HomeMy WebLinkAbout2009-04-21 Agenda Packet - Board Agenda Item # 14
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Public Utility District
ACTION
To: Board of Directors
From: Stephen Hollabaugh
Date: November 04, 2009
Subject: Consideration of a Power Sales Contract for Payson/Nebo Natural
Gas Generation
1. WHY THIS MATTER IS BEFORE THE BOARD
This matter is before the Board for possible approval of the Payson Project, Natural
Gas Power Generation Absolute Assignment and Layoff Power Sales Agreement
2. HISTORY
Information concerning the Payson Project was presented in a workshop on May 7th
and in an action item on June 4th, 2008.
The Payson natural gas contract is a UAMPS project and is owned by UAMPS
members. This project has been discussed with the Board numerous times between
2005 and 2008. The Board approved and executed the pooling appendix between the
City of Payson and Truckee Donner PUD in June 2008.
The City of Payson is interested in selling their portion of their allocation at the NEBO
plant (Payson Project). This transaction can be handled through UAMPS and was
initially done through the pooling appendix.
Natural Gas Power Generation: The Payson Natural Gas Project has been named the
Nebo power plant. This natural gas plant will be a good fit with the other District's
power supply. It gives the District a high load hour generation source and will give the
District a supply to back up wind or geothermal resources.
The City of Payson is interested in selling a portion of their allocation at the Nebo
power plant. This transaction can be handled through UAMPS and initially through a
pooling appendix. There are five steps for finalizing this transaction which include:
1. Approve and Execute the Pooling Appendix by City of Payson and Truckee Donner
PUD (completed June 2008).
2. Submit the offer to the Payson Project participants (first right of refusal, completed
Oct 2008).
3. Approve and execute an Assignment and Assumption Agreement/Power Sales
Contract (Nov 2008)
• Resolution with attached Power Supply Resource Plan, Assignment
Agreement, and Power Sales Contract
• Certificate of Participant
4. Obtain FSA approval
5. Transfer effective
The cost to the District will be the All-In Cost of operating the transferred percentage
of the plant plus a one time fee of $164,287 upon consummation of the permanent
entitlement share transfer. The one time fee is what the City of Payson has paid into
the maintenance account for this portion of the plant that may be transferred.
The Board approved the Purchase Power and Resource Plan at the October 21, 2009
meeting that included the Nebo natural gas resource.
3. NEW INFORMATION
The assignment was subject to approval of Financial Security Assurance ("FSA")
however FSA determined not to approve the assignment.
New Terms: Consequently, Payson and Truckee now desire to enter into the
Absolute Assignment and Lay Off Power Sales Agreement ("Lay Off Agreement")
providing for:
• the lay off and sale by Payson to Truckee of the associated Assigned interest
on a recourse basis upon the effective date; and
• the absolute and unconditional assignment of the Assigned Interest upon
1) the future consent of FSA, or
2) the payment or defeasance of all of the bonds ("Time of Transfer")
Resolution:
• Approval of the Lay Off Agreement, in substantially form and ratification of the
New Power Sales Agreement
• Truckee deemed a participant in the project with an entitlement of 3.6768%.
• Payson shall remain obligated with respect to the Assigned Interest until the
Time of Transfer, at which time, the Assigned interest shall transfer
permanently to Truckee pursuant to the terms of the New Power Sales Contract
• UAMPS approved this at the October 21, 2009 meeting.
4. FISCAL IMPACT
Nebo Natural Gas Electric Generation project will represent a portion of the Electric
Supply Procurement budget that might otherwise be purchased at from the market.
Current average difference ranges from $1 to $37 MWH below market.
The price of this Nebo natural gas generation is All-In cost plus a one time fee of
$164,287, paid from the purchased power budget, upon the consummation of the
permanent entitlement share transfer.
5. RECOMMENDATION
Approve and authorize the President of the Board to execute the Absolute Assignment
and Lay Off Power Sales Agreement concerning the transfer of 3.6765% Entitlement
share of the Payson Project from the City of Payson to Truckee Donner PUD.
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Stephen Hollabaugh Michael D. Holley
Assistant General Manager General Manager
DRAFT
10/12/09
PAYSON POWER PROJECT
POWER SALES CONTRACT
BETWEEN
UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS
AND
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
DATED AS OF DECEMBER 1,2008
Payson-TDPUD PowerSalesContract.doc
0865790/JCB/CJ
s
TABLE OF CONTENTS
PAGE
PREAMBLES.................................................................................................................................1
Section 1. Definitions and Explanations of Terms .................................................2
Section2. Term of Contract..................................................................................13
Section 3. Sale and Purchase of Entitlement Share ..............................................13
Section 4. Prepayments; Calculation of Prepayment Percentage,
Debt Service Percentage and Debt Service Share................................14
Section 5. Description of Initial Facilities; Additional Facilities..........................16
Section 6. Operation, Maintenance and Management of the Project....................17
Section 7. Billing Periods, Billing and Payment...................................................19
Section 8. Scheduling of Electric Energy; Coordination with
UAMPSPool .......................................................................................21
Section 9. Point of Delivery; Metering; Reactive Power......................................22
Section 10. Interruption or Reduction of Deliveries...............................................23
Section 11. Availability of Electric Energy............................................................23
Section 12. Insurance..............................................................................................23
Section 13. Annual Budget; Accounting.................................................................23
Section 14. Information to Be Made Available ......................................................24
Section 15. Additional Bonds and Refunding Bonds .............................................26
Section 16. Disposition or Termination of the Project ...........................................26
Section 17. Participant Covenants ..........................................................................27
Section 18. Reserve and Contingency Fund ...........................................................31
Section 19. Pledge of Payments..............................................................................31
Section 20. Default by Participant..........................................................................31
Section 21. Continuing Obligation of Participant; Right of UAMPS
to Discontinue Service.........................................................................31
Section 22. Transfer of Entitlement Share Following Default; Other
Actionsby UAMPS .............................................................................32
Section 23. Other Default by Participant................................................................37
Section 24. Default by UAMPS..............................................................................37
Section 25. Abandonment of Remedy....................................................................37
Section 26. Waiver of Default ................................................................................37
Section 27. Relationship to and Compliance with Other Instruments....................37
Section 28. Liability of Parties................................................................................37
Section 29. Assignment of Power Sales Contract...................................................38
Section 30. Termination or Amendment of Power Sales Contract.........................39
Section 31. Notices and Computation of Time.......................................................39
Section 32. Relationship of UAMPS and the Participant; Relationship
among Participants...............................................................................39
Section 33. No Recourse Against Officers, Etc. of UAMPS or
Participant............................................................................................40
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Section 34. Applicable Law; Construction.............................................................40
Section 35. Severability;No Merger.......................................................................40
Section 36. Representations and Warranties of Participant....................................40
SCHEDULE I Schedule of Participants, Entitlement Shares, Prepayment Percentages,
Debt Service Percentages and Debt Service Shares
EXHIBIT I Description of Initial Facilities
EXHIBIT II Form of Participant's Annual Information Report
EXHIBIT III Form of Participant's Certificate
EXHIBIT IV Form of Participant's Bring-Down Certificate
EXHIBIT V Form of Opinion of Counsel to the Participant
EXHIBIT VI Form of Bring-Down Opinion of Counsel to the Participant
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PAYSON POWER PROJECT
POWER SALES CONTRACT
This POWER SALES CONTRACT made and entered into as of December 1, 2008, is by and
between UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS, a political subdivision of the State
of Utah ("UAMPS") and Truckee Donner Public Utility District, a public utility district
organized under the laws of the State of California(the "Participant").
RECITALS:
WHEREAS, UAMPS was organized by the Members under the Act and the Joint Action
Agreement as a separate legal entity to accomplish the Members' joint and cooperative action,
including securing power supply resources for the Members' present and future needs;
WHEREAS, the Participant is authorized by applicable law to acquire, construct, own and
operate electric generating, transmission and related facilities and ownership interests therein and
has entered into the Joint Action Agreement to provide for the joint exercise of such powers
through UAMPS;
WHEREAS, UAMPS has acquired and constructed and currently owns and operates the
Payson Power Project, a gas-fired electric generating facility located in Payson City, in Utah
County, Utah(the "Project');
WHEREAS, UAMPS has entered into Payson Power Project Power Sales Contracts dated
as of June 1, 2002 (the "Original Power Sales Contracts" and, together with this Power Sales
Contract, the "Power Sales Contracts") with the original Participants thereunder providing for
the sale of Electric Energy from the Project;
WHEREAS, in order to finance all or a portion of the initial Cost of the Project, UAMPS
has previously issued the Series 2003A Bonds and may in the future issue additional revenue
bonds, notes or other obligations to finance or refinance the Cost of the Project, and the Series
2003A Bonds are and any such additional bonds will be payable from a pledge of the revenues
derived by UAMPS from the operation of the Project, including the payments to be made by the
Participants under the Power Sales Contracts;
WHEREAS, the Participant has executed an Absolute Assignment and Lay Off Power
Sales Agreement, dated as of , 2009 (the "Lay Off Power Sales Agreement") with
Payson City, Utah ("Payson") and UAMPS, providing for (a) the lay off and sale by Payson and
the purchase by the Participant of the Electric Power, Electric Energy and rights and obligations
associated with Payson's Entitlement Share of 3.6768% and a Debt Service Share of 3.8888%
(the `Assigned Interest") on a recourse basis and subject to other terms and conditions upon the
Effective Date of the Lay Off Power Sales Agreement and (b) the absolute and unconditional
assignment of the Assigned Interest upon either (i) the future consent of Financial Security
Assurance Inc., as insurer of the Series 2003A Bonds, or (ii) the payment or defeasance of all of
the Series 2003A Bonds, among other conditions;
WHEREAS, UAMPS desires to enter into this Power Sales Contract with the Participant
(as identified in the preamble to this Power Sales Contract) to provide for the acquisition by the
Participant of the Electric Power, Electric Energy and rights and obligations associated with the
Assigned Interest subject and subordinate to the terms and provisions of the Lay Off Power Sales
Agreement, and the Participant desires to enter into this Power Sales Contract with UAMPS in
order to obtain a long-term, cost-based supply of Electric Energy by the acquisition of an
Entitlement Share, through which the Participant shall hold all of its rights and obligations with
respect to the Assigned Interest, pursuant to the terms and conditions of this Power Sales
Contract, but subject and subordinate to the terms and provisions of the Lay Off Power Sales
Agreement;
WHEREAS, prior to its authorization of the execution, delivery and performance by the
Participant of this Power Sales Contract, the governing body of the Participant has reviewed (or
caused a review to be made on its behalf) various descriptions and summaries of the Project, the
Project Agreements and this Power Sales Contract, and the Participant's current and reasonably
anticipated future requirements for Electric Power and Electric Energy, and the governing body
of the Participant has determined that it is necessary and desirable for the Participant to enter into
this Power Sales Contract in order to obtain a long-term, cost-based supply of Electric Energy by
the acquisition of an Entitlement Share pursuant to the terms and conditions of this Power Sales
Contract;
WHEREAS, pursuant to the Power Sales Contracts and subject to the provisions of the
Project Agreements, UAMPS will operate or cause the Project to be operated and will schedule
the Project Output for the joint and ratable benefit of all of the Participants and, in order to
maximize the benefits of the Project to the Participant and to all other Participants, the
Participant desires to authorize UAMPS to cause the Project to be operated in accordance with
Prudent Utility Practice and to take certain other actions with respect to the disposition of the
Project Output, all as provided herein; and
WHEREAS, UAMPS and the Participant are duly authorized under applicable provisions
of law, to execute, deliver and perform this Power Sales Contract and their respective governing
bodies and any regulatory agencies having jurisdiction have taken all necessary actions and given
all necessary approvals in order to constitute this Power Sales Contract as the legal, valid and
binding obligation of the parties.
Now, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, it is agreed by and between the parties to this Power Sales Contract as follows:
Section 1. Definitions and Explanations of Terms. In addition to the terms defined in
the preamble and recitals, as used in this Power Sales Contract and in the recitals set out above:
"Act" means the Interlocal Cooperation Act, Title 11, Chapter 13, Utah Code Annotated
1953, as amended, and other applicable provisions of law.
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"Additional Bonds" means additional Bonds from time to time issued by UAMPS
pursuant to the Financing Documents and in accordance with this Power Sales Contract.
"Additional Facilities" means capital additions, betterments and replacements and other
capital items directly and functionally related to the Project, including electric transmission, fuel
transportation and related facilities, additional electric generating and related facilities located at
the Project site, long-term supplies of natural gas or other fuel for the use of the Project and any
other facilities, improvements and properties approved by the Project Management Committee.
"Annual Budget"means the budget adopted by UAMPS for each Contract Year pursuant
to the provisions of Section 13 hereof.
"Authorized Officer of UAMPS" means the Chairman of the Board, Vice-Chairman of
the Board, Secretary, Treasurer or General Manager of UAMPS authorized or having delegated
authority to perform specific acts or duties under the Power Sales Contracts by resolution duly
adopted by the Board.
"Billing Period" means such period of time as shall be established from time to time by
UAMPS for the preparation, calculation and billing of the amounts payable by the Participant
hereunder.
"Board" means the Board of Directors of UAMPS or such other governing body of
UAMPS as may be established from time to time pursuant to the Joint Action Agreement and the
Act.
"Bond Anticipation Notes" has the meaning set forth in the Financing Documents and
includes notes or other short-term obligations issued to finance all or a part of the Cost of the
Project.
"Bonds" means (i) the Series 2003A Bonds, and (ii) other bonds, notes and other
obligations issued from time to time by UAMPS pursuant to the Financing Documents to pay any
part of the Cost of the Project and includes Additional Bonds and Refunding Bonds.
"By-Laws" means the By-Laws of UAMPS adopted by the Board pursuant to the Joint
Action Agreement, as such By-Laws may be supplemented and amended from time to time.
"Contract Year" means the Fiscal Year of UAMPS, except that the first Contract Year
under this Power Sales Contract shall commence on the Effective Date. In the event that
UAMPS changes its Fiscal Year for accounting purposes, Contract Year shall, without further
action,be amended to mean such Fiscal Year.
"Construction Agreements"means the EPC Agreement and each other agreement entered
into by UAMPS for the acquisition and construction of any part of the Initial Facilities and any
Additional Facilities.
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"Cost" or "Cost of the Project" means all costs and expenses paid or incurred by
UAMPS in connection with the acquisition and construction of the Project, whether prior or
subsequent to the respective effective dates of the Power Sales Contracts, including but not
limited to amounts paid or payable under the Construction Agreements (including all costs, fees,
compensation and incentives payable to the EPC Contractor under the EPC Agreement) and all
costs and expenses incurred by UAMPS in connection with its investigation, negotiation and
review of the Project and the Project Agreements, all expenses preliminary and incidental
thereto, and the cost of planning, designing, acquiring, constructing and placing in operation the
Initial Facilities and any Additional Facilities. "Cost" or "Cost of the Project" also includes, but
is not limited to, the following:
(1) working capital and reserve requirements of the Project, including, without
limitation, amounts for deposit into the Reserve and Contingency Fund and those items
set forth in the definition of Operation and Maintenance Costs, as may be determined
from time to time by UAMPS;
(2) interest accruing in whole or in part on Bonds issued to pay all or any
portion of the Cost of the Project or the Cost of Additional Facilities prior to and during
the acquisition and construction thereof and for such additional period as UAMPS may
determine to be reasonably necessary for placing the Project or the Additional Facilities in
operation in accordance with the provisions of the Financing Documents;
(3) the deposit or deposits, if any, required to be made under the Financing
Documents from the proceeds of Bonds into any fund or account established pursuant to
the Financing Documents to meet debt service reserve requirements for the Bonds and
premiums and fees payable for any credit or liquidity facilities with respect to the Bonds;
(4) the deposit or deposits required to be made under the Financing
Documents from the proceeds of Bonds into any fund or account established pursuant to
the Financing Documents which deposit or deposits are required by the Financing
Documents;
(5) the payment of principal or redemption price of and interest on any Bond
Anticipation Notes issued for the purpose of providing short-term financing for the Cost
of the Project;
(6) planning and development costs, engineering fees, contractors' fees,
fiduciaries' fees, auditors' and accountants' fees, costs of obtaining all permits and
approvals, the cost of real property, labor, materials, equipment, supplies, training and
testing costs, insurance premiums, legal, financial advisory and financing costs and
issuance costs of the Bonds, costs of any litigation related to the Project, the Project
Agreements, this Power Sales Contract or the interests and transactions contemplated by
such agreements and this Power Sales Contract, amounts payable under the Host City
Agreement during or in connection with the acquisition and construction of the Project,
any amounts payable under the Ground lease during the acquisition and construction of
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the Project, administrative and general costs, and all other costs properly allocable to the
acquisition and construction of the Project and placing the same in operation;
(7) all costs relating to litigation, claims or judgments not otherwise covered
by insurance and arising out of the acquisition, construction or operation of the Project;
(8) payment to UAMPS or any Participant to reimburse advances and
payments made or incurred for costs preliminary or incidental to the acquisition and
construction of the Project;
(9) legally required or permitted federal, state and local taxes, or payments in
lieu of such taxes, relating to the Project incurred during the period of the acquisition or
construction thereof;
(10) the cost of acquiring long-term supplies of natural gas or other fuel
supplies, including transportation facilities or capacity rights, necessary or desirable in
connection with the operation of the Project; and
(11) all other costs incurred by UAMPS, and properly allocable to the
acquisition and construction of the Project, including all costs financed by the issuance of
Additional Bonds.
"Date of Commercial Operation" means the "Commercial Operation Date" determined
under the EPC Agreement, being the first date on which the Project became capable of operating
reliably and continuously at its rated capacity in accordance with the procedures set forth in the
EPC Agreement. The Date of Commercial Operation occurred on June 18, 2004.
"Debt Service Costs" means, for each Billing Period of each Contract Year, an amount
equal to the sum of:
(1) the interest accruing on the Bonds during such Billing Period, except to
the extent that amounts are on deposit under the Financing Documents to pay such
interest from the proceeds of Bonds;
(2) the amounts falling due during such Billing Period under any Interest Rate
Contract with respect to the Bonds;
(3) the portion of the next due principal installment on the Bonds accruing on
the Bonds (which shall be deemed to accrue in the same manner as interest accrues)
during such Billing Period, all as calculated in accordance with the Financing Documents;
(4) any additional amounts necessary or required to be deposited into the
Bond Fund or the Subordinated Indebtedness Fund under the provisions of the Financing
Documents; and
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(5) the accruing principal of and interest on any Bond Anticipation Notes or
obligations subordinate to the Bonds issued by UAMPS pursuant to the Financing
Documents and amounts necessary to provide or replenish and necessary reserves in
connection with such obligations.
Debt Service Costs also include Trustee, paying agent, escrow agent and other fiduciaries' fees
and expenses, the amounts required to be paid from time to time to maintain any credit or
liquidity instruments for and ratings on the Bonds and other costs payable by UAMPS from time
to time in connection with the Bonds.
"Debt Service Percentage" means, with respect to each Participant and as of any date of
determination, the percentage obtained by subtracting the Participant's Prepayment Percentage
from the Participant's Entitlement Share. The Participant's initial Debt Service Percentage is set
forth on Schedule I attached hereto.
"Debt Service Share" means, with respect to each Participant and as of any date of
determination, the actual percentage of Debt Service Costs payable by the Participant,
determined by dividing the Participant's Debt Service Percentage (expressed as a decimal)by the
sum (expressed as a decimal) of the Debt Service Percentages of all Participants, including the
Participant whose Debt Service Share is being determined. The Participant's initial Debt Service
Share is set forth on Schedule I attached hereto.
"Effective Date" means, with respect to this Power Sales Contract, the date set forth on
the cover page hereof, which is the date that is simultaneous with the Participant's purchase of
the Electric Power, Electric Energy and rights and obligations associated with the Assigned
Interest, as set forth in the Lay Off Power Sales Agreement.
"Electric Power"means electric power expressed in kilowatts (M).
"Electric Energy"means electric energy expressed in kilowatt-hours (kWh).
"Entitlement Share" means, with respect to each Participant, that percentage of the
initial Project Capability shown opposite the name of such Participant in Schedule I attached
hereto, as the same may be revised from time to time in accordance with the provisions of this
Power Sales Contract.
"EPC Agreement" means the Engineering, Procurement and Construction Agreement
between UAMPS and the EPC Contractor.
"EPC Contractor" means the firm or corporation appointed as the engineering,
procurement and construction contractor pursuant to the EPC Agreement.
"Financing Documents" means the bond resolution, indenture, trust agreement or other
instrument or instruments providing for the issuance of and the security for the Bonds and any
Bond Anticipation Notes and all amendments thereof and supplements thereto.
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"Fiscal Year" means the annual accounting period of UAMPS as from time to time in
effect, initially a period commencing on April 1, of each calendar year and ending on March 31
of the next succeeding calendar year.
"Fuel Agent" means any entity appointed by UAMPS to manage or facilitate the
acquisition or management of fuel for the operation of the Project or the transportation of fuel to
the Project.
"Fuel Agreement" means any agreement entered into by or on behalf of UAMPS for the
acquisition or management of fuel for the operation of the Project or the transportation or storage
of fuel to the Project. "Fuel Agreement" also includes tolling agreements and any agreement
entered into by UAMPS to manage the cost of fuel for the Project, including options, caps,
collars, swaps and similar agreements.
"Ground Lease" means the Ground Lease between Payson, as lessor, and UAMPS, as
lessee, covering the site of the electric generating facilities included within the Initial Facilities.
"Host City Agreement" means the Host City Agreement between Payson and UAMPS,
covering various matters in connection with the development, construction and operation of the
Project.
"Initial Facilities" means the real and personal property, facilities, structures,
improvements and equipment acquired and constructed in connection with the initial operation of
the Project as generally described on Exhibit I.
"Integrated Utility System" means any combination for operating or financing purposes
of the Participant's electric system with one or more of the other utility systems owned and
operated by the Participant including water, sewer, wastewater, natural gas and similar utility
systems.
"Interest Rate Contract" means any International Swap Dealers Association (ISDA)
Master Agreement, together with the schedules and confirmations thereto, or any similar
agreement entered into by UAMPS pursuant to the provisions of the State Money Management
Act, Title 51, Chapter 7, Utah Code Annotated 1953, as amended.
"Joint Action Agreement" means the Utah Associated Municipal Power Systems
Amended and Restated Agreement for Joint and Cooperative Action dated as of February 17,
1999, as amended and supplemented from time to time.
"Members" means, collectively, each entity which has executed the Joint Action
Agreement or a supplement thereto.
"Month"means a calendar month.
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"Operating Agreement"means any contract between UAMPS and an Operator providing
for the operation and maintenance of all or a substantial portion of the Project, as amended and
supplemented from time to time.
"Operating and Scheduling Procedures" means those standards, procedures and criteria
determined by UAMPS from time to time with respect to the operation of the Project and the
Project Capability and the scheduling of the Project Output which shall, to the extent practicable,
promote the efficient and economic utilization of the Project, the Project Capability and the
Project Output consistent with Prudent Utility Practice for the benefit of the Participants taken as
a whole.
"Operation and Maintenance Costs" means, with respect to each Billing Period of each
Contract Year, all costs and expenses (other than Wheeling Costs and Debt Service Costs)
attributable to the Project that are paid, payable, incurred or accrued by UAMPS during each
Billing Period resulting from the ownership, operation, maintenance and termination of, and
repairs, renewals, replacements, additions, improvements, and betterments and modifications to,
the Project. Operation and Maintenance Costs shall further include, without limitation, the
following items of cost:
(1) any amount which UAMPS may be required during such Billing Period to
pay for the prevention or correction of any unusual loss or damage or for renewals,
replacements, repairs, additions, improvements, modifications and betterments which
arise out of or are required by the Project Agreements for which UAMPS shall be
obligated, but only to the extent that funds for such payment are not provided by the
issuance of Bonds or Prepayments made by the Participants;
(2) the costs of operating and maintaining the Project and of producing and
delivering Electric Power and Electric Energy therefrom during such Billing Period,
including the operation and maintenance expenses and fuel costs of the Project pursuant
to the Project Agreements, amounts payable under the Operating Agreement and each
Fuel Agreement (including fees, expenses, incentives and other compensation payable to
the Operator and the Fuel Agent), the portion of UAMPS' administrative and general
expenses allocable or directly charged to the Project, working capital and reserves for the
payment of operation and maintenance expenses, and all other costs and expenses (but
excluding depreciation) not included in the costs specified in the other items of this
definition and properly chargeable to the Project;
(3) legally required or permitted federal, state and local taxes and ad valorem
taxes or payments in lieu of ad valorem taxes, in each case related to the Project;
(4) all other amounts, including fuel costs, payable by UAMPS pursuant to
the provisions of the Project Agreements;
(5) any additional amount not specified in the other items of this definition
which must be paid by UAMPS during such Billing Period under the Project Agreements,
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including all amounts payable under the Host City Agreement and all rents and other
amounts payable under the Ground Lease;
(6) amounts to be deposited into the Reserve and Contingency Fund
established pursuant to Section 18 hereof,
(7) legal, engineering and accounting fees and expenses, the cost of any
litigation related to the Project, the Project Agreements, this Power Sales Contract and the
interests and transactions contemplated by such agreements and this Power Sales
Contract, the costs of technical and advisory services and the cost of all Permits and
Approvals, all to the extent allocable to the Project;
(8) the costs of Additional Facilities, but only to the extent not paid or
financed as a portion of the Cost of the Project;
(9) all other amounts payable by UAMPS under the terms of the Operating
Agreement; and
(10) the costs of, or reserves for the costs of, decommissioning or removing
from service all or any part of the Project.
"Operator" means any entity that performs all or a substantial portion of the operation
and maintenance work on the Project under an Operating Agreement with UAMPS.
"Participant" means the party defined as the Participant in the first paragraph of this
Power Sales Contract.
"Participants" means the parties, including the Participant, other than UAMPS, to the
Power Sales Contracts substantially similar hereto and named on Schedule I hereto.
"Participant's Representative" means the officer, employee or other agent of the
Participant designated from time to time by the Participant as the Representative of the
Participant for purposes of the Joint Action Agreement, to whom all notices and other
communications to be given by UAMPS to the Participant hereunder shall be sent.
"Payson" means Payson City, Utah, a municipal corporation and a political subdivision
of the State of Utah.
"Permits and Approvals" means all certificates, permits, licenses, approvals, rulings,
orders or other authorizations from any federal, state or local governmental body, board or
agency having jurisdiction over UAMPS, the Project or both that are required to be obtained or
maintained for the construction, operation, maintenance or repair of the Project or any
component of it. The phrase "Permits and Approvals" shall include, without limitation, such
certificates of convenience and necessity issued by the Utah Public Service Commission and
such emissions permits issued by the Utah Department of Environmental Quality (or successor
state agencies) as shall be required for the construction or operation of the Project.
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"Point of Delivery" means, with respect to each Participant, the point of interconnection
between the Participant's electric utility system and the transmission facilities of the applicable
control area utility, as set forth in the Operating and Scheduling Procedures.
"Pooling Agreement" means, collectively, the Power Pooling Agreements between
UAMPS and the Members and certain other entities providing for the establishment and
operation of the UAMPS Pool and related matters, including all supplements and appendices
thereto.
,'Power Sales Contract" means this Power Sales Contract between UAMPS and the
Participant and "Power Sales Contracts" means all of the Power Sales Contracts between
UAMPS and the Participants entered into in connection with the Project, including (1) the
Original Power Sales Contracts (in certain cases, as supplemented by First Supplements to the
Payson Power Project Power Sales Contract, dated as of November 1, 2007, and Second
Supplements to the Payson Power Project Power Sales Contract, dated as of April 1, 2008, each
between UAMPS and certain of the original Participants), and (2) any Power Sales Contracts
hereafter entered into by UAMPS. All of the Power Sales Contracts are and shall be uniform in
all material respects in their terms, conditions and provisions, with the exception of the
Entitlement Share, the Prepayment Percentage, the Debt Service Percentage and the Debt Service
Share for each of the Participants and the other matters set forth in the Exhibits attached hereto.
"Prepayment" means any payment or payments made to UAMPS by the Participant
pursuant to Section 4 of this Power Sales Contract and designated as a Prepayment. Any
Prepayment made by the Participant is a prepayment of all or a part of the Debt Service Costs
which,but for such Prepayment, would otherwise be payable by the Participant.
"Prepayment Percentage" means, with respect to each Participant and as of any date of
determination, the percentage obtained by dividing (1) the sum of all Prepayments made by or
credited to the Participant, by (2) the sum of all Reference Project Costs as of such date as
determined and allocated to such computation by UAMPS, all as more fully provided in
Section 4 hereof. The Participant's initial Prepayment Percentage shall be calculated by UAMPS
and set forth on Schedule I attached hereto as provided in Section 4(i) hereof.
"Project" means the acquisition, construction, improvement and equipping of the Initial
Facilities and any Additional Facilities.
"Project Agreements" means, collectively, the Construction Agreements, the Operating
Agreement, the Ground Lease, the Host City Agreement, each Fuel Agreement and the
Transmission Agreements.
"Project Capability" means the nominal Electric Power and associated Electric Energy
which the Project is capable of producing. Project Capability initially means the aggregate
amount of Electric Power shown on Schedule I hereto and associated Electric Energy.
"Project Management Committee" means the committee of the Participants initially
established under the Original Power Sales Contracts and continued pursuant to Section 6 hereof
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which shall make certain decisions and recommendations with respect to the operation and
management of the Project as provided herein.
"Project Output"means the amount of Electric Power and Electric Energy, if any, which
is actually generated by the Project in any particular hour.
"Prudent Utility Practice"means, as of any particular time, any of the practices, methods
and acts engaged in or approved by a significant portion of the electric utility industry at such
time, or which, in the exercise of reasonable judgment in light of facts known at such time, could
have been expected to accomplish the desired results at the lowest reasonable cost consistent
with good business practices, reliability, safety and expedition. Prudent Utility Practice is not
intended to be limited to the optimum practice, method or act to the exclusion of all others or to
be limited to the lowest-cost practice, method or act, but rather to be a spectrum of possible
practices, methods and acts, having due regard for manufacturers' warranties and the jurisdiction.
"Qualified Independent Engineer" means a licensed or registered engineer or firm of
such engineers acceptable to UAMPS and recognized to be qualified in matters related to public
electric utility systems who shall (1) not be an officer or employee of the Participant or UAMPS
and (2) not have any substantial interest with, or be under the domination of, the Participant or
UAMPS.
"Reference Project Costs" means a nominal amount determined from time to time by
UAMPS prior to the proposed issuance of Bonds (other than Refunding Bonds) for purposes of
calculating the amount of any Prepayment to be made by the Participant as provided in Section 4
hereof. In determining Reference Project Costs, UAMPS shall calculate the sum of the following
items of the Cost of the Project: (1) those items described in the first sentence of the definition of
Cost of the Project; (2) those items set forth in clauses (1), (6), (7), (8), (9), (10) and (11) of the
definition of Cost of the Project,but only to the extent that such items are not related solely to the
Bonds and the issuance thereof, and (3) such other items of cost within the definition of Cost of
the Project as UAMPS shall determine to be properly allocable to the determination of Reference
Project Costs.
"Refunding Bonds" means refunding Bonds from time to time issued by UAMPS
pursuant to the Financing Documents and in accordance with this Power Sales Contract.
"Reserve and Contingency Fund" means the fund, if any, established pursuant to
Section 18.
"Revenue Fund" means the fund by that name established pursuant to the Financing
Documents.
"Schedule of Participants" means the schedule of Participants and their respective
Entitlement Shares, Prepayment Percentages, Debt Service Percentages and Debt Service Shares
attached hereto as Schedule 1, as the same may be amended or supplemented from time to time in
accordance with the provisions hereof.
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"Series 2003A Bonds" means the $100,850,000 Payson Power Project Revenue Bonds,
2003 Series A, which, as of December 1, 2008, are outstanding in the principal amount of
$91,920,000.
"SUVPS" means Southern Utah Valley Power Systems, a political subdivision of the
state of Utah organized under the Act.
"Transmission Agreements"means each transmission contract, agreement or tariff that is
used or necessary for the delivery of Electric Power and Energy from the Project to the
Participant's Point of Delivery, whether by direct transmission, displacement or otherwise.
"Trustee" means the bank or trust company acting as the trustee under the Financing
Documents.
"UAMPS" means Utah Associated Municipal Power Systems, a political subdivision
organized and existing under the laws of the State of Utah, the Act and the Joint Action
Agreement, and its successors. All references to UAMPS in this Power Sales Contract shall
include Authorized Officers of UAMPS and their delegees acting pursuant to specific
authorization by the Board.
"UAMPS Pool" means that certain electric power pool established pursuant to the
Pooling Agreement between UAMPS and the Members and certain other entities under which
UAMPS provides certain services with respect to the scheduling, dispatch and the sale of Electric
Power and Electric Energy and other matters pursuant to the operating criteria and procedures
provided for in the Pooling Agreement.
"Uncontrollable Force" means any cause, event or force beyond the control of the party
affected, including, but not restricted to failure, or threat of failure of facilities, flood, earthquake,
storm, fire, lightning, epidemic, war, acts of a public enemy, riot, civil disturbance or
disobedience, labor dispute, labor or material shortage, sabotage, and restraint by court or public
authority and action or non-action by, or inability to obtain the necessary authorizations or
approvals from, any governmental agency or authority, which by exercise of due diligence and
foresight such party could not reasonably have been expected to avoid and which by exercise of
due diligence it shall be unable to overcome.
"Uniform System of Accounts" means the Federal Energy Regulatory Commission
Uniform Systems of Accounts Prescribed for Public Utilities and Licensees Subject to the
Provisions of the Federal Power Act, 18 C.F.R. Part 101, as the same may be modified, amended
or supplemented from time to time or such other system of accounting as may be applicable by
law to UAMPS.
"Utility Contracts" means all contracts of the Participant for the purchase or sale by the
Participant of any or all of Electric Power, Electric Energy and transmission service, including
contracts pursuant to which the Participant agrees to take or pay, or take and pay, for any or all of
Electric Power, Electric Energy and transmission service, all to the extent related to the
Participant's electric system.
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"Wheeling Costs" means, for each Billing Period of each Contract Year, all capital,
operating and other costs and expenses paid, payable, incurred or accrued by UAMPS during
such Billing Period for the transmission of Electric Energy from the Project to the Participant's
Point of Delivery pursuant to the Transmission Agreements or otherwise.
Section 2. Term of Contract. (a) This Power Sales Contract will become effective
upon the Effective Date, and will continue until the last to occur of the following: (1) the date on
which the principal of, premium, if any, and interest on all Bonds have been paid or sufficient
funds shall have been irrevocably set aside for the full defeasance thereof and all other
obligations of UAMPS under the Financing Documents have been paid or satisfied, all as
determined in accordance with the Financing Documents; and (2) February 17, 2049 or such later
date to which UAMPS' existence shall be extended; and (3) the expiration of the term of all other
Power Sales Contracts; provided, however, that in compliance with the Act, the term of this
Power Sales Contract shall not extend for more than fifty years from the Effective Date.
(b) If UAMPS' existence as a political subdivision (or the existence of a successor to
UAMPS which shall have assumed UAMPS' obligations hereunder) shall be extended beyond
February 17, 2049, and UAMPS or such successor shall continue to operate the Project, then
UAMPS (or any such successor), if and to the extent then permitted by applicable law, will offer
to all the Participants participation in the rights and benefits of the Project in proportion to their
respective Entitlement Shares under the Power Sales Contracts. Any such future participation
shall be on substantially the same applicable terms and conditions as provided for by the Power
Sales Contracts. UAMPS agrees that, if and to the extent it is legally able to do so, it will, in
connection with any extension of the Joint Action Agreement, take any steps necessary to
recognize and preserve the rights granted pursuant to this paragraph.
Section 3. Sale and Purchase of Entitlement Share. (a) {Section 3(a) of the Original
Power Sales Contract, relating to the initial construction and financing of the Project, is no longer
applicable and has been deleted from this Power Sales Contract.}
(b) {Section 3(b) of the Original Power Sales Contract, relating to the initial Permits
and Approvals required for the construction and initial operation of the Project, is no longer
applicable and has been deleted from this Power Sales Contract.}
(c) From and after the Effective Date of this Power Sales Contract, UAMPS shall sell to
the Participant, and the Participant shall purchase from UAMPS, the Participant's Entitlement
Share.
(d) In consideration of the sale of its Entitlement Share, the Participant shall, in
accordance with and subject to the provisions of Section 7, pay to UAMPS in each Billing
Period: (1) for its share of Debt Service Costs, an amount determined by multiplying Debt
Service Costs for such Billing Period by the Participant's Debt Service Share; (2) for its share of
Operation and Maintenance Costs, an amount determined by multiplying Operation and
Maintenance Costs for such Billing Period by the Participant's Entitlement Share; and (3) the
Wheeling Costs actually incurred in transmitting the Electric Energy allocable to the Participant's
Entitlement Share to the Participant's Point of Delivery for such Billing Period. The first Billing
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Period shall commence not sooner than the month in which the Effective Date of this Power
Sales Contract occurs. Each such payment is to be computed and made as provided in Section 7
hereof.
Section 4. Prepayments; Calculation of Prepayment Percentage, Debt Service
Percentage and Debt Service Share. (a) In order to prepay all or any portion of the Debt Service
Costs that would be allocable to the Participant's Entitlement Share, the Participant may elect to
make one or more Prepayments to UAMPS pursuant to and in accordance with the procedures set
forth in this Section 4. The Participant may make a Prepayment only at the time of the financing
of the Cost of the Project by UAMPS through the issuance of Bonds, Additional Bonds or other
obligations under the Financing Documents. In connection with each Prepayment that may be
made by the Participant pursuant to this Section 4, the Participant acknowledges and agrees with
UAMPS that:
(1) each Prepayment shall be held, invested and applied in accordance with
the provisions of, and subject to the limitations set forth in, the Financing Documents;
(2) the Participant's election to make a Prepayment shall be irrevocable and
under no circumstances whatsoever shall the Participant be entitled to a return or rebate
of all or any portion of any Prepayment, including without limitation, circumstances such
as the suspension, interruption, interference, reduction, curtailment or termination of the
Project or the Project Output;
(3) in the event of a default by the Participant hereunder, the Entitlement
Share of the Participant may be allocated or reallocated to the other Participants pursuant
to the procedures set forth in Section 22 hereof and, in the event that the Participant fails
to cure such default within the period provided for in Section 22, the Prepayment
Percentage of the defaulting Participant may be reduced to 0%;
(4) no Prepayment shall be deemed to constitute an investment by the
Participant and the Participant shall not be entitled to any interest, investment earnings or
rate of return on any amounts paid by it to UAMPS as a Prepayment; and
(5) notwithstanding any Prepayment by the Participant, UAMPS shall be
obligated to provide the Electric Energy allocable to the Participant's Entitlement Share
only in accordance with the terms and provisions of this Power Sales Contract.
(b) UAMPS and the Participant agree that the following standards and parameters shall
govern the calculation by UAMPS from time to time of the amount of any Prepayment to be
made by the Participant and the calculation by UAMPS from time to time of the Participant's
Prepayment Percentage, Debt Service Percentage and Debt Service Share:
(1) as of any date of determination, the sum of the Participant's Prepayment
Percentage and the Participant's Debt Service Percentage shall equal the Participant's
Entitlement Share;
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(2) as of any date of determination, the sum of the Prepayment Percentages
and Debt Service Percentages of all Participants shall equal 100%;
(3) as of any date of determination, the sum of the Debt Service Shares of all
Participants having Prepayment Percentages that are less than their respective Entitlement
Shares shall equal 100%; and
(4) UAMPS shall have absolute and exclusive authority to establish escrow
arrangements governing the deposit and disbursement of each Prepayment and to
determine and calculate from time to time the Reference Project Costs and the
Participant's Prepayment Percentage, Debt Service Percentage and Debt Service Share,
and all such determinations and calculations by UAMPS shall be conclusive and binding
upon the Participant.
(c) Prior to the issuance of any Additional Bonds or other obligations pursuant to the
Financing Documents, UAMPS shall provide the Participant with an estimate of:
(1) the applicable Reference Project Costs; and
(2) the Entitlement Share of the Participant (as then proposed or as then in
effect) and the estimated maximum amount of the Prepayment that the Participant may
elect to make pursuant to this Section 4.
Reference Project Costs shall be determined by UAMPS in its sole discretion based upon the
items of the Cost of the Project to be financed in connection with the issuance of Bonds,
Additional Bonds or other obligations under the Financing Documents. The amount of
Reference Project Costs shall be determined from time to time so as to provide for a proportional
allocation of the Cost of the Project (other than items of the Cost of the Project related solely to
the Bonds) between Bond proceeds and Prepayments.
(d) UAMPS will exercise its best efforts to give at least 30 days (but in any event not
less than 15 days) written notice to the Participant of the date by which the Participant must elect
whether to make a Prepayment. This notice will include the information described in clauses (1)
and (2) of paragraph (c). The governing body of the Participant shall then determine whether to
make a Prepayment and the amount of the Prepayment. The amount of the Prepayment may be
any amount that is less than or equal to the product of the Participant's Entitlement Share
(expressed as a decimal) and the Reference Project Costs, and shall be subject to adjustment as
provided in paragraph (g) below. The Participant shall give notice to UAMPS of the
determination of its governing body by the date specified in the notice given by UAMPS. In the
event that the Participant does not notify UAMPS of the determination of its governing body by
the date specified in the notice provided by UAMPS, the Participant shall be deemed to have
elected not to make a Prepayment. After each Participant has notified (or is deemed to have
notified) UAMPS of its election regarding a Prepayment, UAMPS shall complete (or revise, as
applicable) Schedule I and provide a copy of the completed or revised Schedule I to each of the
Participants.
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(e) If the governing body of the Participant elects to make any such Prepayment, the
governing body shall find and determine, and the Participant shall certify to UAMPS (in the
certificate of the Participant attached hereto as Exhibit V), among other things, that:
(1) the amounts used to make such Prepayment are derived from retained
earnings of the Participant's electric enterprise fund, unexpended proceeds of borrowings
previously made by the Participant for electric system purposes or other legally available
moneys of the Participant; and
(2) the Participant will deposit or has deposited, as applicable, with the
Trustee appointed under the Financing Documents, an amount equal to the estimated
amount of the Prepayment to be made by the Participant, all in accordance with
Prepayment escrow instructions provided by DAMPS.
(f) If the governing body of the Participant elects to make any such Prepayment,
UAMPS will then provide the Participant with at least 15 days notice of the date by which the
Participant must deposit the amount of the Prepayment into the escrow established by UAMPS.
The arrangements for such special escrow account shall provide for the investment of the amount
so deposited and for the disbursement of such amount and the investment earnings thereon by the
Trustee upon the direction of UAMPS to pay a portion of the Cost of the Project.
(g) The Participant acknowledges and agrees that the estimated amount of the
Prepayment to be made by the Participant will be subject to adjustment to reflect the actual cost
of the various items included in Reference Project Costs. Not more than 90 days following the
date on which UAMPS shall have made a final disbursement of a Prepayment to pay the Cost of
the Project (or such later date as may be necessary), UAMPS shall render a final accounting
statement to the Participant setting forth a final computation of the amount of the Prepayment,
the amount deposited into the special escrow account by the Participant, the investment earnings
thereon and the amount disbursed therefrom upon the order of UAMPS, and any additional
amount payable by the Participant in respect of the Prepayment or any amount remaining on
deposit in the special escrow account to be credited to the Participant or applied in accordance
with the provisions of the Financing Documents. The Participant agrees that it will pay any
additional amount payable by it in respect of the Prepayment on or before the 15th day following
the date on which such final accounting statement was rendered.
(h) Promptly after the issuance of any Additional Bonds or other obligations pursuant to
the Financing Documents, UAMPS shall make any necessary recalculations of the Prepayment
Percentage, Debt Service Percentage and the Debt Service Share of the Participant and provide
the Participant with a revised form of Schedule I, which shall also set forth the Reference Project
Costs. No action by the Board or the Project Management Committee shall be necessary in
connection with any such recalculation.
Section S. Description of Initial Facilities; Additional Facilities. (a) A general
description of the Initial Facilities and all Additional Facilities in existence as of the Effective
Date is attached as Exhibit 1.
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(b) UAMPS may from time to time recommend the acquisition or construction of
Additional Facilities to improve or add to the Project. Any such Additional Facilities shall be
approved by the Project Management Committee.
(c) Upon completion of any Additional Facilities, UAMPS shall submit to the Project
Management Committee, a final breakdown of all Costs of the Project.
Section 6. Operation, Maintenance and Management of the Project. (a) UAMPS
covenants and agrees that it will use its best efforts to operate, maintain and manage the Project
or cause the same to be operated,maintained and managed in an efficient and economical manner
pursuant to the Operating Agreement in accordance with Prudent Utility Practice for the joint and
ratable benefit of all of the Participants. UAMPS agrees with and covenants to the Participant
that UAMPS will vigorously enforce and defend its rights under the Project Agreements. The
Participant acknowledges and agrees that UAMPS may (as authorized by the Board acting upon
the recommendation of the Project Management Committee) from time to time enter into
amendments of and supplements to any or all of the Project Agreements and that, except as
otherwise required by Section 27(b) hereof, UAMPS will not be required to obtain the consent or
approval of the Participant in connection with any such supplement or amendment.
(b) The Participant hereby acknowledges and agrees that, in order to promote the
efficient and economical utilization of the Project and to fully realize the benefits to the
Participants of their joint and cooperative undertaking, it is necessary and desirable that UAMPS
control the operation of the Project and schedule and utilize the Project Output in accordance
with the Operating and Scheduling Procedures provided for herein, and the Participant hereby
authorizes UAMPS to take all actions necessary or desirable in this regard.
(c) There has been established pursuant to the Power Sales Contracts, and there is
hereby confirmed, a Project Management Committee consisting of one voting representative
from each Participant (who shall be the Participant's Representative) and chaired by a
Participant's Representative elected by the Project Management Committee. An Authorized
Officer of UAMPS shall attend all meetings of the Project Management Committee and shall
cause minutes to be kept of all such meetings. The Joint Action Agreement and the By-Laws of
UAMPS shall govern the procedures for and the voting rights on the Project Management
Committee,provided that:
(1) The Participant's Representative of any Participant that is in default
hereunder shall not be entitled to vote on any matter during the period of such default and
the consent or approval of such Participant or such Participant's Representative shall not
be required to obtain any consent or approval required hereunder during the existence of
such default or to constitute a quorum of the Project Management Committee;
(2) A unanimous vote of all Project Management Committee Representatives
shall be required on all decisions which would result in the termination of the Project; and
(3) All decisions made by the Project Management Committee shall be made
by resolution, order or other appropriate action of the Project Management Committee
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and, before such resolution, order or action of the Project Management Committee shall
take effect, the same shall be ratified and approved by resolution, order or action of the
Board, acting in accordance with the Joint Action Agreement and the By-Laws of
DAMPS.
The Participants acknowledge that the Joint Action Agreement provides, among other things, that
decisions of the Board with respect to the Project shall be made only upon the recommendation
of the Project Management Committee and that weighted votes may be called for on any
recommendation or decision to be made by the Project Management Committee or the Board,
respectively, all as more fully provided in the Joint Action Agreement. The provisions of
Sections 11.3, 11.4, 11.5, 13.3 and 13.4 of the Joint Action Agreement respecting such voting
procedures and rights, as in effect on the date of this Power Sales Contract, are hereby
incorporated into and made a part of this Power Sales Contract. No subsequent amendment to
the Joint Action Agreement may affect such incorporated sections for purposes of this Power
Sales Contract, unless such amendment is unanimously approved by the respective governing
bodies of all Participants.
(d) The Project Management Committee shall:
(1) review, provide advice and recommendations to and consult with UAMPS
regarding the Project,
(2) review, provide advice and recommendations to UAMPS on, and approve
the Project Agreements, the Operating and Scheduling Procedures and any modifications
or amendments thereto;
(3) {Subparagraph (d)(3) of Section 6 of the Original Power Sales Contract,
relating to supervision of the construction of the Project, is no longer applicable and has
been deleted from this Power Sales Contract.}
(4) review, modify, and approve or otherwise act on the quarterly estimates of
the Cost of the Project by the first day of the month prior to the beginning of each quarter;
(5) {Subparagraph (d)(5) of Section 6 of the Original Power Sales Contract,
relating to declaration of completion of the Facility under and as defined in the EPC
Agreement, is no longer applicable and has been deleted from this Power Sales Contract.}
(6) determine and declare the Project Capability from time to time as its
deems necessary to reflect the actual capability of the Project;
(7) review and approve the Operating and Scheduling Procedures and any
Operator of the Project to be appointed by UAMPS;
(7) review and consult with UAMPS regarding the acquisition and
management of supplies of natural gas and any other necessary fuels for the Project and
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review and approve each Fuel Agreement and any Fuel Agent to be appointed by
UAMPS;
(9) review, modify and recommend the Annual Budget and any amendments
thereto to the Board;
(10) review, recommend and approve any Additional Facilities to the Board;
and
(11) review, recommend and consult with UAMPS regarding any actions or
remedies to be taken by UAMPS under Section 21 or 22 of this Power Sales Contract.
Section 7. Billing Periods, Billing and Payment. (a) The initial Billing Period to be
used for the preparation, calculation and billing of the amounts payable by the Participant
hereunder shall be a Month. In order to promote the efficient and economic administration of the
Project, UAMPS may from time to time adopt another standard period of time as the Billing
Period hereunder. In addition to the foregoing, UAMPS may from time to time revise the billing
and payment procedures provided for in this Section 7 to promote the efficient and economic
administration of the Project or to conform such billing procedures to those utilized in
connection with other projects of UAMPS. Any change in the Billing Period or in such billing
and payment shall be made in the Annual Budget provided for in Section 13 hereof and shall not
be effective for at least 15 days after the mailing of notice of such change in the Billing Period or
in the billing and payment procedures to the Participant. At the time of the mailing of such
Annual Budget, UAMPS shall send to the Participant a revised form of paragraphs (b) and (c) of
this Section 7, which shall reflect any changes in the dates of billing and payment and the method
thereof that are necessary or desirable to make this Section 7 correspond to the new Billing
Period, such changes to become effective on the date the new Billing Period takes effect. The
Participant hereby delegates to the Participant's Representative full authority to approve or
disapprove and agree or disagree to such changes in the billing procedures on behalf of the
Participant. In no event shall any such change in the Billing Period or in the billing and payment
procedures increase the amounts payable by the Participant pursuant to this Section 7 in respect
of Operation and Maintenance Costs, Wheeling Costs and Debt Service Costs.
(b) For so long as the Billing Period is a Month, on or before the 25th day after the end
of each Billing Period beginning with the first Billing Period in the first Contract Year, UAMPS
shall render to the Participant a billing statement showing the amount payable by the Participant
for such Billing Period in respect of: (1) Operation and Maintenance Costs; (2) Wheeling Costs;
(3) Debt Service Costs; and (4) any other amounts, adjustments or reconciliations payable by or
credited to such Participant pursuant to this Power Sales Contract or the Financing Documents
and not otherwise shown, including items of the Cost of the Project not then or not to be financed
by the issuance of Bonds or Prepayments which have theretofore been incurred or are then due
and payable by UAMPS. The Participant shall pay the total of such amounts at the time specified
in paragraph (c) of this Section 7, as the same may be revised from time to time. The billing
statement for each Billing Period shall be based, to the fullest extent practicable, upon the actual
operation of the Project during such Billing Period. To the extent that any billing statement
rendered by UAMPS shall have included any estimated amounts in respect of the Participant's
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share of Operation and Maintenance Costs, Wheeling Costs or other amounts (or to the extent
that Debt Service Costs shall have changed as the result of the issuance of Additional Bonds or
Refunding Bonds), such estimated amounts shall be reconciled at least once during each Contract
Year with the actual operation and scheduling of the Project and the Participant shall receive a
bill or credit, as applicable, to reflect such reconciliations pursuant to clause (4) of this paragraph
(b).
(c) Payments required to be paid by the Participant to UAMPS pursuant to this
Section 7 shall be due and payable to UAMPS at the principal office of DAMPS, or such other
address as UAMPS shall designate in writing to the Participant, on the 15th day following the
date on which the billing statement was rendered or at such other time as may be established by
UAMPS pursuant to paragraph(a) above.
(d) If payment in full is not made on or before the close of business on the due date,
UAMPS shall impose a delayed-payment charge on the unpaid amount due for each day overdue
at a rate equal to the lesser of one percent per month, compounded monthly, or the maximum rate
lawfully payable by the Participant;provided, however, that UAMPS, acting upon the direction
of the Board, may elect to waive such delayed-payment charge but only to the extent that any
such waiver will not adversely affect the ability of UAMPS to meet its payment obligations under
the Project Agreements or the Financing Documents. If said due date is Saturday, Sunday or a
holiday, the next following business day shall be the last day on which payment may be made
without the addition of the delayed-payment charge.
(e) In the event of any dispute as to any portion of the billing statement for such Billing
Period, the Participant shall nevertheless pay the full amount of the disputed charges when due
and shall give written notice of the dispute to UAMPS not later than the 60th day after the date
on which such billing statement was sent by UAMPS to the Participant. Such notice shall
identify the disputed billing statement, state the amount in dispute and set forth a full statement
of the grounds for such dispute. No adjustment shall be considered or made for disputed charges
unless such notice is given by the Participant. UAMPS shall give consideration to such dispute
and shall advise the Participant with regard to its position relative thereto within thirty (30) days
following receipt of such written notice. Upon final determination (whether by agreement or
determination by the Board) of the correct amount, any difference between such correct amount
and such full amount shall be accounted for in the billing statement next submitted to the
Participant after such determination.
(f) Debt Service Costs, including any adjustments thereto, shall be determined by
UAMPS in accordance with the Financing Documents. Operation and Maintenance Costs and
Wheeling Costs, including any adjustments thereto, shall be determined by UAMPS in
accordance with the applicable provisions of this Power Sales Contract and the Project
Agreements. The Participant shall pay all such amounts pursuant to this Section 7.
(g) The obligation of the Participant to make the payments under this Section 7 for
Operation and Maintenance Costs, Wheeling Costs, Debt Service Costs and other amounts
payable by the Participant pursuant to this Section 7 is a several obligation and not a joint
obligation with those of any other Participant. The obligation of the Participant to make the
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payments under this Section 7 shall constitute an obligation of the Participant and an operating
expense of the Participant's electric system payable solely from the revenues and other available
funds of the electric system and shall constitute a cost of purchased Electric Power and Electric
Energy, and in no event shall the Participant be obligated or required to levy or collect ad
valorem property taxes or assessments to meet its payment obligations under this Power Sales
Contract. Such payments shall be made whether or not the Project or any portion thereof is
acquired, completed, operable or operating and notwithstanding the suspension, interruption,
interference, reduction or curtailment of the Project Output, or any termination of any of the
Project Agreements, for any reason whatsoever, in whole or in part. The obligations of the
Participant to make such payments shall not be subject to any reduction, whether by offset,
counterclaim, or otherwise, and shall not be conditioned upon the performance by UAMPS under
this or any other agreement or instrument.
(h) Subject to the provision of the Project Agreements, UAMPS shall use its best efforts
to collect or cause to be collected amounts arising from insurance proceeds, condemnation
awards, damages due from contractors, subcontractors or others and proceeds from the sale or
other disposition of surplus property, all related to the Project, and shall apply all receipts,
revenues and other moneys received by it or credited to it from the foregoing sources to the
repair, reconstruction or replacement of the Project, to the retirement or defeasance of Bonds (in
whole or in part), by purchase, redemption or other arrangements therefor, to the payment of
other costs and expenses of UAMPS in connection with the Project or to the credit, pro rata, of
the Participants, based upon their Entitlement Shares in the Project, all as provided in the
Financing Documents.
(i) In the event that the failure of a Participant to make its payments in accordance with
its Power Sales Contract shall have resulted in the application of amounts in any reserve or
working capital funds for the Project, any amounts thereafter paid to UAMPS, including delayed-
payment and interest charges, by such defaulting Participant in respect of past due payments (1)
shall be used to replenish such fund or (2) to the extent that the other Participants shall have
made up the deficiency created by such application or paid additional amounts into any such
funds, shall be credited, pro rata, on the billing statements of such other Participants in the next
Billing Period or Billing Periods as shall be appropriate.
Section 8. Scheduling of Electric Energy; Coordination with UAMPS Pool. (a) From
and after the Effective Date, the Participant shall be entitled to use pursuant to this Section 8 the
Electric Energy allocable to the Participant's Entitlement Share. UAMPS shall schedule or cause
to be scheduled such Electric Energy in accordance with the Operating and Scheduling
Procedures approved by the Project Management Committee. UAMPS shall provide the
Participant with notice of any amendment to or modification of the Operating and Scheduling
Procedures.
(b) At any time the Project is operable or operating the Participant shall not be entitled
to use in any hour Electric Energy in excess of that which is allocable to the Participant's
Entitlement Share, unless arrangements have been made for a planned purchase of such Electric
Energy through the UAMPS Pool. The Participant agrees that, prior to the first delivery of
Electric Energy under this Power Sales Contract, it will execute and deliver to UAMPS an
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appendix to the Pooling Agreement (in a form approved by the Project Management Committee)
that assigns the Electric Energy allocable to the Participant's Entitlement Share to the UAMPS
Pool. The assignment of the Electric Energy allocable to the Participant's Entitlement Share
pursuant to the Pooling Agreement and appendix shall be solely for operating and scheduling
purposes and shall not constitute an assignment or transfer of the Participant's right, title and
interest in and to such Electric Energy. Any surplus Electric Energy attributable to the
Participant's Entitlement Share shall be sold or otherwise disposed of by the Participant only in
accordance with the provisions of such appendix to the Pooling Agreement. In addition to any
sales of surplus Electric Energy requested by the Participant through the UAMPS Pool, UAMPS
will utilize its best efforts to sell, exchange or otherwise dispose of any incidental surplus
Electric Power and Electric Energy attributable to the Project for the benefit of the Participants.
(c) Prior to the first delivery of Electric Energy under this Power Sales Contract, the
Participant shall provide to UAMPS a written schedule of the Participant's available electric
resources and the order in which such resources are to be applied to meet the Participant's
requirements for Electric Power and Electric Energy. UAMPS shall verify all such resources and
promptly notify the Participant of any rejection of such resources. The Participant may revise or
modify such schedule upon written notice to UAMPS at least one business day prior to the
beginning of any Billing Period.
Section 9. Point of Delivery; Metering; Reactive Power. (a) In accordance with the
Transmission Agreements, Electric Energy delivered to the Participant pursuant to Section 8 of
this Power Sales Contract will be delivered at the Participant's Point of Delivery and the
Participant shall pay its share of Wheeling Costs as determined by UAMPS. As indicated on
Exhibit 1, the Project is initially interconnected to the transmission facilities of SUVPS. Through
its Transmission Agreement with PacifiCorp (or its successor as the control area utility), UAMPS
will provide for the displacement of the Electric Energy allocable to the Participant's Entitlement
Share to the Mona Substation (or elsewhere) for transmission to the Participant's Point of
Delivery.
(b) The Participant shall be responsible for the delivery of Electric Energy from its
Point of Delivery to the Participant's electric system and the payment of all costs of such
delivery.
(c) UAMPS will install, maintain and operate metering equipment necessary to measure
at the Participant's Point of Delivery the Participant's load, power factor and such other data as
shall be necessary to enable UAMPS to meet its obligations hereunder. At least once in each
Contract Year, UAMPS or its designee will make or cause to be made such tests and inspections
of the metering equipment as may be necessary to maintain them at standards of accuracy
consistent with Prudent Utility Practice. UAMPS shall provide the Participant with reasonable
notice of the date and time of such tests and inspections and shall permit representatives of the
Participant to be present when such tests and inspections are being made. UAMPS shall provide
the Participant with the results of such tests and inspections.
(d) From and after the Effective Date, the Participant shall be obligated to maintain an
appropriate power factor at the Participant's Point of Delivery consistent with the provisions of
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the Transmission Agreements. Should the power factor, as metered at such Point of Delivery,
not be maintained within the limits established under the Transmission Agreements, the
Participant shall be notified and requested to correct such power factor. If the Participant has not
begun corrective action at the end of 90 days, UAMPS may take corrective action and the
Participant shall be obligated to reimburse or compensate UAMPS for all sums expended and all
services contracted for or performed by UAMPS or for which UAMPS shall be obligated relating
to such corrective action.
Section 10. Interruption or Reduction of Deliveries. UAMPS may interrupt or reduce
deliveries under this Power Sales Contract of Electric Energy if. (a) the Operator has determined
that such interruption or reduction is necessary in case of emergencies affecting the Project, in
order to install equipment, to make repairs and replacements to, to make investigations and
inspections of, or to perform maintenance work on, the Project or otherwise carry out its
obligations as Operator under the Operating Agreement; (b) Electric Energy from the Project is
otherwise unavailable whether due to an event of Uncontrollable Force otherwise; or (c) the
transmission of Electric Energy from the Project is interrupted or curtailed by the control area
utility, SUVPS or other transmitting utility. In order that the operation of the Participant's
electric system will not be unreasonably interrupted or interfered with, UAMPS will, to the
extent necessary, use its best efforts to make arrangements to serve the Participant's load through
other projects of UAMPS or the UAMPS Pool. UAMPS will also use its best efforts, consistent
with the provisions of the Project Agreements and the other Power Sales Contracts, to arrange for
any planned interruption or reduction in the Project Output to be scheduled at a time which will
cause the least interference with the operation of the Participant's electric system.
Section 11. Availability of Electric Energy. (a) Except as provided otherwise by this
Power Sales Contract and subject to the provisions of the Project Agreements, Electric Energy
allocable to the Participant's Entitlement Share shall be made available in accordance with this
Power Sales Contract during the term hereof, provided, however, that nondelivery of Electric
Energy hereunder for any reason whatsoever (1) shall not relieve the Participant from its
obligation to make its payments under Section 7 hereof and (2) shall not impose any liability
upon UAMPS for any direct or consequential damages suffered by the Participant.
(b) The Participant acknowledges and agrees that deliveries of the Electric Energy
allocable to its Entitlement Share are not firm and are contingent upon the operation of the
Project, the availability of transmission and other factors. The Participant agrees that it is solely
responsible for any firming transactions with respect to its Entitlement Share.
Section 12. Insurance. UAMPS shall maintain, in force, as part of the Cost of the
Project or Operation and Maintenance Costs, as appropriate, insurance with responsible insurers
with policies against risk or direct physical loss, damage or destruction of the Project, including
liability insurance and employers' liability insurance, all to the extent consistent with Prudent
Utility Practice and to the extent available at reasonable cost, but in no case less than will satisfy
applicable regulatory requirements and requirements of the Financing Documents.
Section 13. Annual Budget;Accounting. (a) On or before 15 days prior to the estimated
commencement of the first Contract Year and on or before the beginning of each Contract Year
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thereafter, UAMPS shall prepare and mail to the Participant an Annual Budget for the Project
recommended by the Project Management Committee and approved by the Board, based, to the
extent appropriate, on budgets received under the Project Agreements, showing an annual
estimate of Operation and Maintenance Costs, Wheeling Costs and Debt Service Costs, and the
Participant's share of each, for the following Contract Year. The Participant shall, to the extent
and in the manner deemed appropriate by the Participant, incorporate the estimates shown on the
Annual Budget in its annual budgetary process for the Participant's electric enterprise fund.
(b) At the end of each quarter during each Contract Year and at such other times as it
shall deem desirable, UAMPS shall review the Annual Budget of Operation and Maintenance
Costs, Wheeling Costs and Debt Service Costs for the Contract Year. In the event such review
indicates that the Annual Budget does not or will not substantially correspond with actual
receipts or expenditures, or if at any time during such Contract Year there are or are expected to
be extraordinary receipts, credits or expenditures of costs substantially affecting Operation and
Maintenance Costs, Wheeling Costs and Debt Service Costs, UAMPS shall prepare and provide
to the Participant's Representative a revised Annual Budget, recommended by the Project
Management Committee and approved by the Board, incorporating adjustments to reflect such
receipts, credits or expenditures which shall thereupon supersede the previous Annual Budget.
The revised Annual Budget and any written materials that accompany it shall specifically identify
the changes from the Annual Budget that was previously in effect.
(c) UAMPS agrees that it will, from and after the date of the acquisition by UAMPS of
the Project, keep accurate records and accounts relating to the Project, the Cost of the Project,
Reference Project Costs, Operation and Maintenance Costs, Wheeling Costs and Debt Service
Costs in accordance with the Financing Documents and the Uniform System of Accounts,
separate and distinct from its other records and accounts; provided that UAMPS may establish
revenue and operation and maintenance funds that account for more than one project of UAMPS
so long as UAMPS shall maintain books and records adequate to show the amounts in each of
such funds allocable to each such Project. Said accounts shall be audited annually by a firm of
certified public accountants, experienced in public finance and electric utility accounting and of
national reputation, to be employed by UAMPS. A copy of each annual audit, including all
written comments and recommendations of such accountants, approved by the Members shall be
furnished by UAMPS to the Participant not later than 180 days after the end of each Contract
Year.
Section 14. Information to Be Made Available. (a) From and after the Effective Date of
this Power Sales Contract and subject to their availability under the applicable provisions of the
Project Agreements, UAMPS shall make available for examination by the Participant:
(1) all books of accounts, records, documentation and contracts in the
possession of UAMPS relating to the operation of the Project;
(2) copies of all agreements and data in the possession of UAMPS relating to
the financing of the Project;
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(3) copies of all operating and financial records and reports relating to the
Project in the possession of UAMPS;
(4) copies of policies of insurance carried pursuant to Section 12 hereof; and
(5) such other information and documents with respect to the Project as the
Participant may reasonably request from time to time.
(b) The Participant acknowledges that the ability of UAMPS to sell Bonds depends
upon, among other things, the credit standing of the Participants and their electric systems and
that it may be necessary for UAMPS to provide certain information with respect to the
Participants and their electric systems in connection with the sale of Bonds (whether or not the
Participant makes a Prepayment). Consequently, the Participant covenants to and agrees with
UAMPS that the Participant will, upon request, provide to UAMPS all information with respect
to the Participant and its electric system, including financial and operating information and all
contracts, documents, reports, bond resolutions and indentures, as may be requested by UAMPS
or its counsel in connection with the financing of the Project and the issuance of Bonds.
(c) The Participant covenants to and agrees with UAMPS that the Participant will
furnish to UAMPS (1) concurrently with its execution and delivery of this Power Sales Contract
and not later than 180 days after the end of each fiscal year of the Participant, (A) a copy of the
most recent annual financial statements of the Participant and its electric enterprise fund, audited
by an independent certified public accountant or firm of such accountants, together with copies
of all management letters and written recommendations and comments submitted by the
accountants making such audit, and (B) the information and documents described in Exhibit II
attached hereto, and (2) such other information and documents as UAMPS may reasonably
request from time to time.
UAMPS acknowledges that disclosure to third parties of the information and documents
described in Exhibit II and other information provided to UAMPS by the Participant pursuant to
this paragraph (c) could cause immediate and substantial financial and commercial harm to the
Participant. UAMPS agrees to take all actions necessary on its part to classify such information
and documents as "protected records" within the meaning of the Government Records Access
and Management Act, Title 63, Chapter 2, Utah Code Annotated 1953, as amended ("GRAMA").
Such classification shall be based upon, among other things, the immediate and substantial
financial and commercial harm that would be suffered by the Participant and UAMPS as a result
of the disclosure of such information and documents to actual or potential competitors. UAMPS
agrees that it will use its best efforts, to the extent permitted by GRAMA, to avoid disclosing to
any person the commercial information contained in such information and documents. In the
event that UAMPS receives a request for disclosure of the material described in this paragraph,
UAMPS agrees that it will immediately notify the Participant and afford it an opportunity to
contest any disclosure of the same.
(d) Concurrently with its execution and delivery of this Power Sales Contract, the
Participant shall deliver to UAMPS (1) an executed counterpart of the Lay Off Power Sales
Agreement, (2) a certificate, executed by the President of the Participant's Board of Directors or
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other authorized officer, and the Clerk of the Participant or other authorized officer, and the
Participant's Representative, together with attached exhibits, in substantially the form attached
hereto as Exhibit III and (3) an opinion of counsel to the Participant, in substantially the form
attached hereto as Exhibit V. Concurrently with each issuance of Bonds by UAMPS, the
Participant shall deliver to UAMPS (1) a bring-down certificate executed by the President of the
Participant's Board of Directors or other authorized officer, and the Clerk of the Participant or
other authorized officer, in substantially the form attached hereto as Exhibit IV, and (2) a bring-
down opinion of counsel to the Participant, in substantially the form attached hereto as EXHIBIT
Vl.
Section 15. Additional Bonds and Refunding Bonds. (a) Additional Bonds may be sold
and issued by UAMPS in accordance with the provisions of the Financing Documents at any
time and from time to time for the purpose of paying the Cost of the Project, including the Cost
of any Additional Facilities. UAMPS may incur other obligations pursuant to the Financing
Documents to achieve purposes deemed beneficial to the Project.
(b) Any Additional Bonds shall be secured by the pledge made pursuant to the
Financing Documents of the payments required to be made by the Participant under Section 7 of
this Power Sales Contract, as such payments may be increased and extended by reason of the
issuance of Additional Bonds, and of other revenues of UAMPS attributable to the Project.
Additional Bonds may be issued in amounts sufficient to pay the full amount of such costs and to
provide such reserves as may be determined by UAMPS to be reasonably necessary. Any
Additional Bonds issued in accordance with the provisions of this Section 15 shall rank on a
parity as to the security provided by this Power Sales Contract with all Bonds previously issued.
(c) In the event Debt Service Costs may be reduced by the refunding of any Bonds then
outstanding or in the event it shall otherwise be advantageous, in the opinion of UAMPS, to
refund any Bonds, UAMPS may issue and sell Refunding Bonds in accordance with the
Financing Documents. Any such Refunding Bonds may be secured by the pledge made pursuant
to the Financing Documents of the payments required to be made by the Participant under
Section 7 of this Power Sales Contract and of other revenues of UAMPS attributable to the
Project. Any Refunding Bonds issued in accordance with the provisions of this Section 15 and
secured by the pledge of such payments and such revenues shall rank pari passu as to the security
afforded by the provisions of this Power Sales Contract with all Bonds theretofore issued
pursuant to and secured in accordance with the provisions of this Power Sales Contract.
Section 16. Disposition or Termination of the Project. Except as provided in
Section 22(c) and this Section 16, UAMPS shall not sell, lease or otherwise dispose of the
Project or any substantial part of the Project without the consent of all of the Participants.
Subject to the provisions of the Financing Documents, this Section 16 shall not prohibit a merger
or consolidation or sale of all or substantially all of the property of UAMPS. Subject to the
applicable provisions of the Project Agreements, if the Project shall be terminated, UAMPS shall
use its best efforts to cause the Project to be economically salvaged, discontinued, disposed of or
sold in whole or in part. UAMPS shall make accounting statements for each Billing Period to the
Participant of all costs associated therewith. Such accounting statements shall continue for such
Billing Periods until the Project has been salvaged, discontinued or finally disposed of hereunder
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and provision for the payment of the Bonds has been made in accordance with the Financing
Documents, at which time a final accounting statement with respect thereto shall be made by
UAMPS at the earliest reasonable time. The costs of salvage, discontinuance or disposition shall
include, but shall not be limited to, all accrued costs and liabilities resulting from the acquisition,
construction, operation (including cost of fuel), maintenance of and renewals and replacements to
the Project.
Section 17. Participant Covenants. The Participant covenants and agrees with UAMPS
as follows:
(a) Maintenance of Rates. The Participant shall establish, maintain, revise,
charge and collect rates for electric service rendered by it to its customers so that such
rates shall provide revenues which, together with other funds reasonably estimated to be
available, will be sufficient to meet the Participant's obligations to UAMPS under this
Power Sales Contract, to pay all other operating expenses of the Participant's electric
system and to provide revenues sufficient to enable the Participant to keep its electric
system in good working order, and to pay all obligations of the Participant payable from,
or constituting a charge or lien on, the revenues of its electric system and, to the extent
being paid from the revenues of its electric system, all general obligation bonds of the
Participant now or hereafter outstanding.
If the Participant establishes or maintains an Integrated Utility System, it shall maintain
its rates for the services provided to the customers of its Integrated Utility System so that
such rates shall provide revenues, which, together with other funds estimated to be
available, will be sufficient to meet the Participant's obligations to UAMPS under this
Power Sales Contract, and all other operating expenses of the Participant's Integrated
Utility System, and to pay all obligations payable from, or constituting a charge or lien
on, the revenues of its Integrated Utility System.
(b) Maintenance of Revenues. The Participant shall at all times comply with
all terms, covenants and provisions of all Utility Contracts to which it is a party. The
Participant shall promptly collect all charges due for Electric Power and Electric Energy
supplied by the Participant as the same become due. The Participant shall at all times
maintain and promptly and vigorously enforce its rights against any person, customer or
other entity that does not pay such charges when due.
The Participant shall not hereafter (1) enter into any contract pursuant to which the
Participant will be obligated to take or pay for Electric Power and Electric Energy or for
transmission service furnished to the Participant, in either case on a basis substantially
similar to the provisions contained in Section 7(g) of this Power Sales Contract, or (2)
grant any franchise for competing electric service within its service area, except upon 90
days' prior notice to UAMPS and delivery to UAMPS of a certificate and report from a
Qualified Independent Engineer or a written determination by the governing body of the
Participant in each case to the effect that the performance by the Participant of its
obligations under such contract or the granting of such franchise, as applicable, will not
adversely affect the ability of the Participant to meet its obligations under this Power
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Sales Contract. The provisions of this paragraph shall not apply to (x) any contract
between the Participant and UAMPS or (y) any franchises or similar arrangements
required by state or federal law as a part of a comprehensive restructuring of the electric
industry.
To the extent permitted by law and except as otherwise permitted by the preceding
paragraph and paragraph (g)below, the Participant shall vigorously defend and enforce its
exclusive right to provide electric distribution services within its service area.
(c) Sale or Assignment of Electric System or Power Sales Contract. The
Participant shall not sell, lease or otherwise dispose of all or substantially all of its electric
system, nor shall the Participant assign all or any part of its Entitlement Share or any or
all of its interests under this Power Sales Contract, except upon one hundred twenty(120)
days' prior written notice to UAMPS. Within forty-five days after receipt of such notice
from the Participant (and if such notice indicates that the Participant proposes to assign
its Entitlement Share), UAMPS shall notify all of the other Participants of the proposed
assignment by the Participant of all or part of its Entitlement Share. Each of the other
Participants shall have the option of acquiring all or any portion of the Entitlement Share
that is proposed to be assigned and shall notify UAMPS of its exercise of such option
within forty-five days of its receipt of the notice from UAMPS referred to in the
preceding sentence. In the event that two or more of the other Participants shall exercise
their options with respect to the assigning Participant's Entitlement Share in amounts
which exceed the total Entitlement Share proposed to be assigned, UAMPS shall, to the
extent necessary, make a pro rata allocation of the such Entitlement Share among the
Participants which have exercised their options, based upon the existing Entitlement
Shares of the requesting Participants. In the event that less than all of such Entitlement
Share shall be acquired by other Participants, UAMPS shall notify the other Members of
UAMPS of the proposed assignment of an Entitlement Share and shall provide such
Members with an opportunity to acquire the remaining portion of the Participant's
Entitlement Share.
In connection with and as a condition of any sale, assignment or other disposition referred
to in the preceding paragraph, UAMPS shall require the Participant and its purchaser,
assignee or lessee to satisfy the following conditions: (1) at the sole option of UAMPS
either (A) the purchaser, assignee or lessee shall assume all obligations of the Participant
under this Power Sales Contract in such a manner as shall assure UAMPS to its sole
satisfaction that the Participant's Entitlement Share to be purchased hereunder and the
amounts to be paid therefor will not be reduced, and if and to the extent deemed
necessary by UAMPS in its sole discretion to reflect such assignment and assumption,
UAMPS and such purchaser, assignee or lessee shall enter into an agreement
supplemental to this Power Sales Contract to clarify the terms upon which the
Participant's Entitlement Share is to be sold hereunder by UAMPS to such purchaser,
assignee or lessee; or (B) such purchaser, assignee or lessee shall enter into a new
contract with UAMPS for the purchase of the Participant's Entitlement Share at a price
and on terms which UAMPS in its sole discretion determines not to be less beneficial to it
and the other Participants than is this Power Sales Contract; (2) the senior debt, if any, of
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such purchaser, assignee or lessee, if such purchaser, assignee or lessee is not a
Participant shall be rated by at least one nationally recognized bond rating agency in a
category generally recognized to be "investment grade"; (3) UAMPS shall by resolution
determine that such sale, lease or other disposition will not adversely affect UAMPS, the
other Participants or the security for the payment of Bonds; and (4) UAMPS shall have
received an opinion of nationally recognized bond counsel to the effect that such sale,
assignment or disposition will not by itself adversely affect the tax exempt status of
interest on any of the Bonds (theretofore issued or thereafter to be issued as tax exempt
obligations). UAMPS shall make the determinations required by this paragraph (c)
within one hundred twenty (120) days of receipt by UAMPS of the notice referred to in
the first sentence of this paragraph (c) and shall provide a written copy of such
determinations to the Participant.
In the event any sale, lease or other disposition is permitted pursuant to this paragraph (c),
UAMPS may request as additional security to preserve the flow of revenues under this
Power Sales Contract, and the selling, leasing or disposing Participant shall provide the
funds necessary to establish, an escrow deposit equivalent to the sum of(1)the product of
the Participant's Debt Service Share (expressed as a decimal) and Debt Service Costs
plus (2) the product of the Participant's Entitlement Share and the sum of the estimated
Operation and Maintenance Costs and Wheeling Costs, all for the balance of the term of
this Power Sales Contract. Every five years, after the establishment of such escrow
deposit, UAMPS will release to the Participant such of the funds in the escrow equivalent
to those paid to UAMPS by the Participant's purchaser, assignee or lessee during such
previous five years.
(d) Prudent Utility Practice. The Participant shall, in accordance with
Prudent Utility Practice, (1) at all times operate its electric system or Integrated Utility
System and the business thereof in an efficient manner, (2) maintain its electric system or
Integrated Utility System in good repair, working order and condition, and (3) from time
to time make all necessary and proper repairs, renewals, replacements, additions,
betterments and improvements with respect to the electric system or Integrated Utility
System, so that at all times the business thereof shall be properly conducted.
(e) Operating Expenses. UAMPS and the Participant intend that the
payments to be made by the Participant to UAMPS pursuant to this Power Sales Contract
(1) will be treated as a cost of purchased electric power and energy and as an operating
expenses of the Participant's electric system or Integrated Utility System and (2) will be
payable as an operation and maintenance expense of, and (together with all other
operation and maintenance expenses) as a first charge on the revenues derived from the
operation of, its electric system or Integrated Utility System, prior to payment of any debt
service payable from such revenues. The Participant hereby covenants to and agrees with
UAMPS that it will use its best efforts to include the payments to be made by it under this
Power Sales Contract as a cost of purchased power and as an operation and maintenance
expense in the annual operating budgets of its electric system or Integrated Utility System
and in any resolution, ordinance or indenture providing for future borrowings for the
Participant's electric system or Integrated Utility System.
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(f) Tax Status. (1) The Participant shall not use or permit to be used any of
the Electric Energy acquired under this Power Sales Contract or operate its system in any
manner or for any purpose or take or omit to take any action which could, either alone or
in conjunction with any other similar actions by the Participant or other Participants,
result in loss of the exclusion from gross income for federal income tax purposes of the
interest on any Bond or Bonds theretofore issued or thereafter issuable by UAMPS as tax
exempt obligations pursuant to the provisions of the Internal Revenue Code of 1986, as
amended, and applicable regulations and rulings thereunder.
(2) At the time of execution of this Power Sales Contract the Participant has
no contracts and has no current expectation of entering into any contracts whereby any
person, corporation, partnership or other non-governmental entity agrees to purchase
electric service from the Participant on a basis different from that on which the
Participant provides electric service to the public generally, except as shown on Exhibit
III hereto. At least sixty(60) days prior to entering into any contract whereby any person,
corporation, partnership or other nongovernmental entity agrees to purchase electric
service from the Participant on a basis different from that on which the Participant
provides electric service to the public generally, the Participant shall notify UAMPS of its
intent to enter into such contract and provide copies of such contract to UAMPS. Within
sixty (60) days after receipt of such notice, UAMPS shall advise the Participant as to
whether, in the opinion of counsel of recognized standing in the field of law relating to
municipal bonds selected by UAMPS, the entering into of such contract would result in a
violation of the covenant in clause (1) above. The cost of such opinion and other reports
necessary in connection therewith shall be borne by the Participant. Any determination
by UAMPS that any such contract would violate the covenant set forth in clause (1)
above shall be made by UAMPS based upon such opinion of counsel and such other
reports as UAMPS deems necessary. In the event that allocations are necessary to
determine whether entering into any such contract violates the covenant set forth in clause
(1) above, UAMPS shall make such allocations, in its sole discretion, after receipt of an
opinion of counsel of recognized standing in the field of law relating to municipal bonds
selected by UAMPS and other reports necessary in connection therewith and paid for by
the Participant.
(g) Electric Utility Restructuring. In the event that federal or state legislation
is enacted that requires or permits the Participant to provide direct access to the
consumers now served by its electric utility system by competing suppliers of electric
service, the Participant covenants and agrees with UAMPS that it will take all actions
permitted on its part by such legislation to preserve and protect the operating and
financial integrity of its system. To the extent permitted by law, the Participant will (1)
establish and collect such transition charges and charges for the distribution and other
services it continues to provide after the enactment of such electric utility restructuring
legislation that will enable it to meet its obligations to UAMPS under this Power Sales
Contract and (2) include in such transition charges its costs under this Power Sales
Contract.
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Section 18. Reserve and Contingency Fund. (a) In addition to various funds and
accounts established under the Financing Documents, UAMPS shall establish an additional fund
with respect to the Project known as the "Reserve and Contingency Fund" to be funded, held and
applied as provided herein. Amounts on deposit in the Reserve and Contingency Fund may be
used to pay or provide reserves for unusual or extraordinary Operation and Maintenance Costs of
the Project, renewals, repairs, replacements, additions or betterments of or to any items included
in the Project or the cost of any Additional Facilities.
(b) UAMPS may include in the Annual Budget adopted pursuant to Section 13 hereof
an amount for deposit into the Reserve and Contingency Fund. This amount may represent either
an appropriation of excess revenues from the operation of the Project during the preceding Fiscal
Year or amounts to be billed to and collected from the Participants as an item of Operation and
Maintenance Costs during the Fiscal Year covered by the Annual Budget. The aggregate amount
to be billed to the Participants as an item of Operation and Maintenance Costs for deposit into the
Reserve and Contingency Fund in any Contract Year shall not exceed twenty percent (20%) of
the total budgeted Operation and Maintenance Costs of the Project for such Contract Year. The
total amount on deposit in the Reserve and Contingency Fund shall not exceed one year's
average Operation and Maintenance Costs of the Project.
Section 19. Pledge of Payments. All payments required to be made by the Participant
pursuant to the provisions of Section 7, together with other revenues of UAMPS attributable to
the Project may be pledged by UAMPS pursuant to the Financing Documents to secure the
payment of Bonds.
Section 20. Default by Participant. Each of the following shall constitute a"default"by
the Participant under this Power Sales Contract:
(a) failure of the Participant to make to UAMPS any of the payments for
which provision is made in this Power Sales Contract within five business days after the
due date of any such payment; or
(b) failure by the Participant to observe any of the covenants, agreements or
obligations on its part contained herein and failure to remedy the same for a period of
sixty days after written notice thereof, specifying such failure and requiring the same to
be remedied, shall have been given by or on behalf of UAMPS; or
(c) bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, including without limitation proceedings under Title 11, Chapter 9, United
States Code or other proceedings for relief under any federal or state bankruptcy law or
similar law for the relief of debtors, are instituted by or against the Participant and, if
instituted against the Participant, said proceedings are consented to or are not dismissed
within thirty days after such institution.
Section 21. Continuing Obligation of Participant; Right of UAMPS to Discontinue
Service. (a) In the event of any default referred to in Section 20, the Participant shall not be
relieved of its liability for payment of any amounts in default or its failure to observe its
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covenants, agreements and obligations hereunder and UAMPS shall have the right to recover
from the Participant any amount in default. In enforcement of any such right of recovery,
UAMPS may bring any suit, action, or proceeding in law or in equity, including mandamus and
action for specific performance, as may be necessary or appropriate to enforce any covenant,
agreement or obligation of the Participant hereunder or the obligation of the Participant to make
any payment for which provision is made in this Power Sales Contract against the Participant.
(b) In addition to proceeding with its rights against a defaulting Participant pursuant to
paragraph (a) above, UAMPS may, upon not less than thirty days' written notice from UAMPS
to the Participant, cease and discontinue providing all or any portion of the Participant's
Entitlement Share and may terminate the Participant's right to receive the Electric Energy
allocable to its Entitlement Share under this Power Sales Contract. In connection with its
determination to discontinue providing all or any portion of a defaulting Participant's Entitlement
Share, UAMPS shall take into account, among such other matters as UAMPS in its sole
discretion shall deem relevant, the amounts and due dates of its payment obligations under the
Project Agreements and the Financing Documents and the funds and revenues available to
UAMPS to enable it to meet its obligations thereunder. Any such termination of the Participant's
Entitlement Share under this Power Sales Contract shall not, however, terminate, reduce or
modify the Participant's outstanding obligations and liabilities hereunder.
Section 22. Transfer of Entitlement Share Following Default; Other Actions by
UAMPS. UAMPS and the Participant acknowledge that a default by any of the Participants under
its Power Sales Contract could reduce the revenues available to UAMPS which are necessary in
order for UAMPS to meet its obligations under the Project Agreements and the Financing
Documents on a timely basis. In the event of an insufficiency of revenues and an inability on the
part of UAMPS to meet its obligations under the Project Agreements and the Financing
Documents on a timely basis, the ability of UAMPS to deliver Electric Energy from the Project
and the interests of all of the Participants will be materially and adversely affected. The
provisions of this Section 22 are intended to provide a means to assure the sufficiency of
revenues to UAMPS following a default by a Participant under its Power Sales Contract by the
reallocation of the defaulting Participant's Entitlement Share. As set forth below, UAMPS
agrees to take certain actions to mitigate the impact of any such reallocation on the nondefaulting
Participants. The Participants agree that the provisions of this Section 22 are reasonable and
necessary in order for them to achieve the benefits of their joint and cooperative undertaking with
respect to the Project.
(a) In the event of a default by any Participant and discontinuance of service pursuant to
Section 21 of such Participant's Power Sales Contract, but only if the Project has not been
terminated, UAMPS and the nondefaulting Participants shall take the following actions in the
order set forth below:
(1) UAMPS shall immediately make a mandatory allocation of the defaulting
Participant's Entitlement Share among all of the nondefaulting Participants, pro rata on
the basis of their original Entitlement Shares. UAMPS shall provide written notice to the
nondefaulting Participants of the mandatory allocation of the defaulting Participant's
Entitlement Share which notice shall (a) set forth the date of the mandatory allocation, (b)
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include a revised Schedule I showing the increased Entitlement Shares and (to the extent
applicable) the revised Prepayment Percentages, Debt Service Percentages and Debt
Service Shares of the nondefaulting Participants as a result of such allocation, (c) direct
each of the nondefaulting Participants to make an election pursuant to subparagraph (2)
below, and (d) set forth the date by which each of the nondefaulting Participants must
notify UAMPS of its election pursuant to subparagraph (2) below. Such mandatory
allocation of the defaulting Participant's Entitlement Share and the increased Entitlement
Shares and the revised Prepayment Percentages, Debt Service Percentages and Debt
Service Shares of the nondefaulting Participants as a result of such allocation (as shown
on the revised Schedule I prepared by DAMPS) shall remain in effect until the
completion of the procedures provided for in this paragraph(a). During such period, each
of the nondefaulting Participants shall have all of the rights, benefits, obligations and
responsibilities associated with its increased Entitlement Share and its revised
Prepayment Percentage, Debt Service Percentage and Debt Service Share as a result of
such allocation.
(2) Within sixty days after the allocation of the defaulting Participant's
Entitlement Share provided for in subparagraph (1) above, each of the nondefaulting
Participants shall notify UAMPS in writing of its election of one of the following options:
(A) to retain that portion of the defaulting Participant's Entitlement Share allocated to
such nondefaulting Participant pursuant to subparagraph (1) above and the additional
amount, if any, of the defaulting Participant's Entitlement Share that such nondefaulting
Participant elects to acquire from any other nondefaulting Participant that may elect to
retain less than all of the defaulting Participant's Entitlement Share allocated to it
pursuant to subparagraph (1) above; or(B) to retain none or less than all of the defaulting
Participant's Entitlement Share allocated to the Participant pursuant to subparagraph (1)
above. Any Participant that shall have elected to retain all of that portion of the
defaulting Participant's Entitlement Share allocated to it pursuant to subparagraph (1)
above shall be deemed to have fully satisfied its obligations to UAMPS under this
Section 22 and shall not thereafter be required to accept any additional allocation of the
defaulting Participant's Entitlement Share.
(3) Within thirty days after its receipt of the elections of all nondefaulting
Participants pursuant to subparagraph (2) above, UAMPS shall determine whether the
nondefaulting Participants have elected to retain all of the Entitlement Share of the
defaulting Participants pursuant to subparagraph (2). In the event that any of the
Participants shall have elected to retain less than all of its allocation of the defaulting
Participant's Entitlement Share, UAMPS shall proportionally reallocate the remaining
amount of the defaulting Participant's Entitlement Share among those nondefaulting
Participants that have requested additional amounts of the defaulting Participant's
Entitlement Share pursuant to clause (A) of subparagraph (2) above. To the extent
necessary to provide for a complete reallocation of the defaulting Participant's
Entitlement Share, UAMPS shall next reallocate any remaining portion of the defaulting
Participant's Entitlement Share among those Participants that did not elect to retain all of
their initial allocations of such Entitlement Share pursuant to subparagraph (2) above,
with there being reallocated to each such Participant the unallocated portion of the
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defaulting Participant's Entitlement Share that is equal to the quotient that is obtained by
dividing the product of the unallocated portion of the defaulting Participant's Entitlement
Share and the nondefaulting Participant's Entitlement Share by the sum of the
Entitlement Shares of all of such nondefaulting Participants. In no event shall any
reallocation of a defaulting Participant's Entitlement Share, or the total of all mandatory
reallocations of Entitlement Shares in the event of two or more Participant defaults under
the Power Sales Contracts, cause any nondefaulting Participant's Entitlement Share to
increase by more than 25% over its original Entitlement Share set forth on Schedule I. In
the event that this limitation affects any of the nondefaulting Participants to which a
mandatory reallocation is being made, UAMPS shall proportionally reduce the mandatory
reallocations to all other nondefaulting Participants.
(4) UAMPS shall, at the time of each allocation or reallocation of a defaulting
Participant's Entitlement Share pursuant to this paragraph (a), proportionally allocate or
reallocate, as the case may be, the Prepayment Percentage and the Debt Service
Percentage of the defaulting Participant to the nondefaulting Participants which receive
an allocation or reallocation of the defaulting Participant's Entitlement Share. The
Prepayment Percentage and the Debt Service Percentage of the defaulting Participant
shall be allocated to each of such nondefaulting Participants in respective amounts equal
to the quotient that is obtained by dividing the product of the defaulting Participant's
Prepayment Percentage or Debt Service Percentage, as the case may be, and the
nondefaulting Participant's Entitlement Share by the sum of the Entitlement Shares of all
of the nondefaulting Participants to which such allocation or reallocation is being made,
with the Prepayment Percentage, Debt Service Percentage and all Entitlement Shares
being expressed as decimals for purposes of such computation. The standards set forth in
Section 4(b) of this Power Sales Contract shall apply to the foregoing computations.
(5) UAMPS shall deliver, promptly after making the determinations and
reallocations required by this paragraph (a), a notice to the nondefaulting Participants
which notice shall (A) set forth the reallocation of the defaulting Participant's Entitlement
Share made by UAMPS pursuant to subparagraph (3) above, and the effective date of
such reallocation, (B) set forth the amount, if any, of the Entitlement Share of the
defaulting Participant that has been mandatorily reallocated to nondefaulting Participants
that did not elect to retain or acquire the same, and (C) include a revised Schedule I
showing the revised Entitlement Shares, Prepayment Percentages, Debt Service
Percentages and Debt Service Shares, respectively, of the nondefaulting Participants as a
result of the reallocation provided for under subparagraph (3) above. The Entitlement
Shares, Prepayment Percentages, Debt Service Percentages and Debt Service Shares
shown on such revised Schedule I shall thereafter be the Entitlement Shares, Prepayment
Percentages, Debt Service Percentages and Debt Service Shares of the nondefaulting
Participants; provided, however, that if less than all of the defaulting Participant's
Entitlement Share shall have been optionally retained or accepted pursuant to this
paragraph (a), such revised Entitlement Shares, Prepayment Percentages, Debt Service
Percentages and Debt Service Shares shall remain in effect until the completion of the
procedures provided for in this Section 22.
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(6) Any portion of the Entitlement Share of a defaulting Participant
transferred pursuant to this paragraph (a) to a nondefaulting Participant shall become a
part of and shall be added to the Entitlement Share of each transferee Participant, and
from and after the date of such transfer the transferee Participant shall be obligated to pay
for its increased Entitlement Share pursuant to the terms and provisions of this Power
Sales Contract. The defaulting Participant shall remain liable to UAMPS and the other
Participants for costs incurred and damages suffered by them in connection with the
actions taken with respect to the defaulting Participant's Entitlement Share provided for
in this Section 22.
(7) In the event that a defaulting Participant has made a Prepayment, UAMPS
shall calculate the net depreciated amount of such Prepayment as of the date of the
Participant's default. The net depreciated amount of such Prepayment as of such date
shall be calculated utilizing a depreciation schedule comparable to the amortization
schedule for the principal of the Bonds. UAMPS shall, prior to the expiration of the term
of the Power Sales Contracts under Section 2 above, repay such net depreciated amount,
less any unrecovered costs or expenses of UAMPS resulting from the default, to the
defaulting Participant, without interest, from the amounts, if any, on deposit in the
Surplus Fund established under the Financing Documents. UAMPS may, but shall not be
obligated to, repay all or any part of such net depreciated amount prior to the final
payment of all of the Bonds.
(b) In the event that any portion of a defaulting Participant's Entitlement Share shall
have been mandatorily reallocated to nondefaulting Participants pursuant to paragraph (a)(3)
above or in the event that the procedures set forth in paragraph result in the reallocation of less
than all of a defaulting Participant's Entitlement Share, UAMPS shall use its best efforts to sell
or dispose of all or any part of the defaulting Participant's Entitlement Share as follows and in
the following order:
(1) UAMPS shall first seek to sell all or any part of the defaulting
Participant's Entitlement Share on terms and conditions comparable to those contained in
the Power Sales Contracts; and
(2) UAMPS shall then seek to sell all or any part of such portion of the
defaulting Participant's Entitlement Share or the Electric Energy associated therewith on
the best obtainable terms and conditions.
Subject to the provisions of the Financing Documents, no sale, transfer or other disposition of all
or a part of an Entitlement Share shall be made pursuant to this paragraph (b) if such sale,
transfer or disposition will adversely affect the exclusion from gross income for federal income
tax purposes of the interest on any of the Bonds issued as tax exempt obligations.
(c) In the event that UAMPS is unable to sell or dispose of any portion of the defaulting
Participant's Entitlement Share pursuant to paragraph (b) above within 180 days of commencing
its best efforts so to do and UAMPS, based upon determinations by the Project Management
Committee and the Board, determines that the inability to sell or dispose of the defaulting
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Participant's Entitlement Share will materially and adversely affect the ability of the
nondefaulting Participants to meet their obligations under the Power Sales Contract or the ability
of UAMPS to meet its obligations under the Project Agreements and the Financing Documents,
then UAMPS shall take such actions as UAMPS in its sole discretion shall deem necessary to
ensure the availability of sufficient funds and revenues to enable UAMPS to meet its obligations
under the Project Agreements and the Financing Documents. Such actions may include, without
limitation, any of the following measures (or any combination thereof):
(1) UAMPS may sell all or any portion of the Project that is allocable to the
defaulting Participant's Entitlement Share on such terms and conditions as UAMPS
deems to be in the best interest of UAMPS and the nondefaulting Participants and shall
apply the proceeds of such sale to the purchase, redemption or defeasance of the Bonds or
to other purposes related to the Project; or
(2) UAMPS may enter into contractual arrangements for the sale of all or any
portion of the defaulting Participant's Entitlement Share or the Electric Energy associated
therewith on such terms and conditions as will maximize the revenues available to
UAMPS without regard to any adverse effect that such sale may have on the exclusion of
interest on the Bonds from gross income for federal income tax purposes.
In the event that UAMPS makes any sale pursuant to clause (2) above, UAMPS will obtain an
opinion of nationally recognized bond counsel addressing the tax status of interest on the Bonds
issued as tax exempt obligations. UAMPS will take such remedial actions as are available to it
to preserve the tax exempt status of interest on such Bonds. In the event that such opinion
indicates that interest on the Bonds is or will become includible in gross income for federal
income tax purposes, the Participant acknowledges that it may be necessary for UAMPS to pay
additional amounts as interest or penalties on the Bonds and that the Debt Service Costs payable
by the Participant pursuant to Section 7 hereof will increase correspondingly. The Participant
agrees to pay its Debt Service Share of such increased Debt Service Costs pursuant to the
provisions of this Power Sales Contract.
(d) Upon any sale or disposition of all or any portion of a defaulting Participant's
Entitlement Share or the Electric Energy associated therewith or any sale of the Project pursuant
to paragraphs (b) and (c) above, UAMPS shall take into account the proceeds realized or the
revenues to be received from such sale or disposition and shall, to the extent necessary, make
adjustments to the Entitlement Share, Prepayment Percentage, Debt Service Percentage and Debt
Service Share of each of the nondefaulting Participants to reflect such sale or disposition and to
ensure the receipt of revenues sufficient to enable UAMPS to meet its obligations under the
Project Agreements and the Financing Documents. The Participant acknowledges that such
adjustments may, under certain circumstances, result in a change in the Participant's share of
Operation and Maintenance Costs, Wheeling Costs and Debt Service Costs without a
corresponding change in the Participant's Entitlement Share. Upon the completion of the
procedures provided for in this Section 22, UAMPS shall prepare and send to each of the
Participants a final revised Schedule I, setting forth the Entitlement Shares, the Prepayment
Percentages, Debt Service Percentages and Debt Service Shares, respectively, of the
nondefaulting Participants after the procedures and actions provided for in this Section 22.
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Section 23. Other Default by Participant. In the event of a failure of the Participant to
observe, keep and perform any of the covenants, agreements or obligations on its part contained
in this Power Sales Contract, UAMPS may, in addition to its other rights hereunder, bring any
suit, action, or proceeding in law or in equity, including mandamus, injunction and action for
specific performance, as may be necessary or appropriate to enforce any covenant, agreement or
obligation of this Power Sales Contract against the Participant.
Section 24. Default by UAMPS. In the event of any default by UAMPS under any
covenant, agreement or obligation of this Power Sales Contract, the Participant's sole remedy for
such default shall be limited to mandamus, injunction, action for specific performance or any
other available equitable remedy as may be necessary or appropriate and in no event shall the
Participant withhold or offset any payment owed to UAMPS hereunder.
Section 25. Abandonment of Remedy. In case any proceeding taken on account of any
default shall have been discontinued or abandoned for any reason, the parties to such proceedings
shall be restored to their former positions and rights hereunder, respectively, and all rights,
remedies, powers and duties of UAMPS and the Participant shall continue as though no such
proceedings had been taken.
Section 26. Waiver of Default. Any waiver at any time by either UAMPS or the
Participant of its rights with respect to any default of the other party hereto, or with respect to any
other matter arising in connection with this Power Sales Contract, shall not be a waiver with
respect to any subsequent default, right or matter.
Section 27. Relationship to and Compliance with Other Instruments. (a) It is
recognized by the parties hereto that UAMPS, in undertaking, or causing to be undertaken, the
planning, financing, construction, acquisition, operation and maintenance of the Project, must
comply with the requirements of the Financing Documents, the Project Agreements and all
Permits and Approvals necessary therefor, and it is therefore agreed that this Power Sales
Contract is made subject to the terms and provisions of the Financing Documents, the Project
Agreements and all such Permits and Approvals.
(b) UAMPS covenants and agrees that it will use its best efforts for the benefit of the
Participant to comply in all material respects with all terms, conditions and covenants applicable
to it contained in the Financing Documents, the Project Agreements and all Permits and
Approvals relating thereto and that it will not, without the consent of the Participant, enter into
any amendment or modification of the Financing Documents or the Project Agreements which
will change the Participant's Entitlement Share or which will materially and adversely affect the
rights and obligations of the Participant hereunder.
Section 28. Liability of Parties. UAMPS and the Participant shall assume full
responsibility and liability for the maintenance and operation of their respective properties and
each shall, to the extent permitted by law, indemnify and save harmless the other from all
liability and expense on account of any and all damages, claims, or actions, including injury to or
death of persons arising from any act or accident in connection with the installation, presence,
maintenance and operation of the property and equipment of the indemnifying party and not
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caused in whole or in part by the negligence of the other party;provided that any liability which
is incurred by UAMPS through the operation and maintenance of the Project or pursuant to the
Project Agreements and not covered, or not covered sufficiently, by insurance shall be paid solely
from the revenues of UAMPS hereunder, and any payments made by UAMPS to satisfy such
liability shall, except to the extent paid from proceeds of Bonds or Prepayments, become part of
Operation and Maintenance Costs.
Section 29. Assignment of Power Sales Contract. (a) This Power Sales Contract shall
inure to the benefit of and shall be binding upon the respective successors and assigns of the
parties to this Power Sales Contract; provided, however, that neither this Power Sales Contract
nor any interest herein shall be transferred or assigned by either party hereto except as follows:
(1) UAMPS may assign its interests under this Power Sales Contract or all or
any portion of the amounts payable by the Participant hereunder pursuant to the Financing
Documents as described in paragraph(b)below;
(2) UAMPS may sell, transfer or reallocate all or any portion of the
Participant's Entitlement Share following a default by the Participant and a
discontinuance of service as provided in Section 22 hereof;
(3) UAMPS may assign this Power Sales Contract to any successor of
UAMPS or to the Participants as contemplated by Section 2 hereof,
(4) After such point in time as all Bonds issued under the Financing
Documents have been paid or deemed to have been paid as provided in the Financing
Documents, UAMPS may assign this Power Sales Contract and pledge the amounts
payable by the Participant hereunder without limitation;
(5) the Participant shall assign the Electric Energy allocable to the
Participant's Entitlement Share to the UAMPS Pool as provided in Section 8(b) hereof,
and
(6) subject to the provisions of Section 17 hereof, the Participant may assign
or transfer all or any portion of its Entitlement Share or its interests under this Power
Sales Contract.
(b) The Participant acknowledges and agrees that UAMPS may assign and pledge to the
Trustee designated in the Financing Documents all or any portion of its right, title, and interest in
and to the payments to be made to UAMPS under the provisions of this Power Sales Contract, as
security for the payment of the principal (including sinking fund installments) of, premium, if
any, and interest on Bonds and, upon such assignment and pledge, UAMPS may grant to the
Trustee any rights and remedies herein provided to UAMPS, and thereupon any reference herein
to UAMPS shall be deemed, with the necessary changes in detail, to include the Trustee which
on behalf of and together with the owners from time to time of the Bonds shall be third party
beneficiaries of the covenants and agreements of the Participant herein contained.
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Section 30. Termination or Amendment of Power Sales Contract. (a) This Power Sales
Contract shall not be terminated by either party under any circumstances, whether based upon the
default of the other party under this Power Sales Contract or any other instrument or otherwise
except as specifically provided in this Power Sales Contract.
(b) This Power Sales Contract shall not be amended, modified, or otherwise altered in
any manner that will adversely affect the security for the Bonds afforded by the provisions of this
Power Sales Contract. So long as any of the Bonds are outstanding or until adequate provisions
for the payment thereof have been made in accordance with the provisions of the Financing
Documents, this Power Sales Contract shall not be amended, modified, or otherwise altered in
any manner which will reduce the payments pledged as security for the Bonds or extend the time
of such payments provided herein or which will in any manner impair or adversely affect the
rights of the owners from time to time of the Bonds.
(c) No Power Sales Contract entered into between UAMPS and another Participant may
be amended so as to provide terms and conditions that are substantially and materially different
from those herein contained except upon written notice to and written consent or waiver by each
of the other Participants, and upon similar amendment being made to the Power Sales Contract of
any other Participants requesting such amendment after receipt by such Participant of notice of
such amendment.
(d) In connection with any revision or amendment of the billing procedures provided for
in Section 7 or of any of the Exhibits attached hereto, UAMPS shall promptly provide a copy of
the revision or amendment to the Participant.
Section 31. Notices and Computation of Time. Any notice or demand by the Participant
to UAMPS under this Power Sales Contract shall be deemed properly given if mailed postage
prepaid and addressed to UAMPS at its principal office or if telecopied to UAMPS with receipt
confirmed, followed by a written copy of such notice or demand mailed to UAMPS postage
prepaid; any notice or demand by UAMPS to the Participant under this Power Sales Contract
shall be deemed properly given if mailed postage prepaid and addressed to the Participant's
Representative at his address on file with UAMPS or if telecopied to the Participant's
Representative with receipt confirmed, followed by a written copy of such notice or demand
mailed to the Participant's Representative postage prepaid. In computing any period of time
from such notice, such period shall commence at noon, Salt Lake City time, on the date mailed or
telecopied, as applicable. The designations of the name and address to which any such notice or
demand is directed may be changed at any time and from time to time by either party giving
notice as above provided.
Section 32. Relationship of UAMPS and the Participant; Relationship among
Participants. (a) This Power Sales Contract is not intended to create, nor shall it be deemed to
create, any relationship between UAMPS and the Participant other than that of independent
parties contracting with one another for the purpose of effectuating the provisions of this Power
Sales Contract.
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(b) The covenants, obligations, liabilities, rights and benefits of the Participant under
this Power Sales Contract are individual and not joint and several, or collective, with those of any
other Participant. Other than giving effect to the joint and cooperative action of UAMPS on
behalf of the Participants, the Power Sales Contracts shall not be construed to create an
association, joint venture, trust or partnership, or to impose a trust or partnership covenant,
obligation or liability on, between or among the Participant and any one or more of the
Participants. No Participant shall be or be deemed to be under the control of, nor shall any
Participant control or be deemed to control, any or all of the other Participants or the Participants
as a group. No Participant shall be bound by the actions of any other Participant, nor shall any
Participant be deemed to be the agent of any other Participant or have the right to bind any other
Participant.
Section 33. No Recourse Against Officers, Etc. of UAMPS or Participant. No member
of the governing body, nor any officer or employee of UAMPS or the Participant shall be
individually or personally liable for any payment under this Power Sales Contract or be subject to
any personal liability or accountability by reason of the execution of this Power Sales Contract;
provided, however, that this Section shall not relieve any officer or employee of UAMPS or the
Participant from the performance of any official duty imposed by law or this Power Sales
Contract.
Section 34. Applicable Law; Construction. This Power Sales Contract is made under
and shall be governed by the law of the State of Utah;provided, however, that if the Participant is
organized or created pursuant to the laws of another state, then the authority of the Participant to
execute and perform its obligations under this Power Sales Contract shall be determined under
the laws of such state. Headings herein are for convenience only and shall not influence the
construction hereof.
Section 35. Severability; No Merger. (a) If any section, paragraph, clause or provision
of this Power Sales Contract shall be finally adjudicated by a court of competent jurisdiction to
be invalid, the remainder of this Power Sales Contract shall remain in full force and effect as
though such section, paragraph, clause or provision or any part thereof so adjudicated to be
invalid had not been included herein.
(b) This Power Sales Contract constitutes the entire and complete agreement of
UAMPS and the Participant in respect of the Project and shall not be nor shall it be deemed to be
modified, amended or superseded by any other agreement or contract between UAMPS and the
Participant in respect of any other project or subject.
Section 36. Representations and Warranties of Participant. The Participant hereby
represents and warrants that it has reviewed, or caused a review to be made on its behalf of, all
financial and operating information pertaining to the Project, including the Project Agreements
and this Power Sales Contract, and that it has received or been afforded access to all other
information which it deems necessary to make an informed decision for the execution of this
Power Sales Contract. The Participant understands and agrees that it shall be bound by the terms
and conditions of this Power Sales Contract.
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IN WITNESS WHEREOF, the parties hereto have caused this Power Sales Contract to be
executed by their proper officers respectively, being thereunto duly authorized, and their
respective corporate seals to be hereto affixed, as of the day,month and year first above written.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By:
J. Ron Hemig, President
[SEAL]
ATTEST AND COUNTERSIGN
By:
Michael D. Holley, Clerk
Date of Execution and
Delivery:
Approved as to proper form and
compliance with applicable law:
By:
Attorney for Participant
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UTAH ASSOCIATED MUNICIPAL POWER
SYSTEMS
By:
Chairman
[SEAL]
ATTEST AND COUNTERSIGN
By:
Assistant Secretary
Date of Execution and
Delivery:
Approved as to proper form and
compliance with applicable law:
By:
Attorney for UAMPS
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SCHEDULE It
[TO BE REVISED]
SCHEDULE OF PARTICIPANTS,ENTITLEMENT SHARES,
PREPAYMENT PERCENTAGES,DEBT SERVICE PERCENTAGES
AND DEBT SERVICE SHARES
DEBT DEBT
KW ENTITLEMENT PREPAYMENT SERVICE SERVICE
PARTICIPANT AMOUNT SHARE PERCENTAGE PERCENTAGE SHARES
Ephraim
Fairview
Hurricane
Hyrum
Kaysville
Lehi
Logan
Monroe
Mt. Pleasant
Payson
Santa Clara
Spring City
Springville
Strawberry
Truckee
Washington
TOTAL 112,000 100.0000% 5.4545 94.5454 100.0000%
t Prepayment Percentage, Debt Service Percentage and Debt Service Shares have been calculated based upon
Reference Project Costs of $97,167,483, determined as of March 18, 2003, the issue date of the $100,850,000
Payson Power Project Revenue Bonds,2003 Series A.
* Column does not precisely total due to rounding.
SI-1
EXHIBIT I
DESCRIPTION OF THE INITIAL FACILITIES
AND ADDITIONAL FACILITIES
COMBUSTION TURBINE,HRSG AND STEAM TURBINE
General Electric 7EA combustion turbine capable of producing 67 MW of power at 98T,
a duct-fired Heat Recovery Steam Generator (HRSG) and a 75 MW dual-pressure steam turbine,
to provide a nominal (peak site temperature of 98°F, duct burners and chillers in service)
combined cycle generating capacity of 140.5 MW (gross; estimated net capability is 137 MW).
The gas turbines and duct burners are fueled solely by natural gas. Normal operation consists of
the combustion turbine, HRSG and steam turbine operating in combined cycle mode with
varying amounts of supplemental firing. The units are capable of operating continuously(except
during maintenance and repair activities), but may be operated only when market prices are
higher than production costs. The combustion turbine is housed in an acoustical enclosure to
reduce exterior sound levels. The enclosure has its own ventilation, gas and fire detection, and
fire suppression systems.
Natural gas is supplied via a 6-mile lateral connection from the Nebo Tap on the Questar
interstate pipeline near the Project.
PROCESS DESCRIPTION
Ambient air is drawn through air filtration and cooling intake structures into the inlet
compressor section of the turbine, mixed with natural gas and burned in the combustors, which
then exhaust the hot gases through rows of stationary vanes and rotating blades. These hot
exhaust gases turn the turbine and drive a generator to produce electric power. The General
Electric 7EA combustion turbine-generator is capable of producing 67 MW of electricity at 60
hertz at an ambient temperature of 98T with inlet cooling. Higher output is available at lower
ambient temperatures.
The exhaust gases from the combustion turbine then pass through the HRSG, where
boiler feed water is converted to steam. The HRSG is equipped with duct burners to provide
additional steam to generate electricity during periods of peak demand. The steam from the
HRSG is used to drive a steam turbine that is capable of producing 75 MW of electricity at 60
hertz. The design exhaust temperature for the HRSG is 180T, varying with turbine condition,
ambient temperature and operational load.
AUXILIARY EQUIPMENT
Utility water and treated wastewater are supplied by Payson City. Average consumption
is about 1.5 million gallons per day. Raw water is demineralized through an on-site water
treatment system and stored in aboveground tanks. The demineralized water is routed to the
I-1
HRSG for steam production. After passing through the steam turbine, steam is condensed using
water from the on-site cooling tower and cycled back to the HRSG.
Routine water treatment chemicals are utilized in the cooling tower to promote efficient
operation. The water does not come into contact with gaseous or liquid process streams
containing carbon, sulfur, or halogen compounds, cyanide compounds, inorganic acids or acid
gases. Blowdown from the cooling towers is returned to the discharge side of the Payson City
sewage treatment plant and released under permit.
EMISSION CONTROLS
Advanced combustion controls, along with natural gas firing, are employed to reduce
emissions of CO, S02 and PMIo (natural gas combustion produces only negligible quantities of
S02 and PMIo). Dry low-NOx (DLN) technology, coupled with a selective catalytic reduction
(SCR) system, is used to further reduce NOx emissions to approximately 5.0 ppmvd (parts per
million by volume dry), corrected to 15% oxygen for natural gas firing.
Combustion emissions from the turbine and duct burners vent to the HRSG and from
there to the SCR.
The operation of the SCR involves the injection of aqueous ammonia into the exhaust gas
stream ahead of a catalyst bed. Aqueous ammonia arrives on site via tank truck. The truck is
off-loaded into pressure vessels for storage. The aqueous ammonia is injected through a series of
nozzles into the exhaust gas stream.
TRANSMISSION FACILITIES
The Project site is approximately 8.5 miles southwest of the Dry Creek Substation that is
owned by Southern Utah Valley Power Systems (SUVPS). A 138 kV transmission line runs
from the Project substation to the Dry Creek Substation and a 46 kV line runs between the
Project and SUVPS' Taylor Switch Substation. There is an additional 46kV interconnection with
the Suter Substation in Payson City. Most of the new transmission lines run along either railroad
right of way or existing transmission right of way. These transmission lines are owned by
UAMPS.
I-2
PARTICIPANT
FISCAL YEAR
EXHIBIT II
FORM OF PARTICIPANT'S ANNUAL INFORMATION REPORT*
SYSTEM DESCRIPTION
Incorporated area of district square miles.
Service area of utility square miles.
Transmission and distribution lines miles.
Number of employees in electric department (Include sum of shared
employees' time in other department(s) to determine equivalent full-time employees.)
Number of customers served outside district limits
Service area outside district limits square miles.
NUMBER OF ELECTRICAL CUSTOMERS
AND TYPE OF LOAD SERVED
TYPE OF CUSTOMER NUMBER OF CUSTOMERS
Residential
Commercial
Industrial
Agricultural and Pumping
Military and Other
Total
Annual audit will be sent to UAMPS as soon as completed after the fiscal year.
Electric Rate Schedules for the above classes of service are attached hereto.
* Under Section 14(c) of the Power Sales Contract, UAMPS has agreed to classify the information provided
by the Participant on this Exhibit II as a "protected record". The Participant must also take any actions
necessary on its part to appropriately classify and protect the information provided in this Exhibit.
II-1
CUSTOMER SALES BY CLASS
Total sales to your customers kWh.
Revenues from energy sales to your customers in $
[YEAR] KWH SALES REVENUES $
Residential
Commercial
Industrial
Agricultural
Other
Total
II-2
GENERATION
PRODUCED FOR SYSTEM LOAD
GENERATING UNIT PRODUCTION
#1 #2 #3 #4
kW kWh kW kWh kW kWh kW kWh
Jul
August
September
October
November
December
January
February
March
April
may
June
TOTAL
SYSTEM PEAK INCLUDING LOAD
COVERED BY OWN GENERATION
kW kW
July January
August February
September March
October Aril
November May
December June
II-3
FIVE LARGEST LOADS
TYPE OF ANNUAL,
BUSINESS KWH SOLD ELECTRICAL BILLINGS
1.
2.
3.
4.
5.
ACHIEVEMENTS
Provide below the achievements of your utility for the year.
II-4
EXHIBIT III
CERTIFICATE OF PARTICIPANT
STATE OF )
)
COUNTY OF )
The undersigned hereby certify that they are the [President] and [Clerk] of Truckee
Donner Public Utility District (the "Participant"), a member of Utah Associated Municipal
Power Systems ("UAMPS"), and that as such they are authorized to execute this Certificate on
behalf of the Participant and hereby certify as follows:
1. This Certificate has been executed in connection with the Power Sales Contract,
dated as of December 1, 2008 (the "Power Sales Contract"), between the Participant and
UAMPS.
2. The Participant is a public utility district, duly created and validly existing under the
laws of the State of California and is governed by a Board of Directors (the "Governing Body")
composed of onumbem members.
3. Attached hereto as Exhibit A is a true, complete and correct copy of the Power Sales
Contract. Attached hereto as Exhibit B is a true and correct copy of excerpts from the minutes of
a regular public meeting of the Governing Body held on , including a resolution
adopted at such meeting authorizing the execution and delivery of the Power Sales Contract and
related matters (the "Contract Resolution"). The Contract Resolution is in full force and effect
and has not been amended, modified, repealed or supplemented.
4. The names of the [President] and the members of the Governing Body, the [Clerk]
and [Attorney], together with the dates of commencement and expiration of the term of office of
the [President] and the members of the Governing Body, are as follows:
DATE OF
COMMENCEMENT OR DATE OF EXPIRATION
NAME OFFICE CURRENT TERM OF CURRENT TERM
«officer» «office» «commencement» «expiration»
5. In accordance with all open meeting requirements of state law applicable to the
Participant, the [Clerk] of the Participant gave public notice of the meeting of the Governing
Body at which the Contract Resolution was adopted, as well as any required notice of the
Governing Body's annual meeting schedule.
6. (a) No referendum petition was filed with the Participant or any of its officers
seeking to refer the Contract Resolution to the electors of the Participant in accordance with the
III-1
provisions of state law; and (b) no litigation has been instituted, is pending or has been
threatened to require a referendum election on the Contract Resolution.
7. The Participant now owns and operates a local electric utility system (the "System")
and furnishes electric energy to all persons desiring such service within its service area. The
electric energy to be provided by its Entitlement Share in the Project (each as defined in the
Power Sales Contract) will be used by the Participant to provide electric service within its service
area. There is attached hereto as Exhibit C a true, correct and complete copy of the rates, fees
and charges now in effect for the electric services provided by the System.
8. By resolutions heretofore duly adopted by the Governing Body, the Participant has
duly authorized, executed and delivered the Utah Associated Municipal Power Systems
Amended and Restated Agreement for Joint and Cooperative Action dated as of February 17,
1999 and all amendments thereof and supplements thereto (the "UAMPS Joint Action
Agreement") and that certain Power Pooling Agreement (the "Pooling Agreement") between the
Participant and UAMPS relating the power pool administered by UAMPS for the benefit of its
members (the "UAMPS Power Pool") and the UAMPS Joint Action Agreement and the Pooling
Agreement constitute the legal, valid and binding agreements of the Participant.
9. <<Rep» has been duly appointed by the Governing Body as the representative of the
Participant to UAMPS.
10. Prior to the adoption of the Contract Resolution and the execution of the Power
Sales Contract, the Governing Body determined the needs of the Participant for electric power
and energy and considered, among other things, the following: (a) the economies and
efficiencies of scale to be achieved through the ownership and operation by UAMPS of the
Project for the benefit of the Participant and the other members of UAMPS participating in the
Project, (b) the need of the Participant for the electric energy represented by its Entitlement Share
in the Project to meet its current requirements and to provide reserves and peaking capacity, (c)
the estimated useful life of the Project, (d) the length of time in advance necessary to obtain,
acquire or construct an additional or alternative power supply, (e) the reliability and availability
of the Participant's existing power supply sources, the Project and alternative power supply
sources and the cost or estimated cost thereof, (f) the financial, regulatory, and technical
feasibility of operating the Project, and (g) all such other matters as were deemed necessary or
appropriate by the Participant as a basis for and in connection with its authorization and
execution of the Power Sales Contract.
11. Except as listed on Exhibit D, the Participant has no outstanding bonds, notes or
other evidences of indebtedness, or agreements to take or pay for power and energy, payable
from any revenues of the System, other than the Power Sales Contract.
12. The payments to be made by the Participant to UAMPS under the Power Sales
Contract will constitute operating expenses of the System and a cost of purchased electric energy.
13. There is no action, suit, proceeding, inquiry or investigation by or before any court,
governmental agency, public board or administrative body pending or, to the best of our
III-2
knowledge threatened, against the Participant which (a) challenges, contests or questions the due
and regular adoption of the Contract Resolution or the validity thereof affects or seeks to
prohibit, restrain or enjoin the Participant from complying with the obligations contained in the
Power Sales Contract, including the payment obligations to UAMPS contained therein, (b) in any
way affects or questions the validity or enforceability of the UAMPS Joint Action Agreement or
the Power Sales Contract, nor, to the best of our knowledge, is there any basis therefor, (c)
challenges or affects the corporate existence of the Participant or the titles of its officers to their
respective offices, (d) seeks to prohibit, restrain or enjoin the collection of revenues from the
System to be used to make payments to UAMPS under the Power Sales Contract, and (e)
involves any of the property or assets of the Participant which involves the possibility of any
judgment or liability, not fully covered by insurance, which may result in any material adverse
change in the business, properties, assets or in the condition, financial or otherwise, of the
System.
14. (a) The payments to be made to UAMPS by the Participant pursuant to the
Power Sales Contract will not be, directly or indirectly(i) secured by any interest in (A) property
used or to be used in a trade or business carried on by any person other than a state or local
governmental unit or (B) payments in respect of such property, or (ii) derived from payments
(whether or not by or to the Participant), in respect of property, or borrowed money, used or to be
used in a trade or business carried on by any person other than a state or local governmental unit.
(b) No user of the System will use the System on any basis other than the same basis as
the general public; and no person other than a state or local governmental unit will be a user of
the System as a result of (i) ownership, or (ii) actual or beneficial use pursuant to a lease or a
management or incentive payment contract, or(iii) any other similar arrangement.
16. The information provided by the Participant to UAMPS pursuant to Section 14(c) of
the Power Sales Contract and attached as Exhibit II thereto with respect to the Participant and the
System is true, correct and complete. The Participant has duly authorized UAMPS to use such
information in connection with the preparation of any official statement of UAMPS with respect
to any Bonds (as defined in the Power Sales Contract) to be issued and to provide such
information to interested parties.
Dated:
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
[J. Ron Hemig]
By
[Michael D. Holley]
[Seal]
III-3
EXHIBIT A
[Attach Copy of Power Sales Contract]
III-4
EXHIBIT B
[Attach Copy of Contract Resolution]
III-5
EXHIBIT C
[Attach Copy of Resolution or Ordinance Establishing Rates]
III-6
EXHIBIT D
[Attach Schedule of Bonds, Notes, Contracts, Etc.]
[(a) list outstanding bond issues of the Participant secured by the revenues of
the System;
(b) the Power Sales Contract, dated as of June 1, 1982 as amended, between
UAMPS and the Participant, relating to the Hunter Steam Electric Generating Unit No. II;
(c) the Power Sales Contract, dated as of September 28, 1978, as amended,
between Intermountain Power Agency ("IPA") and the Participant, relating to the
Intermountain Power Project;
(d) the Lay-Off Power Purchase Contract, dated as of February 1, 1983,
among Utah Power & Light Company, IPA and the Participant, relating to the
Intermountain Power Project;
(e) the Transmission Service Contract for the Western Colorado-Bonanza
Transmission Project and the Bonanza-Mona Transmission Project, dated as of
January 20, 1989,between UAMPS and the Participant;
(f) the Transmission Service Agreement for the Central-St. George 138 kV
Transmission Project, dated July , 1989 as amended and supplemented, between
UAMPS and the Participant;
(g) the San Juan Project Power Sales Contract, dated as of July 1, 1993,
between UAMPS and the Participant; and
(h) the Master Firm Power Sales Agreement, dated as of June 16, 1999 and
Transaction Schedule No. 1 thereunder,between UAMPS and the Participant.]
III-7
EXHIBIT IV
BRING DOWN CERTIFICATE OF THE PARTICIPANT
STATE OF )
)
COUNTY OF«COUNTY» )
The undersigned hereby certify that they are the [President] and [Clerk] of Truckee
Donner Public Utility District (the "Participant'), a member of Utah Associated Municipal
Power Systems ("UAMPS"), and that as such they are authorized to execute this Certificate on
behalf of the Participant and hereby certify as follows:
1. This certificate has been executed in connection with the issuance by UAMPS of its
(the "Bonds"), as more fully described in the Official Statement of
UAMPS dated (the "Official Statement") prepared in connection with the
offering and sale of the Bonds.
2. In connection with the execution of the Power Sales Contract dated as of December
1, 2008, between the Participant and UAMPS, the undersigned executed and delivered a
certificate dated , 2008 (the "Power Sales Contract Certificate"). The undersigned
hereby reaffirm the statements made in the Power Sales Contract Certificate as though made on
the date hereof in the form they were rendered in the Power Sales Contract Certificate.
3. [For those Participants not making Prepayments: The undersigned have reviewed
the statements and information relating to the Participant and its electric system contained in the
Official Statement under the caption "THE PARTICIPANTS" and such statements and information,
as of the date of the Official Statement and as of the date hereof, are true and correct in all
material respects and did not and do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make such statements, in light of the circumstances
under which they were made, not misleading.]
3. [For those Participants making Prepayments: Pursuant to the provisions of
Section 4 of the Power Sales Contract, the City Governing Body of the Participant has elected to
make a Prepayment (as defined in the Power Sales Contract) in respect of the debt service costs
arising from the [Additional Facilities] of the Project. The Participant certifies that the amounts
used to make such Prepayment are derived from retained earnings of the System or other legally
available moneys of the Participant that do not represent the proceeds of any borrowing by the
Participant. The Participant acknowledges and agrees that its election to make such Prepayment
is irrevocable and that the Participant has deposited an amount equal to the estimated amount of
the Prepayment at the time and in the manner provided in the Power Sales Contract.]
Dated this day of
IV-1
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
[J. Ron Hemig]
[SEAL]
By
[Michael D. Holley]
IV-2
EXHIBIT V
Utah Associated Municipal Power Systems
2825 East Cottonwood Parkway, Suite 200
Salt Lake City, Utah 84121
Ladies and Gentlemen:
I have acted as counsel to Truckee Donner Public Utility District (the "Participant") as a
purchaser of electric energy under a Power Sales Contract, dated as of December 1, 2008 (the
"Power Sales Contract"), between the Participant and Utah Associated Municipal Power
Systems ("UAMPS") and in connection with the matters referred to herein. Capitalized terms
used and not defined herein have the meanings assigned to such terms in the Power Sales
Contract.
As such counsel I have examined (i) those documents relating to the existence,
organization and operation of the Participant and its electric utility system, (ii) all resolutions and
proceedings of the Participant relating to the due authorization, execution and delivery by the
Participant of the Power Sales Contract, (iii) an executed counterpart of the Power Sales
Contract, and (iv) such other documents, information, facts and matters of law as are necessary
for me to render the opinions contained herein.
Based upon the foregoing, I am of the opinion that:
1. The Participant is a public utility district, duly created and validly existing under the
laws of the State of California (the "State") and is duly qualified to own, operate and furnish
electric service through the System.
2. The Participant has full legal right, power and authority to enter into the Power
Sales Contract and to carry out and consummate all of the transactions contemplated thereby, and
the Participant has complied with the provisions of applicable law which would be a condition
precedent to entering into the Power Sales Contract or carrying out and consummating such
transactions.
3. No approval, consent or authorization of any governmental or public agency,
authority, commission or person of the Power Sales Contract or of the Participant's participation
in the transactions contemplated thereby is required for the execution and delivery by the
Participant of the Power Sales Contract or the performance by the Participant of its obligations
thereunder.
V-1
4. By resolution duly adopted on , the Power Sales Contact has been duly
authorized, executed and delivered by the Participant and constitutes the legal, valid and binding
obligation of the Participant, whether or not the Project or any portion thereof is acquired,
completed, operable or operating and notwithstanding the suspension, interruption, interference,
reduction or curtailment of the output of the Project, or any termination of any of the Project
Agreements, in whole or in part for any reason whatsoever, is enforceable under the present law
of the State in accordance with its terms; except that the rights and remedies set forth therein may
be limited by any applicable bankruptcy, insolvency, moratorium, reorganization or other laws
affecting creditors' rights generally or usual equity principles in the event equitable remedies
should be sought.
5. The Participant has, with respect to all meetings held in connection with the
authorization of the Power Sales Contract, been in compliance all open and public meeting laws
of the State.
6. The authorization, execution and delivery of the Power Sales Contract and
compliance with the provisions thereof will not conflict with or constitute a breach of, or default
under, any instrument relating to the organization, existence or operation of the Participant, any
commitment, agreement, indenture, bond, note, resolution or other instrument to which the
Participant is a party or by which it or its property is bound or affected, or any ruling, regulation,
ordinance, judgment, order or decree to which the Participant (or any of its officers in their
respective capacities as such) is subject or any provision of the laws of the State relating to the
Participant and its affairs.
7. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or
before any court, public board or body, pending or, to my knowledge, threatened against or
affecting the Participant or any entity affiliated with the Participant or any of its officers in their
respective capacities as such (nor to the best of my knowledge is there any basis therefor), which
challenges the creation, organization or existence of the Participant or the titles of its officers to
their respective offices or which questions the powers of the Participant referred to in paragraph
2 above or the validity of the proceedings taken by the Participant in connection with the
authorization, execution or delivery of the Power Sales Contract, or wherein any unfavorable
decision, ruling or finding would adversely affect the transactions contemplated by the Power
Sales Contract or which, in any way, would adversely affect the validity or enforceability of the
Power Sales Contract, and there is no litigation pending or, to the best of my knowledge,
threatened against the Participant or involving any of the business, affairs, property or assets of
the System which involves the possibility of any judgment or liability, not fully covered by
insurance, which may result in any material adverse change in the business, affairs, properties,
assets or in the condition, financial or otherwise, of the System.
8. The obligations of the Participant to make payments to UAMPS under the Power
Sales Contract shall constitute an obligation of the Participant payable as an operating expense of
the System solely from the revenues and other available funds of such electric system. Such
payments shall constitute a cost of purchased electric energy and an operating expense of the
System. The application of the revenues and other available funds of the System to make such
payments to UAMPS is not subject to any prior lien, encumbrance or restriction.
V-2
9. The rates charged by the Participant for System services to customers located within
the corporate boundaries of the Participant are not subject to regulation by any authority of the
State or the United States and have been duly and validly adopted by the Participant and are
legally enforceable in accordance with the laws of the State of California.
10. The Participant has lawful authority to own the System and to fix and collect rates,
fees and other charges in connection with such System.
11. The Participant has good and merchantable title to the System as it now exists.
12. Except for those portions of the System which are laid in, on or under public roads,
highways, streets or alleys which have been heretofore dedicated to the public for road, highway,
street or alley purposes and which have actually been in use for such purpose for more than five
years past, substantially all of the System is located either on land of the Participant as to which
the Participant has good and merchantable fee simple title or as to which the Participant has
acquired good and valid permanent easements, rights-of-way, licenses or permits not terminable
by action of any party without the consent of the Participant sufficient to permit the Participant to
maintain and operate the System.
13. The Participant has obtained all necessary permits, licenses and approvals required
by law, whether state or federal, to be obtained by the Participant in connection with the
operation of the System, and such permits, licenses and approvals are in full force and effect.
14. There is no present unsatisfied judgment heretofore rendered against the Participant
constituting or which will constitute a lien on any part of the System.
15. There are no contracts, laws, regulations, court orders or consent decrees that will
restrict the ability of the Participant to comply with its covenants regarding rates for System
services set forth in the Power Sales Contract.
16. The Participant has duly authorized, executed and delivered the Joint Action
Agreement and the Pooling Agreement and each such agreement constitutes the legal, valid and
binding obligation of the Participant enforceable against the Participant in accordance with its
terms.
Respectfully submitted,
V-3
EXHIBIT VI
Utah Associated Municipal Power Systems
2825 East Cottonwood Parkway, Suite 200
Salt Lake City, Utah 84121
Dear Sirs:
I have acted as counsel to Truckee Donner Public Utility District (the "Participant") in
connection with the execution by the Participant of the Power Sales Contract dated as of
December 1, 2008 (the "Power Sales Contract") between the Participant and Utah Associated
Municipal Power Systems ("UAMPS") I have been advised that UAMPS has made arrangements
for the issuance and sale of the date hereof of its (the "Bonds").
In connection with the execution and delivery by the Participant of the Power Sales
Contract, I rendered to UAMPS an approving legal opinion, dated , 2008 (the "Prior
Opinion"), with respect to the Participant. In connection with the issuance and sale of UAMPS
of the Bonds, I hereby reaffirm the Prior Opinion, as though it was dated the date hereof, in the
form it was so rendered on , 2008.
In addition to the foregoing, I have examined (i) the material describing the Participant
and its electric system contained under the caption "THE PARTICIPANTS — " in
the Official Statement, dated (together with any supplements or amendments thereto
as of the date hereof, the "Official Statement") of UAMPS relating to the Bonds and (ii) such
other documents, information, facts and matters of law as are necessary for me to render the
following opinion. Based upon the foregoing, I am of the opinion that the statements and
information with respect to the Participant and its electric utility system in the Official Statement
under the section entitled "THE PARTICIPANTS— " are true and correct in
all material respects as of the date of the Official Statement and as of the date hereof, and no
facts have come to my attention which would lead me to believe that, as of the date of the
Official Statement and as of the date hereof, the statements in the Official Statement under such
caption contained or contain any untrue statement of a material fact or omitted to state or omit to
state any material fact necessary in order to make such statements, in the light of the
circumstances under which they were made, not misleading.
VI-1
I hereby authorize the reference to this opinion and to the Prior Opinion set forth under
the caption "APPROVAL OF LEGAL PROCEEDINGS" in the Official Statement. I hereby further
authorize Chapman and Cutler, bond counsel, and , as representative of the
underwriters of the Bonds, to rely on the Prior Opinion and on this opinion in each case as
though addressed to them.
Respectfully submitted,
VI-2
DRAFT
Truckee Donner Public Utility District
November 4, 2009
The Board of Directors (the "Governing Body") of Truckee Donner Public Utility
District ("TDPUD"), pursuant to due notice met in regular public session on November 4, 2009,
at the hour of 6:00 p.m., at its regular meeting place at 11570 Donner Pass Road, Truckee,
California. The meeting was duly called to order by the President with the following members of
the Governing Body being present, constituting a quorum of the Governing Body:
NAME TITLE
J. Ron Hemig President
Joseph R. Aguera Board Member
Jeff Bender Board Member
John Hillstrom Board Member
Patricia S. Sutton Board Member
Absent:
Also Present:
NAME TITLE
Michael D. Holley General Manager
Stephen Hollabaugh Assistant General Manager
Barbara Cahill Deputy District Clerk
Steve Gross Attorney
Payson-TDPUD Reso.doc
0865790/JCB/CJ
After the conduct of business not pertinent to the following, the following resolution was
then introduced in written form and pursuant to motion duly made and seconded, was adopted
and approved by the following vote:
Aye:
Nay:
The resolution was thereupon signed by the President, was attested and countersigned by
the Clerk, and was ordered recorded in the official records of TDPUD. The resolution is as
follows:
- 2 -
RESOLUTION NO.
A RESOLUTION AUTHORIZING AND APPROVING THE ABSOLUTE
ASSIGNMENT AND LAY OFF POWER SALES AGREEMENT AMONG
TRUCKEE DONNER PUBLIC UTILITY DISTRICT, PAYSON CITY AND
UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS; RATIFYING
CERTAIN ACTIONS PREVIOUSLY TAKEN;AND RELATED MATTERS.
WHEREAS, Truckee Donner Public Utility District ("TDPUD") is a member of Utah
Associated Municipal Power Systems ("UAMPS") pursuant to the provisions of the Utah
Associated Municipal Power Systems Amended and Restated Agreement for Joint and
Cooperative Action, as amended;
WHEREAS, UAMPS has acquired and constructed and now owns and operates a gas-fired
electric generating facility in Payson, Utah, together with related facilities and equipment (the
"Project"), and all of the capacity and output of the Project has been sold to participating
members of UAMPS (collectively, the "Participants"), including Payson City, Utah
("Payson"), pursuant to separate Payson Power Project Power Sales Contracts, each dated as of
June 1, 2002 (collectively, and together with the New Power Sales Contract (defined below), the
"Power Sales Contracts")between UAMPS and each of the Participants;
WHEREAS, the Board of Directors of TDPUD adopted a resolution on November 5, 2008
(the "Prior Resolution"), authorizing and approving the absolute and unconditional acquisition
and assumption all of Payson's rights and obligations with respect to 4,118 kW of the Project's
optimum operating capability (5,000 kW of the Project's maximum operating capability) to
TDPUD, by the assignment of an Entitlement Share of 3.6768% and a Debt Service Share of
3.8888% (collectively, the "Assigned Interest") to TDPUD pursuant to and in compliance with
the provisions of the Power Sales Contracts;
WHEREAS, pursuant to the Prior Resolution, TDPUD, among other things, authorized,
approved, executed and delivered (a) the Absolute Assignment Agreement, dated as of December
1, 2008 (the `Assignment Agreement"), among the City, UAMPS and TDPUD, providing for the
absolute assignment and transfer of the Assigned Interest to TDPUD, and (b) a Power Sales
Contract between TDPUD and UAMPS (the "New Power Sales Contract"), providing for the
acquisition by TDPUD of an Entitlement Share, through which TDPUD was to hold and own the
Assigned Interest;
WHEREAS, as provided in the Assignment Agreement, such assignment was conditioned
upon approval by Financial Security Assurance Inc. ("FSA"), as insurer of the Payson Power
Project Revenue Bonds, 2003 Series A (the "Series 2003 Bonds") issued to finance the Project,
however, FSA has determined not to approve the assignment at this time;
- 3 -
WHEREAS, TDPUD has reviewed its power supply resource plan and has determined that
it remains in its best interest to absolutely and unconditionally acquire and assume the Assigned
Interest from Payson and that, until such time as the assignment can occur, it is in its best interest
purchase the Electric Power, Electric Energy and rights and obligations associated with the
Assigned Interest from Payson on a recourse basis and subject to other terms and conditions;
WHEREAS, TDPUD and Payson now desire to enter into an Absolute Assignment and
Lay-Off Power Sales Agreement (the "Lay-Off Power Sales Agreement") among TDPUD,
Payson and UAMPS providing for (a) the lay off and sale by Payson and the purchase by
TDPUD of the Electric Power, Electric Energy and rights and obligations associated with the
Assigned Interest on a recourse basis and subject to other terms and conditions upon the
Effective Date of the Lay Off Power Sales Agreement and (b) the absolute and unconditional
assignment of the Assigned Interest upon either (i) the future consent of FSA or (ii) the payment
or defeasance of all of the Series 2003 Bonds, among other conditions; and
WHEREAS, TDPUD now desires to authorize and approve the purchase of the Electric
Power, Electric Energy and rights and obligations associated with the Assigned Interest on a
recourse basis and subject to other terms and conditions and the absolute and unconditional
assignment of the Assigned Interest upon satisfaction of certain conditions and the form of the
Lay Off Power Sales Agreement, and ratify the prior authorization, approval, execution and
delivery of the New Power Sales Contract and certain other prior findings, determinations and
actions;
Now, THEREFORE, BE IT RESOLVED by the Governing Body of Truckee Donner Public
Utility District as follows:
Section 1. Definitions. In addition to the terms defined in the recitals, capitalized
terms used and not otherwise defined in this resolution have the meanings assigned to them in the
New Power Sales Contract.
Section 2. Approval of the Lay Off Power Sales Agreement; Ratification of the New
Power Sales Contract and Participant's Representative. (a) The Lay Off Power Sales
Agreement, in substantially the form attached hereto as Annex A, are hereby authorized and
approved. The President is hereby authorized, empowered and directed to execute and deliver
the Lay Off Power Sales Agreement on behalf of TDPUD, and the Clerk is hereby authorized,
empowered and directed to attest and countersign such execution and to affix the corporate seal
of TDPUD to the Lay Off Power Sales Agreement, with such changes to the Lay Off Power Sales
Agreement from the form attached hereto as Annex A as shall be necessary to complete the form
of the Lay Off Power Sales Agreement or to correct any minor irregularities or ambiguities
therein and as are approved by the President, his execution thereof to constitute conclusive
evidence of such approval.
(b) Upon the Effective Date of the Lay Off Power Sales Agreement and pursuant to the
terms thereof, Payson shall lay off and sell and TDPUD shall purchase the Electric Power,
Electric Energy and rights and obligations associated with the Assigned Interest, on a recourse
basis. TDPUD shall hold all of its rights and obligations with respect to the Assigned Interest
- 4 -
pursuant to the terms of the New Power Sales Contract, subject, however, to the terms and
provisions of the Lay Off Power Sales Agreement. Until the Time of Transfer TDPUD shall be
deemed a Participant in the Project with an Entitlement Share of 3.6768% and a Debt Service
Share of 3.8888%, and Payson's Entitlement Share and Debt Service Share shall be deemed
reduced by such amounts, for all purposes of the Power Sales Contracts, except for purposes of
Sections 17(c) and 22 thereof. Payson shall remain obligated with respect to the Assigned
Interest under the terms of its Payson Power Project Power Sales Contract up until the Time of
Transfer. Until the Time of Transfer, as provided in the Lay Off Power Sales Agreement, upon
any default by TDPUD under the New Power Sales Contract, and notwithstanding Sections 21(b)
and 22 thereof, Payson's Entitlement Share and Debt Service Share shall no longer be deemed
reduced, TDPUD shall no longer be deemed a Participant in the Project and all of its rights under
the New Power Sales Contract shall terminate, and Payson shall immediately pay to UAMPS any
amounts in respect of which TDPUD is in default, however, TDPUD shall remain liable for any
such amounts and such other amounts as specified in the Lay Off Power Sales Agreement. Upon
the Time of Transfer the Assigned Interest shall be absolutely and unconditionally assigned and
transferred to TDPUD and TDPUD shall hold and own such Assigned Interest pursuant to the
terms of the New Power Sales Contract.
(c) The authorization, approval, execution and delivery of the New Power Sales
Contract pursuant to the Prior Resolution is hereby ratified. The appointment of Stephen
Hollabaugh as the Participant's Representative to UAMPS for TDPUD, and the delegation of the
authorities and responsibilities to such individual in such capacity(or alternate(s)) as described in
the Prior Resolution, all pursuant to the Prior Resolution, is hereby ratified.
Section 3. Ratification of Certain Findings and Determinations Pursuant to Prior
Resolution; Ratification of Power Supply Resource Plan. (a) Except as modified by this
resolution, all findings and determinations made pursuant to the Prior Resolution, including
findings and determinations relating to (i) the Project and TDPUD's need for the power and
energy to be acquired from the Assigned Interest, (ii) TDPUD's review of the New Power Sales
Contract, Project Agreements and other materials and information and its discussions with
UAMPS and (iii) TDPUD's obligations to make payments under the New Power Sales Contract,
are hereby ratified as if made on the date hereof.
[(b) The authorization and approval of TDPUD's Power Supply Resource Plan pursuant
to the Prior Resolution is hereby ratified as if authorized and approved on the date hereof.]
Section 4. Further Authority. The President, Clerk and Attorney for TDPUD are
hereby authorized and directed to take all actions on their part necessary or desirable in
connection with the execution and delivery of the Lay Off Power Sales Agreement, Power Sales
Contract and the completion of the transactions contemplated thereby, including the execution
and delivery of such closing certificates and opinions of counsel as may be necessary. If(a) the
President or (b) the Clerk shall be unavailable to execute or attest and countersign, respectively,
the foregoing agreements and contracts, the same may be executed, or attested and
countersigned, respectively, by (i) the Vice President or any other member of the Board of
Directors, or(ii) any Assistant Clerk.
- 5 -
Section S. Miscellaneous; Effective Date. (a) This resolution shall be and remain
irrepealable until the expiration or termination of the New Power Sales Contract in accordance
with its terms.
(b) All previous acts and resolutions in conflict with this resolution or any part hereof
are hereby repealed to the extent of such conflict.
(c) In case any provision in this resolution shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
(d) This resolution shall take effect immediately upon its adoption and approval.
- 6 -
ADOPTED AND APPROVED this 4th day of November, 2009.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
J. Ron Hemig, President
ATTEST:
Michael D. Holley, Clerk
[SEAL]
- 7 -
ANNEX A
[Attach Lay Off Power Sales Agreement]
Annex A-1
After the conduct of other business not pertinent to the foregoing, it was moved and
carried that the Governing Body adjourn.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
J. Ron Hemig, President
ATTEST:
By
Michael D. Holley, Clerk
[SEAL]
- 8 -
STATE OF CALIFORNIA )
COUNTY OF NEVADA )
I, the undersigned, do hereby certify that I am the duly qualified and acting Clerk of
Truckee Donner Public Utility District (-TDPUD"). I further certify that the above and
foregoing constitutes a true and correct copy of the minutes of a regular public meeting of the
Governing Body (the "Governing Body") of TDPUD, held on October 21, 2009, including a
resolution adopted at such meeting, together with the exhibits attached thereto, as said minutes,
resolution and exhibits are recorded in the regular official book of minutes of the proceedings of
the Governing Body kept in the office of the Clerk, that said proceedings were duly had and
taken as therein shown, that the meeting therein shown was in all respects called, held and
conducted in accordance with law, and that the persons therein named were present at said
meeting, as therein shown.
IN WITNESS WHEREOF, I have hereunto subscribed my official signature and impressed or
imprinted hereon the official seal of TDPUD, this 41h day of November, 2009.
Michael D. Holley, Clerk
Truckee Donner Public Utility District
[SEAL]
- 9 -
DRAFT
10/12/2009
CERTIFICATE OF TRUCKEE DONNER PUBLIC UTILITY DISTRICT
DATED: ,2009.
STATE OF CALIFORNIA )
)
COUNTY OF NEVADA )
The undersigned hereby certify that they are the President and the Clerk of Truckee
Donner Public Utility District (the "Participant"), a member of Utah Associated Municipal
Power Systems ("UAMPS"), and that as such they are authorized to execute this Certificate on
behalf of the Participant and hereby certify as follows:
1. This Certificate has been executed in connection with the Absolute Assignment and
Lay Off Power Sales Agreement, dated as of , 2009 (the "Lay Off Power Sales
Agreement"), among Payson City, Utah, UAMPS and the Participant, and the Power Sales
Contract, dated as of , 2009 (the "Power Sales Contract" and, together with the Lay
Off Power Sales Agreement, the `Agreements"),between the Participant and UAMPS.
2. The Participant is a public utility district, duly created and validly existing under the
laws of the State of California (the "State") and is governed by a Board of Directors (the
"Governing Body") composed of five(5)members.
3. Attached hereto as Exhibit A is a true, complete and correct copy of the Power Sales
Contract. Attached hereto as Exhibit B are true, complete and correct copies of excerpts from the
minutes of regular public meetings of the Governing Body held on (a) November 5, 2008,
including a resolution adopted at such meeting authorizing the execution and delivery of the
Power Sales Contract and related matters (the "2008 Resolution") and (b) October 21, 2009,
including a resolution adopted at such meeting authorizing the execution and delivery of the Lay
Off Power Sales Agreement and related matters (the "2009 Resolution" and, together with the
2008 Resolution, the "Resolutions"). The Resolutions were duly adopted and are in full force
and effect and, except as the 2008 Resolution has been modified by the 2009 Resolution, have
not been amended, modified, repealed or supplemented.
4. The names of the President and the members of the Governing Body, the Clerk,
Deputy District Clerk and the Participant's Attorney together with the dates of commencement
and expiration of the term of office of the President and the members of the Governing Body, are
as follows:
Payson-TDPUD Certificate.doc
0865790/CI
DATE OF
COMMENCEMENT OF DATE OF EXPIRATION
NAME OFFICE CURRENT TERM OF CURRENT TERM
J. Ronald Hemig President December 1, 2006 December 3, 2010
Joseph R. Aguera Board Member December 5, 2008 December 12, 2012
Jeff Bender Board Member December 5, 2008 December 12, 2012
John Hillstrom Board Member December 5, 2008 December 12, 2012
Patricia S. Sutton Board Member December 1, 2006 December 3, 2010
Michael D. Holley General Manager N/A N/A
Barbara Cahill Deputy District Clerk N/A N/A
Steve Gross Attorney N/A N/A
5. The meetings of the Governing Body at which the Resolutions were adopted were
duly called and held in accordance with the provisions of the Ralph M. Brown Act.
6. (a) No referendum petition was filed with the Participant or any of its officers
seeking to refer either of the Resolutions to the electors of the Participant in accordance with the
provisions of state law; and (b) no litigation has been instituted, is pending or has been
threatened to require a referendum election on either of the Resolutions.
7. The Participant now owns and operates a local electric utility system (the "System")
and furnishes electric energy to all persons desiring such service within its service area. All
electric energy to be acquired pursuant to the Agreements will be used by the Participant to
provide electric service within its service area. There is attached hereto as Exhibit C a true,
correct and complete copy of the rates, fees and charges now in effect for the electric services
provided by the System.
8. By resolutions heretofore duly adopted by the Governing Body, the Participant has
duly authorized, executed and delivered the Utah Associated Municipal Power Systems
Amended and Restated Agreement for Joint and Cooperative Action, dated as of February 17,
1999, and all amendments thereof and supplements thereto (the "UAMPS Joint Action
Agreement") and that certain Power Pooling Agreement (the "Pooling Agreement") between the
Participant and UAMPS relating the power pool administered by UAMPS for the benefit of its
members and the UAMPS Joint Action Agreement and the Pooling Agreement constitute the
legal, valid and binding agreements of the Participant.
9. Stephen Hollabaugh has been duly appointed by the Governing Body as the
representative of the Participant to UAMPS.
- 2 -
10. Prior to the adoption of the Resolutions and the execution of the Agreements, the
Governing Body determined the needs of the Participant for electric power and energy and
considered, among other things, the following: (a) the economies and efficiencies of scale to be
achieved through the ownership and operation by UAMPS of the Project for the benefit of the
Participant and the other members of UAMPS participating in the Project, (b) the need of the
Participant for the electric energy represented by its Entitlement Share in the Project to meet its
current requirements and to provide reserves and peaking capacity, (c) the estimated useful life of
the Project, (d) the length of time in advance necessary to obtain, acquire or construct an
additional or alternative power supply, (e) the reliability and availability of the Participant's
existing power supply sources, the Project and alternative power supply sources and the cost or
estimated cost thereof, (f) the financial, regulatory, and technical feasibility of operating the
Project, and (g) all such other matters as were deemed necessary or appropriate by the Participant
as a basis for and in connection with its authorization and execution of the Agreements.
11. Except as listed on Exhibit D, the Participant has no outstanding bonds, notes or
other evidences of indebtedness, or agreements to take or pay for power and energy, payable
from any revenues of the System, other than the Power Sales Contract.
12. The payments to be made by the Participant to UAMPS under the Power Sales
Contract will constitute operating expenses of the System and a cost of purchased electric energy.
13. There is no action, suit, proceeding, inquiry or investigation by or before any court,
governmental agency, public board or administrative body pending or, to the best of our
knowledge threatened, against the Participant which (a) challenges, contests or questions the due
and regular adoption of the Resolutions or the validity thereof or affects or seeks to prohibit,
restrain or enjoin the Participant from complying with the obligations contained in the
Agreements, including the payment obligations to UAMPS contained in the Power Sales
Contract, (b) in any way affects or questions the validity or enforceability of the UAMPS Joint
Action Agreement or the Agreements, nor, to the best of our knowledge, is there any basis
therefor, (c) challenges or affects the corporate existence of the Participant or the titles of its
officers to their respective offices, (d) seeks to prohibit, restrain or enjoin the collection of
revenues from the System to be used to make payments to UAMPS under the Power Sales
Contract, and (e) involves any of the property or assets of the Participant which involves the
possibility of any judgment or liability, not fully covered by insurance, which may result in any
material adverse change in the business, properties, assets or in the condition, financial or
otherwise, of the System.
14. (a) The payments to be made to UAMPS by the Participant pursuant to the
Power Sales Contract will not be, directly or indirectly(i) secured by any interest in (A) property
used or to be used in a trade or business carried on by any person other than a state or local
governmental unit or (B) payments in respect of such property, or (ii) derived from payments
(whether or not by or to the Participant), in respect of property, or borrowed money, used or to be
used in a trade or business carried on by any person other than a state or local governmental unit.
(b) No user of the System will use the System on any basis other than the same basis as
the general public; and no person other than a state or local governmental unit will be a user of
- 3 -
the System as a result of(i) ownership, or (ii) actual or beneficial use pursuant to a lease or a
management or incentive payment contract, or(iii) any other similar arrangement.
15. The information provided by the Participant to UAMPS pursuant to Section 14(c) of
the Power Sales Contract and attached as Exhibit II thereto with respect to the Participant and the
System is true, correct and complete. The Participant has duly authorized UAMPS to use such
information in connection with the preparation of any official statement of UAMPS with respect
to any Bonds (as defined in the Power Sales Contract) to be issued and to provide such
information to interested parties.
- 4 -
DATED as of the day and year first above written.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
J. Ron Hemig, President
By
Michael D. Holley, Clerk
[Seal]
- 5 -
EXHIBIT A
[Attach Power Sales Contract]
A-1
EXHIBIT B
[Attach Copies of Extracts of Proceedings from November 5, 2008,
and November 4, 2009, Meetings, including Resolutions]
B-1
EXHIBIT C
[Attach Copy of Resolution or Ordinance Establishing Rates]
C-1
EXHIBIT D
SCHEDULE OF BONDS,NOTES,CONTRACTS,ETC.
(a) $26,265,000 aggregate principal amount of Truckee Donner Public Utility
District Revenue Certificates of Participation, Series 2003A and Taxable Series 2003B,
issued pursuant to an Installment Purchase Agreement dated as of March 1, 2003,
between Truckee Donner Public Utility District and Truckee Donner Public Utility
District Financing Corporation;
(b) [Description of Installment Loans listed on page 47 of financials for 2008
FYI
(c) the Master Firm Power Sales Agreement, dated as of June 16, 1999 and
Transaction Schedule No. 1 thereunder,between UAMPS and the Participant.
C-1
DRAFT
10/13/09
[LETTERHEAD OF COUNSEL TO TDPUD]
[TO BE DATED THE DATE OF CLOSING]
Utah Associated Municipal Power Systems
2825 East Cottonwood Parkway, Suite 200
Salt Lake City, Utah 84121
Ladies and Gentlemen:
I have acted as counsel to Truckee Donner Public Utility District ("TDPUD") in
connection with its approval, execution and delivery of(a) the Absolute Assignment and Lay Off
Power Sales Agreement, dated as of , 2009 (the "Lay Off Power Sales Agreement"),
among Payson City, Utah ("Payson"), Utah Associated Municipal Power Systems ("UAMPS-)
and TDPUD and (b) the Payson Power Project Power Sales Contract (the "Power Sales
Contract"), between TDPUD and UAMPS. Capitalized terms used and not defined herein have
the meanings assigned to such terms in the Lay Off Power Sales Agreement and the Power Sales
Contract. The Lay Off Power Sales Agreement and the Power Sales Contract are referred to
collectively herein as the "Agreements. "
Upon the Effective Date of the Lay Off Power Sales Agreement and subject to the terms
and provisions thereof, Payson shall lay off and sell and TDPUD shall purchase the Electric
Power, Electric Energy and rights and obligations associated with the Assigned Interest on a
recourse basis. TDPUD shall hold all of its rights and obligations with respect to the Assigned
Interest pursuant to the terms of the Power Sales Contract, subject, however, to the terms and
provisions of the Lay Off Power Sales Agreement. Until the Time of Transfer„ TDPUD shall be
deemed a Participant in the Project with an Entitlement Share of 3.6768% and Debt Service
Share of 3.8888%, and Payson's Entitlement Share and Debt Service Share shall be deemed
reduced by such amounts, for all purposes of the Power Sales Contracts, except for purposes of
Sections 17(c) and 22 thereof, as provided in the Lay Off Power Sales Agreement. Payson shall
remain obligated with respect to the Assigned Interest up until the Time of Transfer. Until the
Time of Transfer, as provided in the Lay Off Power Sales Agreement, upon any default by
TDPUD under the Power Sales Contract, and notwithstanding Sections 21(b) and 22 thereof,
Payson's Entitlement Share and Debt Service Share shall no longer be deemed reduced, TDPUD
shall no longer be deemed a Participant in the Project and all of its rights under the Power Sales
Contract shall terminate, and Payson shall immediately pay to UAMPS any amounts in respect of
which TDPUD is in default, however, TDPUD shall remain liable for any such amounts and such
other amounts as specified in the Lay Off Power Sales Agreement. Upon the satisfaction of the
conditions specified in the Lay Off Power Sales Agreement, the Assigned Interest shall
Payson-TDPUD Atty Opin.doc
0865790/CJ
absolutely and unconditionally transfer to TDPUD and TDPUD shall hold and own such
Assigned Interest pursuant to the terms of the Power Sales Contract. To the extent permitted by
law, TDPUD shall indemnify and hold harmless Payson against all obligations or liabilities
arising with respect to the Assigned Interest from and after the Time of Transfer.
Pursuant to the Power Sales Contract, TDPUD agrees to pay for its Entitlement Share in
accordance with the terms and provisions of the Power Sales Contract. The obligation of
TDPUD to make such payments constitutes an operating expense of its electric utility system (the
"System") payable from the revenues and other available funds of the System as a cost of
purchased electric capacity and energy. Such payments are required to be made regardless of
whether the Project is operable or operating and notwithstanding the suspension, interruption,
interference, reduction or curtailment of the Project Output for any reason whatsoever.
As counsel to TDPUD and in connection with the opinions set forth below, I have
examined or am otherwise familiar with (a) those documents relating to the existence,
organization and operation of TDPUD and the System, (b) all resolutions and proceedings of
TDPUD relating to the due authorization, execution and delivery by TDPUD of the Agreements,
(c) executed counterparts of the Agreements, and (d) such other documents, information, facts
and matters of law as are necessary for me to render the opinions contained herein.
Based upon the foregoing, I am of the opinion that:
1. TDPUD is a public utility district, duly created and validly existing under the laws
of the State of California (the "State") and is duly qualified to own, operate and furnish electric
service through the System.
2. TDPUD has full legal right, power and authority to enter into the Agreements and to
carry out and consummate all of the transactions contemplated thereby, and TDPUD has
complied with the provisions of applicable law which would be a condition precedent to entering
into the Agreements or carrying out and consummating such transactions.
3. No approval, consent or authorization of any governmental or public agency,
authority, commission or person of the Agreements or of TDPUD's participation in the
transactions contemplated thereby is required for the execution and delivery by TDPUD of the
Agreements or the performance by TDPUD of its obligations thereunder.
4. By resolutions duly adopted on November 5, 2008, and October 21, 2009, each of
the Agreements has been duly authorized, executed and delivered by TDPUD and (a) the Lay Off
Power Sales Agreement constitutes the legal, valid and binding obligation of TDPUD
enforceable in accordance with its terms and (b) the Power Sales Contract constitutes the legal,
valid and binding obligation of TDPUD, whether or not the Project or any portion thereof is
acquired, completed, operable or operating and notwithstanding the suspension, interruption,
interference, reduction or curtailment of the output of the Project, or any termination of any of
the Project Agreements, in whole or in part for any reason whatsoever, is enforceable under the
present law of the State in accordance with its terms; except that the rights and remedies set forth
in the Agreements may be limited by any applicable bankruptcy, insolvency, moratorium,
- 2 -
reorganization or other laws affecting creditors' rights generally or usual equity principles in the
event equitable remedies should be sought.
5. TDPUD has, with respect to all meetings held in connection with the authorization
of the Agreements, been in compliance with all open and public meeting laws of the State.
6. The authorization, execution and delivery of the Agreements and compliance with
the provisions thereof will not conflict with or constitute a breach of, or default under, any
instrument relating to the organization, existence or operation of TDPUD, any commitment,
agreement, indenture, bond, note, resolution or other instrument to which TDPUD is a party or
by which it or its property is bound or affected, or any ruling, regulation, ordinance, judgment,
order or decree to which TDPUD (or any of its officers in their respective capacities as such) is
subject or any provision of the laws of the State relating to TDPUD and its affairs.
7. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or
before any court, public board or body, pending or, to my knowledge, threatened against or
affecting TDPUD or any entity affiliated with TDPUD or any of its officers in their respective
capacities as such (nor to the best of my knowledge is there any basis therefor), which challenges
the creation, organization or existence of TDPUD or the titles of its officers to their respective
offices or which questions the powers of TDPUD referred to in paragraph 2 above or the validity
of the proceedings taken by TDPUD in connection with the authorization, execution or delivery
of the Agreements, or wherein any unfavorable decision, ruling or finding would adversely affect
the transactions contemplated by the Agreements or which, in any way, would adversely affect
the validity or enforceability of the Agreements, and there is no litigation pending or, to the best
of my knowledge, threatened against TDPUD or involving any of the business, affairs, property
or assets of the System which involves the possibility of any judgment or liability, not fully
covered by insurance, which may result in any material adverse change in the business, affairs,
properties, assets or in the condition, financial or otherwise, of the System.
8. The obligations of TDPUD to make payments to UAMPS under the Power Sales
Contract shall constitute an obligation of TDPUD payable as an operating expense of the System
solely from the revenues and other available funds of such System. Such payments shall
constitute a cost of purchased electric energy and an operating expense of the System. The
application of the revenues and other available funds of the System to make such payments to
UAMPS is not subject to any prior lien, encumbrance or restriction.
9. The rates charged by TDPUD for System services to customers located within the
corporate boundaries of TDPUD are not subject to regulation by any authority of the State or the
United States and have been duly and validly adopted by TDPUD and are legally enforceable in
accordance with the laws of the State.
10. TDPUD has lawful authority to own the System and to fix and collect rates, fees and
other charges in connection with such System.
11. TDPUD has good and merchantable title to the System as it now exists.
- 3 -
12. Except for those portions of the System which are laid in, on or under public roads,
highways, streets or alleys which have been heretofore dedicated to the public for road, highway,
street or alley purposes and which have actually been in use for such purpose for more than five
years past, substantially all of the System is located either on land of TDPUD as to which
TDPUD has good and merchantable fee simple title or as to which TDPUD has acquired good
and valid permanent easements, rights-of-way, licenses or permits not terminable by action of
any party without the consent of TDPUD sufficient to permit TDPUD to maintain and operate
the System.
13. TDPUD has obtained all necessary permits, licenses and approvals required by law,
whether state or federal, to be obtained by TDPUD in connection with the operation of the
System, and such permits, licenses and approvals are in full force and effect.
14. There is no present unsatisfied judgment heretofore rendered against TDPUD
constituting or which will constitute a lien on any part of the System.
15. There are no contracts, laws, regulations, court orders or consent decrees that will
restrict the ability of TDPUD to comply with its covenants regarding rates for System services set
forth in the Power Sales Contract.
16. TDPUD has duly authorized, executed and delivered the Joint Action Agreement
and the Pooling Agreement and each such agreement constitutes the legal, valid and binding
obligation of TDPUD enforceable against TDPUD in accordance with its terms.
Chapman and Cutler LLP and VanCott, Bagley, Cornwall & McCarthy are each entitled
to rely on the opinions expressed above with the same effect as if such opinions were addressed
to each of them.
Respectfully submitted,
- 4 -
DRAFT
A RESOLUTION AUTHORIZING AND APPROVING THE ABSOLUTE
ASSIGNMENT AND LAY OFF POWER SALES AGREEMENT AMONG
PAYSON CITY, TRUCKEE DONNER PUBLIC UTILITY DISTRICT AND
UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS; RATIFYING
CERTAIN OTHER ACTIONS PREVIOUSLY TAKEN IN CONNECTION
WITH SUCH PROPOSED ASSIGNMENT;AND RELATED MATTERS.
WHEREAS, Utah Associated Municipal Power Systems ("UAMPS") has been organized
under the Interlocal Cooperation Act, Title 11, Chapter 13, Utah Code Annotated 1953, as
amended, and the Utah Associated Municipal Power Systems Amended and Restated Agreement
for Joint and Cooperative Action, as supplemented and amended, as a separate legal entity and a
political subdivision of the State of Utah to accomplish the purposes of its members' joint and
cooperative action and to provide a means to secure electric power and energy for the present and
future needs of its members;
WHEREAS, UAMPS has previously entered into Payson Power Project Power Sales
Contracts, each dated as of June 1, 2002 (the "Power Sales Contracts'), with each of the
Participants, including Payson City ("Payson"), pursuant to which UAMPS has agreed to sell to
each Participant, and each Participant has agreed to purchase from UAMPS, the electric energy
allocable to such Participant's respective share of the output of the Project;
WHEREAS, capitalized terms used and not otherwise defined in this resolution shall have
the meanings assigned to them in the Power Sales Contracts or, if not in the Power Sales
Contracts, then in the Prior Resolution(defined below);
WHEREAS, at its meeting on November 19, 2008, the UAMPS Board of Directors (the
"Board") adopted a resolution (the "Prior Resolution") authorizing the absolute and
unconditional assignment of the Assigned Interest by Payson to TDPUD and approving the
Assignment Agreement and the New Power Sales Contract;
Payson-UAMPS Reso.doc
0865790/JCB/CJ
WHEREAS, in anticipation of such assignment, the governing bodies of Payson and
TDPUD adopted resolutions authorizing such assignment pursuant to the Assignment
Agreement, and Payson, TDPUD and UAMPS executed and delivered the Assignment
Agreement, and TDPUD and UAMPS executed the New Power Sales Contract;
WHEREAS, such assignment was, as provided in the Assignment Agreement, subject to
the authorizing approval of Financial Security Assurance Inc. ("FSA") as insurer of the Payson
Power Project Revenue Bonds, 2003 Series A (the "Series 2003 Bonds"), however, FSA has
determined not to approve such assignment at this time;
WHEREAS, Payson and TDPUD now desire to enter into, and there has been prepared and
submitted to the Board, an Absolute Assignment and Lay Off Power Sales Agreement (the "Lay
Off Power Sales Agreement") among Payson, TDPUD and UAMPS providing for (a) the lay off
and sale by Payson to TDPUD of the Electric Power, Electric Energy and rights and obligations
associated with the Assigned Interest on a recourse basis and subject to other terms and
conditions upon the Effective Date of the Lay Off Power Sales Agreement and (b) the absolute
and unconditional assignment of the Assigned Interest upon either (i) the future consent of FSA
or(ii) the payment or defeasance of all of the Series 2003 Bonds, among other conditions; and
WHEREAS, the Board now desires to authorize and approve the lay off and sale of the
Assigned Interest by Payson to TDPUD on a recourse basis and subject to other terms and
conditions and the absolute and unconditional assignment of the Assigned Interest upon the
satisfaction of certain conditions, and the form of the Lay Off Power Sales Agreement;
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF UTAH
ASSOCIATED MUNICIPAL POWER SYSTEMS,AS FOLLOWS:
Section 1. Authorization of Lay Off Power Sales Agreement; Ratification of New
Power Sales Agreement. (a) The Lay Off Power Sales Agreement, in substantially the form
-2-
attached hereto as Exhibit A, and all transactions contemplated thereby, is hereby authorized and
approved. The Chairman is hereby authorized, empowered and directed to execute and deliver
the Lay Off Power Sales Agreement on behalf of DAMPS, with such changes from the forms
attached hereto as the Chairman shall approve; provided, however, that the Chairman may not
approve any change (a) to the items deliverable contemporaneously with the execution of the Lay
Off Power Sales Agreement and the conditions precedent to assignment of the Assigned Interest,
as set forth in the form of the Lay Off Power Sales Agreement attached hereto or (b) contrary to
the rights of FSA. The Secretary or any Assistant Secretary is hereby authorized, empowered and
directed to attest such execution and to countersign and affix the corporate seal of UAMPS to the
Lay Off Power Sales Agreement.
(b) Upon the Effective Date of the Lay Off Power Sales Agreement and subject to the
terms and provisions thereof, Payson will lay off and sell and TDPUD will purchase the Electric
Power, Electric Energy and rights and obligations associated with the Assigned Interest, on a
recourse basis. TDPUD shall hold all of its rights and obligations with respect to the Assigned
Interest pursuant to the terms of the New Power Sales Contract, subject, however, to the terms
and provisions of the Lay Off Power Sales Agreement. Until the Time of Transfer, as provided
in the Lay Off Power Sales Agreement, TDPUD shall be deemed a Participant in the Project with
an Entitlement Share of 3.6768%, a Debt Service Percentage of 3.6768%, a Prepayment
Percentage of 0.0000% and a Debt Service Share of 3.8888%, and Payson's Entitlement Share,
Debt Service Percentage and Debt Service Share shall be deemed reduced by such amounts, for
all purposes of the Power Sales Contracts, except for purposes of Sections 17(c) and 22 thereof.
Payson shall remain obligated with respect to the Assigned Interest under the terms of its Power
Sales Contract up until the Time of Transfer. Until the Time of Transfer, as provided in the Lay
Off Power Sales Agreement, upon any default by TDPUD under the New Power Sales Contract,
-3-
and notwithstanding Sections 21(b) and 22 thereof, Payson's Entitlement Share, Debt Service
Percentage and Debt Service Share shall no longer be deemed reduced, TDPUD shall no longer
be deemed a Participant in the Project and all of its rights under the New Power Sales Contract
shall terminate, and Payson shall immediately pay to UAMPS any amounts in respect of which
TDPUD is in default, however, TDPUD shall remain be liable for any such amounts and such
other amounts as specified in the Lay Off Power Sales Agreement. Upon the Time of Transfer,
the Assigned Interest shall absolutely and unconditionally transfer to TDPUD and TDPUD shall
hold and own such Assigned Interest pursuant to terms of the New Power Sales Contract.
(c) The authorization, approval, execution and delivery of the New Power Sales
Agreement pursuant to the Prior Resolution is hereby ratified.
(d) In connection with the execution by UAMPS, Payson and TDPUD of the Lay Off
Power Sales Agreement, UAMPS has provided to Payson and TDPUD (i) the form of the Lay
Off Power Sales Agreement for approval by their respective governing bodies, (ii) the forms of
the authorizing and approving resolutions of their respective governing bodies, and (iii)the forms
of their closing certificates and opinions of counsel which, in the case of TDPUD, are in
substantially the forms attached to the original Power Sales Contract, with such modifications as
UAMPS has determined to be necessary or appropriate. Upon the completion of the transaction
contemplated by this Resolution, UAMPS shall prepare and distribute to the Participants a
revised Schedule I to the Power Sales Contracts showing the Entitlement Shares, Debt Service
Percentages, Prepayment Percentages and Debt Service Shares of all Participants.
Section 2. Findings and Determinations. The Board's findings and determinations in
the Prior Resolution with respect to the prior distribution of the Assignment Notices are hereby
ratified. Pursuant to the provisions of Section 17(c) of the Power Sales Contract, UAMPS
hereby finds and determines that the lay off and sale by Payson to TDPUD of the Assigned
-4-
Interest on a recourse basis and subject to the other terms and conditions as provided in the Lay
Off Power Sales Agreement and the absolute and unconditional assignment of the Assigned
Interest by Payson to TDPUD upon satisfaction of certain conditions, all as contemplated by the
Lay Off Power Sales Agreement, (a) is in the best interest of UAMPS and the Participants and
(b) will not adversely affect UAMPS, any of the Participants or the security for the payment of
the Bonds.
Section 3. Further Authority. The officers and management of UAMPS are hereby
authorized and directed to take all actions, in consultation with general counsel, on their part
necessary or desirable in connection with the execution and delivery of the Lay Off Power Sales
Agreement and the New Power Sales Contract and the completion of the transactions
contemplated thereby. If(a) the Chairman or (b) the Secretary shall be unavailable to execute or
attest and countersign, respectively, the foregoing Agreements and Contracts, the same may be
executed, or attested and countersigned, respectively, by (i) the Vice Chairman or any other
member of the Board of Directors, or(ii) any Assistant Secretary.
Section 4. Effective Date. This resolution shall be effective immediately upon its
approval and adoption.
-5-
ADOPTED AND APPROVED by the Board of Directors of Utah Associated Municipal
Power Systems, this 21 st day of October, 2009.
UTAH ASSOCIATED MUNICIPAL POWER
SYSTEMS
Chairman
[SEAL]
ATTEST:
Assistant Secretary
-6-
EXHIBIT A
[ATTACH LAY OFF POWER SALES AGREEMENT]
A-1
DRAFT
Payson City, Utah
October 21, 2009
The City Council (the "Governing Body") of Payson City, Utah (the "City"), pursuant to
due notice met in regular public session on October 21, 2009, at the hour of 6:00 p.m., at its
regular meeting place at 430 West Utah Avenue, Payson, Utah. The meeting was duly called to
order by the Mayor with the following members of the Governing Body being present,
constituting a quorum of the Governing Body:
NAME TITLE
Burtis Bills Mayor
Brad Daley Councilmember
Jolynn Ford Councilmember
Brent Grotegut Councilmember
Kim Hancock Councilmember
Scott Phillips Councilmember
Absent:
Also Present:
NAME TITLE
Jeanette Curtis City Recorder
Payson Reso Min.doc
0865790/JCB/CJ
After the minutes of the preceding meeting had been read and approved, the City
Recorder presented to the Governing Body an affidavit evidencing the giving of public notice of
the agenda, date, time and place of the October 21, 2009 regular public meeting of the Governing
Body in compliance with the requirements of applicable Utah law. The affidavit was ordered
recorded in the minutes of the meeting and is as follows:
- 2 -
STATE OF UTAH )
)
COUNTY OF UTAH )
I, the undersigned, the duly qualified and acting City Recorder of Payson City, Utah (the
"City"), do hereby certify, according to the records of the City in my official possession, and
upon my own knowledge and belief, that in accordance with the requirements of Section 52-4-
202, Utah Code Annotated 1953, as amended, I gave public notice of the agenda, date, time and
place of the October 21, 2009, regular public meeting held by the Governing Body of the City,
by:
(a) causing a Notice of Public Meeting, in the form attached hereto as Exhibit A, to be
posted at the principal office of the Governing Body on October , 2009, at least 24 hours
before the convening of the meeting; said Notice of Public Meeting having continuously
remained so posted and available for public inspection during the regular office hours of the
Governing Body until the convening of the meeting;
(b) causing a copy of the Notice of Public Meeting in the form attached hereto as
Exhibit A to be provided on October _, 2009, at least 24 hours before the convening of the
meeting, to the Payson Chronicle, a newspaper of general circulation within the geographic
jurisdiction of the City and to each local media correspondent, newspaper, radio station or
television station that has requested notification of meetings of the Governing Body; and
(c) causing a Notice of Public Meeting in the form attached hereto as Exhibit A to be
posted on October , 2009, on the Utah Public Notice Website at least twenty-four (24) hours
before the convening of the meeting.
- 3 -
IN WITNESS WHEREOF, I have hereunto subscribed my official signature and impressed
hereon the official seal of the City, this 21 st day of October, 2009.
City Recorder
Payson City, Utah
[SEAL]
-4 -
EXHIBIT A
[Attach Notice of Public Meeting]
A-1
As required by Section 52-4-203, Utah Code Annotated 1953, as amended, written
minutes and a recording of this meeting are being kept.
The following resolution was then introduced in written form and pursuant to motion
duly made and seconded, was adopted and approved by the following vote:
AYE:
NAY:
The resolution was thereupon signed by the Mayor, was attested and countersigned by the
City Recorder and was ordered recorded in the official records of the City. The resolution is as
follows:
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RESOLUTION NO.
A RESOLUTION AUTHORIZING AND APPROVING THE ABSOLUTE
ASSIGNMENT AND LAY OFF POWER SALES AGREEMENT AMONG THE
CITY, TRUCKEE DONNER PUBLIC UTILITY DISTRICT AND UTAH
ASSOCIATED MUNICIPAL POWER SYSTEMS AND RELATED MATTERS.
WHEREAS, Payson City (the "City") and Utah Associated Municipal Power Systems
("UAMPS") have previously entered into the Payson Power Project Power Sales Contract, dated
as of June 1, 2002 (the "Power Sales Contract"), providing for the purchase and sale of an
Entitlement Share (as defined in the Power Sales Contract) in the electric capacity and energy
from the Payson Power Project (the "Project");
WHEREAS, the City adopted a resolution on November 5, 2008 (the "Prior Resolution
authorizing and approving the absolute and unconditional assignment and transfer all of its rights
and obligations with respect to 4,118 kW of the Project's optimum operating capability (5,000
kW of the Project's maximum operating capability) to Truckee Donner Public Utility District
("TDPUD"), by the assignment of an Entitlement Share of 3.6768% and a Debt Service Share of
3.8888% (collectively, the "Assigned Interest") to TDPUD pursuant to and in compliance with
the provisions of the Power Sales Contract;
WHEREAS, pursuant to the Prior Resolution, the City authorized, approved, executed and
delivered the Absolute Assignment Agreement, dated as of December 1, 2008 (the "Assignment
Agreement"), among the City, UAMPS and TDPUD, providing for such absolute assignment and
transfer of the Assigned Interest to TDPUD;
WHEREAS, as provided in the Assignment Agreement, such assignment was conditioned
upon approval by Financial Security Assurance Inc. ("FSA"), as insurer of the Payson Power
Project Revenue Bonds, 2003 Series A (the "Series 2003 Bonds"), issued to finance the Project,
however, FSA has determined not to approve the assignment at this time;
WHEREAS, the City has reviewed its power supply resource portfolio and has determined
that it remains in its best interest to absolutely and unconditionally assign and transfer the
Assigned Interest to TDPUD and that, until such time as the assignment can occur, it is in its best
interest to lay off and sell to TDPUD the Electric Power, Electric Energy and rights and
obligations associated with the Assigned Interest on a recourse basis and subject to certain other
temrs and conditions;
WHEREAS, the City and TDPUD now desire to enter into an Absolute Assignment and
Lay Off Power Sales Agreement (the "Lay Off Power Sales Agreement") among the City,
TDPUD and UAMPS providing for (a) the lay off and sale to TDPUD of the Electric Power,
- 6 -
Electric Energy and rights and obligations associated with the Assigned Interest on a recourse
basis and subject to other terms and conditions upon the Effective Date of the Lay Off Power
Sales Agreement and (b) the absolute and unconditional assignment of the Assigned Interest
upon either (i) the future consent of FSA or (ii) the payment or defeasance of all of the Series
2003 Bonds, among other conditions; and
WHEREAS, the City now desires to authorize and approve the lay off and sale of the
Assigned Interest to TDPUD on a recourse basis and subject to other terms and conditions and
the absolute and unconditional assignment of the Assigned Interest upon satisfaction of certain
conditions, and the form of the Lay Off Power Sales Agreement;
Now, THEREFORE, BE IT RESOLVED by the Governing Body of Payson City, Utah, as
follows:
Section 1. Definitions. In addition to the terms defined in the recitals, capitalized
terms used and not otherwise defined in this resolution have the meanings assigned to them in the
Power Sales Contract.
Section 2. Approval of Lay Off Power Sales Agreement. (a) The Lay Off Power Sales
Agreement, in substantially the form attached hereto as Annex A, and all transactions
contemplated thereby, are hereby authorized and approved. The Mayor is hereby authorized,
empowered and directed to execute and deliver the Lay Off Power Sales Agreement on behalf of
the City, and the City Recorder is hereby authorized, empowered and directed to attest and
countersign such execution and to affix the corporate seal of the City to the Lay Off Power Sales
Agreement, with such changes from the form of Lay Off Power Sales Agreement attached hereto
as shall be necessary to complete the form of the Lay Off Power Sales Agreement or to correct
any minor irregularities or ambiguities therein and as are approved by the Mayor, his execution
thereof to constitute conclusive evidence of such approval.
(b) Upon the Effective Date of the Lay Off Power Sales Agreement and subject to the
terms and provisions thereof, the City shall lay off and sell and TDPUD shall purchase the
Electric Power, Electric Energy and rights and obligations associated with the Assigned Interest,
on a recourse basis. TDPUD shall hold all of its rights and obligations with respect to the
Assigned Interest pursuant to the terms of its Payson Power Project Power Sales Contract with
DAMPS, subject, however, to the terms and provisions of the Lay Off Power Sales Agreement.
Until the Time of Transfer, TDPUD shall be deemed a Participant in the Project with an
Entitlement Share of 3.6768% and a Debt Service Share of 3.8888%, and Payson's Entitlement
Share and Debt Service Share shall be deemed reduced by such amounts, for all purposes of the
Power Sales Contracts, except for Sections 17(c) and 22 thereof. The City shall remain obligated
with respect to the Assigned Interest under the terms of the Power Sales Contract up until the
Time of Transfer. Until the Time of Transfer, as provided in the Lay Off Power Sales
Agreement, upon any default by TDPUD under its Payson Power Project Power Sales Contract,
and notwithstanding Sections 21(b) and 22 thereof, the City's Entitlement Share and Debt
Service Share shall no longer be deemed reduced, TDPUD shall no longer be deemed a
Participant in the Project and all of its rights under its Payson Power Project Power Sales
Contract shall terminate, and the City shall immediately pay to UAMPS any amounts in respect
- 7 -
of which TDPUD is in default, however, TDPUD shall remain liable for any such amounts and
such other amounts as specified in the Lay Off Power Sales Agreement. Upon the Time of
Transfer the Assigned Interest shall be absolutely and unconditionally assigned and transferred to
TDPUD.
Section 3. Further Authority. The Mayor, City Recorder and City Attorney are hereby
authorized and directed to take all actions on their part necessary or desirable in connection with
the execution and delivery of the Lay Off Power Sales Agreement and the completion of the
transactions contemplated thereby, including the execution and delivery of such closing
certificates and opinions of counsel as may be necessary. If (a) the Mayor or (b) the City
Recorder shall be unavailable to execute or attest and countersign, respectively, the foregoing
Lay Off Power Sales Agreement and other documents, the same may be executed, or attested and
countersigned, respectively, by (i) any other member of the Governing Body, or (ii) the City
Manager.
Section 4. Miscellaneous; Effective Date. (a) This resolution shall be and remain
irrepealable until the expiration or termination of the Power Sales Contract in accordance with its
terms.
(b) All previous acts and resolutions in conflict with this resolution or any part hereof
are hereby repealed to the extent of such conflict.
(c) In case any provision in this resolution shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
(d) This resolution is adopted pursuant to the provisions of the laws of the State of
Utah, including particularly the Interlocal Cooperation Act.
(e) This resolution shall take effect immediately upon its adoption and approval.
- 8 -
ADOPTED AND APPROVED this 21 st day of October, 2009.
PAYSON CITY,UTAH
By
Mayor
ATTEST:
City Recorder
[SEAL]
- 9 -
ANNEX A
[Attach Lay Off Power Sales Agreement]
Annex A-1
DRAFT
10/12/09
ABSOLUTE ASSIGNMENT AND
LAY OFF POWER SALES AGREEMENT
This ABSOLUTE ASSIGNMENT AND LAY-OFF POWER SALES AGREEMENT (this
"Agreement') is made and entered into this_day of November, 2009 (the "Effective Date")by
and between Payson City, a Utah municipal corporation ("Payson") and Truckee Donner Public
Utility District, a California public utility district ("TDPUD"). Payson and TDPUD are
sometimes individually referred to herein as a "Party" and collectively as the "Parties". Utah
Associated Municipal Power Systems, a political subdivision of the State of Utah ("UAMPS"),
has joined in this Agreement in order to approve, facilitate and administer the transaction
between the Parties.
RECITALS:
A. UAMPS and Payson have previously entered into that certain Payson
Power Project Power Sales Contract dated as of June 1, 2002 (the "Power Sales
Contract") for the purchase by Payson of power and energy from the Payson Power
Project of UAMPS (the "Project"). Pursuant to the Power Sales Contract, Payson has an
Entitlement Share of 11.7470%, and a Debt Service Share of 12.4247%.
B. Payson has determined that the capacity and energy available to it from its
Entitlement Share exceed its present power supply requirements and desires to transfer its
rights and obligations with respect to a 3.6768% Entitlement Share and a 3.8888% Debt
Service Share under the Power Sales Contract, representing approximately 5,000 kW of
capacity at the Project's maximum net operating capability of 136,000 kW ("PMAX")
and approximately 4,118 kW of capacity at the Project's optimum operating capability of
112,000 kW ("Sweet Spot"), and any and all other privileges, claims, and responsibilities
of every type and description that Payson may have under its Power Sales Contract in
connection therewith(the "Assigned Interest"), to TDPUD by assignment hereunder.
C. TDPUD, subject to the conditions set forth in this Agreement and the
terms and provisions of the New Power Sales Contract (defined below) between it and
UAMPS, desires to accept and assume the Assigned Interest.
D. Pending satisfaction of the conditions to the absolute and unconditional
assignment of the Assigned Interest set forth in Section 3(b) of this Agreement, Payson
desires to lay off and sell to TDPUD, and TDPUD desires to purchase from Payson, all of
the Electric Power, Electric Energy and rights associated with the Assigned Interest upon
the terms and provisions set forth herein and in the New Power Sales Contract.
E. The Board of Directors of UAMPS has by resolution: (i) determined that
the absolute and unconditional assignment of the Assigned Interest pursuant to this
Agreement is in the best interest of UAMPS and the Participants and will not adversely
affect UAMPS, any of the Participants or the security for the payment of the Bonds; and
(ii) approved the lay off sale and purchase of the Electric Power, Electric Energy and
Payson-Abs Assign Lay Off PSA.doc
0865790/JCB/CJ
rights associated with the Assigned Interest pending satisfaction of the conditions to the
absolute and unconditional assignment of the Assigned Interest set forth herein.
Now, THEREFORE, in consideration of the foregoing, the mutual promises, waivers, and
releases contained herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties agree as follows:
Section 1. Definitions and Construction. Initially capitalized terms used and not
otherwise defined in this Agreement have the meanings assigned to them in the Power Sales
Contract. In addition to the terms defined in the preamble to and the recitals of this Agreement,
the following terms shall have the following meanings when used in this Agreement:
"Bond Indenture" means the Trust Indenture dated as of October 1, 2002 as
supplemented and amended through the Second Supplemental Trust Indenture dated as of
March 1, 2003, each between UAMPS and Wells Fargo Bank Northwest, National Association,
as trustee.
"Government Agency" means the United States of America, any state thereof, or any
local jurisdiction, or any political subdivision of any of the foregoing including, but not limited
to courts, administrative bodies, departments, commissions, boards, bureaus, agencies,
municipalities or other instrumentalities.
"New Power Sales Contract" means a Payson Power Project Power Sales Contract
between UAMPS and TDPUD, in substantially the form of the Power Sales Contract, with
certain revisions to reflect TDPUD's acquisition of the Assigned Interest and its status as a
California public utility district.
"Series 2003 Bonds" means the Payson Power Project Revenue Bonds, 2003 Series A,
issued by UAMPS on March 18, 2003 pursuant to the Bond Indenture to finance the Cost of the
Project.
"Time of Transfer" means 12:01 a.m., prevailing Mountain Time, on the day
immediately following the business day on which all of the conditions precedent specified in
Section 3(b) have been satisfied.
Section 2. Effective Date and Term; Contemporaneous Deliveries. (a) This
Agreement shall be effective on and as of the Effective Date and shall remain in full force and
effect until the Time of Transfer.
(b) The following documents shall be delivered contemporaneously with the execution
of this Agreement:
(i) by each Party, an original or certified copy of the resolution of its
governing body authorizing it to execute and deliver this Agreement and to enter into the
transactions contemplated hereby;
- 2 -
(ii) by each Party, a legal opinion to the effect that this Agreement has been
duly authorized, executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms;
(iii) by TDPUD and UAMPS, a fully-executed New Power Sales Contract,
together with such certificates and opinions of TDPUD and its counsel as are
contemplated by the New Power Sales Contract or as UAMPS may reasonably require;
and
(iv) an opinion of nationally recognized bond counsel to UAMPS to the effect
that this Agreement will not by itself adversely affect the tax exempt status of interest on
any of the Bonds.
Section 3. Assignment of Assigned Interest; Conditions Precedent. (a) Effective at
and as of the Time of Transfer, (i) Payson hereby transfers and assigns to TDPUD and its
respective successors and assigns, the Assigned Interest, and (ii) TDPUD hereby acquires and
accepts the transfer and assignment of the Assigned Interest from Payson. It is the intention and
understanding of each of the Parties that the transfer and assignment of the Assigned Interest is
and shall be absolute, unconditional, and irrevocable, and that the Assigned Interest represents
the specified amounts of Payson's Entitlement Share and Debt Service Share to be assigned to
TDPUD as set forth in the Recitals above.
(b) Notwithstanding anything to the contrary herein, the assignment and assumption of
the Assigned Interest as contemplated hereunder will not become effective and the Time of
Transfer will not occur until UAMPS shall have received:
(i) a certificate of each of the Parties to the effect that its representations and
warranties in Section 6 and, with respect to Payson, Section 7 are true and correct as of
the Time of Transfer;
(ii) an opinion of nationally recognized bond counsel to UAMPS to the effect
that (A) all requirements of the Bond Indenture in connection with the assignment and
assumption of the Assigned Interest have been satisfied, and (B) the assignment and
assumption of the Assigned Interest will not by itself adversely affect the tax exempt
status of interest on any of the Bonds; and
(iii) either (A) the written consent of Financial Security Assurance, Inc. to the
assignment and assumption of the Assigned Interest as required by Section 503(a) and (b)
of the Bond Indenture or (B) all documents necessary to evidence the payment or
defeasance of all of the Series 2003 Bonds as provided in Sections 11.01 and 506(a) of
the Bond Indenture.
Section 4. Lay-Off Power Sale and Purchase. (a) In order to enable the Parties to
optimize their respective power supply resources pending satisfaction of the conditions to the
assignment of the Assigned Interest set forth in Section 3(b), Payson hereby lays off and sells to
TDPUD, and TDPUD hereby purchases from Payson, all of the Electric Power, Electric Energy
- 3 -
and rights and obligations associated with the Assigned Interest, upon the following terms and
provisions set forth below.
(b) TDPUD shall enter into the New Power Sales Contract with UAMPS and, subject to
the terms of this Agreement, shall hold all of its rights and obligations with respect to the Electric
Power, Electric Energy and rights and obligations associated with the Assigned Interest pursuant
to the terms thereof.
(c) From the Effective Date until the Time of Transfer and for so long as no default by
TDPUD shall have occurred and be continuing under the New Power Sales Contract, the Parties
and UAMPS agree that:
(i) TDPUD shall be deemed to be a Participant in the Project with an
Entitlement Share of 3.6768% and a Debt Service Share of 3.8888% for all purposes of
the Power Sales Contracts, including the right to appoint a Participant's Representative to
the Project Management Committee, provided that TDPUD shall have no option or
obligation to acquire additional Entitlement Shares pursuant to Sections 17(c) and 22 of
the Power Sales Contracts;
(ii) Payson's Entitlement Share and Debt Service Share shall be deemed to be
reduced by 3.6768% and 3.8888%, respectively, for all purposes of the Power Sales
Contracts, except that Payson's Entitlement Share and Debt Service Share shall not be
deemed to be so reduced for purposes of the option or obligation of Participants to
acquire additional Entitlement Shares pursuant to Sections 17(c) and 22 of the Power
Sales Contracts;
(iii) UAMPS shall bill TDPUD directly for Operation and Maintenance Costs
and Debt Service Costs allocable to an Entitlement Share of 3.6768% and a Debt Service
Share of 3.8888%, together with all Wheeling Costs payable by TDPUD, as provided in
Section 7 of the New Power Sales Contract; and
(iv) UAMPS shall reduce its billings to Payson for Operation and Maintenance
Costs and Debt Service Costs by amounts equal to the amounts billed to TDPUD
pursuant to clause (iii) above.
(d) Upon the occurrence of any default by TDPUD under Section 20 of the New Power
Sales Contract prior to the Time of Transfer, the Parties and UAMPS agree that:
(i) UAMPS shall give immediate notice specifying such default to TDPUD
and Payson and, if such default is a payment default pursuant to Section 20(a) of the New
Power Sales Contract, shall include in such notice a demand upon Payson to pay
immediately the amount in default;
(ii) as of the date of such default and notwithstanding the provisions of
Sections 21(b) and 22 of the New Power Sales Contract, all rights of TDPUD under the
New Power Sales Contract shall be terminated and TDPUD shall no longer be deemed to
- 4 -
be a Participant in the Project, provided that TDPUD shall remain liable to UAMPS
under the New Power Sales Contract for all amounts in default, together with interest
thereon;
(iii) from and after the date of such default and notwithstanding the provisions
of Sections 21(b) and 22 of the New Power Sales Contract, the deemed reductions in
Payson's Entitlement Share and Debt Service Share pursuant to clause (c)(ii) above shall
no longer be in effect; and
(iv) Payson shall pay immediately to UAMPS, but in any event not more than
two business days after receipt of UAMPS' notice of default pursuant to clause (d)(i)
above, any unpaid amount resulting from a default by TDPUD under the New Power
Sales Contract and shall have the right to file suit against TDPUD for the recovery of the
amount in default, together with interest and damages.
(e) UAMPS hereby approves and consents to the terms and provisions of this
Agreement. UAMPS agrees that, in the event Additional Bonds are issued pursuant to the Bond
Indenture during the term of this Agreement, it will use commercially reasonable efforts to
subject such Additional Bonds to the rights of the Parties to complete the absolute assignment of
the Assigned Interest pursuant to the terms of this Agreement.
Section S. Effect of Assignment; Final Billing. (a) Upon the occurrence of the Time
of Transfer (i) all right, title, interest and Entitlement Share of Payson in, under and to its Power
Sales Contract with respect to the Assigned Interest shall terminate, (ii) Payson's Entitlement
Share and Debt Service Share under the Power Sales Contract shall be reduced to 8.0705% and
8.5361%, respectively, (iii) TDPUD shall own the Assigned Interest and shall have and hold all
rights and obligations associated therewith, all upon and subject to the terms and provisions of
the New Power Sales Contract, and (iv) to the extent permitted by law, TDPUD shall indemnify
and hold harmless Payson against all obligations or liabilities arising with respect to the
Assigned Interest from and after the Time of Transfer.
(b) Payson shall remain obligated to UAMPS with respect to the Assigned Interest
under the provisions of the Power Sales Contract up to the Time of Transfer. All costs, expenses
and obligations accruing to Payson with respect to the Assigned Interest up to the Time of
Transfer (and not otherwise billed to and collected from TDPUD pursuant to Section 4 above
and the New Power Sales Contract) shall be included in the next regular billing statement
submitted to Payson by UAMPS pursuant to the provisions of Section 7 of the Power Sales
Contract at the time and in accordance with UAMPS' regular monthly billing cycle for the
Project. The rights and obligations of Payson with respect to such billing statement in
accordance with the Power Sales Contract shall survive the Time of Transfer. To the extent
permitted by law, Payson shall indemnify and hold harmless TDPUD against all obligations and
liabilities arising with respect to the Assigned Interest up until the Effective Date.
Section 6. Representations, Warranties and Agreements of the Parties. As a material
inducement to entering into this Agreement, each Party, with respect to itself, hereby represents
- 5 -
and warrants to and agrees with each other Party as of the Effective Date and as of the Time of
Transfer as follows:
(a) it is duly organized and validly existing under the laws of the state in
which it is organized, and has all requisite power and authority, corporate or otherwise, to
enter into and to perform its obligations hereunder and to carry out the terms and
conditions hereof and the transactions contemplated hereby;
(b) there is no litigation, action, suit, proceeding or investigation pending or,
to the best of such Party's knowledge, threatened, before or by any Government Agency,
which could reasonably be expected to materially and adversely affect the performance
by such Party of its obligations hereunder, or that questions the validity, binding effect or
enforceability of this Agreement, any action taken or to be taken by such Party pursuant
to this Agreement or any of the transactions contemplated by this Agreement;
(c) the execution, delivery and performance of this Agreement by such Party
have been duly authorized by all necessary action on the part of such Party and do not
require any approval or consent of any holder (or any trustee for any holder) of any
indebtedness or other obligation of such Party, except for such approvals and consents as
have been obtained;
(d) this Agreement has been duly executed and delivered on its behalf by a
duly authorized officer of such Party and constitutes the legal, valid and binding
obligation of such Party, enforceable against it in accordance with its terms, as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally and by general
principles of equity;
(e) the execution, delivery and performance of this Agreement by such Party
shall not violate any provision of any law, rule, regulation, order, writ,judgment, decree
or other legal or regulatory determination applicable to it;
(f) the execution, delivery and performance by such Party of this Agreement,
and the consummation of the transactions contemplated hereby and thereby, including the
incurrence by such Party of its financial obligations hereunder, shall not result in any
violation of any term of any material contract or agreement applicable to it, or any of its
charter or bylaws or of any license, permit, franchise, judgment, writ, injunction or
regulation, decree, order, charter, law, ordinance, rule or regulation applicable to it or any
of its properties, or to any obligations incurred by it or by which it or any of its properties
or obligations are bound or affected, or of any determination or award of any arbitrator
applicable to it, and shall not conflict with, or cause a breach of, or default under, any
such term or result in the creation of any lien upon any of its properties or assets;
(g) to the best of the knowledge and belief of such Party, no consent,
approval, order or authorization of, or registration, declaration or filing with, or giving of
notice to, obtaining of any license or permit from, or taking of any other action with
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respect to, any Government Agency is required in connection with the valid
authorization, execution, delivery and performance by such Party of this Agreement or
the consummation of any of the transactions contemplated hereby, except for such
consents, approvals and similar requirements as shall have been previously obtained; and
(h) it hereby waives compliance by the other Party with all notices required to
be given by such Party and any other actions required to be taken by such Party under
Section 17(c) of the Power Sales Contract in connection with the assignment and transfer
of the Assigned Interest.
Section 7. Additional Representations, Warranties and Agreements of Payson. As a
material inducement to the execution and performance of this Agreement by UAMPS and the
acceptance by TDPUD of the Assigned Interest, Payson hereby represents and warrants and
agrees with UAMPS and TDPUD as of the Effective Date as follows:
(a) it has made no assignment of any of the Assigned Interest to any person or
entity except as set forth herein;
(b) it has the unqualified right to sell, assign and transfer the Assigned
Interest, subject only to the provisions of the Power Sales Contract, and has done no act,
nor failed to do any act, which might prevent TDPUD from exercising (to the extent of
the Assigned Interest), on and after the Time of Transfer, any of the rights, powers and
privileges conferred upon Payson by the Power Sales Contract;
(c) it has, and at the Time of Transfer will transfer to TDPUD, good title to
the Assigned Interest, free and clear of any liens, charges or encumbrances; and
(d) the agreements, covenants and obligations of TDPUD contained in this
Agreement, including its assumption of the Assigned Interest, and payment by TDPUD
as set forth in Section 9, constitute full and complete consideration and fair value for the
transfer and assignment of the Assigned Interest.
Section 8. Further Assurances. The Parties agree to execute, to cause to be
acknowledged and to deliver to one another and to any other parties such other and further
instruments, documents, agreements, and certificates, and to perform such other and further acts
as may be required to accomplish the transactions contemplated by this Agreement.
Section 9. Renewal and Replacement Fund Deposit; Costs of Assignment. (a)
Pursuant to Section 18 of the Power Sales Contracts, UAMPS has previously established a
Reserve and Contingency Fund with respect to the Project, and pursuant to the Annual Budgets
for the Project has billed to and collected from Payson amounts which are now on deposit in the
Reserve and Contingency Fund. TDPUD has previously transferred to UAMPS for deposit into
the Reserve and Contingency Fund $164,287. Promptly upon the Effective Date, UAMPS
agrees to (i) deposit the transferred amount into the Reserve and Contingency Fund and (ii)
release an equal amount from the Reserve and Contingency Fund and pay or credit the same to
Payson. Such amount shall be forfeited by TDPUD in the event of any default by it hereunder,
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including any failure by TDPUD to observe or perform any covenant, agreement or obligation
hereunder, any misrepresentation made by TDPUD hereunder or any default by TDPUD under
the New Power Sales Contract.
(b) Promptly after the Effective Date, UAMPS shall provide a statement to TDPUD
setting forth all costs and expenses incurred by UAMPS in connection with this Agreement, the
New Power Sales Contract and the transactions contemplated hereby and thereby. TDPUD
hereby agrees that it shall pay all amounts set forth in such statement within 30 days of receipt of
such statement.
(c) Promptly after the Time of Transfer, UAMPS shall provide a statement to TDPUD
setting forth all costs and expenses incurred by UAMPS in connection with the assignment of the
Assigned Interest. TDPUD hereby agrees that it shall pay all amounts set forth in such statement
within 30 days of receipt of such statement.
Section 10. Entire Agreement. This Agreement constitutes the entire understanding and
agreement between the Parties relating to the assignment of the Assigned Interest. This
Agreement may be modified only by written amendment signed by all the Parties hereto or their
successors in interest.
Section 11. Severability. The invalidity or unenforceability of any particular provision
of this Agreement shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid provisions were omitted.
Section 12. Governing Law; Venue. This Agreement shall be governed by the laws of
the State of Utah; provided that the power and authority of TDPUD to enter into and perform
this Agreement shall be determined under the laws of the State of California. Any litigation
among the Parties arising out of or related to this Agreement will be conducted exclusively in the
Third District Court of the State of Utah in Salt Lake County, Utah, and each Party consents to
the venue of, and jurisdiction by, such court.
Section 13. Counterparts and Facsimile Signatures. This Agreement may be executed
in one or more counterparts with the same effect as if all of the signatures on such counterparts
appeared on one document. All executed counterparts shall together constitute one and the same
agreement. Facsimile signatures shall be considered as original signatures.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
PAYSON CITY,UTAH
By
Burtis Bills, Mayor
[SEAL]
Attest:
Jeanette Curtis, City Recorder
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
J. Ron Heming, President
[SEAL]
Attest and Countersign:
Michael D. Holley, Clerk of the Board
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UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS
By
Jack Taylor, Chair
[SEAL]
Attest:
Jackie Coombs, Assistant Secretary
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After the conduct of other business not pertinent to the foregoing, it was moved and
carried that the Governing Body adjourn.
PAYSON CITY,UTAH
By
Mayor
ATTEST:
By
City Recorder
[SEAL]
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STATE OF UTAH )
)
COUNTY OF UTAH )
I, the undersigned, do hereby certify that I am the duly qualified and acting City Recorder
of Payson City, Utah (the "City"). I further certify that the above and foregoing constitutes a
true and correct copy of the minutes of a regular public meeting of the Governing Body (the
"Governing Body") of the City, held on October 21, 2009, including a resolution adopted at such
meeting, together with the documents annexed thereto, as said minutes, resolution and
documents are recorded in the regular official book of minutes of the proceedings of the
Governing Body kept in the office of the City Recorder, that said proceedings were duly had and
taken as therein shown, that the meeting therein shown was in all respects called, held and
conducted in accordance with law, and that the persons therein named were present at said
meeting, as therein shown.
I further certify that I caused a true and correct copy of the above-referenced resolution
(including the documents annexed thereto) to be filed in the office of the City Recorder for
examination by any interested person during the regular business hours of the office of the City
Recorder.
IN WITNESS WHEREOF, I have hereunto subscribed my official signature and impressed or
imprinted hereon the official seal of the City, this 21 st day of October, 2009.
City Recorder
Payson City, Utah
[SEAL]
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DRAFT
CERTIFICATE OF PAYSON CITY,UTAH
DATED: ,2009
STATE OF UTAH )
)
COUNTY OF WASHINGTON )
The undersigned hereby certify that they are the Mayor and City Recorder of Payson City,
Utah (the "City"), a member of Utah Associated Municipal Power Systems ("UAMPS"), and
that as such they are authorized to execute this Certificate on behalf of the City and hereby certify
as follows:
1. This Certificate has been executed in connection with the Lay Off Power Sales
Agreement, dated as of , 2009 (the "Lay Off Power Sales Agreement"), among the
City, UAMPS and Truckee Donner Public Utility District. Capitalized terms used and not
defined herein have the meanings assigned to them in the Lay Off Power Sales Agreement or the
Payson Power Project Power Sales Contract, dated as of June 1, 2002 (the "Power Sales
Contract"),between the City and UAMPS.
2. The Participant is a political subdivision of the State of Utah and is governed by a
City Council (the "Governing Body") composed of six (6) members.
3. Attached hereto as Exhibit A is a true, complete and correct copy of excerpts from
the minutes of a regular public meeting of the Governing Body held on October 21, 2009,
including a resolution adopted at such meeting authorizing the execution and delivery of the Lay
Off Power Sales Agreement and related matters (the "Resolution"). The Resolution was duly
adopted and is in full force and effect and has not been amended, modified, repealed or
supplemented.
4. The names of the Mayor and the members of the Governing Body, the City
Recorder and City Attorney, together with the dates of commencement and expiration of the term
of office of the Mayor and the members of the Governing Body, are as follows:
DATE OF
COMMENCEMENT OR DATE OF EXPIRATION
NAME OFFICE CURRENT TERM OF CURRENT TERM
Burtis Bills Mayor
Brad Daley Councilmember
Jolynn Ford Councilmember
Bret Grotegut Councilmember
Payson Certificate 2524801 02 03.doc
0865790/JCB/CJ
DATE OF
COMMENCEMENT OR DATE OF EXPIRATION
NAME OFFICE CURRENT TERM OF CURRENT TERM
Kim Hancock Councilmember
Scott Phillips Councilmember
Jeanette Curtis City Recorder
David Tuckett City Attorney
5. In accordance with all open meeting requirements of Utah law applicable to the
City, the City Recorder of the City gave public notice of the meeting of the Governing Body at
which the Resolution was adopted, as well as any required notice of the Governing Body's
annual meeting schedule.
6. (a) No referendum petition was filed with the City or any of its officers seeking to
refer the Resolution to the electors of the City in accordance with the provisions of state law; and
(b) no litigation has been instituted, is pending or has been threatened to require a referendum
election on the Resolution.
7. Ron J. Crump has been duly appointed by the Governing Body as the representative
of the City to DAMPS.
8. There is no action, suit, proceeding, inquiry or investigation by or before any court,
governmental agency, public board or administrative body pending or, to the best of our
knowledge threatened, against the City which (a) challenges, contests or questions the due and
regular adoption of the Resolution or the validity thereof or affects or seeks to prohibit, restrain
or enjoin the City from complying with the obligations contained in the Lay Off Power Sales
Agreement or (b) in any way affects or questions the validity or enforceability of the Lay Off
Power Sales Agreement, nor, to the best of our knowledge, is there any basis therefore.
9. In connection with the execution of the Power Sales Contract, the Mayor and City
Recorder of the City executed and delivered a certificate dated October 10, 2002 (the "Power
Sales Contract Certificate"). The undersigned hereby reaffirm the statements made in the Power
Sales Contract Certificate as though made on the date hereof in the form they were rendered in
the Power Sales Contract Certificate, except as modified hereby, and subject to any changes
between the date of the Power Sales Contract Certificate and the date hereof in (a) the City's
resolution or ordinance establishing electric rates and charges and (b) the obligations of the City
payable from the revenues of its electric system.
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DATED as of the day and year first above written.
PAYSON CITY,UTAH
By
Mayor
By
City Recorder
[Seal]
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EXHIBIT A
[Attach copy of Extract of Proceedings of October 21, 2009,
including Resolution]
A-1
DRAFT
[LETTERHEAD OF COUNSEL TO PAYSON]
[TO BE DATED THE DATE OF CLOSING]
Utah Associated Municipal Power Systems
2825 East Cottonwood Parkway, Suite 200
Salt Lake City, Utah 84121
Ladies and Gentlemen:
I have acted as counsel to Payson City, Utah ("Payson') in connection with its approval,
execution and delivery of the Absolute Assignment and Lay Off Power Sales Agreement, dated
as of , 2009 (the "Lay Off Power Sales Agreement"), among Payson, Utah
Associated Municipal Power Systems ("UAMPS") and Truckee Donner Public Utility District
("TDPUD"). Capitalized terms used and not defined herein have the meanings assigned to such
terms in the Lay Off Power Sales Agreement and the Payson Power Project Power Sales
Contract, dated as of June 1, 2002 (the "Power Sales Contract"),between UAMPS and Payson.
Upon the Effective Date of the Lay Off Power Sales Agreement and subject to the terms
and provisions thereof, Payson shall lay off and sell to TDPUD, and TDPUD shall purchase from
Payson, the Electric Power, Electric Energy and rights and obligations associated with the
Assigned Interest on a recourse basis. TDPUD shall hold all of its rights and obligations with
respect to the Assigned Interest pursuant to the terms of the New Power Sales Contract, subject,
however, to the terms and provisions of the Lay Off Power Sales Agreement. Until the Time of
Transfer, TDPUD shall be deemed a Participant in the Project with an Entitlement Share of
3.6768% and a Debt Service Share of 3.8888%, and Payson's Entitlement Share and Debt
Service Share shall be deemed reduced by such amounts, for all purposes of the Power Sales
Contracts, except for Sections 17(c) and 22 thereof. Payson shall remain obligated with respect
to the Assigned Interest under the terms of the Power Sales Contract up until the Time of
Transfer. Until the Time of Transfer, as provided in the Lay Off Power Sales Agreement, upon
any default by TDPUD under its Payson Power Project Power Sales Contract, and
notwithstanding Sections 21(b) and 22 thereof, Payson's Entitlement Share and Debt Service
Share shall no longer be deemed reduced, TDPUD shall no longer be deemed a Participant in the
Project and all of its rights under its Payson Power Project Power Sales Contract shall terminate
and Payson shall immediately pay to UAMPS any amounts in respect of which TDPUD is in
default, however, TDPUD shall remain be liable for any such amounts and such other amounts as
specified in the Lay Off Power Sales Agreement. To the extent permitted by law, Payson shall
indemnify and hold harmless TDPUD against all obligations and liabilities arising with respect to
the Assigned Interest up until the Effective Date of the Lay Off Power Sales Agreement. Upon
the satisfaction of the conditions specified in the Lay Off Power Sales Agreement, the Assigned
Interest shall absolutely and unconditionally transfer to TDPUD.
Payson Atty Opin 2528358 02 03.doc
0865790/0
As counsel to Payson and in connection with the opinions set forth below, I have
examined or am otherwise familiar with (a) those documents relating to the existence,
organization and operation of Payson, (b) all resolutions and proceedings of Payson relating to
the due authorization, execution and delivery by Payson of the Lay Off Power Sales Agreement,
(c) an executed counterpart of the Lay Off Power Sales Agreement, and (d) such other
documents, information, facts and matters of law as are necessary for me to render the opinions
contained herein.
Based upon the foregoing I am of the opinion that:
1. Payson is a political subdivision of the State of Utah (the "State"), duly created,
organized and existing under the laws of the State.
2. Payson has full legal right, power and authority to enter into the Lay Off Power
Sales Agreement and to carry out and consummate all of the transactions contemplated thereby,
and Payson has complied with the provisions of applicable law which would be a condition
precedent to its entering into the Lay Off Power Sales Agreement or carrying out and
consummating such transactions.
3. No approval, consent or authorization of any governmental or public agency,
authority, commission or person of the Lay Off Power Sales Agreement or of Payson's
participation in the transactions contemplated thereby, is required for the execution and delivery
by Payson of the Lay Off Power Sales Agreement, or the performance by Payson of its
obligations thereunder.
4. By resolution duly adopted on October 21, 2009, the Lay Off Power Sales
Agreement has been duly authorized, executed and delivered by Payson and constitutes the legal,
valid and binding obligation of Payson enforceable in accordance with its terms, except as
enforceability may be limited by any applicable bankruptcy, insolvency, moratorium,
reorganization or other laws affecting creditors' rights generally or usual equity principles in the
event equitable remedies should be sought.
5. Payson has, with respect to all meetings held in connection with the authorization of
the Lay Off Power Sales Agreement, been in compliance with all open and public meeting laws
of the State.
6. The authorization, execution and delivery of the Lay Off Power Sales Agreement
and compliance with the provisions thereof will not conflict with or constitute a breach of, or
default under, any instrument relating to the organization, existence or operation of Payson, any
commitment, agreement, indenture, bond, note, resolution or other instrument to which Payson is
a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance,
judgment, order or decree to which Payson (or any of its officers in their respective capacities as
such) is subject or any provision of the laws of the State relating to Payson and its affairs.
7. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or
before any court, public board or body, pending or, to my knowledge, threatened against or
- 2 -
affecting Payson or any entity affiliated with Payson or any of its officers in their respective
capacities as such (nor to the best of my knowledge is there any basis therefor), which challenges
the creation, organization or existence of Payson or the titles of its officers to their respective
offices or which questions the powers of Payson referred to in paragraph 2 above or the validity
of the proceedings taken by Payson in connection with the authorization, execution or delivery of
the Lay Off Power Sales Agreement, or wherein any unfavorable decision, ruling or finding
would adversely affect the transactions contemplated by the Lay Off Power Sales Agreement or
which, in any way, would adversely affect the validity or enforceability of the Lay Off Power
Sales Agreement.
8. In connection with the execution and delivery of the Lay Off Power Sales
Agreement, I have reviewed the legal opinion, dated October 10, 2002 (the "Prior Opinion"),
rendered by me for Payson with respect to certain legal matters. I hereby reaffirm the Prior
Opinion, as though it was dated the date hereof, in the form it was so rendered on October 10,
2002.
Chapman and Cutler LLP and VanCott, Bagley, Cornwall & McCarthy are each entitled
to rely on the opinions expressed above and on the Prior Opinion with the same effect as if such
opinions were addressed to each of them.
Respectfully submitted,
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