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price was to include a 2 percent, or $2,255,000, premium over the
stated aggregate principal amount of such bonds.
On December 5, 1984, Mercer County and petitioner entered
into an agreement entitled “LEASE AND SUBLEASE”, which was
effective as of November 1, 1984 (1984 lease and sublease).
Pursuant to the 1984 lease and sublease, petitioner agreed to
lease the AVS unit II pollution control facilities to Mercer
County, and Mercer County agreed to pay $112,750,000 to peti-
tioner as rent at the beginning of the term of that lease.
Pursuant to the 1984 lease and sublease, Mercer County agreed to
sublease the AVS unit II pollution control facilities to peti-
tioner, and petitioner agreed to pay to Mercer County as rent “an
amount [of money] sufficient to pay, when due, the principal of
and premium, if any, and interest on the [1984 tax-exempt] Bonds
in funds available at such times to make all payments when due on
the Bonds.” (We shall refer to the amounts that petitioner was
obligated to pay to Mercer County under the 1984 lease and
sublease as the 1984 sublease rent.) Petitioner agreed to, and
did, issue a promissory note (Basin Electric 1984 note) to
evidence its obligation to Mercer County to pay the 1984 sublease
rent.
At the time petitioner and Mercer County entered into the
1984 lease and sublease, petitioner intended to transfer by sale
or otherwise its interest in the AVS unit II to one or more
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Last modified: May 25, 2011