate Trust Office and signify its
acceptance of the duties and obligations imposed upon it hereunder by a
written instrument of acceptance delivered to the Authority, the Trustee,
the Remarketing Agents, the Indexing Agent, the Bank and the Company under
which the Tender Agent will agree, particularly to perform its obligations
under Article II and to request the Trustee to draw on the Letter of
Credit as provided in Section 6.07.1. Notwithstanding anything to the
contrary in the Indenture, the Tender Agent shall not invest any moneys it
receives from such a draw on the Letter of Credit.
The Tender Agent may designate from time to time a
different Corporate Trust Office within The City of New York, New York, by
a written instrument delivered to the Authority, the Trustee, the
Remarketing Agents, the Indexing Agent, the Bank and the Company.
The Tender Agent undertakes to perform such duties, and
only such duties, as are specifically set forth in the Indenture and in
any written instrument of acceptance of duties hereunder and no implied
covenants shall be read into the Indenture against the Tender Agent.
Insofar as such provisions may be applicable, the Tender
Agent shall enjoy the same protective provisions in the performance of its
duties hereunder as are specified in Sections 11.03, 11.05, 11.06, 11.07
and 11.14 with respect to the Trustee.
Section 15.07. Qualifications of Tender Agent;
Resignation; Removal. Any successor Tender Agent shall be a bank or trust
company or a corporation duly organized under the laws of the United
States of America or any state or territory thereof, which has an office
in The City of New York, New York, and having a combined capital stock,
surplus and undivided profits of at least $100,000,000 and authorized by
law to perform all the duties imposed upon it by the Indenture. The
Tender Agent may at any time resign and be discharged of the duties and
obligations created by the Indenture by giving at least sixty (60) days'
notice to the Authority, the Trustee, the Remarketing Agents, the Indexing
Agent and the Company. The Tender Agent may be removed at any time, at
the request of the Company, by an instrument, signed by the Authority,
delivered to the Tender Agent, and to the Trustee, the Remarketing Agents,
the Bank and the Indexing Agent. Any such resignation or removal of the
Tender Agent shall not take effect until the appointment of a successor
Tender Agent.
<PAGE> 175
129.
In the event of the resignation or removal of the Tender
Agent, the Tender Agent shall pay over, assign and deliver any moneys and
Bonds held by it in such capacity to its successor (provided that to
qualify as a successor Tender Agent, such successor, or the parent
corporation of such successor, shall be rated at least Baa-3 and/or P-3 or
an equivalent rating by Moody's or otherwise be acceptable to Moody's and
the Authority) or, if there be no successor, to the Trustee.
In the event that the Tender Agent shall resign or be
removed, or be dissolved, or if the property or affairs of the Tender
Agent shall be taken under the control of the state or federal court or
administrative body because of bankruptcy or insolvency, or for any other
reason, a successor may be appointed by the Authority with the prior
written approval of the Bank and the Trustee. Any such successor shall
have an office in The City of New York, New York, and shall be acceptable
to the Trustee. Written notice of such appointment shall immediately be
given by the Company to the Trustee and the Remarketing Agents and the
Trustee shall cause written notice of such appointment to be given to the
owners of the Bonds. Any successor Tender Agent shall execute and deliver
an instrument accepting such appointment and thereupon such successor,
without any further act, deed or conveyance, shall become fully vested
with all rights, powers, duties and obligations of its predecessor, with
like effect as if originally named as Tender Agent, but such predecessor
shall nevertheless, on the written request of the Authority or the
Trustee, or of the successor, execute and deliver such instruments and do
such other things as may reasonably be required to more fully and
certainly vest and confirm in such successor all rights, powers, duties
and obligations of such predecessor. If no successor Tender Agent has
accepted appointment in the manner provided above within 90 days after the
Tender Agent has given notice of its resignation as provided above, the
Tender Agent may petition any court of competent jurisdiction for the
appointment of a temporary successor Tender Agent; provided that any
Tender Agent so appointed shall immediately and without further act be
superseded by a Tender Agent appointed by the Authority as provided above.
The Tender Agent shall not be required to take or be deemed to have notice
of any Event of Default or of any event which the lapse of time or giving
of notice, or both, would constitute an Event of Default unless an officer
in its Corporate Trust Office shall have received written notice thereof
from the Authority, the Bank or the Trustee.
<PAGE> 176
130.
ARTICLE XVI
MISCELLANEOUS
Section 16.01. Parties in Interest. Except as herein
otherwise specifically provided, nothing in the Indenture expressed or
implied is intended or shall be construed to confer upon any Person other
than the Company, the Authority, the Trustee, the Tender Agent, the Bank
and the owners of the Bonds hereunder, any right, remedy or claim under or
by reason of the Indenture, the Indenture being intended to be for the
sole and exclusive benefit of the Company, the Authority, the Trustee, the
Bank and the owners of the Bonds.
Section 16.02. Severability. In case any one or more
of the provisions of the Indenture or of the Bonds issued hereunder shall,
for any reason, be held to be illegal or invalid, such illegality or
invalidity shall not affect any other provisions of the Indenture or of
the Bonds, and the Indenture and the Bonds shall be construed and enforced
as if such illegal or invalid provisions had not been contained therein.
Section 16.03. No Individual Liability. No covenant or
agreement contained in the Bonds or in the Indenture shall be deemed to be
the covenant or agreement of any member, agent or employee of the
Authority in his or her individual capacity, and neither the members of
the Authority nor any official executing the Bonds shall be liable
personally on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof.
Section 16.04. Payment Due on Saturdays, Sundays and
Holidays. In any case where the date of maturity of interest on or
principal of the Bonds or the date fixed for redemption of any Bonds or
any Mandatory Purchase Date shall be on a day other than a Business Day,
then payment of interest or principal and premium, if any, or Purchase
Price, need not be made on such date but may be made (without additional
interest) on the next succeeding Business Day, with the same force and
effect as if made on the date of maturity or the date fixed for redemption
or the Mandatory Purchase Date.
Section 16.05. Notices. (a) All notices,
certificates, requests or other communications hereunder shall be
sufficiently given and shall be deemed given, unless otherwise required by
the Indenture, when mailed by first class mail, postage prepaid, addressed
as follows: If to the Authority, at Empire State Plaza, Agency Building
#2, Albany, New York 12223, Attention: President; if to the Company, at
175 East Old Country Road, Hicksville, New
<PAGE> 177
131.
York, Attention: Treasurer; if to the Trustee, at 450 West 33rd Street,
15th Floor, New York, New York 10001, Attention: Corporate Trustee
Administration Department; if to the Tender Agent, at 55 Water Street,
Room 234, North Building, New York, New York 10041, Attention: Corporate
Tellers; if to the Bank, at its address specified in the Reimbursement
Agreement; and, if to the Indexing Agent or Remarketing Agents, at the
address specified in their respective acceptances delivered pursuant to
Article XV. A duplicate copy of each notice, certificate, request or
other communication given hereunder to the Authority, the Company, the
Trustee, the Bank, the Indexing Agent, the Tender Agent or the Remarketing
Agents shall also be given to the Authority, the Company and the Trustee.
The Company, the Authority, the Trustee, the Bank, the Remarketing Agents
and the Indexing Agent may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates,
requests or other communications shall be sent. Any notice or other
communication to be mailed to Registered Owners of the Bonds hereunder
shall be mailed by first class mail in a sealed envelope, postage prepaid,
addressed to each such Bondowner as his or her address last appears on the
Bond Register. In case, by reason of the suspension of or irregularities
in regular mail service, it shall be impractical to mail notice to the
Registered Owners of Bonds of any event when such notice is required to be
given pursuant to any provision of the Indenture, then any manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
(b) So long as the Bonds shall be rated by Moody's, the
Trustee shall furnish to Moody's at 99 Church Street, New York, New York,
Attn: Structured Transactions Group or such other office as Moody's may
designate to the Trustee, and if the Bonds shall be rated by S&P, the
Trustee shall furnish to S&P, (i) a copy of each amendment to the
Indenture, Participation Agreement, Letter of Credit, and Reimbursement
Agreement of which it has knowledge, (ii) notice of the termination,
extension or expiration of any Letter of Credit, (iii) notice of the
payment of all the Bonds, (iv) notice of conversion to a Medium-Term Rate
Period of greater than three years duration or a Fixed Rate, and (v)
notice of any successor Trustee, Paying Agent, Tender Agent or Remarketing
Agents; provided, however, that failure by the Trustee to notify Moody's
or S&P shall not result in any liability on the part of the Trustee or
affect the validity of such documents or actions.
SECTION 16.06. GOVERNING LAW. THE LAW OF THE STATE OF
NEW YORK SHALL GOVERN THE CONSTRUCTION OF THE INDENTURE AND OF THE BONDS.
<PAGE> 178
132.
Section 16.07. Effective Date; Counterparts. The
Indenture shall become effective on delivery. The Indenture may be
executed in several counterparts, each of which shall be an original and
all of which shall constitute but one and the same instrument.
Section 16.08. References to the Bank. After the
establishment of a Fixed Rate for the Bonds and upon receipt by the
Trustee of notice from the Bank that all amounts payable to the Bank with
respect to draws under the Letter of Credit have been received, all
references in the Indenture to the Bank shall be ineffective.
Section 16.09. Date for Identification Purposes Only.
The date of the Indenture shall be for identification purposes only and
shall not be construed to imply that the Indenture was delivered as of any
date other than the actual date of the delivery hereof by the parties
hereto.
<PAGE> 179
IN WITNESS WHEREOF, the Authority has caused the
Indenture to be executed by its Chair and its corporate seal to be
hereunto affixed and attested by its Secretary, and the Trustee has caused
the Indenture to be executed by one of its Vice Presidents or Assistant
Vice Presidents and attested by one of its authorized officers or persons,
all as of the date first above written.
NEW YORK STATE ENERGY
RESEARCH AND DEVELOPMENT
AUTHORITY
By /s/ Francis J. Murray, Jr.
--------------------------
Chair
(SEAL)
Attest:
/s/ Howard A. Jack
- -------------------
Secretary
CHEMICAL BANK
AS TRUSTEE
By /s/ Glenn Booth
------------------------
ASSISTANT VICE PRESIDENT
(SEAL)
Attest:
/s/ L. O'Brien
- -----------------------
ASSISTANT SECRETARY
<PAGE> 180
STATE OF NEW YORK )
: ss.:
COUNTY OF ALBANY )
On the 9th day of November, 1993, before me personally
came Francis J. Murray, Jr., to me known, who being by me duly sworn, did
depose and say that he is Chair of New York State Energy Research and
Development Authority, the Authority described in and which executed the above
instrument and that he signed his name thereto by authority of the members of
said Authority.
/s/ Jacquelyn L. Jerry
----------------------
Notary Public
Jacquelyn L. Jerry
Notary Public, State of New York
No. 4953824
Qualified in Albany County
Commission Expires July 31, 1995
STATE OF NEW YORK )
: ss.:
COUNTY OF ALBANY )
On the 9th day of November, 1993, before me personally came
Howard A. Jack, to me known, who being by me duly sworn, did depose and say
that he is Secretary of New York State Energy Research and Development
Authority, the Authority described in and which executed the above instrument;
that he knows the seal of said Authority, the Authority described in and which
executed the above instrument; that he knows the seal of said Authority; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the members of said Authority, and that he signed his
name thereto by like authority.
/s/ Jacquelyn L. Jerry
----------------------
Notary Public
Jacquelyn L. Jerry
Notary Public, State of New York
No. 4953824
Qualified in Albany County
Commission Expires July 31, 1995
<PAGE> 181
135.
STATE OF NEW YORK )
: ss.:
CITY OF NEW YORK )
On the 17th day of November, 1993 before me personally came
Glenn Booth and L. O'Brien, to me known, who, being by me duly sworn, did
depose and say that they are a(n) Assistant Vice President and a(n) Assistant
Secretary, respectively, of Chemical Bank, the Trustee, described in and which
executed the above instrument; that they know the seal of said Trustee; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Corporate Trust Committee of the Board of Directors
of said Trustee, and that they signed their names thereto by like authority.
/s/ Annabelle DeLuca
--------------------
Notary Public
ANNABELLE DELUCA
Notary Public, State of New York
No. 01DE5013759
Qualified in Kings County
Certificate Filed in New York County
Commission Expires July 15, 1995
<PAGE> 182
EXHIBIT A
[Intentionally Omitted]
<PAGE> 183
EXHIBIT B
NOTICE OF ELECTION TO RETAIN BOND*
FOLLOWING A MANDATORY PURCHASE DATE
[Name and Address
of Tender Agent]
Attention: Bond Tender Unit
Gentlemen:
This notice is being sent to you in your capacity as Tender
Agent under the Indenture of Trust (the "Indenture"), dated as of November 1,
1993, between New York State Energy Research and Development Authority (the
"Authority") and Chemical Bank as Trustee (the "Trustee"), relating to the
Authority's $__________ aggregate principal amount Electric Facilities Revenue
Bonds (Long Island Lighting Company Project), 1993 Series B (the "Bonds"). You
are hereby notified that:
1. The undersigned is the owner of Bond No.(s)
_______________ outstanding under the Indenture in the principal amount(s)
of $__________.
2. The undersigned's address is ________________
______________________.
3. The undersigned has received a notice from the
Trustee that the Bonds are required to be tendered on the Mandatory Purchase
Date for purchase on the Mandatory Purchase Date as a result of the matters
discussed in such notices.
4. The undersigned elects to retain Bond No.(s)
____________ in the principal amount(s) of $_____________ (or any portion
thereof in an authorized denomination) and will not tender such Bond(s) (or
portion thereof as aforesaid) on the Mandatory Purchase Date (or prior thereto)
for purchase pursuant to Section 2.05(e)(4) of the Indenture.
5. The undersigned agrees to surrender such Bond(s) to
be retained by the undersigned to [Name of Trustee], as Trustee, on the
Mandatory Purchase Date in exchange for a replacement Bond or
- ----------------------------------
*Note: Owners of Bonds may not elect to retain (i) if the Bonds
currently bear interest at a Money Market Municipal Rate and (ii) unless the
Bonds continue to be secured by a Letter of Credit after the Mandatory Purchase
Date or have been converted to a Fixed Rate, as more particularly set forth in
Section 2.05(e) of the Indenture.
<PAGE> 184
Bonds bearing the appropriate legend and in the following denomination(s):
______________________.
6. The undersigned acknowledges that this notice of
election is irrevocable and that the events specified in the notice from
the Trustee referred to in Paragraph 3 above are to occur.
7. The undersigned acknowledges that the rating
assigned by Moody's or S&P, if any, to the Bonds may be lowered or
withdrawn as a result of the matters described in the notice from the
Trustee referred to in Paragraph 3 above.
8. All capitalized terms not otherwise defined
herein shall have the meaning given to such terms in the Indenture.
<TABLE>
<S> <C>
Dated:
----------, ----
----------------------- ------------------------------
Witness Name of owner as it is written
on the face of the above-identified
Bonds, in every particular without
alteration, enlargement or
any change whatsoever.
</TABLE>
B-2
<PAGE> 185
EXHIBIT C
REQUISITION CERTIFICATE
Long Island Lighting Company (the "Company") hereby requests
Chemical Bank, as Trustee, under the Indenture of Trust relating to New
York State Energy Research and Development Authority's (the "Authority")
Electric Facilities Revenue Bonds (Long Island Lighting Company Project), 1993
Series B dated as of November 1, 1993 (the "Indenture"), to withdraw
$___________ from the Construction Account in the Project Fund established
under the Indenture for purposes permitted by Section 5.03 thereof. In
connection with this withdrawal, the Company states as follows:
1. This requisition relates to the Bond Proceeds
Sub-Account of the separate account in the Project Fund relating to the Project
(as defined in the Indenture).
2. The number of this requisition is No. _____.
3. Payments aggregating $____________ are due to the
following persons in the following amounts for expenditures incurred in
connection with the Project:
Person Amount Item
------ ------ ----
4. Payment is due to the Company in the total
amount of $____________ in reimbursement for amounts paid by the Company
in connection with the Project as shown on the Schedule attached hereto.
Deposit such payment by wire transfer to the ___________________________
_____________________________________________________.
5. Each amount referred to in paragraphs 3 and 4
hereof will be used to pay, or reimburse the Company for, a Cost of
Construction of such Project and is a proper charge against the separate
account for such Project in the Project Fund.
6. None of the items for which the disbursement is
requested has formed the basis for any disbursement heretofore made from
the Project Fund.
7. The disbursement will not be used in a manner
that would result in a violation of any representation, warranty or
<PAGE> 186
covenant contained in Section 5.04 of the Participation Agreement or in
the Tax Regulatory Agreement.
8. No "event of default" as defined in the
Participation Agreement has occurred and is continuing and no event which
with the lapse of time alone would become such a default has occurred and
is continuing.
9. No "event of default" as defined in the
Indenture has occurred and is continuing and no event which with the lapse
of time alone would become such a default has occurred and is continuing.
Capitalized terms used in this requisition are used as
defined in the Indenture.
I am an Authorized Company Representative.
LONG ISLAND LIGHTING COMPANY
By:
--------------------------
Name:
Title:
C-2
<PAGE> 187
C-3
<PAGE> 1
Exhibit 10(w)
SUPPLEMENTAL DEATH AND RETIREMENT BENEFITS PLAN
OF LONG ISLAND LIGHTING COMPANY
As Amended and Restated Effective January 1, 1993
<PAGE> 2
ARTICLE I
PURPOSE OF PLAN
This Supplemental Death and Retirement Benefits Plan of Long
Island Lighting Company (The "Plan") provides death benefits
and unfunded retirement benefits for Officers and other
Principal Executives of LILCO who are subject to
disproportionate amounts of income tax as a result of
protecting their Beneficiaries during their active employment.
This plan also mitigates the more severe cost of living erosion
such executives experience after retirement. The Company
believes that this additional compensation will make LILCO's
Executive Compensation Program sufficiently competitive so that
the Company will continue to attract, retain, and motivate
highly qualified executives.
ARTICLE II
DEFINITIONS
Wherever used in the Plan, the masculine pronoun shall be
deemed to include the feminine. Words used in the singular or
plural shall be construed as if plural or singular,
respectively, where they would so apply.
* * * * * * * * * * * *
Wherever used herein:
2.1 "Beneficiary" means the person or persons (including the
Participant's spouse) whom the Participant designated to
receive the benefits payable under the Plan. For the
retirement benefits provided under Section 5.5, each
Participant must name the Beneficiary on a form furnished by
and filed with the Plan Administrator. Each Participant may
change the Beneficiary by filing with the Plan Administrator
written notice to that effect on a form furnished by the Plan
Administrator. The change will take effect when the Plan
Administrator receives notice. For the death benefits provided
under Article V, the Beneficiary means the person or persons
whom the Participant designated in the manner prescribed by the
insurer or in the manner described in Section 5.3 or 5.4. With
respect to both retirement and death benefits, if no
Beneficiary is selected, payment will be made to the
Participant's estate.
-2-
<PAGE> 3
2.2 "Company" or "LILCO" means Long Island Lighting Company, a New
York Corporation.
2.3 "Compensation" means the Participant's highest annual rate of
base pay in effect at any time.
2.4 "Effective Date" means April 1, 1981.
2.5 "Executive Officer" means the Chief Executive Officer and
the President of the Company. Each Executive Officer will have
five Units of Compensation.
2.6 "Disability Leave Plan" means the Disability Leave
Plan of Long Island Lighting Company in effect as of January 1,
1993.
2.7 "Long Term Disability Plan" means the Long Term Disability Plan
for Management and Management Support Employees of Long Island
Lighting Company in effect as of January 1, 1993.
2.8 "Normal Retirement Date" means the first day of the month
nearest the Participant's 65th birthday.
2.9 "Officer" means an employee who, on or after January 1, 1993,
is either (a) a Company Officer, or (b) an Assistant Vice
President. Each Officer will have three Units of Compensation.
2.10 "Participant" means an Executive Officer, an Officer, or a
Principal Executive during the period of his eligibility in the
Plan.
2.11 "Plan" means the plan set forth herein, known as the
"Supplemental Death And Retirement Benefits Plan of Long Island
Lighting Company," as it may be amended from time to time.
2.12 "Plan Administrator" means an appointed or duly elected
Officer of the Company designated by the Board of Directors.
2.13 "Principal Executive" means an employee of the Company who
meets the conditions set forth in (a) or (b) below and has been
provided with notice of his status as a Participant in the
Plan.
(a) Before the date on which any designations are made in
accordance with the provisions of section 2.13(b), an
employee who was a
-3-
<PAGE> 4
Principal Executive between April 1, 1981 and November
30, 1986.
Principal Executives satisfying this condition will
have two Units of Compensation for calculating Death
Benefits under Article V and three Units of
Compensation for calculating Retirement Benefits under
Section 5.5(2).
(b) Subsequent to December 31, 1992, an employee who has
been designated by the Board of Directors to be a
Principal Executive for purposes of the Plan.
Principal Executives satisfying this condition will
have two Units of Compensation.
2.14 "Years of Participation" means the period measured in years and
months from the date the Participant is included in the Plan
until the Participant's status in the Plan is terminated.
Years of Participation include periods during which the
employee would have been in active employment with LILCO as a
Participant except if the Participant was on a leave of absence
from active employment authorized solely by LILCO.
2.15 "Years of Employment" means the sum of the period or periods,
measured in years and months, whether or not continuous, that
the Participant worked at LILCO.
2.16 "Unit of Compensation" means the Participant's Compensation.
ARTICLE III
ELIGIBILITY
3.1 Executive Officers and Officers are eligible to participate in
the Plan and continue to participate in the Plan during the
period of their employment either as an Executive Officer or as
an Officer.
3.2 Employees who were Principal Executives as defined in Section
2.13(a) between April 1, 1981 and November 30, 1986 are
eligible to participate in the Plan during the period of their
employment.
3.3 An employee who has been designated by the Board of Directors
to be a Principal Executive is eligible to participate in the
Plan and will continue to participate in the Plan only during
the period fixed by
-4-
<PAGE> 5
the Board of Directors at the time of designation as a
Principal Executive or for such longer period as the Board of
Directors shall subsequently determine.
ARTICLE IV
VESTING
A Participant who has reached the earlier of (1) age 60 and 10
years of service or (2) his or her Normal Retirement Date will
be vested in the benefits described herein. A nonvested
Participant whose employment is terminated is not entitled to
any benefits under this Plan.
ARTICLE V
BENEFITS UNDER THE PLAN
5.1 Pre-retirement Death Benefit
Upon the death of a Participant before retirement, the
Participant's Beneficiary will be entitled to receive a lump
sum in an amount equal to the product, rounded up to the
nearest $1,000 of (1) the Participant's Unit of Compensation
and (2) the multiple indicated below:
(a) if the Participant is an Executive Officer, five,
(b) if the Participant is an Officer, three.
(c) if the Participant is a Principal Executive, two.
5.2 Insured Death Benefit
If the Company chooses to enter into an insurance contract or
contracts in order to provide the death benefits described in
the Plan, the Participant must apply for insurance. In order
to obtain coverage under the Plan, the Participant must comply
with the necessary administrative requirements of the insurance
company. If the Participant applies for insurance but is found
to be ineligible by the insurance company, the Participant will
be covered under the Plan on an uninsured basis and will
receive from the Company the dollar amount of death benefit
described in Section
-5-
<PAGE> 6
5.1. If, for any reason, the insurer after issuing a policy
should successfully contest the Participant's right to receive
insurance proceeds in an amount equal to the death benefit
described in Section 5.1, the Participant will receive from
LILCO the difference between the amount, if any, the insurer
paid and the dollar amount of death benefit described in
Section 5.1.
If LILCO enters into an insurance contract or contracts in
order to provide the death benefits described in the Plan, the
Participant will not be eligible to receive any annuity payment
pursuant to section 5.5 of the Plan until the insurance policy
is terminated or the Participant has designated LILCO as
Beneficiary of the policy. To the extent that the terms of the
insurance policy permit assignment of the right to designate
the Beneficiary, the Participant will be permitted to assign
such right. However, if the Participant does not reserve the
right to redesignate the Company as the Beneficiary of the
policy, the Participant will not have the right to receive an
annuity under Section 5.5 of the Plan. No portion of any
uninsured death benefit is subject to assignment or
anticipation.
5.3 Pre-retirement Insured Death Benefit
To the extent an insurance policy funds the death benefits and
the Participant designates a Beneficiary to receive the
proceeds payable under the policy, the payment terms under the
insurance contract the Participant has elected will control in
the event of the Participant's death.
5.4 Pre-retirement Uninsured Death Benefit
Any pre-retirement death benefit not payable by an insurer at
the direction of the insured shall only be a general LILCO
obligation. A Participant eligible for insurance protection
under an insurance policy maintained by LILCO may elect to name
LILCO as the Beneficiary under the policy. In that event, the
death benefit will be deemed uninsured and payment of the
amount described in Section 5.1 will only be a general LILCO
obligation and the Participant will have no rights in any
insurance policy maintained by LILCO on the Participant's life.
LILCO will pay any actual or deemed uninsured death benefit to
the Beneficiary designated in writing on the form furnished by
and filed with the Plan Administrator. If no Beneficiary
-6-
<PAGE> 7
is selected, payment will be made to the Participant's estate.
For a discussion of the federal income tax consequences if
LILCO is designated as the Beneficiary, see Article XIII.
If a Participant has not designated a Beneficiary for any
increased amount of death benefit payable after January 1,
1993, payment will be made to the same Beneficiary whom the
Participant designated under the existing group term life
insurance contract in the same proportions as the proceeds
payable to each Beneficiary under that insurance contract.
5.5 Post-Retirement Benefit
Not later than December 31 in the year preceding the
Participant's Normal Retirement Date, the Participant must make
an election for each Unit of Compensation, up to a total of
five units for an Executive Officer; up to a total of three
units for an Officer; and up to a total of two units for a
Principal Executive, except for those who were Principal
Executives in the Plan between April 1, 1981 and November 30,
1986 who are entitled to two Units of Compensation if they
elect the death benefits under subsection (1) hereof, or three
Units of Compensation if they elect the retirement benefits
under subsection (2) hereof. The election will be to have
either:
(1) the Company continue to pay (to the Participant, or at
his election, to the insurer) an amount equal to the
premiums due under the life insurance policy on the
Participant's life described in Section 5.1 (or, if
payment of the Participant's death benefit is an
obligation of LILCO and not the insurer, have the
Company continue to provide the amount of death
benefit to which the Participant is entitled under
Section 5.1), or
(2) the Company pay a retirement benefit, in the form
described below in subparagraph (a) or a combination
of (a) and (b):
(a) A basic supplemental retirement benefit
payable monthly for 180 months certain,
beginning on the first day of the month
following the date of retirement, equal to
five percent of each Unit of Compensation.
The Participant's election under this option
may provide for the benefit to be received in
one of several different equivalent actuarial
-7-
<PAGE> 8
forms that are set forth in the Appendix to
this Plan.
(b) A lump sum amount payable on the first day of
the month following the date of retirement
equal to no more than 50 percent of the
present value of the basic supplemental
retirement benefit that would otherwise be
payable under (a) above.
If the Participant elects a combination of (a) and (b), the
annuity described in option (a) will be reduced so that its
present value is equal to the present value of the annuity
initially described in (a) reduced by the amount paid pursuant
to option (b).
If a Participant does not make an election pursuant to this
section, the form of the pre-retirement death benefit
previously in effect will be continued.
5.6 Earliest Pension Commencement Date
Notwithstanding any other provision of this Plan, the earliest
date that monthly retirement payments may commence or that the
lump sum amount may be paid to any Participant as described
under Section 5.5(2)(a) and (2)(b), respectively, will be the
first day of the first month coincident with or next following
the fifth anniversary of the Participant's date of entry into
the Plan, with that date being the Participant's "Earliest
Pension Commencement Date." A vested Participant who retires
before his Earliest Pension Commencement Date will receive at
the Earliest Pension Commencement Date the benefit to which he
was entitled at his Normal Retirement Date.
If a Participant should die during the period beginning with
the date of actual retirement and ending on his Earliest
Pension Commencement Date, the Participant will be deemed to
have retired on the day before his date of death and to have
commenced receipt of the pension benefit, if any, which he
elected to receive.
5.7 Late Retirement
If the Participant continues his employment with the Company
beyond his Normal Retirement Date, the Participant may change
the election he previously made pursuant to Section 5.5,
provided any such changed election is made no later than
December 31 in the year preceding his actual retirement.
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<PAGE> 9
5.8 Early Retirement
A Participant may retire before his Normal Retirement Date on
the first day of any month coincident with or next following
the date on which he has both attained age 60 and completed 10
years of employment. Upon such early retirement, the death
benefit or post-retirement annuity or any combination thereof
will be reduced. The amount of the reduced death benefit or
reduced post-retirement annuity or any combination thereof
shall be equal to the product of (1) and (2) where (1) is equal
to the ratio of the Participant's Years of Participation at his
early retirement date to the Years of Participation the
Participant would have had at his Normal Retirement Date if his
participation had continued until that date and (2) is equal to
the amount determined under the option the Participant elected
under Section 5.5 as though the Participant's early retirement
date were his Normal Retirement Date. The Participant must
make the Section 5.5 elections not later than December 31 in
the year preceding retirement.
5.9 Disability
If a Participant becomes disabled as determined under either
the Disability Leave Plan or the Long Term Disability Plan, the
Participant will be considered disabled under this Plan. A
disabled Participant will continue to be a Participant in this
Plan during the period of disability for purposes of vesting
and Plan participation until the Earliest Pension Commencement
Date, as referred to in Section 5.6, at which time the
Participant will be deemed to have retired for purposes of this
Plan.
ARTICLE VI
ADMINISTRATION
6.1 Plan Administrator and Powers
The Plan Administrator shall administer this Plan. On all
matters and questions of interpreting or administering the
Plan, the decisions of the Plan Administrator shall govern and
control and shall be conclusive and binding on the persons at
any time having or claiming to have any interest whatsoever
under this Plan. For example, the Plan Administrator will
establish the factors, methods and assumptions
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<PAGE> 10
utilized to determine the actuarial equivalent value of any
benefit under this Plan or he may provide for additional times
at which benefit elections under this Plan may be made. The
Plan Administrator may employ attorneys, accountants, actuaries
and other consultants or advisors to render advice to or
otherwise to assist him in carrying out his responsibilities
under the Plan including participation in the Claims Review
Procedure.
ARTICLE VII
CLAIMS REVIEW PROCEDURE
Any Participant, former Participant, or Beneficiary of either,
who has been denied a benefit by a decision of the Plan
Administrator may request that the Plan Administrator give
further consideration to his claim by filing with the Plan
Administrator a request for a hearing. That request, together
with a written statement of the reasons why the claimant
believes his claim should be allowed, must be filed with the
Plan Administrator no later than 60 days after the claimant
receives written notice that his initial claim in whole or in
part was denied.
Upon receiving a request for review, the Plan Administrator
will conduct a hearing within the next 60 days, at which the
claimant may be present and may be represented by an attorney
or other representative of his choosing. At the hearing, the
claimant will have the opportunity to submit written and oral
evidence and arguments in support of his claim. At the hearing
(or before the hearing date upon five business days' written
notice to the Plan Administrator), the claimant or his
representative will be given the opportunity to review all
documents in the Plan Administrator's possession that relate to
the claim and its disallowance.
Either the claimant or the Plan Administrator may cause a court
reporter to attend the hearing and record the proceedings. In
such event, the reporter will furnish both parties with a
complete written transcript of the proceedings. The full
expense of any such reporter and transcript will be borne by
the party causing the reporter to attend the hearing.
The Plan Administrator will make the final decision as to the
allowance of the claim within 60 days of receiving the appeal
(unless there has been an extension of up to 60 days due to
special
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<PAGE> 11
circumstances, provided the delay and the circumstances
occasioning it are communicated to the claimant within the
60-day period). Such communication must be written in a manner
calculated to be understood by the claimant and must include
specific reasons for the decision and specific references to
the Plan provisions on which the decision is based.
ARTICLE VIII
EFFECT OF DESIGNATION OF LILCO AS BENEFICIARY
In general, to the extent that any death benefit is not funded
by an insurance policy or is paid under a policy pursuant to
which LILCO has been designated as the Beneficiary of the
proceeds, the premium payments made on the policy will not be
includable in the Participant's income for federal income tax
purposes. However, the death benefits payable under the policy
will be subject to federal income tax.
On the other hand, to the extent that any death benefit is
funded by an insurance policy and the Participant designates a
Beneficiary other than LILCO, the premiums paid by LILCO will
be included in the Participant's income for federal income tax
purposes. However, the death benefits payable under the policy
will not be subject to federal income tax.
This is not intended to be general tax advice but merely to
inform Participants regarding the effect of exercising the
option now available to designate LILCO as a Beneficiary under
the policy. In making the determination as to the appropriate
Beneficiary designation, the Participant should consider all
the aspects of his family financial planning objectives.
ARTICLE IX
MISCELLANEOUS
Payment of premiums, death benefits not payable by the insurer,
and annuity benefits under this Plan will be paid out of the
Company's general assets. A trust currently exists to
accumulate the funds necessary to pay the benefits under the
Plan. The Company may, from time to time, establish an
additional trust for this purpose. The Participant's right to
receive benefits under the Plan will be no greater than the
right of any unsecured general creditor, and no amount payable
by
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<PAGE> 12
the Company under this Plan, in whole or in part, will be
subject in any manner to anticipation, alienation, or
assignment by the Participant or the Participant's Beneficiary.
Nothing in this Plan may be construed as a contract of
employment between the Company and the Participant nor may any
provision of the Plan interfere with the right of the Company
to discharge any employee.
ARTICLE X
AMENDMENT OR TERMINATION
The Company intends to continue the Plan indefinitely.
Nevertheless, in order to protect against unforeseen
conditions, the Company reserves the right at any time and from
time to time, by resolution of its Board of Directors, to amend
or terminate this Plan, provided, however, that no such
amendment or termination adversely affects the vested benefit
that had accrued to any Participant or Beneficiary before the
date that the Plan was amended or terminated.
-12-
<PAGE> 13
APPENDIX 1
OPTIONAL FORMS OF BENEFIT
A.1 Form of Monthly Retirement Income Payments
A Participant who elects to receive all or a portion of his
benefits in the form of a monthly retirement income payment
under Section 5.5(2)(a) may further elect to receive that
income payment in one of the following optional forms of
monthly payment, which, in each case, is determined by
multiplying the basic supplemental retirement benefit described
in the first sentence of Section 5.5(2)(a) by the applicable
conversion factor.
(1) An increasing rate of payment for 180 months certain
with the amount of payment for each of the first 12
months being equal to 78.95% of the amount that would
otherwise be payable and with the rate of monthly
payments for each subsequent 12 months increased by
4%, compounded annually. During the 15th year, the
last year of payments under the option, the rate of
monthly payment will be $1.73 for each $1.00 of
monthly payments in the first year.
(2) A reduced annuity for the lifetime of the Participant,
with 180 months certain where each such monthly
payment will be determined by reference to the
applicable conversion factor.
(3) A 50% joint and survivor annuity under which the
monthly payment for the lifetime of the Participant
will be determined by reference to the applicable
conversion factor and, upon the Participant's death,
continued for the lifetime of the Participant's
beneficiary at 50% of the monthly payment that has
been made by the Participant. This option has no
certain period.
(4) A combination of Options (1) and (2) above under which
payments will be made for the lifetime of the
Participant for 180 monthly certain payments. The
amount of payment for each of the first twelve months
will be determined by reference to the applicable
conversion factor with the rate of monthly payment for
each subsequent twelve months increasing by 4%,
compounded annually for the remainder of the
Participant's lifetime.
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<PAGE> 14
(5) A combination of Options (1) and (3) as described
above with the amount of payment for each of the first
twelve months being determined by reference to the
applicable conversion factor with the rate of monthly
payment for each subsequent twelve months increased by
4% compounded annually for the remainder of the
Participant's lifetime and, upon the Participant's
death, continued for the lifetime of the Participant's
Beneficiary at 50% of the monthly payment that had
been made to the Participant. This option has no
certain period.
(6) A 100% joint and survivor annuity under which each
monthly payment during the lifetime of the Participant
will be determined by reference to the applicable
conversion factor and, upon the Participant's death,
continued for the lifetime of the Participant's
Beneficiary at 100% of the monthly payment that had
been made to the Participant. This option has no
certain period.
A.2 Election Period
If a Participant elects to receive the post-retirement benefit
described in Section 5.5 and the form of monthly income payments
as described in Section A.1 of this Appendix, the Participant
must make the election in the time prescribed in Sections 5.5,
5.7 or 5.8, whichever is applicable.
If circumstances preclude the Participant from making an
election before January 1 of the year in which the date of
retirement falls, this requirement may be waived in the sole
discretion of the Plan Administrator.
A.3 Manner of Election
All elections must be made in writing on forms provided by the
Plan Administrator.
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<PAGE> 1
LONG ISLAND LIGHTING COMPANY
EXECUTIVE EMPLOYMENT AGREEMENT
FOURTH AMENDMENT, dated as of December 31, 1993 (herein sometimes
called the "Amendment") to that certain Executive Employment Contract dated the
20th day of March 1987, between Long Island Lighting Company (the "Company")
and William J. Catacosinos (the "Executive"), such Executive Employment
Contract being hereinafter referred to as the "Contract."
WHEREAS, the Board of Directors of the Company (the "Board") on
December 15, 1993, determined that it is desirable to extend the term of the
Contract so that the objectives intended to be achieved thereby will continue
to be provided.
NOW, THEREFORE, for good and valuable consideration, the Company and
the Executive agree as follows:
1. Paragraph 9 of the Contract is hereby amended by deleting
therefrom the date "December 31, 1993" and inserting in its place the date
"December 31, 1994."
2. On and after the date hereof, each reference in the Contract
to "this Agreement," "hereto" or words of like import referring to the Contract
shall mean and be a reference to the Contract as amended hereby.
3. Except as specifically amended above, the Contract is and
shall continue to be in full force and effect and is in all respects ratified
and confirmed.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment.
LONG ISLAND LIGHTING COMPANY
By /s/ Kathleen A. Marion
----------------------------
KATHLEEN A. MARION
Secretary
Executive:
/s/ W. J. Catacosinos
----------------------------
WILLIAM J. CATACOSINOS
<PAGE> 1
LONG ISLAND LIGHTING COMPANY
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT between Long Island Lighting Company, a New York corporation
(the "Company"), and Theodore A. Babcock (the "Executive"),
WHEREAS, the Board of Directors of the Company (the "Board") believes
that, in the event of a threat or occurrence of a bid to acquire or change
control of the Company or to effect a business combination, it is in the best
interest of the Company and its present and future shareholders that the
business of the Company be continued with a minimum of disruption, and that
such objective will be achieved if its key executives are given reasonable
assurances of employment security so they will not be distracted by personal
uncertainties and risks created during such period; and
WHEREAS, the Company believes the giving of such assurances will (a)
secure the continued services of its key executives in the performance of both
their regular duties and such extra duties as may be required of them during
such period of uncertainty, (b) enable the Company to rely on such executives
to manage its affairs during any such period with less concern for their
personal risks, and (c) enhance the Company's ability to attract new key
executives as needed; and
<PAGE> 2
WHEREAS, the Compensation Committee of the Board has recommended, and
the Board has approved, entering into agreements with key executives of the
Company in order to achieve the foregoing objectives; and
WHEREAS, the Executive is a key executive of the Company;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Employment. This Agreement provides the Executive with
certain rights in the event of a Change in Control. The Company agrees that if
Executive is in the employ of the Company on the date on which a Change in
Control occurs (the "Change in Control Date") and, within three years after the
Change in Control Date, Executive's employment is terminated for any reason,
including but not limited to voluntary resignation of the Executive, then
Executive shall be entitled to receive the benefits enumerated in Paragraph 2.
For the purposes of this Agreement, a "Change in Control" shall be deemed to
have taken place if: (a) LILCO merges with, or consolidates into another
person or entity; (b) all or a substantial portion of the assets of LILCO are
transferred to another person or entity unless the sale is approved by a
majority of the Continuing Directors; (c) any person or group of persons (as
defined in Rule 13d-5 of the Securities and Exchange Act of 1934), together
with its affiliates, is or becomes the beneficial owner (as defined in Rule
13d-3 of the Securities and Exchange Act of 1934), directly
- 2 -
<PAGE> 3
or indirectly, of securities of the Company (including securities convertible
at the option of the holder into securities of the Company ordinarily having
the right to vote in election of directors) which together represent, or would
together represent after giving effect to such conversion, in excess of 40
percent of the combined voting power of the Company's outstanding securities
ordinarily having the right to vote in election of directors; (d) a liquidator,
trustee or other similar person is appointed for all or substantially all of
the assets of the Company; or (e) Continuing Directors no longer constitute at
least a majority of the Company's Board. For the purposes of this agreement,
"Continuing Director" means any individual who is a member of the Company's
Board on March 15, 1987, or is designated (before such person's initial
election as a director) as a Continuing Director by a majority of the then
remaining Continuing Directors.
2. Termination Benefits. In the event of Executive's
termination of employment for any reason, including but not limited to
voluntary resignation of the Executive, within three years following a Change
in Control Date, Executive shall be entitled to the following termination
benefits:
(a) The Executive shall receive severance pay equal to
the greater of (i) one year's salary at the Executive's annual compensation
rate in effect on the date of such termination or the Change in Control Date,
whichever is greater, or (ii) the
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<PAGE> 4
total compensation paid to the Executive in the 12-month period ending on the
date of such termination.
(b) The Executive shall receive
(i) a benefit which shall be equal to the amount
determined under Section 3.2(B) of the Supplemental
Death and Retirement Benefit Plan ("SD&RB") as though
the Executive's date of termination was the date of
his attainment of age 65, multiplied by a fraction,
the numerator of which is the Executive's years of
service, or partial years of service computed to the
nearest whole month, with the Company at his date of
termination, and the denominator of which is the
years of service, or partial years of service
computed to the nearest whole month, with the Company
which the Executive would have had at age 65 had he
been continuously employed by the Company until age
65, reduced by
(ii) the benefit under the SD&RB to which he
is entitled at the date of his termination of
employment.
The benefit computed above shall be paid in the same manner as provided for any
benefit described in Section 3.2(B) of the SD&RB except that the Executive may
elect to receive as a lump sum the Actuarial Equivalent of such benefit
computed above immediately upon termination. In determining such Actuarial
Equivalent, such benefit shall be deemed to be payable as of the attainment of
age 60 by the Executive with no reduction for early commencement and an
actuarial factor of $110.16 per $1 of monthly income payable shall be used. If
the Executive is under age 60 at termination, the benefit shall be reduced by
4% for each year the Executive is under age 60.
- 4 -
<PAGE> 5
(c) In addition, the Company shall continue to provide
coverage for the Executive under its Medical, Dental and Life Insurance Plans
in effect on the Change in Control Date, as amended to comply with COBRA, or
pay the Executive monthly an amount that will allow the Executive to obtain
insurance coverage essentially no less favorable than that provided to the
Executive prior to termination under such plans. Such benefits will continue
for a period equal to the lesser of (i) one year following the date of
termination, or (ii) until the Executive is provided substantially comparable
or greater benefits by another employer.
(d) Notwithstanding any other provision of this
Agreement, if any payment under this Agreement calculated as set forth above,
either alone or together with other amounts which the Executive has the right
to receive from the Company, would constitute an "excess parachute payment" (as
defined in Section 280G of the Code) (collectively referred to as "Affected
Payment"), then the Executive shall be entitled to receive an additional cash
payment (an "Additional Payment") which, when added to the Affected Payment
provides a net benefit to the Executive, after payment of the excise tax
imposed by Section 4999 of the Code and payment of any federal, state and local
income taxes attributable to such Additional Payment, equal to the Affected
Payment before such Additional Payment. The Company shall have the option of
defending or challenging any
- 5 -
<PAGE> 6
determination concerning the status of payments as "excess parachute payments."
The Executive shall receive the Additional Payments concurrently with Affected
Payments; provided, however, the Executive shall be entitled to Additional
Payments in arrears upon a subsequent finding by the Internal Revenue Service
or court of competent jurisdiction that any payment is an "excess parachute
payment."
3. Other Benefits. Any salary or consulting fees due to the
Executive during the 12 months following termination under any other agreement
shall be reduced by payments made under paragraph 2(a) above. For purposes of
any other agreement between the Executive and the Company which provides a
benefit the amount of which depends upon the SD&RB Plan, any benefit payable
pursuant to paragraph 2(b) above shall be treated as the benefit under the
SD&RB Plan for purposes of calculations under such other agreement.
4. Payments. Amounts payable under paragraphs 2(a) and 2(b)
above to the Executive shall be paid by the Company in cash within five
business days of such termination. If the Company fails to pay any such amount
within five business days, the trustee of the trust established for the
preservation of the amounts payable under this Agreement shall pay the amounts
due within 10 business days of termination. If the amounts due have not been
paid to the Executive within 10 business days of the termination, the Executive
shall have the right to recover from
- 6 -
<PAGE> 7
the Company or the trust all costs incurred in obtaining payment plus interest
on both the amounts due and such costs at a rate of 15% per annum calculated
from the date of termination.
5. Attorneys Fees. The Company is aware that various parties may
attempt to deny the Executive the benefits intended under this Agreement or
other agreements that provide for payments after a Change in Control. The
Company irrevocably authorizes the Executive to retain counsel at the expense
of the Company to represent the Executive in connection with the initiation or
defense of any litigation relating to any payments under this Agreement or
other agreements due from the Company if a Change in Control occurs. Legal
fees and expenses shall be paid or reimbursed to the Executive by the Company
on a regular, periodic basis upon presentation by the Executive of a statement
to the Company. In the event the Company fails to pay or reimburse such
amounts, the trustee of the SD&RB Trust shall pay such amounts up to an
aggregate amount which, in the trustees sole and exclusive judgment, will not
impair the ability of the SD&RB Trust to pay benefits due under the SD&RB Plan.
6. GOVERNING LAW. EXCEPT TO THE EXTENT REQUIRED BY ERISA, THIS
AGREEMENT SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF NEW YORK.
7. Amendment. This Agreement may not be amended except by
the written agreement of the parties hereto.
- 7 -
<PAGE> 8
8. Binding Effect. This Agreement shall be binding on the
Company, its successors, and assigns. Should there be a consolidation or
merger of the Company with or into another corporation, or a purchase of all or
substantially all of the assets of the Company and another entity, the
surviving or acquiring corporation will succeed to the rights and obligations
of the Company under this Agreement.
9. Term. This Agreement shall be effective with respect to any
Change in Control from February 4, 1994 through December 31, 1994.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
dated this 23rd day of February, 1994.
LONG ISLAND LIGHTING COMPANY
By /S/ WILLIAM J. CATACOSINOS
-------------------------------------
Chairman, Board of Directors
Executive:
/S/ THEODORE A. BABCOCK
-----------------------------------
Theodore A. Babcock
- 8 -
<PAGE> 1
AGREEMENT
This Agreement is made this 23rd day of February 1994 by and between
Long Island Lighting Company, a New York corporation (the "Company"), and
Theodore A. Babcock ("Indemnitee").
W I T N E S S E T H:
WHEREAS, the Company, as an additional inducement to Indemnitee to
continue to serve the Company, has agreed to provide Indemnitee with the
benefits contemplated by this Agreement which benefits are intended to
supplement or replace, if necessary, the Company's existing directors' and
officers' liability insurance; and
WHEREAS, as a result of the provision of such benefits Indemnitee has
agreed to serve or to continue to serve as a director and/or officer of the
Company;
NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, including the Indemnitee's
continued service to the Company, the Company and Indemnitee hereby agree as
follows:
1. Definitions. The following terms, as used herein, shall have the
following respective meanings:
"Adverse Determination" means a Determination (as hereinafter defined)
that Indemnitee is not entitled to be fully indemnified by the Company for
Losses and Expenses in connection with any actual or threatened action, suit or
proceeding, whether civil, criminal or investigative, against Indemnitee
because the claim is an Excluded Claim or because Indemnitee is not otherwise
entitled to payment under this Agreement.
<PAGE> 2
"Change of Control" means any transaction or event where (a) the
Company merges with, or consolidates into, another person or entity, (b) all or
a substantial portion of the assets of the Company are transferred to another
person or entity unless the sale is approved by a majority of the Continuing
Directors, (c) any person or group of persons (as defined in Rule 13d-5
promulgated under the Securities Exchange Act of 1934), together with its
affiliates, is or becomes the beneficial owner (as defined in Rule 13d-3 under
such Act), directly or indirectly, of securities of the Company (including
securities convertible at the option of the holder into securities of the
Company ordinarily having the right to vote in elections of directors) which
together represent or would together represent, after giving effect to any
conversion, in excess of 40 percent of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote in
elections of directors, (d) a liquidator, trustee or other similar person is
appointed for all or substantially all of the assets of the Company, or (e)
Continuing Directors no longer constitute at least a majority of the Company's
Board. For purposes of this Agreement, (y) the Company's class of Preferred
Stock shall not be deemed to be securities of the Company ordinarily having the
right to vote in elections of directors, and (z) "Continuing Director" means
any individual who was a member of the Company's Board on March 15, 1987, or is
designated (before such person's initial election as a director) as a
Continuing Director by a majority of the then remaining Continuing Directors.
"Covered Amount" means Losses and Expenses which, in type or amount,
are not insured under the D&O Insurance maintained by the Company from time to
time.
"Covered Act" means any breach of duty, neglect, error, misstatement,
misleading statement, omission or other act done or wrongfully attempted by
Indemnitee or any of the foregoing alleged by any claimant or any claim against
Indemnitee solely by reason of being a director or officer of the Company or
serving at the request of the Company any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any capacity.
"D&O Insurance" means the directors' and officers' liability insurance
policies currently maintained by the Company, identified in Exhibit A hereto,
and any replacement or substitute policies issued by one or more reputable
insurers providing in all respects coverage at least comparable to and in the
same amount as that provided under the policies identified in Exhibit A.
- 2 -
<PAGE> 3
"Determination" means a determination, based on the facts known at the
time, made by:
(i) A majority vote of a quorum of Disinterested Directors; or
(ii) Independent legal counsel in a written opinion prepared at the
request of a majority of a quorum of Disinterested Directors; or
(iii) A majority of the disinterested shareholders of the Company; or
(iv) A final adjudication by a court of competent jurisdiction;
provided, however, that after a Change of Control occurs, a "Determination"
shall mean only a final adjudication by a court of competent jurisdiction.
"Determined" shall have a correlative meaning.
"Disinterested Director" means a director of the Company who is not
and was not a party to the action, suit or proceeding in respect of which
indemnification is sought.
"Excluded Claim" means any payment for Losses or Expenses in
connection with any claim the payment of which by the Company under this
Agreement is not permitted by applicable law.
"Expenses" means any reasonable expenses incurred by Indemnitee as a
result of a claim or claims made against him for Covered Acts including,
without limitation, attorneys fees and disbursements and costs of
investigative, judicial or administrative proceedings or appeals, but shall not
include Fines.
"Fines" means any fine, penalty or, with respect to an employee
benefit plan, any excise tax or penalty assessed with respect thereto, but only
to the extent such may not be indemnified by the Company under applicable law.
"Losses" means any amounts which Indemnitee is legally obligated to
pay as a result of a claim or claims made against him for Covered Acts
including, without limitation, damages and judgments and sums paid in
settlement of a claim or claims, but shall not include Fines.
2. Maintenance of D&O Insurance.
(a) The Company hereby represents and warrants that the
insurance policies identified in Exhibit A contain all policies of directors'
and officers' liability insurance currently maintained by the Company and that
such policies are in full force and effect.
- 3 -
<PAGE> 4
(b) In all policies of D&O Insurance, Indemnitee shall be
named as an insured in such a manner as to provide Indemnitee the same rights
and benefits, subject to the same limitations, as are accorded to the Company's
directors or officers most favorably insured by such policy.
(c) The Company hereby covenants and agrees that, so long as
Indemnitee shall continue to serve as a director and/or officer of the Company
and thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Indemnitee was a director
and/or officer of the Company, the Company, shall maintain in full force and
effect D&O Insurance; provided, however, that prior to a Change of Control, the
Company shall have no obligation to maintain D&O Insurance if the Company
determines in good faith that such insurance is not reasonably available, the
premium costs for such insurance are disproportionate to the amount of coverage
provided, or the coverage provided by such insurance is limited by exclusions
so as to provide an insufficient benefit. Subsequent to a Change of Control,
the Company shall maintain in full force and effect D&O Insurance.
3. Indemnification. The Company shall indemnify Indemnitee and hold
him harmless to the extent of the Covered Amount from any and all Losses and
Expenses subject, in each case, to the further provisions of this Agreement.
4. Excluded Coverage.
(a) The Company shall have no obligation to indemnify
Indemnitee for and hold him harmless from any Loss or Expense which has been
Determined to constitute an Excluded Claim.
(b) The Company shall have no obligation pursuant to this
Agreement to indemnify Indemnitee and hold him harmless for any Loss or Expense
to the extent that Indemnitee is indemnified by the Company pursuant to the
Company's By-Laws or otherwise indemnified and in each case he actually
receives payment of such indemnity amount.
5. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of the
commencement of or the threat of commencement of any action, suit or
proceeding, Indemnitee may, if indemnification with respect thereto may be
sought from the Company under this
- 4 -
<PAGE> 5
Agreement, notify the Company of the commencement thereof, but Indemnitee's
failure to so notify the Company shall not affect his right to indemnification
hereunder.
(b) If, at the time of the receipt of such notice, the Company
has D&O Insurance in effect, the Company shall give prompt notice to the
insurers of the commencement or the threat of commencement of such action, suit
or proceeding in accordance with the procedures set forth in the respective
policies in favor of Indemnitee. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such actual or
threatened action, suit or proceeding in accordance with the terms of such
policies.
(c) To the extent the Company does not, at the time of the
commencement of or the threat of commencement of such action, suit or
proceeding, have applicable D&O Insurance, or if a Determination is not made
that any Expenses arising out of such action, suit or proceeding will be
payable under the D&O Insurance then in effect, the Company shall be obligated
to advance the Expenses of any such action, suit or proceeding as they are
billed and in advance of the final disposition thereof and the Company, if
appropriate, shall be entitled to assume the defense of such action, suit or
proceeding, with counsel satisfactory to Indemnitee in his sole discretion,
upon the delivery to Indemnitee of written notice of its election so to do.
After delivery of such notice, the Company will not be liable to Indemnitee
under this Agreement for any legal or other Expenses subsequently incurred by
the Indemnitee in connection with such defense other than reasonable Expenses
of investigation; provided that Indemnitee shall have the right to employ his
own counsel in any such action, suit or proceeding but the fees and expenses of
such counsel incurred after delivery of notice from the Company of its
assumption of such defense shall be at the Indemnitee's expense; provided
further that if (i) the employment of his own counsel by Indemnitee has been
previously authorized by the Company, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, (iii) a Change of Control shall
have occurred before or during the actual or threatened action, suit or
proceeding, or (iv) the Company shall not, in fact, have employed counsel to
assume the defense of such actual or threatened action, suit or proceeding, the
fees and disbursements of counsel chosen by Indemnitee in his sole discretion
shall be at the expense of the Company.
- 5 -
<PAGE> 6
(d) All payments on account of the Company's indemnification
obligations under this Agreement shall be made within sixty (60) days of
Indemnitee's written request therefor unless a Determination is made that the
claims giving rise to Indemnitee's request are Excluded Claims or otherwise not
payable under this Agreement, provided that all payments on account of the
Company's obligations under Section 5(c) of this Agreement prior to the final
disposition of any action, suit or proceeding shall be made within 20 days of
Indemnitee's written request therefor and such obligation shall not be subject
to any such Determination but shall be subject to Section 5(e) of this
Agreement.
(e) Indemnitee agrees that he will (without interest)
reimburse the Company for Losses and Expenses paid by the Company pursuant to
this Agreement in connection with any actual or threatened action, suit or
proceeding against Indemnitee in the event and only to the extent that a
Determination shall have been made by a court in a final adjudication from
which there is no further right of appeal that the Indemnitee is not entitled
to be indemnified by the Company for such Losses or Expenses because the claim
is an Excluded Claim or because Indemnitee is otherwise not entitled to payment
under this Agreement.
6. Settlement. The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any
pending or threatened action, suit or proceeding effected without the Company's
prior written consent prior to a Change of Control, but shall have the
obligation to so indemnify Indemnitee in any such settlement effected without
the Company's prior written consent upon or after a Change of Control. The
Company shall not settle any claim in any manner which would impose any Fine or
any obligation on Indemnitee without Indemnitee's written consent. Neither the
Company nor Indemnitee shall unreasonably withhold their consent to any
proposed settlement.
7. Presumptions and Effect of Certain Proceedings. The Secretary of
the Company shall, promptly upon receipt of Indemnitee's request for
indemnification, advise in writing the Board of Directors or such other person
or persons empowered to make the Determination as provided in Section 5 hereof
that Indemnitee shall be presumed to be entitled to indemnification hereunder
and the Company shall have the burden of proof in the making of any
Determination contrary to such presumption. If the person or persons so
empowered to make such Determination shall have failed to make the requested
Determination within 60 days after receipt by the Company of such request, the
requisite Determination of entitlement to indemnification shall be deemed
- 6 -
<PAGE> 7
to have been made and Indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 5 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the cause of action adjudicated or that he personally gained in fact a
financial profit or other advantage to which he was not legally entitled; or
(b) otherwise adversely affect the rights of Indemnitee to indemnification
except as may be provided herein.
8. Rights Not Exclusive. Nothing herein shall limit or affect any
right of Indemnitee otherwise than hereunder to indemnification or advancement
of expenses, including attorneys fees, under any statute, rule, regulation,
certificate of incorporation, by-law, insurance policy, contract, vote of
disinterested shareholders or disinterested directors, or otherwise, both as to
action in his official capacity and as to action in any other capacity by
holding such office, and shall continue after the Indemnitee ceases to serve
the Company as a director and/or officer.
9. Enforcement.
(a) Indemnitee's right to indemnification shall be enforceable
by Indemnitee in the state courts of the State of New York or the United States
District Courts for the Southern or Eastern Districts of New York and shall be
enforceable by Indemnitee notwithstanding any Adverse Determination (except an
Adverse Determination not subject to further appeal by a court of competent
jurisdiction). In any such action, if a prior Adverse Determination has been
made, the burden of proving that indemnification is required under this
Agreement shall be on Indemnitee. The Company shall have the burden of proving
that indemnification is not required under this Agreement if no prior Adverse
Determination shall have been made.
(b) In the event that any action is instituted by Indemnitee
under this Agreement, or to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all court costs and
expenses, including reasonable counsel fees ("Enforcement Expenses"), incurred
by Indemnitee with respect to such action. If the payment by the Company of
any of the Enforcement Expenses results in the recognition by the Indemnitee of
taxable income for Federal, state or local tax purposes, the Company, to the
extent permitted by law, shall make an additional payment to Indemnitee which,
when added to the
- 7 -
<PAGE> 8
Enforcement Expenses, results in a net after-tax benefit to Indemnitee equal to
the Enforcement Expenses, unless the court determines that each of the material
assertions made by Indemnitee as a basis for such action were not made in good
faith or were frivolous.
(c) Subsequent to a Change of Control and unless and until a
court of competent jurisdiction makes an Adverse Determination which becomes
final and not subject to further appeal, Indemnitee (whether or not still
serving as a director and/or officer of the Company) and Indemnitee's agents,
for purposes of enforcing this Agreement and investigating, defending and/or
settling any claim for which indemnification may be available under this
Agreement, shall have full access to the Company's employees and records to the
same extent that Indemnitee now has, and the Company at its expense will
provide Indemnitee with copies of any such records requested by Indemnitee or
Indemnitee's agents. The Company will cooperate fully with Indemnitee in
making such records and employees available in connection with the
investigation, defense and/or settlement of any such claim.
(d) The Company hereby waives, effective upon a Change of
Control, any objections it may have, whether based upon conflict of interest or
otherwise, to any attorney or law firm which has represented the Company within
the past five years in connection with any matter or may hereafter represent
the Company in connection with any matter, and affirmatively agrees that any
such attorney may represent Indemnitee in connection with the interpretation,
construction or enforcement of this Agreement or of the Trust (as that term is
defined in Section 15) or in any other matter.
(e) The Company hereby authorizes any attorney, effective upon
a Change of Control, to appear on its behalf in any state court of the State of
New York or the United States District Court for the Southern or Eastern
District of New York to consent to summary judgment in favor of Indemnitee in
any declaratory judgment action brought by Indemnitee to determine the validity
and enforceability of this Agreement and of the Trust.
10. Severability. In the event that any provision of this Agreement
is determined by a final order not subject to further appeal of a court of
competent jurisdiction to require the Company to do or to fail to do an act
which is in violation of applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a
- 8 -
<PAGE> 9
violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their terms.
11. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
12. Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
New York and the United States District Courts for the Southern and Eastern
Districts of New York for all purposes in connection with any action or
proceeding which arises out of or relates to this Agreement and agree that any
action instituted under this Agreement shall be brought only in the state
courts of the State of New York and the United States District Courts for the
Southern and Eastern Districts of New York.
13. Successors and Assigns. This Agreement shall be (i) binding upon
all successors and assigns of the Company (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law) and (ii) shall be binding on and inure to the benefit of the
heirs, personal representatives and estate of Indemnitee.
14. Amendment. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in a writing
signed by each of the parties hereto.
15. Establishment of Trust. The Company has created a trust pursuant
to the agreement annexed hereto as Exhibit B (the "Trust") for the benefit of
Indemnitee and other directors and officers of the Company (together with the
Indemnitee, the "Beneficiaries") who have executed agreements similar to this
Agreement (together with this Agreement, the "Indemnity Agreements"), the
trustee and any successor trustee of which shall be chosen by a majority of the
Beneficiaries. The Company initially funded the Trust with $5,000 and, prior
to a Change of Control, shall fund the Trust in an additional amount sufficient
in the sole judgment of a majority of the continuing Directors to satisfy any
and all Losses and Expenses reasonably anticipated at the time of such funding
for which the Company may indemnify the Beneficiaries under the Indemnity
Agreements. From time to time after a Change of Control, upon receipt of a
written request from any of the Beneficiaries, the Company shall further fund
the Trust in amounts sufficient to satisfy any and all Losses and Expenses
reasonably anticipated at the time of such request for which the Company may
indemnify the Beneficiaries under the Indemnity Agreements. The amount of
amounts to be deposited in the Trust pursuant to the foregoing funding
obligations shall be determined by mutual agreement of the indemnitee and the
Company or, if the Company and the Indemnitee are unable to reach such an
agreement, by independent legal counsel selected by a majority of
- 9 -
<PAGE> 10
the Beneficiaries. The terms of the Trust shall provide that, except upon the
written consent of all of the Beneficiaries and the Company, (i) the Trust
shall not be revoked or the principal thereof invaded, (ii) the trustee shall
advance to the Indemnitee within 20 days of a request by Indemnitee, any and
all Losses and Expenses, Indemnitee hereby agreeing to reimburse the trustee of
the Trust for Losses and Expenses so advanced in the event and only to the
extent that a Determination is made by a court in a final adjudication from
which there is no further right of appeal that Indemnitee is not entitled to be
indemnified under this Agreement, (iii) the Trust shall continue to be funded
by the Company in accordance with the funding obligations set forth in this
Section, (iv) the trustee shall promptly pay to Indemnitee any amounts to which
Indemnitee shall be entitled (including amounts to be advanced) pursuant to
this Agreement, and (v) all unexpended funds in the Trust shall revert to the
Company upon a final determination by independent legal counsel selected by a
majority of the Beneficiaries or a court of competent jurisdiction that all of
the Beneficiaries have been fully indemnified with respect to the proceeding
giving rise to the establishment of the Trust in question under the terms of
the Indemnity Agreements.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement as of the day and year first above written.
<TABLE>
<S> <C>
Attest: LONG ISLAND LIGHTING COMPANY
By: /s/ HERBERT M. LEIMAN By: /s/ WILLIAM J. CATACOSINOS
-------------------------- ---------------------------
Herbert M. Leiman William J. Catacosinos
Title: Assistant Corporate Title: Chairman and
Secretary Chief Executive
Officer
Witness:
/s/ TIMOTHY P. KIERNAN /s/ THEODORE A. BABCOCK
- ------------------------------ ----------------------------
Theodore A. Babcock
</TABLE>
- 10 -
<PAGE> 11
EXHIBIT A
Policies of insurance providing indemnification of Directors and Officers for a
claim alleging a wrongful act on their part and/or reimbursement to the Company
for damages due to indemnification by the Company which may be required or
permitted by law.
<TABLE>
<CAPTION>
Insurance Limits of Policy
Company Liability Deductible Number Term
- --------- --------- ---------- ------ ----
($ millions)
<S> <C> <C> <C> <C>
Associated $35 At least DOO4OA 8/26/93
Electric & $5,000 but 1A93 8/26/94
Gas Ins. no more than
Services Ltd. $55,000
(AEGIS)
Energy Ins. $50 Underlying 900153 8/26/93
Mutual Ltd. X/O Coverage 92DO 8/26/94
(EIM) $35
Continental $15 Underlying DSB 8/26/93
Ins. Co. X/O Coverage 082593-1 8/26/94
$85
Zurich Ins. $10 Underlying DSB 8/26/93
Co. X/O Coverage 082593-2 8/26/94
$100
ACE Ins. $45 Underlying LIL 8/26/93
Co. Ltd. X/O 7035D 8/26/94
$110
Zurich Ins. $15 Underlying DSB 8/26/93
Co. X/O Coverage 082593-3 8/26/94
$155
XL Ins. $10 Underlying XLDCR 8/26/93
Co. Ltd. X/O Coverage 00278-93 8/26/94
$170
ACE Ins. $45 Underlying LIL 8/26/93
Co. Ltd. X/O Coverage 7036D 8/26/94
$180
</TABLE>
- 11 -
<PAGE> 1
AGREEMENT
This Agreement is made this third day of January 1994 by and
between Long Island Lighting Company, a New York corporation (the "Company"),
and Vicki L. Fuller ("Indemnitee").
W I T N E S S E T H:
WHEREAS, the Company, as an additional inducement to
Indemnitee to continue to serve the Company, has agreed to provide Indemnitee
with the benefits contemplated by this Agreement which benefits are intended to
supplement or replace, if necessary, the Company's existing directors' and
officers' liability insurance; and
WHEREAS, as a result of the provision of such benefits
Indemnitee has agreed to serve or to continue to serve as a director and/or
officer of the Company;
NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, including the Indemnitee's
continued service to the Company, the Company and Indemnitee hereby agree as
follows:
1. Definitions. The following terms, as used herein, shall
have the following respective meanings:
"Adverse Determination" means a Determination (as hereinafter
defined) that Indemnitee is not entitled to be fully indemnified by the Company
for Losses and Expenses in connection with any actual or threatened action,
suit or proceeding, whether civil, criminal or investigative, against
Indemnitee because the claim is an Excluded Claim or because Indemnitee is not
otherwise entitled to payment under this Agreement.
<PAGE> 2
"Change of Control" means any transaction or event where (a)
the Company merges with, or consolidates into, another person or entity, (b)
all or a substantial portion of the assets of the Company are transferred to
another person or entity unless the sale is approved by a majority of the
Continuing Directors, (c) any person or group of persons (as defined in Rule
13d-5 promulgated under the Securities Exchange Act of 1934), together with its
affiliates, is or becomes the beneficial owner (as defined in Rule 13d-3 under
such Act), directly or indirectly, of securities of the Company (including
securities convertible at the option of the holder into securities of the
Company ordinarily having the right to vote in elections of directors) which
together represent or would together represent, after giving effect to any
conversion, in excess of 40 percent of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote in
elections of directors, (d) a liquidator, trustee or other similar person is
appointed for all or substantially all of the assets of the Company, or (e)
Continuing Directors no longer constitute at least a majority of the Company's
Board. For purposes of this Agreement, (y) the Company's class of Preferred
Stock shall not be deemed to be securities of the Company ordinarily having the
right to vote in elections of directors, and (z) "Continuing Director" means
any individual who was a member of the Company's Board on March 15, 1987, or is
designated (before such person's initial election as a director) as a
Continuing Director by a majority of the then remaining Continuing Directors.
"Covered Amount" means Losses and Expenses which, in type or
amount, are not insured under the D&O Insurance maintained by the Company from
time to time.
"Covered Act" means any breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done or wrongfully
attempted by Indemnitee or any of the foregoing alleged by any claimant or any
claim against Indemnitee solely by reason of being a director or officer of the
Company or serving at the request of the Company any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity.
"D&O Insurance" means the directors' and officers' liability
insurance policies currently maintained by the Company, identified in Exhibit A
hereto, and any replacement or substitute policies issued by one or more
reputable insurers providing in all respects coverage at least comparable to
and in the same amount as that provided under the policies identified in
Exhibit A.
- 2 -
<PAGE> 3
"Determination" means a determination, based on the facts
known at the time, made by:
(i) A majority vote of a quorum of Disinterested Directors; or
(ii) Independent legal counsel in a written opinion prepared
at the request of a majority of a quorum of Disinterested Directors; or
(iii) A majority of the disinterested shareholders of the
Company; or
(iv) A final adjudication by a court of competent
jurisdiction; provided, however, that after a Change of Control occurs, a
"Determination" shall mean only a final adjudication by a court of competent
jurisdiction.
"Determined" shall have a correlative meaning.
"Disinterested Director" means a director of the Company who
is not and was not a party to the action, suit or proceeding in respect of
which indemnification is sought.
"Excluded Claim" means any payment for Losses or Expenses in
connection with any claim the payment of which by the Company under this
Agreement is not permitted by applicable law.
"Expenses" means any reasonable expenses incurred by
Indemnitee as a result of a claim or claims made against him for Covered Acts
including, without limitation, attorneys fees and disbursements and costs of
investigative, judicial or administrative proceedings or appeals, but shall not
include Fines.
"Fines" means any fine, penalty or, with respect to an
employee benefit plan, any excise tax or penalty assessed with respect thereto,
but only to the extent such may not be indemnified by the Company under
applicable law.
"Losses" means any amounts which Indemnitee is legally
obligated to pay as a result of a claim or claims made against him for Covered
Acts including, without limitation, damages and judgments and sums paid in
settlement of a claim or claims, but shall not include Fines.
2. Maintenance of D&O Insurance.
(a) The Company hereby represents and warrants that
the insurance policies identified in Exhibit A contain all policies of
directors' and officers' liability insurance currently maintained by the
Company and that such policies are in full force and effect.
- 3 -
<PAGE> 4
(b) In all policies of D&O Insurance, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee the same
rights and benefits, subject to the same limitations, as are accorded to the
Company's directors or officers most favorably insured by such policy.
(c) The Company hereby covenants and agrees that, so
long as Indemnitee shall continue to serve as a director and/or officer of the
Company and thereafter so long as Indemnitee shall be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal or investigative, by reason of the fact that Indemnitee was a
director and/or officer of the Company, the Company, shall maintain in full
force and effect D&O Insurance; provided, however, that prior to a Change of
Control, the Company shall have no obligation to maintain D&O Insurance if the
Company determines in good faith that such insurance is not reasonably
available, the premium costs for such insurance are disproportionate to the
amount of coverage provided, or the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit. Subsequent to
a Change of Control, the Company shall maintain in full force and effect D&O
Insurance.
3. Indemnification. The Company shall indemnify Indemnitee
and hold him harmless to the extent of the Covered Amount from any and all
Losses and Expenses subject, in each case, to the further provisions of this
Agreement.
4. Excluded Coverage.
(a) The Company shall have no obligation to indemnify
Indemnitee for and hold him harmless from any Loss or Expense which has been
Determined to constitute an Excluded Claim.
(b) The Company shall have no obligation pursuant to
this Agreement to indemnify Indemnitee and hold him harmless for any Loss or
Expense to the extent that Indemnitee is indemnified by the Company pursuant to
the Company's By-Laws or otherwise indemnified and in each case he actually
receives payment of such indemnity amount.
5. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of
the commencement of or the threat of commencement of any action, suit or
proceeding, Indemnitee may, if indemnification with respect thereto may be
sought from the Company under this
- 4 -
<PAGE> 5
Agreement, notify the Company of the commencement thereof, but Indemnitee's
failure to so notify the Company shall not affect his right to indemnification
hereunder.
(b) If, at the time of the receipt of such notice,
the Company has D&O Insurance in effect, the Company shall give prompt notice
to the insurers of the commencement or the threat of commencement of such
action, suit or proceeding in accordance with the procedures set forth in the
respective policies in favor of Indemnitee. The Company shall thereafter take
all necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such actual or
threatened action, suit or proceeding in accordance with the terms of such
policies.
(c) To the extent the Company does not, at the time
of the commencement of or the threat of commencement of such action, suit or
proceeding, have applicable D&O Insurance, or if a Determination is not made
that any Expenses arising out of such action, suit or proceeding will be
payable under the D&O Insurance then in effect, the Company shall be obligated
to advance the Expenses of any such action, suit or proceeding as they are
billed and in advance of the final disposition thereof and the Company, if
appropriate, shall be entitled to assume the defense of such action, suit or
proceeding, with counsel satisfactory to Indemnitee in his sole discretion,
upon the delivery to Indemnitee of written notice of its election so to do.
After delivery of such notice, the Company will not be liable to Indemnitee
under this Agreement for any legal or other Expenses subsequently incurred by
the Indemnitee in connection with such defense other than reasonable Expenses
of investigation; provided that Indemnitee shall have the right to employ his
own counsel in any such action, suit or proceeding but the fees and expenses of
such counsel incurred after delivery of notice from the Company of its
assumption of such defense shall be at the Indemnitee's expense; provided
further that if (i) the employment of his own counsel by Indemnitee has been
previously authorized by the Company, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, (iii) a Change of Control shall
have occurred before or during the actual or threatened action, suit or
proceeding, or (iv) the Company shall not, in fact, have employed counsel to
assume the defense of such actual or threatened action, suit or proceeding, the
fees and disbursements of counsel chosen by Indemnitee in his sole discretion
shall be at the expense of the Company.
- 5 -
<PAGE> 6
(d) All payments on account of the Company's
indemnification obligations under this Agreement shall be made within sixty
(60) days of Indemnitee's written request therefor unless a Determination is
made that the claims giving rise to Indemnitee's request are Excluded Claims or
otherwise not payable under this Agreement, provided that all payments on
account of the Company's obligations under Section 5(c) of this Agreement prior
to the final disposition of any action, suit or proceeding shall be made within
20 days of Indemnitee's written request therefor and such obligation shall not
be subject to any such Determination but shall be subject to Section 5(e) of
this Agreement.
(e) Indemnitee agrees that he will (without interest)
reimburse the Company for Losses and Expenses paid by the Company pursuant to
this Agreement in connection with any actual or threatened action, suit or
proceeding against Indemnitee in the event and only to the extent that a
Determination shall have been made by a court in a final adjudication from
which there is no further right of appeal that the Indemnitee is not entitled
to be indemnified by the Company for such Losses or Expenses because the claim
is an Excluded Claim or because Indemnitee is otherwise not entitled to payment
under this Agreement.
6. Settlement. The Company shall have no obligation to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any pending or threatened action, suit or proceeding effected without the
Company's prior written consent prior to a Change of Control, but shall have
the obligation to so indemnify Indemnitee in any such settlement effected
without the Company's prior written consent upon or after a Change of Control.
The Company shall not settle any claim in any manner which would impose any
Fine or any obligation on Indemnitee without Indemnitee's written consent.
Neither the Company nor Indemnitee shall unreasonably withhold their consent to
any proposed settlement.
7. Presumptions and Effect of Certain Proceedings. The
Secretary of the Company shall, promptly upon receipt of Indemnitee's request
for indemnification, advise in writing the Board of Directors or such other
person or persons empowered to make the Determination as provided in Section 5
hereof that Indemnitee shall be presumed to be entitled to indemnification
hereunder and the Company shall have the burden of proof in the making of any
Determination contrary to such presumption. If the person or persons so
empowered to make such Determination shall have failed to make the requested
Determination within 60 days after receipt by the Company of such request, the
requisite Determination of entitlement to indemnification shall be deemed
- 6 -
<PAGE> 7
to have been made and Indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 5 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the cause of action adjudicated or that he personally gained in fact a
financial profit or other advantage to which he was not legally entitled; or
(b) otherwise adversely affect the rights of Indemnitee to indemnification
except as may be provided herein.
8. Rights Not Exclusive. Nothing herein shall limit or
affect any right of Indemnitee otherwise than hereunder to indemnification or
advancement of expenses, including attorneys fees, under any statute, rule,
regulation, certificate of incorporation, by-law, insurance policy, contract,
vote of disinterested shareholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in any other
capacity by holding such office, and shall continue after the Indemnitee ceases
to serve the Company as a director and/or officer.
9. Enforcement.
(a) Indemnitee's right to indemnification shall be
enforceable by Indemnitee in the state courts of the State of New York or the
United States District Courts for the Southern or Eastern Districts of New York
and shall be enforceable by Indemnitee notwithstanding any Adverse
Determination (except an Adverse Determination not subject to further appeal by
a court of competent jurisdiction). In any such action, if a prior Adverse
Determination has been made, the burden of proving that indemnification is
required under this Agreement shall be on Indemnitee. The Company shall have
the burden of proving that indemnification is not required under this Agreement
if no prior Adverse Determination shall have been made.
(b) In the event that any action is instituted by
Indemnitee under this Agreement, or to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all court costs and
expenses, including reasonable counsel fees ("Enforcement Expenses"), incurred
by Indemnitee with respect to such action. If the payment by the Company of
any of the Enforcement Expenses results in the recognition by the Indemnitee of
taxable income for Federal, state or local tax purposes, the Company, to the
extent permitted by law, shall make an additional payment to Indemnitee which,
when added to the
- 7 -
<PAGE> 8
Enforcement Expenses, results in a net after-tax benefit to Indemnitee equal to
the Enforcement Expenses, unless the court determines that each of the material
assertions made by Indemnitee as a basis for such action were not made in good
faith or were frivolous.
(c) Subsequent to a Change of Control and unless and
until a court of competent jurisdiction makes an Adverse Determination which
becomes final and not subject to further appeal, Indemnitee (whether or not
still serving as a director and/or officer of the Company) and Indemnitee's
agents, for purposes of enforcing this Agreement and investigating, defending
and/or settling any claim for which indemnification may be available under this
Agreement, shall have full access to the Company's employees and records to the
same extent that Indemnitee now has, and the Company at its expense will
provide Indemnitee with copies of any such records requested by Indemnitee or
Indemnitee's agents. The Company will cooperate fully with Indemnitee in
making such records and employees available in connection with the
investigation, defense and/or settlement of any such claim.
(d) The Company hereby waives, effective upon a
Change of Control, any objections it may have, whether based upon conflict of
interest or otherwise, to any attorney or law firm which has represented the
Company within the past five years in connection with any matter or may
hereafter represent the Company in connection with any matter, and
affirmatively agrees that any such attorney may represent Indemnitee in
connection with the interpretation, construction or enforcement of this
Agreement or of the Trust (as that term is defined in Section 15) or in any
other matter.
(e) The Company hereby authorizes any attorney,
effective upon a Change of Control, to appear on its behalf in any state court
of the State of New York or the United States District Court for the Southern
or Eastern District of New York to consent to summary judgment in favor of
Indemnitee in any declaratory judgment action brought by Indemnitee to
determine the validity and enforceability of this Agreement and of the Trust.
10. Severability. In the event that any provision of this
Agreement is determined by a final order not subject to further appeal of a
court of competent jurisdiction to require the Company to do or to fail to do
an act which is in violation of applicable law, such provision shall be limited
or modified in its application to the minimum extent necessary to avoid a
- 8 -
<PAGE> 9
violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their terms.
11. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
12. Consent to Jurisdiction. The Company and the Indemnitee
each hereby irrevocably consent to the jurisdiction of the courts of the State
of New York and the United States District Courts for the Southern and Eastern
Districts of New York for all purposes in connection with any action or
proceeding which arises out of or relates to this Agreement and agree that any
action instituted under this Agreement shall be brought only in the state
courts of the State of New York and the United States District Courts for the
Southern and Eastern Districts of New York.
13. Successors and Assigns. This Agreement shall be (i)
binding upon all successors and assigns of the Company (including any
transferee of all or substantially all of its assets and any successor by
merger or otherwise by operation of law) and (ii) shall be binding on and inure
to the benefit of the heirs, personal representatives and estate of Indemnitee.
14. Amendment. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in a writing
signed by each of the parties hereto.
15. Establishment of Trust. The Company has created a trust
pursuant to the agreement annexed hereto as Exhibit B (the "Trust") for the
benefit of Indemnitee and other directors and officers of the Company (together
with the Indemnitee, the "Beneficiaries") who have executed agreements similar
to this Agreement (together with this Agreement, the "Indemnity Agreements"),
the trustee and any successor trustee of which shall be chosen by a majority of
the Beneficiaries. The Company initially funded the Trust with $5,000 and,
prior to a Change of Control, shall fund the Trust in an additional amount
sufficient in the sole judgment of a majority of the continuing Directors to
satisfy any and all Losses and Expenses reasonably anticipated at the time of
such funding for which the Company may indemnify the Beneficiaries under the
Indemnity Agreements. From time to time after a Change of Control, upon
receipt of a written request from any of the Beneficiaries, the Company shall
further fund the Trust in amounts sufficient to satisfy any and all Losses and
Expenses reasonably anticipated at the time of such request for which the
Company may indemnify the Beneficiaries under the Indemnity Agreements. The
amount of amounts to be deposited in the Trust pursuant to the foregoing
funding obligations shall be determined by mutual agreement of the indemnitee
and the Company or, if the Company and the Indemnitee are unable to reach such
an agreement, by independent legal counsel selected by a majority of
- 9 -
<PAGE> 10
the Beneficiaries. The terms of the Trust shall provide that, except upon the
written consent of all of the Beneficiaries and the Company, (i) the Trust
shall not be revoked or the principal thereof invaded, (ii) the trustee shall
advance to the Indemnitee within 20 days of a request by Indemnitee, any and
all Losses and Expenses, Indemnitee hereby agreeing to reimburse the trustee of
the Trust for Losses and Expenses so advanced in the event and only to the
extent that a Determination is made by a court in a final adjudication from
which there is no further right of appeal that Indemnitee is not entitled to be
indemnified under this Agreement, (iii) the Trust shall continue to be funded
by the Company in accordance with the funding obligations set forth in this
Section, (iv) the trustee shall promptly pay to Indemnitee any amounts to which
Indemnitee shall be entitled (including amounts to be advanced) pursuant to
this Agreement, and (v) all unexpended funds in the Trust shall revert to the
Company upon a final determination by independent legal counsel selected by a
majority of the Beneficiaries or a court of competent jurisdiction that all of
the Beneficiaries have been fully indemnified with respect to the proceeding
giving rise to the establishment of the Trust in question under the terms of
the Indemnity Agreements.
IN WITNESS WHEREOF, the Company and Indemnitee have executed
this Agreement as of the day and year first above written.
<TABLE>
<S> <C>
Attest: LONG ISLAND LIGHTING COMPANY
By: /s/ H. M. Leiman By: /s/ W. J. Catacosinos
------------------------ -----------------------
Herbert M. Leiman William J. Catacosinos
Title: Assistant Corporate Title: Chairman and
Secretary Chief Executive
Officer
Witness:
/s/ Renee Banks /s/ Vicki L. Fuller
- ------------------------------- ------------------------------
Renee Banks Vicki L. Fuller
</TABLE>
- 10 -
<PAGE> 11
EXHIBIT A
Policies of insurance providing indemnification of Directors and Officers for a
claim alleging a wrongful act on their part and/or reimbursement to the Company
for damages due to indemnification by the Company which may be required or
permitted by law.
<TABLE>
<CAPTION>
Insurance Limits of Policy
Company Liability Deductible Number Term
- --------- --------- ---------- ------ ----
($ millions)
<S> <C> <C> <C> <C>
Associated $35 At least DOO4OA 8/26/93
Electric & $5,000 but 1A93 8/26/94
Gas Ins. no more than
Services Ltd. $55,000
(AEGIS)
Energy Ins. $50 Underlying 900153 8/26/93
Mutual Ltd. X/O Coverage 92DO 8/26/94
(EIM) $35
Continental $15 Underlying DSB 8/26/93
Ins. Co. X/O Coverage 082593-1 8/26/94
$85
Zurich Ins. $10 Underlying DSB 8/26/93
Co. X/O Coverage 082593-2 8/26/94
$100
ACE Ins. $45 Underlying LIL 8/26/93
Co. Ltd. X/O 7035D 8/26/94
$110
Zurich Ins. $15 Underlying DSB 8/26/93
Co. X/O Coverage 082593-3 8/26/94
$155
XL Ins. $10 Underlying XLDCR 8/26/93
Co. Ltd. X/O Coverage 00278-93 8/26/94
$170
ACE Ins. $5 Underlying LIL 8/26/93
Co. Ltd. X/O Coverage 7036D 8/26/94
$180
</TABLE>
- 11 -
<PAGE> 1
AGREEMENT
This Agreement is made this 20th day of April 1993 by and
between Long Island Lighting Company, a New York corporation (the "Company"),
and Katherine D. Ortega ("Indemnitee").
W I T N E S S E T H:
WHEREAS, the Company has experienced increasing difficulty in
obtaining directors' and officers' liability insurance, significantly higher
premiums for such insurance than has historically been charged the Company and
reductions in the coverage of such insurance; and
WHEREAS, the Company, as an additional inducement to
Indemnitee to continue to serve the Company, has agreed to provide Indemnitee
with the benefits contemplated by this Agreement which benefits are intended to
supplement or replace, if necessary, the Company's existing directors' and
officers' liability insurance; and
WHEREAS, as a result of the provision of such benefits
Indemnitee has agreed to serve or to continue to serve as a director and/or
officer of the Company;
NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, including the Indemnitee's
continued service to the Company, the Company and Indemnitee hereby agree as
follows:
1. Definitions. The following terms, as used herein, shall
have the following respective meanings:
"Adverse Determination" means a Determination (as hereinafter
defined) that Indemnitee is not entitled to be fully indemnified by the Company
for Losses and Expenses in connection with any actual or threatened action,
suit or proceeding, whether civil, criminal or investigative, against
Indemnitee because the claim is an Excluded Claim or because Indemnitee is not
otherwise entitled to payment under this Agreement.
<PAGE> 2
"Change of Control" means any transaction or event where (a)
the Company merges with, or consolidates into, another person or entity, (b)
all or a substantial portion of the assets of the Company are transferred to
another person or entity unless the sale is approved by a majority of the
Continuing Directors, (c) any person or group of persons (as defined in Rule
13d-5 promulgated under the Securities Exchange Act of 1934), together with its
affiliates, is or becomes the beneficial owner (as defined in Rule 13d-3 under
such Act), directly or indirectly, of securities of the Company (including
securities convertible at the option of the holder into securities of the
Company ordinarily having the right to vote in elections of directors) which
together represent or would together represent, after giving effect to any
conversion, in excess of 40 percent of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote in
elections of directors, (d) a liquidator, trustee or other similar person is
appointed for all or substantially all of the assets of the Company, or (e)
Continuing Directors no longer constitute at least a majority of the Company's
Board. For purposes of this Agreement, (y) the Company's class of Preferred
Stock shall not be deemed to be securities of the Company ordinarily having the
right to vote in elections of directors, and (z) "Continuing Director" means
any individual who was a member of the Company's Board on March 15, 1987, or is
designated (before such person's initial election as a director) as a
Continuing Director by a majority of the then remaining Continuing Directors.
"Covered Amount" means Losses and Expenses which, in type or
amount, are not insured under the D&O Insurance maintained by the Company from
time to time.
"Covered Act" means any breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done or wrongfully
attempted by Indemnitee or any of the foregoing alleged by any claimant or any
claim against Indemnitee solely by reason of being a director or officer of the
Company or serving at the request of the Company any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity.
"D&O Insurance" means the directors' and officers' liability
insurance policies currently maintained by the Company, identified in Exhibit A
hereto, and any replacement or substitute policies issued by one or more
reputable insurers providing in all respects coverage at least comparable to
and in the same amount as that provided under the policies identified in
Exhibit A.
- 2 -
<PAGE> 3
"Determination" means a determination, based on the facts
known at the time, made by:
(i) A majority vote of a quorum of Disinterested Directors; or
(ii) Independent legal counsel in a written opinion prepared
at the request of a majority of a quorum of Disinterested Directors; or
(iii) A majority of the disinterested shareholders of the
Company; or
(iv) A final adjudication by a court of competent
jurisdiction; provided, however, that after a Change of Control occurs, a
"Determination" shall mean only a final adjudication by a court of competent
jurisdiction.
"Determined" shall have a correlative meaning.
"Disinterested Director" means a director of the Company who
is not and was not a party to the action, suit or proceeding in respect of
which indemnification is sought.
"Excluded Claim" means any payment for Losses or Expenses in
connection with any claim the payment of which by the Company under this
Agreement is not permitted by applicable law.
"Expenses" means any reasonable expenses incurred by
Indemnitee as a result of a claim or claims made against him for Covered Acts
including, without limitation, attorneys fees and disbursements and costs of
investigative, judicial or administrative proceedings or appeals, but shall not
include Fines.
"Fines" means any fine, penalty or, with respect to an
employee benefit plan, any excise tax or penalty assessed with respect thereto,
but only to the extent such may not be indemnified by the Company under
applicable law.
"Losses" means any amounts which Indemnitee is legally
obligated to pay as a result of a claim or claims made against him for Covered
Acts including, without limitation, damages and judgments and sums paid in
settlement of a claim or claims, but shall not include Fines.
2. Maintenance of D&O Insurance.
(a) The Company hereby represents and warrants that
the insurance policies identified in Exhibit A contain all policies of
directors' and officers' liability insurance currently maintained by the
Company and that such policies are in full force and effect.
- 3 -
<PAGE> 4
(b) In all policies of D&O Insurance, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee the same
rights and benefits, subject to the same limitations, as are accorded to the
Company's directors or officers most favorably insured by such policy.
(c) The Company hereby covenants and agrees that, so
long as Indemnitee shall continue to serve as a director and/or officer of the
Company and thereafter so long as Indemnitee shall be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal or investigative, by reason of the fact that Indemnitee was a
director and/or officer of the Company, the Company, shall maintain in full
force and effect D&O Insurance; provided, however, that prior to a Change of
Control, the Company shall have no obligation to maintain D&O Insurance if the
Company determines in good faith that such insurance is not reasonably
available, the premium costs for such insurance are disproportionate to the
amount of coverage provided, or the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit. Subsequent to
a Change of Control, the Company shall maintain in full force and effect D&O
Insurance.
3. Indemnification. The Company shall indemnify Indemnitee
and hold him harmless to the extent of the Covered Amount from any and all
Losses and Expenses subject, in each case, to the further provisions of this
Agreement.
4. Excluded Coverage.
(a) The Company shall have no obligation to indemnify
Indemnitee for and hold him harmless from any Loss or Expense which has been
Determined to constitute an Excluded Claim.
(b) The Company shall have no obligation pursuant to
this Agreement to indemnify Indemnitee and hold him harmless for any Loss or
Expense to the extent that Indemnitee is indemnified by the Company pursuant to
the Company's By-Laws or otherwise indemnified and in each case he actually
receives payment of such indemnity amount.
5. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of
the commencement of or the threat of commencement of any action, suit or
proceeding, Indemnitee may, if indemnification with respect thereto may be
sought from the Company under this
- 4 -
<PAGE> 5
Agreement, notify the Company of the commencement thereof, but Indemnitee's
failure to so notify the Company shall not affect his right to indemnification
hereunder.
(b) If, at the time of the receipt of such notice,
the Company has D&O Insurance in effect, the Company shall give prompt notice
to the insurers of the commencement or the threat of commencement of such
action, suit or proceeding in accordance with the procedures set forth in the
respective policies in favor of Indemnitee. The Company shall thereafter take
all necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such actual or
threatened action, suit or proceeding in accordance with the terms of such
policies.
(c) To the extent the Company does not, at the time
of the commencement of or the threat of commencement of such action, suit or
proceeding, have applicable D&O Insurance, or if a Determination is not made
that any Expenses arising out of such action, suit or proceeding will be
payable under the D&O Insurance then in effect, the Company shall be obligated
to advance the Expenses of any such action, suit or proceeding as they are
billed and in advance of the final disposition thereof and the Company, if
appropriate, shall be entitled to assume the defense of such action, suit or
proceeding, with counsel satisfactory to Indemnitee in his sole discretion,
upon the delivery to Indemnitee of written notice of its election so to do.
After delivery of such notice, the Company will not be liable to Indemnitee
under this Agreement for any legal or other Expenses subsequently incurred by
the Indemnitee in connection with such defense other than reasonable Expenses
of investigation; provided that Indemnitee shall have the right to employ his
own counsel in any such action, suit or proceeding but the fees and expenses of
such counsel incurred after delivery of notice from the Company of its
assumption of such defense shall be at the Indemnitee's expense; provided
further that if (i) the employment of his own counsel by Indemnitee has been
previously authorized by the Company, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, (iii) a Change of Control shall
have occurred before or during the actual or threatened action, suit or
proceeding, or (iv) the Company shall not, in fact, have employed counsel to
assume the defense of such actual or threatened action, suit or proceeding, the
fees and disbursements of counsel chosen by Indemnitee in his sole discretion
shall be at the expense of the Company.
- 5 -
<PAGE> 6
(d) All payments on account of the Company's
indemnification obligations under this Agreement shall be made within sixty
(60) days of Indemnitee's written request therefor unless a Determination is
made that the claims giving rise to Indemnitee's request are Excluded Claims or
otherwise not payable under this Agreement, provided that all payments on
account of the Company's obligations under Section 5(c) of this Agreement prior
to the final disposition of any action, suit or proceeding shall be made within
20 days of Indemnitee's written request therefor and such obligation shall not
be subject to any such Determination but shall be subject to Section 5(e) of
this Agreement.
(e) Indemnitee agrees that he will (without interest)
reimburse the Company for Losses and Expenses paid by the Company pursuant to
this Agreement in connection with any actual or threatened action, suit or
proceeding against Indemnitee in the event and only to the extent that a
Determination shall have been made by a court in a final adjudication from
which there is no further right of appeal that the Indemnitee is not entitled
to be indemnified by the Company for such Losses or Expenses because the claim
is an Excluded Claim or because Indemnitee is otherwise not entitled to payment
under this Agreement.
6. Settlement. The Company shall have no obligation to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any pending or threatened action, suit or proceeding effected without the
Company's prior written consent prior to a Change of Control, but shall have
the obligation to so indemnify Indemnitee in any such settlement effected
without the Company's prior written consent upon or after a Change of Control.
The Company shall not settle any claim in any manner which would impose any
Fine or any obligation on Indemnitee without Indemnitee's written consent.
Neither the Company nor Indemnitee shall unreasonably withhold their consent to
any proposed settlement.
7. Presumptions and Effect of Certain Proceedings. The
Secretary of the Company shall, promptly upon receipt of Indemnitee's request
for indemnification, advise in writing the Board of Directors or such other
person or persons empowered to make the Determination as provided in Section 5
hereof that Indemnitee shall be presumed to be entitled to indemnification
hereunder and the Company shall have the burden of proof in the making of any
Determination contrary to such presumption. If the person or persons so
empowered to make such Determination shall have failed to make the requested
Determination within 60 days after receipt by the Company of such request, the
requisite Determination of entitlement to indemnification shall be deemed
- 6 -
<PAGE> 7
to have been made and Indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 5 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the cause of action adjudicated or that he personally gained in fact a
financial profit or other advantage to which he was not legally entitled; or
(b) otherwise adversely affect the rights of Indemnitee to indemnification
except as may be provided herein.
8. Rights Not Exclusive. Nothing herein shall limit or
affect any right of Indemnitee otherwise than hereunder to indemnification or
advancement of expenses, including attorneys fees, under any statute, rule,
regulation, certificate of incorporation, by-law, insurance policy, contract,
vote of disinterested shareholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in any other
capacity by holding such office, and shall continue after the Indemnitee ceases
to serve the Company as a director and/or officer.
9. Enforcement.
(a) Indemnitee's right to indemnification shall be
enforceable by Indemnitee in the state courts of the State of New York or the
United States District Courts for the Southern or Eastern Districts of New York
and shall be enforceable by Indemnitee notwithstanding any Adverse
Determination (except an Adverse Determination not subject to further appeal by
a court of competent jurisdiction). In any such action, if a prior Adverse
Determination has been made, the burden of proving that indemnification is
required under this Agreement shall be on Indemnitee. The Company shall have
the burden of proving that indemnification is not required under this Agreement
if no prior Adverse Determination shall have been made.
(b) In the event that any action is instituted by
Indemnitee under this Agreement, or to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all court costs and
expenses, including reasonable counsel fees ("Enforcement Expenses"), incurred
by Indemnitee with respect to such action. If the payment by the Company of
any of the Enforcement Expenses results in the recognition by the Indemnitee of
taxable income for Federal, state or local tax purposes, the Company, to the
extent permitted by law, shall make an additional payment to Indemnitee which,
when added to the
- 7 -
<PAGE> 8
Enforcement Expenses, results in a net after-tax benefit to Indemnitee equal to
the Enforcement Expenses, unless the court determines that each of the material
assertions made by Indemnitee as a basis for such action were not made in good
faith or were frivolous.
(c) Subsequent to a Change of Control and unless and
until a court of competent jurisdiction makes an Adverse Determination which
becomes final and not subject to further appeal, Indemnitee (whether or not
still serving as a director and/or officer of the Company) and Indemnitee's
agents, for purposes of enforcing this Agreement and investigating, defending
and/or settling any claim for which indemnification may be available under this
Agreement, shall have full access to the Company's employees and records to the
same extent that Indemnitee now has, and the Company at its expense will
provide Indemnitee with copies of any such records requested by Indemnitee or
Indemnitee's agents. The Company will cooperate fully with Indemnitee in
making such records and employees available in connection with the
investigation, defense and/or settlement of any such claim.
(d) The Company hereby waives, effective upon a
Change of Control, any objections it may have, whether based upon conflict of
interest or otherwise, to any attorney or law firm which has represented the
Company within the past five years in connection with any matter or may
hereafter represent the Company in connection with any matter, and
affirmatively agrees that any such attorney may represent Indemnitee in
connection with the interpretation, construction or enforcement of this
Agreement or of the Trust (as that term is defined in Section 15) or in any
other matter.
(e) The Company hereby authorizes any attorney,
effective upon a Change of Control, to appear on its behalf in any state court
of the State of New York or the United States District Court for the Southern
or Eastern District of New York to consent to summary judgment in favor of
Indemnitee in any declaratory judgment action brought by Indemnitee to
determine the validity and enforceability of this Agreement and of the Trust.
10. Severability. In the event that any provision of this
Agreement is determined by a final order not subject to further appeal of a
court of competent jurisdiction to require the Company to do or to fail to do
an act which is in violation of applicable law, such provision shall be limited
or modified in its application to the minimum extent necessary to avoid a
- 8 -
<PAGE> 9
violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their terms.
11. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
12. Consent to Jurisdiction. The Company and the Indemnitee
each hereby irrevocably consent to the jurisdiction of the courts of the State
of New York and the United States District Courts for the Southern and Eastern
Districts of New York for all purposes in connection with any action or
proceeding which arises out of or relates to this Agreement and agree that any
action instituted under this Agreement shall be brought only in the state
courts of the State of New York and the United States District Courts for the
Southern and Eastern Districts of New York.
13. Successors and Assigns. This Agreement shall be (i)
binding upon all successors and assigns of the Company (including any
transferee of all or substantially all of its assets and any successor by
merger or otherwise by operation of law) and (ii) shall be binding on and inure
to the benefit of the heirs, personal representatives and estate of Indemnitee.
14. Amendment. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in a writing
signed by each of the parties hereto.
15. Establishment of Trust. The Company has created a trust
pursuant to the agreement annexed hereto as Exhibit B (the "Trust") for the
benefit of Indemnitee and other directors and officers of the Company (together
with the Indemnitee, the "Beneficiaries") who have executed agreements similar
to this Agreement (together with this Agreement, the "Indemnity Agreements"),
the trustee and any successor trustee of which shall be chosen by a majority of
the Beneficiaries. The Company initially funded the Trust with $5,000 and,
prior to a Change of Control, shall fund the Trust in an additional amount
sufficient in the sole judgment of a majority of the continuing Directors to
satisfy any and all Losses and Expenses reasonably anticipated at the time of
such funding for which the Company may indemnify the Beneficiaries under the
Indemnity Agreements. From time to time after a Change of Control, upon
receipt of a written request from any of the Beneficiaries, the Company shall
further fund the Trust in amounts sufficient to satisfy any and all Losses and
Expenses reasonably anticipated at the time of such request for which the
Company may indemnify the Beneficiaries under the Indemnity Agreements. The
amount of amounts to be deposited in the Trust pursuant to the foregoing
funding obligations shall be determined by mutual agreement of the indemnitee
and the Company or, if the Company and the Indemnitee are unable to reach such
an agreement, by independent legal counsel selected by a majority of
- 9 -
<PAGE> 10
the Beneficiaries. The terms of the Trust shall provide that, except upon the
written consent of all of the Beneficiaries and the Company, (i) the Trust
shall not be revoked or the principal thereof invaded, (ii) the trustee shall
advance to the Indemnitee within 20 days of a request by Indemnitee, any and
all Losses and Expenses, Indemnitee hereby agreeing to reimburse the trustee of
the Trust for Losses and Expenses so advanced in the event and only to the
extent that a Determination is made by a court in a final adjudication from
which there is no further right of appeal that Indemnitee is not entitled to be
indemnified under this Agreement, (iii) the Trust shall continue to be funded
by the Company in accordance with the funding obligations set forth in this
Section, (iv) the trustee shall promptly pay to Indemnitee any amounts to which
Indemnitee shall be entitled (including amounts to be advanced) pursuant to
this Agreement, and (v) all unexpended funds in the Trust shall revert to the
Company upon a final determination by independent legal counsel selected by a
majority of the Beneficiaries or a court of competent jurisdiction that all of
the Beneficiaries have been fully indemnified with respect to the proceeding
giving rise to the establishment of the Trust in question under the terms of
the Indemnity Agreements.
IN WITNESS WHEREOF, the Company and Indemnitee have executed
this Agreement as of the day and year first above written.
<TABLE>
<S> <C>
Attest: LONG ISLAND LIGHTING COMPANY
By: /s/ Herbert M. Leiman By: /s/ William J. Catacosinos
------------------------ ------------------------------
Herbert M. Leiman William J. Catacosinos
Title: Assistant Corporate Title: Chairman and
Secretary Chief Executive
Officer
Witness:
/s/ Michael W. Scott /s/ Katherine D. Ortega
- ------------------------------- ------------------------------
Michael W. Scott Katherine D. Ortega
</TABLE>
- 10 -
<PAGE> 11
EXHIBIT A
Policies of insurance providing indemnification of Directors and Officers for a
claim alleging a wrongful act on their part and/or reimbursement to the Company
for damages due to indemnification by the Company which may be required or
permittted by law.
<TABLE>
<CAPTION>
Insurance Limits of Policy
Company Liability Deductible Number Term
- --------- --------- ---------- ------ ----
($ millions)
<S> <C> <C> <C> <C>
Associated $35 - DOO4OA 8/26/92
Electric & 1A92 8/26/93
Gas Ins.
Services Ltd.
(AEGIS)
Energy Ins. $50 Underlying 900153 8/26/92
Mutual Ltd. X/O Coverage 92DO 8/26/93
(EIM) $35
XL Ins. $25 Underlying XLDCR 8/26/92
Co. Ltd. X/O Coverage 00278-92 8/26/93
$85
ACE Ins. $50 Underlying AD071 8/26/92
Co. Ltd. X/O Coverage 826 8/26/93
$110
</TABLE>
- 11 -
<PAGE> 1
AGREEMENT
This Agreement dated as of April 20, 1993 is made this 30th
day of September 1993 by and between Long Island Lighting Company, a New York
corporation (the "Company"), and Lionel M. Goldberg ("Indemnitee").
W I T N E S S E T H:
WHEREAS, the Indemnitee having reached the mandatory age of
retirement and having served the Company since his retirement as a Director in
the capacity of Consulting Director, the Company, as an additional inducement
to Indemnitee to continue to serve the Company, has agreed to provide
Indemnitee with the benefits contemplated by this Agreement which benefits are
intended to supplement or replace, if necessary, the Company's existing
directors' and officers' liability insurance; and
WHEREAS, as a result of the provision of such benefits
Indemnitee has agreed to serve or to continue to serve as a director and/or
officer of the Company;
NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, including the Indemnitee's
continued service to the Company, the Company and Indemnitee hereby agree as
follows:
1. Definitions. The following terms, as used herein, shall
have the following respective meanings:
"Adverse Determination" means a Determination (as hereinafter
defined) that Indemnitee is not entitled to be fully indemnified by the Company
for Losses and Expenses in connection with any actual or threatened action,
suit or proceeding, whether civil, criminal or investigative, against
Indemnitee because the claim is an Excluded Claim or because Indemnitee is not
otherwise entitled to payment under this Agreement.
<PAGE> 2
"Change of Control" means any transaction or event where (a)
the Company merges with, or consolidates into, another person or entity, (b)
all or a substantial portion of the assets of the Company are transferred to
another person or entity unless the sale is approved by a majority of the
Continuing Directors, (c) any person or group of persons (as defined in Rule
13d-5 promulgated under the Securities Exchange Act of 1934), together with its
affiliates, is or becomes the beneficial owner (as defined in Rule 13d-3 under
such Act), directly or indirectly, of securities of the Company (including
securities convertible at the option of the holder into securities of the
Company ordinarily having the right to vote in elections of directors) which
together represent or would together represent, after giving effect to any
conversion, in excess of 40 percent of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote in
elections of directors, (d) a liquidator, trustee or other similar person is
appointed for all or substantially all of the assets of the Company, or (e)
Continuing Directors no longer constitute at least a majority of the Company's
Board. For purposes of this Agreement, (y) the Company's class of Preferred
Stock shall not be deemed to be securities of the Company ordinarily having the
right to vote in elections of directors, and (z) "Continuing Director" means
any individual who was a member of the Company's Board on March 15, 1987, or is
designated (before such person's initial election as a director) as a
Continuing Director by a majority of the then remaining Continuing Directors.
"Covered Amount" means Losses and Expenses which, in type or
amount, are not insured under the D&O Insurance maintained by the Company from
time to time.
"Covered Act" means any breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done or wrongfully
attempted by Indemnitee or any of the foregoing alleged by any claimant or any
claim against Indemnitee solely by reason of being a director or officer of the
Company or serving at the request of the Company any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity.
"D&O Insurance" means the directors' and officers' liability
insurance policies currently maintained by the Company, identified in Exhibit A
hereto, and any replacement or substitute policies issued by one or more
reputable insurers providing in all respects coverage at least comparable to
and in the same amount as that provided under the policies identified in
Exhibit A.
- 2 -
<PAGE> 3
"Determination" means a determination, based on the facts
known at the time, made by:
(i) A majority vote of a quorum of Disinterested Directors; or
(ii) Independent legal counsel in a written opinion prepared
at the request of a majority of a quorum of Disinterested Directors; or
(iii) A majority of the disinterested shareholders of the
Company; or
(iv) A final adjudication by a court of competent
jurisdiction; provided, however, that after a Change of Control occurs, a
"Determination" shall mean only a final adjudication by a court of competent
jurisdiction.
"Determined" shall have a correlative meaning.
"Disinterested Director" means a director of the Company who
is not and was not a party to the action, suit or proceeding in respect of
which indemnification is sought.
"Excluded Claim" means any payment for Losses or Expenses in
connection with any claim the payment of which by the Company under this
Agreement is not permitted by applicable law.
"Expenses" means any reasonable expenses incurred by
Indemnitee as a result of a claim or claims made against him for Covered Acts
including, without limitation, attorneys fees and disbursements and costs of
investigative, judicial or administrative proceedings or appeals, but shall not
include Fines.
"Fines" means any fine, penalty or, with respect to an
employee benefit plan, any excise tax or penalty assessed with respect thereto,
but only to the extent such may not be indemnified by the Company under
applicable law.
"Losses" means any amounts which Indemnitee is legally
obligated to pay as a result of a claim or claims made against him for Covered
Acts including, without limitation, damages and judgments and sums paid in
settlement of a claim or claims, but shall not include Fines.
2. Maintenance of D&O Insurance.
(a) The Company hereby represents and warrants that
the insurance policies identified in Exhibit A contain all policies of
directors' and officers' liability insurance currently maintained by the
Company and that such policies are in full force and effect.
- 3 -
<PAGE> 4
(b) In all policies of D&O Insurance, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee the same
rights and benefits, subject to the same limitations, as are accorded to the
Company's directors or officers most favorably insured by such policy.
(c) The Company hereby covenants and agrees that, so
long as Indemnitee shall continue to serve as a director and/or officer of the
Company and thereafter so long as Indemnitee shall be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal or investigative, by reason of the fact that Indemnitee was a
director and/or officer of the Company, the Company, shall maintain in full
force and effect D&O Insurance; provided, however, that prior to a Change of
Control, the Company shall have no obligation to maintain D&O Insurance if the
Company determines in good faith that such insurance is not reasonably
available, the premium costs for such insurance are disproportionate to the
amount of coverage provided, or the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit. Subsequent to
a Change of Control, the Company shall maintain in full force and effect D&O
Insurance.
3. Indemnification. The Company shall indemnify Indemnitee
and hold him harmless to the extent of the Covered Amount from any and all
Losses and Expenses subject, in each case, to the further provisions of this
Agreement.
4. Excluded Coverage.
(a) The Company shall have no obligation to indemnify
Indemnitee for and hold him harmless from any Loss or Expense which has been
Determined to constitute an Excluded Claim.
(b) The Company shall have no obligation pursuant to
this Agreement to indemnify Indemnitee and hold him harmless for any Loss or
Expense to the extent that Indemnitee is indemnified by the Company pursuant to
the Company's By-Laws or otherwise indemnified and in each case he actually
receives payment of such indemnity amount.
5. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of
the commencement of or the threat of commencement of any action, suit or
proceeding, Indemnitee may, if indemnification with respect thereto may be
sought from the Company under this
- 4 -
<PAGE> 5
Agreement, notify the Company of the commencement thereof, but Indemnitee's
failure to so notify the Company shall not affect his right to indemnification
hereunder.
(b) If, at the time of the receipt of such notice,
the Company has D&O Insurance in effect, the Company shall give prompt notice
to the insurers of the commencement or the threat of commencement of such
action, suit or proceeding in accordance with the procedures set forth in the
respective policies in favor of Indemnitee. The Company shall thereafter take
all necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such actual or
threatened action, suit or proceeding in accordance with the terms of such
policies.
(c) To the extent the Company does not, at the time
of the commencement of or the threat of commencement of such action, suit or
proceeding, have applicable D&O Insurance, or if a Determination is not made
that any Expenses arising out of such action, suit or proceeding will be
payable under the D&O Insurance then in effect, the Company shall be obligated
to advance the Expenses of any such action, suit or proceeding as they are
billed and in advance of the final disposition thereof and the Company, if
appropriate, shall be entitled to assume the defense of such action, suit or
proceeding, with counsel satisfactory to Indemnitee in his sole discretion,
upon the delivery to Indemnitee of written notice of its election so to do.
After delivery of such notice, the Company will not be liable to Indemnitee
under this Agreement for any legal or other Expenses subsequently incurred by
the Indemnitee in connection with such defense other than reasonable Expenses
of investigation; provided that Indemnitee shall have the right to employ his
own counsel in any such action, suit or proceeding but the fees and expenses of
such counsel incurred after delivery of notice from the Company of its
assumption of such defense shall be at the Indemnitee's expense; provided
further that if (i) the employment of his own counsel by Indemnitee has been
previously authorized by the Company, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, (iii) a Change of Control shall
have occurred before or during the actual or threatened action, suit or
proceeding, or (iv) the Company shall not, in fact, have employed counsel to
assume the defense of such actual or threatened action, suit or proceeding, the
fees and disbursements of counsel chosen by Indemnitee in his sole discretion
shall be at the expense of the Company.
- 5 -
<PAGE> 6
(d) All payments on account of the Company's
indemnification obligations under this Agreement shall be made within sixty
(60) days of Indemnitee's written request therefor unless a Determination is
made that the claims giving rise to Indemnitee's request are Excluded Claims or
otherwise not payable under this Agreement, provided that all payments on
account of the Company's obligations under Section 5(c) of this Agreement prior
to the final disposition of any action, suit or proceeding shall be made within
20 days of Indemnitee's written request therefor and such obligation shall not
be subject to any such Determination but shall be subject to Section 5(e) of
this Agreement.
(e) Indemnitee agrees that he will (without interest)
reimburse the Company for Losses and Expenses paid by the Company pursuant to
this Agreement in connection with any actual or threatened action, suit or
proceeding against Indemnitee in the event and only to the extent that a
Determination shall have been made by a court in a final adjudication from
which there is no further right of appeal that the Indemnitee is not entitled
to be indemnified by the Company for such Losses or Expenses because the claim
is an Excluded Claim or because Indemnitee is otherwise not entitled to payment
under this Agreement.
6. Settlement. The Company shall have no obligation to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any pending or threatened action, suit or proceeding effected without the
Company's prior written consent prior to a Change of Control, but shall have
the obligation to so indemnify Indemnitee in any such settlement effected
without the Company's prior written consent upon or after a Change of Control.
The Company shall not settle any claim in any manner which would impose any
Fine or any obligation on Indemnitee without Indemnitee's written consent.
Neither the Company nor Indemnitee shall unreasonably withhold their consent to
any proposed settlement.
7. Presumptions and Effect of Certain Proceedings. The
Secretary of the Company shall, promptly upon receipt of Indemnitee's request
for indemnification, advise in writing the Board of Directors or such other
person or persons empowered to make the Determination as provided in Section 5
hereof that Indemnitee shall be presumed to be entitled to indemnification
hereunder and the Company shall have the burden of proof in the making of any
Determination contrary to such presumption. If the person or persons so
empowered to make such Determination shall have failed to make the requested
Determination within 60 days after receipt by the Company of such request, the
requisite Determination of entitlement to indemnification shall be deemed
- 6 -
<PAGE> 7
to have been made and Indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 5 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the cause of action adjudicated or that he personally gained in fact a
financial profit or other advantage to which he was not legally entitled; or
(b) otherwise adversely affect the rights of Indemnitee to indemnification
except as may be provided herein.
8. Rights Not Exclusive. Nothing herein shall limit or
affect any right of Indemnitee otherwise than hereunder to indemnification or
advancement of expenses, including attorneys fees, under any statute, rule,
regulation, certificate of incorporation, by-law, insurance policy, contract,
vote of disinterested shareholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in any other
capacity by holding such office, and shall continue after the Indemnitee ceases
to serve the Company as a director and/or officer.
9. Enforcement.
(a) Indemnitee's right to indemnification shall be
enforceable by Indemnitee in the state courts of the State of New York or the
United States District Courts for the Southern or Eastern Districts of New York
and shall be enforceable by Indemnitee notwithstanding any Adverse
Determination (except an Adverse Determination not subject to further appeal by
a court of competent jurisdiction). In any such action, if a prior Adverse
Determination has been made, the burden of proving that indemnification is
required under this Agreement shall be on Indemnitee. The Company shall have
the burden of proving that indemnification is not required under this Agreement
if no prior Adverse Determination shall have been made.
(b) In the event that any action is instituted by
Indemnitee under this Agreement, or to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all court costs and
expenses, including reasonable counsel fees ("Enforcement Expenses"), incurred
by Indemnitee with respect to such action. If the payment by the Company of
any of the Enforcement Expenses results in the recognition by the Indemnitee of
taxable income for Federal, state or local tax purposes, the Company, to the
extent permitted by law, shall make an additional payment to Indemnitee which,
when added to the
- 7 -
<PAGE> 8
Enforcement Expenses, results in a net after-tax benefit to Indemnitee equal to
the Enforcement Expenses, unless the court determines that each of the material
assertions made by Indemnitee as a basis for such action were not made in good
faith or were frivolous.
(c) Subsequent to a Change of Control and unless and
until a court of competent jurisdiction makes an Adverse Determination which
becomes final and not subject to further appeal, Indemnitee (whether or not
still serving as a director and/or officer of the Company) and Indemnitee's
agents, for purposes of enforcing this Agreement and investigating, defending
and/or settling any claim for which indemnification may be available under this
Agreement, shall have full access to the Company's employees and records to the
same extent that Indemnitee now has, and the Company at its expense will
provide Indemnitee with copies of any such records requested by Indemnitee or
Indemnitee's agents. The Company will cooperate fully with Indemnitee in
making such records and employees available in connection with the
investigation, defense and/or settlement of any such claim.
(d) The Company hereby waives, effective upon a
Change of Control, any objections it may have, whether based upon conflict of
interest or otherwise, to any attorney or law firm which has represented the
Company within the past five years in connection with any matter or may
hereafter represent the Company in connection with any matter, and
affirmatively agrees that any such attorney may represent Indemnitee in
connection with the interpretation, construction or enforcement of this
Agreement or of the Trust (as that term is defined in Section 15) or in any
other matter.
(e) The Company hereby authorizes any attorney,
effective upon a Change of Control, to appear on its behalf in any state court
of the State of New York or the United States District Court for the Southern
or Eastern District of New York to consent to summary judgment in favor of
Indemnitee in any declaratory judgment action brought by Indemnitee to
determine the validity and enforceability of this Agreement and of the Trust.
10. Severability. In the event that any provision of this
Agreement is determined by a final order not subject to further appeal of a
court of competent jurisdiction to require the Company to do or to fail to do
an act which is in violation of applicable law, such provision shall be limited
or modified in its application to the minimum extent necessary to avoid a
- 8 -
<PAGE> 9
violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their terms.
11. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
12. Consent to Jurisdiction. The Company and the Indemnitee
each hereby irrevocably consent to the jurisdiction of the courts of the State
of New York and the United States District Courts for the Southern and Eastern
Districts of New York for all purposes in connection with any action or
proceeding which arises out of or relates to this Agreement and agree that any
action instituted under this Agreement shall be brought only in the state
courts of the State of New York and the United States District Courts for the
Southern and Eastern Districts of New York.
13. Successors and Assigns. This Agreement shall be (i)
binding upon all successors and assigns of the Company (including any
transferee of all or substantially all of its assets and any successor by
merger or otherwise by operation of law) and (ii) shall be binding on and inure
to the benefit of the heirs, personal representatives and estate of Indemnitee.
14. Amendment. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in a writing
signed by each of the parties hereto.
IN WITNESS WHEREOF, the Company and Indemnitee have executed
this Agreement as of the day and year first above written.
<TABLE>
<S> <C>
Attest: LONG ISLAND LIGHTING COMPANY
By: /s/ H. M. Leiman By: /s/ W. J. Catacosinos
------------------------ -----------------------
Herbert M. Leiman William J. Catacosinos
Title: Assistant Corporate Title: Chairman and
Secretary Chief Executive
Officer
Witness:
/s/ Jean Burger /s/ L. M. Goldberg
- ------------------------------- ------------------------------
Jean Burger Lionel M. Goldberg
</TABLE>
- 9 -
<PAGE> 10
EXHIBIT A
Policies of insurance providing indemnification of Directors and Officers for a
claim alleging a wrongful act on their part and/or reimbursement to the Company
for damages due to indemnification by the Company which may be required or
permitted by law.
<TABLE>
<CAPTION>
Insurance Limits of Policy
Company Liability Deductible Number Term
- --------- --------- ---------- ------ ----
($ millions)
<S> <C> <C> <C> <C>
Associated $35 At least DOO4OA 8/26/93
Electric & $5,000 but 1A93 8/26/94
Gas Ins. no more than
Services Ltd. $55,000
(AEGIS)
Energy Ins. $50 Underlying 900153 8/26/93
Mutual Ltd. X/O Coverage 92DO 8/26/94
(EIM) $35
Continental $15 Underlying DSB 8/26/93
Ins. Co. X/O Coverage 082593-1 8/26/94
$85
Zurich Ins. $10 Underlying DSB 8/26/93
Co. X/O Coverage 082593-2 8/26/94
$100
ACE Ins. $45 Underlying LIL 8/26/93
Co. Ltd. X/O Coverage 7035D 8/26/94
$110
Zurich Ins. $15 Underlying DSB 8/26/93
Co. X/O Coverage 082593-3 8/26/94
$155
XL Ins. $10 Underlying XLDCR 8/26/93
Co. Ltd. X/O Coverage 00278-93 8/26/94
$170
ACE Ins. $5 Underlying LIL 8/26/93
Co. Ltd. X/O Coverage 7036D 8/26/94
$180
</TABLE>
- 10 -
<PAGE> 1
AGREEMENT
This Agreement dated as of April 20, 1993 is made this 30th
day of September 1993 by and between Long Island Lighting Company, a New York
corporation (the "Company"), and Eben W. Pyne ("Indemnitee").
W I T N E S S E T H:
WHEREAS, the Indemnitee has reached the mandatory age of
retirement and the Company has requested him to continue to serve the Company
as a Consulting Director; and
WHEREAS, the Company, as an additional inducement to
Indemnitee to continue to serve the Company, has agreed to provide Indemnitee
with the benefits contemplated by this Agreement which benefits are intended to
supplement or replace, if necessary, the Company's existing directors' and
officers' liability insurance; and
WHEREAS, as a result of the provision of such benefits
Indemnitee has agreed to serve or to continue to serve as a director and/or
officer of the Company;
NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, including the Indemnitee's
continued service to the Company, the Company and Indemnitee hereby agree as
follows:
1. Definitions. The following terms, as used herein, shall
have the following respective meanings:
"Adverse Determination" means a Determination (as hereinafter
defined) that Indemnitee is not entitled to be fully indemnified by the Company
for Losses and Expenses in connection with any actual or threatened action,
suit or proceeding, whether civil, criminal or investigative, against
Indemnitee because the claim is an Excluded Claim or because Indemnitee is not
otherwise entitled to payment under this Agreement.
<PAGE> 2
"Change of Control" means any transaction or event where (a)
the Company merges with, or consolidates into, another person or entity, (b)
all or a substantial portion of the assets of the Company are transferred to
another person or entity unless the sale is approved by a majority of the
Continuing Directors, (c) any person or group of persons (as defined in Rule
13d-5 promulgated under the Securities Exchange Act of 1934), together with its
affiliates, is or becomes the beneficial owner (as defined in Rule 13d-3 under
such Act), directly or indirectly, of securities of the Company (including
securities convertible at the option of the holder into securities of the
Company ordinarily having the right to vote in elections of directors) which
together represent or would together represent, after giving effect to any
conversion, in excess of 40 percent of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote in
elections of directors, (d) a liquidator, trustee or other similar person is
appointed for all or substantially all of the assets of the Company, or (e)
Continuing Directors no longer constitute at least a majority of the Company's
Board. For purposes of this Agreement, (y) the Company's class of Preferred
Stock shall not be deemed to be securities of the Company ordinarily having the
right to vote in elections of directors, and (z) "Continuing Director" means
any individual who was a member of the Company's Board on March 15, 1987, or is
designated (before such person's initial election as a director) as a
Continuing Director by a majority of the then remaining Continuing Directors.
"Covered Amount" means Losses and Expenses which, in type or
amount, are not insured under the D&O Insurance maintained by the Company from
time to time.
"Covered Act" means any breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done or wrongfully
attempted by Indemnitee or any of the foregoing alleged by any claimant or any
claim against Indemnitee solely by reason of being a director or officer of the
Company or serving at the request of the Company any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity.
"D&O Insurance" means the directors' and officers' liability
insurance policies currently maintained by the Company, identified in Exhibit A
hereto, and any replacement or substitute policies issued by one or more
reputable insurers providing in all respects coverage at least comparable to
and in the same amount as that provided under the policies identified in
Exhibit A.
- 2 -
<PAGE> 3
"Determination" means a determination, based on the facts
known at the time, made by:
(i) A majority vote of a quorum of Disinterested Directors; or
(ii) Independent legal counsel in a written opinion prepared
at the request of a majority of a quorum of Disinterested Directors; or
(iii) A majority of the disinterested shareholders of the
Company; or
(iv) A final adjudication by a court of competent
jurisdiction; provided, however, that after a Change of Control occurs, a
"Determination" shall mean only a final adjudication by a court of competent
jurisdiction.
"Determined" shall have a correlative meaning.
"Disinterested Director" means a director of the Company who
is not and was not a party to the action, suit or proceeding in respect of
which indemnification is sought.
"Excluded Claim" means any payment for Losses or Expenses in
connection with any claim the payment of which by the Company under this
Agreement is not permitted by applicable law.
"Expenses" means any reasonable expenses incurred by
Indemnitee as a result of a claim or claims made against him for Covered Acts
including, without limitation, attorneys fees and disbursements and costs of
investigative, judicial or administrative proceedings or appeals, but shall not
include Fines.
"Fines" means any fine, penalty or, with respect to an
employee benefit plan, any excise tax or penalty assessed with respect thereto,
but only to the extent such may not be indemnified by the Company under
applicable law.
"Losses" means any amounts which Indemnitee is legally
obligated to pay as a result of a claim or claims made against him for Covered
Acts including, without limitation, damages and judgments and sums paid in
settlement of a claim or claims, but shall not include Fines.
2. Maintenance of D&O Insurance.
(a) The Company hereby represents and warrants that
the insurance policies identified in Exhibit A contain all policies of
directors' and officers' liability insurance currently maintained by the
Company and that such policies are in full force and effect.
- 3 -
<PAGE> 4
(b) In all policies of D&O Insurance, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee the same
rights and benefits, subject to the same limitations, as are accorded to the
Company's directors or officers most favorably insured by such policy.
(c) The Company hereby covenants and agrees that, so
long as Indemnitee shall continue to serve as a director and/or officer of the
Company and thereafter so long as Indemnitee shall be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal or investigative, by reason of the fact that Indemnitee was a
director and/or officer of the Company, the Company, shall maintain in full
force and effect D&O Insurance; provided, however, that prior to a Change of
Control, the Company shall have no obligation to maintain D&O Insurance if the
Company determines in good faith that such insurance is not reasonably
available, the premium costs for such insurance are disproportionate to the
amount of coverage provided, or the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit. Subsequent to
a Change of Control, the Company shall maintain in full force and effect D&O
Insurance.
3. Indemnification. The Company shall indemnify Indemnitee
and hold him harmless to the extent of the Covered Amount from any and all
Losses and Expenses subject, in each case, to the further provisions of this
Agreement.
4. Excluded Coverage.
(a) The Company shall have no obligation to indemnify
Indemnitee for and hold him harmless from any Loss or Expense which has been
Determined to constitute an Excluded Claim.
(b) The Company shall have no obligation pursuant to
this Agreement to indemnify Indemnitee and hold him harmless for any Loss or
Expense to the extent that Indemnitee is indemnified by the Company pursuant to
the Company's By-Laws or otherwise indemnified and in each case he actually
receives payment of such indemnity amount.
5. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of
the commencement of or the threat of commencement of any action, suit or
proceeding, Indemnitee may, if indemnification with respect thereto may be
sought from the Company under this
- 4 -
<PAGE> 5
Agreement, notify the Company of the commencement thereof, but Indemnitee's
failure to so notify the Company shall not affect his right to indemnification
hereunder.
(b) If, at the time of the receipt of such notice,
the Company has D&O Insurance in effect, the Company shall give prompt notice
to the insurers of the commencement or the threat of commencement of such
action, suit or proceeding in accordance with the procedures set forth in the
respective policies in favor of Indemnitee. The Company shall thereafter take
all necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such actual or
threatened action, suit or proceeding in accordance with the terms of such
policies.
(c) To the extent the Company does not, at the time
of the commencement of or the threat of commencement of such action, suit or
proceeding, have applicable D&O Insurance, or if a Determination is not made
that any Expenses arising out of such action, suit or proceeding will be
payable under the D&O Insurance then in effect, the Company shall be obligated
to advance the Expenses of any such action, suit or proceeding as they are
billed and in advance of the final disposition thereof and the Company, if
appropriate, shall be entitled to assume the defense of such action, suit or
proceeding, with counsel satisfactory to Indemnitee in his sole discretion,
upon the delivery to Indemnitee of written notice of its election so to do.
After delivery of such notice, the Company will not be liable to Indemnitee
under this Agreement for any legal or other Expenses subsequently incurred by
the Indemnitee in connection with such defense other than reasonable Expenses
of investigation; provided that Indemnitee shall have the right to employ his
own counsel in any such action, suit or proceeding but the fees and expenses of
such counsel incurred after delivery of notice from the Company of its
assumption of such defense shall be at the Indemnitee's expense; provided
further that if (i) the employment of his own counsel by Indemnitee has been
previously authorized by the Company, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, (iii) a Change of Control shall
have occurred before or during the actual or threatened action, suit or
proceeding, or (iv) the Company shall not, in fact, have employed counsel to
assume the defense of such actual or threatened action, suit or proceeding, the
fees and disbursements of counsel chosen by Indemnitee in his sole discretion
shall be at the expense of the Company.
- 5 -
<PAGE> 6
(d) All payments on account of the Company's
indemnification obligations under this Agreement shall be made within sixty
(60) days of Indemnitee's written request therefor unless a Determination is
made that the claims giving rise to Indemnitee's request are Excluded Claims or
otherwise not payable under this Agreement, provided that all payments on
account of the Company's obligations under Section 5(c) of this Agreement prior
to the final disposition of any action, suit or proceeding shall be made within
20 days of Indemnitee's written request therefor and such obligation shall not
be subject to any such Determination but shall be subject to Section 5(e) of
this Agreement.
(e) Indemnitee agrees that he will (without interest)
reimburse the Company for Losses and Expenses paid by the Company pursuant to
this Agreement in connection with any actual or threatened action, suit or
proceeding against Indemnitee in the event and only to the extent that a
Determination shall have been made by a court in a final adjudication from
which there is no further right of appeal that the Indemnitee is not entitled
to be indemnified by the Company for such Losses or Expenses because the claim
is an Excluded Claim or because Indemnitee is otherwise not entitled to payment
under this Agreement.
6. Settlement. The Company shall have no obligation to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any pending or threatened action, suit or proceeding effected without the
Company's prior written consent prior to a Change of Control, but shall have
the obligation to so indemnify Indemnitee in any such settlement effected
without the Company's prior written consent upon or after a Change of Control.
The Company shall not settle any claim in any manner which would impose any
Fine or any obligation on Indemnitee without Indemnitee's written consent.
Neither the Company nor Indemnitee shall unreasonably withhold their consent to
any proposed settlement.
7. Presumptions and Effect of Certain Proceedings. The
Secretary of the Company shall, promptly upon receipt of Indemnitee's request
for indemnification, advise in writing the Board of Directors or such other
person or persons empowered to make the Determination as provided in Section 5
hereof that Indemnitee shall be presumed to be entitled to indemnification
hereunder and the Company shall have the burden of proof in the making of any
Determination contrary to such presumption. If the person or persons so
empowered to make such Determination shall have failed to make the requested
Determination within 60 days after receipt by the Company of such request, the
requisite Determination of entitlement to indemnification shall be deemed
- 6 -
<PAGE> 7
to have been made and Indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 5 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the cause of action adjudicated or that he personally gained in fact a
financial profit or other advantage to which he was not legally entitled; or
(b) otherwise adversely affect the rights of Indemnitee to indemnification
except as may be provided herein.
8. Rights Not Exclusive. Nothing herein shall limit or
affect any right of Indemnitee otherwise than hereunder to indemnification or
advancement of expenses, including attorneys fees, under any statute, rule,
regulation, certificate of incorporation, by-law, insurance policy, contract,
vote of disinterested shareholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in any other
capacity by holding such office, and shall continue after the Indemnitee ceases
to serve the Company as a director and/or officer.
9. Enforcement.
(a) Indemnitee's right to indemnification shall be
enforceable by Indemnitee in the state courts of the State of New York or the
United States District Courts for the Southern or Eastern Districts of New York
and shall be enforceable by Indemnitee notwithstanding any Adverse
Determination (except an Adverse Determination not subject to further appeal by
a court of competent jurisdiction). In any such action, if a prior Adverse
Determination has been made, the burden of proving that indemnification is
required under this Agreement shall be on Indemnitee. The Company shall have
the burden of proving that indemnification is not required under this Agreement
if no prior Adverse Determination shall have been made.
(b) In the event that any action is instituted by
Indemnitee under this Agreement, or to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all court costs and
expenses, including reasonable counsel fees ("Enforcement Expenses"), incurred
by Indemnitee with respect to such action. If the payment by the Company of
any of the Enforcement Expenses results in the recognition by the Indemnitee of
taxable income for Federal, state or local tax purposes, the Company, to the
extent permitted by law, shall make an additional payment to Indemnitee which,
when added to the
- 7 -
<PAGE> 8
Enforcement Expenses, results in a net after-tax benefit to Indemnitee equal to
the Enforcement Expenses, unless the court determines that each of the material
assertions made by Indemnitee as a basis for such action were not made in good
faith or were frivolous.
(c) Subsequent to a Change of Control and unless and
until a court of competent jurisdiction makes an Adverse Determination which
becomes final and not subject to further appeal, Indemnitee (whether or not
still serving as a director and/or officer of the Company) and Indemnitee's
agents, for purposes of enforcing this Agreement and investigating, defending
and/or settling any claim for which indemnification may be available under this
Agreement, shall have full access to the Company's employees and records to the
same extent that Indemnitee now has, and the Company at its expense will
provide Indemnitee with copies of any such records requested by Indemnitee or
Indemnitee's agents. The Company will cooperate fully with Indemnitee in
making such records and employees available in connection with the
investigation, defense and/or settlement of any such claim.
(d) The Company hereby waives, effective upon a
Change of Control, any objections it may have, whether based upon conflict of
interest or otherwise, to any attorney or law firm which has represented the
Company within the past five years in connection with any matter or may
hereafter represent the Company in connection with any matter, and
affirmatively agrees that any such attorney may represent Indemnitee in
connection with the interpretation, construction or enforcement of this
Agreement or of the Trust (as that term is defined in Section 15) or in any
other matter.
(e) The Company hereby authorizes any attorney,
effective upon a Change of Control, to appear on its behalf in any state court
of the State of New York or the United States District Court for the Southern
or Eastern District of New York to consent to summary judgment in favor of
Indemnitee in any declaratory judgment action brought by Indemnitee to
determine the validity and enforceability of this Agreement and of the Trust.
10. Severability. In the event that any provision of this
Agreement is determined by a final order not subject to further appeal of a
court of competent jurisdiction to require the Company to do or to fail to do
an act which is in violation of applicable law, such provision shall be limited
or modified in its application to the minimum extent necessary to avoid a
- 8 -
<PAGE> 9
violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their terms.
11. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
12. Consent to Jurisdiction. The Company and the Indemnitee
each hereby irrevocably consent to the jurisdiction of the courts of the State
of New York and the United States District Courts for the Southern and Eastern
Districts of New York for all purposes in connection with any action or
proceeding which arises out of or relates to this Agreement and agree that any
action instituted under this Agreement shall be brought only in the state
courts of the State of New York and the United States District Courts for the
Southern and Eastern Districts of New York.
13. Successors and Assigns. This Agreement shall be (i)
binding upon all successors and assigns of the Company (including any
transferee of all or substantially all of its assets and any successor by
merger or otherwise by operation of law) and (ii) shall be binding on and inure
to the benefit of the heirs, personal representatives and estate of Indemnitee.
14. Amendment. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in a writing
signed by each of the parties hereto.
IN WITNESS WHEREOF, the Company and Indemnitee have executed
this Agreement as of the day and year first above written.
Attest: LONG ISLAND LIGHTING COMPANY
By: Herbert M. Leiman By: William J. Catacosinos
----------------- ----------------------
Herbert M. Leiman William J. Catacosinos
Title: Assistant Corporate Title: Chairman and
Secretary Chief Executive
Officer
Witness:
Susan Ingenito Eben W. Pyne
-------------- ------------
Eben W. Pyne
- 9 -
<PAGE> 10
EXHIBIT A
Policies of insurance providing indemnification of Directors and Officers for a
claim alleging a wrongful act on their part and/or reimbursement to the Company
for damages due to indemnification by the Company which may be required or
permitted by law.
<TABLE>
<CAPTION>
Insurance Limits of Policy
Company Liability Deductible Number Term
- --------- --------- ---------- ------ ----
($ millions)
<S> <C> <C> <C> <C>
Associated $35 At least DOO4OA 8/26/93
Electric & $5,000 but 1A93 8/26/94
Gas Ins. no more than
Services Ltd. $55,000
(AEGIS)
Energy Ins. $50 Underlying 900153 8/26/93
Mutual Ltd. X/O Coverage 92DO 8/26/94
(EIM) $35
Continental $15 Underlying DSB 8/26/93
Ins. Co. X/O Coverage 082593-1 8/26/94
$85
Zurich Ins. $10 Underlying DSB 8/26/93
Co. X/O Coverage 082593-2 8/26/94
$100
ACE Ins. $45 Underlying LIL 8/26/93
Co. Ltd. X/O Coverage 7035D 8/26/94
$110
Zurich Ins. $15 Underlying DSB 8/26/93
Co. X/O Coverage 082593-3 8/26/94
$155
XL Ins. $10 Underlying XLDCR 8/26/93
Co. Ltd. X/O Coverage 00278-93 8/26/94
$170
ACE Ins. $5 Underlying LIL 8/26/93
Co. Ltd. X/O Coverage 7036D 8/26/94
$180
</TABLE>
- 10 -
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Post-Effective
Amendment No. 3 to Registration Statement (No 33-16238) on Form S-8 relating to
Long Island Lighting Company's Employee Stock Purchase Plan, Post-Effective
Amendment No. 1 to Registration Statement (No. 2-87427) on Form S-3 relating to
Long Island Lighting Company's Automatic Dividend Reinvestment Plan and in the
related Prospectus, Registration Statement (No. 2-88578) on Form S-3 relating
to the issuance of Common Stock and in the related Prospectus and Registration
Statement (No. 33-45834) on Form S-3 relating to the issuance of General and
Refunding Bonds and in the related Prospectus and Registration Statement (No.
33-60744) on Form S-3 relating to the issuance of General and Refunding Bonds,
Debentures, Preferred Stock or Common Stock and in the related Prospectus, of
our report dated February 4, 1994, with respect to the financial statements and
schedules of Long Island Lighting Company included in this Annual Report on
Form 10-K for the year ended December 31, 1993.
ERNST & YOUNG
Melville, New York
March 11, 1994
<PAGE> 1
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 18th day of February 1994.
/s/ W. J. CATACOSINOS
--------------------------------
WILLIAM J. CATACOSINOS
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
<PAGE> 2
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 21st day of February 1994.
/s/ WINFIELD E. FROMM
--------------------------------
WINFIELD E. FROMM
<PAGE> 3
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 21st day of February 1994.
/s/ PHYLLIS S. VINEYARD
--------------------------------
PHYLLIS S. VINEYARD
<PAGE> 4
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 21st day of February 1994.
/s/ JOHN H. TALMAGE
------------------------------
JOHN H. TALMAGE
<PAGE> 5
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 21st day of February 1994.
/s/ BASIL A. PATERSON
--------------------------------
BASIL A. PATERSON
<PAGE> 6
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 21st day of February 1994.
/s/ GEORGE BUGLIARELLO
--------------------------------
GEORGE BUGLIARELLO
<PAGE> 7
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 9th day of March 1994.
/s/ GEORGE J. SIDERIS
--------------------------------
GEORGE J. SIDERIS
<PAGE> 8
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 21st day of February 1994.
/s/ A. JAMES BARNES
--------------------------------
A. JAMES BARNES
<PAGE> 9
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 21st day of February 1994.
/s/ RICHARD L. SCHMALENSEE
--------------------------------
RICHARD L. SCHMALENSEE
<PAGE> 10
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 17th day of February 1994.
/s/ RENSO L. CAPORALI
--------------------------------
RENSO L. CAPORALI
<PAGE> 11
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 22nd day of February 1994.
/s/ PETER O. CRISP
--------------------------------
PETER O. CRISP
<PAGE> 12
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 22nd day of February 1994.
/s/ KATHERINE D. ORTEGA
--------------------------------
KATHERINE D. ORTEGA
<PAGE> 13
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K as
prescribed by said Commission pursuant to said Act and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in my capacity either as a director or
officer, or both as the case may be, of said Company, I do hereby appoint
KATHLEEN A. MARION, ANTHONY NOZZOLILLO, and ROBERT J. GREY, and each of them
severally, as my attorneys-in-fact with power to execute in my name and place,
and in my capacity as a director, officer, or both, as the case may be, of LONG
ISLAND LIGHTING COMPANY, said Report, any amendment to said Report and any
other documents required in connection therewith, and to file the same with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have executed this power of attorney
this 21st day of February 1994.
/s/ VICKI L. FULLER
--------------------------------
VICKI L. FULLER
<PAGE> 1
EXHIBIT 24(b)
1993 Form 10-K
LONG ISLAND LIGHTING COMPANY
CERTIFICATE AS TO POWER OF ATTORNEY
WHEREAS, LONG ISLAND LIGHTING COMPANY, a New York corporation,
intends to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, an Annual Report for the year
ended December 31, 1993, on Form 10- K as prescribed by said Commission
pursuant to said Act and the rules and regulations promulgated thereunder.
NOW, THEREFORE, in my capacity as Assistant Corporate
Secretary of Long Island Lighting Company, I do hereby certify that Anthony
Nozzolillo has been appointed by the Board of Directors of Long Island Lighting
Company with power to execute, among other documents, said Report, any
amendment to said Report and any other documents required in connection
therewith, and to file the same with the Securities and Exchange Commission.
WITNESS my hand and the seal of the Company this 10th day of
March, 1994.
/s/ HERBERT M. LEIMAN
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HERBERT M. LEIMAN
Assistant Corporate Secretary
(Corporate Seal)
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Exhibit 24(c)
1993 FORM 10-K
LONG ISLAND LIGHTING COMPANY
I, HERBERT M. LEIMAN, Assistant Corporate Secretary of LONG ISLAND
LIGHTING COMPANY (the "Company"), a New York corporation, DO HEREBY CERTIFY
that annexed hereto is a true, correct and complete copy of the resolution
adopted at a meeting of the Board of Directors of the Company duly called and
held on February 22, 1994, at which meeting a quorum was present and acting
throughout.
AND I DO FURTHER CERTIFY that the foregoing resolution has not been in
any way amended, annulled, rescinded or revoked and that the same is still in
full force and effect.
WITNESS my hand and the seal of the Company this 10th day of March,
1994.
/s/ HERBERT M. LEIMAN
----------------------------
HERBERT M. LEIMAN
Assistant Corporate Secretary
(Corporate Seal)
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LONG ISLAND LIGHTING COMPANY
(Resolution adopted on February 22, 1994)
"RESOLVED, that
1. the proper officers of this Company are authorized to execute and
file with the Securities and Exchange Commission under the Securities Act of
1934, as amended, the Annual Report for the year ended December 31, 1993 on
Form 10-K as prescribed by said Commission pursuant to said Act and the rules
and regulations promulgated thereunder, substantially in the form submitted to
each of the directors with such additional changes therein as the General
Counsel of the Company shall approve (the "Form 10-K");
2. Anthony Nozzolillo, Senior Vice President, and Kathleen A. Marion,
Corporate Secretary, their successors and each of them, are designated as
agents for service in connection with said Report and each of them is
authorized to receive all notices and communications from the Securities and
Exchange Commission respecting said Report and any amendment thereto; and all
powers which are provided by any rules and regulations of said Commission to be
conferred upon persons so designated are hereby conferred upon each of said
officers; and
3. without limiting the authority of any officer of this Company to
act in the premises, Anthony Nozzolillo, Robert J. Grey and Kathleen A.
Marion, their successors and each of them, are hereby appointed
attorneys-in-fact of this Company and the power to execute and file any
instruments and documents, including but not limited to the Annual Report on
Form 10-K, and to make any payments and do any other acts and things, including
the execution and filing of any amendment to said Report as they may deem
necessary or desirable to effect such filing; and the Corporate Secretary or
any Assistant Corporate Secretary, or any other officer of this Company, is
hereby authorized to certify and deliver to the Securities and Exchange
Commission copies of this resolution as evidence of such powers."
