FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
---------------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-42125
Chugach Electric Association, Inc.
(Exact name of registrant as specified in its charter)
Alaska 92-0014224
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5601 Minnesota Drive Anchorage, Alaska 99518
(Address of principal executive offices) (Zip Code)
(907) 563-7494
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last
report)
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 .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT AUGUST 1, 1996
NONE NONE
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
INDEX
Part I. Financial Information Page Number
Balance Sheets, June 30, 1996 (Unaudited) and December 31, 1995 3
Statements of Revenues, Expenses and Patronage Capital, Three Months
Ended June 30, 1996 and 1995 and Six Months Ended June 30, 1996
and 1995 (Unaudited) 5
Statements of Cash Flows, Six Months Ended June 30, 1996 and 1995
(Unaudited) 6
Notes to Financial Statements (Unaudited) 7
Management's Discussion and Analysis of Results of Operations and
Financial Condition (Unaudited) 8
Part II. Other Information
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 15
2
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Assets
<TABLE>
June 30, 1996 December 31, 1995
------------- -----------------
(Unaudited)
<S> <C> <C>
Utility plant:
Electric plant in service ................... $603,883,114 $587,877,992
Construction work in progress ............... 14,473,178 27,068,964
------------ ------------
618,356,292 614,946,956
Less accumulated depreciation ............... 205,806,594 196,677,723
------------ ------------
Net utility plant .......... 412,549,698 418,269,233
------------ ------------
Other property and investments, at cost:
Nonutility property ......................... 3,550 3,550
Investments in associated organizations ..... 7,434,668 7,513,807
Restricted cash - margins from economy
energy sales, all repurchase agreements .. 3,106,891 3,026,634
------------ ------------
10,545,109 10,543,991
------------ ------------
Current assets:
Cash and cash equivalents ................... 6,543,084 6,371,687
Cash - restricted construction funds ........ 150,218 --
Special deposits ........................... 88,098 97,789
Accounts receivable, net .................... 13,807,008 17,108,823
Materials and supplies, at average cost ..... 20,101,770 18,498,783
Prepayments ................................. 1,098,298 675,117
Other current assets ........................ 194,025 412,209
------------ ------------
Total current assets ......... 41,982,501 43,164,408
------------ ------------
Deferred charges ................................. 12,426,271 12,812,691
------------ ------------
$477,503,579 $484,790,323
------------ ------------
</TABLE>
See accompanying notes to unaudited financial statements.
3
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Balance Sheets
Liabilities and Equities
<TABLE>
June 30, 1996 December 31, 1995
------------- -----------------
(Unaudited)
<S> <C> <C>
Equities and margins:
Memberships ..................................... $ 786,973 $ 765,123
Patronage capital ............................... 100,660,740 95,421,358
Other ........................................... 2,980,046 3,044,069
------------ ------------
104,427,759 99,230,550
------------ ------------
Long-term obligations, excluding current installments:
First mortgage bonds payable .................... 252,753,000 294,054,000
National Bank for Cooperatives (CoBank)
bonds payable ................................... 54,972,845 11,587,703
Capital leases .................................. 37,971 --
------------ ------------
307,763,816 305,641,703
------------ ------------
Current liabilities:
Bank overdraft .................................. 1,307,886 492,204
Notes payable ................................... -- 8,000,000
Current installments of long-term debt and
capital leases ............................... 5,992,503 5,665,749
Accounts payable ................................ 3,275,241 6,659,477
Consumer deposits ............................... 1,072,772 1,119,056
Accrued interest ................................ 7,213,877 8,052,786
Salaries, wages and benefits .................... 4,252,323 3,772,608
Fuel ............................................ 2,907,221 2,289,776
Other ........................................... 6,200,514 2,624,341
------------ ------------
Total current liabilities ......... 32,222,337 38,675,997
------------ ------------
Deferred credits ..................................... 33,089,667 41,242,073
------------ ------------
$477,503,579 $484,790,323
------------ ------------
</TABLE>
See accompanying notes to unaudited financial statements.
4
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Statements of Revenues, Expenses and Patronage Capital
<TABLE>
Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
1996 1995 1996 1995
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating revenues ..................... $ 31,244,744 $ 30,532,734 $ 66,342,456 $ 66,621,461
------------- ------------ ------------- ------------
Operating expenses:
Production ........................ 8,315,461 6,904,656 16,698,051 15,033,884
Purchased power ................... 2,589,753 3,153,558 4,919,195 5,221,425
Transmission ...................... 703,488 897,563 1,586,694 1,608,040
Distribution ...................... 2,387,555 2,455,807 4,831,435 5,067,165
Consumer accounts ................. 1,777,840 1,701,411 3,569,237 3,434,627
Administrative, general and other . 3,247,813 3,463,110 6,673,278 7,041,584
Depreciation and amortization ..... 5,202,482 4,787,554 10,237,550 9,500,332
------------- ------------ ------------- ------------
Total operating expenses .. 24,224,392 23,363,659 48,515,440 46,907,057
------------- ------------ ------------- ------------
Interest:
On long-term debt ................. 5,382,523 6,369,342 12,686,767 12,831,860
Other ............................. 314,902 260,724 500,835 384,837
Charged to construction - credit .. (115,824) (290,449) (238,095) (585,011)
------------- ------------ ------------- ------------
Net interest expense ...... 5,581,601 6,339,617 12,949,507 12,631,686
------------- ------------ ------------- ------------
Net operating margins ..... 1,438,751 829,458 4,877,509 7,082,718
------------- ------------ ------------- ------------
Nonoperating margins:
Interest income ................... 219,982 202,745 391,144 366,106
Other ............................. 37,944 (163,577) 54,490 (87,995)
------------- ------------ ------------- ------------
Total nonoperating margins 257,926 39,168 445,634 278,111
------------- ------------ ------------- ------------
Assignable margins ........ 1,696,677 868,626 5,323,143 7,360,829
Patronage capital at beginning of period 99,013,147 97,532,205 95,421,358 91,079,686
Retirement of capital credits and
estate payments ..................... (49,084) (15,327) (83,761) (55,011)
------------- ------------ ------------- ------------
Patronage capital at end of period ..... $ 100,660,740 $ 98,385,504 $ 100,660,740 $ 98,385,504
------------- ------------ ------------- ------------
</TABLE>
See accompanying notes to unaudited financial statements.
5
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Statement of Cash Flows
<TABLE>
Six months ended June 30
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Assignable margins .......................................................... $ 5,323,143 $ 7,360,829
------------ ------------
Adjustments to reconcile assignable margins to net cash used in operating
activities:
Depreciation and amortization ........................................... 10,237,550 9,500,332
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable ................................................... 3,301,815 2,639,748
Prepayments ........................................................... (423,181) (576,962)
Materials and supplies ................................................ (1,602,987) (877,622)
Deferred charges ...................................................... 386,420 (1,355,874)
Other ................................................................. (2,600) 47,302
Increase (decrease) in liabilities:
Accounts payable ...................................................... (3,384,236) (1,753,708)
Consumer deposits ..................................................... (46,284) (27,104)
Accrued interest ...................................................... (838,909) (181,130)
Deferred credits ...................................................... (8,152,406) (1,322,961)
Other ................................................................. 4,673,332 (888,844)
------------ ------------
Total adjustments ............................................... 4,148,514 5,203,177
------------ ------------
Net cash provided by operating
activities ..................................................... 9,471,657 12,564,006
Cash flows from investing activities:
Extension and replacement of plant .......................................... (4,518,014) (7,757,382)
Investments in associated organizations ..................................... 79,139 128,728
------------ ------------
Net cash used in investing activities ........................... (4,438,875) (7,628,654)
------------ ------------
Cash flows from financing activities:
Net change in bank overdraft ................................................ 815,682 794,352
Short-term borrowings, net .................................................. 14,000,000 3,300,000
Proceeds from long-term debt ................................................ 21,500,000 --
Repayments of long-term debt ................................................ (41,051,134) (5,223,350)
Retirement of patronage capital ............................................. (83,761) (55,011)
Other ....................................................................... (42,172) (23,889)
------------ ------------
Net cash used by financing activities ........................... (4,861,385) (1,207,898)
------------ ------------
Net increase (decrease) in cash and
cash equivalents .............................................. 171,397 3,727,454
Cash and cash equivalents at beginning of period ............................... 6,371,687 5,975,927
------------ ------------
Cash and cash equivalents at end of period ..................................... $ 6,543,084 $ 9,703,381
------------ ------------
</TABLE>
See accompanying notes to unaudited financial statements.
6
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
Notes to Financial Statements
June 30, 1996
(Unaudited)
1. Presentation of Financial Information
During interim periods, Chugach Electric Association, Inc. (Chugach)
follows the accounting policies set forth in its audited financial
statements included in Form 10-K filed with the Securities and Exchange
Commission. Users of interim financial information are encouraged to refer
to footnotes contained in Form 10-K when reviewing interim financial
results. Management believes that the accompanying interim financial
statements reflect all adjustments which are necessary for a fair statement
of the results of the interim period presented. All adjustments made in the
accompanying interim financial statements are of a normal recurring nature.
2. Lines of Credit
Chugach maintains a line of credit of $35 million with National Bank for
Cooperatives (CoBank). The CoBank line of credit expires August 1, 1997 but
is expected to be renewed. At June 30, 1996, $22 million was outstanding at
an interest rate of 6.30%. This balance is expected to be converted to a
long-term bond by the 3rd quarter of 1996, using a credit facility
currently in place. Thus, it is classified in long-term obligations at June
30, 1996. In addition, the Association has an annual line of credit of $50
million available at the National Rural Utilities Cooperative Finance
Corporation (NRUCFC). At June 30, 1996, there was no outstanding balance.
The NRUCFC line of credit expires February 19, 1998.
3. Restricted Cash
Beginning in the first quarter of 1996, Chugach began receiving grant funds
from the Alaska Industrial Development and Export Authority (AIDEA) to
finance the siting study for the Southern Intertie. Under the terms of the
grant agreement, Chugach agreed to deposit these funds in a separate
interest bearing bank account at its main banking institution. Chugach
reimburses itself from this account monthly for expenditures related to the
siting study.
The initial amount approved for the study was $900,000. At June 30, 1996
this account contained a balance of $150,218.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
RESULTS OF OPERATIONS
Current Year Quarter Versus Prior Year Quarter
Operating revenues, which include sales of electric energy to retail, wholesale
and economy energy customers and other miscellaneous revenues, increased by 2.3%
for the quarter ended June 30, 1996 over the same quarter in 1995. The increase
in revenues is attributable to higher kWh sales to retail customers and one of
the wholesale customer classes which more than offset overall decreases in
demand and energy rates charged to both classes. Retail rates decreased by 4.9%
in May of 1995 and remained constant through the quarter ended June 30, 1996.
Rates charged to one wholesale customer class decreased by 5.7% in May of 1995,
by 1.8% in November of 1995 and increased by 2.5% in May of 1996 (on an
interim-refundable basis). Additionally, the combination of these impacts more
than offset lower kWh sales and an overall demand and energy rate decrease to
the other wholesale customer class. Rates to the other wholesale customer class
decreased by 5.0% in May of 1995, by 4.8% in November of 1995 and increased by
5.3% in May of 1996 (again, on an interim-refundable basis (see below)).
The Alaska Public Utilities Commission (APUC) approved Chugach's December 1995
test period Simplified Rate Filing on an interim-refundable basis pending
investigation of several ratemaking issues. For the December 1995 test period,
Chugach filed for a $1.15 million revenue requirement increase which resulted in
proposed wholesale demand and energy rate increases of 2.5% to one of the
wholesale customer classes and 5.3% to the other.
A date certain has not been established for convening a hearing on the issues.
It is not known how the APUC will rule in this proceeding.
On August 7, 1996, the Chugach Board of Directors decided to request permission
of the APUC to withdraw from the Simplified Rate Filing (SRF) method of setting
its base rates. If permitted to withdraw, Chugach would continue to be regulated
by the APUC in the establishment of rate levels and options.
Production expense increased for the quarter ended June 30, 1996 over the same
period in 1995. This increase was due primarily to higher fuel costs associated
with the increase in kWh sales and entering Period 2 under the long-term fuel
supply contracts. For several years prior to this, the price of fuel had been
ramped upwards in order to smooth the transition into Period 2. Entering Period
2 completed the ramp from the inexpensive take-or-pay gas contracts (old Beluga
gas) to the new market-based prices. Thus, future fuel costs are expected to be
higher in comparison to prior periods. Purchased power expense was lower for the
quarter ended June 30, 1996 compared to the same period in 1995. This variance
was substantially due to the operating scenario that existed during the second
quarter of 1995 whereby it was more economical for Chugach to purchase power
from Alaska Electric Generation & Transmission
8
<PAGE>
(AEG&T) on the Kenai Peninsula and from Anchorage Municipal Light & Power
locally than to start one of its own generation units. This operating scenario
did not exist to the same extent during the second quarter of 1996. Transmission
expense was also lower for the quarter ended June 30, 1996 from the same period
in 1995. The majority of this decrease was caused by lower substation and
overhead line maintenance costs.
Interest on long-term debt decreased for the quarter ended June 30, 1996 from
the same period in 1995. This was primarily caused by the repurchase of
Chugach's Series 1 2022 bonds. As previously reported, Chugach repurchased
$15.595 million of the Series 1 2022 bonds during the first quarter of 1996. The
net cost of these transactions was approximately $882,000 which was expensed.
During the second quarter of 1996, Chugach determined that these costs were
recoverable through rates and therefore established a regulatory asset. Thus,
the net cost of the repurchase transaction was deferred and will be amortized to
expense over the life of the replacement debt. In June of 1996, another $20
million of the bonds were repurchased. Combined with the previous repurchases,
approximately $766,000 in net repurchase costs have been deferred. Additionally,
the interest rates on the replacement debt were lower than the repurchased bonds
which also contributed to the decrease. Other interest expense increased in the
current period due to a higher average outstanding balance on the short-term
line of credit. Interest charged to construction decreased for the quarter ended
June 30, 1996 versus the same period in 1995 due to a decrease in the balance in
construction work in progress during the period.
Non-operating margins increased for the second quarter of 1996 because in 1995
the write-off of a failed submarine cable was recorded. There were no similar
events in the second quarter of 1996.
Current Year to Date Versus Prior Year to Date
Operating revenues for the six-month period ended June 30, 1996 decreased by
0.4% from the same period in 1995. These lower revenues were due to decreases in
average rates charged to retail customers and both of the wholesale rate
classes. The rate decreases more than offset higher retail and wholesale kWh
sales.
Production expense increased for the six-month period ended June 30, 1996 for
essentially the same reasons outlined in the quarter to date comparison section.
The other operating expenses remained relatively constant when compared to the
same period in 1995.
Other interest expense increased and interest charged to construction decreased
for the six-months ended June 30, 1996 for the same reasons outlined above in
the analysis of the quarter to quarter variance.
For the six-month period ended June 30, 1996, non-operating margins were higher
than those for the same period in 1995. This is primarily due to the
aforementioned failure of a submarine cable being recorded in 1995. No similar
event occurred in 1996.
Financial Condition
Total assets declined by 1.5% from December 31, 1995 to June 30, 1996. The
decrease is due
9
<PAGE>
primarily to the lower balance in net utility plant. This lower balance was
caused by the higher accumulated depreciation reserve resulting from higher
depreciation rates which have been implemented over a three-year phase-in
program. The seasonal decline in accounts receivable also contributed to the
lower total asset balance. Notable changes to total liabilities include the
decrease in First Mortgage bonds payable and the corresponding increase in
CoBank long-term debt resulting from the repurchases of the Series 1 2022 bonds.
The latest repurchase transaction ($20 million in June 1996) was financed (along
with the associated transaction costs) with a $22 million draw on the short-term
line of credit. This balance is expected to be refinanced into a long-term bond
by the 3rd quarter of 1996 using a credit facility currently in place and thus
has been classified as a long-term liability at June 30, 1996. This also
explains the decrease in the short-term note payable balance. Other liabilities
increased due to the reclassification of the current portions of both the rate
stabilization fund and the submarine cable reserve that will be returned to
customers in 1996 and early 1997.
Liquidity and Capital Resources
Chugach has satisfied its operational and capital cash requirements primarily
through internally generated funds, an annual $50 million line of credit from
National Rural Utilities Cooperative Finance Corporation (NRUCFC) and a $35
million line of credit with CoBank. At June 30, 1996, Chugach had $22 million
outstanding with CoBank which carried an interest rate of 6.30%. As previously
noted, this amount is classified as long-term debt at June 30, 1996. There were
no amounts outstanding on the NRUCFC line at June 30, 1996.
Capital construction in 1996 is estimated at $26 million. At June 30, 1996
approximately $4.5 million has been expended. Capital improvement expenditures
are expected to increase in the third quarter as the construction season began
in April and extends into October.
Chugach has negotiated a supplemental indenture (Third Supplemental Indenture of
Trust) with CoBank for up to $80 million in future bond financing. At June 30,
1996, Chugach had bonds in the amount of $33.2 million outstanding under this
financing arrangement. The balance is comprised of a $1.7 million bond (CoBank
1) which carries an interest rate of 8.95% maturing in 2002, a $10 million bond
(CoBank 2) priced at 7.76% due in 2005 and a $21.5 million bond (CoBank 3)
priced at 6.30% (repriced monthly). Principal payments on the $21.5 million bond
commence in 2003 and continue through 2022. Additionally, Chugach has negotiated
a similar supplemental indenture (Fifth Supplemental Indenture of Trust) with
NRUCFC also for $80 million. At June 30, 1996 there were no amounts outstanding
under this financing arrangement.
To date, Chugach has repurchased $38.095 million of its Series 1 2022 bonds.
This strategy has been in response to the favorable long-term interest rate
environment. Included in this total is the latest repurchase transaction for $20
million of the bonds which took place in June of 1996. Chugach will continue to
explore similar repurchase transactions if market conditions warrant such
action. Except for any further repurchases of its bonds (and any similar future
refinancings), Chugach does not anticipate issuance of additional long-term debt
in 1996.
Chugach management continues to expect that cash flows from operations and
external funding sources will be sufficient to cover operational and capital
funding requirements in 1996.
10
<PAGE>
Chugach's current ratios (total current assets divided by current liabilities)
at December 31, 1995 and June 30, 1996 were as follows:
Current Ratio
December 31, 1995 1.12
June 30, 1996 1.30
Environmental Matters
Regulatory initiatives arising out of recent amendments to state and federal
environmental laws (including the Clean Air Act Amendments of 1990) may require
significant capital expenditures in the future. These initiatives have not
developed to the point where their financial impact on Chugach can be
determined. Chugach is commenting on proposed revisions to the Alaska air
quality protection rules. The Association has focused its efforts on minimizing
the financial impact on Chugach of the new regulations, while meeting the
requirements of State and Federal law. Other environmental compliance changes
will require new substation designs to incorporate spill-containment features.
The cost of incorporating these features has been considered in future
construction work plan projects.
Refer to Part II, Item 1 for an update on the status of the Standard Steel
Salvage Yard Site litigation.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported in the Form 10-Q for the period ended March 31, 1996, a
cost-recovery action was filed in Federal District Court on December 27, 1991,
by the United States against Chugach and six other Potentially Responsible
Parties (PRPs) seeking reimbursement of removal and response action costs (Past
Response Costs) incurred by U.S. EPA at the Standard Steel and Metals Salvage
Yard Superfund Site in Anchorage, Alaska (Site). The six other PRPs named in the
action are the Alaska Railroad, Westinghouse Electric Corporation, Sears,
Roebuck and Co., Montgomery Ward & Co., J.C. Penney Company, Inc. and
Bridgestone/Firestone, Inc.
On September 23, 1992, Chugach entered into an Administrative Order on Consent
(AOC) with the EPA to perform a remedial investigation and feasibility study
(RI/FS) for the Site. Under a separate agreement, several federal agency PRPs
are reimbursing Chugach for 75% of the costs of performing the RI/FS. Chugach's
contractors have now completed the RI/FS for the Site and, based on the results
of the RI/FS, EPA has selected a remedy for cleanup of the Site which has been
documented in a Record of Decision. The preferred remedy for cleanup of the Site
selected by EPA is soil treatment by means of stabilization and solidification.
Although Chugach's contractors completed the RI/FS, EPA has required Chugach to
perform additional work during 1996 pursuant to the AOC, including the removal
from the Site of drums containing regulated materials. In addition, since the
last report in the Form 10-Q, EPA has increased the principal amount of Past
Response Costs.
As reported in the Form 10-Q, all of the PRPs and the United States government,
including EPA and the Department of Justice (DOJ), are negotiating a consent
decree to settle both the cost recovery action and the PRPs' (including the
federal PRPs') alleged liability for costs associated with the Site through
completion of work under the AOC and entry of the consent decree. The consent
decree reflects a settlement in which the United States has agreed to compromise
some of its costs. The parties anticipate that the consent decree will be
entered by the Federal District Court in the early Fall of 1996.
The consent decree, which must be approved by the parties and the Court, will
allocate to Chugach 14.37% of Past Response Costs, DOJ enforcement costs
(through entry of the consent decree), RI/FS Costs, and EPA oversight costs
(through completion of work under the AOC) incurred in connection with the Site.
RI/FS Costs include scrap removal costs and expenses associated with drum
removal work being conducted during the Summer of 1996. Also included are EPA
oversight costs and all costs of overseeing work conducted under the AOC,
including the 1996 drum removal work. Because Chugach is currently funding the
RI/FS, the consent decree requires the other PRPs to reimburse Chugach and, in
the event any PRP fails to make such reimbursement, the consent decree provides
a credit to Chugach for the unreimbursed amounts. If applicable, this credit
will be applied to reduce Chugach's obligation to pay EPA oversight costs so
that the total amount paid by Chugach will not exceed 14.37% of the costs being
settled under the consent decree.
The total estimated cost of the settlement under the consent decree is
approximately $6,720,000
12
<PAGE>
for Past Response Costs (as recently adjusted by EPA and including interest from
December 1991), RI/FS costs (including scrap and drum removal costs), DOJ
enforcement costs (as compromised by the U.S.) and EPA oversight costs. This
total cost is an estimate because costs (both RI/FS and Oversight) have not yet
been incurred in connection with the drum removal and because interest will
continue to accrue on Past Response Costs until paid by the PRPs. The consent
decree does not settle Chugach's liability for future costs of designing and
performing a remedy to cleanup the Site (Future Costs). Applying Chugach's
percentage share under the consent decree (14.37%), the total Chugach will have
to pay to settle all costs associated with the Site except Future Costs is
approximately $965,664.
Although the consent decree does not settle Chugach's or the other private PRPs'
liability for Future Costs, the consent decree does bind the federal PRPs and
the Alaska Railroad to pay an aggregate share of 64% of Future Costs. Chugach
and the five other private PRPs will divide the remaining 36% of Future Costs
among themselves in accordance with an allocation of shares to be negotiated.
The current low and high estimates of the Future Costs of remedial design and
remedial action at the Site are approximately $5,717,000 to $6,679,000. These
cost estimates are based on the predicted scope of the stabilization and
solidification remedy as contemplated in the FS report. Although EPA has
selected stabilization and solidification as the cleanup remedy, the actual,
full scope of the stabilization and solidification cleanup at the Site will not
be known, and the projected costs associated with the remedy cannot be refined,
until EPA approves remedial design documents. Based on currently available
information, however; Chugach's share of future costs for remedial work at the
Site will not exceed some percentage of 36% (as divided among the six private
PRPs) of $6,679,000, or $2,404,440.
Four of Chugach's insurance carriers have agreed under a reservation of rights
to pay, and currently are paying, Chugach's costs of defense for the Site. The
carriers have reserved their rights regarding indemnification of Chugach for
response costs. Management believes that all past and future costs incurred for
response, removal, investigation and cleanup of the Site would be fully
recoverable in rates or covered by insurance and therefore would have no impact
on Chugach's financial condition.
Items 2, 3, 4 and 5
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Bylaws of the Registrant (as amended April 25, 1996).
Closing documents dated April 30, 1996 First Mortgage Bond, CoBank
Series (CoBank-3), due March 15, 2022 pursuant to the Third
Supplemental Indenture of Trust.
13
<PAGE>
Sixth Supplemental Indenture of Trust by and among Chugach
Electric Association, Inc. and Seattle-First National Bank dated
April 3, 1996.
Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended June 30, 1996.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHUGACH ELECTRIC ASSOCIATION, INC.
By: /s/ Eugene N. Bjornstad
Eugene N. Bjornstad, General Manager
Date: August 13, 1996
By: /s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Executive Manager, Finance & Planning
Date: August 13, 1996
15
<PAGE>
EXHIBITS
Listed below are the exhibits which are filed as part of this Report:
Exhibit
number Description Page
3.2 Bylaws of the Registrant (as amended April 25, 1996). N/A
4.4.3 Closing documents dated April 30, 1996 First Mortgage Bond,
CoBank Series (CoBank-3), Due March 15, 2022 pursuant to the
Third Supplemental Indenture of Trust. N/A
4.7 Sixth Supplemental Indenture of Trust by and among Chugach
Electric Association, Inc. and Seattle-First National Bank
dated April 3, 1996. N/A
27 Financial Data Schedule N/A
16
<PAGE>
Chugach Electric Association, Inc. is a cooperative, owned by its more than
54,000 members. These bylaws are the framework of the organization.
As a member, you are entitled to vote for the directors who oversee Chugach.
Directors are elected each spring in conjunction with the cooperative's annual
meeting. At the same time members vote on any proposed changes to these bylaws.
Proposed bylaw amendments may be submitted to:
Bylaws Committee
c/o Chugach General Counsel
P. O. Box 196300
5601 Minnesota Drive
Anchorage, Alaska 99519-6300
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
BYLAWS
(As Amended April 25, 1996)
CORRECTED AND REISSUED JUNE 7, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE I MEMBERSHIP Page
Section 1 Requirements for Membership.....................1
Section 2 Membership Certificates.........................1
Section 3 Joint Membership................................1
Section 4 Conversion of Membership........................2
Section 5 Membership and Service Connection Fees..........2
Section 6 Purchase of Electric Energy.....................2
Section 7 Termination of Membership.......................3
ARTICLE II RIGHTS AND LIABILITIES OF
MEMBERS
Section 1 Property Interest of Members....................3
Section 2 Non-liability for Debts of the Association......4
ARTICLE III MEMBERS, MEETINGS AND
ELECTIONS
Section 1 Annual Meeting..................................4
Section 2 Special Meetings................................4
Section 3 Notice of Members' Meetings.....................4
Section 4 Waiver of Notice................................5
Section 5 Quorum..........................................5
Section 6 Voting..........................................5
Section 7 Order of Business...............................6
Section 8 Elections and Election Committee................6
ARTICLE IV DIRECTORS
Section 1 General Powers................................. 9
Section 2 Election and Tenure of Office...................9
Section 3 Qualifications.................................10
Section 4 Nominations................................... 11
Section 5 General Manager and Financial Advisor..........11
Section 6 Policy, Rules and Regulations..................11
Section 7 Removal of Directors by Members................12
Section 8 Vacancies......................................12
Section 9 Compensation...................................12
ARTICLE V MEETINGS OF DIRECTORS
Section 1 Regular Meeting ...............................13
Section 2 Special Meetings ..............................13
Section 3 Quorum ........................................14
Section 4 Director Attendance ...........................14
Section 5 Membership Attendance .........................14
Section 6 Minutes .......................................15
Section 7 Telephonic Board Meetings......................15
<PAGE>
ARTICLE VI OFFICERS
Section 1 Number ........................................15
Section 2 Election and Term of Office ...................15
Section 3 Removal of Officers and Agents by
Directors..................................15
Section 4 President......................................16
Section 5 Vice-President ................................16
Section 6 Secretary .....................................16
Section 7 Treasurer .....................................17
Section 8 Delegation of Duties ..........................17
Section 9 Bonds of Officers..............................18
Section 10 Budget ........................................18
Section 11 Reports........................................18
ARTICLE VII PATRONAGE CAPITAL
Section 1 Patronage Capital .............................18
ARTICLE VIII FISCAL MANAGEMENT AND
ACCOUNTING
Section 1 Revenues and Expenditures .....................20
Section 2 Accounting System and Reports .................20
Section 3 Disclosure ....................................20
ARTICLE IX DISPOSITION OF PROPERTY
Section 1 Disposition of Property .......................20
ARTICLE X SEAL ..........................................21
ARTICLE XI FINANCIAL TRANSACTIONS
Section 1 Contracts .....................................21
Section 2 Checks, Drafts, etc. ..........................21
Section 3 Deposits ......................................21
Section 4 Fiscal Year ...................................21
Section 5 Full and Open Competitive Bidding..............21
ARTICLE XII MISCELLANEOUS
Section 1 Membership in Other Organizations..............22
Section 2 Waiver of Notice...............................22
Section 3 Interpretation.................................22
<PAGE>
ARTICLE XIII AMENDMENTS
Section 1 Notice.........................................22
Section 2 Bylaws Committee...............................23
ARTICLE XIV ADVISORY COUNCIL
Section 1 Member Advisory Council........................23
Section 2 General Duties.................................23
ARTICLE XV STANDING AND AD HOC
COMMITTEES
Section 1 General........................................23
Section 2 Compensation...................................23
Section 3 Terms..........................................24
Section 4 Membership.....................................24
Section 5 Vacancy........................................24
ARTICLE XVI INDEMNIFICATION ...............................24
ARTICLE XVII MEMBER ACCESS TO INFORMATION
Section 1 Access Rights..................................25
Section 2 Charges........................................26
Section 3 Policies and Procedures........................26
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
BYLAWS
ARTICLE I
MEMBERSHIP
SECTION 1. Requirements for Membership. Any person, firm, association,
corporation, or body politic, or subdivision thereof, shall become a member of
CHUGACH ELECTRIC ASSOCIATION, INC. by:
(a) Making a written application for membership therein;
(b) Agreeing to purchase from the Association electric
energy as hereinafter specified;
(c) Agreeing to comply with, and be bound by, the
articles of incorporation and bylaws of the
Association, and any rules and regulations adopted by
its board of directors; and
(d) Paying the membership fee hereinafter specified.
No person may hold more than one membership in the Association, and no
membership in the Association shall be transferable, except as provided in these
bylaws.
SECTION 2. Membership Certificates. Membership in the Association shall be
evidenced by a membership certificate, which shall be in such form and shall
contain such provisions as shall be determined by the board of directors. No
membership certificate shall be issued for less than the membership fee fixed in
these bylaws, nor until such membership fee has been paid. In case a certificate
is lost, destroyed or mutilated, a new certificate may be issued therefore upon
such uniform terms and indemnity to the Association as the board of directors
may prescribe.
SECTION 3. Joint Membership. A husband and wife may apply for a joint
membership and, subject to the compliance with the requirements set forth in
Section 1 of this Article, may be accepted for such membership. The term
"member" as used in these bylaws shall be deemed to include a husband and wife
holding a joint membership, and any provisions relating to the rights and
liabilities of membership shall apply equally with respect to the holders of a
joint membership. Without limiting the generality of the foregoing,
the effect of the hereinafter specified actions by, or in respect to, the
holders of a joint membership shall be as follows:
<PAGE>
(a) The presence at a meeting of either or both shall be regarded as the
presence of one member and shall have the effect of constituting a
joint waiver of notice of the meeting;
(b) The vote of either separately, or both jointly, shall constitute one
joint vote;
(c) A waiver of notice signed by either or both shall constitute a joint
waiver;
(d) Notice to either shall constitute notice to both;
(e) Expulsion of either shall terminate the joint membership;
(f) Withdrawal of either shall terminate the joint membership;
(g) Either, but not both, may be elected or appointed as an officer or
director, provided that both meet the qualifications for such office.
SECTION 4. Conversion of Membership. (a) A membership may be converted to a
joint membership upon the written request of the holder thereof, and the
agreement by such holder to comply with the articles of incorporation, bylaws,
and rules and regulations adopted by the board of directors. The membership
certificate shall be reissued by the Association in such manner as shall
indicate the changed membership status.
(b) Upon the death of a married member the surviving spouse shall succeed
to the membership. The membership certificate shall be reissued in such manner
as shall indicate the changed membership status; provided, however, that the
estate of the deceased shall not be released from any debts due the Association.
SECTION 5. Membership and Service Connection Fees. The non-refundable
membership fee shall be five dollars. Payment of the membership fee and
completion of a membership application are conditions of service. The board of
directors may also, as a condition of service, require the payment of a consumer
deposit or the furnishing of other acceptable security.
SECTION 6. Purchase of Electric Energy. Each member shall, as soon as
electric energy shall be available, purchase from the Association all electric
energy purchased for use on the premises specified in his application for
membership, unless the member is an electric public utility purchasing electric
energy for resale. Each member shall pay monthly at rates which shall from time
to time be fixed by the board of directors.
<PAGE>
The board of directors may limit the amount of electric energy which the
Association shall be required to furnish to its member(s). Each member shall pay
to the Association such minimum amount per month, regardless of the electric
energy consumed, as shall be fixed by the board of directors from time to time.
Each member shall also pay all amounts owed by him to the Association as and
when the same shall become due and payable. Production or use of electric energy
on such premises, regardless of the source thereof, by means of facilities which
shall be interconnected with the Association's facilities, shall be subject to
appropriate regulations as shall be fixed from time to time by the Association.
SECTION 7. Termination of Membership. (a) Any member of the Association may
withdraw from membership with written notice. Additionally, the board, by at
least a two-thirds vote of all members of the board, may expel any member who
fails to comply with Association regulations. Members subject to expulsion will
be contacted in writing by the Association and will have ten (10) days to comply
with Association regulations. An expelled member may be reinstated by a majority
vote of the board or by a vote of the members at any annual or special meeting.
The board may also cancel membership if the member:
1) has not purchased electric energy for six (6) months;
2) has had a disconnect order active for thirty (30) days without signing a
reconnect order; or
3) has been disconnected because of nonpayment of electric energy debts to
the Association provided that this delinquency has continued for at
least thirty (30) days after termination of service.
(b) Upon the withdrawal, death, cessation of existence or expulsion of a
member, the membership of such member shall thereupon terminate, except as
provided in Article 1, Section 4. Termination of membership in any manner shall
not release a member or his estate from any debts due the Association.
ARTICLE II
RIGHTS AND LIABILITIES OF MEMBERS
SECTION 1. Property Interest of Members. Upon dissolution, after paying, or
discharging, or adequately providing for the payment or discharge of all its
debts, obligations and liabilities, other than those to patrons arising by
reason of their patronage, the Association shall distribute any remaining sums,
first to patrons for the pro rata return of all amounts standing to
<PAGE>
their credit by reason of their patronage, and second, to members for the pro
rata repayment of membership fees. Any sums then remaining shall be distributed
among its members and former members in proportion to their patronage, except as
participation in such distribution may have been legally waived. In the event of
the lawful liquidation, through transfer or sale of all the property and assets
of the Association, the proceeds of such liquidation, transfer or sale shall be
distributed in the same manner as hereinabove provided for in the case of
dissolution.
SECTION 2. Non-liability for Debts of the Association. The private property
of the members shall be exempt from execution or other liability for the debts
of the Association, and no members shall be liable or responsible for any debts
or liabilities of the Association.
ARTICLE III
MEMBERS, MEETINGS AND ELECTIONS
SECTION 1. Annual Meeting. The annual meeting of the members shall be held
on such convenient date, on or after the 1st day of April, and on or before the
1st day of May of each year, at such place or building in the Municipality of
Anchorage, State of Alaska, as shall be designated by the board of directors in
the notice of meeting, for the purpose of electing directors, passing upon
reports for the previous fiscal year, and transacting such other business as may
come before the meeting. Failure to hold the annual meeting at the designated
time shall not work a forfeiture or dissolution of the Association.
SECTION 2. Special Meetings. Special meetings of the members may be called
by resolution of the board of directors, or upon a written request signed by any
four directors to the president, or by a written request made to the president
and signed by not less than ten percent (10%) of the members and it shall
thereupon be the duty of the secretary to cause notice of such meeting to be
given as hereinafter provided. Special meetings of the members may be held at
any place within the Municipality of Anchorage specified in the notice of the
special meeting.
SECTION 3. Notice of Members' Meetings. Written notice stating the place,
day and hour and agenda of the annual meeting shall be delivered by mail to each
member not less than thirty (30) or more than sixty (60) days before the date of
the meeting. Notice of a special meeting of the members, including but not
limited to a meeting where a merger or dissolution of the Association, or sale,
transfer or other disposal of all or a substantial portion of the assets of the
Association is to be voted on, shall be delivered, together with notice of the
purpose for
<PAGE>
which the meeting is called, not less than ninety (90) or more than 120 days
before the date of the meeting, with notice of a public hearing on the proposed
action to be held not less than sixty (60) days before the meeting. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the member at his address as it appears on the records of the
Association, with postage thereon prepaid. The failure of any member to receive
notice of an annual or special meeting of the members shall not invalidate any
action which may be taken by the members at any such meeting.
SECTION 4. Waiver of Notice. Repealed April 23, 1986.
SECTION 5. Quorum. Fifty (50) members present in person shall constitute a
quorum for a regular or special meeting of the members. No business shall be
conducted at a regular or special meeting of the members lacking a quorum,
except for counting marked ballots as specified in this Article III, Section
8(d) and announcing the results thereof. If less than a quorum is present at any
meeting of the members, a majority of those present may adjourn the meeting to
another date and time no later than 90 days after the adjourned meeting at a
place within the Municipality of Anchorage, provided that the Secretary shall
notify all members of the date, time and place of such adjourned meeting by
delivering notice thereof no later than ten days in advance of such meeting.
SECTION 6. Voting. (a) Each member shall be entitled to only one vote upon
each matter submitted to a vote at a meeting of the members. All questions shall
be decided by a vote of a majority of the members voting thereon in person,
except as otherwise provided by law, the articles of incorporation, or these
bylaws.
(b) A non-natural member may designate an individual to vote on its behalf,
in accordance with the member's own procedures. The election committee may
require the designated individual to submit satisfactory written proof of his
designation, prior to his voting.
(c) Members may vote by a mailed official ballot on the election of
directors, the amendment of bylaws, the merger or dissolution of the
Association, and the sale, transfer or disposal of all or a substantial portion
of the Association's assets.
(d) A minimum of five hundred valid ballots must be cast by mail or in
person to constitute a valid election of directors (except for filling of
vacancies under Article IV, Section 8) or to approve amendments to the bylaws.
Directors shall be elected by the plurality vote of the members. A minimum of
five hundred ballots must be cast in person to constitute a valid removal of a
director or directors. See Article IV, Sections 7 and 8.
<PAGE>
(e) An affirmative vote by ballot of at least 10 percent of the number of
members as of the date of the notice of the election is required to authorize
disposition of all or a substantial portion of the Association's property to
another cooperative, pursuant to Article IX, Section (1)(b).
(f) A merger of the Association must be approved by a majority of those
members voting, but in no event can the affirmative vote be less than 10 percent
of the number of members, as of the date of notice of the election.
(g) An affirmative vote by ballot of not less than the majority of the
number of members as of the date of the notice of the election is required to
authorize the Association to sell, lease, or otherwise dispose of all or a
substantial portion of the Association's property, as provided in Article IX,
Section 1(b).
SECTION 7. Order of Business. (a) The order of business at the annual
meeting of the members and, insofar as possible, at all other meetings of the
members, shall be essentially as follows:
1) Report on the number of members present in person in order to determine
the existence of a quorum.
2) Reading of the notice of the meeting and proof of the due publication or
mailing thereof.
3) Reading of unapproved minutes of previous meetings of the members,
making technical changes only to the minutes, and approval thereof.
4) Presentation and consideration of reports of officers, directors and
committees.
5) Election of directors.
6) Unfinished business.
7) New business.
8) Adjournment.
(b) Proposed amendments to the bylaws upon which voting is being conducted
by ballot may be discussed at the annual meeting, but shall not be treated as
being before the annual meeting for action, other than passage or defeat of the
proposed amendments. They may not be further amended or tabled by action of the
annual meeting.
SECTION 8. Elections and Election Committee. (a) At the beginning of each
calendar year, and not less than ninety (90) days prior to the annual meeting,
the board of directors shall appoint an election committee, as provided for in
Article
<PAGE>
XV of these bylaws. The committee shall consist of the master election judge,
who shall chair the committee, and not more than twelve election judges. This
committee shall have the responsibility for conducting all voting by secret
ballot during the calendar year. The election committee shall devise such
procedures, and adopt such rules and regulations, subject to the approval of the
board of directors, as may be reasonably necessary or convenient to the
discharge of the election committee's responsibilities. These responsibilities
shall include, but are not limited to (1) the registration of members at the
annual or special meeting, and (2) the obligation of insuring the fairness,
impartiality, confidentiality, and integrity of the voting process. The master
election judge and election judges shall be selected from the Association
membership, with consideration for geographical representation. In case of a
vacancy, the board of directors shall appoint an Association member to complete
the unexpired term of the committee member.
(b) The election committee shall cause the preparation of an official
ballot containing the names of the candidates for the office of director and the
proposed bylaw amendments. The ballot shall be designed with the position of
names of the candidates changed as many times as there are candidates. As nearly
as possible, an equal number of ballots shall be printed after each change. In
making the changes of position, the name of the candidate shall be taken and
placed at the bottom and the column moved up so that the name that before was
second is first after the change. After the ballots are printed, they shall be
placed in separate stacks, one stack for each change of position. The ballots
shall then be gathered by taking one from each stack, the intention being that
every other ballot in the accumulated stack of ballots shall have the names of
the candidates in a different position. The ballot shall also include a brief
description concerning the number of offices to be filled at the election and
the time, place, and method of voting. At least thirty (30) days prior to the
meeting, an official ballot shall be mailed by the secretary to each member with
1) a statement of the number of directors' seats to be filled, 2) the
candidates' names and election statements, 3) an explanation of any other
matters to be voted on by mail, the proposed changes to the bylaws, with the
Bylaws Committee's comments and 4) a report covering the calendar year
immediately preceding the annual meeting prepared by the General Manager setting
forth the attendance record of directors at regular and special board meetings,
together with a summary setting forth the agenda business items voted and the
vote of each director. The candidates' statements:
1) Shall specify whether the candidate was nominated by the Nominating
Committee or by petition.
2) Shall specify whether the candidate is:
<PAGE>
(i) A member, officer, director, or employee of any union local currently
acting as a bargaining agent for Association employees.
(ii) A person who has within the last two years had a financial interest in
a bid, proposal, project, or contract with Chugach.
(iii) A spouse, child, brother, sister, parent, stepparent, stepchild or
stepsibling of: a) any person included in subparagraph (i) or (ii)
above or b)an employee of the Association.
3) May include a photograph of the candidate, and a statement not to exceed
200 words.
The election committee shall procure a post office box where all ballots shall
be received.
(c) Mailed ballots, to be valid, must be received in the designated post
office box by 12:00 Noon three (3) calendar days prior to the annual meeting or
special meeting. In lieu of casting a ballot by mail, a member may register a
vote by special ballot at the meeting.
(d) The election committee shall make proper arrangements to secure all
ballots before, during, and following the election. Marked ballots shall be
counted as soon after the close of balloting as may be reasonable under the
circumstances. The results thereof will be announced as soon as the count is
completed. Marked ballots will be retained and secured for a period of ninety
(90) days following the election, after which time they may be destroyed.
(e) The election committee may employ such additional election clerks as
may be required to register members at the annual or special meeting, to assist
in the counting of the ballots and otherwise to ensure the efficient management
of the meeting and balloting. Each candidate for the office of director may have
a representative present during all times that ballots are being counted. The
decision of a majority of the election committee shall be conclusive with
respect to the eligibility of any person to vote and the validity of any ballot
cast.
(f) A recount of votes cast for a director's seat may only be requested by
a candidate in that election. A request for a recount must be made in writing
and received by the Election Committee within 10 days of the close of balloting.
The recount will be done in the same manner as and by the same entity that
performed the original vote count. If the recount indicates that the candidate
requesting the recount has lost the election by more than 1 percent of the total
votes cast, then the cost of the recount shall be borne by the candidate. If the
recount indicates
<PAGE>
that the candidate requesting the recount has either won a seat or lost by a
margin of 1 percent or less, then the cost of the recount shall be borne by the
Association.
A group of 10 or more members who voted in that election may request a
recount of the ballots for a bylaws change or ballot question. A request for a
recount must be made in writing and received by the Election Committee within 10
days of the close of balloting. The same provision for payment of the costs as
provided above shall prevail, with the voters who requested the recount paying
for the recount if the margin is greater than 1 percent, and the Association
bearing the expense if the margin is 1 percent or less.
(g) In the event of a tie for an election of a director, a bylaws change or
a ballot question, a recount of the ballots shall be done. The Association shall
bear the cost of recounts in the event of a tie. If the recount confirms the
existence of a tie, then a run-off election shall be conducted by mail within 60
days of the date the results of the recount are certified. The form and content
of the ballots shall comply with this Article III, Section 8(b). The run-off
election shall be conducted by the Election Committee. The provisions of this
Article III, Section 8(d), (e) and (f) shall apply.
ARTICLE IV
DIRECTORS
SECTION 1. General Powers. The management of the business and the affairs
of the Association shall be vested in a board of seven directors who shall
exercise all of the powers of the Association, except such as are by law, the
articles of incorporation, or by these bylaws conferred upon or reserved to the
members.
SECTION 2. Election and Tenure of Office. The persons named as directors in
the articles of incorporation shall compose the board of directors until their
successors shall have been elected and shall have qualified. Directors shall be
elected by secret ballot either mailed or cast in person at annual or special
meetings of the membership, by and from the members, to serve for a three-year
term, not to exceed three consecutive three year terms, until their successors
shall have been elected and qualify, provided that the directors elected to fill
vacancies as provided in Article IV, Section 8 of these bylaws, shall serve only
for the unexpired portion of the term vacated. Where the terms to be filled are
of different lengths, the longest term shall be given to the director receiving
the most votes. If the size of the board is subsequently increased, the initial
terms of the directors to fill the newly created seat or seats shall be
scheduled so that, as nearly as possible, an equal number of terms expire each
year. At each annual or special meeting, members shall be
<PAGE>
elected to fill the seats on the board which become vacant as contemplated by
Article IV, Section 8 of these bylaws.
SECTION 3. Qualifications. (a) A person shall be eligible to serve as a
director, who:
1) Has been a member of the Association for 12 continuous months before the
notice of the election;
2) Is not in any way employed by a competing enterprise;
3) Does not have a financial interest in a competing enterprise;
4) Is not a supplier, contractor, consultant, or other entity which does
business with the Association or a person with more than a 10%
ownership interest in a supplier, contractor, consultant, or other
entity which does business with the Association, except for providers
whose annual business with the Association does not exceed $25,000;
5) Is not an employee of the Association nor a member, officer, director,
nor employee of any union local currently acting as a bargaining
agent for Association employees;
6) Is not a person living in the same household with and financially
interdependent upon any person included in paragraphs 2, 3, 4, and
5, above; and
7) Maintains his or her membership throughout his or her term of office.
(b) An individual who is the authorized representative of a non-natural
entity (corporation, association or partnership, for example) which itself is
qualified under subsection (a) may become or remain a director if he is
qualified under subsections (a)(2), (3), (4), (5), and (6). If the individual or
the non-natural member fails to meet the prescribed qualifications, or if the
non-natural member changes its authorized representative, the individual shall
become subject to removal under subsection (c), and the director's position
shall become vacant, without power of appointment by the non-natural member.
(c) Upon establishment of the fact that a director is holding office in
violation of any of the foregoing provisions including the disclosure provisions
of Article III, Section 8(b), subsection (2), the board of directors shall
remove such director from office unless the basis for disqualification is
remedied within thirty (30) days of notice of disqualification by the board of
directors.
<PAGE>
(d) Directors are ineligible for employment by the Association for a period
of two (2) years after their term has expired.
Nothing contained in this section shall affect in any manner whatsoever the
validity of any action taken at any meeting of the board of directors.
SECTION 4. Nominations. (a) Nominating Committee. It shall be the duty of
the board of directors to appoint, not less than one hundred and twenty days
before the dates of a meeting of the members at which directors are to be
elected, a committee on nominations, as provided for in Article XV of these
bylaws. The committee shall consist of not less than five nor more than seven
members, who shall be selected from different sections of the service area of
the Association as to insure equitable representation. No member of the board of
directors may serve on such committee. The committee shall seek qualified
candidates, as well as screen potential nominees. Public notice for nominations
shall be given ninety days prior to the meeting. The committee, keeping in mind
the principle of geographical representation, shall approve, prepare and post at
the principal office of the Association, at least seventy days before the
meeting, a list of nominations for directors, which may include a greater number
of candidates than are to be elected.
(b) Petition. Any fifty or more members, acting together, may make other
nominations by petition not less than sixty days prior to the election, and the
secretary shall post such nominations at the same place where the list of
nominations made by the committee is posted.
SECTION 5. General Manager and Financial Advisor. The board of directors
may appoint the following:
(a) General Manager. The general manager may be but shall not be required
to be a member of the Association. The general manager, together with
such other staff, agents and employees as he may select shall perform
such duties and shall exercise such authority as the board of directors
may from time to time vest in him.
(b)Financial Advisor. The Board, at its sole discretion, may engage the
services of a financial advisor, which may be used to advise on any and
all fiscal matters. The financial advisor shall report to the board.
SECTION 6. Policy, Rules and Regulations. The board of directors shall have
the power to make, adopt and enforce such policy, rules and regulations, not
inconsistent with law, the articles of incorporation, or these bylaws, as it may
deem advisable for the management of the affairs and business of the
Association, for the protection of its investment, and for the
<PAGE>
interest and welfare of the members thereof. Such policy statements, rules and
regulations shall be in writing and shall be made available for review by the
members.
SECTION 7. Removal of Directors by Members. Any member may bring charges
against a director and, by filing with the secretary such charges in writing,
together with a petition signed by at least 300 members, request the removal of
such director by reason thereof, provided, however, that the signatures of
members shall be acceptable only when affixed to a sheet on which the petition
therein is fully set forth; and, provided further, that the person who solicited
the signatures affixed to such petition shall acknowledge thereon before a
person authorized to take acknowledgments of deeds that he had read the petition
and the said charges against such director to each of the members prior to the
latter subscribing their names thereto. Such director shall be informed in
writing of the charges at least ten days prior to the meeting of the members at
which the charges are to be considered, and shall have an opportunity at the
meeting to be heard in person, or by counsel, and to present evidence in respect
to the charges; and the person or persons bringing the charges against him shall
have the same opportunity. The question of the removal of such director shall be
considered and voted upon at the meeting of the members. A minimum of five
hundred valid ballots must be cast in person with a majority in favor of removal
for such removal to be effective.
SECTION 8. Vacancies. (a) Vacancies caused by the removal of directors by
the members shall be filled for the remainder of the removed director('s) term
by vote of the members at such meeting as removal has occurred without
compliance with Article IV, Section 4, but subject, however, to the provisions
of Article IV, Section 2 and 3, except that the number of valid ballots cast
equal to or greater than a quorum as required by Article III, Section 5, shall
be sufficient for such election.
(b) Any other vacancy occurring in the board shall be filled by the
affirmative vote of the majority of the remaining directors, and the member so
elected to the board shall serve until his successor has been elected. At such
election following the existence of such vacancy, the members shall elect one of
their number to serve as director during the unexpired portion of the term
vacated, subject, however to provisions of Article IV, Section 2, 3 and 4 of
these bylaws.
SECTION 9. Compensation. (a) Directors shall not receive any salary for
their services as directors, except that, by resolution of the board of
directors, a fixed fee and expenses of attendance, if any, may be allowed for
attendance at each meeting of the board of directors, or a meeting of a
committee thereof, or when a director is otherwise representing the
<PAGE>
Association in an official capacity. No attendance other than regular or special
board meetings shall be reimbursed unless authorized in advance by the majority
vote of the board. The fixed fee shall not exceed $100.00 per meeting, and a
director may not be compensated for more than two regular board meetings per
month, and an additional 12 special board meetings per year. The total
compensated meetings shall not exceed 70 meetings per year for a director, and
85 meetings per year for the president. The Association may not provide health
insurance for directors or their families, or insurance for risks except those
incurred in their capacity as directors.
(b) Directors' expense reimbursement requests shall be reviewed and
approved by the majority vote of the board. Directors may not receive salaries
for their services as directors, and, except in emergencies, shall not receive
salaries for their services in any other capacity without the approval of the
members.
ARTICLE V
MEETINGS OF DIRECTORS
SECTION 1. Regular Meeting. A regular meeting of the board of directors
shall be held without notice immediately after, and at the same place as, the
annual meeting of the members. A regular meeting of the board of directors shall
also be held monthly at such time and place in the Municipality of Anchorage,
State of Alaska, as the board of directors may provide by resolution. Such
regular monthly meetings may be held without notice other than such resolution
fixing the time and place thereof except that the board shall cause notice of
the selection of the time and place of the regular meetings to be given to the
members promptly after it is selected.
SECTION 2. Special Meetings. Special Meetings of the board of directors may
be called by the president, or by any three directors, and it shall thereupon be
the duty of the secretary to cause notice of such meetings to be given as
hereinafter provided. The president of the directors calling the meeting shall
fix the time and place, which shall be in the Municipality of Anchorage, State
of Alaska, for the holding of the meeting.
Written notice of the time, place and purpose of any special meetings of
the board of directors shall be delivered to each director not less than three
days previous thereto, either personally or by mail, by or at the direction of
the secretary, or upon default in duty by the secretary, by the president or the
directors calling the meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the director at
his address as it appears on the records of the Association, with postage
thereon prepaid.
<PAGE>
SECTION 3. Quorum. A majority of the board of directors shall constitute a
quorum; provided, that if less than a majority of the directors are present at
said meeting, a majority of the directors present may adjourn the meeting from
time to time; and provided further, that the secretary shall notify any absent
directors of the time and place of such adjourned meeting. The act of the
majority of the directors present at the meeting at which a quorum is present
shall be the act of the board of directors. Each director present shall vote or
abstain on each motion. Each director shall disclose any financial interest of
the director or of a member of the director's immediate family in a matter
before the board.
SECTION 4. Director Attendance. If a director is absent from three or all
regular board meetings in a sixty (60) day period, or from 25% of all meetings,
including regular and special meetings, board workshops, and committee meetings,
in a six month period, he shall be deemed to have resigned from the board of
directors, and the vacancy thereby resulting will be filled as provided in
Article IV, Section 8, of these bylaws. A director who is absent on Association
business, including reasonable travel time to and from such business, shall not
be counted absent, provided such travel and absence was approved in advance by
the board. For purposes of this Section, an absence shall not be counted if it
is excused by a vote of a majority of the members of the board not requesting
the excuse at the next regular or special board meeting. However, no more than
three absences per director may be excused by the board in any 12-month period.
SECTION 5. Membership Attendance. (a) Regular meetings, special meetings
and work sessions shall be open to all Association members. The notice of such
meeting and an agenda shall be posted in a conspicuous place in the public
places of business of the Association not later than three days prior to the
meeting. The board of directors shall adopt a policy establishing additional
means of providing public notice of meetings.
(b) No closed or executive sessions shall be held except to discuss:
1) Matters the immediate knowledge of which would clearly have an adverse
effect on the Association's finances;
2) Subjects that tend to prejudice the reputation and character of a
person; however, that person may request a public discussion;
3) Matters discussed with an attorney for the Association, the immediate
knowledge of which could have an adverse effect on the Association's
legal position.
<PAGE>
SECTION 6. Minutes. Minutes will be kept for all regular and special
meetings and shall include each director's vote on each matter voted upon by the
board of directors. Copies of the minutes shall promptly be given to Association
members upon request. The board of directors may prescribe a reasonable fee for
such copies provided such fee shall not exceed the actual labor and material
costs of reproduction. An electronic recording of all regular and special
meetings shall also be made and kept for at least one year; Association members
may request a transcription of the tape upon payment of the cost of
transcription by a court reporter service; members shall also be permitted to
listen to such tapes at the headquarters building.
SECTION 7. Telephonic Board Meetings. For the purpose of the holding of any
regular or special meeting, the Board of Directors can validly conduct such
meeting by communicating with each other by means of conference telephones or
similar communications equipment as allowed by law; not to exceed teleconference
attendance at 25% of the meetings by any one director for any twelve month
period.
ARTICLE VI
OFFICERS
SECTION 1. Number. The officers of the Association shall be a president,
vice-president, secretary and treasurer, and such other officers as may be
determined by the board of directors from time to time. The offices of secretary
and treasurer may be held by the same person.
SECTION 2. Election and Term of Office. The officers shall be elected
annually by ballot, by and from the board of directors, at the meeting of the
board of directors held immediately after the annual meeting of the members. If
the election of officers shall not be held at such meeting, such election shall
be held as soon thereafter as conveniently may be. Each officer shall hold
office until the first meeting of the board of directors following the next
succeeding annual meeting of the members, or until his successor shall have been
elected and shall have qualified. A vacancy in any office shall be filled by the
board of directors for the unexpired portion of the term.
SECTION 3. Removal of Officers and Agents by Directors. Any officer or
agent elected or appointed by the board of directors may be removed by the board
of directors whenever in its judgement the best interests of the Association
will be served thereby. In addition, any member of the Association may bring
charges against an officer and, by filing with the secretary such charges in
writing, together with a petition signed by at least a sufficient number of
members to
<PAGE>
constitute a quorum as defined in Section 5, Article III, may request the
removal of such officer by reason thereof; provided, however, that the
signatures of the members shall be acceptable only when affixed to a sheet on
which petition therein is fully set forth; and provided further, that the person
who solicited the signature affixed to such petition shall acknowledge thereon
before a person authorized to take acknowledgments of deeds that he had read the
petition and the said charges against such officer to each of the members prior
to the latter subscribing their names thereto. The officer against whom such
charges have been brought shall be informed in writing of the charges at least
ten days prior to the board meeting at which the charges are to be considered
and shall have an opportunity at the meeting to be heard in person, or by
counsel, and to present evidence in respect of the charges; and the person or
persons bringing the charges against him shall have the same opportunity. In the
event the board does not remove the officer, the question of his removal shall
be considered and voted upon at the next meeting of the members.
SECTION 4. President. The president shall:
(a) Be the principal executive officer of the Association and, unless
otherwise determined by the members or the board of directors, shall
preside at all meetings of the members and the board of directors;
(b) Sign any deeds, mortgages, deeds of trust, notes, bonds, contracts or
other instruments authorized by the board of directors to be executed,
except in cases in which the signing and execution thereof shall be
expressly delegated by the board of directors or these bylaws to some
other officer or agent of the Association, or shall be required by law
to be otherwise signed or executed; and
(c) In general, perform all duties incident to the office of president and
such other duties as may be prescribed by the board of directors from
time to time.
SECTION 5. Vice-President. In the absence of the president, or in the event
of his inability or refusal to act, the vice-president shall perform the duties
of the president, and when so acting, shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice-president shall
also perform such duties as from time to time may be assigned to him by the
board of directors.
SECTION 6. Secretary. The secretary shall be responsible for:
<PAGE>
(a) Keeping the minutes of the meetings of the members and of the board of
directors;
(b) Seeing that all notices are given in accordance with these bylaws, or
as required by law;
(c) The safekeeping of the corporate records and seal of the Association,
and affixing the seal of the Association to all documents, the
execution of which on behalf of the Association under its seal is duly
authorized in accordance with the provisions of these bylaws;
(d) Keeping a register of the names and post office addresses of all
members;
(e) Keeping on file at all times a complete copy of the articles of
incorporation and bylaws of the Association containing all amendments
thereto, which copy shall always be open to the inspection of any
members, and at the expense of the Association, forwarding a copy of
the bylaws and of all amendments thereto to each member on request; and
(f) In general, performing all duties incident to the office of secretary,
and such other duties as from time to time may be assigned by the board
of directors.
SECTION 7. Treasurer. The treasurer shall be responsible for:
(a) Custody of all funds and securities of the Association;
(b) The receipt of, and the issuance of receipts for, all moneys due and
payable to the Association, and for the deposit of all such moneys in
the name of the Association in such bank or banks as shall be selected
in accordance with the provisions of these bylaws; and
(c) In general, performing all the duties incident to the office of
treasurer and such other duties as from time to time may be assigned by
the board of directors.
SECTION 8. Delegation of Duties. In the absence of an officer, or in the
event of his inability or refusal to act, the board of directors will appoint
one of their number to perform the duties of his office; provided that the
offices of president and vice-president may not be combined with any other
office; and, provided further, nothing herein shall limit the right and duty of
the vice-president to perform the duties of the president in the
<PAGE>
event that the president is absent, is unable to act, or refuses to act. The
board of directors may provide for the delegation of one or more of the duties
of the secretary and treasurer.
SECTION 9. Bonds of Officers. The treasurer, and any other officer or agent
of the Association charged with responsibility for the custody of any of its
funds or property, shall give bond in such sum, and with such surety, as the
board of directors shall determine. The board of directors, in its discretion,
may also require any other officer, agent or employee of the Association to give
bond in such amount and with such surety as it shall determine.
SECTION 10. Budget. The Board of Directors shall review, revise and approve
an annual operating budget prior to each fiscal year.
SECTION 11. Reports. The officers of the Association shall submit, at each
annual meeting of the members, reports covering the business of the Association
for the previous fiscal year. Such reports shall set forth the condition of the
Association at the close of such fiscal year.
ARTICLE VII
PATRONAGE CAPITAL
SECTION 1. Patronage Capital. The Association shall at all times be
operated on a cooperative, nonprofit basis for the mutual benefit of its
patrons. The Association's operations shall be so conducted that all patrons,
members and non-members alike, will through their patronage furnish capital for
the Association, subject to the provisions for sinking funds and reserves as
provided by Article VIII of these bylaws.
In order to induce patronage and to assure that the Association will
operate on a nonprofit basis, the Association is obliged to account on a
patronage basis to all its patrons, members and non-members alike, for all
amounts received from the furnishing of electric energy in excess of operating
costs and expenses properly chargeable against the furnishing of electric
energy. All such amounts in excess of operating costs and expenses are received
with the understanding that they are furnished by the patrons, members and
non-members alike, as capital. The Association is obligated to pay all such
amounts in excess of operating costs and expenses to the patrons by credits to a
capital account for each patron. The books and records of the Association shall
be set up and kept in such a manner that at the end of each fiscal year the
amount of capital, if any, so furnished by each patron, is clearly reflected and
credited in an appropriate record to the capital account of each patron, and the
Association shall within a reasonable time after the close of the
<PAGE>
fiscal year notify each patron of the amount of capital so credited to his
account. All such amounts credited to the capital account of any patron shall
have the same status as though they had been paid to the patron in cash in
pursuance of a legal obligation to do so, and the patron had then furnished the
Association corresponding amounts for capital. In the event of dissolution or
liquidation of the Association, after all outstanding indebtedness of the
Association shall have been paid, outstanding capital credits shall be retired
without priority on a pro rata basis before any payments are made on account of
property rights of members. If, at any time prior to dissolution or liquidation,
the board of directors shall determine that the financial condition of the
Association will not be impaired thereby, the capital then credited to patrons'
accounts may be retired in full or in part, according to policies adopted by the
board. Capital credited to the account of each patron shall be assignable only
on the books of the Association pursuant to written instructions from the
assignor, and only to successors in interest or successors in occupancy in all
or a part of such patron's premises served by the Association, unless the board
of directors, acting under policies of general application, shall determine
otherwise. All other amounts received by the Association from its operations in
excess of costs and expenses shall, insofar as permitted by law, be:
(a) Used to offset any losses incurred during the current or any prior
fiscal year; and
(b) To the extent not needed for that purpose, allocated to its patrons on
a patronage basis, and any amount so allocated shall be included as
part of the capital credited to the accounts of patrons, as herein
provided.
Notwithstanding any other provisions of these bylaws, the board of
directors, at its discretion, shall have the power at any time, upon the death
of any patron, if the legal representative of his estate shall request in
writing that the capital credited to any such patron be retired prior to the
time such capital would otherwise be retired under the provisions of these
bylaws, to retire capital credited to any such patron immediately upon such
terms and conditions as the board of directors, acting under policies of general
application, and the legal representative of such patron's estate shall agree
upon, provided, however, that the financial condition of the Association will
not be impaired thereby.
<PAGE>
ARTICLE VIII
FISCAL MANAGEMENT AND ACCOUNTING
SECTION 1. Revenues and Expenditures. The board of directors shall adopt
and maintain a system of accounting for receipts and expenditures in conformance
with the laws of the United States and of the State of Alaska applicable to
cooperative associations and corporations, which system shall at all times
provide the proper reserves for payments of interest and principal on
outstanding indebtedness, reserves for taxes, insurance, depreciation,
replacement of capital plant and facilities, and such other reserves and
accounts as the board of directors shall deem proper.
SECTION 2. Accounting System and Reports. The accounting system adopted and
maintained by the board of directors shall conform to such rules and regulations
applicable to accounting systems, their establishment and operation, and which
may be established by any applicable laws, rules and regulations of the United
States, the State of Alaska, or any regulatory agency thereof of competent
jurisdiction. The board of directors shall also, after the close of each fiscal
year, cause to be made a full, complete and independent audit of the accounts,
books, and financial conditions of the Association as of the end of each fiscal
year. A reasonably comprehensive and easily understood summary of the audit
report shall be submitted to the members prior to each annual meeting.
SECTION 3. Disclosure. Repealed April 25, 1996.
ARTICLE IX
DISPOSITION OF PROPERTY
SECTION 1. Disposition of Property. (a) The board of directors shall have
full power and authority to authorize the execution and delivery of a mortgage
or mortgages, or a deed or deeds of trust, of any and all of the property,
rights, privileges, licenses, franchises and permits of the Association, whether
acquired or to be acquired, and wherever situated, as well as the revenues
therefrom, all upon such terms and conditions as the board of directors shall
determine, to secure any indebtedness of the Association.
(b) The Association may not sell, lease, or otherwise dispose of all or a
substantial portion of the Association's
<PAGE>
property unless such sale, lease, or other disposition is authorized by the
affirmative vote of not less than the majority of all the members of the
cooperative. However, the board of directors may sell, lease, or otherwise
dispose of all or a substantial portion of its property to another cooperative,
if authorized by a majority of those members of the Association voting, but in
no event can the affirmative vote be less than 10% of the members as of the date
of notice of the election.
ARTICLE X
SEAL
The corporate seal of the Association shall be in the form of a circle and
shall have inscribed thereon the name of the Association and the words
"Corporate Seal, State of Alaska."
ARTICLE XI
FINANCIAL TRANSACTIONS
SECTION 1. Contracts. Except as otherwise provided in these bylaws, the
board of directors may authorize any officer or officers, agent or agents, to
enter into any contract, or execute and deliver any instrument, in the name and
on behalf of the Association, and such authority may be general or confined to
specific instances.
SECTION 2. Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, and all notes, bonds or other evidences of indebtedness issued
in the name of the Association, shall be signed by such officer or officers,
agent or agents, employee or employees of the Association, and in such manner,
as shall from time to time be determined by resolution of the board of
directors.
SECTION 3. Deposits. All funds of the Association shall be deposited from
time to time to the credit of the Association in such bank or banks as the board
of directors may select.
SECTION 4. Fiscal Year. The fiscal year of the Association shall begin on
the first day of January of each year and shall end on the thirty-first day of
December of the same year.
SECTION 5. Full and Open Competitive Bidding. It is deemed to be in the
best interest of the Association: to encourage and require full and open
competitive bidding of contracts; to take affirmative steps to insure that the
Association selects the lowest responsible bidder for its requirements from
<PAGE>
among the broadest range of suppliers qualified by expertise and resources; and
to insure that responsible bidders are not excluded. These requirements shall
not apply in emergency matters, to professional service contracts, or (in the
discretion of the Association) to contracts reasonably expected to be less than
$50,000. The Directors shall require a review of the Association's bidding
procedures and qualifications and shall take such actions as may be in the best
interests of the Association as determined herein.
Within thirty (30) months of the passage of this Section 5, the Board of
Directors shall have fully implemented the provisions of this Section 5.
ARTICLE XII
MISCELLANEOUS
SECTION 1. Membership in Other Organizations. The Association may, with the
approval of the Board of Directors, become a member or stockholder in non-profit
organizations which promote rural electrification, cooperatives, civic or
professional purposes, and any other corporation for the purpose of acquiring
electric facilities. The Association may become a member or stockholder of other
organizations upon approval of the members.
SECTION 2. Waiver of Notice. Any member or director may waive in writing
any notice of a meeting required to be given by these bylaws. The attendance of
a member or director at any meeting shall constitute a waiver of notice of the
meeting, unless the person participates in the meeting solely for the express
purpose of objecting to the transaction of any business on the ground that the
meeting has not been lawfully called or convened.
SECTION 3. Interpretation. Wherever the masculine gender is used in these
bylaws it shall be construed also to refer to the feminine.
ARTICLE XIII
AMENDMENTS
SECTION 1. Notice. These bylaws may be altered, amended or repealed by the
members at any regular or special meeting, or by ballot as provided for in
Article III, Section 8, provided the notice of such meeting shall have contained
a copy of the proposed alteration, amendment or repeal. Notice to the membership
shall be given ninety days prior to the annual
<PAGE>
meeting election for submission of recommended bylaw changes.
SECTION 2. Bylaws Committee. It shall be the duty of the board of directors
to appoint, not later than December 15th of each year, members to a committee on
bylaws, as provided in Article XV of these bylaws. The committee shall consist
of not less than five nor more than seven members, who shall be selected from
different sections of the service area of the Association so as to insure
equitable representation. No member of the board of directors may serve on such
a committee. The committee shall review the bylaws of the Association, consider
any recommendations for revisions thereof which may be made by the board of
directors or any member, and report their recommendations concerning the bylaws
to the annual membership meeting. Nothing herein shall be interpreted to limit
the authority of the board of directors to propose changes in the bylaws, or the
right of the members to call a special meeting for any proper purpose pursuant
to Article III, Section 2, herein.
ARTICLE XIV
ADVISORY COUNCIL
SECTION 1. Member Advisory Council. The board of directors shall create and
establish a Member Advisory Council to advise the board.
SECTION 2. General Duties. It shall be the duty of the board of directors
to appoint members to the advisory council, as provided in Article XV. Members
shall be selected from different sections of the service area to the Association
so as to insure equitable representation.
ARTICLE XV
STANDING AND AD HOC COMMITTEES
SECTION 1. General. This section shall apply to standing and ad hoc
committees which may from time to time be appointed by the board. Standing
committees include: the Election Committee, as provided for in Article III,
Section 8; the Nominating Committee, as provided for in Article IV, Section 4;
the Bylaws Committee, as provided for in Article XIII, Section 2; and the Member
Advisory Council, as provided for in Article XIV.
SECTION 2. Compensation. Members of standing and ad hoc committees shall
receive no compensation or gratuity for their participation in the affairs of
the Association.
<PAGE>
SECTION 3. Terms. The terms of standing committee members shall be for no
more than three (3) years and be staggered so that, as nearly as possible,
one-third shall expire each year. Members may not serve consecutive terms on the
same committee.
SECTION 4. Membership. In order to be fairly representative of the
Association's diverse membership, it is preferable that standing and ad hoc
committees be comprised of members who reflect that diversity. Toward that end,
the selection process shall include consideration of the member's occupation,
education, experience, geographical area in which service is provided by the
Association, and type of service provided by the Association. A person is
eligible to serve on such committees provided that such person is not:
(a) an employee or director of the Association;
(b) a director, officer or employee of any union local currently acting as
a bargaining agent for Association employees;
(c) a person employed by a competing enterprise;
(d) a person having a financial interest in a competing enterprise;
(e) a supplier, contractor, consultant or other entity which does business
with the Association or a person with more than a 20% ownership
interest in a supplier, contractor, consultant or other entity which
does business with the Association except for providers whose actual
business with the Association does not exceed $50,000; or
(f) a person living in the same household with and financially
interdependent upon any of the persons listed in (a) through (e),above.
SECTION 5. Vacancy. In the case of a vacancy, the board of directors shall
appoint an Association member in accordance with the provisions of this Article
to complete the unexpired term of a committee member.
ARTICLE XVI
INDEMNIFICATION
The Association shall indemnify and defend directors, officers, employees
or agents of the Association who are, or are threatened to be made, parties to
civil, criminal or administrative proceedings, for expenses (including
attorneys' fees), judgments, fines and settlements, actually and reasonably
incurred, if the
<PAGE>
acts complained of were performed within the scope of the director's, officer's,
employee's or agent's duties, and the director, officer, employee or agent acted
in good faith and in a manner he reasonably believed should be in, or not
opposed to, the best interests of the Association, and, with respect to a
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The Association may purchase and maintain insurance to provide for
such indemnification and defense.
ARTICLE XVII
MEMBER ACCESS TO INFORMATION
SECTION 1. Access Rights. The rights of the members to examine and make
copies of the books and records of the Association at a reasonable time and for
a proper purpose in accordance with Alaska Statutes shall not be infringed. The
following information is deemed to be requested for a proper purpose without any
showing whatsoever and shall be made available to members on request of a
member.
(a) Names and mailing addresses of Association members when requested by a
candidate running for election to the Association Board;
(b) Salary, title, job classification and position description, benefits,
leave accrued and cashed-in, and hours worked, but not employee name, for each
employee position in the Association;
(c) Collective bargaining agreements of any kind to which the Association
is a party;
(d) Published information which shall include:
1) Documents provided to any regulatory authority including, but not
limited to Alaska Public Utilities Commission (APUC), Federal Energy
Regulatory Commission (FERC) and Securities and Exchange Commission
(SEC) filings,
2) Documents provided in open session to the Board of Directors or
Association committees, including but not limited to budget
documents, feasibility studies, audits or cost effectiveness
studies, correspondence between the Association and third parties
and minutes of Board of Directors or Association committee meetings.
<PAGE>
SECTION 2. Charges. The Association may charge no more than the actual
incremental cost of producing the above information.
SECTION 3. Policies and Procedures. Nothing in this Article XVII prevents
the Association from allowing for additional disclosure of Association
information or from developing other rules for disclosure and payment therefor
by policy or procedure provided that the policy or procedure shall in no way
restrict the disclosure required in this Article XVII.
<PAGE>
First Trust Washington, as Trustee
April 30, 1996
Page 1
April 30, 1996
First Trust Washington, as Trustee
P. O. Box 24425
Seattle, Washington 98124-0425
Attention: Michael Jones, Trust Officer
Re: Opinion of Counsel and Title Evidence in connection
with issuance of First Mortgage Bond, CoBank Series
Ladies and Gentlemen:
This letter constitutes the opinion of General Counsel for Chugach Electric
Association, Inc. ("Chugach") pursuant to Sections 5.01C, 5.01E, 5.02(6) and
5.02(7) of the Indenture of Trust dated as of September 15, 1991 between Chugach
and Seattle-First National Bank, as Trustee (the "Trustee") (as amended by the
First, Second, Third, Fourth, Fifth and Sixth Supplemental Indentures thereto,
dated March 17, 1993, May 19, 1994, June 29, 1994, March 1, 1995, September 6,
1995, and April 3, 1996 respectively, the "Indenture of Trust") and the terms
used in this opinion shall have the meanings established therein. I have based
my opinion on my review of the following records and documents associated with
the issuance of a First Mortgage Bond, CoBank Series in the original principal
amount of $21,500,000 Dollars (the "Bond") pursuant to the Third Supplemental
Indenture of Trust dated June 29, 1994 (the "Third Supplemental Indenture"),
which review is in my opinion sufficient to enable me to express an informed
opinion on the matters discussed in this letter.
Indenture of Trust;
Loan Agreement between Chugach and CoBank dated June 22, 1994;
Board Resolution dated April 3, 1996, authorizing the issuance of a
First Mortgage Bond to CoBank pursuant to the Third Supplemental
Indenture;
Officers' Certificate dated April 30, 1996, signed by the General
Manager and the Executive Manager, Finance and Planning;
Available Margins Certificate dated April 30, 1996;
<PAGE>
First Trust Washington, as Trustee
April 30, 1996
Page 2
Certificate as to Bondable Additions No. 3 dated April 30, 1996;
The articles of incorporation of Chugach (including all amendments
thereto); and
The bylaws of Chugach as in effect on the date hereof.
Based on my review of the above records and my knowledge of Chugach as General
Counsel, I am of the opinion that:
(1) no tax, recording or filing law requirements apply to the issuance of
the Bond;
(2) no authorization, approval or consent by any Federal, state or other
governmental regulatory agency is required for the issuance of the Bond;
(3) all conditions precedent provided for in the Indenture of Trust
relating to the authentication and delivery of the Bond to CoBank have been
complied with;
(4) the Bond, when executed by Chugach and authenticated and delivered by
the Trustee and when issued by Chugach will be the legal, valid and binding
obligation of Chugach enforceable in accordance with its terms and the terms of
the Indenture of Trust (subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles) and entitled to
the benefits of and secured by the lien of the Indenture of Trust equally and
ratably with all other Outstanding Secured Bonds;
(5) none of the Trust Estate is subject to any Prior Lien other than Prior
Liens permitted by Section 14.06 of the Indenture of Trust;
(6) no instruments, other than the Indenture of Trust, are necessary to
vest in the Trustee as a part of the Trust Estate all right, title and interest
of Chugach in and to all Property Additions to which the Certificate as to
Bondable Additions refers;
(7) with respect to all Property Additions to which the Certificate as to
Bondable Additions refers that are located or constructed on, over or under
public highways, rivers, waters or other public property, Chugach has the lawful
right under permits or franchises granted by a governmental body having
jurisdiction in the premises or by law to maintain and operate such Property
Additions for an unlimited, indeterminate or indefinite period of time or for
the period, if any, specified in such permit, franchise or law, and to remove
such property at the expiration of the period covered by such permit, franchise
or law, or the terms of such permit, franchise or law require any public
authority having the right to take over such property to pay fair consideration
therefor.
<PAGE>
First Trust Washington, as Trustee
April 30, 1996
Page 3
(8) Chugach has corporate power to own and operate all Property Additions
to which the Certificate as to Bondable Additions refers;
(9) the Indenture of Trust is a lien upon all Property Additions described
in the Certificate as to Bondable Additions (except such as have been Retired)
free and clear of any Prior Liens except to the extent otherwise provided in
Section 6.02D(2);
(10) the documents which have been or are herewith delivered to the Trustee
conform to the requirements of the Indenture of Trust for an Application for the
authentication and delivery of the Bond and, upon the basis of the Application,
all conditions precedent provided for in the Indenture of Trust relating to
authentication and delivery of the Bond have been complied with; and
(11) Chugach has title to the Property Additions described in the
Certificate as to Bondable Additions (except as have been Retired), free and
clear of any Prior Liens (except to the extent otherwise permitted by the
proviso to Section 6.02D(2) and except for Permitted Encumbrances), and Chugach
has duly obtained any easements or rights-of-way which are described in the
Certificate as to Bondable Additions, subject only to Permitted Encumbrances.
Pursuant to the definition of "Title Evidence" contained in Section 1.01 of the
Indenture of Trust, each of the foregoing opinions to the effect that Chugach
has title to any portion of the Trust Estate shall be deemed to be an opinion
only that Chugach has such title as in my opinion is satisfactory for the use
thereof in connection with its operations and is qualified by and subject to any
irregularity or deficiency in the record evidence of title which, in my opinion,
can be cured by proceedings within the power of Chugach or does not
substantially impair the usefulness of such property for the purposes of
Chugach.
This opinion is limited to the federal laws of the United States of America and
the laws of the State of Alaska, and I disclaim any opinion as to the laws of
any other jurisdiction.
This opinion is rendered to you in connection with the issuance of the Bond and
is solely for your benefit. This opinion may not be relied upon by any other
person, firm, corporation or other entity
<PAGE>
without my prior written consent. I disclaim any obligation to advise you of
any change of law that occurs, or any facts of which I become aware, after the
date of this opinion.
Sincerely,
CHUGACH ELECTRIC ASSOCIATION, INC.
/s/ Donald W. Edwards
Donald W. Edwards
General Counsel
<PAGE>
96 04 02
Chugach Electric Association, Inc.
Anchorage, Alaska
RESOLUTION
WHEREAS, the Board of Directors has previously approved and Chugach
Electric Association, Inc. ("Chugach") has entered into a Third Supplemental
Indenture of Trust dated as of June 29, 1994 between Chugach and Seattle-First
National Bank ("Third Supplemental Indenture") amending and supplementing that
Indenture of Trust dated as of September 15, 1991 (as heretofore amended, the
"Indenture") and establishing a new series of bonds to be designated First
Mortgage Bonds, CoBank Series to be issued to Cobank pursuant to a Credit
Agreement dated June 29, 1994 from time to time to secure advances made by
CoBank;
WHEREAS, it is in the best interest of Chugach for the Board of
Directors to authorize the issuance of a bond to the National Bank for
Cooperatives ("CoBank") under the Third Supplemental Indenture for the purpose
of securing indebtedness for
$21,500,000.00.
NOW THEREFORE BE IT RESOLVED, that the Board of Directors hereby
requests the authentication and delivery of a First Mortgage Bond, CoBank Series
(designated CoBank 3), in the principal amount of $21,500,000.00, under Section
5.02 of the Indenture;
BE IT FURTHER RESOLVED, that the President, Vice President, Treasurer,
Secretary, General Manager and Executive Managers of Chugach, or any of them
(the "Officers and Managers") are and each of them hereby is, authorized,
empowered and directed, for and on behalf of Chugach, to execute and deliver, 1)
the First Mortgage Bond, CoBank Series in the amount of $21,500,000.00, to bear
interest at the CoBank Fixed Rate Option in substantially the form attached
hereto, and 2) any Company Request, Application, Company Order or other document
or instrument that such person deems necessary or desirable in connection with
the issuance of such bond;
BE IT FURTHER RESOLVED, that the execution by such Officers and
Managers of the said Bond, instrument or other document and the doing by them of
any act in connection with the foregoing matters shall conclusively establish
their authority therefor from Chugach.
CERTIFICATION
I, Patricia Jasper, do hereby certify that I am Secretary of Chugach
Electric Association, Inc., and electric non-profit cooperative membership
corporation organized and existing under the laws of the State of Alaska; that
the foregoing is a complete and correct copy of a resolution adopted at a
meeting of the Board of Directors of the corporation, duly and properly called
and held on the 3rd day of April, 1996; that a quorum was present at the
meeting; that the resolution is set forth in the minutes of the meeting and has
not been rescinded or modified.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of this corporation this 3rd day of April, 1996.
(Seal) /s/ Patricia B. Jasper
Secretary
<PAGE>
THIS FIRST MORTGAGE BOND, CoBANK SERIES, HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION
UNDER SUCH ACT OR IN RELIANCE UPON AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
Chugach Electric Association, Inc.
First Mortgage Bond, CoBank Series, Due 2022
No. CoBank-3 $21,500,000.00
Chugach Electric Association, Inc., an Alaska electric cooperative
(herein called the "Company", which term includes any successor corporation
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to CoBank (the "Lender"), or registered assigns, (1) the
principal sum of $21,500,000.00 Dollars, (2) interest (computed on the basis of
a 360 day year) thereon, from the date of issuance, at the rate or rates
hereafter provided for, which interest shall be payable on each Regular Interest
Payment Date with respect to the principal balance Outstanding from time to time
during the calendar month most recently ended prior to such Regular Interest
Payment Date, and (3) a Redemption Premium in the amounts (if any) hereinafter
provided. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture described on the
reverse hereof, be paid to the Person in whose name this Bond (or one or more
predecessor Bonds) is registered at the close of business on the Regular Record
Date (as defined below) for such interest. 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 be paid to the Person in whose name this Bond
(or one or more Predecessor Bonds) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Bonds of this series
not less than 10 days prior to such Special Record Date.
Payments of the principal of (and premium, if any) and interest on this
Bond shall be made to the Holder hereof by wire transfer of immediately
available funds. Wire transfers will be made to ABA #30-70-88754 for advice to
and credit of CoBank (or to such other account as the Holder hereof may
designate by notice) and shall be in time to be received prior to 1:00 p.m.,
Alaska time, on the date each payment is due.
This Bond will mature on the date stated above. Interest only shall be
due until the first Principal Payment Date. The principal amount of this Bond
shall be repaid in accordance with the following amortization schedule:
Date 03/15/03 Principal Amount Due $ 413,670
Date 03/15/04 Principal Amount Due $ 451,500
Date 03/15/05 Principal Amount Due $ 492,777
Date 03/15/06 Principal Amount Due $ 537 828
Date 03/15/07 Principal Amount Due $ 586,983
Date 03/15/08 Principal Amount Due $ 640,569
Date 03/15/09 Principal Amount Due $ 699,160
Date 03/15/10 Principal Amount Due $ 763,086
Date 03/15/11 Principal Amount Due $ 832,838
Date 03/15/12 Principal Amount Due $ 908,908
Date 03/15/13 Principal Amount Due $ 992,036
Date 03/15/14 Principal Amount Due $1,082,714
Date 03/15/15 Principal Amount Due $1,181,597
Date 03/15/16 Principal Amount Due $1,289,672
Date 03/15/17 Principal Amount Due $1,407,511
Date 03/15/18 Principal Amount Due $1,536,183
Date 03/15/19 Principal Amount Due $1,676,590
Date 03/15/20 Principal Amount Due $1,829,798
Date 03/15/21 Principal Amount Due $1,997,038
Date 03/15/22 Principal Amount Due $2,179,542
Reference is hereby made to the further provisions of this Bond set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Bond
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Bond to be duly
executed.
Dated: April 30, 1996
CHUGACH ELECTRIC ASSOCIATION, INC.
Attest: /s/ Mary Minder By: /s/ Eugene N. Bjornstad
Secretary Authorized Officer
<PAGE>
This Bond is one of a duly authorized issue of Bonds of the Company
designated as its "First Mortgage Bonds" (herein called the "Bonds"), issued and
to be issued in one or more series under, all equally and ratably secured by, an
Indenture of Trust, dated as of September 15, 1991, (herein together with the
First Supplemental Indenture of Trust, dated as of March 17, 1993, the Second
Supplemental Indenture of Trust dated as of May 19, 1994, the Third Supplemental
Indenture of Trust dated as of June 29, 1994, the Fourth Supplemental Indenture
of Trust dated as of March 1, 1995, the Fifth Supplemental Indenture of Trust
dated as of September 6, 1995, and the Sixth Supplemental Indenture of Trust
dated as of April 3, 1996, called the "Indenture"), between the Company and
Seattle-First National Bank (successor-in-interest to Security Pacific Bank
Washington, N.A.), as trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture reference is
hereby made for a statement of the description of the properties thereby
mortgaged, pledged and assigned, the nature and extent of the security and the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Bonds and of the terms upon
which the Bonds are, and are to be, authenticated and delivered. This Bond is
one of the series and maturity designated on the face hereof, limited in
aggregate principal amount to the Maximum Amount (as defined below) at any one
time outstanding.
This Bond is subject to redemption at any time, upon at least twenty
(20) Business Days (as hereinafter defined) notice to the Holder hereof, as a
whole or in part in multiples of $1,000, at the election of the Company, at a
Redemption Price equal to 100% of the principal amount being redeemed plus the
Redemption Premium (as defined below), if any, with respect to the principal
amount hereof being redeemed, together with accrued interest to the Redemption
Date on the principal amount being redeemed, but interest installments whose
Stated Maturity is on or prior to such Redemption Date will be payable to the
Holder of this Bond, or one or more Predecessor Bonds, of record at the close of
business on the relevant Record Dates.
The Company has selected the Fixed Rate Option set forth in (B) below
for an initial period of 30 days at an interest rate of 6.30000 % per annum:
(A) Variable Rate Option. Except as provided below, the unpaid
principal balance of this CoBank Bond shall bear interest at a rate per annum
equal at all times to the National Variable Rate (as hereinafter defined) plus
25 basis points. For purposes hereof, the National Variable Rate shall mean the
rate of interest established by CoBank from time to time as its National
Variable Rate. The National Variable Rate is intended by CoBank to be a
reference rate, and CoBank may charge other borrowers rates at, above, or below
that rate. Any change in the National Variable Rate shall take effect on the
date established by CoBank as the effective date of such change, and CoBank
agrees to notify the Company promptly after any change in the rate.
(B) Fixed Rate Option. From time to time at the request of the
Company, the rate of interest charged on this CoBank Bond may be fixed at a rate
to be quoted by CoBank in its sole and absolute discretion. Under this option,
individual amounts may be fixed for periods ranging from thirty (30) days to the
life of the CoBank Bond, and the minimum aggregate principal amount of CoBank
Bonds on which the interest rate may be fixed at any one time shall be $100,000.
However, rates may only be fixed for periods which expire on a Business Day, and
shall take into account repayments of principal in accordance with the
amortization schedule. Upon the expiration of any fixed rate period, interest
shall automatically accrue at the rate set forth in (A) above, unless the amount
fixed is repaid or the Company fixes the rate for an additional period.
Until the principal hereof is completely repaid whether by reason of
maturity or redemption, interest on this Bond not theretofore paid shall be
payable, in arrears, on each Interest Payment Date with respect to the principal
balance outstanding from time to time during the Interest Period to which such
Interest Payment date relates. Interest shall be calculated on the actual number
of days this Bond is outstanding on the basis of a year consisting of 360 days.
In calculating interest, the first day of each period for which interest is
calculated shall be included and the day on which interest is paid shall be
excluded.
If prior to maturity of this Bond the Company fails to make any payment
required to be made hereunder or under the terms of the Credit Agreement, then
at the Holder's option in each instance, such payment shall bear interest from
the date due to the date such amount is paid in full at the Default Rate (as
hereafter defined). After maturity, whether by reason of acceleration or
otherwise, the entire indebtedness under this Bond shall automatically bear
interest at the Default Rate. All interest provided for in this provision shall
be payable on demand.
If an Event of Default with respect to the Bonds shall occur and be
continuing, the principal of the Bonds 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 Bonds under the Indenture at any time
by the Company with the consent of the Holders of a majority in aggregate
principal amount of Bonds of all series at the time outstanding affected by such
modification. The Indenture also contains provisions permitting the Holders of a
majority in principal amount of Bonds at the time Outstanding, on behalf of the
Holders of all Bonds 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 Bond shall be
conclusive and binding upon such Holder and upon all future Holders of this Bond
and of any bond issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Bond.
No reference herein to the Indenture and no provisions of this Bond or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Bond at the times, places and rates, and in the coin or
currency, herein provided.
Pursuant to Section 34.20.160 of the Alaska Statutes, notice is hereby
given that the Company is personally obligated and fully liable for the amount
due under this Bond and the Holder of this Bond has the right to sue on this
Bond and obtain a personal judgment against the Company for satisfaction of the
amount due hereunder either before or after a judicial foreclosure of the lien
of the Indenture under Sections 09.45.170 through 09.45.220 of Alaska Statutes.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Bond is registrable in the Bond Register. Upon
surrender of this Bond for registration of transfer at the office or agency of
the company in Anchorage, Alaska, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Bond
Registrar duly executed by the Holder hereof or the Holder's attorney duly
authorized in writing, one or more new Bonds of this series, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Bonds of this series are issuable only in registered form without
coupons in denomination of $1,000 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations therein set forth, Bonds of
this series are exchangeable for a like aggregate principal amount of Bonds of
this series of a different authorized denomination, but of the same maturity and
interest rate or interest rate formula, 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 Bond 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 Bond is registered as the owner hereof for all
purposes, whether or not this Bond is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
As used herein, the term:
"Business Day" means any day on which CoBank and the Trustee are open for
business.
"CoBank" means CoBank, ACB (as successor to National Bank for Cooperatives
by virtue of merger).
"CoBank Bond" means a First Mortgage Bond, CoBank Series.
"Credit Agreement" means that Credit Agreement secured hereby dated as of
June 22, 1994, between CoBank and the Company, as the same may be amended from
time to time, or such other Credit Agreement as may hereafter exist between
CoBank and the Company relating to the issuance of CoBank Bonds.
"Default Rate" means 4% per annum in excess of the rate or rates that would
otherwise be in effect.
"Interest Payment Date" with respect to any CoBank Bond means a Regular
Interest Payment Date with respect to such Bond.
"Interest Period" means a calendar month.
"Maturity Date" with respect to this CoBank Bond means the due date set
forth on the face hereof.
"Maximum Amount" of CoBank Bonds means Eighty Million Dollars
($80,000,000).
"National Variable Rate" shall mean the rate of interest established by
CoBank from time to time as its National Variable Rate. The National Variable
Rate is intended by CoBank to be a reference rate, and CoBank may charge other
borrowers rates at, above, or below that rate.
"Principal Payment Date" with respect to this CoBank Bond means each date
on which a payment of principal is required to be made on this CoBank Bond
pursuant to the amortization schedule set forth on the face hereof.
"Redemption Premium" with respect to this CoBank Bond means the premium due
upon the redemption or repricing of any portion of this CoBank Bond then subject
to a fixed rate of interest calculated by CoBank in accordance with its
methodology and equal to the present value of the difference between: (A) the
amount of interest which would have accrued on such portion during the remainder
of the applicable fixed rate period; less (B) the amount of interest that CoBank
would earn if such portion were reinvested for the remaining fixed rate period
in U.S. Treasury obligations having a weighted average life approximately equal
to the remaining fixed rate period. For the purpose of calculating present
value, the discount rate will be the rate of interest accruing on the U.S.
Treasury obligations selected in (B) above.
"Regular Interest Payment Date" with respect to this CoBank Bond means the
20th day of each calendar month.
"Regular Record Date" for the payment of interest on this CoBank Bond
payable, and punctually paid or duly provided for, on any Interest Payment Date
means the last day (whether or not a Business Day) of the calendar month next
preceding such Interest Payment Date.
All other capitalized terms used in this Bond shall have the meanings
assigned to them in the Indenture.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
FOR CoBANK BONDS
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture.
FIRST TRUST WASHINGTON;
a national banking association, as Trustee
By: /s/ Michael A. Jones
Authorized Signatory
<PAGE>
CERTIFICATE AS TO BONDABLE ADDITIONS NO. 3
(Re Application for Authentication and Delivery of Bond CoBank-3)
Pursuant to Section 5.02 of the Indenture of Trust dated as of
September 15, 1991 from Chugach Electric Association, Inc. (the "Company") to
Security Pacific Bank Washington, N.A., as trustee, as modified and supplemented
by Supplemental Indentures No. 1, 2, 3, 4 and 5 thereto dated March 17, 1993,
May 19, 1994, June 29, 1994, March 1, 1995, September 6, 1995 and April 4, 1996
respectively (the "Indenture"), and in connection with the Company's request for
authentication and delivery of an additional Bond No. CoBank-3, the undersigned
hereby make this Certificate of Bondable Additions. Capitalized terms not
otherwise defined herein have the meanings assigned to them in the Indenture.
(a) The balance of Bondable Additions stated in item 9 of the most recent
(August 31, 1995) Summary of Certificate as to Bondable Additions
heretofore filed with the Trustee as the balance of Bondable Additions
to remain after the action then applied for, is $54,081,666 (item 1 in
the Summary of Certificate as to Bondable Additions set forth below
(the "Summary")).
(b) The Amount (item 2 in the Summary) of Property Additions, not described
in any previous Certificate as to Bondable Additions, acquired during
the period from July 1, 1995 through December 31, 1995, is $16,851,737.
Such Property Additions are described in reasonable detail on
Attachment 1
hereto, and:
i) have not been included in any previous Certificate as to
Bondable Additions;
ii) do not include Acquired Facilities or assets acquired and
paid for in whole or in part through the transfer or
delivery of securities or other property; and
iii) are listed in Attachment 1 at Cost, which in the opinion of
the undersigned is equal to their Fair Value to the Company.
(c) The aggregate amount (item 3 in the Summary) of all Retirements during
the period from July 1, 1995, through December 31, 1995, is
$10,735,782.
(d) There are no credits (item 4 of the Summary) against Retirements.
(e) The excess (item 6 in the Summary) of the Amount of Property Additions
shown in (b) above (item 2 of the Summary) over the net amount of
Retirements (item 5 of the Summary) is $6,115,955, which is the amount
of the net Bondable Additions now being certified.
<PAGE>
(f) The sum (item 7 of the Summary) of the amount shown pursuant to clause
(a) above (item 1) and the net amount of Bondable Additions now being
certified shown in clause (e) (item 6) above is $60,197,621.
(g) The total amount (item 8 in the Summary) of Bondable Additions being
used in connection with authentication and delivery of the additional
Bond whose authentication and delivery are now being applied for under
Section 5.02 of the Indenture is 110% x $3,405,000 = $3,745,500.
(h) The balance (item 9 in the Summary) of the Bondable Additions that will
remain after the granting of the Application now being made is
$56,452,121.
(i) With respect to the Property Additions described in this Certificate:
i) such Property Additions are desirable in the conduct of
the business of the Company;
ii) the allocation of the Cost to the Company of such Property
Additions to each account is, in the opinion of the
undersigned, proper; and
iii) the balance of the Bondable Additions to remain after the
action applied for plus the Cost to the Company or the Fair
Value to the Company, whichever is less, of uncertified
Property Additions is at least equal to the aggregate amount
of uncertified Retirements.
(j) The allowances or charges (if any) for interest, taxes, engineering,
legal expenses, superintendence, insurance, casualties and other
items during construction (or in connection with the acquisition of
Property Additions) which are included in the Cost to the Company
of such of the Property Additions described in this Certificate as
were constructed or acquired by or for the Company have been charged
and are properly chargeable to fixed plant accounts in accordance with
Accounting Requirements and are, in the opinion of the signers, proper
in respect of the Property Additions specified;
(k) No portion of the Cost to the Company of the Property Additions
described in this Certificate should properly have been charged to
maintenance or repairs and no expenditures are included in this
Certificate which under Accounting Requirements are not properly
chargeable to fixed plant accounts.
(l) The terms used in this Certificate which are defined in the Indenture
are used as defined in the Indenture.
<PAGE>
Summary of Certificate as to Bondable Additions No. 3
The undersigned certify the following to be a true summary of this
Certificate:
Start with:
1. The balance of Bondable Additions
remaining after the action applied for in
the previous Certificate (Certificate
No. 2).................................................. $54,081,666.
Then take the new gross Property Additions as
shown in item 2 below:
2. Amount of additional Property Additions now certified, being the Amount
of all or some Property Additions in the period from July 1, 1995
thorough December 31, 1995 (none of which has been certified in any
previous Certificate as to Bondable
Additions).................................................$16,851,737.
Then determine the deductions for Retirements by deducting item 4 below from
item 3 below to produce item 5:
3. The aggregate amount of all Retirements ..................$10,735,782
4. The sum of the credits against
Retirements................................................$ 0.
5. The net amount of Retirements to be
deducted...................................................$10,735,782.
Then determine the net Bondable Additions now being certified by deducting
item 5 from item 2 to produce item 6:
6. Net Bondable Additions now being
certified..................................................$ 6,115,955.
Then add item 1 and item 6 to produce item 7:
7. Total Bondable additions available for
the action applied for.....................................$60,197,621.
Deduct item 8 from item 7 to produce item 9:
8. Bondable Additions now being used..........................$ 3,745,500.
9. Balance of Bondable Additions to remain
after the action applied for...............................$56,452,121.
<PAGE>
Dated April 30, 1996
/s/ Michael R. Cunningham
Michael R. Cunningham
Title: Principal Accounting Officer
(Accountant)
/s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Title: Principal Financial Officer
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
Title: General Manager
(Engineer)
<PAGE>
CHUGACH ELECTRIC ASSOCIATION, INC.
ATTACHMENT 1 TO CERTIFICATE AS TO BONDABLE ADDITIONS NO. 3
NET CHANGES TO ELECTRIC PLANT
FOR THE PERIOD JUNE, 1995 THROUGH DECEMBER, 1995
<TABLE>
6/30/95 - 6/30/95 -
BALANCE 12/31/95 12/31/95 BALANCE
ACCOUNT DESCRIPTION 6/30/95 ADDITIONS RETIREMENTS 12/31/95
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRODUCTION PLANT
31100 626 00 2101 STM - STRC & IMPR/BELUGA./OTHR/G&A. 6,824,566 524,647 0 7,349,213
31200 626 00 2101 STM - BLR PLT EQP/BELUGA./OTHR/G&A. 20,700,773 4,619,024 (469,093) 24,850,704
31400 626 00 2101 STM - TURBOGENR../BELUGA./OTHR/G&A. 26,044,673 (5,123,854) (204,673) 20,716,146
31500 626 00 2101 STM - ACC ELEC EQ/BELUGA./OTHR/G&A. 6,796,027 136,751 0 6,932,778
31600 626 00 2101 STM -MISC PWR PLT/BELUGA./OTHR/G&A. 567,710 (23,681) 0 544,029
33100 000 00 2101 HYD - STRC & IMPR/GENERAL/OTHR/G&A. 822,725 (132,685) 0 690,040
33200 000 00 2101 HYD - RESV-DM-WW./GENERAL/OTHR/G&A. 5,632,731 50,587 (16,718) 5,666,600
33300 000 00 2101 HYD - WTWL-TR-GN./GENERAL/OTHR/G&A. 947,920 99,482 0 1,047,402
33400 000 00 2101 HYD - ACC ELEC EQ/GENERAL/OTHR/G&A. 688,955 (317,041) 0 371,914
33500 000 00 2101 HYD - MISC PW PLT/GENERAL/OTHR/G&A. 69,530 50,692 (22,516) 97,706
33600 000 00 2101 HYD - RESV-DM-WW./GENERAL/OTHR/G&A. 893,099 0 0 893,099
34000 626 00 2101 OTH - LAND&RIGHTS/BELUGA./OTHR/G&A. 422,664 0 0 422,664
34100 622 00 2101 OTH - STRC & IMPR/INTNATL/OTHR/G&A. 438,868 (35,459) (59,511) 343,898
34100 624 00 2101 OTH - STRC & IMPR/BERNLKE/OTHR/G&A. 1,339,440 439,312 0 1,778,752
34100 626 00 2101 OTH - STRC & IMPR/BELUGA./OTHR/G&A. 21,325,980 (349,048) (139,638) 20,837,294
34200 622 00 2101 OTH - FL HLDR-PRS/INTNATL/OTHR/G&A. 541,096 58,570 (446,798) 152,868
34200 624 00 2101 OTH - FL HLDR-PRS/BERNLKE/OTHR/G&A. 364,153 107,697 0 471,850
34200 626 00 2101 OTH - FL HLDR-PRS/BELUGA./OTHR/G&A. 2,821,550 218,708 0 3,040,258
34300 622 00 2101 OTH - PRIME MOVER/INTNATL/OTHR/G&A. 3,719,794 (61,085) 0 3,658,709
34300 624 00 2101 OTH - PRIME MOVER/BERNLKE/OTHR/G&A. 10,237,381 (468,363) (906,359) 8,862,659
34300 626 00 2101 OTH - PRIME MOVER/BELUGA./OTHR/G&A. 45,972,618 7,334,751 (4,827,865) 48,479,504
34400 622 00 2101 OTH - GENERATORS./INTNATL/OTHR/G&A. 779,742 0 0 779,742
34400 624 00 2101 OTH - GENERATORS./BERNLKE/OTHR/G&A. 2,643,926 0 (27) 2,643,899
34400 626 00 2101 OTH - GENERATORS./BELUGA./OTHR/G&A. 8,966,979 0 (25,236) 8,941,743
34500 622 00 2101 OTH - ACC ELEC EQ/INTNATL/OTHR/G&A. 427,651 61,534 (9,625) 479,560
34500 624 00 2101 OTH - ACC ELEC EQ/BERNLKE/OTHR/G&A. 963,806 (127,103) (52,129) 784,574
34500 626 00 2101 OTH - ACC ELEC EQ/BELUGA./OTHR/G&A. 4,633,322 (972,993) 0 3,660,329
34600 622 00 2101 OTH -MISC PWR PLT/INTNATL/OTHR/G&A. 55,928 (36,463) 0 19,465
34600 624 00 2101 OTH -MISC PWR PLT/BERNLKE/OTHR/G&A. 189,422 (6,532) (181,351) 1,539
34600 626 00 2101 OTH -MISC PWR PLT/BELUGA./OTHR/G&A. 2,045,582 (174,003) (8,764) 1,862,815
ROUNDING 2 (2) 0 0
===========================================================
TOTAL PRODUCTION PLANT 177,878,613 5,873,443 (7,370,303) 176,381,753
===========================================================
TRANSMISSION PLANT
35000 000 00 2101 TRN - LD & LDRITS/GENERAL/OTHR/G&A. 316,165 0 0 316,165
35000 327 00 2101 TRN - LD & LDRITS/SUBTRANS/OTHR/G&A. 0 138,818 0 138,818
35200 000 00 2101 TRN - STRC & IMPR/GENERAL/OTHR/G&A. 692,856 0 0 692,856
35200 626 00 2101 TRN - STRC & IMPR/BELUGA./OTHR/G&A. 428,664 0 0 428,664
35300 000 00 2101 TRN - STATION EQP/GENERAL/OTHR/G&A. 29,464,597 2,399,496 (365,040) 31,499,053
35300 304 00 2101 TRN - STATION EQP/LDSRVMT/OTHR/G&A. 196,977 0 0 196,977
35300 626 00 2101 TRN - STATION EQP/BELUGA./OTHR/G&A. 38,514,764 138,112 (3,847) 38,649,029
35400 000 00 2101 TRN - TWR & FXTRS/GENERAL/OTHR/G&A. 5,378,824 0 0 5,378,824
35400 626 00 2101 TRN - TWR & FXTRS/BELUGA./OTHR/G&A. 26,890,112 0 0 26,890,112
35500 000 00 2101 TRN - POLES & FIX/GENERAL/OTHR/G&A. 8,717,566 73,699 (25,469) 8,765,796
35500 327 00 2101 TRN - POLES & FIX/SUBTRANS/OTHR/G&A. 0 32,060 0 32,060
35500 626 00 2101 TRN - POLES & FIX/BELUGA./OTHR/G&A. 1,074,661 0 0 1,074,661
35600 000 00 2101 TRN -OH CND & DVS/GENERAL/OTHR/G&A. 6,441,826 50,577 (29,858) 6,462,545
35600 327 00 2101 TRN -OH CND & DVS/SUBTRANS/OTHR/G&A. 0 15,750 0 15,750
35600 626 00 2101 TRN -OH CND & DVS/BELUGA./OTHR/G&A. 7,836,678 0 0 7,836,678
35700 000 00 2101 TRN - UG CONDUIT./GENERAL/OTHR/G&A. 562,221 0 0 562,221
35700 327 00 2101 TRN - UG CONDUIT./SUBTRANS/OTHR/G&A. 0 834,898 0 834,898
35700 626 00 2101 TRN - UG CONDUIT./BELUGA./OTHR/G&A. 0 0 0 0
35800 000 00 2101 TRN - UG CND & DV/GENERAL/OTHR/G&A. 3,553,187 0 0 3,553,187
35800 327 00 2101 TRN - UG CND & DV/SUBTRANS/OTHR/G&A. 0 1,464,557 0 1,464,557
35800 626 00 2101 TRN - UG CND & DV/BELUGA./OTHR/G&A. 55,920,512 0 (924,820) 54,995,692
35900 626 00 2101 TRN-RDS & TRL-BLG/BELUGA./OTHR/G&A. 4,000 0 0 4,000
ROUNDING 1 0 0 1
===========================================================
TOTAL TRANSMISSION PLANT 185,993,611 5,147,967 (1,349,034) 189,792,544
===========================================================
DISTRIBUTION PLANT
36000 000 00 2101 DIS - LD & LDRITS/GENERAL/OTHR/G&A. 805,759 0 0 805,759
36100 000 00 2101 DIS - STRUC & IMP/GENERAL/OTHR/G&A. 1,817,354 0 0 1,817,354
36200 000 00 2101 DIS - STATION EQP/GENERAL/OTHR/G&A. 19,035,309 12,391 0 19,047,700
36400 000 00 2101 DIS - POLES-TW&FX/GENERAL/OTHR/G&A. 14,350,648 219,198 (99,860) 14,469,986
36500 000 00 2101 DIS - OH CND & DV/GENERAL/OTHR/G&A. 8,824,734 358,781 (94,731) 9,088,784
36600 000 00 2101 DIS - UG CONDUIT./GENERAL/OTHR/G&A. 5,753,141 1,588,905 (12,932) 7,329,114
36700 000 00 2101 DIS - UG CND & DV/GENERAL/OTHR/G&A. 33,325,539 (1,035,725) (156,578) 32,133,236
36800 000 00 2101 DIS - LINE TRNSFR/GENERAL/OTHR/G&A. 18,344,630 (39,814) (94,483) 18,210,333
36900 000 00 2101 DIS - SERVICES.../GENERAL/OTHR/G&A. 17,826,072 1,385,320 (61,049) 19,150,343
37000 000 00 2101 DIS - METERS...../GENERAL/OTHR/G&A. 5,616,402 1,385,592 (219,365) 6,782,629
37100 000 00 2101 DIS-INSTL CUS PRM/GENERAL/OTHR/G&A. 331,356 0 0 331,356
37300 000 00 2101 DIS-ST LTS & SIGN/GENERAL/OTHR/G&A. 7,970,329 747,016 (650,590) 8,066,755
ROUNDING (2) 2 0 0
===========================================================
TOTAL DISTRIBUTION PLANT 134,001,271 4,621,666 (1,389,588) 137,233,349
===========================================================
GENERAL PLANT
38900 000 00 2101 GEN - LD & LDRITS/GENERAL/OTHR/G&A. 122,063 0 0 122,063
38910 000 00 2101 GEN - LD IMPROVMT/GENERAL/OTHR/G&A. 65,097 0 0 65,097
39000 000 00 2101 GEN - STRC & IMPR/GENERAL/OTHR/G&A. 19,662,641 120,990 (607,977) 19,175,654
39000 310 00 2101 GEN - STRC & IMPR/LSHLDIM/OTHR/G&A. 198,601 0 0 198,601
39000 311 00 2101 GEN - STRC & IMPR/S&VSTRU/OTHR/G&A. 96,438 0 0 96,438
39100 000 00 2101 GEN-OFC FURN & EQ/GENERAL/OTHR/G&A. 1,831,206 27,363 0 1,858,569
39100 321 00 2101 GEN-OFC FURN & EQ/DPEQUIP/OTHR/G&A. 3,728,279 121,146 (18,880) 3,830,545
39200 000 00 2101 GEN - TRANSP EQMT/GENERAL/OTHR/G&A. 4,879,222 121,586 0 5,000,808
39300 000 00 2101 GEN - STORES EQMT/GENERAL/OTHR/G&A. 1,192,579 6,266 0 1,198,845
39400 000 00 2101 GEN -TL-SHP & GAR/GENERAL/OTHR/G&A. 1,222,494 69,461 0 1,291,955
39500 000 00 2101 GEN - LAB EQUIPMT/GENERAL/OTHR/G&A. 1,932,221 69,036 0 2,001,257
39600 000 00 2101 GEN - PWR OP EQMT/GENERAL/OTHR/G&A. 1,280,020 5,965 (35,190) 1,250,795
39600 323 00 2101 GEN - PWR OP EQMT/GENTRAN/OTHR/G&A. 752,114 8,519 0 760,633
39800 000 00 2101 GEN - MISC EQUIPT/GENERAL/OTHR/G&A. 579,479 470,439 (40,382) 1,009,536
39800 340 00 2101 GEN - MISC EQUIPT/BARGE../OTHR/G&A. 0 0 0 0
ROUNDING 1 (1) 0 0
===========================================================
TOTAL GENERAL PLANT 37,542,455 1,020,770 (702,429) 37,860,796
===========================================================
COMMUNICATION PLANT
39700 000 00 2101 GEN - COMM EQUIPT/GENERAL/OTHR/G&A. 2,719,811 12,798 0 2,732,609
39700 330 00 2101 GEN - COMM EQUIPT/MICROWV/OTHR/G&A. 5,758,959 781,602 0 6,540,561
39700 331 00 2101 GEN - COMM EQUIPT/SCADA../OTHR/G&A. 3,012,280 0 0 3,012,280
39700 333 00 2101 GEN - COMM EQUIPT/TELESYS/OTHR/G&A. 305,416 0 0 305,416
39700 338 00 2101 GEN - COMM EQUIPT/ORSCADA/OTHR/G&A. 8,875,262 0 0 8,875,262
ROUNDING (1) 0 0 (1)
===========================================================
TOTAL COMMUNICATION PLANT 20,671,727 794,400 0 21,466,127
===========================================================
TOTAL PLANT 556,087,677 17,458,246 (10,811,354) 562,734,569
===========================================================
LESS EXCLUDABLE PLANT
39200 000 00 2101 GEN - TRANSP EQMT/GENERAL/OTHR/G&A. 4,879,223 121,586 0 5,000,809
39600 000 00 2101 GEN - PWR OP EQMT/GENERAL/OTHR/G&A. 1,280,020 5,965 (35,190) 1,250,795
39600 323 00 2101 GEN - PWR OP EQMT/GENTRAN/OTHR/G&A. 752,114 8,519 0 760,633
39800 000 00 2101 GEN - MISC EQUIPT/GENERAL/OTHR/G&A. 579,478 470,439 (40,382) 1,009,535
39800 340 00 2101 GEN - MISC EQUIPT/BARGE../OTHR/G&A. 0 0 0 0
ROUNDING 0 0 0 0
===========================================================
TOTAL EXCLUDABLE PLANT 7,490,835 606,509 (75,572) 8,021,772
===========================================================
TOTAL INCLUDABLE PLANT 548,596,842 16,851,737 (10,735,782) 554,712,797
===========================================================
</TABLE>
<PAGE>
Chugach Electric Association, Inc.
Available Margins Certificate
Eugene N. Bjornstad, General Manager; Evan J. Griffith, Jr., Executive
Manager, Finance and Planning (Principal Financial Officer); and Michael R.
Cunningham, Controller (Principal Accounting Officer) of Chugach Electric
Association, Inc. each hereby certifies that (1) the Margins for Interest for
any 12 consecutive calendar months during the period of 18 calendar months
immediately preceding the first day of the calendar month in which this
application for authentication and delivery of Additional Bonds under Section
5.02 of the Indenture described below is made are not less than 1.20 times the
Interest Charges during such 12-month period; (2) the sum of (i) Margins for
Interest for any 12 consecutive calendar months during the period of 18 calendar
months immediately preceding the first day of the calendar month in which this
Application for authentication and delivery of additional Bonds under Section
5.02 is made and (ii) Incremental Interest with respect to such 12- month
period, is not less than 1.20 times the sum of Interest Charges during such
12-month period plus Incremental Interest with respect to such 12-month period;
and (3) the Margins for Interest have been calculated in accordance with the
definition contained in Section 1.01 of that Indenture of Trust dated September
15, 1991 (as heretofore amended by the First, Second, Third, Fourth, Fifth and
Sixth Supplemental Indentures, thereto dated March 17, 1993, May 19, 1994, June
29, 1994 and March 1, 1995, September 6, 1995 and April 4, 1996 respectively
(the "Indenture") and such calculations are set forth in the Attachment 1
hereto.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture.
IN WITNESS WHEREOF, we have hereunto signed our names.
Dated: April 30, 1996
/s/ Eugene N. Bjornstad /s/ Michael R. Cunningham
Eugene N. Bjornstad Michael R. Cunningham
Title: General Manager Title: Controller
/s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Title: Executive Manager,
Finance and Planning
Principal Financial Officer
<PAGE>
<TABLE>
Long-Term Short-Term Total Margins For Interest 12 Month
Month Ending Margins Interest Expense Interest Expense Interest Expense By Interest MFI/I
------------ ------- ---------------- ---------------- ---------------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
September, 1994 467,071 2,152,804 24,593 2,177,397 1.2145
October, 1994 921,985 2,147,613 49,131 2,196,744 1.4197
November, 1994 1,604,449 2,153,394 49,345 2,202,739 1.7284
December, 1994 875,537 2,152,924 47,201 2,200,125 1.3979
January, 1995 2,753,024 2,154,951 43,380 2,198,331 2.2523
February, 1995 2,081,124 2,170,265 20,364 2,190,629 1.9500
March, 1995 1,658,056 2,137,301 60,369 2,197,670 1.7545
April, 1995 969,717 2,124,949 99,714 2,224,663 1.4359
May, 1995 608,466 2,119,671 91,275 2,210,946 1.2752
June, 1995 (709,557) 2,124,722 69,735 2,194,457 0.6767
July, 1995 (432,272) 2,119,441 58,490 2,177,931 0.8015
August, 1995 (343,437) 2,121,479 54,489 2,175,968 0.8422 1.3968
September, 1995 (106,783) 2,188,637 22,082 2,210,719 0.9517 1.3745
October, 1995 629,101 2,185,136 32,438 2,217,574 1.2837 1.3631
November, 1995 1,003,392 2,188,054 26,301 2,214,355 1.4531 1.3402
December, 1995 895,363 1,925,118 33,736 1,958,854 1.4571 1.3441
January, 1996 2,068,780 2,230,499 42,036 2,272,535 1.9103 1.3171
February, 1996 968,678 1,930,124 19,475 1,949,599 1.4969 1.2772
March, 1996 589,008 693,932 124,422 818,354 1.7197 1.2493
</TABLE>
<PAGE>
Chugach Electric Association, Inc.
Officers' Certificate
Eugene N. Bjornstad, General Manager, and Evan J. Griffith, Jr., Executive
Manager, Finance and Planning of Chugach Electric Association, Inc. ("Chugach")
each hereby certifies that: 1) he has read the conditions and covenants and
definitions related thereto in the Indenture of Trust dated as of September 15,
1991 (as heretofore amended, the "Trust Indenture"); 2) the below opinions are
based on the above review and on his knowledge of Chugach in the above capacity;
3) he has, in his opinion, made such examination or investigation as is
necessary to enable him to express an informed opinion as to the opinions
expressed below; and 4) in accordance with Section 5.01 B of the Trust
Indenture:
(i) No Event of Default (as defined in the Trust Indenture) exists;
(ii) None of the Trust Estate (as defined in the Trust Indenture) is
subject to any Prior Lien other than Prior Liens permitted by Section
14.06 of the Trust Indenture;
(iii) In his opinion, all conditions precedent provided for in the
Trust Indenture relating to the authentication and delivery of the
First Mortgage Bond, CoBank Series No. CoBank-3 (CoBank-3 Bond) in the
principal amount of $21,500,000.00, have been complied with;
(iv) Pursuant to the Trust Indenture Section 5.03 B., in lieu of
delivering Bonds to the Trustee, Chugach has conveyed evidence by
facsimiles dated January 19, February 20 and March 11, 1996 of
repurchase of Bonds heretofore authenticated and delivered under this
Indenture and in transferable form in an aggregate principal amount
equal to $18,095,000 (Repurchased Bonds) and has demonstrated thereby
that these Repurchased Bonds have been redeemed, retired and have
ceased to be outstanding.
(v) The Repurchased Bonds being made the basis, in part, for the
authentication and delivery of the CoBank-3 Bond do not include:
(a) any Bonds which shall have theretofore been made, or are
currently being otherwise made, the basis for the
authentication and delivery of bonds or the withdrawal or
application of Deposited Cash or Trust Moneys; or
(b) any Bonds (1) whose payment, redemption or other
retirement, or provision therefor, has been effected through
the operation of any sinking, amortization, improvement or
other analogous fund and (ii) whose use under this Article is
at the time precluded by any provision of this Indenture; or
Page 1 of 2
<PAGE>
(c) any Bond which has been surrendered upon any exchange or
transfer or any Bond in lieu of which another Bond has been
authenticated and delivered under Section 3.08; or
(d) any Bond which, in accordance with the last paragraph of
Section 5.01,is treated as though it had never been
Outstanding;
(vi) at no time after the authentication and delivery of any of the
Repurchased Bonds being made the basis for the authentication and
delivery of CoBank-3 Bond, has there been filed with the Trustee an
Available Margins Certificate in which the annual interest charges on
such Bonds were not included.
(vii) no Bonds applied for bear interest at a rate greater than any of
the Bonds which are being made the basis for the authentication and
delivery of CoBank-3 Bond and.
IN WITNESS WHEREOF, we have hereunto signed our names.
Dated: April 30, 1996
/s/ Eugene N. Bjornstad
Eugene N. Bjornstad
Title: General Manager
/s/ Evan J. Griffith, Jr.
Evan J. Griffith, Jr.
Title: Executive Manager
Finance and Planning
Principal Financial Officer
Page 2 of 2
<PAGE>
After Recording Return To:
Chugach Electric Association, Inc.
5601 Minnesota Drive
Post Office Box 196300
Anchorage, Alaska 99519-6300
Attention, Mr. Don Edwards, General Counsel
SIXTH SUPPLEMENTAL INDENTURE OF TRUST
(Adding Legal Description of Additional Real Property
Acquired by the Company to Exhibit A of the Indenture)
THIS SIXTH SUPPLEMENTAL INDENTURE OF TRUST, dated as of April 3, 1996,
is amendatory and supplemental to that certain Indenture of Trust dated
September 15, 1991 (the "Original Indenture"), by and between CHUGACH ELECTRIC
ASSOCIATION, INC., an Alaska electric cooperative (the "Company"), and SECURITY
PACIFIC BANK WASHINGTON, N.A., a national banking association, recorded
September 25, 1991, under the following recording numbers:
Recording District Recording Number, Book and Page
- ------------------ -------------------------------
Anchorage 91-040327 (Book 2195, Page 178)
Kenai 91-7151 (Book 389, Page 637)
Palmer 91-011276 (Book 663, Page 167)
Seward 91-1051 (Book 62, Page 251)
Valdez 91-0738 (Book 114, Page 233)
The Original Indenture was amended by that First Supplemental Indenture
of Trust dated as of March 17, 1993 ("First Supplemental Indenture"), which was
recorded in districts of Anchorage, Kenai, Palmer, Seward and Valdez, Alaska on
dates shown under the following recording numbers:
Chugach Electric Association, Inc.
Page No. 1
<PAGE>
Recording Recording Number, Recording
District Book and Page Date
- -------- ------------- ----
Anchorage 93-014587 (Book 2394, Page 638) March 30, 1993
Kenai 94-3630 (Book 441, Page 841) April 27, 1994
Palmer 94-6629 (Book 763, Page 279) April 26, 1994
Seward 94-562 (Book 72, Page 239) April 29, 1994
Valdez 94-0604 (Book 122, Page 677) April 27, 1994
The purposes of the First Supplemental Indenture were to confirm the
Company's intention that certain real property acquired by the Company after the
date of the Original Indenture be subjected to the lien of the Indenture, and to
confirm the substitution of Seattle-First National Bank (successor by merger to
the original Trustee, Security Pacific Bank Washington, N.A.) as Trustee under
the Indenture.
The Original Indenture was amended by the Second Supplemental Indenture
of Trust dated as of May 19, 1994 (the "Second Supplemental Indenture"), which
was recorded in districts of Anchorage, Kenai, Palmer, Seward and Valdez, Alaska
on dates shown under the following recording numbers:
Recording Recording Number, Recording
District Book and Page Date
- -------- ------------- ----
Anchorage 94-036094 (Book 2656, Page 313) May 23, 1994
Kenai 94-4844 (Book 444, Page 348) May 31, 1994
Palmer 94-008794 (Book 768, Page 219) May 27, 1994
Seward 94-0832 (Book 72, Page 786) June 2, 1994
Valdez 94-0767 (Book 122, Page 967) May 31, 1994
The Second Supplemental Indenture amended Exhibit A to the Original
Indenture to include additional real property of the Company not specifically
described in the Original Indenture.
The Original Indenture was amended by the Third Supplemental Indenture
of Trust dated as of June 29, 1994 (the "Third Supplemental Indenture"), which
was recorded in districts of Anchorage, Kenai, Palmer, Seward and Valdez, Alaska
on dates shown under the following recording numbers:
Chugach Electric Association, Inc.
Page No. 2
<PAGE>
Recording Recording Number, Recording
District Book and Page Date
- -------- ------------- ----
Anchorage 94-046579 (Book 2678, Page 629) July 11, 1994
Kenai 94-6354 (Book 447, Page 238) July 11, 1994
Palmer 94-011249 (Book 773, Page 460) July 11, 1994
Seward 94-1091 (Book 73, Page 283) July 12, 1994
Valdez 94-0971 (Book 123, Page 269) July 11, 1994
The purpose of the Third Supplemental Indenture was to provide for the
creation of a new series of Bonds designated First Mortgage Bonds, CoBank Series
and specify the form and provisions of the Bonds of such series.
The Original Indenture was amended by the Fourth Supplemental Indenture
of Trust dated as of March 1, 1995 (the "Fourth Supplemental Indenture"), which
was recorded in districts of Anchorage, Kenai, Palmer, Seward and Valdez, Alaska
on dates shown under the following recording numbers:
Recording Recording Number, Recording
District Book and Page Date
- -------- ------------- ----
Anchorage 95-015010 (Book 2772, Page 604) Mar 31, 1995
Kenai 95-0383 (Book 461, Page 299) Apr 10, 1995
Palmer 95-003739 (Book 0800, Page 693) Apr 4, 1995
Seward 95-0392 (Book 76, Page 575) Apr 4, 1995
Valdez 95-0383 (Book 126, Page 214) Apr 10, 1995
The Fourth Supplemental Indenture amended Exhibit A to the Original
Indenture to include additional real property of the Company not specifically
described in the Original Indenture.
The Original Indenture was amended by the Fifth Supplemental Indenture
of Trust dated as of September 6, 1995 (the "Fifth Supplemental Indenture"),
which was recorded in districts of Anchorage, Kenai, Palmer, Seward and Valdez,
Alaska on dates shown under the following recording numbers:
Chugach Electric Association, Inc.
Page No. 3
<PAGE>
Recording Recording Number, Recording
District Book and Page Date
- -------- ------------- ----
Anchorage 96-006182 (Book 2886, Page 853) Feb 12, 1996
Kenai 96-1826 (Book 480, Page 485) Mar 12, 1996
Palmer 96-003374 (Book 0840, Page 390) Mar 12, 1996
Seward 96-0301 (Book 80, Page 589) Feb 29, 1996
Valdez 96-0158 (Book 128, Page 435) Feb 28, 1996
The purpose of the Fifth Supplemental Indenture was to provide for the
creation of a new series of Bonds designated First Mortgage Bonds, Series CFC
and specify the form and provisions of the Bonds of such series.
The Original Indenture, as amended by the First, Second, Third, Fourth
and Fifth Supplemental Indentures, is referred to herein as the "Indenture."
The Indenture secures payment of the principal of (and premium, if any)
and interest on the Outstanding Secured Bonds (as defined in the Indenture) and
the performance of the covenants contained in such Outstanding Secured Bonds and
the Indenture.
Pursuant to the Indenture, the Company did grant, bargain, sell, alien,
remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set
over and confirm to Security Pacific Bank Washington, N.A., as Trustee, all
property, rights, privileges and franchises of the Company of every kind and
description, real, personal or mixed, tangible and intangible, whether then
owned or thereafter acquired by the Company, except any Excepted Property (as
defined in the Indenture), and granted a security interest therein for the
purposes therein expressed.
On June 30, 1995 and December 13, 1995, the Company acquired additional
interests in two parcels of real property which real property was not
specifically described in Exhibit A to the Indenture, but which interest was
intended to be subjected to the lien of the Indenture from and after the date of
the Company's acquisition thereof.
The purpose of this Sixth Supplemental Indenture is to confirm that the
Company's interest in the real property described in Exhibit A attached hereto,
including the Company's interest in all
Chugach Electric Association, Inc.
Page No. 4
<PAGE>
improvements thereon and appurtenances thereto, is in all respects subject to
the lien of the Indenture in the same manner and to the same extent as if
legally described in Exhibit A to the Indenture, and Exhibit A to the Indenture
is hereby amended to add the Company's interest in the real property described
in Exhibit A attached to this Sixth Supplemental Indenture.
CHUGACH ELECTRIC ASSOCIATION, INC.,
an Alaska electric cooperative
By /s/ Eugene N. Bjornstad
-----------------------
Title: General Manager
SEATTLE-FIRST NATIONAL BANK,
a national banking association
By /s/ Michael A. Jones
--------------------
Title: Assistant Vice President
Chugach Electric Association, Inc.
Page No. 5
<PAGE>
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this 3rd day of April,
1996, by Eugene N. Bjornstad, the General Manager of CHUGACH ELECTRIC
ASSOCIATION, INC., an Alaska electric cooperative, on behalf of the cooperative.
(Seal)
/s/ Dianne Hillemeyer
-----------------------------------
Notary Public in and for Alaska
My commission expires May 13, 1996
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that Michael A. Jones,
is the person who appeared before me, and on oath stated that He was authorized
to execute this instrument, and acknowledged it as the Assistant Vice President
of FIRST TRUST WASHINGTON, to be a free and voluntary act and deed of said
national banking association, for the uses and purposes therein mentioned.
Given under my hand and official seal this 22nd day of
May, 1996.
(Seal) /s/ Linda E. Houston
-----------------------------------
NOTARY PUBLIC in and for the State of
Washington, residing at King County Washington
My appointment expires September 26, 1998
Chugach Electric Association, Inc.
Page No. 6
<PAGE>
EXHIBIT A
(Sixth Supplement Indenture)
Lot Twenty (20), Block Three (3), TOWNSITE
OF GIRDWOOD, U.S. SURVEY NO. 1177, according to
the official plat thereof, filed with the Bureau
of Land Management, located in the records of the
Anchorage Recording District, Third Judicial
District, State of Alaska.
and:
Lots Twenty-One (21), and Twenty-Two (22),
Block Three (3), TOWNSITE OF GIRDWOOD, ALASKA,
located in U.S. Survey 1177, records of the
Anchorage Recording District, Third Judicial
District, State of Alaska.
Chugach Electric Association, Inc.
Page No. 7
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,693,302
<SECURITIES> 0
<RECEIVABLES> 14,257,372
<ALLOWANCES> (450,364)
<INVENTORY> 20,101,770
<CURRENT-ASSETS> 41,982,501
<PP&E> 618,356,292
<DEPRECIATION> (205,806,594)
<TOTAL-ASSETS> 477,503,579
<CURRENT-LIABILITIES> 32,222,337
<BONDS> 307,725,845
0
0
<COMMON> 0
<OTHER-SE> 104,427,759
<TOTAL-LIABILITY-AND-EQUITY> 477,503,579
<SALES> $66,342,456
<TOTAL-REVENUES> $66,342,456
<CGS> 0
<TOTAL-COSTS> 48,515,440
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,949,507
<INCOME-PRETAX> 5,323,143
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,323,143
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,323,143
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
