AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 1, 2002
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
-------------
WESTAR ENERGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
Kansas 4931 48-0290150
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Identification No.)
Organization) Code Number)
818 South Kansas Avenue
Topeka, Kansas 66612
(785) 575-6300
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive office)
-------------
Larry D. Irick, Esq.
Vice President and Corporate Secretary
Westar Energy, Inc.
818 South Kansas Avenue
Topeka, Kansas 66612
(785) 575-6300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Jonathan I. Mark, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
(212) 701-3000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is a compliance
with General Instruction G, check the following box. [_] ____________
If this form is filed to register additional securities for an offering
under Rule 462(b) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]____________
If this form is a post-effective amendment filed under the Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]____________
-------------
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Each Class of Amount to be Offering Price Aggregate Registration
Securities to be Registered Registered Per Unit Offering Price Fee(1)
- -----------------------------------------------------------------------------------------------------------
First Mortgage Bonds, 7 7/8% Series Due 2007 $ 365,000,000 100% $ 365,000,000 $ 33,580
- -----------------------------------------------------------------------------------------------------------
Senior Notes, 9 3/4% Series Due 2007........ $ 400,000,000 100% $ 400,000,000 $ 36,800
================================================================================
(1)Calculated in compliance with Rule 457(f) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON THE DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
================================================================================
The information in this prospectus is not complete and may be changed. We may
not consummate the exchange offers until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these exchange securities and is not soliciting an offer to
acquire these exchange securities in any state where the offer or sale is not
permitted.
PROSPECTUS
[LOGO] Westar Energy/TM/
$765,000,000
Westar Energy, Inc.
Exchange Offer for
$365,000,000 First Mortgage Bonds, 7 7/8% Series Due 2007
$400,000,000 Senior Notes, 9 3/4% Series Due 2007
-------------
... The exchange offers will expire at 5:00 p.m., New York City time, on
, 2002, unless extended.
... The exchange is subject to certain customary conditions, which may be
waived by us.
... All outstanding $365,000,000 First Mortgage Bonds, 7 7/8% Series Due 2007,
and $400,000,000 Senior Notes, 9 3/4% Series Due 2007, that are validly
tendered and not withdrawn will be exchanged.
... At any time prior to the expiration of these exchange offers, you may
withdraw your tender of any outstanding bonds or notes.
... The exchange of the outstanding bonds or outstanding notes will not be a
taxable exchange for U.S. federal income tax purposes.
... We will not receive any cash proceeds from the exchange offers.
... The terms of the exchange bonds and notes are substantially identical to
the terms of outstanding bonds and notes except for certain transfer
restrictions and registration rights relating to the outstanding bonds and
notes.
... Any outstanding bonds or notes not validly tendered will remain subject to
existing transfer restrictions.
-------------
See "Risk Factors" beginning on page 8 for a discussion of certain factors
that should be considered by holders before tendering their outstanding
securities in the exchange offers.
We refer to the outstanding bonds and the outstanding notes together as the
"outstanding securities." We refer to the exchange bonds and the exchange notes
as the "exchange securities." We refer to the outstanding bonds and exchange
bonds together as the bonds and the outstanding notes and exchange notes
together as the notes (unless the context requires otherwise).
There has not previously been any public market for the exchange securities
that will be issued in the exchange offers. We do not intend to list the
exchange securities on any national stock exchange or on the Nasdaq National
Market. There can be no assurance that an active market for such exchange
securities will develop.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of either the bonds or the notes to be
issued in the exchange offers or determined that this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
[ ], 2002
You should rely only on the information contained in this prospectus, and
the other information incorporated herein by reference. We have not authorized
anyone to provide you with different information. We are not making an offer of
these exchange securities in any state where the offer is not permitted. You
should not assume that the information contained in this prospectus or
incorporated by reference herein is accurate as of any date other than the date
on the front cover of this prospectus or the date of the documents incorporated
by reference herein. Our business, financial condition, results of operations
and prospects may have changed since that date.
-------------
TABLE OF CONTENTS
Page
----
Forward-Looking Statements....................................... ii
Prospectus Summary............................................... 1
Risk Factors..................................................... 8
Use of Proceeds.................................................. 11
The Exchange Offers.............................................. 12
Description of Bonds............................................. 22
Description of Notes............................................. 28
Book-Entry System................................................ 61
Certain U.S. Federal Income Tax Considerations................... 63
Plan of Distribution............................................. 67
Legal Matters.................................................... 68
Independent Accountants.......................................... 68
Where You Can Find More Information.............................. 68
Incorporation of Certain Documents by Reference.................. 68
-------------
These exchange offers are not being made to, nor will we accept surrenders
for exchange from, holders of outstanding securities in any jurisdiction in
which the exchange offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
i
FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934, or the "Exchange Act." All statements other than statements of
historical fact included or incorporated by reference herein, for example,
regarding the prospects for the electric industry or our prospects, plans,
financial position and business strategy, may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995 has
established that these statements qualify for safe harbors from liability.
Forward-looking statements may include words like we "believe," "anticipate,"
"expect," "plan," "will," "may," "could," "estimate," "intend" or words of
similar meaning. Forward-looking statements describe our future plans,
objectives, expectations or goals. Such statements address future events and
conditions concerning:
. capital expenditures,
. earnings,
. liquidity and capital resources,
. litigation,
. possible corporate restructurings (including the separation of our
regulated and unregulated businesses), mergers, acquisitions and
dispositions (including our intended sale of our ownership interests in
ONEOK),
. compliance with debt and other restrictive covenants,
. interest and dividends,
. Protection One, Inc.'s financial condition and its impact on our
consolidated results,
. impairment charges that have been expensed during the first quarter of
2002 or that may be expensed hereafter,
. environmental matters,
. nuclear operations,
. ability to enter new markets successfully and capitalize on growth
opportunities in non-regulated businesses,
. events in foreign markets in which investments have been made and
. the overall economy of our service area.
What happens in each case could vary materially from what we expect because
of such things as:
. electric utility deregulation,
. ongoing municipal, state and federal activities, such as the Wichita
municipalization effort,
. future economic conditions,
. changes in accounting requirements and other accounting matters,
. changing weather,
. rate and other regulatory matters, including the impact of (i) the
Kansas Corporation Commission's order to reduce our rates issued on July
25, 2001, (ii) the Kansas Corporation Commission's order issued July 20,
2001 and related proceedings with respect to the proposed separation of
our electric utility businesses from Westar Industries, Inc. and (iii)
the Kansas Corporation Commission's recent comments and orders relating
to our refinancing activities,
ii
. the impact on our service territory of the September 11, 2001 terrorist
attacks,
. the impact of Enron Corporation's bankruptcy on the market for trading
wholesale electricity,
. our liquidity, financial position and results of operations,
. political, legislative and regulatory developments,
. amendments or revisions to our current business and financial plans,
. the outcome of litigation related to the agreement concerning the
acquisition of our electric operations by Public Service Company of New
Mexico, which agreement has been terminated,
. regulatory, legislative and judicial actions,
. regulated and competitive markets and
. other circumstances affecting anticipated operations, sales and costs.
These lists do not purport to be all-inclusive because it is not possible to
identify or predict all possible factors.
iii
PROSPECTUS SUMMARY
In June 2002, we changed our corporate name from Western Resources, Inc. to
Westar Energy, Inc. For information with respect to us, you should carefully
read the information set forth below and the information incorporated by
reference herein as set forth under "Incorporation of Certain Documents by
Reference". The incorporated documents include our Annual Report on Form 10-K/A
for the year ended December 31, 2001 and our Quarterly Report on Form 10-Q for
the quarter ended March 31, 2002 (which reports include information with
respect to risk factors, financial data and financial statements) and our
Current Reports on Forms 8-K. Unless the context requires otherwise, the terms
"Westar Energy," "Company," "we," "our," "ours" and "us" refer to Westar
Energy, Inc. and its subsidiaries. However, in the sections captioned
"Description of Bonds," "Description of Notes" and related matters, these terms
refer solely to Westar Energy, Inc. and not to any of Westar Energy, Inc.'s
subsidiaries.
Our Company
We are a consumer services company, which operates the largest electric
utility in Kansas under the name "Westar Energy." This utility provides
electric transmission and distribution services to approximately 640,000
customers in Kansas and owns 5,947 megawatts, or "MW," of net generation
capacity. In 2001, the utility sold over 25.7 million megawatt hours, or "MWh,"
of electricity and had approximately $1.8 billion in revenues, almost 81% of
our total consolidated revenues.
Westar Industries, Inc., or "Westar Industries," our wholly owned
subsidiary, has interests in monitored security businesses, ONEOK, Inc., or
"ONEOK," and international generation projects. Westar Industries provides
monitored security services to approximately 1.2 million customers in North
America and continental Europe through its interests in Protection One, Inc.,
or "Protection One," and Protection One Europe. ONEOK, in which Westar
Industries has an approximate 45% ownership interest, provides natural gas
transmission and distribution services to approximately 1.4 million customers
in Oklahoma and Kansas. We have notified ONEOK of our intention to dispose of
our entire ownership interest in ONEOK.
1
The Exchange Offers
For a more complete description of the terms of the exchange offers, see
"Exchange Offers."
Registration Rights......... You are entitled to exchange your outstanding
securities for freely tradeable exchange
securities with substantially identical terms to
the outstanding securities. The exchange offers
are intended to satisfy your exchange rights.
After the exchange offers are complete, you will
no longer be entitled to any exchange or
registration rights with respect to your
outstanding securities. Accordingly, if you do
not exchange your outstanding securities, you
will not be able to reoffer, resell or otherwise
dispose of your outstanding securities, unless
you comply with the registration and prospectus
delivery requirements of the Securities Act, or
there is an exemption available.
The Bonds Exchange Offer.... We are offering to exchange $1,000 principal
amount of our First Mortgage Bonds, 7 7/8% Series
Due 2007, which have been registered under the
Securities Act, for $1,000 principal amount of
our outstanding First Mortgage Bonds, 7 7/8%
Series Due 2007, which were issued in a private
offering on May 7, 2002. As of the date of this
prospectus, there are $365.0 million principal
amount of outstanding bonds. We will issue
exchange bonds promptly after the expiration of
the exchange offer.
The Notes Exchange Offer.... We are offering to exchange $1,000 principal
amount of our Senior Notes, 9 3/4% Series Due
2007, which have been registered under the
Securities Act, for $1,000 principal amount of
our Senior Notes, 9 3/4% Series Due 2007, which
were issued in a private offering on May 7, 2002.
As of the date of this prospectus, there are $400
million principal amount of outstanding notes. We
will issue exchange notes promptly after the
expiration of the exchange offer.
Resales..................... We believe that the exchange securities issued in
the exchange offers may be offered for resale,
resold or otherwise transferred by you without
compliance with the registration and prospectus
delivery requirements of the Securities Act,
provided that:
. you are acquiring the exchange securities in
the ordinary course of your business;
. you are not participating, do not intend to
participate and have no arrangement or
understanding with any person to participate
in a distribution of the exchange securities;
and
. you are not an "affiliate" of ours.
If you do not meet the above criteria, you will
have to comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any reoffer,
resale or other disposition of your exchange
securities.
2
Each broker or dealer that receives exchange
securities for its own account in exchange for
outstanding securities that were acquired as a
result of market-making or other trading
activities must acknowledge that it will deliver
this prospectus in connection with any sale of
exchange securities.
Expiration Date............. 5:00 p.m., New York City time, on , 2002,
unless we extend the expiration date.
Conditions to the Exchange
Offers.................... The exchange offers are subject to certain
customary conditions, which may be waived by us.
The exchange offers are not conditioned upon any
minimum principal amount of outstanding
securities being tendered.
Procedures for Tendering
Outstanding Securities.... If you wish to tender outstanding securities, you
must complete, sign and date the letter of
transmittal, or a facsimile of it, in accordance
with our instructions and transmit the letter of
transmittal, together with your outstanding
securities to be exchanged and any other required
documentation, to the appropriate exchange agent
(see "Exchange Agents" below), at its address set
forth in the letter of transmittal to arrive by
5:00 p.m., New York City time, on the expiration
date. See "The Exchange Offers--Procedures for
Tendering Outstanding Securities." By executing
the letter of transmittal, you will represent to
us that you are acquiring the exchange securities
in the ordinary course of your business, that you
are not participating, do not intend to
participate and have no arrangement or
understanding with any person to participate in
the distribution of exchange securities and that
you are not an "affiliate" of ours. See "The
Exchange Offers--Procedures for Tendering
Outstanding Securities."
Special Procedures for
Beneficial Holders........ If you are the beneficial holder of outstanding
securities that are registered in the name of
your broker, dealer, commercial bank, trust
company or other nominee, and you wish to tender
in the exchange offers, you should contact the
person in whose name your outstanding securities
are registered promptly and instruct such person
to tender on your behalf. See "The Exchange
Offers--Procedures for Tendering Outstanding
Securities."
Guaranteed Delivery
Procedures................ If you wish to tender your outstanding securities
and you cannot deliver such outstanding
securities, the letter of transmittal or any
other required documents to the appropriate
exchange agent before the expiration date, you
may tender your outstanding securities according
to the guaranteed delivery procedures set forth
in "The Exchange Offers--Guaranteed Delivery
Procedures."
Withdrawal Rights........... Tenders may be withdrawn at any time before 5:00
p.m., New York City time, on the expiration date.
3
Acceptance of Outstanding
Securities and Delivery of
Exchange Securities....... Subject to certain conditions, we will accept for
exchange any and all outstanding securities which
are properly tendered in the exchange offers
before 5:00 p.m., New York City time, on the
expiration date. The exchange securities will be
delivered promptly after the expiration date. See
"The Exchange Offers--Terms of the Exchange
Offers."
Certain Federal Income Tax
Considerations............ The exchange of outstanding securities for
exchange securities will not be a taxable event
for federal income tax purposes. You will not
recognize any taxable gain or loss as a result of
exchanging outstanding securities for exchange
securities and you will have the same tax basis
and holding period in the exchange securities as
you had in the outstanding securities immediately
before the exchange. See "Certain Federal Income
Tax Considerations."
Use of Proceeds............. We will not receive any proceeds from the
issuance of the exchange securities.
Exchange Agents............. BNY Midwest Trust Company is serving as exchange
agent in connection with the exchange bonds and
Deutsche Bank Trust Company Americas is serving
as the exchange agent in connection with the
exchange notes. The address, telephone number and
facsimile number of the exchange agents are set
forth in "The Exchange Offers--Exchange Agents."
4
The Exchange Bonds
For a more complete description of the terms of the exchange bonds, see
"Description of Exchange Bonds."
Issuer...................... Westar Energy, Inc.
Bonds Offered............... $365,000,000 First Mortgage Bonds, 7 7/8% Series
Due 2007.
Maturity Date............... May 1, 2007.
Interest Payment Dates...... May 1 and November 1, beginning on November 1,
2002.
Ranking..................... The outstanding bonds were and the exchange bonds
will be our secured obligations, equal in right
of payment to all other bonds currently
outstanding or hereafter issued under the
mortgage. The mortgage under which the
outstanding bonds were and the exchange bonds
will be issued prohibits us from incurring other
debt senior or equal to the bonds (unless certain
tests are met). The outstanding bonds were and
the exchange bonds will be subordinate to the
debt of our subsidiaries with respect to the
assets of our subsidiaries. As of March 31, 2002,
after giving effect to the issuance of the
outstanding bonds and notes, we would have had
total indebtedness on our consolidated balance
sheet of approximately $3.38 billion and $220
million of our mandatorily redeemable preferred
securities. Approximately $1.12 billion was
senior with respect to the assets of our
subsidiaries because our subsidiaries are the
obligors under such indebtedness. Our total
indebtedness includes approximately $298 million
of outstanding borrowings under our $400 million
revolving credit facility.
Optional Redemption......... We may redeem all or a part of the bonds at any
time and from time to time by paying a
"make-whole" premium based on U.S. Treasury rates
as described under "Description of
Bonds--Optional Redemption."
Change of Control........... Upon a change of control, as defined under
"Description of Notes--Certain Definitions," you
will have the right, as a holder of bonds, to
require us to repurchase all or part of your
bonds at a repurchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase.
Risk Factors................ You should consider carefully all of the
information set forth in this prospectus and, in
particular, you should evaluate the specific
factors set forth under "Risk Factors" herein and
in our 2001 Form 10-K before deciding whether to
invest in the exchange bonds.
5
The Exchange Notes
For a more complete description of the terms of the exchange notes, see
"Description of Notes."
Issuer...................... Westar Energy, Inc.
Notes Offered............... $400,000,000 Senior Notes, 9 3/4% Series Due 2007.
Maturity Date............... May 1, 2007.
Interest Payment Dates...... May 1 and November 1, beginning on November 1,
2002.
Ranking..................... The outstanding notes were and the exchange notes
will be our senior unsecured obligations, equal
in right of payment to all of our existing and
future unsecured senior indebtedness and other
obligations that are not, by their terms,
expressly subordinated in right of payment to the
exchange notes.
The outstanding notes were and the exchange notes
will be effectively junior to all of our secured
indebtedness, including the exchange bonds
offered hereby and other obligations to the
extent of the value of the assets securing such
indebtedness and other obligations. The
outstanding notes were and the exchange notes
will be subordinate to the indebtedness of our
subsidiaries to the extent of their assets. As of
March 31, 2002, after giving effect to the
issuance of the outstanding bonds and notes, we
would have had total indebtedness on our
consolidated balance sheet of approximately $3.38
billion and $ million of our mandatorily
redeemable preferred securities. Approximately
$1.12 billion was senior with respect to the
assets of our subsidiaries because our
subsidiaries are the obligors under such
indebtedness and approximately $220 million would
have been senior indebtedness representing our
secured obligations. Our total indebtedness
includes approximately $298 million of
outstanding borrowings under our $400 million
revolving credit facility.
Optional Redemption......... We may redeem all or a part of the notes at any
time and from time to time by paying a
"make-whole" premium based on U.S. Treasury rates
as described under "Description of
Notes--Optional Redemption."
Before May 1, 2004, we may redeem up to 35% of
the notes at 109.75% of their principal amount,
plus accrued and unpaid interest, if any, to the
date of redemption with the proceeds of
registered public offerings of our common stock
as described under "Description of
Notes--Optional Redemption."
Change of Control........... Upon a change of control, as defined under
"Description of Notes--Certain Definitions," you
will have the right, as a holder of notes, to
require us to repurchase all or part of your
exchange notes at a repurchase price equal to
101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date
of repurchase.
6
Restrictive Covenants....... The securities resolution governing the notes
contains certain covenants that will limit, among
other things, our ability and the ability of our
Restricted Subsidiaries (as defined in
"Description of Notes") to:
. incur additional debt;
. pay dividends on, redeem or repurchase our
capital stock;
. create liens;
. distribute the proceeds of asset sales;
. create restrictions on our subsidiaries'
abilities to pay dividends;
. enter into transactions with affiliates;
. engage in sale and leaseback transactions;
. designate subsidiaries as Unrestricted
Subsidiaries;
. engage in other lines of business; and
. consolidate, merge or sell all or
substantially all of our assets.
These covenants will apply principally to us and
to KGE, which conduct our electric utility
operations. These covenants will not apply to
Westar Industries and its subsidiaries, including
Protection One and Protection One Europe, or to
our investment in ONEOK.
If the notes receive and maintain an investment
grade rating by two of three rating agencies, and
we and our Restricted Subsidiaries are and remain
in compliance with the indenture governing the
notes, we and our Restricted Subsidiaries will
not be required to comply with particular
covenants contained in the indenture. For more
detailed information on the covenants contained
in the securities resolution governing the notes,
see "Description of Notes."
Risk Factors................ You should consider carefully all of the
information set forth in this prospectus and, in
particular, you should evaluate the specific
factors set forth under "Risk Factors" herein and
in our 2001 Form 10-K before deciding whether to
invest in the exchange notes.
7
RISK FACTORS
In addition to the information contained elsewhere in this prospectus and in
the documents incorporated by reference herein (which includes certain of the
risk factors set forth in our Form 10-K for the year ended December 31, 2001),
the following risk factors should be carefully considered by each prospective
investor in deciding to exchange your outstanding securities for exchange
securities.
Risks Relating to the Exchange Securities
Our substantial indebtedness could impair our financial condition and our
ability to fulfill our obligations under our existing indebtedness as well as
under the securities.
We have a significant amount of debt outstanding. The following chart shows
important credit statistics giving effect to the sale of the outstanding bonds
and outstanding notes and our use of the proceeds thereof to retire debt. The
chart also gives effect to the first quarter 2002 goodwill and customer account
impairment charges as of March 31, 2002:
March 31, 2002
--------------
(in thousands)
Total debt........................................ $3,378,188
Shareholders' equity and mandatorily redeemable
preferred securities............................ $1,408,119
Total debt as a percentage of total capitalization 70.6%
Our substantial indebtedness could, for example:
. make it more difficult for us to satisfy our obligations with respect to
the securities;
. reduce the amount of money available to finance our operations, capital
expenditures and other activities;
. increase our vulnerability to economic downturns and industry conditions;
. limit our flexibility in responding to changing business and economic
conditions, including increased competition and demand for new products
and services;
. limit our ability to borrow additional funds; and
. impact our ability to pay dividends.
We may incur substantial additional debt in the future, and we may do so in
order to finance future acquisitions and investments. The terms of the mortgage
and/or the indenture governing the bonds and the notes, respectively, will
permit us and our subsidiaries to do so, subject to certain limitations with
respect to our Restricted Subsidiaries, which conduct or hold our utility
businesses. The addition of further debt to our current debt levels could
intensify the leverage-related risks that we now face. The Note indenture also
permits us to incur additional debt senior to the notes including the first
mortgage bonds issued under the mortgage.
The securities are effectively subordinated to all debt and other liabilities
of our subsidiaries with respect to the assets of our subsidiaries.
Significant portions of our operations are conducted through our
subsidiaries. Due to structural subordination, the securities will be
effectively subordinated to all existing and future indebtedness and other
liabilities and commitments of our subsidiaries with respect to the assets of
our subsidiaries. The mortgage and the indenture governing the bonds and the
notes, respectively, do not contain any covenants which restrict the ability of
our Unrestricted Subsidiaries, which conduct or hold our non-utility
businesses, to incur additional indebtedness. As of March 31, 2002, our
subsidiaries had approximately $1.12 billion of indebtedness outstanding, of
which $433 million is the debt of our Unrestricted Subsidiaries, not subject to
the covenants described under "Description of Notes."
8
The agreements governing our indebtedness contain various covenants that limit
our management's discretion in the operation of our businesses and also require
us to meet certain financial maintenance tests. Failure to comply with any of
these tests could have a material adverse effect on us.
The agreements governing our indebtedness contain various covenants,
including those that restrict our ability to:
. incur additional debt;
. pay dividends on, redeem or repurchase our capital stock;
. create liens; and
. consolidate, merge or sell all or substantially all of our assets.
Any failure to comply with the restrictions of any of our existing or new
credit facilities or any agreement governing our indebtedness, including the
mortgage and the indenture governing the bonds and the notes, respectively, may
result in a default under such facilities and agreements. Such default may
allow the creditors to accelerate the related debt, which acceleration may
trigger cross-acceleration or cross-default provisions in other debt. For more
information, see "Description of Bonds" and "Description of Notes."
We may be unable to repurchase the bonds or the notes if we experience a change
of control.
Following a change of control, we would be required to offer to purchase the
bonds and notes at a price equal to 101% of their principal amount, plus
accrued interest to the purchase date. We cannot assure you that we will have
sufficient funds available to make the required purchases of the bonds and/or
notes in that event.
Any future debt that we incur may also contain restrictions on repurchases
in the event of a change of control or similar event. These purchase
requirements may delay or make it harder for a third party to obtain control of
our company.
The change of control provisions may not protect you in a transaction in
which we incur a large amount of debt, including a reorganization,
restructuring, merger or other similar transaction, if the transaction does not
involve any shift in voting power or beneficial ownership or does not involve a
shift large enough to trigger a change of control as defined in the indentures
governing the bonds or notes, respectively.
The change of control provisions do not apply to the proposed merger with
PNM or to any merger of a Restricted Subsidiary and us, or to the acquisition
of any additional shares of our common stock by Westar Industries.
An active or liquid trading market for the exchange securities may not develop.
Prior to these offerings, there has been no public market for the exchange
securities. We intend to apply to have the exchange securities designated as
eligible for trading in the PORTAL Market. The initial purchasers of the
outstanding securities have informed us that they intend to make a market in
the exchange securities. However, they are not obligated to do so, and may
discontinue any such market-making with respect to the exchange bonds, the
exchange notes or both, at any time without notice. There can be no assurance
that an active trading market for the exchange securities will develop, or, if
one does develop, that it will be sustained.
Historically, the market for non-investment grade debt has been highly
volatile in terms of price. It is possible that the market for the exchange
securities, as well as for the publicly tradeable exchange securities for which
they may be exchanged, will also be volatile. This volatility may affect your
ability to resell your outstanding bonds, outstanding notes or the exchange
bonds or exchange notes, as well as the timing of any such resale or exchange.
9
Failure to exchange your outstanding securities will leave them subject to
transfer restrictions.
If you do not exchange your outstanding securities for exchange securities,
you will continue to be subject to the restrictions on transfer of your
outstanding securities set forth in their legend, because the outstanding
securities were issued pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. In general,
outstanding securities may not be offered or sold unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. We
currently do not anticipate registering the outstanding securities under the
Securities Act. As outstanding securities are tendered and accepted in the
exchange offers, the aggregate principal amount of outstanding securities will
decrease, which decrease will decrease their liquidity.
Risks Relating to the Exchange Notes
Holders of our secured debt would be paid first to the extent of their security
interest if we were to become insolvent.
The notes are not secured by any of our assets or any of the assets of our
subsidiaries. The indenture governing the notes permits us to incur additional
debt, including bonds, purchase money debt and other secured debt. If we were
to become insolvent, holders of any current and future secured debt would be
paid first to the extent of their security interest. Our bonds are secured by a
first lien on substantially all of our assets (excluding cash and accounts
receivable, securities not pledged under the mortgage, electric energy, gas,
water, materials and supplies held for consumption in operation or held in
advance of use for fixed capital purposes and merchandise, appliances and
supplies held for resale or lease to customers). Accordingly, investors in the
notes may not be fully repaid if we become insolvent.
As of March 31, 2002, we had secured debt on our consolidated balance sheet
of approximately $1.4 billion giving effect to the issuance of the outstanding
notes and bonds. In addition, we may incur additional secured debt in the
future, including under our revolving credit facility. See "Description of
Bonds" and "Description of Notes."
Other Risks
Accountants
The indictment of Arthur Andersen LLP may adversely affect Arthur Andersen
LLP's ability to satisfy any claims arising from the provision of auditing
services to us, including claims that may arise out of Arthur Andersen LLP's
audit of our financial statements incorporated by reference in this prospectus,
and may impede our access to the capital markets after completion of this
offering. Arthur Andersen LLP, which audited our financial statements
incorporated by reference in this prospectus for each of the years in the
three-year period ended December 31, 2001 has informed us that on March 14,
2002 an indictment was unsealed charging it with federal obstruction of justice
arising from the government's investigation of Enron Corp. Arthur Andersen LLP
has indicated that it intends to contest the indictment vigorously. Should we
seek to access the public capital markets after we complete this offering, SEC
rules will require us to include or incorporate by reference in any prospectus
three years of audited financial statements. The SEC's current rules would
require us to present audited financial statements for one or more fiscal years
audited Arthur Andersen LLP. If the SEC ceases accepting financial statements
audited by Arthur Andersen LLP, we could be unable to access the public capital
markets unless Deloitte and Touche LLP, our current independent accounting
firm, or another independent accounting firm, is able to audit the financial
statements originally audited by Arthur Andersen LLP. Any delay or inability to
access the public capital markets caused by these circumstances could have a
material adverse effect on our business, profitability and growth prospects.
10
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange
securities offered by this prospectus. In consideration for issuing the
exchange bonds or exchange notes as contemplated by this prospectus, we will
receive a like principal amount of outstanding bonds or outstanding notes, as
the case may be. The terms of the exchange securities will be identical in all
material respects to the terms of the outstanding securities for which they are
exchanged, except that the transfer restrictions and registration rights
applicable to the outstanding securities will not be applicable to the exchange
securities. The outstanding securities tendered in exchange for the exchange
securities will be retired and canceled. Accordingly, the issuance of the
exchange securities will not result in any increase in our indebtedness.
11
THE EXCHANGE OFFERS
Purpose and Effect of the Exchange Offers
Exchange Offer Registration Statements. We issued the outstanding
securities on May 10, 2002. The initial purchasers have advised us that they
subsequently resold the outstanding securities to "qualified institutional
buyers" in reliance on Rule 144A under the Securities Act and to certain
persons in offshore transactions in reliance on Regulation S under the
Securities Act. As a condition to the offering of the outstanding securities,
we entered into registration rights agreements dated May 10, 2002, pursuant to
which we agreed, for the benefit of all holders of the outstanding securities,
at our own expense, to do the following:
(1) to file the registration statement of which this prospectus is a part
with the Commission on or prior to 180 days after the issue date of the
outstanding securities,
(2) to use our best efforts to cause the registration statement to be
declared effective under the Securities Act within 270 days after the issue
date of the outstanding securities, and
(3) to use our best efforts to keep the registration statement effective
during the one-year period following the consummation of the exchange offers.
Further, we agreed to keep the exchange offers open for acceptance for not
less than 20 nor more than 35 business days (or longer if required by
applicable law). For each outstanding security validly tendered pursuant to the
exchange offers and not withdrawn, the holder of the outstanding security will
receive an exchange security having a principal amount equal to that of the
tendered outstanding security. Interest on each exchange security will accrue
from the last date on which interest was paid on the tendered outstanding
security in exchange therefor or, if no interest was paid on such outstanding
security, from the issue date.
The following is a summary of the registration rights agreements relating to
the outstanding securities. It does not purport to be complete and it does not
contain all of the information you might find useful. For further information
you should read the registration rights agreement, a copy of which has been
filed as an exhibit to the registration statement. The exchange offers are
intended to satisfy certain of our obligations under the registration rights
agreement.
Transferability. We issued the outstanding securities on May 10, 2002 in a
transaction exempt from the registration requirements of the Securities Act and
applicable state securities laws. Accordingly, the outstanding securities may
not be offered or sold in the United States unless registered or pursuant to an
applicable exemption under the Securities Act and applicable state securities
laws. Based on no-action letters issued by the staff of the Commission with
respect to similar transactions, we believe that the exchange securities issued
pursuant to the exchange offers in exchange for outstanding securities may be
offered for resale, resold and otherwise transferred by holders of securities
who are not our affiliates without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that:
(1) any exchange securities to be received by the holder were acquired in
the ordinary course of the holder's business;
(2) at the time of the commencement of the exchange offers the holder has
no arrangement or understanding with any person to participate in the
distribution (within the meaning of the Securities Act) of the exchange
securities; and
(3) the holder is not an "affiliate" of the Company, as defined in Rule
405 under the Securities Act.
However, we have not sought a no-action letter with respect to the exchange
offers and we cannot assure you that the staff of the Commission would make a
similar determination with respect to the exchange offers. Any holder who
tenders his outstanding securities in the exchange offers with any intention of
participating in a distribution of exchange securities (1) cannot rely on the
interpretation by the staff of the Commission, (2) will
12
not be able to validly tender outstanding securities in the exchange offers and
(3) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any secondary resale transactions.
In addition, each broker-dealer that receives exchange securities for its
own account pursuant to the exchange offers must acknowledge that it will
deliver a prospectus in connection with any resale of such exchange securities.
The letter of transmittal accompanying this prospectus states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "under-writer" within the meaning of Section
2(11) of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange securities received in exchange for outstanding
securities where the outstanding securities were acquired by such broker-dealer
as a result of market-making activities or other trading activities. Pursuant
to the registration rights agreement, we agreed to make this prospectus
available to any such broker-dealer for use in connection with any such resale
for the one-year period ending on the first anniversary of the expiration date.
Each broker-dealer that receives exchange securities for its own account in
exchange for outstanding securities, where such securities were acquired by
such broker dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange securities. See "Plan of Distribution."
Shelf Registration Statement. We will, at our cost, (a) file with the
Commission one or more shelf registration statements covering resales of the
outstanding securities as soon as practicable, but, in any event, within 360
days after the issue date of the outstanding securities, (b) use our best
efforts to cause the shelf registration statement to be declared effective
under the Securities Act and (c) use our best efforts to keep the shelf
registration statement continually effective, supplemented and amended to the
extent necessary to ensure that it is available for resales of securities by
the holders of Transfer Restricted Securities for a period of at least two
years following the effective date of such shelf registration statement (or
such shorter period that will terminate when all the securities covered by such
shelf registration statement have been sold pursuant to such shelf registration
statement or are otherwise no longer Transfer Restricted Securities), if:
(1) we are not required to file the exchange offer registration statement
or not permitted to consummate the exchange offers because the exchange
offers are not permitted by applicable law or Commission policy or
(2) any initial purchaser so requests with respect to outstanding
securities that are not eligible to be exchanged for exchange securities in
the exchange offers or notifies us that it may not resell the exchange
securities acquired by it in the exchange offers to the public without
delivering a prospectus and the prospectus contained in the exchange offer
registration statements is not appropriate or available for such resales.
We will, in the event of the filing of the shelf registration statement,
provide to each holder of the outstanding securities copies of the prospectus
which is a part of the shelf registration statement, notify each such holder
when the shelf registration statement for the outstanding securities has become
effective and take certain other action as is required to permit unrestricted
resales of the outstanding securities. A holder of outstanding securities who
sells such outstanding securities pursuant to the shelf registration statement
generally will (1) be required to be named as a selling security holder in the
related prospectus, (2) be subject to certain of the civil liability provisions
under the Securities Act in connection with such sales and (3) be bound by the
provisions of
the registration rights agreement which are applicable to the holder (including
certain indemnification obligations).
Terms of the Exchange Offers
Upon satisfaction or waiver of all the conditions of the exchange offers, we
will accept any and all outstanding securities properly tendered and not
withdrawn prior to the expiration date and will issue the
13
exchange securities promptly after acceptance of the outstanding securities.
See "--Conditions to the Exchange Offers" and "Procedures for Tendering
Outstanding Securities." We will issue $1,000 principal amount of exchange
securities in exchange for each $1,000 principal amount of outstanding
securities accepted in the exchange offers. As of the date of this prospectus,
there are $365,000,000 aggregate principal amount of outstanding bonds and
$400,000,000 aggregate principal amount of outstanding notes. Holders may
tender some or all of their outstanding securities pursuant to the exchange
offers. However, outstanding securities may be tendered only in integral
multiples of $1,000.
The exchange securities are identical to the outstanding securities except
for the elimination of certain transfer restrictions and registration rights.
The exchange securities will evidence the same debt as the outstanding
securities and will be issued pursuant to, and entitled to the benefits of, the
respective indentures pursuant to which the outstanding securities were issued
and each will be deemed one issue of securities, together with the outstanding
securities.
This prospectus, together with the letter of transmittal, is being sent to
all registered holders and to others believed to have beneficial interests in
the outstanding securities. Holders of outstanding securities do not have any
appraisal or dissenters' rights under the indentures in connection with the
exchange offers. We intend to conduct the exchange offers in accordance with
the applicable requirements of the Securities Act, the Exchange Act and the
rules and regulations of the Commission promulgated thereunder.
For purposes of the exchange offers, we will be deemed to have accepted
validly tendered outstanding securities when, and as if, we have given oral or
written notice thereof to the appropriate exchange agent. Each exchange agent
will act as our agent for the purpose of distributing the appropriate exchange
securities from us to the tendering holders. If we do not accept any tendered
outstanding securities because of an invalid tender, the occurrence of certain
other events set forth in this prospectus or otherwise, we will return the
unaccepted outstanding securities, without expense, to the tendering holder
thereof as promptly as practicable after the expiration date.
Holders who tender outstanding securities in the exchange offers will not be
required to pay brokerage commissions or fees or, except as set forth below
under "--Transfer Taxes," transfer taxes with respect to the exchange of
outstanding securities pursuant to the exchange offers. We will pay all charges
and expenses, other than certain applicable taxes, in connection with the
exchange offers. See "--Fees and Expenses."
Expiration Date; Extensions; Amendments
The term "expiration date" shall mean 5:00 p.m., New York City time,
on , 2002, for each exchange offer unless we, in our sole discretion,
extend an exchange offer, in which case the term "expiration date" shall mean
the latest date and time to which the exchange offer is extended. In order to
extend an exchange offer, we will notify the exchange agent by oral or written
notice and each appropriate registered holder by means of press release or
other public announcement of any extension, in each case, prior to 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
expiration date. We reserve the right, in our sole discretion, (1) to delay
accepting any outstanding securities, (2) to extend each exchange offer, (3) to
terminate each exchange offer if each condition set forth below under
"--Conditions to the Exchange Offers" shall not have been satisfied, or (4) to
amend the terms of the exchange offer in any manner. We will notify the
appropriate exchange agent of any delay, extension, termination or amendment by
oral or written notice. We will additionally
notify each registered holder of any amendment. We will give to the appropriate
exchange agent written confirmation of any oral notice.
Exchange Date
As soon as practicable after the close of each exchange offer we will accept
for exchange all outstanding securities properly tendered and not validly
withdrawn prior to 5:00 p.m., New York City time, on the expiration date in
accordance with the terms of this prospectus and the letter of transmittal.
14
Conditions to the Exchange Offers
Notwithstanding any other provisions of the exchange offers, and subject to
our obligations under the registration rights agreement, we (1) shall not be
required to accept any outstanding securities for exchange, (2) shall not be
required to issue exchange securities in exchange for any outstanding
securities and (3) may terminate or amend an exchange offer if, at any time
before the acceptance of outstanding securities for exchange, any of the
following events shall occur:
(1) any injunction, order or decree shall have been issued by any court
or any governmental agency that would prohibit, prevent or otherwise
materially impair our ability to proceed with the exchange offer;
(2) any change, or any development involving a prospective change, in our
business or financial affairs or any of our subsidiaries has occurred which,
in our sole judgment, might materially impair our ability to proceed with an
exchange offer or materially impair the contemplated benefits of such
exchange offer to us;
(3) any law, statute, rule or regulation is proposed, adopted or enacted
which, in our sole judgment, might materially impair our ability to proceed
with an exchange offer or materially impair the contemplated benefits of the
exchange offer to us;
(4) any governmental approval has not been obtained, which approval we
shall, in our sole discretion, deem necessary for the consummation of the
exchange offer as contemplated hereby; or
(5) the exchange offer will violate any applicable law or any applicable
interpretation of the staff of the Commission.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. Our failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and such right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any outstanding securities
tendered, and no exchange securities will be issued in exchange for any such
outstanding securities, if at such time any stop order shall be threatened by
the Commission or be in effect with respect to the registration statement of
which this prospectus is a part or the qualification of the indenture for the
bonds or the notes, as the case may be, under the Trust Indenture Act of 1939,
as amended.
Neither exchange offer is conditioned on any minimum aggregate principal
amount of outstanding securities being tendered for exchange.
The exchange offers are separate transactions and the consummation of the
bonds exchange offer is not conditioned upon the consummation of the notes
exchange offer and vice versa.
Consequences of Failure to Exchange
Any outstanding securities not tendered pursuant to the exchange offers will
remain outstanding and continue to accrue interest. The outstanding securities
will remain "restricted securities" within the meaning of the Securities Act.
Accordingly, prior to the date that is one year after the later of the issue
date and the last date on which we or any of our affiliates was the owner of
the outstanding securities, the outstanding securities may be resold only (1)
to us, (2) to a person who the seller reasonably believes is a "qualified
institutional buyer" purchasing for its own account or for the account of
another "qualified institutional buyer" in compliance with the resale
limitations of Rule 144A, (3) to an Institutional Accredited Investor that,
prior to the transfer, furnishes to the trustee a written certification
containing certain representations and agreements relating to the restrictions
on transfer of the securities (the form of this letter can be obtained from the
trustee), (4) pursuant to the
15
limitations on resale provided by Rule 144 under the Securities Act, (5)
pursuant to the resale provisions of Rule 904 of Regulation S under the
Securities Act, (6) pursuant to an effective registration statement under the
Securities Act, or (7) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to compliance with applicable state securities laws. As a
result, the liquidity of the market for non-tendered outstanding securities
could be adversely affected upon completion of the exchange offers.
Fees and Expenses
We will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offers. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone
by our officers and employees.
Expenses incurred in connection with the exchange offers will be paid by us.
Such expenses include, among others, the fees and expenses of the trustee and
the exchange agent, accounting and legal fees, printing costs and other
miscellaneous fees and expenses.
Accounting Treatment
We will not recognize any gain or loss for accounting purposes upon the
consummation of the exchange offers. We will amortize the expenses of the
exchange offers as additional interest expense over the term of the exchange
securities.
Procedures for Tendering Outstanding Securities
The tender of outstanding securities pursuant to any of the procedures set
forth in this prospectus and in the letter of transmittal will constitute a
binding agreement between the tendering holder and us in accordance with the
terms and subject to the conditions set forth in this prospectus and in the
letter of transmittal. The tender of outstanding securities will constitute an
agreement to deliver good and marketable title to all tendered outstanding
securities prior to the expiration date free and clear of all liens, charges,
claims, encumbrances, interests and restrictions of any kind.
Except as provided in "--Guaranteed Delivery Procedures," unless the
outstanding securities being tendered are deposited by you with the appropriate
exchange agent prior to the expiration date and are accompanied by a properly
completed and duly executed letter of transmittal, we may, at our option,
reject the tender. Issuance of exchange securities will be made only against
deposit of tendered outstanding securities and delivery of all other required
documents. Notwithstanding the foregoing, DTC participants tendering through
its Automated
Tender Offer Program ("ATOP") will be deemed to have made valid delivery where
the exchange agent receives an agent's message prior to the expiration date.
Accordingly, to properly tender outstanding securities, the following
procedures must be followed:
Securities held through a Custodian. Each beneficial owner holding
outstanding securities through a DTC participant must instruct the DTC
participant to cause its outstanding securities to be tendered in accordance
with the procedures set forth in this prospectus.
Securities held through DTC. Pursuant to an authorization given by DTC to
the DTC participants, each DTC participant holding outstanding securities
through DTC must (1) electronically transmit its acceptance through ATOP, and
DTC will then edit and verify the acceptance, execute a book-entry delivery to
the exchange agent's account at DTC and send an agent's message to the exchange
agent for its acceptance, or (2) comply with the guaranteed delivery procedures
set forth below and in a notice of guaranteed delivery. See "--Guaranteed
Delivery Procedures--Securities held through DTC."
16
The exchange agents will (promptly after the date of this prospectus)
establish accounts at DTC for purposes of the exchange offers with respect to
outstanding securities held through DTC. Any financial institution that is a
DTC participant may make book-entry delivery of interests in outstanding
securities into the exchange agent's account through ATOP. However, although
delivery of interests in the outstanding securities may be effected through
book-entry transfer into the exchange agent's account through ATOP, an agent's
message in connection with such book-entry transfer, and any other required
documents, must be, in any case, transmitted to and received by the exchange
agent at its address set forth under "--Exchange Agents," or the guaranteed
delivery procedures set forth below must be complied with, in each case, prior
to the expiration date. Delivery of documents to DTC does not constitute
delivery to an exchange agent. The confirmation of a book-entry transfer into
an exchange agent's account at DTC as described above is referred to herein as
a "Book-Entry Confirmation."
The term "agent's message" means a message transmitted by DTC to, and
received by, the appropriate exchange agent and forming a part of the
book-entry confirmation, which states that DTC has received an express
acknowledgment from each DTC participant tendering through ATOP that such DTC
participant has received a letter of transmittal and agrees to be bound by the
terms of the letter of transmittal and that we may enforce such agreement
against such DTC participants.
Cede & Co., as the holder of the global security, will tender a portion of
the global security equal to the aggregate principal amount due at the stated
maturity for which instructions to tender are given by DTC participants.
By tendering, each holder and each DTC participant will represent to us
that, among other things, (1) it is not our affiliate, (2) it is not a
broker-dealer tendering outstanding securities acquired directly from us for
its own account, (3) it is acquiring the exchange securities in its ordinary
course of business and (4) it is not engaged in, and does not intend to engage
in, and has no arrangement or understanding with any person to participate in,
a distribution of the exchange securities.
We will not accept any alternative, conditional, irregular or contingent
tenders (unless waived by us). By executing a letter of transmittal or
transmitting an acceptance through ATOP, as the case may be, each tendering
holder waives any right to receive any notice of the acceptance for purchase of
its outstanding securities.
We will resolve all questions as to the validity, form, eligibility
(including time of receipt) and acceptance of tendered outstanding securities,
and such determination will be final and binding. We reserve the absolute right
to reject any or all tenders that are not in proper form or the acceptance of
which may, in the opinion of our counsel, be unlawful. We also reserve the
absolute right to waive any condition to either exchange offer and any
irregularities or conditions of tender as to particular outstanding securities.
Our interpretation of the terms and conditions of each exchange offer
(including the instructions in the letter of transmittal) will be final and
binding. Unless waived, any irregularities in connection with tenders must be
cured within such time as we shall determine. We, along with the exchange
agents, shall be under no duty to give notification of defects in such tenders
and shall not incur liabilities for failure to give such notification. Tenders
of outstanding securities will not be deemed to have been made until such
irregularities have been cured or waived. Any outstanding securities received
by an exchange agent that are not properly tendered and as to which the
irregularities have not been cured or waived will be returned by the exchange
agent to the tendering holder, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
LETTERS OF TRANSMITTAL AND OUTSTANDING SECURITIES MUST BE SENT ONLY TO THE
EXCHANGE AGENT. DO NOT SEND LETTERS OF TRANSMITTAL OR OUTSTANDING SECURITIES TO
US OR DTC.
The method of delivery of outstanding securities, letters of transmittal,
any required signature guarantees and all other required documents, including
delivery through DTC and any acceptance through ATOP, is at the election and
risk of the persons tendering and delivering acceptances or letters of
transmittal and, except as
17
otherwise provided in the applicable letter of transmittal, delivery will be
deemed made only when actually received by the appropriate exchange agent. If
delivery is by mail, it is suggested that the holder use properly insured,
registered mail with return receipt requested, and that the mailing be made
sufficiently in advance of the expiration date to permit delivery to the
appropriate exchange agent prior to the expiration date.
Guaranteed Delivery Procedures
Securities held through DTC. DTC participants holding outstanding
securities through DTC who wish to cause their outstanding securities to be
tendered, but who cannot transmit their acceptances through ATOP prior to the
expiration date, may cause a tender to be effected if:
(1) guaranteed delivery is made by or through a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act, including:
. a bank;
. a broker, dealer, municipal securities dealer, municipal securities
broker, government securities dealer or government securities broker;
. a credit union;
. a national securities exchange, registered securities association or
clearing agency; or
. a savings institution that is a participant in a Securities Transfer
Association recognized program;
(2) prior to the expiration date, the exchange agent receives from any of
the above institutions a properly completed and duly executed notice of
guaranteed delivery (by mail, hand delivery, facsimile transmission or
overnight courier) substantially in the form provided with this prospectus;
and
(3) book-entry confirmation and an agent's message in connection
therewith are received by the exchange agent within three NYSE trading days
after the date of the execution of the notice of guaranteed delivery.
Withdrawal Rights
You may withdraw tenders of outstanding securities, or any portion of your
outstanding securities, in integral multiples of $1,000 principal amount due at
the stated maturity, at any time prior to 5:00 p.m., New York City time, on the
expiration date. Any outstanding securities properly withdrawn will be deemed
to be not validly tendered for purposes of the exchange offers.
Securities held through DTC. DTC participants holding outstanding
securities who have transmitted their acceptances through ATOP may, prior to
5:00 p.m., New York City time, on the expiration date, withdraw the instruction
given thereby by delivering to the appropriate exchange agent, at its address
set forth under "--Exchange Agents," a written, telegraphic or facsimile notice
of withdrawal of such instruction. Such notice of withdrawal must contain the
name and number of the DTC participant, the principal amount due at the stated
maturity of outstanding securities to which such withdrawal relates and the
signature of the DTC participant. Receipt of such written notice of withdrawal
by the appropriate exchange agent effectuates a withdrawal.
A withdrawal of a tender of outstanding securities by a DTC participant or a
holder, as the case may be, may be rescinded only by a new transmission of an
acceptance through ATOP or execution and delivery of a new letter of
transmittal, as the case may be, in accordance with the procedures described
herein.
Securities held by Holders. Holders may withdraw their tender of
outstanding securities, prior to 5:00 p.m., New York City time, on the
expiration date, by delivering to the exchange agent, at its address set forth
under "--Exchange Agents," a written, telegraphic or facsimile notice of
withdrawal. Any such notice of withdrawal must (1) specify the name of the
person who tendered the outstanding securities to be withdrawn,
18
(2) contain a description of the outstanding securities to be withdrawn and
identify the certificate number or numbers shown on the particular certificates
evidencing such outstanding securities and the aggregate principal amount due
at the stated maturity represented by such outstanding securities and (3) be
signed by the holder of such outstanding securities in the same manner as the
original signature on the letter of transmittal by which such outstanding
securities were tendered (including any required signature guarantees), or be
accompanied by (x) documents of transfer in a form acceptable to us, in our
sole discretion, and (y) a properly completed irrevocable proxy that authorized
such person to effect such revocation on behalf such holder. If the outstanding
securities to be withdrawn have been delivered or otherwise identified to the
exchange agent, a signed notice of withdrawal is effective immediately upon
written, telegraphic or facsimile notice of withdrawal even if physical release
is not yet effected.
All signatures on a notice of withdrawal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchange Medallion
Program; provided, however, that signatures on the notice of withdrawal need
not be guaranteed if the outstanding securities being withdrawn are held for
the account of any of the institutions listed above under "--Guaranteed
Delivery Procedures."
A withdrawal of an instruction or a withdrawal of a tender must be executed
by a DTC participant or a holder of outstanding securities, as the case may be,
in the same manner as the person's name appears on its transmission through
ATOP or letter of transmittal, as the case may be, to which such withdrawal
relates. If a notice of withdrawal is signed by a trustee, partner, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person must
so indicate when signing and must submit with the revocation appropriate
evidence of authority to execute the notice of withdrawal. A DTC participant or
a holder may withdraw an instruction or a tender, as the case may be, only if
such withdrawal complies with the provisions of this prospectus.
A withdrawal of a tender of outstanding securities by a DTC participant or a
holder, as the case may be, may be rescinded only by a new transmission of an
acceptance through ATOP or execution and delivery of a new letter of
transmittal, as the case may be, in accordance with the procedures described
herein.
19
Exchange Agents
BNY Midwest Trust Company has been appointed as exchange agent for the
exchange bonds. Questions, requests for assistance and requests for additional
copies of this prospectus or of the letter of transmittal in connection with
the exchange bonds should be directed to BNY Midwest Trust Company addressed as
follows:
By Registered or Certified Mail:
The Bank of New York,
as Exchange Agent
The Bank of New York
Corporate Trust Operations Reorganization Unit
15 Broad Street, 16th Floor
New York, NY 10007
By Hand before 4:30 p.m.:
The Bank of New York
Corporate Trust Operations Reorganization Unit
15 Broad Street, 16th Floor
New York, NY 10007
By Hand after 4:30 p.m. or by Overnight Courier:
The Bank of New York
Corporate Trust Operations Reorganization Unit
15 Broad Street, 16/th/ Floor
New York, NY 10007
Facsimile: 212-235-2261
Telephone: 212-235-2363
Attention: Santino Ginocchietti
Deutsche Bank Trust Company Americas has been appointed as exchange agent
for the exchange notes. Questions, requests for assistance and requests for
additional copies of this prospectus or of the letter of transmittal in
connection with the exchange notes should be directed to Deutsche Bank Trust
Company Americas addressed as follows:
By Registered or Certified Mail:
Deutsche Bank Trust Company Americas,
as Exchange Agent
DB Services Tennessee, Inc.
Reorganization Unit
P.O. Box 292737
Nashville, TN 37229-2737
By Hand before 4:30 p.m.:
c/o DTC Transfer Agent Services
55 Water Street, 1st Floor
Jeannette Park Entrance
New York, NY 10041
By Hand after 4:30 or by Overnight Courier:
DB Services Tennessee, Inc.
Reorganization Unit
648 Grassmere Park Road
Nashville, TN 37211
Facsimile: (615) 835-3701
Telephone: (800) 735-7777
Attention: Customer Service
20
Transfer Taxes
Holders of outstanding securities who tender their outstanding securities
for exchange securities will not be obligated to pay any transfer taxes in
connection therewith, except that holders who instruct us to register exchange
securities in the name of, or request that outstanding securities not tendered
or not accepted in the exchange offers be returned to, a person other than the
registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
21
DESCRIPTION OF BONDS
In this description, the terms "Westar Energy," "Company," "we," "our,"
"ours" and "us" refer solely to Westar Energy, Inc. and not to any of our
subsidiaries.
Description of Bonds
The outstanding bonds were and the exchange bonds will be issued under and
secured by the Mortgage and Deed of Trust, dated July 1, 1939, between Western
Resources and BNY Midwest Trust Company, as successor to Harris Trust and
Savings Bank, as Trustee (the "Trustee"), as supplemented and amended by
thirty-four supplemental indentures and as to be supplemented and amended by a
thirty-fifth supplemental indenture (the "Thirty-Fifth Supplemental Indenture")
providing for the outstanding bonds (the original mortgage as so supplemented
and amended we will refer to as the "Mortgage"). We will refer to the
outstanding bonds and the exchange bonds as the "Bonds" and to all the first
mortgage bonds issued or issuable under the Mortgage as the "bonds." What
follows is a brief summary of certain provisions contained in the Mortgage. The
following summaries of certain provisions of the Mortgage do not purport to be
complete and are qualified in their entirety by express reference to the
Mortgage and any supplemental indentures. Capitalized terms used in this
section without definition have the meanings given to such terms in the
Mortgage. In addition, capitalized terms used in "--Repurchase at the Option of
Holders Upon a Change of Control" in this "Description of Bonds" have the same
meanings given to such terms in "Description of Notes--Repurchase at the Option
of Holders upon a Change of Control."
General
The Bonds are limited to an aggregate principal amount of $365 million. The
Bonds were issued only in the form of registered bonds without coupons in
denominations of $1,000 and multiples thereof. The Bonds are exchangeable for
other bonds in equal aggregate principal amounts without charge to the holders
except for any applicable tax or governmental charge.
Each Bond bears interest at the rate set forth on the cover, payable
semi-annually on May 1 and November 1 each year. Subject to certain exceptions
provided in the Mortgage, interest is payable at either the office of the
Trustee in Chicago, Illinois, or of the Paying Agent, BNY Midwest Trust
Company, Chicago, Illinois, to the persons in whose names the Bonds are
registered at the close of business on the tenth day prior to the interest
payment date or, at the option of the Company, may be paid by checks mailed to
such persons at their registered addresses. Principal of the Bonds is payable
at either of the agencies of the Company mentioned above.
There are no improvement and/or maintenance fund for the Bonds.
The Company maintains routine banking relationships with the Trustee.
Optional Redemption
At any time, and from time to time, the Company may redeem all or any
portion of the Bonds, after giving the required notice under the Mortgage at a
redemption price equal to the greater of:
(a) of the principal amount of the Bonds to be redeemed, or
(b) the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 50 basis points, plus, in either case,
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest
due on the relevant interest payment date).
22
Any notice to holders of Bonds of such a redemption shall state, among other
things, the redemption price and date. No such redemptions may be conditional
once notice of redemption is given.
Sinking Fund
There is no mandatory sinking fund payments for the Bonds.
Repurchase at the Option of Holders Upon a Change of Control
Upon the occurrence of a Change of Control, each holder of Bonds shall have
the right to require the Company to repurchase all or any part of such holder's
Bonds pursuant to the offer described below (the "Change of Control Offer") at
a purchase price (the "Change of Control Purchase Price") equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
purchase date (Thirty-Fifth Supplemental Indenture, Article III).
Within 30 days following any Change of Control, the Company shall:
(a) cause a notice of the Change of Control Offer to be sent at least
once to the Dow Jones News Service or similar business news service in the
United States; and
(b) send, by first-class mail, with a copy to the Trustee, to each holder
of Bonds, at such holder's address appearing in the security register, a
notice stating:
(1) that a Change of Control has occurred and a Change of Control
Offer is being made pursuant to the covenant entitled "--Repurchase at
the Option of Holders upon a Change of Control" and that all Bonds
timely tendered will be accepted for payment;
(2) the Change of Control Purchase Price and the purchase date, which
shall be, subject to any contrary requirements of applicable law, a
business day no earlier than 30 days nor later than 60 days from the
date such notice is mailed;
(3) the circumstances and relevant facts regarding the Change of
Control; and
(4) the procedures that holders of Bonds must follow in order to
tender their Bonds (or portions thereof) for payment, and the procedures
that holders of Bonds must follow in order to withdraw an election to
tender Bonds (or portions thereof) for payment.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Bonds pursuant to a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with the provisions of the covenant described hereunder, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the covenant described hereunder
by virtue of such compliance.
Subject to certain covenants described below, the Company could, in the
future, enter into certain transactions, including acquisitions, refinancings
or other recapitalizations, that would not constitute a Change of Control under
the Mortgage, but that could increase the amount of Debt outstanding at such
time or otherwise affect the Company's capital structure or credit ratings.
The definition of Change of Control includes a phrase relating to the sale,
transfer, assignment, lease, conveyance or other disposition of "all or
substantially all" the Company's assets. Although there is a developing body of
case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law. Accordingly, if the
Company disposes of less than all its assets by any of the means described
above, the ability of a holder of Bonds to require the Company to repurchase
its Bonds may be
23
uncertain. In such a case, holders of the Bonds may not be able to resolve this
uncertainty without resorting to legal action.
Other Debt of the Company issued in the future may contain prohibitions of
certain events which would constitute a Change of Control or require such Debt
to be repurchased upon a Change of Control. Moreover, the exercise by holders
of Bonds of their right to require the Company to repurchase such Bonds could
cause a default under existing or future Debt of the Company, even if the
Change of Control itself does not, due to the financial effect of such
repurchase on the Company. Finally, the Company's ability to pay cash to
holders of Bonds upon a repurchase may be limited by the Company's then
existing financial resources. There can be no assurance that sufficient funds
will be available when necessary to make any required repurchases. The
Company's failure to purchase Bonds in connection with a Change of Control
would result in a default under the Mortgage. Such a default would, in turn,
constitute a default under existing Debt of the Company, and may constitute a
default under future Debt as well. The Company's obligation to make an offer to
repurchase the Bonds as a result of a Change of Control may be waived or
modified at any time prior to the occurrence of such Change of Control with the
written consent of the holders of a majority in principal amount of the Bonds.
See "--Modification of the Mortgage."
Issuance of Additional Bonds
Additional bonds ranking equally with the bonds of other series then
outstanding, including the Bonds, may be issued having dates, maturities,
interest rates, redemption prices and other terms as may be determined by our
board of directors. Additional bonds may be issued in principal amounts not
exceeding the sum of:
(1) 60% (so long as any bonds issued prior to January 1, 1997 remain
outstanding, and thereafter 70%) of the net bondable value of property
additions not subject to an unfunded prior lien;
(2) the principal amount of bonds retired or to be retired (except out of
trust monies); and
(3) the amount of cash deposited with the Trustee for such purpose, which
may thereafter be withdrawn upon the same basis that additional bonds are
issuable under (1) or (2) above.
Additional bonds may not be issued on the basis of property additions
subject to an unfunded prior lien. (Mortgage, Article III; Twenty-Eighth,
Twenty-Ninth, Thirtieth, Thirty-First, Thirty-Second, Thirty-Third,
Thirty-Fourth and Thirty-Fifth Supplemental Indentures, Article V.) As of
January 31, 2002, we had approximately $271 million of net bondable property
additions not subject to unfunded prior liens enabling us to issue
approximately $163 million principal amount of additional bonds on such date,
subject to certain other limitations.
In addition to the restrictions discussed above, so long as any bonds issued
prior to January 1, 1997 remain outstanding additional bonds may not be issued
unless our unconsolidated net earnings available for interest, depreciation and
property retirements for a period of any 12 consecutive months during the
period of 15 calendar months immediately preceding the first day of the month
in which the application for authentication and delivery of additional bonds is
made shall have been not less than the greater of two times the annual interest
charges on, and 10% of the principal amount of, all bonds then outstanding, all
additional bonds then applied for, all outstanding prior lien bonds and all
prior lien bonds, if any, then being applied for. Bonds canceled at or prior to
the time application is made for the issuance of bonds are not deemed to be
outstanding for purposes of calculating interest charges in determining whether
the net earnings test is met for the issuance of additional bonds. Bonds or
prior lien bonds for which monies sufficient for the payment thereof have been
deposited with the Trustee are not considered outstanding for this purpose.
The net earnings test referred to in the previous paragraph need not be
satisfied to issue additional bonds:
. on the basis of property additions subject to an unfunded prior lien
which simultaneously will become a funded prior lien, if application for
the issuance of the additional bonds is made at any time after a date
two years prior to the date of the maturity of the bonds secured by the
prior lien, and
24
. on the basis of the payment at maturity of bonds heretofore issued by
us, or the redemption, conversion or purchase of bonds, after a date two
years prior to the date on which those bonds mature.
We have reserved the right to amend the Mortgage to eliminate the foregoing
requirement. See "--Modification of the Mortgage."
Based on our results for the twelve months ended January 31, 2002, and
giving effect to the repayment of $100 million principal amount of bonds
maturing on August 15, 2002, and $397.8 million principal amount of bonds
released as collateral from credit facilities, we could issue approximately
$365 million principal amount of additional bonds (assuming an interest rate of
7 7/8%). The Bonds have been issued against the principal amount of bonds
retired or to be retired and/or additional property additions. (Mortgage,
Article III, Sections 3, 4, and 6; Twenty-Eighth, Twenty-Ninth, Thirtieth,
Thirty-First, Thirty-Second, Thirty-Third, Thirty-Fourth and Thirty-Fifth
Supplemental Indentures, Article V.)
Release and Substitution of Property
The Mortgage provides that, subject to various limitations, property may be
released from the lien thereof on the basis of cash deposited with the Trustee,
bonds or purchase money obligations delivered to the Trustee, prior lien bonds
delivered to the Trustee, or unfunded net property additions certified to the
Trustee. (Mortgage, Article VII.) The Mortgage also in effect permits the
withdrawal of cash against the certification to the Trustee of gross property
additions at 100%, or the net bondable value of property additions at 60% (so
long as any bonds issued prior to January 1, 1997 remain outstanding, and
thereafter 70%), or the deposit with the Trustee of bonds we have acquired.
(Mortgage, Article VIII; Sections 1-3; Twenty-Eighth, Twenty-Ninth, Thirtieth,
Thirty-First, Thirty-Second, Thirty-Third, Thirty-Fourth and Thirty-Fifth
Supplemental Indentures, Article V.) The Mortgage contains special provisions
with respect to the release of all or substantially all of our gas and electric
properties. (Twenty-Eighth, Twenty-Ninth, Thirtieth, Thirty-First,
Thirty-Second, Thirty-Third, Thirty-Fourth and Thirty-Fifth Supplemental
Indentures, Article IV, Sections 2 and 3.) We have reserved the right to amend
the Mortgage to change the release and substitution provisions. See
"--Modification of the Mortgage."
Priority and Security
In the opinion of Larry D. Irick, Esq., our Vice President and Corporate
Secretary, the Bonds are secured, equally and ratably with all of the bonds now
outstanding or hereafter issued under the Mortgage, by the lien on
substantially all of our fixed property and franchises purported to be conveyed
by the Mortgage, subject to the exceptions referred to below, to certain minor
leases and easements, permitted liens, exceptions and reservations in the
instruments by which we acquired title to our property and the prior lien of
the Trustee for compensation, expenses and liability. In the opinion of Mr.
Irick, the Mortgage constitutes a lien on after-acquired property of the
character intended to be mortgaged property.
Excepted from the lien of the Mortgage are:
. cash and accounts receivable;
. contracts or operating agreements;
. securities not pledged under the Mortgage;
. electric energy, gas, water, materials and supplies held for consumption
in operation or held in advance of use for fixed capital purposes; and
. merchandise, appliances and supplies held for resale or lease to
customers.
There is further expressly excepted any property of any other corporation,
all the securities of which may be owned or later acquired by us. (Granting
Clauses of the Mortgage.) The lien of the Mortgage does not apply to property
of KGE so long as KGE remains our wholly owned subsidiary, to the stock of KGE
owned by us or to
25
the stock of any of our other subsidiaries. The Mortgage permits our
consolidation or merger with, or the conveyance of all or substantially all of
our property to, any other corporation; provided, that the successor
corporation assumes the due and punctual payment of the principal and interest
on the bonds of all series then outstanding under the Mortgage and assumes the
due and punctual performance of all the covenants and conditions of the
Mortgage (Mortgage, Article XII, Section 1); provided further, however, holders
of Bonds may require us to purchase all or part of their Bonds as described
more fully under "--Repurchase at the Option of Holders upon a Change of
Control."
Modification of the Mortgage
Except as provided in "--Repurchase at the Option of Holders upon a Change
of Control," the Mortgage may be modified or altered, subject to our rights and
obligations and the rights of holders of bonds, by the written consent of the
holders of at least 60% in principal amount of the bonds, and, if the rights of
one or more, but less than all, series of bonds then outstanding are to be
affected by action taken pursuant to such consent, then also by consent of the
holders of at least 60% in principal amount of each series of bonds so
affected. No modification or alteration may be made which will permit the
extension of the time or times of payment of the principal of, and premium, if
any, or interest (including additional interest) on any bond or a reduction in
the rate of interest thereon, or otherwise affect the terms of payment of the
principal of, and premium, if any, or interest (including additional interest)
on any bond or a reduction in the rate of interest thereon or reduce the
percentages required for the taking of any action thereunder. Bonds owned by us
or any affiliated corporation are excluded for the purpose of any vote,
determination of a quorum or consent. (Mortgage, Article XV, Section 6;
Twenty-Eighth, Twenty-Ninth, Thirtieth, Thirty-First, Thirty-Second,
Thirty-Third, Thirty-Fourth and Thirty-Fifth Supplemental Indentures, Article
V, Sections 3 and 4.)
The Mortgage also provides that without the consent of any holder of any
bond issued thereunder, the right of such holder to receive payment of the
principal of, and premium, if any, or interest (including additional interest)
on, on or after the respective due dates expressed in such bond, or to
institute suit for the enforcement of any payment on or after such respective
due dates shall not be impaired or affected. (Mortgage, Article XXII, Section
2.)
We have reserved the right, subject to appropriate corporate action, but
without the consent or other action of holders of bonds of any series created
after January 1, 1997, to make amendments to the Mortgage to permit, unless an
event of default shall have happened and be continuing, or shall happen as a
result of making or granting an application,
1. the release from the lien of the Mortgage of any mortgaged property
if the fair value of all of the property constituting the trust estate
(excluding the mortgaged property to be released but including any mortgaged
property to be acquired by us with the proceeds of, or otherwise in
connection with, such release) equals or exceeds an amount equal to 10/7ths
of the aggregate principal amount of outstanding bonds and any prior lien
bonds outstanding at the time of such release;
2. in the event we are unable to obtain a release of property as
described in clause (1), the release from the lien of the Mortgage of any
property constituting part of the trust estate if the fair value thereof is
less than 1/2 of 1% of the aggregate principal amount of bonds and prior
lien bonds outstanding at the time of such release; provided, that the
property released pursuant to this clause (2) in any period of
12 consecutive calendar months shall not exceed 1% of such bonds and prior
lien bonds;
3. the deletion of the net earnings test for the issuance of additional
bonds;
4. the deletion of the requirement to obtain an independent engineer's
certificate in connection with certain releases of property from the lien of
the Mortgage; and
5. the deletion of a financial test to be met by another corporation in
the event of our consolidation or merger into or our sale of our property as
an entirety or substantially as an entirety to such other corporation.
(Thirty-Third, Thirty-Fourth and Thirty-Fifth Supplemental Indentures,
Article V.)
26
Events of Default
An event of default under the Mortgage includes:
. default in the payment of the principal of any bond when the same shall
become due and payable, whether at maturity or otherwise;
. default continuing for 30 days in the payment of any installment of
interest on any bond or in the payment or satisfaction of any sinking
fund obligation;
. default in performance or observance of any other covenant, agreement or
condition in the Mortgage continuing for a period of 60 days after
written notice to us thereof by the Trustee or by the holders of not
less than 15% of the aggregate principal amount of all bonds then
outstanding;
. failure to discharge or stay within 30 days a final judgment against us
for the payment of money in excess of $100,000; and
. certain events in bankruptcy, insolvency or reorganization. (Mortgage,
Article IX, Section 1.)
The Trustee is required, within 90 days after the occurrence thereof, to
give to the holders of the bonds notice of all defaults known to the Trustee
unless such defaults shall have been cured before the giving of such notice
(the term "defaults" for such purposes being defined to be the events specified
above, not including any periods of grace); provided, however, that except in
the case of default in the payment of the principal of, and premium, if any, or
interest (including additional interest) on any of the bonds, or in the payment
or satisfaction of any sinking or purchase fund installment, the Trustee shall
be protected in withholding notice if and so long as the Trustee in good faith
determines that the withholding of notice is in the interests of the holders of
the bonds and, in the case of any default specified in the third bullet point
above, no notice shall be given until at least 60 days after the occurrence
thereof. (Mortgage, Article XIX, Section 3.) The Trustee is under no obligation
to defend or initiate any action under the Mortgage which would result in the
incurring of non-reimbursable expenses unless one or more of the holders of
bonds, including the Bonds, furnishes the Trustee with reasonable indemnity
against such expenses. In the event of a default, the Trustee is not required
to act unless requested to act by holders of at least 25% in aggregate
principal amount of the bonds then outstanding. (Mortgage, Article IX, Sections
1 and 4, Article XIII, Section 2 and Article XXI, Section 6.) In addition, a
majority of the holders of the bonds have the right to direct all proceedings
under the Mortgage; provided, the Trustee is indemnified to its satisfaction.
(Mortgage, Article IX, Section 11.)
27
DESCRIPTION OF NOTES
In this description the terms "Westar Energy," "we," "Company," "our,"
"ours" and "us" refer solely to Westar Energy, Inc. and not to any of our
subsidiaries.
Description of Debt Securities
The outstanding notes and the exchange notes are a series of unsecured debt
securities (the "Debt Securities"). The outstanding notes were and the exchange
notes will be under an Indenture and a Securities Resolution (together, the
"Indenture") between the Company and Deutsche Bank Trust Company Americas, as
trustee (the "Note Trustee"). The following summaries of certain provisions of
the Indenture establishing the terms of the Notes do not purport to be complete
and are qualified in their entirety by express reference to the Indenture. For
purposes of this section, the term "Notes" refers to both the outstanding notes
and the exchange notes. Certain capitalized terms used in this section,
"Description of Notes," are used with the meanings set forth under "--Certain
Definitions," below. Certain other capitalized terms used in this section
without definition have the meanings given to such terms in the Indenture.
General
The Indenture does not limit the amount of Debt Securities that can be
issued thereunder and provides that the Debt Securities may be issued from time
to time in one or more series pursuant to the terms of one or more Securities
Resolutions creating such series. The Debt Securities are unsecured and rank on
a parity with all other unsecured and unsubordinated senior debt of the
Company, but are effectively junior to any existing and future secured Debt to
the extent of the value of the collateral securing the Debt. The Debt
Securities are senior to all indebtedness of the Company which by its terms is
made subordinate to the Debt Securities.
Ranking
The Notes are:
. senior unsecured obligations of the Company;
. equal in right of payment ("pari passu") with all existing and future
Senior Debt; and
. senior in right of payment to all existing and future Subordinated
Obligations.
As of March 31, 2002, after giving effect to the issuance of the outstanding
bonds and outstanding notes and our use of the net proceeds to retire debt, we
would have had indebtedness on our consolidated balance sheet of approximately
$3.38 billion and $220 million of mandatorily redeemable preferred securities.
Approximately $1.16 billion would have been senior with respect to the assets
of our Subsidiaries because our Subsidiaries are the obligors under such
indebtedness, and $724 million would have been senior indebtedness representing
our secured obligations. Our total indebtedness would have included $298
million of outstanding borrowings under our $400 million revolving credit
facility.
The Company only has a stockholder's claim on the assets of its
Subsidiaries. This stockholder's claim is junior to the claims that creditors
of the Company's Subsidiaries have against those Subsidiaries. Holders of the
Notes are only creditors of the Company, and not of any of its Subsidiaries. As
a result, all the existing and future liabilities of the Company's
Subsidiaries, including any claims of trade creditors and preferred
stockholders, are effectively senior to the Notes with respect to the assets of
the Subsidiaries.
The Company's Subsidiaries have significant liabilities, including
contingent liabilities. Although the Indenture contains limitations on the
amount of additional Debt that the Company and any Restricted Subsidiary may
Incur, the amounts of such Debt could be substantial. In addition, the
Indenture does not restrict the Incurrence of Debt by the Company's
Unrestricted Subsidiaries, and such Debt would be effectively senior in right
of payment to the Notes with respect to the assets of those Subsidiaries. See
"--Certain Covenants--Limitation on Debt."
28
The Notes are obligations exclusively of the Company. To the extent that the
Company's ability to service its debt, including the Notes, may be dependent
upon the earnings of the Company's Subsidiaries, the Company's ability to do so
will be dependent on the Subsidiaries' ability to distribute those earnings to
the Company as dividends, loans or other payments. There are no loan documents
or other agreements that restrict the ability of the Company's Restricted
Subsidiaries to pay dividends, extend loans or make other payments to the
Company. Certain laws restrict the ability of the Company's Restricted
Subsidiaries to pay dividends, extend loans or make other payments to the
Company.
The Notes are unsecured obligations. Secured Debt of the Company is
effectively senior to the Notes to the extent of the value of the assets
securing such secured Debt. Substantially all of the utility assets of the
Company and KGE, a Restricted Subsidiary, are subject to Liens under the
Mortgage pursuant to which the bonds are issued and under the KGE mortgage
pursuant to which KGE's bonds are issued, respectively.
As of March 31, 2002, $724 million of the bonds were outstanding. The
Mortgage provides that no other Debt equal with respect to the property subject
to the Lien of the Mortgage or senior to such bonds in right of payment may be
Incurred by the Company except as permitted thereunder.
See "Risk Factors--Risks Relating to the Exchange Securities--Our
substantial indebtedness could impair our financial condition and our ability
to fulfill our obligations under our existing indebtedness as well as under the
exchange securities" and "--The exchange securities are effectively
subordinated to all debt and other liabilities of our subsidiaries with respect
to the assets of our subsidiaries."
Optional Redemption
At any time, and from time to time, the Company may redeem all or any
portion of the Notes, after giving the required notice under the Indenture at a
redemption price equal to the greater of:
(a) 100% of the principal amount of the Notes to be redeemed, or
(b) the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 75 basis points,
plus, in either case, accrued and unpaid interest, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
Any notice to holders of Notes of such a redemption shall state, among other
things, the redemption price and date. No such redemptions may be conditional
once notice of redemption is given.
At any time and from time to time, prior to May 1, 2004, the Company may
redeem up to a maximum of 35% of the original aggregate principal amount of the
Notes with the proceeds of one or more Public Equity Offerings at a redemption
price equal to 109.75% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date); provided, however, that after giving effect to any such
redemption, at least 65% of the original aggregate principal amount of the
Notes remains outstanding. Any such redemption shall be made within 75 days of
such Public Equity Offering upon not less than 30 nor more than 60 days' prior
notice.
Sinking Fund
There is no mandatory sinking fund payments for the Notes.
29
Repurchase at the Option of Holders Upon a Change of Control
Upon the occurrence of a Change of Control, each holder of Notes shall have
the right to require the Company to repurchase all or any part of such holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
a purchase price (the "Change of Control Purchase Price") equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
purchase date.
Within 30 days following any Change of Control, the Company shall:
(a) cause a notice of the Change of Control Offer to be sent at least
once to the Dow Jones News Service or similar business news service in the
United States; and
(b) send, by first-class mail, with a copy to the Note Trustee, to each
holder of Notes, at such holder's address appearing in the security
register, a notice stating:
(1) that a Change of Control has occurred and a Change of Control
Offer is being made pursuant to the covenant entitled "Repurchase at the
Option of Holders Upon a Change of Control" and that all Notes timely
tendered will be accepted for payment;
(2) the Change of Control Purchase Price and the purchase date, which
shall be, subject to any contrary requirements of applicable law, a
business day no earlier than 30 days nor later than 60 days from the
date such notice is mailed;
(3) the circumstances and relevant facts regarding the Change of
Control; and
(4) the procedures that holders of Notes must follow in order to
tender their Notes (or portions thereof) for payment, and the procedures
that holders of Notes must follow in order to withdraw an election to
tender Notes (or portions thereof) for payment.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with the provisions of the covenant described hereunder, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the covenant described hereunder
by virtue of such compliance.
Subject to certain covenants described below, the Company could, in the
future, enter into certain transactions, including acquisitions, refinancings
or other recapitalizations, that would not constitute a Change of Control under
the Indenture, but that could increase the amount of Debt outstanding at such
time or otherwise affect the Company's capital structure or credit ratings.
The definition of Change of Control includes a phrase relating to the sale,
transfer, assignment, lease, conveyance or other disposition of "all or
substantially all" the Company's assets. Although there is a developing body of
case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law. Accordingly, if the
Company disposes of less than all its assets by any of the means described
above, the ability of a holder of Notes to require the Company to repurchase
such holder's Notes may be uncertain. In such a case, holders of the Notes may
not be able to resolve this uncertainty without resorting to legal action.
Other Debt of the Company issued in the future may contain prohibitions on
certain events which would constitute a Change of Control or require such Debt
to be repurchased upon a Change of Control. Moreover, the exercise by holders
of Notes of their right to require the Company to repurchase such Notes could
cause a default under existing or future Debt of the Company, even if the
Change of Control itself does not, due to the financial effect of such
repurchase on the Company. Finally, the Company's ability to pay cash to
holders of Notes upon a repurchase may be limited by the Company's then
existing financial resources. There can be no assurance that sufficient funds
will be available when necessary to make any required repurchases. The
Company's failure to purchase Notes in connection with a Change of Control
would result in a default under the Indenture. Such a
30
default would, in turn, constitute a default under existing Debt of the
Company, and may constitute a default under future Debt as well. The Company's
obligation to make an offer to repurchase the Notes as a result of a Change of
Control may be waived or modified at any time prior to the occurrence of such
Change of Control with the written consent of the holders of a majority in
principal amount of the Notes. See "--Amendments and Waivers."
Certain Covenants
Covenant Suspension. Set forth below are summaries of certain covenants
applicable to the Notes. During any period of time that the Notes have
Investment Grade Ratings from the Required Rating Agencies, the Company and any
Restricted Subsidiary will not be subject to the following provisions of the
Indenture:
. "--Limitation on Debt,"
. "--Limitation on Restricted Payments,"
. "--Limitation on Asset Sales,"
. "--Limitation on Restrictions on Distributions from any Restricted
Subsidiary,"
. "--Limitation on Transactions with Affiliates,"
. clause (x) of the fourth paragraph (and such clause (x) as referred to
in the second paragraph) of "--Designation of Restricted and
Unrestricted Subsidiaries,"
. "--Limitation on Company's Business,"
. "--Repurchase at the Option of Holders Upon a Change of Control" and
. clauses (e) and (f) of the first paragraph of "--Merger, Consolidation
and Sale of Property"
(collectively, the "Suspended Covenants"). In the event that the Company and
any Restricted Subsidiary are not subject to the Suspended Covenants for any
period of time as a result of the preceding sentence and, subsequently, a
Rating Agency withdraws its rating or downgrades the rating assigned to the
Notes so that the Notes no longer have Investment Grade Ratings from the
Required Rating Agencies or a Default or Event of Default occurs and is
continuing, then the Company and any Restricted Subsidiary will thereafter
again be subject to the Suspended Covenants and compliance with the Suspended
Covenants with respect to Restricted Payments made after the time of such
withdrawal, downgrade, Default or Event of Default will be calculated in
accordance with the terms of the covenant described below under "--Limitation
on Restricted Payments" as though such covenant had been in effect during the
entire period of time from the Issue Date.
Limitation on Debt. The Company shall not, and shall not permit any
Restricted Subsidiary to, Incur, directly or indirectly, any Debt unless, after
giving effect to the application of the proceeds thereof, no Default or Event
of Default would occur as a consequence of such Incurrence or be continuing
following such Incurrence and either:
(1) if such Debt is Debt of the Company or any Restricted Subsidiary,
after giving effect to the Incurrence of such Debt and the application of
the proceeds thereof, the Consolidated Interest Coverage Ratio would be
greater than 2.00 to 1.00, or
(2) such Debt is Permitted Debt.
The term "Permitted Debt" is defined to include the following:
(a) Debt of the Company evidenced by the Notes and the bonds (including
bonds pledged to secure Debt under clause (b) below);
31
(b) Debt of the Company under the Credit Facilities, provided that the
aggregate principal amount of all such Debt under the Credit Facilities at
any one time outstanding shall not exceed $1.3 billion, which amount shall
be permanently reduced by the amount of Net Available Cash used to Repay
Debt under the Credit Facilities, and not subsequently reinvested in
Additional Assets or used to purchase Notes or Repay other Debt, pursuant to
the covenant described under "--Limitation on Asset Sales";
(c) Capital Expenditure Debt, provided that:
(1) the aggregate principal amount of such Debt does not exceed the
Fair Market Value (on the date of the Incurrence thereof) of the
Property acquired, constructed or leased, and
(2) the aggregate principal amount of all Debt Incurred pursuant to
this clause (c) during any calendar year does not exceed $150 million;
(d) Debt of the Company owing to and held by any Wholly Owned Restricted
Subsidiary and Debt of a Restricted Subsidiary owing to and held by the
Company or any Wholly Owned Restricted Subsidiary; provided, however, that
any subsequent issue or transfer of Capital Stock or other event that
results in any such Wholly Owned Restricted Subsidiary ceasing to be a
Wholly Owned Restricted Subsidiary or any subsequent transfer of any such
Debt (except to the Company or a Wholly Owned Restricted Subsidiary) shall
be deemed, in each case, to constitute the Incurrence of such Debt by the
issuer thereof;
(e) Debt under Interest Rate Agreements entered into by the Company or
any Restricted Subsidiary for the purpose of limiting interest rate risk in
the ordinary course of the financial management of the Company or such
Restricted Subsidiary and not for speculative purposes, provided that the
obligations under such Agreements are directly related to payment
obligations on Debt otherwise permitted by the terms of this covenant;
(f) Debt under Currency Exchange Protection Agreements entered into by
the Company or any Restricted Subsidiary for the purpose of limiting
currency exchange rate risks directly related to transactions entered into
by the Company or such Restricted Subsidiary in the ordinary course of
business and not for speculative purposes;
(g) Debt under Commodity Price Protection Agreements entered into by the
Company or any Restricted Subsidiary in the ordinary course of the financial
management of the Company or such Restricted Subsidiary and not for
speculative purposes;
(h) Debt in connection with one or more standby letters of credit,
performance bonds and/or collateral margin accounts issued or opened by the
Company or any Restricted Subsidiary (but not including any Guarantees) in
the ordinary course of business or pursuant to self-insurance obligations
and not in connection with the borrowing of money or the obtaining of
advances or credit;
(i) Debt outstanding on the Issue Date not otherwise described in clauses
(a) through (h) above;
(j) Debt of the Company and the Restricted Subsidiaries in an aggregate
principal amount outstanding at any one time not to exceed $100 million; and
(k) Permitted Refinancing Debt Incurred in respect of Debt Incurred
pursuant to clauses (a), (c) and (i) of clause (2) of this covenant.
Notwithstanding anything to the contrary contained in this covenant,
(a) accrual of interest, accretion or amortization of original issue
discount and the payment of interest or dividends in the form of additional
Debt will be deemed not to be an incurrence of Debt for purposes of this
covenant; and
(b) for purposes of determining compliance with this covenant, in the
event that an item of Debt (including Acquired Debt) meets the criteria of
more than one of the categories of Permitted Debt described in clauses (a)
through (k) of clause (2) of this covenant or is entitled to be incurred
pursuant to clause (l) of the first paragraph of this covenant, the Company
will, in its sole discretion, classify (or later reclassify in whole or in
part, in its sole discretion) such item of Debt in any manner that complies
with this covenant.
32
Limitation on Restricted Payments. The Company shall not make, and shall
not permit any Restricted Subsidiary to make, directly or indirectly, any
Restricted Payment if at the time of, and after giving effect to, such proposed
Restricted Payment,
(a) a Default or Event of Default shall have occurred and be continuing,
(b) the Company could not Incur at least $1.00 of additional Debt
pursuant to clause (1) of the first paragraph of the covenant described
under "--Limitation on Debt" or
(c) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made since the Issue Date (the amount of any
Restricted Payment, if made other than in cash, to be based upon Fair Market
Value) would exceed an amount equal to the sum of:
(1) 50% of the aggregate amount of Consolidated Net Income accrued
during the period (treated as one accounting period) from the beginning
of the first fiscal quarter during which the Issue Date occurs to the
end of the most recent fiscal quarter for which financial statements are
available prior to the date of such Restricted Payment (or if the
aggregate amount of Consolidated Net Income for such period shall be a
deficit, minus 100% of such deficit), plus
(2) Capital Stock Sale Proceeds, plus
(3) the sum of:
(A) the aggregate net cash proceeds received by the Company or any
Restricted Subsidiary from the issuance or sale after the Issue Date
of convertible or exchangeable Debt that has been converted into or
exchanged for Capital Stock (other than Disqualified Stock) of the
Company, and
(B) the aggregate amount by which Debt (other than Subordinated
Obligations) of the Company or any Restricted Subsidiary is reduced
on the Company's consolidated balance sheet on or after the Issue
Date upon the conversion or exchange of any Debt issued or sold on or
prior to the Issue Date that is convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company,
excluding, in the case of clause (A) or (B):
(x) any such Debt issued or sold to the Company or any
Restricted Subsidiary of the Company, and
(y) the aggregate amount of any cash or other Property
distributed by the Company or such Restricted Subsidiary upon any
such conversion or exchange,
plus
(4) an amount equal to the sum of:
(A) the net reduction in Investments in any Person other than the
Company or a Restricted Subsidiary resulting from dividends,
repayments of loans or advances or other transfers of Property, in
each case to the Company or any Restricted Subsidiary from such
Person, and
(B) the portion (proportionate to the Company's equity interest in
such Unrestricted Subsidiary) of the Fair Market Value of the net
assets of an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided, however,
that the foregoing sum shall not exceed, in the case of any Person,
the amount of Investments previously made (and treated as a
Restricted Payment) by the Company or any Restricted Subsidiary in
such Person.
Notwithstanding the foregoing limitation, the Company may:
(a) pay dividends on its Capital Stock within 75 days of the declaration
thereof if, on said declaration date, such dividends could have been paid in
compliance with the Indenture and this covenant; provided, however, that at
the time of such payment of such dividend, no other Default or Event of
Default shall have occurred and be continuing (or result therefrom);
provided further, however, that such dividends shall be included in the
calculation of the amount of Restricted Payments;
33
(b) purchase, repurchase, redeem, legally defease, acquire or retire for
value Capital Stock of the Company or Subordinated Obligations in exchange
for, or out of the proceeds of the substantially concurrent sale of, Capital
Stock of the Company (other than Disqualified Stock and other than Capital
Stock issued or sold to a Subsidiary of the Company); provided, however, that
(1) such purchase, repurchase, redemption, legal defeasance,
acquisition or retirement shall be excluded in the calculation of the
amount of Restricted Payments, and
(2) the Capital Stock Sale Proceeds from such exchange or sale shall
be excluded from the calculation pursuant to clause (c)(2) above; and
(c) purchase, repurchase, redeem, legally defease, acquire or retire for
value any Subordinated Obligations in exchange for, or out of the proceeds
of the substantially concurrent sale of, Permitted Refinancing Debt;
provided, however, that such purchase, repurchase, redemption, legal
defeasance, acquisition or retirement shall be excluded in the calculation
of the amount of Restricted Payments;
(d) repurchase shares of, or options to purchase shares of, common stock
of the Company or any of its Subsidiaries from current or former officers,
directors or employees of the Company or any of its Subsidiaries (or
permitted transferees of such current or former officers, directors or
employees), pursuant to the terms of agreements (including employment
agreements) or plans (or amendments thereto) approved by the Board of
Directors under which such individuals purchase or sell, or are granted the
option to purchase or sell, shares of such common stock; provided, however,
that at the time of such repurchase, no other Default or Event of Default
shall have occurred and be continuing (or result therefrom); provided
further, however, that such repurchases shall be excluded in the calculation
of the amount of Restricted Payments;
(e) make a Restricted Payment, if at the time the Company or any
Restricted Subsidiary first Incurred a commitment for such Restricted
Payment, such Restricted Payment could have been made; provided, however,
that all commitments Incurred and outstanding shall be treated as if such
commitments were Restricted Payments expended by the Company or such
Restricted Subsidiary at the time the commitments were Incurred, except that
commitments Incurred and outstanding that are treated as the Restricted
Payment expended by the Company or such Restricted Subsidiary and that are
terminated shall no longer be treated as a Restricted Payment expended by
the Company or such Restricted Subsidiary upon the termination of such
commitment;
(f) pay scheduled dividends on Preferred Stock of the Company or any
Restricted Subsidiary or on Disqualified Stock of the Company issued
pursuant to and in compliance with the covenant described under
"--Limitation on Debt," provided, however, that any such dividends shall be
included in the calculation of the amount of Restricted Payments;
(g) pay scheduled cash dividends on the Company's common stock and
Restricted Share Units at an annual rate not in excess of $1.20 per share,
provided, however, that any such cash dividends shall be included in the
calculation of the amount of Restricted Payments;
(h) make distributions of part or all of the businesses of Protection One
or Protection One Europe to holders of the Company's Capital Stock;
(i) repurchase the Cumulative Preferred Stock outstanding as of the Issue
Date; and
(j) make Restricted Payments not otherwise permitted hereunder in an
aggregate amount not in excess of $50 million.
Limitation on Liens. So long as any of the Notes are outstanding, the
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, Incur or suffer to exist, any Lien (other than Permitted Liens)
upon or with respect to any of its Property of any character, including without
limitation any shares of Capital Stock of any Restricted Subsidiary, without
making effective provision whereby the Notes shall (so long as any such other
creditor shall be so secured) be equally and ratably secured (along with any
other creditor similarly entitled to be secured) by a direct Lien on all
property subject to such Lien (for the avoidance of doubt, the foregoing
restriction shall not apply to Permitted Liens securing Debt of the Company).
34
Limitation on Asset Sales. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale
unless:
(a) the Company or such Restricted Subsidiary receives consideration at
the time of such Asset Sale at least equal to the Fair Market Value of the
Property subject to such Asset Sale;
(b) at least 75% of the consideration paid to the Company or such
Restricted Subsidiary in connection with such Asset Sale is in the form of
cash or Cash Equivalents or the assumption by the purchaser of liabilities
of the Company or such Restricted Subsidiary (other than liabilities that
are by their terms subordinated to the Notes) as a result of which the
Company and such Restricted Subsidiary are no longer obligated with respect
to such liabilities, provided, however, that the foregoing shall not
prohibit the Company or such Restricted Subsidiary from transferring assets
in consideration of receipt of Additional Assets and other cash or Cash
Equivalents; and
(c) the Company delivers an Officers' Certificate to the Note Trustee
certifying that such Asset Sale complies with the foregoing clauses (a) and
(b).
The Net Available Cash (or any portion thereof) from Asset Sales may be
applied by the Company or any Restricted Subsidiary, to the extent the Company
or any Restricted Subsidiary elects (or is required by the terms of any Debt):
(a) to Repay Senior Debt of the Company or Debt of any Restricted
Subsidiary (excluding, in any such case, any Debt owed to the Company or an
Unregulated Affiliate of the Company); or
(b) to reinvest in Additional Assets (including by means of an Investment
in Additional Assets by such Restricted Subsidiary with Net Available Cash
received by the Company or another Restricted Subsidiary).
Any Net Available Cash from an Asset Sale not applied in accordance with the
preceding paragraph within one year from the date of the receipt of such Net
Available Cash or that is not segregated from the general funds of the Company
for investment in identified Additional Assets in respect of a project that
shall have been commenced, and for which binding contractual commitments have
been entered into, prior to the end of such one-year period and that shall not
have been completed or abandoned shall constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $25 million (taking
into account income earned on such Excess Proceeds, if any), the Company will
be required to make an offer to purchase (the "Prepayment Offer") the Notes,
which offer shall be in the amount of the Allocable Excess Proceeds, on a pro
rata basis according to the principal amount of the Notes, at a purchase price
equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the purchase date, in accordance with the procedures
(including prorating in the event of oversubscription) set forth in the
Indenture. To the extent that any portion of the amount of Net Available Cash
remains after compliance with the preceding sentence and provided that all
holders of Notes have been given the opportunity to tender their Notes for
purchase in accordance with the Indenture, the Company or any Restricted
Subsidiary may use such remaining amount for any purpose permitted by the
Indenture and the amount of Excess Proceeds will be reset to zero.
The term "Allocable Excess Proceeds" will mean the product of:
(a) the Excess Proceeds, and
(b) a fraction,
(1) the numerator of which is the aggregate principal amount of the
Notes outstanding on the date of the Prepayment Offer, and
(2) the denominator of which is the sum of the aggregate principal
amount of the Notes outstanding on the date of the Prepayment Offer and
the aggregate principal amount of other Debt of the Company outstanding
on the date of the Prepayment Offer that is pari passu in right of
payment with the Notes and subject to terms and conditions in respect of
Asset Sales similar in all material
35
respects to the covenant described hereunder and requiring the Company
to make an offer to purchase such Debt at substantially the same time as
the Prepayment Offer.
Within five business days after the Company is obligated to make a
Prepayment Offer as described in the second preceding paragraph, the Company
shall send a written notice, by first-class mail, to the holders of Notes,
accompanied by such information as the Company in good faith believes will
enable such holders to make an informed decision with respect to such
Prepayment Offer. Such notice shall state, among other things, the purchase
price and the purchase date, which shall be, subject to any contrary
requirements of applicable law, a business day no earlier than 30 days nor
later than 60 days from the date such notice is mailed.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to the covenant described
hereunder. To the extent that the provisions of any securities laws or
regulations conflict with provisions of the covenant described hereunder, the
Company will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
Limitation on Restrictions on Distributions from any Restricted
Subsidiary. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist any consensual restriction on the right of such Restricted Subsidiary to:
(a) pay dividends, in cash or otherwise, or make any other distributions
on or in respect of its Capital Stock, or pay any Debt or other obligation
owed, to the Company or any other Restricted Subsidiary;
(b) make any loans or advances to the Company or any other Restricted
Subsidiary; or
(c) transfer any of its Property to the Company or any other Restricted
Subsidiary.
The foregoing limitations shall not apply:
(1) to restrictions:
(A) in effect on the Issue Date,
(B) relating to Debt of any Restricted Subsidiary and existing at the
time it became a Restricted Subsidiary, or
(C) that result from the Refinancing of Debt Incurred pursuant to an
agreement referred to in clause (1)(A) or (B) above or in clause (2)(A)
or (B) below, provided that such restriction is no less favorable to the
holders of Notes than those under the agreement evidencing the Debt so
Refinanced, and
(2) with respect to clause (c) only, to restrictions:
(A) relating to Debt (that is permitted to be Incurred and secured
without also securing the Notes) pursuant to the covenants described
under "--Limitation on Debt" and "--Limitation on Liens" that limit the
right of the debtor to dispose of the Property securing such Debt,
(B) encumbering Property at the time such Property was acquired by
the Company or any Restricted Subsidiary, so long as such restriction
relates solely to the Property so acquired,
(C) resulting from customary provisions restricting subletting or
assignment of leases or customary provisions in other agreements that
restrict assignment of such agreements or rights thereunder, or
(D) customary restrictions contained in asset sale agreements
limiting the transfer of such Property pending the closing of such sale.
36
Limitation on Transactions with Affiliates. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, conduct
any business or enter into or suffer to exist any transaction or series of
transactions (including the purchase, sale, transfer, assignment, lease,
conveyance or exchange of any Property or the rendering of any service) with,
or for the benefit of, any Affiliate of the Company (an "Affiliate
Transaction"), unless:
(a) the terms of such Affiliate Transaction are:
(1) set forth in writing, and
(2) in the best interest of the Company or such Restricted
Subsidiary, as the case may be, and
(3) no less favorable to the Company or such Restricted Subsidiary,
as the case may be, than those that could be obtained in a comparable
arm's-length transaction with a Person that is not an Affiliate of the
Company;
(b) if such Affiliate Transaction involves aggregate payments or value in
excess of $10 million, the Board of Directors approves such Affiliate
Transaction and, in its good faith judgment, believes that such Affiliate
Transaction complies with clauses (a)(2) and (a)(3) of this paragraph as
evidenced by a Board resolution promptly delivered to the Note Trustee;
(c) if such Affiliate Transaction involves aggregate payments or value in
excess of $50 million, the Company obtains a written opinion from an
Independent Financial Advisor to the effect that the consideration to be
paid or received in connection with such Affiliate Transaction is fair, from
a financial point of view, to the Company and such Restricted Subsidiary; or
(d) if such Affiliate Transaction involves or arises out of contracts or
agreements (1) in existence on the Issue Date and any amendments,
modifications or extensions thereof not materially disadvantageous to the
Company, or (2) ordered or required by the KCC.
Limitation on Sale and Leaseback Transactions. The Company shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale and
Leaseback Transaction with respect to any Property unless:
(a) the Company or such Restricted Subsidiary would be entitled to:
(1) Incur Debt in an amount equal to the Attributable Debt with
respect to such Sale and Leaseback Transaction pursuant to the covenant
described under "--Limitation on Debt," and
(2) create a Lien on such Property securing such Attributable Debt
without also securing the Notes pursuant to the covenant described under
"--Limitation on Liens"; and
(b) such Sale and Leaseback Transaction is effected in compliance with
the covenant described under "--Limitation on Asset Sales".
Designation of Restricted and Unrestricted Subsidiaries. Subject to the
relevant provisions of the covenant described under "-- Limitation on Company's
Business," the Board of Directors may designate any Restricted Subsidiary
(including any newly acquired or newly formed Subsidiary of the Company), other
than KGE, to be an Unrestricted Subsidiary if such Subsidiary to be so
designated does not own any Capital Stock or Debt of, or own or hold any Lien
on any Property of, the Company or any other Restricted Subsidiary; provided
that: (A) any Guarantee by the Company or any Restricted Subsidiary of any Debt
of the Subsidiary being so designated shall be deemed an "Incurrence" of such
Debt and an "Investment" by the Company or such Restricted Subsidiary at the
time of such designation; (B) either the Subsidiary to be so designated has
total assets of $1,000 or less or if such Subsidiary has assets of greater than
$1,000, such designation would be permitted under "--Limitation on Restricted
Payments"; and (C) if applicable, the Incurrence of Indebtedness and the
Investment referred to in clause (A) of this covenant would be permitted under
"--Limitation on Debt" and "--Limitation on Restricted Payments."
Unless so designated as an Unrestricted Subsidiary, any Person that becomes
a Subsidiary of the Company will be classified as a Restricted Subsidiary;
provided, however, that such Subsidiary shall not be designated a
37
Restricted Subsidiary and shall be automatically classified as an Unrestricted
Subsidiary if either of the requirements set forth in clauses (x) and (y) of
the second immediately following paragraph will not be satisfied after giving
pro forma effect to such classification or if such Person is a Subsidiary of an
Unrestricted Subsidiary.
In addition, neither the Company nor any Restricted Subsidiary shall be
directly or indirectly liable for any Debt incurred after the Issue Date that
provides that the holder thereof may (with the passage of time or notice or
both) declare a default thereon or cause the payment thereof to be accelerated
or payable prior to its Stated Maturity upon the occurrence of a default with
respect to any Debt, Lien or other obligation of any Unrestricted Subsidiary
(including any right to take enforcement action against such Unrestricted
Subsidiary).
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary if, immediately after giving pro forma effect to such
designation,
(x) the Company could Incur at least $1.00 of additional Debt pursuant to
clause (1) of the first paragraph of the covenant described under
"--Limitation on Debt," and
(y) no Default or Event of Default shall have occurred and be continuing
or would result therefrom.
Any such designation or redesignation by the Board of Directors will be
evidenced to the Note Trustee by filing with the Note Trustee a Board
Resolution giving effect to such designation or redesignation and an Officers'
Certificate that:
(a) certifies that such designation or redesignation complies with the
foregoing provisions, and
(b) gives the effective date of such designation or redesignation,
such filing with the Note Trustee to occur within 45 days after the end of the
fiscal quarter of the Company in which such designation or redesignation is
made (or, in the case of a designation or redesignation made during the last
fiscal quarter of the Company's fiscal year, within 90 days after the end of
such fiscal year).
Limitation on Company's Business. The Company shall not, directly or
indirectly through Restricted Subsidiaries, engage primarily in any business
other than the Regulated Utility Business. For the avoidance of doubt, the
Company may not transfer any material portion of the assets used by the Company
in its Regulated Utility Business to any Affiliate and may not do so to any
Subsidiary unless (i) such Subsidiary is designated as a Restricted Subsidiary
and (ii) such Subsidiary unconditionally Guarantees the Company's obligations
under the Notes; provided, however, this covenant shall not limit the
businesses engaged in by the Unrestricted Subsidiaries or their Subsidiaries or
successors.
Merger, Consolidation and Sale of Property
The Company shall not merge, consolidate or amalgamate with or into any
other Person (other than a merger of any Restricted Subsidiary into the
Company) or sell, transfer, assign, lease, convey or otherwise dispose of all
or substantially all its Property, excluding the Unrestricted Subsidiaries, in
any one transaction or series of transactions unless:
(a) the Company shall be the surviving Person (the "Surviving Person") or
the Surviving Person (if other than the Company) formed by such merger,
consolidation or amalgamation or to which such sale, transfer, assignment,
lease, conveyance or disposition is made shall be a corporation organized
and existing under the laws of the United States of America, any State
thereof or the District of Columbia and which is engaged primarily, directly
or indirectly through Subsidiaries, in the Regulated Utility Business;
(b) the Surviving Person (if other than the Company) expressly assumes,
by supplemental indenture in form satisfactory to the Note Trustee, executed
and delivered to the Note Trustee by such Surviving Person, the due and
punctual payment of the principal of, and premium, if any, and interest on,
all the Notes,
38
according to their tenor, and the due and punctual performance and
observance of all the covenants and conditions of the Indenture to be
performed by the Company;
(c) in the case of a sale, transfer, assignment, lease, conveyance or
other disposition of all or substantially all the Property of the Company,
excluding the Unrestricted Subsidiaries, such Property shall have been
transferred as an entirety or virtually as an entirety to one Person;
(d) immediately before and after giving effect to such transaction or
series of transactions on a pro forma basis (and treating, for purposes of
this clause (d) and clauses (e) and (f) below, any Debt that becomes, or is
anticipated to become, an obligation of the Surviving Person or a Restricted
Subsidiary as a result of such transaction or series of transactions as
having been Incurred by the Surviving Person or the Restricted Subsidiary at
the time of such transaction or series of transactions), no Default or Event
of Default shall have occurred and be continuing;
(e) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the Company or the Surviving Person, as
the case may be, would be able to Incur at least $1.00 of additional Debt
under clause (1) of the first paragraph of the covenant described under
"--Limitation on Debt";
(f) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the Surviving Person shall have a
Consolidated Net Worth in an amount which is not less than the Consolidated
Net Worth of the Company immediately prior to such transaction or series of
transactions; and
(g) the Company shall deliver, or cause to be delivered, to the Note
Trustee, in form and substance reasonably satisfactory to the Note Trustee,
an Officers' Certificate and an Opinion of Counsel, each stating that such
transaction and the supplemental indenture, if any, in respect thereto
comply with this covenant and that all conditions precedent herein described
relating to such transaction have been satisfied.
The Surviving Person shall succeed to, and be substituted for, and may
exercise every right and power of the Company under the Indenture, but the
predecessor Company in the case of:
(a) a sale, transfer, assignment, conveyance or other disposition (unless
such sale, transfer, assignment, conveyance or other disposition is of all
the assets of the Company as an entirety or virtually as an entirety), or
(b) a lease,
shall not be released from any of the obligations or covenants under the
Indenture, including with respect to the payment of the Notes.
SEC Reports
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file
with the SEC and provide the Note Trustee and holders of Notes with such annual
reports and such information, documents and other reports as are specified in
Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation
subject to such Sections, such information, documents and reports to be so
filed and provided at the times specified for the filing of such information,
documents and reports under such Sections; provided, however, that the Company
shall not be so obligated to file such information, documents and reports with
the SEC if the SEC does not permit such filings.
Events of Default
Events of Default in respect of the Notes include:
(a) failure to make the payment of any interest on the Notes when the
same becomes due and payable, and such failure continues for a period of 30
days;
39
(b) failure to make the payment of any principal of, or premium, if any,
on, any of the Notes when the same becomes due and payable at its Stated
Maturity, upon acceleration, redemption, optional redemption, required
repurchase or otherwise;
(c) failure to comply with the covenant described under "--Merger,
Consolidation and Sale of Property";
(d) failure to comply with any other covenant or agreement in the Notes
or in the Indenture (other than a failure that is the subject of the
foregoing clause (1), (2) or (3)) and such failure continues for 90 days
after written notice is given to the Company as provided below;
(e) a default under any Debt by the Company or any Restricted Subsidiary
that results in acceleration of the maturity of such Debt, or failure to pay
any such Debt at maturity, in an aggregate amount greater than $25 million
(or its foreign currency equivalent at the time), which acceleration has not
been rescinded or annulled within 10 days after the period for annulment in
the agreement governing such Debt (the "cross acceleration provisions");
(f) any judgment or judgments for the payment of money in an aggregate
amount in excess of $25 million (or its foreign currency equivalent at the
time) that shall be rendered against the Company or any Restricted
Subsidiary and that shall not be waived, satisfied or discharged for any
period of 60 consecutive days during which a stay of enforcement shall not
be in effect (the "judgment default provisions"); and
(g) certain events involving bankruptcy, insolvency or reorganization of
the Company or any Restricted Subsidiary (the "bankruptcy provisions");
A Default under clause (4) is not an Event of Default until the Note Trustee
or the holders of not less than 25% in aggregate principal amount of the Notes
then outstanding notify the Company of the Default and the Company does not
cure such Default within the time specified after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default."
The Company shall provide an Officers' Certificate to the Note Trustee
promptly upon the Company obtaining knowledge of any Default or Event of
Default that has occurred, and, if applicable, describe such Default or Event
of Default, the status thereof and what action the Company is taking or
proposes to take with respect thereto.
If an Event of Default with respect to the Notes (other than an Event of
Default resulting from certain events involving bankruptcy, insolvency or
reorganization with respect to the Company) shall have occurred and be
continuing, the Note Trustee or the registered holders of not less than 25% in
aggregate principal amount of the Notes then outstanding may declare to be
immediately due and payable the principal amount of all the Notes then
outstanding, plus accrued but unpaid interest to the date of acceleration. In
case an Event of Default resulting from certain events of bankruptcy,
insolvency or reorganization with respect to the Company shall occur, such
amount with respect to all the Notes shall be due and payable immediately
without any declaration or other act on the part of the Note Trustee or the
holders of the Notes. After any such acceleration, but efore a judgment or
decree based on acceleration is obtained by the Note Trustee, the registered
holders of a majority in aggregate principal amount of the Notes then
outstanding may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the nonpayment of accelerated
principal, premium or interest, have been cured or waived as provided in the
Indenture.
Subject to the provisions of the Indenture relating to the duties of the
Note Trustee, in case an Event of Default shall occur and be continuing, the
Note Trustee shall be under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any of the holders of
the Notes, unless such holders shall have offered to the Note Trustee indemnity
satisfactory to it. Subject to such provisions for the indemnification of the
Note Trustee, the holders of a majority in aggregate principal amount of the
Notes then
40
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Note Trustee or
exercising any trust or power conferred on the Note Trustee with respect to the
Notes.
No holder of Notes shall have any right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or trustee, or
for any remedy thereunder, unless:
(a) such holder has previously given to the Note Trustee written notice
of a continuing Event of Default,
(b) the registered holders of at least 25% in aggregate principal amount
of the Notes then outstanding have made written request and offered
reasonable indemnity to the Note Trustee to institute such proceeding as
trustee, and
(c) the Note Trustee shall not have received from the registered holders
of a majority in aggregate principal amount of the Notes then outstanding a
direction inconsistent with such request and shall have failed to institute
such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a holder of
any Note for enforcement of payment of the principal of, and premium, if any,
or interest on, such Note on or after the respective due dates expressed in
such Note.
Amendments and Waivers
Subject to certain exceptions, the Indenture may be amended with the consent
of the registered holders of a majority in aggregate principal amount of the
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for the Notes) and any past default or compliance with
any provisions may also be waived (except a default in the payment of
principal, premium or interest and certain covenants and provisions of the
Indenture which cannot be amended without the consent of each holder of an
outstanding Note) with the consent of the registered holders of at least a
majority in aggregate principal amount of the Notes then outstanding. However,
without the consent of each holder of an outstanding Note, no amendment may,
among other things,
(1) reduce the amount of Notes whose holders must consent to an amendment
or waiver,
(2) reduce the rate of or extend the time for payment of interest on any
Note,
(3) reduce the principal of, or premium, if any, or extend the Stated
Maturity of any Note,
(4) make any Note payable in money other than U.S. dollars,
(5) impair the right of any holder of the Notes to receive payment of
principal of, or premium, if any, and interest on such holder's Notes on or
after the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such holder's Notes,
(6) subordinate the Notes to any other obligation of the Company,
(7) reduce the Change of Control Purchase Price or, at any time after a
Change of Control has occurred, change the time at which the Change of
Control Offer relating thereto must be made or at which the Notes must be
repurchased pursuant to such Change of Control Offer, and
(8) at any time after the Company is obligated to make a Prepayment Offer
with the Excess Proceeds from Asset Sales, change the time at which such
Prepayment Offer must be made or at which the Notes must be repurchased
pursuant thereto.
Without the consent of any holder of the Notes, the Company and the Note
Trustee may amend the Indenture to:
(1) cure any ambiguity, omission, defect or inconsistency in any manner
that is not adverse in any material respect to any holder of the Notes,
41
(2) provide for the assumption by a successor corporation of the
obligations of the Company under the Indenture,
(3) provide for uncertificated Notes in addition to or in place of
certificated Notes,
(4) secure the Notes, to add to the covenants of the Company for the
benefit of the holders of the Notes or to surrender any right or power
conferred upon the Company,
(5) make any change that does not adversely affect the rights of any
holder of the Notes,
(6) make any change to the subordination provisions of the Indenture that
would not limit or terminate the benefits available to any holder of Senior
Debt under such provisions or to comply with any requirement of the SEC in
connection with the qualification of the Indenture under the Trust Indenture
Act of 1939, and
(7) provide for the issuance of additional Notes in accordance with the
Indenture.
No amendment may be made to the subordination provisions of the Indenture
that adversely affects the rights of any holder of Senior Debt then outstanding
unless the holders of such Senior Debt (or their Representative) consent to
such change. The consent of the holders of the Notes is not necessary to
approve the particular form of any proposed amendment. It is sufficient if such
consent approves the substance of the proposed amendment. After an amendment
becomes effective, the Company is required to mail to each registered holder of
the Notes at such holder's address appearing in the security register a notice
briefly describing such amendment. However, the failure to give such notice to
all holders of the Notes, or any defect therein, will not impair or affect the
validity of the amendment.
Defeasance
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes.
The Company at any time may terminate:
(1) its obligations under the covenants described under "--Repurchase at
the Option of Holders Upon a Change of Control" and "--Certain Covenants,"
(2) the operation of the cross acceleration provisions, the judgment
default provisions, and the bankruptcy provisions described under "--Events
of Default" above, and
(3) the limitations contained in clauses (e) and (f) under the first
paragraph of "--Merger, Consolidation and Sale of Property," above
("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the Notes
may not be accelerated because of an Event of Default with respect thereto. If
the Company exercises its covenant defeasance option, payment of the Notes may
not be accelerated because of an Event of Default specified in clause (4) (with
respect to the covenants described under "--Certain Covenants"), (5), (6) or
(7) under "--Events of Default" above or because of the failure of the Company
to comply with clauses (e) and (f) under the first paragraph of "--Merger,
Consolidation and Sale of Property," above.
The legal defeasance option or the covenant defeasance option may be
exercised only if:
(a) the Company irrevocably deposits in trust with the Note Trustee money
or U.S. Government Obligations for the payment of principal of, premium, if
any, and interest on the Notes to repurchase, redemption or maturity, as the
case may be;
42
(b) the Company delivers to the Note Trustee a certificate from a
nationally recognized firm of independent certified public accountants
expressing their opinion that the payments of principal and interest when
due and without reinvestment on the deposited U.S. Government Obligations
plus any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal, premium, if any,
and interest when due on all the Notes to repurchase, redemption or
maturity, as the case may be;
(c) 91 days pass after the deposit is made and during the 91-day period
no Default described in clause (7) under "--Events of Default" occurs with
respect to the Company or any other Person making such deposit which is
continuing at the end of the period;
(d) no Default or Event of Default has occurred and is continuing on the
date of such deposit and after giving effect thereto;
(e) such deposit does not constitute a default under any other agreement
or instrument binding on the Company;
(f) in the case of the legal defeasance option, the Company delivers to
the Note Trustee an Opinion of Counsel stating that:
(1) the Company has received from the Internal Revenue Service, or
"IRS," a ruling, or
(2) since the date of the Indenture there has been a change in the
applicable Federal income tax law, to the effect, in either case, that,
and based thereon such Opinion of Counsel shall confirm that, the
holders of the Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at the
same time as would have been the case if such legal defeasance had not
occurred; and
(g) in the case of the covenant defeasance option, the Company delivers
to the Note Trustee an Opinion of Counsel to the effect that the holders of
the Notes will not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such legal defeasance had not occurred.
Governing Law
The Indenture and the Notes are governed by the internal laws of the State
of New York without reference to principles of conflicts of law.
The Note Trustee
Deutsche Bank Trust Company Americas is the Note Trustee under the Indenture.
Except during the continuance of an Event of Default, the Note Trustee will
perform only such duties as are specifically set forth in the Indenture. During
the existence of an Event of Default, the Note Trustee will exercise such of
the rights and powers vested in it under the Indenture and use the same degree
of care and skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture and in this "Description of Notes." Reference is made to the
Indenture for the full definition of all such terms as well as any other
capitalized terms used herein for which no definition is provided. Unless the
context otherwise requires, an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP.
"Additional Assets" means:
(a) any Property (other than cash, Cash Equivalents and securities) to be
owned by the Company or any Restricted Subsidiary and used in a Regulated
Utility Business; or
43
(b) Capital Stock of a Person that becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by the Company or another
Restricted Subsidiary from any Person other than the Company or an Affiliate
of the Company, provided, that such Person which becomes a Restricted
Subsidiary is not engaged primarily in any business other than the Regulated
Utility Business.
"Affiliate" of any specified Person means:
(a) any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified Person, or
(b) any other Person who is a director or officer of:
(1) such specified Person,
(2) any Subsidiary of such specified Person, or
(3) any Person described in clause (a) above.
For the purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. For purposes of the covenants described
under "--Certain Covenants--Limitation on Transactions with Affiliates" and
"--Limitation on Asset Sales" and the definition of "Additional Assets" only,
"Affiliate" shall also mean any beneficial owner of shares representing 10% or
more of the total voting power of the Voting Stock (on a fully diluted basis)
of the Company or of rights or warrants to purchase such Voting Stock (whether
or not currently exercisable) and any Person who would be an Affiliate of any
such beneficial owner pursuant to the first sentence hereof.
"Asset Sale" means any sale, lease (other than operating leases entered into
in the ordinary course of business), transfer, issuance or other disposition
(or series of related sales, leases, transfers, issuances or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of
(a) any shares of Capital Stock of a Restricted Subsidiary, or
(b) any other assets of the Company or any Restricted Subsidiary outside
of the ordinary course of business of the Company or such Restricted
Subsidiary,
other than:
(1) any disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to another Restricted Subsidiary,
(2) any disposition that constitutes a Permitted Investment or Restricted
Payment permitted by the covenant described under "--Certain
Covenants--Limitation on Restricted Payments,"
(3) any disposition effected in compliance with the first paragraph of
the covenant described under "--Merger, Consolidation and Sale of Property,"
(4) any sales of accounts receivable, and
(5) any disposition or series of related dispositions the proceeds of
which do not exceed $20 million.
"Attributable Debt" in respect of a Sale and Leaseback Transaction means, at
any date of determination:
(a) if such Sale and Leaseback Transaction is a Capital Lease Obligation,
the amount of Debt represented thereby according to the definition of
"Capital Lease Obligation," and
(b) in all other instances the present value (discounted at the interest
rate borne by the Notes, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of
44
the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of any date of determination, with respect to any
Debt or Preferred Stock, the quotient obtained by dividing: (a) the sum of the
product of the number of years (rounded to the nearest one-twelfth of one year)
from the date of determination to the dates of each successive scheduled
principal payment of such Debt or redemption or similar payment with respect to
such Preferred Stock multiplied by the amount of such payment, by (b) the sum
of all such payments.
"Board of Directors" means the board of directors of the Company.
"bonds" means any series of the bonds, including the Bonds.
"Capital Expenditure Debt" means Debt Incurred by any Person to finance a
capital expenditure so long as such capital expenditure is or should be
included as an addition to "Property, Plant and Equipment, Net" in accordance
with GAAP; provided, that the proceeds of such Debt are expressly dedicated to,
or segregated for, the payment of such capital expenditure or to repay
short-term Debt incurred to pay part or all of such capital expenditure.
"Capital Lease Obligations" means any obligation under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP; and the amount of Debt represented by such obligation shall be the
capitalized amount of such obligation determined in accordance with GAAP; and
the Stated Maturity thereof shall be the date of the last payment of rent or
any other amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty. For
purposes of "--Certain Covenants--Limitation on Liens," a Capital Lease
Obligation shall be deemed secured by a Lien on the Property being leased.
"Capital Stock" means, with respect to any Person, any shares or other
equivalents (however designated) of any class of corporate stock or partnership
interests or any other participations, rights, warrants, options or other
interests in the nature of an equity interest in such Person, including
Preferred Stock, but excluding any debt security convertible or exchangeable
into such equity interest.
"Capital Stock Sale Proceeds" means the aggregate cash proceeds received by
the Company from the issuance or sale (other than to a Subsidiary of the
Company) by the Company of its Capital Stock (other than Disqualified Stock)
after the Issue Date, net of attorneys' fees, accountants' fees, underwriters'
or placement agents' fees, discounts or commissions and brokerage, consultant
and other fees actually incurred in connection with such issuance or sale and
net of taxes paid or payable as a result thereof.
"Cash Equivalents" means any of the following:
(a) Investments in U.S. Government Obligations maturing within 365 days
of the date of acquisition thereof;
(b) Investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 90 days of the date of acquisition
thereof issued by a bank or trust company organized under the laws of the
United States of America or any state thereof having capital, surplus and
undivided profits aggregating in excess of $500 million and whose long-term
debt is rated "A," "A-3" or "A-" or higher according to Fitch Ratings,
Moody's or S&P (or such similar equivalent rating by at least one
"nationally recognized statistical rating organization" (as defined in Rule
436 under the Securities Act));
(c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (a) entered into with:
45
(1) a bank meeting the qualifications described in clause (b) above,
or
(2) any primary government securities dealer reporting to the Market
Reports Division of the Federal Reserve Bank of New York;
(d) Investments in commercial paper, maturing not more than 90 days after
the date of acquisition, issued by a corporation (other than an Affiliate of
the Company) organized and in existence under the laws of the United States
of America with a rating at the time as of which any Investment therein is
made of "F1" (or higher) according to Fitch Ratings, "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P (or such similar
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)); and
(e) direct obligations (or certificates representing an ownership
interest in such obligations) of any State of the United States of America
(including any agency or instrumentality thereof) for the payment of which
the full faith and credit of such state is pledged and which are not
callable or redeemable at the issuer's option, provided that:
(1) the long-term debt of such State is rated "A," "A-3" or "A-" or
higher according to Fitch Ratings, Moody's or S&P (or such similar
equivalent rating by at least one "nationally recognized statistical
rating organization" (as defined in Rule 436 under the Securities Act)),
and
(2) such obligations mature within 180 days of the date of
acquisition thereof.
"Change of Control" means the occurrence of any of the following events:
(a) if any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act or any successor provisions to either of the
foregoing), other than Westar Industries, including any group acting for the
purpose of acquiring, holding, voting or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act, except that a
person will be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
35% or more of the total voting power of the Voting Stock of the Company
(for purposes of this clause (a), such person or group shall be deemed to
beneficially own any Voting Stock of a corporation held by any other
corporation (the "parent corporation") so long as such person or group
beneficially owns, directly or indirectly, in the aggregate a majority of
the total voting power of the Voting Stock of such parent corporation); or
(b) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the assets
of the Company and any Restricted Subsidiary, considered as a whole (other
than a disposition of such assets as an entirety or virtually as an entirety
to a Wholly Owned Restricted Subsidiary), shall have occurred, or the
Company merges, consolidates or amalgamates with or into any other Person or
any other Person merges, consolidates or amalgamates with or into the
Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is reclassified into or exchanged
for cash, securities or other Property, other than any such transaction
where:
(1) the outstanding Voting Stock of the Company is reclassified into
or exchanged for other Voting Stock of the Company or for Voting Stock
of the surviving corporation, and
(2) the holders of the Voting Stock of the Company immediately prior
to such transaction own, directly or indirectly, not less than a
majority of the Voting Stock of the Company or the surviving corporation
immediately after such transaction and in substantially the same
proportion as before the transaction; or
(c) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election or appointment by such Board or whose
nomination for election by the shareholders of the Company was approved by a
vote of not less than three-fourths of the directors then still in office
who were either directors at the beginning of such
46
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office; or
(d) the shareholders of the Company shall have approved any plan of
liquidation or dissolution of the Company.
Notwithstanding the above, the proposed merger of the Company with Public
Service Company of New Mexico shall not be deemed a Change of Control.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Price Protection Agreement" means, in respect of a Person, any
forward contract, commodity swap agreement, commodity option agreement or other
similar agreement or arrangement designed to protect such Person against
fluctuations in commodity prices.
"Consolidated Current Liabilities" means, as of any date of determination,
the aggregate amount of liabilities of the Company and any Restricted
Subsidiary which may properly be classified as current liabilities (including
taxes accrued as estimated), after eliminating:
(a) all intercompany items between the Company and any Restricted
Subsidiary or between two or more Restricted Subsidiaries, and
(b) all current maturities of long-term Debt.
"Consolidated Interest Coverage Ratio" means, as of any date of
determination, the ratio of:
(a) the aggregate amount of EBITDA for the most recent four consecutive
fiscal quarters for which financial statements are available prior to such
determination date to
(b) Consolidated Interest Expense for such four fiscal quarters;
provided, however, that:
(1) if
(A) since the beginning of such period the Company or any Restricted
Subsidiary has Incurred any Debt that remains outstanding or Repaid any
Debt, or
(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is an Incurrence or Repayment of
Debt,
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Incurrence or Repayment as if such
Debt was Incurred or Repaid on the first day of such period, provided that, in
the event of any such Repayment of Debt, EBITDA for such period shall be
calculated as if the Company or any Restricted Subsidiary had not earned any
interest income actually earned during such period in respect of the funds used
to Repay such Debt, and
(2) if
(A) since the beginning of such period the Company or any Restricted
Subsidiary shall have made any Asset Sale or an Investment (by merger or
otherwise) in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of Property which constitutes
all or substantially all of an operating unit of a business,
(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is such an Asset Sale, Investment
or acquisition, or
47
(C) since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or
any Restricted Subsidiary since the beginning of such period) shall have
made such an Asset Sale, Investment or acquisition,
then EBITDA for such period shall be calculated after giving pro forma effect
to such Asset Sale, Investment or acquisition as if such Asset Sale, Investment
or acquisition had occurred on the first day of such period.
If any Debt bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Debt shall be calculated as if the base
interest rate in effect for such floating rate of interest on the date of
determination had been the applicable base interest rate for the entire period
(taking into account any Interest Rate Agreement applicable to such Debt if
such Interest Rate Agreement has a remaining term in excess of 12 months). In
the event the Capital Stock of any Restricted Subsidiary is sold during the
period, the Company shall be deemed, for purposes of clause (1) above, to have
Repaid during such period the Debt of such Restricted Subsidiary to the extent
the Company and its continuing Restricted Subsidiary are no longer liable for
such Debt after such sale.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and any Restricted Subsidiary, plus, to the extent not
included in such total interest expense, and to the extent Incurred by the
Company or any Restricted Subsidiary,
(a) interest expense attributable to Capital Lease Obligations,
(b) amortization of debt discount and debt issuance cost, including
commitment fees,
(c) non-cash interest expense,
(d) capitalized interest,
(e) commissions, discounts and other fees and charges owed with respect
to letters of credit and bankers' acceptance financing,
(f) net costs associated with Hedging Obligations (including amortization
of fees),
(g) Disqualified Stock Dividends and Preferred Stock Dividends (not
including the dividends due in respect of the Preferred Stock of the Company
or any Restricted Subsidiary outstanding as of the Issue Date),
(h) interest Incurred in connection with Investments in discontinued
operations,
(i) interest accruing on any Debt of any other Person to the extent such
Debt is Guaranteed by the Company or any Restricted Subsidiary, and
(j) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Debt Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and any Restricted Subsidiary; provided, however, that there shall
not be included in such Consolidated Net Income:
(a) any net income (loss) of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that, the Company's and any
Restricted Subsidiary's interest in the net income of any such Person for
such period shall be included in the Consolidated Net Income up to the
aggregate amount of cash distributed by such Person during such period to
the Company or any Restricted Subsidiary as a dividend or other distribution,
(b) any extraordinary gain or loss,
(c) the cumulative effect of a change in accounting principles, and
48
(d) any non-cash compensation expense realized for grants of performance
shares, stock options or other rights to officers, directors and employees
of the Company or any Restricted Subsidiary, provided that such shares,
options or other rights can be redeemed at the option of the holder only for
Capital Stock of the Company (other than Disqualified Stock).
Notwithstanding the foregoing, for purposes of the covenant described under
"--Certain Covenants--Limitation on Restricted Payments" only, there shall be
excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of Property from Unrestricted Subsidiaries to the
Company or any Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (c)(4) of such covenant.
"Consolidated Net Tangible Assets" means, as of any date of determination,
the sum of the amounts that would appear on a consolidated balance sheet of the
Company and its consolidated Restricted Subsidiaries as the total assets (less
accumulated depreciation and amortization, allowances for doubtful receivables,
other applicable reserves and other properly deductible items) of the Company
and its Restricted Subsidiaries, after giving effect to purchase accounting and
after deducting therefrom Consolidated Current Liabilities and, to the extent
otherwise included, the amounts of (without duplication): the excess of cost
over Fair Market Value of assets or businesses acquired; any revaluation or
other write-up in book value of assets subsequent to the last day of the fiscal
quarter of the Company immediately preceding the Issue Date as a result of a
change in the method of valuation in accordance with GAAP; unamortized debt
discount and expenses and other unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights, licenses,
organization or developmental expenses and other intangible items; minority
interests in consolidated Subsidiaries held by Persons other than the Company
or any Restricted Subsidiary; treasury stock; cash or securities set aside and
held in a sinking or other analogous fund established for the purpose of
redemption or other retirement of Capital Stock to the extent such obligation
is not reflected in Consolidated Current Liabilities; and investments in and
assets of Unrestricted Subsidiaries.
"Consolidated Net Worth" means the total of the amounts shown on the
consolidated balance sheet of the Company and any Restricted Subsidiary as of
the end of the most recent fiscal quarter of the Company ending prior to the
taking of any action for the purpose of which the determination is being made,
as:
(a) the par or stated value of all outstanding Capital Stock of the
Company, plus
(b) paid-in capital or capital surplus relating to such Capital Stock,
plus
(c) any retained earnings or earned surplus, less:
(1) any accumulated deficit, and
(2) any amounts attributable to Disqualified Stock.
"Credit Facilities" means, with respect to the Company or any Restricted
Subsidiary, one or more debt or commercial paper facilities with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables or inventory financing (including through the sale of receivables
or inventory to such lenders or to special purpose, bankruptcy remote entities
formed to borrow from such lenders against such receivables or inventory) or
trade letters of credit--including, for the avoidance of doubt and not by way
of limitation, the Western Resources, Inc. Credit Agreement dated as of June
28, 2000, the Western Resources, Inc. Five-Year Competitive Advance and
Revolving Credit Facility Agreement dated as of March 17, 1998, the WR
Receivables Corporation Purchase and Sale Agreement dated as of July 28, 2000
and the WR Receivables Corporation Receivables Purchase Agreement dated as of
July 28, 2000--in each case together with any extensions, revisions,
refinancings or replacements thereof by a lender or syndicate of lenders.
"Currency Exchange Protection Agreement" means, in respect of a Person, any
foreign exchange contract, currency swap agreement, currency option or other
similar agreement or arrangement designed to protect such Person against
fluctuations in currency exchange rates.
49
"Debt" means, with respect to any Person on any date of determination
(without duplication):
(a) the principal of and premium (if any) in respect of:
(1) debt of such Person for money borrowed, and
(2) debt evidenced by Notes, debentures, secured notes (including the
bonds) or other similar instruments for the payment of which such Person
is responsible or liable;
(b) all Capital Lease Obligations of such Person;
(c) all obligations of such Person issued or assumed as the deferred
purchase price of Property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);
(d) all obligations of such Person for the reimbursement of any obligor
on any letter of credit, bankers' acceptance or similar credit transaction
(other than obligations with respect to letters of credit securing
obligations, other than obligations described in (a) through (c), above,
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn
upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following
payment on the letter of credit);
(e) the amount of all obligations of such Person with respect to the
Repayment of any Disqualified Stock or, with respect to any Subsidiary of
such Person, any Preferred Stock (but excluding, in each case, any accrued
dividends);
(f) all obligations of the type referred to in clauses (a) through (e) of
other Persons and all dividends of other Persons for the payment of which,
in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(g) all obligations of the type referred to in clauses (a) through (f) of
other Persons secured by any Lien on any Property of such Person (whether or
not such obligation is assumed by such Person), the amount of such
obligation being deemed to be the lesser of the value of such Property or
the amount of the obligation so secured;
(h) to the extent not otherwise included in this definition, Hedging
Obligations of such Person; and
(i) the Mandatorily Redeemable Preferred Securities and any Guarantees
related thereto.
The amount of Debt of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and
the maximum liability, upon the occurrence of the contingency giving rise to
the obligation, of any contingent obligation at such date. The amount of Debt
represented by a Hedging Obligation shall be equal to:
(1) zero if such Hedging Obligation has been Incurred pursuant to
clause (e), (f) or (g) of the second paragraph of the covenant described
under "--Certain Covenants--Limitation on Debt," or
(2) the notional amount of such Hedging Obligation if not Incurred
pursuant to such clauses.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Direct Stock Purchase Plan" means the Company's direct stock purchase plan
pursuant to which shares of the Company's common stock may be issued, either
through original issue or through shares purchased on the open market.
"Disqualified Stock" means any Capital Stock of the Company or any
Restricted Subsidiary that by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable, in either case at the
option of the holder thereof) or otherwise:
(a) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise,
50
(b) is or may become redeemable or repurchaseable at the option of the
holder thereof, in whole or in part, or
(c) is convertible or exchangeable at the option of the holder thereof
for Debt or Disqualified Stock,
on or prior to, in the case of clause (a), (b) or (c), the first anniversary of
the Stated Maturity of the Notes.
"Disqualified Stock Dividends" means all dividends with respect to
Disqualified Stock of the Company held by Persons other than any Restricted
Subsidiary. The amount of any such dividend shall be equal to the quotient of
such dividend divided by the difference between one and the maximum statutory
Federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the Company.
"EBITDA" means, for any period, an amount equal to, for the Company and its
consolidated Restricted Subsidiaries:
(a) the sum of Consolidated Net Income for such period, plus the
following to the extent that they reduce Consolidated Net Income for such
period:
(1) the provision for taxes based on income or profits or utilized in
computing net loss,
(2) Consolidated Interest Expense,
(3) depreciation,
(4) amortization of intangibles,
(5) any other non-cash items (other than any such non-cash item to
the extent that it represents an accrual of or reserve for cash
expenditures in any future period), minus
(b) all non-cash items increasing Consolidated Net Income for such period
(other than any such non-cash item to the extent that it will result in the
receipt of cash payments in any future period), plus
(c) for the fiscal quarters of the Company ending on December 31, 2001
and March 31, 2002, (1) up to $36 million in respect of one-time cash
workforce reduction costs to the extent incurred by the Company and (2) up
to $25 million in respect of a one-time cash charge to the extent such
charge is taken by the Company with respect to costs incurred in connection
with repairs necessitated by a January 2002 ice storm.
Notwithstanding the foregoing clause (a), the provision for taxes and the
depreciation, amortization and non-cash items of any Restricted Subsidiary
shall be added to Consolidated Net Income to compute EBITDA only to the extent
(and in the same proportion) that the net income of such Restricted Subsidiary
was included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Restricted Subsidiary or its shareholders.
"Event of Default" has the meaning set forth under "--Events of Default."
"Exchange Notes" means the notes issued in exchange for the Notes as
described under "Exchange Offers; Registration Rights."
"Fair Market Value" means, with respect to any Property, the price that
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction. Fair Market Value shall be
determined, except as otherwise provided,
51
(a) if such Property has a Fair Market Value equal to or less than $10
million, by any Officer of the Company, or
(b) if such Property has a Fair Market Value in excess of $10 million, by
a majority of the Board of Directors and evidenced by a Board resolution,
dated within 30 days of the relevant transaction, delivered to the Note
Trustee.
"Fitch Ratings" means Fitch, Inc.
"GAAP" means United States generally accepted accounting principles as in
effect on the Issue Date, including those set forth:
(a) in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants,
(b) in the statements and pronouncements of the Financial Accounting
Standards Board,
(c) in such other statements by such other entity as may be approved by a
significant segment of the accounting profession, and
(d) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Debt of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt of such other Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise), or
(b) entered into for the purpose of assuring in any other manner the
obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include:
(1) endorsements for collection or deposit in the ordinary course of
business, or
(2) a contractual commitment by one Person to invest in another Person
for so long as such Investment is reasonably expected to constitute a
Permitted Investment under clause (b) of the definition of "Permitted
Investment."
The term "Guarantee" used as a verb has a corresponding meaning. The term
"Guarantor" shall mean any Person Guaranteeing any obligation.
"Hedging Obligation" of any Person means any obligation of such Person
pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement
or any other similar agreement or arrangement, but not including a Commodity
Price Protection Agreement.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by merger, conversion, exchange or otherwise), extend,
assume, Guarantee or become liable in respect of such Debt or other obligation
or the recording, as required pursuant to GAAP or otherwise, of any such Debt
or obligation on the balance sheet of such Person (and "Incurrence" and
"Incurred" shall have meanings correlative to the foregoing);
52
provided, however, that a change in GAAP that results in an obligation of such
Person that exists at such time, and is not theretofore classified as Debt,
becoming Debt shall not be deemed an Incurrence of such Debt; provided further,
however, that any Debt or other obligations of a Person existing at the time
such Person becomes a Restricted Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Restricted
Subsidiary at the time it becomes a Restricted Subsidiary; and provided
further, however, that solely for purposes of determining compliance with
"--Certain Covenants--Limitation on Debt," amortization of debt discount shall
not be deemed to be the Incurrence of Debt, provided that in the case of Debt
sold at a discount, the amount of such Debt Incurred shall at all times be the
aggregate principal amount at Stated Maturity.
"Independent Financial Advisor" means an investment banking firm of national
standing or any third-party appraiser of national standing, provided that such
firm or appraiser is not an Affiliate of the Company.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect against fluctuations in interest rates.
"Investment" by any Person means any direct or indirect loan (other than
advances to customers in the ordinary course of business that are recorded as
accounts receivable on the balance sheet of such Person), advance or other
extension of credit or capital contribution (by means of transfers of cash or
other Property to others or payments for Property or services for the account
or use of others, or otherwise) to, or Incurrence of a Guarantee of any
obligation of, or purchase or acquisition of Capital Stock, secured notes,
notes, debentures or other securities or evidence of Debt issued by, any other
Person. For purposes of the covenant described under "--Certain
Covenants--Limitation on Restricted Payments" and the definition of "Restricted
Payment," "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the Fair Market Value of the
net assets of any Unrestricted Subsidiary of the Company. In determining the
amount of any Investment made by transfer of any Property other than cash, such
Property shall be valued at its Fair Market Value at the time of such
Investment.
"Investment Grade Rating" means a rating equal to or higher than BBB- (or
the equivalent) by Fitch Ratings, Baa3 (or the equivalent) by Moody's or BBB-
(or the equivalent) by S&P.
"Investment Grade Status" shall be deemed to have been reached on the date
that the Notes have an Investment Grade Rating from the Required Rating
Agencies.
"Investment Rating" means a rating by Fitch Ratings, Moody's or S&P.
"Issue Date" means the date on which the Notes are initially issued.
"Lien" means, with respect to any Property of any Person, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such Property (including any Capital Lease
Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction).
"Mandatorily Redeemable Preferred Securities" means the 7 7/8% Cumulative
Quarterly Income Preferred Securities, Series A (QUIPS) (related debentures due
2025), the 8 1/2 % Cumulative Quarterly Income Preferred Securities, Series B
(QUIPS) (related debentures due 2036) and similar securities issued from time
to time, the proceeds of which are received by the Company and which are
treated for accounting and rating agency purposes in a substantively similar
manner.
"Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.
53
"Net Available Cash" from any Asset Sale means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a Note or installment receivable or otherwise, but only
as and when received, but excluding any other consideration received in the
form of assumption by the acquiring Person of Debt or other obligations
relating to the Property that is the subject of such Asset Sale or received in
any other non-cash form), in each case net of:
(a) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred (including, without limitation, fees and expenses
of counsel, accountants and investment bankers), and all taxes required to
be accrued as a liability under GAAP, as a consequence of such Asset Sale,
(b) all payments made on any Debt that is secured by any Property subject
to such Asset Sale, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such Property, or which must
by its terms, or in order to obtain a necessary consent to such Asset Sale,
or by applicable law, be repaid out of the proceeds from such Asset Sale,
(c) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Sale, and
(d) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with
the Property disposed in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale.
"Officer" means the Chief Executive Officer, the President, the Chief
Financial Officer, any Executive Vice President, Senior Vice President or Vice
President of the Company.
"Officers' Certificate" means a certificate signed by two Officers of the
Company, at least one of whom shall be the principal executive officer or
principal financial officer of the Company, and delivered to the Note Trustee.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Note Trustee. The counsel may be an employee of or counsel to
the Company or the Note Trustee.
"Permitted Investment" means any Investment by the Company or any Restricted
Subsidiary in:
(a) any Restricted Subsidiary or any Person that will, upon the making of
such Investment, become a Restricted Subsidiary;
(b) any Person if as a result of such Investment such Person is merged or
consolidated with or into, or transfers or conveys all or substantially all
its Property to, the Company or any Restricted Subsidiary;
(c) Cash Equivalents;
(d) receivables owing to the Company or any Restricted Subsidiary, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the
Company or any Restricted Subsidiary deem reasonable under the circumstances;
(e) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(f) loans and advances (other than loans and advances outstanding on the
Issue Date) to employees made in the ordinary course of business consistent
with past practices of the Company or any Restricted Subsidiary, as the case
may be, provided that such loans and advances do not exceed $15 million at
any one time outstanding;
(g) stock, obligations or other securities received in settlement of
debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction of judgments;
54
(h) any Person to the extent such Investment represents the non-cash
portion of the consideration received in connection with an Asset Sale
consummated in compliance with the covenant described under "--Certain
Covenants--Limitation on Asset Sales"; and
(i) other Investments made for Fair Market Value that do not exceed $25
million outstanding at any one time in the aggregate.
"Permitted Liens" means:
(a) Liens to secure Debt permitted to be Incurred under clause (b) of the
second paragraph of the covenant described under "--Certain
Covenants--Limitation on Debt;"
(b) securities issued under the Company's Mortgage, securities issued
under KGE's original Mortgage and Deed of Trust dated April 1, 1940, as
amended and to be amended (together with the Mortgage, the "Mortgages and
Deeds of Trust"), or Liens permitted by the terms of the Mortgages and Deeds
of Trust;
(c) Liens to secure Debt permitted to be Incurred under clause (c) of the
second paragraph of the covenant described under "--Certain
Covenants--Limitation on Debt," provided that any such Lien may not extend
to any Property of the Company or any Restricted Subsidiary, other than the
Property acquired, constructed or leased with the proceeds of such Debt and
any improvements or accessions to such Property;
(d) Liens for taxes, assessments or governmental charges or levies on the
Property of the Company or any Restricted Subsidiary if the same shall not
at the time be delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision that shall be required in conformity with GAAP shall
have been made therefor;
(e) Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens, on the Property of the Company or
any Restricted Subsidiary arising in the ordinary course of business and
securing payment of obligations that are not more than 90 days past due or
are being contested in good faith and by appropriate proceedings;
(f) Liens on the Property of the Company or any Restricted Subsidiary
incurred in the ordinary course of business to secure performance of
obligations with respect to statutory or regulatory requirements,
performance or return-of-money bonds, surety bonds or other obligations of a
like nature and Incurred in a manner consistent with industry practice, in
each case which are not Incurred in connection with the borrowing of money,
the obtaining of advances or credit or the payment of the deferred purchase
price of Property and which do not in the aggregate impair in any material
respect the use of such Property in the operation of the business of the
Company and any Restricted Subsidiary taken as a whole;
(g) Liens on Property at the time the Company or any Restricted
Subsidiary acquired such Property, including any acquisition by means of a
merger or consolidation with or into the Company or any Restricted
Subsidiary; provided, however, that any such Lien may not extend to any
other Property of the Company or any Restricted Subsidiary; provided
further, however, that such Liens shall not have been Incurred in
anticipation of or in connection with the transaction or series of
transactions pursuant to which such Property was acquired by the Company or
any Restricted Subsidiary;
(h) Liens on the Property of a Person at the time such Person becomes a
Restricted Subsidiary; provided, however, that any such Lien may not extend
to any other Property of the Company or any other Restricted Subsidiary that
is not a direct Subsidiary of such Person; provided further, however, that
any such Lien was not Incurred in anticipation of or in connection with the
transaction or series of transactions pursuant to which such Person became a
Restricted Subsidiary;
(i) purchase money Liens upon or in Property acquired and held by the
Company in the ordinary course of business to secure the purchase price of
such Property or to secure indebtedness incurred solely for the purpose of
financing the acquisition of any such Property to be subject to such Liens,
or Liens existing
55
on any such Property at the time of acquisition, or extensions, renewals or
replacements of any of the foregoing for the same or a lesser amount,
provided that no such Lien shall extend to or cover any Property other than
the Property being acquired and no such extension, renewal or replacement
shall extend to or cover Property not theretofore subject to the Lien being
extended, renewed or replaced;
(j) pledges or deposits by the Company or any Restricted Subsidiary under
workmen's compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Debt) or leases to which the
Company or any Restricted Subsidiary is party, or deposits to secure public
or statutory obligations of the Company, or deposits for the payment of
rent, in each case incurred in the ordinary course of business;
(k) utility easements, building restrictions and such other encumbrances
or charges against real Property as are of a nature generally existing with
respect to properties of a similar character;
(l) Liens existing on the Issue Date not otherwise described in clauses
(a) through (k) above;
(m) Liens not otherwise described in clauses (a) through (l) above on the
Property of any Restricted Subsidiary to secure any Debt permitted to be
Incurred by any Restricted Subsidiary pursuant to the covenant described
under "--Certain Covenants--Limitation on Debt";
(n) Liens on the Property of the Company or any Restricted Subsidiary to
secure any Refinancing, in whole or in part, of any Debt secured by Liens
referred to in clause (c), (g), (h), (i), (j) or (l) above; provided,
however, that any such Lien shall be limited to all or part of the same
Property that secured the original Lien (together with improvements and
accessions to such Property) and the aggregate principal amount of Debt that
is secured by such Lien shall not be increased to an amount greater than the
sum of:
(1) the outstanding principal amount, or, if greater, the committed
amount, of the Debt secured by Liens being refinanced and fees and
expenses incurred in connection therewith, at the time the original Lien
became a Permitted Lien under the Indenture, and
(2) an amount necessary to pay any fees and expenses, including
premiums and defeasance costs, incurred by the Company or any Restricted
Subsidiary in connection with such Refinancing; and
(o) Liens not otherwise permitted by clauses (a) through (n) above
encumbering Property having an aggregate Fair Market Value not in excess of
5% of Consolidated Net Tangible Assets, as determined based on the
consolidated balance sheet of the Company as of the end of the most recent
fiscal quarter for which financial statements are available.
"Permitted Refinancing Debt" means any Debt that Refinances any other Debt,
including any successive Refinancings, so long as:
(a) such Debt is in an aggregate principal amount (or if Incurred with
original issue discount, an aggregate issue price) not in excess of the sum
of:
(1) the aggregate principal amount (or if Incurred with original
issue discount, the aggregate accreted value) then outstanding, plus
interest thereon, of the Debt being Refinanced; and
(2) an amount necessary to pay any fees and expenses, including
premiums and defeasance costs, related to such Refinancing;
(b) (1) the Average Life of such Debt is equal to or greater than the
Average Life of the Debt being Refinanced and the Stated Maturity of such
Debt is no earlier than the Stated Maturity of the Debt being Refinanced; or
(2) the first mandatory maturity date for any such new Debt is subsequent
to May 1, 2007; and
(c) the new Debt shall not be senior in right of payment to the Debt that
is being Refinanced;
provided, however, that Permitted Refinancing Debt shall not include Debt of
the Company or any Restricted Subsidiary that Refinances Debt of an
Unrestricted Subsidiary.
56
"Person" means any individual, corporation, company (including any limited
liability company), association, partnership, joint venture, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to the payment
of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares of any other
class of Capital Stock issued by such Person.
"Preferred Stock Dividends" means all dividends with respect to Preferred
Stock of Restricted Subsidiaries held by Persons other than the Company or a
Restricted Subsidiary. The amount of any such dividend shall be equal to the
quotient of such dividend divided by the difference between one and the maximum
statutory Federal income rate (expressed as a decimal number between 1 and 0)
then applicable to the issuer of such Preferred Stock.
"pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms hereof, a calculation performed in accordance with
Article 11 of Regulation S-X promulgated under the Securities Act, as
interpreted in good faith by the Board of Directors after consultation with the
independent certified public accountants of the Company, or otherwise a
calculation made in good faith by the Board of Directors after consultation
with the independent certified public accountants of the Company, as the case
may be.
"Property" means, with respect to any Person, any interest of such Person in
any kind of property or asset, whether real, personal or mixed, or tangible or
intangible, including Capital Stock in, and other securities of, any other
Person. For purposes of any calculation required pursuant to the Indenture, the
value of any Property shall be its Fair Market Value.
"Public Equity Offering" means an underwritten public offering of common
stock of the Company.
"Purchase Money Debt" means Debt:
(a) consisting of the deferred purchase price of property, conditional
sale obligations, obligations under any title retention agreement, other
purchase money obligations and obligations in respect of industrial revenue
bonds, in each case where the maturity of such Debt does not exceed the
anticipated useful life of the Property being financed, and
(b) Incurred to finance the acquisition, construction or lease by the
Company or any Restricted Subsidiary of such Property, including additions
and improvements thereto;
provided, however, that such Debt is Incurred within 180 days after the
acquisition, construction or lease of such Property by the Company or such
Restricted Subsidiary.
"Rating Agencies" means Fitch Ratings, Moody's and S&P.
"Refinance" means, in respect of any Debt, to refinance, extend, renew,
refund or Repay, or to issue other Debt in exchange or replacement for, such
Debt. "Refinanced" and "Refinancing" shall have correlative meanings.
"Regulated Utility Business" means any business that is related, ancillary
or complementary to the businesses of the Company and any Restricted Subsidiary
on the Issue Date, as well as any other business primarily related to the
provision of utility services subject to the regulations, in any aspect of such
business, of any Federal, State, municipal or other governmental authority in
the United States or elsewhere.
"Repay" means, in respect of any Debt, to repay, prepay, repurchase, redeem,
legally defease or otherwise retire such Debt. "Repayment" and "Repaid" shall
have correlative meanings. For purposes of the covenant described under
"--Certain Covenants--Limitation on Asset Sales" and the definition of
"Consolidated Interest Coverage Ratio," Debt in the form of revolving loans
shall be considered to have been Repaid only to the extent the related loan
commitment, if any, shall have been permanently reduced in connection therewith.
57
"Required Rating Agencies" means any two of the Rating Agencies.
"Restricted Payment" means:
(a) any dividend or distribution (whether made in cash, securities or
other Property) declared or paid on or with respect to any shares of Capital
Stock of the Company or any Restricted Subsidiary (including any payment in
connection with any merger or consolidation with or into the Company or any
Restricted Subsidiary), except for any dividend or distribution that is made
solely to the Company or any Restricted Subsidiary or any dividend or
distribution payable solely in shares of Capital Stock (other than
Disqualified Stock) of the Company;
(b) the purchase, repurchase, redemption, acquisition or retirement for
value of any Capital Stock of the Company or any Restricted Subsidiary
(other than from the Company or any Restricted Subsidiary) or any securities
exchangeable for or convertible into any such Capital Stock, including the
exercise of any option to exchange any Capital Stock (other than for or into
Capital Stock of the Company or any Restricted Subsidiary that is not
Disqualified Stock);
(c) the purchase, repurchase, redemption, acquisition or retirement for
value, prior to the date for any scheduled maturity, sinking fund or
amortization or other installment payment, of any Subordinated Obligation
(other than (x) the purchase, repurchase or other acquisition or retirement
for value of any Subordinated Obligation purchased in anticipation of
satisfying a scheduled maturity, sinking fund or amortization or other
installment obligation, in each case due within two years of the date of
purchase, repurchase, redemption, acquisition or retirement and (y) the
retirement of Subordinated Obligations issued in connection with the
Mandatorily Redeemable Preferred Securities); or
(d) any Investment (other than Permitted Investments) in any Person.
"Restricted Share Unit" means the restricted share units issued pursuant to
the Company's 1996 Long Term Incentive and Share Award Plan, which allows for
the Company's executive officers and other employees to receive awards of
restricted share units related to the common stock of the Company and its
Subsidiaries and to receive dividend equivalents with respect to such
restricted share units.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service or any successor to the rating
agency business thereof.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
relating to Property now owned or hereafter acquired whereby the Company or any
Restricted Subsidiary transfers such Property to another Person and the Company
or any Restricted Subsidiary leases it from such Person.
"Senior Debt" means:
(a) all obligations consisting of the principal, premium, if any, and
accrued and unpaid interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to the
Company to the extent post-filing interest is allowed in such proceeding) in
respect of:
(1) Debt of the Company for borrowed money, and
(2) Debt of the Company evidenced by notes, debentures, bonds or
other similar instruments permitted under the Mortgage or the Indenture
for the payment of which the Company is responsible or liable;
(b) all Capital Lease Obligations of the Company;
(c) all obligations of the Company
(1) for the reimbursement of any obligor on any letter of credit,
bankers' acceptance or similar credit transaction,
58
(2) under Hedging Obligations, or
(3) issued or assumed as the deferred purchase price of Property and
all conditional sale obligations of the Company and all obligations
under any title retention agreement permitted under the Indenture; and
(d) all obligations of other Persons of the type referred to in clauses
(a), (b) and (c) for the payment of which the Company is responsible or
liable as Guarantor;
provided, however, that Senior Debt shall not include:
(A) Subordinated Obligations;
(B) any Debt Incurred in violation of the provisions of the Indenture;
(C) accounts payable or any other obligations of the Company to trade
creditors created or assumed by the Company in the ordinary course of
business in connection with the obtaining of materials or services
(including Guarantees thereof or instruments evidencing such liabilities);
(D) any liability for taxes owed or owing by the Company;
(E) any obligation of the Company to any Subsidiary; or
(F) any obligations with respect to any Capital Stock of the Company.
"Special Interest" means the additional interest, if any, to be paid on the
Notes as described under "Exchange Offers; Registration Rights."
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Debt of the Company (whether outstanding
on the Issue Date or thereafter Incurred) that is subordinate or junior in
right of payment to the Notes pursuant to a written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation, company
(including any limited liability company), association, partnership, joint
venture or other business entity of which a majority of the total voting power
of the Voting Stock is at the time owned or controlled, directly or indirectly,
by:
(a) such Person,
(b) such Person and one or more Subsidiaries of such Person, or
(c) one or more Subsidiaries of such Person.
"Treasury Rate" means, as of any redemption date, the yield to maturity as
of such redemption date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the redemption date (or, if such statistical release is
no longer published, any publicly available source of similar market data))
most nearly equal to the period from the redemption date to May 1, 2007;
provided, however, that if the period from the redemption date to May 1, 2007
is less than one year, the weekly average yield on actively traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.
"Unregulated Affiliate" means any Affiliate that is primarily engaged in a
business not involving the provision of utility services.
59
"Unrestricted Subsidiary" means:
(a) Westar Industries;
(b) any Subsidiary of the Company that is designated after the Issue Date
as an Unrestricted Subsidiary as permitted or required pursuant to the
covenant described under "--Certain Covenants --Designation of Restricted
and Unrestricted Subsidiaries" and is not thereafter redesignated as a
Restricted Subsidiary as permitted pursuant thereto;
(c) any Subsidiary of an Unrestricted Subsidiary; and
(d) any successor corporation to any Unrestricted Subsidiary identified
in clauses (a) through (c) of this definition.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of any Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Restricted Subsidiary" means, at any time, a Restricted
Subsidiary all the Voting Stock of which (except directors' qualifying shares)
is at such time owned, directly or indirectly, by the Company and its other
Wholly Owned Subsidiaries.
60
BOOK-ENTRY SYSTEM
The outstanding securities are represented by a global security in
registered, global form without interest coupons (the " Outstanding Global
Security"). The Global Security was deposited upon issuance with the DTC or its
nominee, for credit to the accounts of persons holding through it with the
respective principal amounts of the outstanding securities represented by such
Global Security purchased by such persons in the offerings of the outstanding
securities.
After the expiration of the exchange offers new global securities will be
issued. Those securities which are not exchanged will be represented by one or
more securities (the "Outstanding Global Security") in registered, global form
without interest coupons. The exchange securities will be represented by one or
more securities in registered, global form without interest coupons (the
"Exchange Global Securities" and together with the Outstanding Global
Securities, the "Global Securities"). The Global Securities will be deposited
on the date of the acceptance for exchange of the outstanding securities and
the issuance of the exchange securities with the DTC, and registered in the
name of a nominee of such depositary.
Ownership of beneficial interests in the Global Securities will be limited
to persons that have accounts with DTC ("participants") or persons that may
hold interests through participants. Any person acquiring an interest in a
Global Securities through an offshore transaction in reliance on Regulation S
under the Securities Act ("Regulation S") may hold such interest through
Clearstream or Euroclear. Holders of exchange securities under DTC's system
must be made through direct participants who will receive a credit for the
Securities on DTC's records. The ownership interest of each beneficial owner is
in turn to be recorded on the records of the direct participants and indirect
participants. The laws of certain jurisdictions require that certain purchasers
of Securities take physical delivery of such exchange securities in definitive
form. Such limits and such laws may impair the ability to pledge or transfer
beneficial interests in the exchange securities.
Payment of the principal of, or premium, if any, and interest on, exchange
securities represented by the Global Securities will be made in immediately
available funds to DTC or its nominee, as the case may be, as the sole
registered owner and the sole holder of the Securities represented thereby for
all purposes under the Mortgage or Indenture. We have been advised by DTC that
upon receipt of any payment of principal of, premium, if any, or interest on,
any Global Security, DTC will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with payments in
amounts proportionate to their respective beneficial interests in such Global
Security as shown on the records of DTC. Payments by participants to owners of
beneficial interests in a Global Security held through such participants will
be governed by standing instructions and customary practices as is now the case
with securities held for customer accounts registered in "street name" and will
be the sole responsibility of such participants.
A Global Security may not be transferred except as a whole by DTC or a
nominee of DTC to a nominee of DTC or to DTC. A Global Security is exchangeable
for certificated exchange securities only if:
(a) DTC notifies us that it is unwilling or unable to continue as a
depositary for such Global Security or if at any time DTC ceases to be a
clearing agency registered under the Exchange Act;
(b) we in our discretion at any time determine not to have all the
exchange securities represented by such Global Security; or
(c) there shall have occurred and be continuing a Default or an Event of
Default with respect to the Securities represented by such Global Security.
Any Global Security that is exchangeable for certificated exchange
securities pursuant to the preceding sentence will be exchanged for
certificated Securities in authorized denominations and registered in such
names as DTC or any successor depositary holding such Global Security may
direct. Subject to the foregoing, a Global Security is not exchangeable, except
for a Global Security of like denomination to be registered in the name of
61
DTC or any successor depositary or its nominee. If a Global Security becomes
exchangeable for certificated Securities,
(a) certificated exchange securities will be issued only in fully
registered form in denominations of $1,000 or integral multiples thereof,
(b) payment of the principal of, premium, if any, and interest on, the
certificated exchange securities will be payable and the transfer of the
certificated Securities will be registerable, at our office or an agency
maintained by us for such purposes, and
(c) no service charge will be made for any registration of the transfer
or exchange of the certificated Securities, although we may require payment
of a sum sufficient to cover any tax or governmental charge imposed in
connection therewith.
So long as DTC or any successor depositary for a Global Security, or any
nominee, is the registered owner of such Global Security, DTC or such successor
depositary or nominee, as the case may be, will be considered the sole owner or
holder of the Securities represented by such Global Security for all purposes
under the Mortgage, the Indenture and the Securities. Except as set forth
above, owners of beneficial interests in a Global Security will not be entitled
to have the Securities represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Securities in definitive form and will not be considered to be the
owners or holders of any exchange securities under such Global Security.
Accordingly, each person owning a beneficial interest in a Global Security must
rely on the procedures of DTC or any successor depositary, and, if such person
is not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder under the Mortgage
or the Indenture. We understand that under existing industry practices, in the
event that we request any action of holders or that an owner of a beneficial
interest in a Global Security desires to give or take any action which a holder
is entitled to give or take under the Mortgage or the Indenture, DTC or any
successor depositary would authorize the participants holding the relevant
beneficial interest to give or take such action, and such participants would
authorize beneficial owners owning through such participants to give or take
such action or would otherwise act upon the instructions of beneficial owners
owning through them.
DTC has advised us that DTC is a limited-purpose trust company organized
under the Banking Law of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered under the Exchange Act. DTC
was created to hold the securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in their respective
accounts, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers (which
may include the initial purchasers), banks, trust companies, clearing
corporations and certain other organizations, some of which (or their
representatives) own DTC. Access to DTC's book-entry system is also available
to others, such as banks, brokers, dealers and trust companies, that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in Global Securities among participants of DTC, it is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time.
62
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain U.S. Federal income tax
considerations relevant to the purchase, ownership and disposition of the
securities by the holders thereof. This summary does not purport to be a
complete analysis of all the potential U.S. Federal income tax consequences
relating to the ownership and disposition of the exchange securities by holders
who acquired the exchange securities in the exchange offers. There can be no
assurance that the IRS will take a similar view of such consequences. Further,
the discussion does not address all aspects of taxation that may be relevant to
particular purchasers in light of their individual circumstances (including the
effect of any foreign, state or local laws) or to certain types of purchasers
subject to special treatment under U.S. Federal income tax laws (including
dealers in securities, insurance companies, financial institutions,
pass-through entities, persons that hold securities that are a hedge or that
are hedged against currency risks or that are part of a straddle or conversion
transaction, persons whose functional currency is not the U.S. dollar and
tax-exempt entities). The discussion below assumes that the exchange securities
are held as capital assets and were acquired at original issue for their
original "issue price."
The discussion of the U.S. Federal income tax consequences below is based on
currently existing provisions of the Code, judicial decisions, and
administrative interpretations. Because individual circumstances may differ,
each holder of outstanding securities, is strongly urged to consult its own tax
advisor with respect to its particular tax situation and the particular tax
effects of any state, local, non-U.S. or other tax laws and possible changes in
the tax laws. As used herein, the term "U.S. Holder" means a beneficial owner
of a Bond or a Note who or which is for U.S. Federal income tax purposes either:
(a) a citizen or resident of the U.S.;
(b) a corporation or other entity treated as a corporation, created or
organized in or under the laws of the U.S. or of any political subdivision
thereof;
(c) an estate the income of which is subject to U.S. Federal income
taxation regardless of its source; or
(d) a trust if a court within the U.S. is able to exercise primary
supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the trust.
The term "U.S. Holder" also includes certain former citizens of the U.S.
whose income and gain on the Securities will be subject to U.S. taxation. As
used herein, the term "Non-U.S. Holder" means a beneficial owner of a Bond or a
Note that is not a U.S. Holder or a pass-through entity.
The exchange of the outstanding securities for exchange securities will not
be a taxable event for federal income tax purposes. A holder will not recognize
any taxable gain or loss as a result of exchanging outstanding securities for
exchange securities, and the holder will have the same tax basis and holding
period in the exchange securities as he had in the outstanding securities
immediately before exchange.
Tax Consequences to U.S. Holders
Payments of Interest
Interest on an exchange bond or exchange note generally will be taxable to a
U.S. Holder as ordinary income at the time it accrues or is received, in
accordance with the U.S. Holder's method of accounting for U.S. Federal income
tax purposes.
If special interest is paid, although not free from doubt, such payment
should be taxable to a U.S. Holder as ordinary income at the time it accrues or
is received in accordance with such U.S. Holder's regular method of accounting.
It is possible, however, that the IRS may take a different position, in which
case the timing and amount of income inclusion may be different.
63
Under certain circumstances, we may be entitled to redeem all or a portion
of the exchange bonds and/or the exchange notes. In addition, under certain
circumstances, each holder of the exchange bonds or the exchange notes, as the
case may be, will have the right to require us to repurchase all or any part of
such holder's exchange bonds or exchange notes. Treasury Regulations contain
special rules for determining the yield to maturity or maturity date of a debt
instrument in the event the debt instrument provides for a contingency that
could result in the acceleration or deferral of one or more payments. We do not
believe that these rules are likely to apply either to our right to redeem the
exchange bonds and/or the exchange notes or to the holders' rights to require
us to repurchase the exchange bonds and/or the exchange notes. Therefore, we do
not intend to treat such redemption and repurchase provisions of the exchange
bonds and/or exchange notes as affecting the computation of the yield to
maturity or maturity date of the exchange bonds and/or exchange notes.
Sale, Exchange or Retirement of Securities
Upon the sale, exchange or retirement of an exchange bond or an exchange
note, a U.S. Holder will recognize taxable gain or loss equal to the difference
between the amount realized on the sale, exchange or retirement (not including
any amount attributable to accrued but unpaid interest) and such U.S. Holder's
adjusted tax basis in the exchange bond or the exchange note, as the case may
be. A U.S. Holder's adjusted tax basis in an exchange bond or an exchange note
generally will be equal to the cost of the Bond or Note to such U.S. Holder.
In general, gain or loss realized on the sale, exchange or retirement of an
exchange bond or an exchange note by a U.S. Holder will be capital gain or
loss, and will be long-term capital gain or loss if at the time of the sale,
exchange or retirement, the U.S. Holder has held the exchange bond or exchange
note for more than one year. For a U.S. Holder who is an individual, long-term
capital gain generally is taxed at a Federal maximum rate of 20%. The
distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.
Tax Consequences to Non-U.S. Holders
Under present U.S. Federal income tax law, and subject to the discussion
below concerning backup withholding:
1. payments of the principal of, premium, if any, or interest on, the
exchange securities by us or any paying agent to a beneficial owner of the
Securities that is a Non-U.S. Holder will not be subject to U.S. Federal
withholding tax, or the "portfolio interest exemption," provided that, in
the case of interest:
(a) such Non-U.S. Holder does not own, actually or constructively,
10% or more of the total combined voting power of all classes of our
stock;
(b) such Non-U.S. Holder is not, for U.S. Federal income tax
purposes, a controlled foreign corporation related, directly or
indirectly, to us through stock ownership;
(c) such Non-U.S. Holder is not a bank receiving interest described
in Section 881(c)(3)(A) of the Code; and
(d) the certification requirements under Section 871(h) or Section
881(c) of the Code and Treasury Regulations thereunder (summarized
below) are met.
2. a Non-U.S. Holder of the exchange securities will not be subject to
U.S. Federal income tax on gains realized on the sale, exchange or other
disposition of such exchange securities, unless:
(a) such holder is an individual who is present in the U.S. for 183
days or more in the taxable year of sale, exchange or other disposition,
and certain other conditions are met;
(b) such gain is effectively connected with the conduct by such
Non-U.S. Holder of a trade or business in the U.S., and if so provided
in an applicable tax treaty, is attributable to a U.S. permanent
establishment maintained by the Non-U.S. Holder; or
64
(c) the Non-U.S. Holder is subject to tax pursuant to the Code
provisions applicable to certain U.S. expatriates.
Sections 871(h) and 881(c) of the Code and currently effective Treasury
Regulations thereunder require that, to obtain the exemption from withholding
tax described above, either (a) the beneficial owner of an exchange bond or an
exchange note must certify on IRS Form W-8BEN, under penalties of perjury, to
us or the paying agent, as the case may be, that such owner is a Non-U.S.
Holder and must provide such owner's name and address, and U.S. taxpayer
identification number, if any, or (b) a securities clearing organization, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business, or a "financial institution" that holds the
exchange bond or the exchange note on behalf of the beneficial owner thereof
must certify, under penalties of perjury, to us or the paying agent, as the
case may be, that such certificate has been received from the beneficial owner
by it or by a financial institution between it and the beneficial owner and
must furnish the payor with a copy thereof.
If a Non-U.S. Holder of an exchange bond or an exchange note is engaged in a
trade or business in the U.S., and if interest on such exchange bond or
exchange note, or gain realized on the sale, exchange or other disposition of
such exchange bond or exchange note, is effectively connected with the conduct
of such trade or business and, if so provided in an applicable tax treaty, is
attributable to a U.S. permanent establishment maintained by the Non-U.S.
Holder, the Non-U.S. Holder, although exempt from U.S. withholding tax, will
generally be subject to regular U.S. income tax on such interest or gain in the
same manner as if it were a U.S. Holder. In lieu of the certificate described
in the preceding paragraph, such a holder must provide us a properly executed
IRS Form W-8ECI to claim an exemption from withholding tax. In addition, if
such Non-U.S. Holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% (or such lower rate provided by an applicable treaty)
of its effectively connected earnings and profits for the taxable year, subject
to certain adjustments. For purposes of the branch profits tax, interest on and
any gain recognized on the sale, exchange or other disposition of an exchange
bond or an exchange note is included in the earnings and profits of the
Non-U.S. Holder if such interest or gain is effectively connected with the
conduct by the Non-U.S. Holder of a trade or business in the U.S.
Interest that neither qualifies for the portfolio interest exemption
described above nor constitutes U.S. trade or business income will be subject
to U.S. withholding tax at the rate of 30% unless such withholding tax is
reduced or eliminated by an applicable income tax treaty. To claim the
protection of an income tax treaty, a Non-U.S. Holder must provide a properly
executed Form W-8BEN prior to the payment of interest and must periodically
update such Form W-8BEN (or, if necessary, provide the applicable successor
form). A Non-U.S. Holder may be required to obtain a U.S. taxpayer
identification number and provide documentary evidence issued by foreign
governmental authorities to prove residence in a foreign treaty country.
Information Reporting and Backup Withholding
We will, where required, report to the holders of the exchange bonds and/or
exchange notes and the IRS the amount of any interest paid on the exchange
bonds and/or exchange notes in each calendar year and the amounts of Federal
income tax withheld, if any, with respect to payments. A noncorporate U.S.
Holder may be subject to information reporting and to backup withholding with
respect to payments of principal, premium, if any, and interest made on the
exchange bonds and/or the exchange notes, or on proceeds of the disposition of
the exchange bonds and/or exchange notes before maturity, unless such U.S.
Holder provides a correct taxpayer identification number or proof of an
applicable exemption, and otherwise complies with applicable requirements of
the information and backup withholding rules. The backup withholding rate for
payments made in 2002 and 2003 is 30% and will be reduced to 29% for years 2004
and 2005, and further reduced to 28% for years 2006 through 2007.
Backup withholding and information reporting will not apply to payments made
by us or any agent thereof (in its capacity as such) to a Non-U.S. Holder of
the exchange securities if such Non-U.S. Holder has provided
65
the required certification that it is not a U.S. person on the Form W-8BEN or
has otherwise established an exemption (provided that neither we nor our agents
have actual knowledge or has reason to know that such holder is a U.S. person
or that the conditions of any exemption are not in fact satisfied).
Payments of the proceeds from the sale of exchange securities to or through
a foreign office of a broker will not be subject to information reporting or
backup withholding, except if the broker is (i) a U.S. person, (ii) a
controlled foreign corporation, (iii) a foreign person 50% or more of whose
gross income for certain periods is effectively connected with a U.S. trade or
business, or (iv) a foreign partnership, if at any time during its taxable year
one or more of its partners are U.S. persons who in the aggregate hold more
than 50% of the income or capital interest in the partnership, or if at any
time during its taxable year the foreign partnership is engaged in a U.S. trade
or business, unless the Non-U.S. Holder establishes an exception.
Backup withholding is not an additional tax. Any amount withheld under the
backup withholding rules will be refunded or credited against the Non-U.S.
Holder's Federal income tax liability, provided that the required information
is furnished to the IRS.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX
ADVICE. ACCORDINGLY, EACH PROSPECTIVE HOLDER OF A BOND OR NOTE SHOULD CONSULT
ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO THE PROSPECTIVE
HOLDER OF PURCHASING, HOLDING AND DISPOSING OF THE BONDS AND/OR NOTES,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR NON-U.S. INCOME
TAX LAWS AND ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS.
66
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange securities for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange securities. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange securities received
in exchange for outstanding securities where such outstanding securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. We have agreed that, starting on the expiration date and
ending on the close of business one year after the expiration date, we will
make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition,
until , 200 , all dealers effecting transactions in the exchange
securities may be required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange securities by
broker-dealers. Exchange securities received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the exchange securities or a combination of
such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such exchange
securities. Any broker-dealer that resells exchange securities that were
received by it for its own account pursuant to the exchange offer and any
broker or dealer that participates in a distribution of such exchange
securities may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit of any such resale of exchange securities and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of one year after the expiration date, we will promptly send
additional copies of this prospectus and any amendment or supplement thereto to
any broker-dealer that requests such documents in the letter of transmittal. We
have agreed to pay all expenses incident to the exchange offer (including the
expenses of any one counsel for the Holders of the Notes) other than
commissions or concessions of any brokers or dealers and will indemnify the
Holders of the Notes participating in the exchange offer (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
67
LEGAL MATTERS
Legal matters as to the validity of the exchange securities offered by this
prospectus will be passed upon for the company Larry D. Irick, Esq., our Vice
President and Corporate Secretary, as to matters governed by Kansas law.
INDEPENDENT ACCOUNTANTS
Our consolidated financial statements and the related financial statement
schedule, as of December 31, 2001 and 2000, and for each of the years in the
three-year period ended December 31, 2001, included in our 2001 Form 10-K, have
been audited by Arthur Andersen LLP, independent certified public accountants,
as stated in their report, incorporated by reference herein in reliance upon
the authority of that firm as experts in giving such reports. We have not been
able to obtain, after reasonable efforts, the written consent of Arthur
Andersen to the inclusion of their report in this prospectus, and we have
dispensed with the requirement to file their consent in reliance on Rule 437A
promulgated under the Securities Act. Because Arthur Andersen has not consented
to the inclusion of its report in this prospectus, your ability to assert
claims against Arthur Andersen may be limited. In particular, because of this
lack of consent, you will not be able to sue Arthur Andersen under Section
11(a)(4) of the Securities Act for any untrue statements of a material fact
contained in the financial statements audited by Arthur Andersen or any
omissions to state a material fact required to be stated in those financial
statements and therefore your right of recovery under that section may be
limited.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. Our
SEC filings are available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file with the
SEC at the SEC's public reference room at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms and their copy charges.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We "incorporate by reference" information into this prospectus, which means
that we disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is deemed a part of this prospectus, except for any information
superseded by information contained directly in this prospectus.
We incorporate by reference the documents listed below and any future
filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act filed prior to the time the registration statement of which this
prospectus is a part became effective and prior to the termination of these
offerings:
. Our annual report on Form 10-K for the year ended December 31, 2001;
. Our amendment no. 1 to our annual report on Form 10-K/A for the year
ended December 31, 2001;
. Our amendment no. 2 to our annual report on Form 10-K/A for the year
ended December 31, 2001;
. Our report on Form 10-Q for the quarter ended March 31, 2002;
. Our current report on Form 8-K filed with the SEC on January 9, 2002;
68
. Our current report on Form 8-K filed with the SEC on February 27, 2002;
. Our current report on Form 8-K filed with the SEC on April 26, 2002;
. Our current report on Form 8-K filed with the SEC on May 30, 2002;
. Our current report on Form 8-K filed with the SEC on June 6, 2002;
. Our current report on Form 8-K filed with the SEC on June 10, 2002.
All of these filings are available from the SEC. See "Where You Can Find
More Information." You may also request a copy of any of these filings, at no
cost, by writing or telephoning us at the following address or phone number:
818 South Kansas Avenue
Topeka, Kansas 66612
(785) 575-6300
Attention: Investor Relations
69
================================================================================
Exchange Offer for
$365,000,000 First Mortgage Bonds, 7 7/8% Series Due 2007
$400,000,000 Senior Notes, 9 3/4% Series Due 2007
[LOGO] Westar Energy/TM/
--------
PROSPECTUS
--------
, 2002
================================================================================
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article XVIII of the registrant's Restated Articles of Incorporation, as
amended, provides that a director shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for paying a dividend or approving a stock
repurchase in violation of the Kansas General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. This
provision is specifically authorized by Section 17-6002(b)(8) of the Kansas
General Corporation Law.
Section 17-6305 of the Kansas General Corporation Law (the "Indemnification
Statute") provides for indemnification by a corporation of its corporate
officers, directors, employees and agents. The indemnification Statute provides
that a corporation may indemnify such persons who have been, are, or may become
a party to an action, suit or proceeding due to his or her status as a
director, officer, employee or agent of the corporation. Further, the
Indemnification Statute grants authority to a corporation to implement its own
broader indemnification policy. Article XVIII of the registrant's Restated
Articles of Incorporation, as amended, requires the corporation to indemnify
its directors and officers to the fullest extent provided by Kansas law.
Further, as is provided for in Article XVIII, the registrant entered into
indemnification agreements with its directors, which provide indemnification
broader than that available under Article XVIII and the Indemnification Statute.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS INDEX.
(a) Exhibits:
Exhibits No. Description
- ------------ -----------
3.1 Restated Articles of Incorporation of the company, as amended I through May 25, 1988 (filed as
Exhibit 4 to Registration Statement, SEC File No. 33-23022)
3.2* Certificate of Amendment to Restated Articles of Incorporation, as amended, of Western
Resources, Inc.
3.3 By-laws of the company, as amended March 16, 2000 (filed as Exhibit I 3(a) to December 31,
1999 Form 10-K)
4.1 Mortgage and Deed of Trust dated July 1, 1939 between the company and Harris Trust and
Savings Bank, Trustee (filed as Exhibit 4(a) to Registration Statement No. 33-21739)
4.2 First through Fifteenth Supplemental Indentures dated July 1, 1939 April 1, 1949, July 20, 1949,
October 1, 1949, December 1, 1949, October 4, 1951, December 1, 1951, May 1, 1952,
October 1, 1954, September 1, 1961, April 1, 1969, September 1, 1970, February 1 1975, May
1, 1976 and April 1, 1977, respectively (filed as Exhibit 4(b) to Registration Statement
No. 33-21739)
4.3 Sixteenth Supplemental Indenture dated June 1, 1977 (filed as Exhibit 2-D to Registration
Statement No. 2-60207)
4.4 Seventeenth Supplemental Indenture dated February 1, 1978 (filed as Exhibit 2-E to Registration
Statement No. 2-61310)
4.5 Eighteenth Supplemental Indenture dated January 1, 1979 (filed as Exhibit (b) (1)-9 to
Registration Statement No. 2-64231)
II-1
Exhibits No. Description
- ------------ -----------
4.6 Nineteenth Supplemental Indenture dated May 1, 1980 (filed as Exhibit 4(f) to Registration
Statement No. 33-21739)
4.7 Twentieth Supplemental Indenture dated November 1, 1981 (filed as Exhibit 4(g) to Registration
Statement No. 33-21739)
4.8 Twenty-First Supplemental Indenture dated April 1, 1982 (filed as Exhibit 4(h) to Registration
Statement No. 33-21739)
4.9 Twenty-Second Supplemental Indenture dated February 1, 1983 (filed as Exhibit 4(i) to
Registration Statement No. 33-21739)
4.10 Twenty-Third Supplemental Indenture dated July 2, 1986 (filed as Exhibit 4(j) to Registration
Statement No. 33-12054)
4.11 Twenty-Fourth Supplemental Indenture dated March 1, 1987 (filed as Exhibit 4(k) to Registration
Statement No. 33-21739)
4.12 Twenty-Fifth Supplemental Indenture dated October 15, 1988 (filed as Exhibit 4 to the September
30, 1988 Form 10-Q)
4.13 Twenty-Sixth Supplemental Indenture dated February 15, 1990 (filed as Exhibit 4(m) to the
December 31, 1989 Form 10-K)
4.14 Twenty-Seventh Supplemental Indenture dated March 12, 1992 (filed as Exhibit 4(n) to the
December 31, 1991 Form 10-K)
4.15 Twenty-Eighth Supplemental Indenture dated July 1, 1992 (filed as Exhibit 4(o) to the December
31, 1992 Form 10-K)
4.16 Twenty-Ninth Supplemental Indenture dated August 20, 1992 (filed as Exhibit 4(p) to the
December 31, 1992 Form 10-K)
4.17 Thirtieth Supplemental Indenture dated February 1, 1993 (filed as Exhibit 4(q) to the December
31, 1992 Form 10-K)
4.18 Thirty-First Supplemental Indenture dated April 15, 1993 (filed as Exhibit 4(r) to Registration
Statement No. 33-50069)
4.19 Thirty-Second Supplemental Indenture dated April 15, 1994 (filed as Exhibit 4(s) to the
December 31, 1994 Form 10-K)
4.20 Thirty-Fourth Supplemental Indenture dated June 28, 2000 (filed as Exhibit 4(v) to the December
31, 2000 Form 10-K)
4.21 Thirty Fifth Supplemental Indenture dated May 10, 2002 (filed as Exhibit 4.1 to the March 31,
2002 Form 10-Q)
4.22 Debt Securities Indenture dated August 1, 1998 (filed as Exhibit 4.1 to the June 30,
1998 Form 10-Q)
4.23 Securities Resolution dated May 7, 2002 (filed as Exhibit 4.2 to the March 31, 2002 Form 10-Q)
4.24* Purchase Agreement, dated as of May 10, 2002 among Western Resources, Inc., Salomon Smith
Barney Inc., J.P. Morgan Securities Inc. and BNY Capital Markets Inc. (relating to the Bonds)
4.25* Purchase Agreement, dated as of May 10, 2002 among Western Resources, Inc., Salomon Smith
Barney Inc., J.P. Morgan Securities Inc. and BNY Capital Markets Inc. (relating to the Notes)
II-2
Exhibits No. Description
- ------------ -----------
4.26* Registration Rights Agreement, dated as of May 10, 2002 among Western Resources, Inc.,
Salomon Smith Barney Inc., J.P. Morgan Securities Inc. and BNY Capital Markets Inc.
(relating to the Bonds)
4.27* Registration Rights Agreement, dated as of May 10, 2002 among Western Resources, Inc.,
Salomon Smith Barney Inc., J.P. Morgan Securities Inc. and BNY Capital Markets Inc.
(relating to the Notes)
4.28* Form of Global Bond
4.29* Form of Global Note (included in Exhibit 4.23)
5.1* Opinion of Vice President and Corporate Secretary of the Company relating to the Exchange
Notes
5.2* Opinion of Vice President and Corporate Secretary of the Company relating to the Exchange
Bonds
12.1 Computation of Ratio of Earnings to Fixed Charges (filed as Exhibit 12 to the December 31, 2001
Form 10-K)
24.1* Power of Attorney (set forth on the signature pages to this Registration Statement)
25.1* Statement regarding eligibility of Trustee on Form T-1 of BNY Midwest Trust Company
25.2* Statement regarding eligibility of Trustee on Form T-1 of Deutsche Bank Trust Company
Americas
99.1* Form of Letter of Transmittal (relating to the Bonds)
99.2* Form of Letter of Transmittal (relating to the Notes)
99.3 Form of Notice of Guaranteed Delivery
- --------
* Filed Herewith
(b) Financial Schedules:
None
II-3
ITEM 22. UNDERTAKINGS.
The undersigned Registrants hereby undertake that:
(a) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation
S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(d) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This undertaking includes information contained in documents filed
subsequent to the effective date of this registration statement through the
date of responding to the request.
(e) To supply by means of a post-effective amendment all information
concerning a transaction and the company being acquired involved therein,
that was not the subject of and included in this registration statement when
it became effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Topeka, State of Kansas,
on the 26th day of June, 2002.
WESTAR ENERGY, INC.
By: /S/ PAUL R. GEIST
-----------------------------
Name:Paul R. Geist
Title:Chief Financial Officer
and Senior Vice
President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Paul R. Geist and Larry D. Irick and each acting alone, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments or supplements to this Registration
Statement and to file the same with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing necessary or appropriate to be done with
this Registration Statement and any amendments or supplements hereto, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/S/ DAVID C. WITTIG Chairman of the Board, President June 26, 2002
- ---------------------------- and Chief Executive Officer
David C. Wittig
/S/ PAUL R. GEIST Chief Financial Officer and June 26, 2002
- ---------------------------- Treasurer
Paul R. Geist
/S/ FRANK J. BECKER Director June 26, 2002
- ----------------------------
Frank J. Becker
/S/ GENE A. BUDIG Director June 26, 2002
- ----------------------------
Gene A. Budig
/S/ CHARLES Q. CHANDLER, IV Director June 26, 2002
- ----------------------------
Charles Q. Chandler, IV
/S/ JOHN C. DICUS Director June 26, 2002
- ----------------------------
John C. Dicus
/S/ R.A. EDWARDS Director June 26, 2002
- ----------------------------
R. A. Edwards
II-5
Signature Title Date
--------- ----- ----
/S/ DOUGLAS T. LAKE Director June 26, 2002
- -------------------------
Douglas T. Lake
/S/ JOHN C. NETTLES, JR. Director June 26, 2002
- -------------------------
John C. Nettles, Jr.
II-6
Exhibit 3.2
RON THORNBURGH First Floor, Memorial Hall
Secretary of State 120 SW 10th Avenue
Topeka, KS 66612-1594
(785) 296-4564
STATE OF KANSAS
June 19, 2002
WALK IN
RE: WESTAR ENERGY, INC.
ID #: 08-777-5
To The Corporation
A certified copy of the amendment that was recently filed in the Corporations
Division of our office is enclosed.
Every corporation in Kansas is assigned an identification number. Use of this
number in any correspondence with our office will give us immediate access to
your file and enable us to offer you faster, more efficient service. Your
corporation's identification number is at the top of this letter.
CERTIFICATE OF AMENDMENT TO RESTATED ARTICLES
OF INCORPORATION, AS AMENDED, OF
WESTERN RESOURCES, INC.
We, David C. Wittig, Chairman of the Board, President, and Chief
Executive Officer, and Larry D. Irick, Vice President and Corporate Secretary of
Western Resources, Inc., a corporation organized and existing under the laws of
the State of Kansas, do hereby certify that at a meeting of the Board of
Directors of said corporation, the board adopted resolutions setting forth the
following amendment to the Restated Articles of Incorporation and declaring its
advisability:
WHEREAS, Article II of the Company's Restated Articles of
Incorporation sets forth the legal name of the Company;
WHEREAS, the Board of Directors and management deem the change
of the Company's name appropriate and advisable;
NOW, THEREFORE, BE IT RESOLVED, that Article II of the
Company's Restated Articles of Incorporation be amended by deleting
Article II in its entirety and substituting in place thereof the
following Article II, and such action is hereby declared advisable:
"Article II
The name of the Surviving Corporation is and shall be Westar
Energy, Inc."
FURTHER RESOLVED, that the foregoing amendment to Article II
of the Company's Restated Articles of Incorporation be submitted to the
Company's stockholders for approval and, conditioned upon such
approval, the Secretary or Assistant Secretary of the Company is hereby
authorized and directed to certify the resolution and to file the same
with the Secretary of State of the State of Kansas;
-2-
FURTHER RESOLVED, that the officers of the Company are hereby
authorized to take such action as they may deem necessary or appropriate to
carry out the foregoing resolutions.
We further certify that thereafter, pursuant to said resolution, and in
accordance with the by-laws of the corporation and the laws of the State of
Kansas, pursuant to notice and in accordance with the statutes of the State of
Kansas, the shareholders at a meeting duly convened considered the proposed
amendment.
We further certify that at the annual meeting of shareholders held on
June 11, 2002, a majority of common and preferred shares together entitled to
vote, voted in favor of the proposed amendment.
We further certify that the amendment was duly adopted in accordance
with the provision of K.S.A. 17-6602, as amended.
We further certify that the capital of said corporation will not be
reduced under or by reason of said amendment.
IN WITNESS WHEREOF, we have hereunto set our hands and affixed the seal
of said corporation the 19th day of June, 2002.
/s/ David C. Wittig
------------------------
David C. Wittig
Chairman of the Board, President
and Chief Executive Officer
-3-
/s/ Larry D. Irick
--------------------------------------
Larry D. Irick
Vice President and Corporate Secretary
State of Kansas )
) ss.
County of Shawnee )
Be it remembered that before me, a Notary Public in and for the
aforesaid county and state, personally appeared David C. Wittig, Chairman of the
Board, President, and Chief Executive Officer, and Larry D. Irick, Vice
President and Corporate Secretary, of the corporation named in this document,
who are known to me to be the same persons who executed the foregoing
certificate and duly acknowledge that execution of the same this 19th day of
June, 2002.
/s/ Patti Beasley
----------------------------
Notary Public
Exhibit 4.24
Execution Copy
WESTERN RESOURCES, INC.
$365,000,000
First Mortgage Bonds, 7 7/8% Series Due 2007
Purchase Agreement
New York, New York
May 7, 2002
Salomon Smith Barney Inc.
J.P. Morgan Securities Inc.
BNY Capital Markets, Inc.
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Western Resources, Inc., a corporation organized under the
laws of the State of Kansas (the "Company"), proposes to issue and sell to the
several parties named in Schedule I hereto (the "Initial Purchasers"),
$365,000,000 principal amount of its First Mortgage Bonds, 7 7/8% Series Due
2007 (the "Securities"). The Securities are to be issued under and secured by
the Mortgage and Deed of Trust, dated July 1, 1939, between the Company and BNY
Midwest Trust Company, as successor to Harris Trust and Savings Bank, as trustee
(the "Trustee"), as amended and supplemented by thirty-four indentures
supplemental thereto (such Mortgage and Deed of Trust, as amended and
supplemented by such thirty-four supplemental indentures, being hereinafter
called the "Mortgage"), and as amended and supplemented by a thirty-fifth
supplemental indenture, to be dated as of May 10, 2002 (the "Thirty-Fifth
Supplemental Indenture") (the Mortgage, as amended and supplemented by the
Thirty-Fifth Supplemental Indenture, being hereinafter called the "Amended
Mortgage"). The Securities have the benefit of a Registration Rights Agreement
(the "Registration Rights Agreement"), dated as of May 10, 2002, between the
Company and the Initial Purchasers, pursuant to which the Company has agreed to
register the Securities under the Act subject to the terms and conditions
therein specified. The use of the neuter in this Agreement shall include the
feminine and masculine wherever appropriate. Certain terms used herein are
defined in Section 17 hereof.
The sale of the Securities to the Initial Purchasers will be
made without registration of the Securities under the Act in reliance upon
exemptions from the registration requirements of the Act.
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum, dated April 24, 2002 (including any
and all exhibits thereto and any information incorporated by reference therein,
the "Preliminary
28
Memorandum"), and a final offering memorandum, dated May 7, 2002 (including any
and all exhibits thereto and any information incorporated by reference therein,
the "Final Memorandum"). Each of the Preliminary Memorandum and the Final
Memorandum sets forth certain information concerning the Company and the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Memorandum and the Final Memorandum in connection with the offer and
sale of the Securities by the Initial Purchasers. Unless stated to the contrary,
any references herein to the terms "amend," "amendment" or "supplement" with
respect to the Final Memorandum shall be deemed to refer to and include any
information filed under the Exchange Act, subsequent to the Execution Time and
prior to the completion of the distribution of the Securities by the Initial
Purchasers, which is incorporated by reference into the Final Memorandum.
The Preliminary Memorandum and the Final Memorandum also
relate to the sale by the Company of $400,000,000 principal amount of Senior
Notes, 9 3/4% Series Due 2007 (the "Notes Due 2007"). While the Securities and
the Notes Due 2007 are expected to be sold on the same date, the consummation of
the sale of the Securities and Notes Due 2007 are not conditioned upon each
other.
1. Representations and Warranties. The Company represents
------------------------------
and warrants to each Initial Purchaser as set forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. At the Execution Time and on
the Closing Date (as defined in Section 3 hereof), the Final Memorandum did
not, and will not (and any amendment or supplement thereto, at the date
thereof and on the Closing Date, will not), contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. However, the Company makes no representation or
warranty as to the information contained in or omitted from the Preliminary
Memorandum or the Final Memorandum, or any amendment or supplement thereto,
in reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of the Initial Purchasers through Salomon Smith
Barney Inc. specifically for inclusion in the Preliminary Memorandum or the
Final Memorandum.
(b) The Company will not resell any Securities that have been acquired
by it.
(c) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration of the Securities under
the Act.
38
(d) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with any
offer or sale of the Securities in the United States.
(e) The Securities satisfy the eligibility requirements of Rule 144A(d)(3)
under the Act.
(f) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf has engaged in any directed selling efforts with respect
to the Securities, and each of them has complied with the offering restrictions
requirement of Regulation S. Terms used in this paragraph have the meanings
given to them in Regulation S.
(g) The Company has been advised by the NASD's PORTAL Market that the
Securities have been designated PORTAL-eligible securities in accordance with
the rules and regulations of the NASD.
(h) The Company is not, and after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Final Memorandum will not be, an "investment company" within the meaning of the
Investment Company Act, without taking account of any exemption arising out of
the number of holders of the Company's securities.
(i) The Company is subject to and in full compliance with the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act.
(j) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any Securities (except as
contemplated by this Agreement).
(k) The Company has not taken, directly or indirectly, any action designed
to cause or which has constituted or which might reasonably be expected to cause
or result, under the Exchange Act or otherwise, in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.
(l) The information provided by the Company pursuant to Section 5(g) hereof
will not, at the date thereof, contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(m) Each of the Company and the Principal Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction in which it is chartered or organized with full
corporate power and authority to carry on the electric utility business in which
it is engaged,
48
and is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such qualification
except where the failure to so qualify would not reasonably be expected to have
a material adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final Memorandum (a
"Material Adverse Effect").
(n) All the outstanding shares of capital stock of the Principal Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Final Memorandum, all
outstanding shares of capital stock of the Principal Subsidiary owned by the
Company, as described in the Final Memorandum, are owned by it free and clear of
any perfected security interest or any other security interests, claims, liens
or encumbrances.
(o) The Company's authorized equity capitalization is as set forth in the
Final Memorandum, and the capital stock of the Company conforms in all material
respects to the description thereof contained in the Final Memorandum.
(p) The statements in the Final Memorandum under the headings "Certain U.S.
Federal Income Tax Considerations," "Description of Bonds," "Description of
Notes" and "Exchange Offers; Registration Rights" fairly summarize the matters
therein described.
(q) This Agreement has been duly authorized, executed and delivered by the
Company; the Amended Mortgage has been duly authorized, executed and delivered
by the Company, and has been qualified under the Trust Indenture Act, and,
assuming due authorization, execution and delivery thereof by the Trustee,
constitutes a legal, valid, binding instrument enforceable against the Company
in accordance with its terms except that (x) the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights or remedies generally; (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought (regardless of whether enforcement is sought
in a proceeding at law or in equity); and (iii) any indemnification or
contribution provision that may be contrary to or inconsistent with public
policy and (y) the enforceability of provisions imposing liquidated damages,
penalties or an increase in interest rate upon the occurrence of certain events
may be limited in certain circumstances (collectively, the "Enforceability
Limitations"); the Securities have been duly authorized, and, when executed and
authenticated in accordance with the provisions of the Amended Mortgage and
delivered to and paid for by the Initial
58
Purchasers, will have been duly executed and delivered by the Company and will
constitute the legal, valid and binding obligations of the Company entitled to
thelien of and benefits provided by the Amended Mortgage subject to the
Enforceability Limitations; the Registration Rights Agreement has been duly
authorized and, when executed and delivered by the Company, will constitute the
legal, valid, binding and enforceable instrument of the Company subject to the
Enforceability Limitations; and the New Securities (as such term is defined in
the Registration Rights Agreement) have been duly authorized by the Company for
issuance and sale pursuant to the Amended Mortgage and the Registration Rights
Agreement, and such New Securities, when executed, authenticated, issued and
delivered in the manner provided for in the Registration Rights Agreement and
the Amended Mortgage against payment of consideration therefor in the form of
the Securities, will constitute valid and legally binding obligations of the
Company, entitled to the benefits of the Amended Mortgage, enforceable against
the Company in accordance with their terms subject to the Enforceability
Limitations.
(r) No consent, approval, authorization, filing with or order of the State
Corporation Commission of the State of Kansas (the "KCC") or any court or
governmental agency or body is required in connection with the transactions
contemplated herein or in the Amended Mortgage or the Registration Rights
Agreement, except (i) the June 15, 2000 authorization from the Federal Energy
Regulatory Commission (the "FERC") in Federal Power Act docket numbers
ES00-39-000 and ES00-39-001 and the filing with the FERC of the reports required
by 18 CFR Section 34.10; (ii) such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of the
Securities by the Initial Purchasers in the manner contemplated herein and in
the Final Memorandum and the Registration Rights Agreement; and (iii) the filing
with the KCC of a copy of the registration statement contemplated by the
Registration Rights Agreement.
(s) Neither the execution and delivery of this Agreement, the Amended
Mortgage or the Registration Rights Agreement, the issue and sale of the
Securities, nor the consummation of any other of the transactions herein or
therein contemplated, nor the fulfillment of the terms hereof or thereof will
conflict with, result in a breach or violation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or the Principal
Subsidiary pursuant to: (i) the charter or by-laws of the Company or the
Principal Subsidiary; (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company or the
Principal Subsidiary is a party or bound or to which its or their property is
subject; or (iii) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or the Principal Subsidiary of any court, regulatory
body, administrative agency, governmental body, arbitrator or
68
other authority having jurisdiction over the Company or the Principal Subsidiary
or any of its or their properties.
(t) The consolidated historical financial statements and schedules of the
Company and its consolidated subsidiaries included in the Final Memorandum
present fairly in all material respects the financial condition, results of
operations and cash flows of the Company as of the dates and for the periods
indicated, comply as to form with the applicable accounting requirements of the
Act and have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as otherwise noted therein); the selected financial data set forth under the
caption "Summary Consolidated Financial Data" in the Final Memorandum fairly
present, on the basis stated in the Final Memorandum, the information included
therein; the information set forth under the captions "Summary Approximate
Restricted Group Pro Forma Financial Data" and "Summary Approximate Restricted
Group EBITDA Reconciliation" fairly present, on the basis stated in the Final
Memorandum, the information included therein; and the capitalization set forth
under the columns "Actual" and "As Adjusted" fairly present the information
included therein.
(u) No action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its
subsidiaries or its or their property is pending or, to the best knowledge of
the Company, threatened that (i) could reasonably be expected to have a Material
Adverse Effect on the performance of this Agreement, the Amended Mortgage or the
Registration Rights Agreement, or the consummation of any of the transactions
contemplated hereby or thereby; or (ii) could reasonably be expected to have a
Material Adverse Effect , except as set forth in or contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto).
(v) The Amended Mortgage and all required financing statements under the
Uniform Commercial Code have been duly recorded or filed in each place in which
any of the properties or assets of the Company subject to the lien of the
Amended Mortgage are situated and in which such recording or filing is required
to protect and preserve the lien of the Amended Mortgage, and all taxes and
recording or filing fees required to be paid in connection with the execution,
recording or filing of the Amended Mortgage have been duly paid.
(w) Each of the Company and each of its subsidiaries owns or leases all
such properties as are necessary to the conduct of its operations as presently
conducted, except where the failure to own or lease such properties would not
reasonably be expected to have a Material Adverse Effect.
(x) The Company has good and sufficient title to, or a satisfactory
easement in, all the real property, and has good and sufficient title to all the
78
personal property described in the Amended Mortgage as owned by it and subject
to the lien of the Amended Mortgage, except any which may have been released
from the lien thereof pursuant to the provisions thereof, subject only to
permitted liens as defined in the Amended Mortgage; subject only as above set
forth in this paragraph, the Amended Mortgage constitutes a valid, direct first
mortgage lien upon said properties and upon all franchises owned by the Company,
which properties and franchises include all the physical properties and
franchises of the Company (other than classes of property expressly excepted in
the Amended Mortgage); all physical properties and franchises (other than
classes of property expressly excepted in the Amended Mortgage as aforesaid)
hereafter acquired by the Company will, upon such acquisition, become subject to
the lien thereof, subject however to liens permitted thereby and to any liens
existing or placed upon such properties at the time of the acquisition thereof
by the Company and except as described in the Final Memorandum; and the
descriptions of all such properties and assets contained in the granting clauses
of the Amended Mortgage are correct and adequate for the purposes of the Amended
Mortgage.
(y) Neither the Company nor the Principal Subsidiary is in violation or
default of (i) any provision of its charter or by-laws; (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to
which the Company or the Principal Subsidiary is a party or bound or to which
its property is subject; or (iii) any statute, law, rule, regulation, judgment,
order or decree applicable to the Company or the Principal Subsidiary of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or the Principal Subsidiary
or any of its properties, as applicable, except for violations or defaults which
would not reasonably be expected to have a Material Adverse Effect.
(z) Arthur Andersen LLP ("Arthur Andersen"), who have certified certain
financial statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated financial
statements and schedules included in the Final Memorandum, are independent
public accountants with respect to the Company within the meaning of the Act and
the applicable published rules and regulations thereunder.
(aa) The Company has received from Arthur Andersen (i) a letter dated March
27, 2002 concerning Arthur Andersen's quality controls in connection with Arthur
Andersen's audit of the audited financial statements of the Company and its
consolidated subsidiaries included in the Final Memorandum (the "AA
Representation Letter"), including representations regarding the continuity of
Arthur Andersen's personnel working on the audit, the availability of national
office consultation and the availability of personnel at foreign affiliates of
Arthur Andersen to conduct relevant portions of the audit. The AA Representation
Letter has not been rescinded and the Company has no reason to believe that the
88
representations contained in the AA Representation Letter are not true and
correct in all respects.
(bb) There are no stamp or other issuance or transfer taxes or duties or
other similar fees or charges required to be paid in connection with the
execution and delivery of this Agreement or the issuance or sale by the Company
of the Securities to the Initial Purchasers.
(cc) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not reasonably be
expected to have a Material Adverse Effect and except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or supplement
thereto)) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as would not reasonably be
expected to have a Material Adverse Effect and except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or supplement
thereto).
(dd) No labor problem or dispute with the employees of the Company or the
Principal Subsidiary exists or is threatened or imminent, and the Company is not
aware of any existing or imminent labor disturbance by the employees of any of
its or the Principal Subsidiary's principal suppliers, contractors or customers,
that would reasonably be expected to have a Material Adverse Effect, except as
set forth in or contemplated in the Final Memorandum (exclusive of any amendment
or supplement thereto).
(ee) The Company and the Principal Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; all policies of insurance and fidelity or surety bonds insuring the
Company or the Principal Subsidiary or their respective businesses, assets,
employees, officers and directors are in full force and effect; the Company and
the Principal Subsidiary are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the Company or
the Principal Subsidiary under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause; neither the Company nor the Principal Subsidiary has been refused
any insurance coverage sought or applied for; and neither the Company nor the
Principal Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not reasonably be expected to have a Material
98
Adverse Effect, except as set forth in or contemplated in the Final Memorandum
(exclusive of any amendment or supplement thereto).
(ff) The Principal Subsidiary is not currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on its capital stock, from repaying to the Company any loans or
advances to the Principal Subsidiary from the Company or from transferring any
of the Principal Subsidiary's property or assets to the Company, except as
described in or contemplated by the Final Memorandum.
(gg) Each of the Company and the Principal Subsidiary possesses valid and
subsisting franchises, certificates of convenience and authority, licenses and
permits authorizing it to carry on the electric utility business in which it is
engaged, subject to the expiration of the Principal Subsidiary's franchise
agreement with the City of Wichita, and neither the Company nor the Principal
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such franchise, certificate of convenience and authority,
license or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected to have a
Material Adverse Effect, except as set forth in or contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto).
(hh) The Company and the Principal Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ii) The Company and the Principal Subsidiary are (i) in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"); (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (iii) have not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals, or liability would not, individually or in the aggregate, reasonably
be
108
expected to have a Material Adverse Effect, except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto); except as set forth in the Final Memorandum, neither
the Company nor any of the subsidiaries has been named as a "potentially
responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
(jj) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties); on the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate reasonably be expected to have a Material Adverse
Effect, except as set forth in or contemplated in the Final Memorandum
(exclusive of any amendment or supplement thereto).
(kk) The offerings are in the ordinary course of business of the Company
and the Company does not believe that an exemption from the July 20, 2001 Order
of the KCC is required.
Any certificate signed by any officer of the Company and delivered to the
Initial Purchasers or counsel for the Initial Purchasers in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Initial Purchaser.
2. Purchase and Sale. Subject to the terms and conditions and in reliance
-----------------
upon the representations and warranties herein set forth, the Company agrees to
sell to each Initial Purchaser, and each Initial Purchaser agrees, severally and
not jointly, to purchase from the Company, at a purchase price of 99% of the
principal amount thereof, the principal amount of Securities set forth opposite
such Initial Purchaser's name in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the Securities shall
--------------------
be made at 10:00 A.M., New York City time, on May 10, 2002, or at such time on
such later date (not later than May 17, 2002) as the Initial Purchasers and the
Company shall agree, which date and time may be postponed by agreement between
the Initial Purchasers and the Company or as provided in Section 9 hereof (such
date and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the Initial
Purchasers for their respective accounts against payment by the several Initial
Purchasers of the purchase price thereof to or upon the order of the Company by
wire transfer payable in same-day funds to the account
118
specified by the Company. Delivery of the Securities shall be made through the
facilities of The Depository Trust Company.
4. Offering by Initial Purchasers. Each Initial Purchaser, severally and
------------------------------
not jointly, represents and warrants to and agrees with the Company that:
(a) It has not offered or sold, and will not offer or sell, any Securities
except (i) to those it reasonably believes to be "Qualified Institutional
Buyers" (as defined in Rule 144A under the Act) and that, in connection with
each such sale, it has taken or will take reasonable steps to ensure that the
purchaser of such Securities is aware that such sale is being made in reliance
on Rule 144A or (ii) in accordance with the restrictions set forth in Exhibit A
hereto.
(b) Neither it nor any person acting on its behalf has made or will make
offers or sales of the Securities in the United States by means of any form of
general solicitation or general advertising (within the meaning of Regulation D)
in the United States.
5. Agreements. The Company agrees with each Initial Purchaser that:
----------
(a) The Company will furnish to each Initial Purchaser and to counsel for
the Initial Purchasers, without charge, during the period referred to in
paragraph (c) below, as many copies of the Final Memorandum and any amendments
and supplements thereto as it may reasonably request.
(b) The Company will not (except as is necessary to comply with applicable
law) amend or supplement the Final Memorandum, other than by filing documents
under the Exchange Act that are incorporated by reference therein, without the
prior written consent of the Initial Purchasers; provided, however, that, prior
to the completion of the distribution of the Securities by the Initial
Purchasers (as determined by the Initial Purchasers), the Company will not file
any document under the Exchange Act that is incorporated by reference in the
Final Memorandum unless, prior to such proposed filing, the Company has
furnished the Initial Purchasers with a copy of such document for their review
and the Initial Purchasers have not reasonably objected to the filing of such
document.
(c) If at any time prior to the completion of the distribution of the
Securities by the Initial Purchasers (as determined by the Initial Purchasers),
any event occurs as a result of which the Final Memorandum, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it should
be necessary to amend or supplement the Final Memorandum to comply with
applicable law, the Company promptly (i) will notify the Initial Purchasers of
any such event; (ii) subject to the requirements of paragraph (b) of this
Section 5, will
128
prepare an amendment or supplement that will correct such statement or omission
or effect such compliance; and (iii) will supply any supplemented or amended
Final Memorandum to the several Initial Purchasers and counsel for the Initial
Purchasers without charge in such quantities as the Initial Purchasers may
reasonably request.
(d) The Company will not, and will not permit any of its Affiliates to,
resell any Securities (other than to other Affiliates) that have been acquired
by any of them.
(e) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf will, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances that would
require the registration of the Securities under the Act.
(f) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with any
offer or sale of the Securities in the United States.
(g) So long as any of the Securities are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, the Company will, during any period in
which it is not subject to and in compliance with Section 13 or 15(d) of the
Exchange Act or it is not exempt from such reporting requirements pursuant to
and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each
holder of such restricted securities and to each prospective purchaser (as
designated by such holder) of such restricted securities, upon the request of
such holder or prospective purchaser, any information required to be provided by
Rule 144A(d)(4) under the Act. This covenant is intended to be for the benefit
of the holders, and the prospective purchasers designated by such holders, from
time to time of such restricted securities.
(h) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf will engage in any directed selling efforts with respect
to the Securities, and each of them will comply with the offering restrictions
requirement of Regulation S. Terms used in this paragraph have the meanings
given to them by Regulation S.
(i) The Company will cooperate with the Initial Purchasers and use its best
efforts to permit the Securities to be eligible for clearance and settlement
through The Depository Trust Company.
(j) The Company will use its best efforts to cause the Amended Mortgage to
be duly filed for record, appropriate notices of such filing to be recorded, and
an appropriate financing statement to be filed, wherever necessary
138
or appropriate to perfect the lien of the Amended Mortgage for the benefit of
the Securities prior to the Closing Date.
(k) The Company will not for a period of 90 days following the Execution
Time, without the prior written consent of Salomon Smith Barney Inc., offer,
sell or contract to sell, or otherwise dispose of (or enter into any transaction
which is designed to, or might reasonably be expected to, result in the
disposition
(k) (whether by actual disposition or effective economic disposition due to
cash settlement or otherwise) by the Company or any Affiliate of the Company or
any person in privity with the Company or any Affiliate of the Company),
directly or indirectly, or announce the offering of, any debt securities issued
or guaranteed by the Company (other than (i) the Securities; (ii) the Notes Due
2007; and (iii) indebtedness under the Company's Credit Agreement dated as of
June 28, 2000, the Five-Year Competitive Advance and Revolving Credit Facility
Agreement dated as of March 17, 1998 and the WR Receivables Corporation Purchase
and Sale Agreement dated as of July 28, 2000); provided, however that the
Company may incur indebtedness under credit facilities that replace the credit
facilities described in clause (iii) above.
(l) The Company will not take, directly or indirectly, any action designed
to or which has constituted or which might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities.
(m) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation of the Registration Rights Agreement, the
issuance of the Securities and the fees of the Trustee; (ii) the preparation,
printing or reproduction of the Preliminary Memorandum and Final Memorandum and
each amendment or supplement to either of them; (iii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the Preliminary Memorandum and
Final Memorandum, and all amendments or supplements to either of them, as may,
in each case, be reasonably requested for use in connection with the offering
and sale of the Securities; (iv) the preparation, printing, authentication,
issuance and delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (v) the printing (or reproduction) and delivery of this Agreement
and all other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Securities; (vi) admitting the Securities
for trading in the PORTAL Market; (vii) the reasonable transportation and other
expenses incurred by or on behalf of Company representatives (which shall
exclude expenses of the Initial Purchasers) in connection with presentations to
prospective purchasers of the Securities; (viii) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company; and (ix) all other
148
costs and expenses incident to the performance by the Company of its obligations
hereunder.
(n) The Company will cause Westar Industries, Inc., contemporaneously with
the consummation of the issuance of the Securities, to transfer to the Company
in exchange for equity, Company debt in an amount equal to the sum of any
offering expenses, Initial Purchasers' discounts, and the amount, if any, by
which the debt incurred under and in connection with the issuance of the
Securities and the Notes Due 2007 exceeds the amount of the debt of the Company
retired by application of the proceeds of the sale of the Securities and the
Notes Due 2007.
6. Conditions to the Obligations of the Initial Purchasers. The obligations
-------------------------------------------------------
of the Initial Purchasers to purchase the Securities shall be subject to the
accuracy of the representations and warranties on the part of the Company
contained herein at the Execution Time and the Closing Date, to the accuracy of
the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) The Initial Purchasers shall have received from Larry D. Irick, Esq.,
Vice President and Corporate Secretary of the Company, and from other counsel
(which may be Company counsel) acceptable to the Initial Purchasers, one or more
legal opinions, dated the Closing Date and addressed to the Initial Purchasers
to the cumulative effect that:
(i) each of the Company and the Principal Subsidiary has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Kansas, with full
corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as
described in the Final Memorandum, and is duly qualified to do
business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification
and where the failure to be so qualified would be materially
adverse to the Company and its subsidiaries considered as a
whole;
(ii) each of the Company and the Principal Subsidiary possesses valid
and subsisting franchises, certificates of convenience and
authority, licenses and permits authorizing it to carry on the
electric utility business in which it is engaged, subject to the
expiration of the Principal Subsidiary's franchise agreement with
the City of Wichita, in each case as described in the Final
Memorandum;
(iii) the Amended Mortgage has been duly and validly authorized by all
necessary corporate action and has been duly executed and
delivered, and has been qualified under the Trust Indenture Act
of
158
1939, as amended, and constitutes a valid and binding instrument enforceable in
accordance with its terms subject to the Enforceability Limitations;
(iv) the Amended Mortgage and all required financing statements under the
Uniform Commercial Code have been duly recorded or filed in each place in which
any of the properties or assets of the Company subject to the lien of the
Amended Mortgage are situated and in which such recording or filing is required
to protect and preserve the lien of the Amended Mortgage, and all taxes and
recording or filing fees required to be paid in connection with the execution,
recording or filing of the Amended Mortgage have been duly paid;
(v) the Securities have been duly authorized, executed, issued and
delivered by the Company and constitute valid and legally binding obligations of
the Company entitled to the lien of and benefits provided by the Amended
Mortgage subject to the Enforceability Limitations;
(vi) the Registration Rights Agreement has been duly authorized, executed
and delivered and constitutes the legal, valid, binding and enforceable
instrument of the Company subject to the Enforceability Limitations;
(vii) neither the execution and delivery of the Amended Mortgage, the
Registration Rights Agreement, the Securities or this Agreement, nor the
consummation of the transactions therein contemplated, nor compliance with the
terms and provisions thereof, will conflict with, violate or result in a breach
of any law, any administrative regulation or any court decree known to such
counsel to be applicable to the Company or the Principal Subsidiary, conflict
with or result in a breach of any of the terms, conditions or provisions of the
charter or by-laws of the Company or the Principal Subsidiary or of any
agreement or instrument known to such counsel to which the Company or the
Principal Subsidiary is a party or by which the Company or the Principal
Subsidiary is bound or constitute a default thereunder, or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any properties or assets of the Company or the Principal
Subsidiary other than the lien of the Amended Mortgage;
(viii) this Agreement has been duly authorized, executed and delivered by
the Company;
(ix) the Securities and the Amended Mortgage conform as to legal matters in
all material respects with the statements concerning them set forth in the Final
Memorandum under the captions "Description of
168
Bonds" and "Exchange Offers; Registration Rights," insofar as such statements
purport to summarize certain provisions;
(x) an appropriate order has been entered by the FERC in Federal Power Act
dockets ES00-39-000 and ES00-39-001 authorizing the issuance and sale of the
Securities and the transactions related thereto as contemplated by this
Agreement and the Registration Rights Agreement, and no additional consent,
approval, authorization, filing with or order of the FERC, the KCC or any court
or governmental agency or body is required in connection with the transactions
contemplated herein or in the Amended Mortgage and the Registration Rights
Agreement, except (i) such as may be required under the blue sky or securities
laws of any jurisdiction in connection with the purchase and sale of the
Securities by the Initial Purchasers in the manner contemplated in this
Agreement and the Final Memorandum and the Registration Rights Agreement; (ii)
the filing with the FERC of the reports required by 18 CFR Section 34.10; and
(iii) the filing with the KCC of a copy of the registration statement
contemplated by the Registration Rights Agreement and such other approvals
(specified in such opinion) as have been obtained;
(xi) the Company has good and sufficient title to, or a satisfactory
easement in, all the real property, and has good and sufficient title to all the
personal property described in the Amended Mortgage as owned by it and subject
to the lien of the Amended Mortgage, except any which may have been released
from the lien thereof pursuant to the provisions thereof, subject only to (a)
minor leases and liens of judgements not prior to the lien of the Amended
Mortgage, which, in such counsel's opinion, do not interfere with the Company's
business, (b) minor defects, irregularities and deficiencies in titles of
properties and rights-of-way which, in such counsel's opinion, do not materially
impair the use of such property and rights-of-way for the purposes for which
they are held by the Company, and (c) other permitted liens as defined in the
Amended Mortgage; subject only as above set forth in this paragraph, the Amended
Mortgage constitutes a valid, direct first mortgage lien upon said properties
and upon all franchises owned by the Company, which properties and franchises
include all the physical properties and franchises of the Company (other than
classes of property expressly excepted in the Amended Mortgage); all physical
properties and franchises (other than classes of property expressly excepted in
the Amended Mortgage as aforesaid) hereafter acquired by the Company will, upon
such acquisition, become subject to the lien thereof, subject however to liens
permitted thereby and to any liens existing or placed upon such properties at
the time of the acquisition thereof by the Company and except as described in
the Final Memorandum; and the descriptions of all such properties and assets
178
contained in the granting clauses of the Amended Mortgage are correct and
adequate for the purposes of the Amended Mortgage;
(xii) to the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or the Principal
Subsidiary or its or their property that is not adequately disclosed in the
Final Memorandum, except in each case for such proceedings that, if the subject
of an unfavorable decision, ruling or finding would not singly or in the
aggregate, result in a material adverse change in the condition (final or
otherwise), prospects, earnings, business or properties of the Company and its
Restricted Subsidiaries, taken as a whole;
(xiii) the statements in the Final Memorandum under the heading "Certain
U.S. Federal Income Tax Considerations" and the statements in the Company's
Annual Report on Form 10-K for the year ended December 31, 2001 (the "Annual
Report") under the heading "Legal Proceedings" fairly summarize the matters
therein described;
(xiv) no facts have come to such counsel's attention that lead him to
believe that the Final Memorandum at the Execution Time and on the Closing Date
contained or contains any untrue statement of a material fact or omitted or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (in
each case, other than the statistical information, financial statements and
other financial information contained therein, as to which such counsel need
express no opinion);
(xv) assuming the accuracy of the representations and warranties and
compliance with the agreements contained herein, no registration of the
Securities under the Act, and no qualification of an indenture under the Trust
Indenture Act, are required for the offer and sale by the Initial Purchasers of
the Securities in the manner contemplated by this Agreement; and
(xvi) the documents of the Company incorporated by reference in the Final
Memorandum, as of the respective dates on which they were filed with the
Commission pursuant to the Exchange Act, complied as to form in all material
respects with the Exchange Act and the applicable published rules and
regulations of the Commission under the Exchange Act.
In rendering such opinion, counsel may rely as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and
188
public officials. References to the Final Memorandum in this Section 6(a)
include any amendment or supplement thereto at the Closing Date.
(b) The Company shall have requested and caused Morris, Laing, Evans, Brock
& Kennedy, Chartered, special counsel for the Company, to furnish to the Initial
Purchasers its opinion, dated the Closing Date, addressed to the Initial
Purchasers and in form reasonably satisfactory to the Initial Purchasers, to the
effect that:
(i) unless the issue and sale of the Securities pursuant to this
Agreement violates an existing valid order of the KCC, no
consent, approval, authorization, order, registration, waiver,
exemption or qualification of or with the KCC is required for the
issue and sale of the Securities by the Company pursuant to this
Agreement;
(ii) the issue and sale of the Securities should not be interpreted by
the KCC to violate the July 20, 2001 Order of the KCC; and
(iii) if the KCC were to determine that the issue and sale of the
Securities violates the July 20, 2001 Order, (i) any such
violation should not affect the validity of the Securities; (ii)
any such violation should not impair the legal enforceability of
such Securities; and (iii) the Company should not be prevented
from making timely payments of interest, premium, if any, and
principal pursuant to the terms of the Securities, or otherwise
complying with the terms of the Securities.
(c) The Initial Purchasers shall have received from Cahill Gordon &
Reindel, special counsel to the Company, a legal opinion dated the Closing Date
and addressed to the Initial Purchasers and in form reasonably satisfactory to
the Initial Purchasers, covering the matters referred to in clauses (iii), (v),
(vi), (viii), (ix), the statement with respect to "Certain U.S. Federal Income
Tax Considerations" in (xiii) and (xv) of Section 6(a) above. In rendering such
opinions, such counsel may rely as to matters of fact, to the extent they deem
proper on certificates of responsible officers of the Company and public
officials, and as to matters relating to the FERC authorization and Kansas law
(including matters relating to the KCC), upon the opinions rendered pursuant to
Sections 6(a) and 6(b) above. In addition, such counsel shall state that they
have participated in conferences with officers and other representatives of the
Company, counsel for the Company, representatives of the independent certified
public accountants for the Company and the Initial Purchasers at which
conferences the contents of the Final Memorandum were discussed and that
although they are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Final
Memorandum (except as to matters referred to in their opinion described in
clauses (ix) and (xiii) referred to above, on the basis of the foregoing
(relying as to materiality to a large extent upon the opinions
198
of officers, counsel and other representatives of the Company), no facts came to
their attention which lead them to believe that the Final Memorandum, as of its
date, or (as amended or supplemented) as of the Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading (except in each
case as to the financial statements and other financial and statistical data
contained therein or incorporated by reference therein, with respect to which
they need make no comment).
(d) The Initial Purchasers shall have received from Sidley Austin Brown &
Wood LLP, counsel for the Initial Purchasers, such opinion or opinions, dated
the Closing Date and addressed to the Initial Purchasers, with respect to the
issuance and sale of the Securities, the Amended Mortgage, the Registration
Rights Agreement, the Final Memorandum (as amended or supplemented at the
Closing Date) and other related matters as the Initial Purchasers may reasonably
require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters. Sidley
Austin Brown & Wood LLP may rely on the opinion of one or more of the foregoing
counsel for the Company.
(e) The Company shall have furnished to the Initial Purchasers a
certificate of the Company, signed by two of its executive officers (one of whom
shall be a principal financial or accounting officer of the Company), dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Final Memorandum, any amendment or supplement to the Final
Memorandum and this Agreement and that:
(i) the representations and warranties of the Company in this Agreement
are true and correct in all material respects on and as of the Closing
Date with the same effect as if made on the Closing Date, and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date; and
(ii) since the date of the most recent financial statements included in the
Final Memorandum (exclusive of any amendment or supplement thereto),
there has been no material adverse change in the condition (financial
or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated by the Final Memorandum (exclusive of any
amendment or supplement thereto).
(f) Subject to such modifications as the Initial Purchasers may, in their
discretion, deem acceptable to accommodate the current uncertainty
relating to the
208
ongoing operations of Arthur Andersen, at the Execution Time and at the Closing
Date, the Company shall have requested and caused Arthur Andersen to furnish to
the Initial Purchasers letters, dated respectively as of the Execution Time and
as of the Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent accountants within the meaning
of the Act and the Exchange Act and the applicable rules and regulations
thereunder, and that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated in the Final
Memorandum and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Exchange
Act and the related published rules and regulations thereunder;
(ii) on the basis of carrying out certain specified procedures
(but not an examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of significance
with respect to the comments set forth in such letter; a reading of
the minutes of the meetings of the stockholders, directors and
committees thereof committees of the Company and its subsidiaries; and
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters of the Company and its
subsidiaries as to transactions and events subsequent to December 31,
2001, nothing came to their attention which caused them to believe
that:
(1) with respect to the period subsequent to December
31, 2001 there were any changes, at a specified date not
more than five days prior to the date of the letter, in the
total long-term liabilities of the Company and its
subsidiaries or cumulative preferred stock or common stock
of the Company or decreases in the shareholders' equity of
the Company as compared with the amounts shown on the
December 31, 2001 consolidated balance sheet included in the
Annual Report, or for the period from January 1, 2002 to
such specified date there were any decreases, as compared
with the corresponding period in the preceding year in total
sales or earnings (loss) before income taxes or in total or
per share amounts of net income of the Company and its
subsidiaries, except in all instances for changes or
decreases set forth in such letter (including decreases as a
result of the impairment charge in the first quarter of 2002
of approximately $657 million), in which case the letter
shall be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is not
deemed necessary by the Initial Purchasers; or
218
(2) the information included under the headings "Selected
Financial Data" in the Annual Report is not in conformity with
the disclosure requirements of Regulation S-K; or
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Final Memorandum, the information included in Items 1, 2,
6, 7 and 11 of the Annual Report agrees with the accounting records of
the Company and its subsidiaries, excluding any questions of legal
interpretation.
References to the Final Memorandum in this Section 6(f) include any
amendment or supplement thereto at the date of the applicable letter.
(g) On the Closing Date, the AA Representation Letter shall not have
been rescinded and the Company shall have no reason to believe that the
representations in the AA Representation Letter are not true and correct in
all respects.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum (exclusive of any
amendment or supplement thereto), there shall not have been (i) any change
or decrease specified in the letter or letters referred to in paragraph (f)
of this Section 6; or (ii) any change, or any development involving a
prospective change, in or affecting the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
Restricted Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto) the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the sole judgment of the Initial Purchasers, so
material and adverse as to make it impractical or inadvisable to market the
Securities as contemplated by the Final Memorandum (exclusive of any
amendment or supplement thereto).
(i) The Securities shall have been designated as PORTAL-eligible
securities in accordance with the rules and regulations of the NASD, and
the Securities shall be eligible for clearance and settlement through The
Depositary Trust Company.
(j) Subsequent to the Execution Time, there shall not have been any
(i) downgrading in the rating accorded the Company's debt securities by a
"nationally recognized securities rating organization," as that term is
defined by the Commission for purposes of its Rule 436(g)(2); and (ii) no
such rating
228
organization shall have announced publicly that it has placed, or informed the
Company or the Initial Purchasers that it intends to place, any of the Company's
debt securities on what is commonly referred to as a "watchlist" for possible
downgrading, in a manner or to an extent indicating a materially greater
likelihood of a downgrading in rating as described in clause (i) above occurring
than was the case as of the date hereof.
(k) Prior to the Closing Date, the Company shall have furnished to the
Initial Purchasers such further information, certificates and documents as
the Initial Purchasers may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Initial Purchasers and counsel for the Initial Purchasers,
this Agreement and all obligations of the Initial Purchasers hereunder may be
cancelled at, or at any time prior to, the Closing Date by the Initial
Purchasers. Notice of such cancellation shall be given to the Company in writing
or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 will be
delivered at the office of counsel for the Initial Purchasers, at 875 Third
Avenue, New York, NY 10021, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities provided
for herein is not consummated because any condition to the obligations of
the Initial Purchasers set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason
of a default by any of the Initial Purchasers, the Company will reimburse
the Initial Purchasers severally through Salomon Smith Barney Inc. on
demand for all reasonable out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, the directors and
officers of each Initial Purchaser and each person who controls any Initial
Purchaser within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange
Act or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Memorandum, the Final Memorandum (or in any supplement or
amendment thereto) or any information provided
238
by the Company to any holder or prospective purchaser of Securities pursuant to
Section 5(g), or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
--------
however, that the Company will not be liable in any such case to the extent that
- -------
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made in the Preliminary Memorandum or the Final Memorandum, or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Initial
Purchasers through the Initial Purchasers specifically for inclusion therein.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Initial Purchaser severally and not jointly agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers, and
each person who controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Initial Purchaser, but only with reference to written information relating
to such Initial Purchaser furnished to the Company by or on behalf of such
Initial Purchaser through the Initial Purchasers specifically for inclusion in
the Preliminary Memorandum or the Final Memorandum (or in any amendment or
supplement thereto). This indemnity agreement will be in addition to any
liability which any Initial Purchaser may otherwise have. The Company
acknowledges that the statements set forth in (i) the last paragraph of the
cover page regarding the delivery of the Securities, the fourth full paragraph
on page (ii) and the related disclosure on page 73 (in the third full paragraph
from the bottom of page 73) concerning stabilization, syndicate covering
transactions and penalty bids and, under the heading "Plan of Distribution";
(ii) the sentences related to concessions and reallowances; (iii) the paragraph
related to stabilization, syndicate covering transactions and penalty bids in
the Preliminary Memorandum and the Final Memorandum and (iv) paragraphs three,
five and seven under the heading "Plan of Distribution," constitute the only
information furnished in writing by or on behalf of the Initial Purchasers for
inclusion in the Preliminary Memorandum or the Final Memorandum (or in any
amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and
248
defenses; and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party shall
be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
- -------- -------
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party; (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action; or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit
or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Initial Purchasers agree to contribute
to the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or defending
same) (collectively "Losses") to which the Company and one or more of the
Initial Purchasers may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and by the
Initial Purchasers on the other from the offering of the Securities; provided,
--------
however, that in no case shall any Initial Purchaser (except as may be provided
- -------
in any agreement among the Initial Purchasers relating to the offering of the
Securities) be responsible for any amount in excess of the purchase discount or
commission applicable to the Securities purchased by such Initial Purchaser
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Initial Purchasers shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
258
of the Initial Purchasers on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) received by
it, and benefits received by the Initial Purchasers shall be deemed to be equal
to the total purchase discounts and commissions in each case set forth on the
cover of the Final Memorandum. Relative fault shall be determined by reference
to, among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company on the one hand or the Initial
Purchasers on the other, the intent of the parties and their relative knowledge,
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Initial Purchaser within the meaning
of either the Act or the Exchange Act and each director and officer of an
Initial Purchaser shall have the same rights to contribution as such Initial
Purchaser, and each person who controls the Company within the meaning of either
the Act or the Exchange Act and each officer and director of the Company shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d). The Initial Purchasers'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule 1 hereto, and not joint.
9. Default by an Initial Purchaser. If any one or more Initial Purchasers
-------------------------------
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Initial Purchasers)
the Securities which the defaulting Initial Purchaser or Initial Purchasers
agreed but failed to purchase; provided, however, that in the event that the
-------- -------
aggregate amount of Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase shall exceed 10% of the aggregate
amount of Securities set forth in Schedule I hereto, the remaining Initial
Purchasers shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Securities, and if such nondefaulting Initial
Purchasers do not purchase all the Securities, this Agreement will terminate
without liability to any nondefaulting Initial Purchaser or the Company. In the
event of a default by any Initial Purchaser as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding five Business
Days,
268
as the Initial Purchasers shall determine in order that the required changes in
the Final Memorandum or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Initial
Purchaser of its liability, if any, to the Company or any nondefaulting Initial
Purchaser for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
-----------
absolute discretion of the Initial Purchasers, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange or trading in securities generally
on the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange; (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities; or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the judgment of the Initial Purchasers, impracticable or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by the
Final Memorandum (exclusive of any amendment or supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
------------------------------------------
representations, warranties, indemnities and other statements of the Company or
its officers and of the Initial Purchasers set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Initial Purchasers or the Company or any of the
officers, directors or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and effective
-------
only on receipt, and, if sent to the Initial Purchasers, will be mailed,
delivered or telefaxed to the Salomon Smith Barney Inc. General Counsel (fax
no.: (212) 816-7912) and confirmed to the General Counsel, Salomon Smith Barney
Inc. at 388 Greenwich Street, New York, New York 10013 Attention: General
Counsel; or, if sent to the Company, will be mailed, delivered or telefaxed to
Western Resources, Inc. Legal Department (fax no.: (785) 575-1936) and confirmed
to Mr. Larry D. Irick, Vice President and Corporate Secretary, at 818 South
Kansas Avenue, Topeka, Kansas 66612.
13. Successors. This Agreement will inure to the benefit of and be binding
----------
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 8 hereof, and, except
as expressly set forth in Section 5(h) hereof, no other person will have any
right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
--------------
278
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York.
15. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original and all of
which together shall constitute one and the same instrument.
16. Headings. The section headings used herein are for convenience only and
--------
shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this Agreement, shall
-----------
have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" shall have the meaning specified in Rule 501(b) of Regulation
D.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York, New York and Topeka,
Kansas.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean, the date and time that this Agreement is
executed and delivered by the parties hereto.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Principal Subsidiary" shall mean Kansas Gas and Electric Company.
"Restricted Subsidiaries" shall have the same meaning as in the Amended
Mortgage.
288
"Regulation D" shall mean Regulation D under the Act.
"Regulation S" shall mean Regulation S under the Act.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated thereunder.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
Agreement and your acceptance shall represent a binding agreement between the
Company and the several Initial Purchasers.
Very truly yours,
Western Resources, Inc.
By /s/ Paul R. Geist
-------------------------
Name: Paul R. Geist
Title: Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Smith Barney Inc.
J.P. Morgan Securities Inc.
BNY Capital Markets, Inc.
By: Salomon Smith Barney Inc.
By /s/ Arthur Tildesley, Jr
----------------------------------
Name: Arthur Tildesley, Jr.
Title: Managing Director
For itself and the other several
Initial Purchasers named in
Schedule I to the foregoing
Agreement.
308
SCHEDULE I
Principal
Amount of Securities
Initial Purchasers to be Purchased
- ------------------ --------------------
Salomon Smith Barney Inc..........................................................$ 212,386,000
J.P. Morgan Securities Inc..........................................................141,591,000
BNY Capital Markets, Inc............................................................ 11,023,000
-----------
Total......................................................................$ 365,000,000
===========
EXHIBIT A
Selling Restrictions for Offers and
-----------------------------------
Sales outside the United States
-------------------------------
(1)(a) The Securities have not been and will not be registered
under the Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with Regulation
S under the Act or pursuant to an exemption from the registration requirements
of the Act. Each Initial Purchaser represents and agrees that, except as
otherwise permitted by Section 4(a)(i) of the Agreement to which this is an
exhibit, it has offered and sold the Securities, and will offer and sell the
Securities, (i) as part of their distribution at any time; and (ii) otherwise
until 40 days after the later of the commencement of the offering and the
Closing Date, only in accordance with Rule 903 of Regulation S under the Act.
Accordingly, each Initial Purchaser represents and agrees that neither it, nor
any of its Affiliates nor any person acting on its or their behalf has engaged
or will engage in any directed selling efforts with respect to the Securities,
and that it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Initial Purchaser agrees that, at
or prior to the confirmation of sale of Securities (other than a sale of
Securities pursuant to Section 4(a)(i) of the Agreement to which this is an
exhibit), it shall have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the distribution compliance period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Act") and may not be
offered or sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and the closing
date of the offering, except in either case in accordance with
Regulation S or Rule 144A under the Act. Terms used above have
the meanings given to them by Regulation S."
(b) Each Initial Purchaser also represents and agrees that it
has not entered and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the
Securities, except with its Affiliates or with the prior written
consent of the Company.
(c) Terms used in this section have the meanings given to them
by Regulation S.
(2) Each Initial Purchaser, severally and not jointly,
represents, warrants and agrees that (i) it has not offered or sold and, prior
to the date six months after the Closing Date, will not offer or sell any
Securities to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has complied and will comply with
all applicable provisions of the Financial Services and Markets Act 2000 (the
"FSMA")
A-1
28
with respect to anything done by it in relation to the Securities in,
from or otherwise involving the United Kingdom; and (iii) it has only
communicated, or caused to be communicated, and will only communicate, or cause
to be communicated, any invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the FSMA) received by it in
connection with the issue or sale of the Securities in circumstances in which
Section 21(1) of the FSMA does not apply to the Company.
A-2
Exhibit 4.25
Execution Copy
WESTERN RESOURCES, INC.
$400,000,000
Senior Notes, 9 3/4% Series Due 2007
Purchase Agreement
New York, New York
May 7, 2002
Salomon Smith Barney Inc.
J.P. Morgan Securities Inc.
BNY Capital Markets, Inc.
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Western Resources, Inc., a corporation organized under the laws of the
State of Kansas (the "Company"), proposes to issue and sell to the several
parties named in Schedule I hereto (the "Initial Purchasers"), $400,000,000
principal amount of its Senior Notes, 9 3/4% Series Due 2007 (the "Securities").
The Securities are to be issued under an indenture (the "Indenture") dated as of
August 1, 1998, between the Company and Deutsche Bank Trust Company Americas,
(formerly known as Bankers Trust Company), as trustee (the "Trustee"). The
Securities have the benefit of a Registration Rights Agreement (the
"Registration Rights Agreement"), dated as of May 10, 2002, between the Company
and the Initial Purchasers, pursuant to which the Company has agreed to register
the Securities under the Act subject to the terms and conditions therein
specified. The use of the neuter in this Agreement shall include the feminine
and masculine wherever appropriate. Certain terms used herein are defined in
Section 17 hereof.
The sale of the Securities to the Initial Purchasers will be made without
registration of the Securities under the Act in reliance upon exemptions from
the registration requirements of the Act.
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum, dated April 24, 2002 (including any and all
exhibits thereto and any information incorporated by reference therein, the
"Preliminary Memorandum"), and a final offering memorandum, dated May 7, 2002
(including any and all exhibits thereto and any information incorporated by
reference therein, the "Final Memorandum"). Each of the Preliminary Memorandum
and the Final Memorandum sets forth certain information concerning the Company
and the Securities. The Company hereby confirms that it has authorized the use
of the Preliminary Memorandum and the Final Memorandum in connection with the
offer and sale of the Securities by the Initial Purchasers. Unless stated to the
contrary, any references herein to the terms "amend,"
22
"amendment" or "supplement" with respect to the Final Memorandum shall be deemed
to refer to and include any information filed under the Exchange Act, subsequent
to the Execution Time and prior to the completion of the distribution of the
Securities by the Initial Purchasers, which is incorporated by reference into
the Final Memorandum.
The Preliminary Memorandum and the Final Memorandum also relate to the sale
by the Company of $365,000,000 principal amount of First Mortgage Bonds, 7 7/8%
Series Due 2007 (the "Bonds Due 2007"). While the Securities and the Bonds Due
2007 are expected to be sold on the same date, the consummation of the sale of
the Securities and Bonds Due 2007 are not conditioned upon each other.
1. Representations and Warranties. The Company represents and warrants to
------------------------------
each Initial Purchaser as set forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. At the Execution Time and on the Closing Date
(as defined in Section 3 hereof), the Final Memorandum did not, and will not
(and any amendment or supplement thereto, at the date thereof and on the Closing
Date, will not), contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. However, the
Company makes no representation or warranty as to the information contained in
or omitted from the Preliminary Memorandum or the Final Memorandum, or any
amendment or supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the Initial
Purchasers through Salomon Smith Barney Inc. specifically for inclusion in the
Preliminary Memorandum or the Final Memorandum.
(b) The Company will not resell any Securities that have been acquired by
it.
(c) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf has, directly or indirectly, made any offers or sales of
any security, or solicited offers to buy any security, under circumstances that
would require the registration of the Securities under the Act.
(d) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with any
offer or sale of the Securities in the United States.
(e) The Securities satisfy the eligibility requirements of Rule 144A(d)(3)
under the Act.
32
(f) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf has engaged in any directed selling efforts with respect
to the Securities, and each of them has complied with the offering restrictions
requirement of Regulation S. Terms used in this paragraph have the meanings
given to them in Regulation S.
(g) The Company has been advised by the NASD's PORTAL Market that the
Securities have been designated PORTAL-eligible securities in accordance with
the rules and regulations of the NASD.
(h) The Company is not, and after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Final Memorandum will not be, an "investment company" within the meaning of the
Investment Company Act, without taking account of any exemption arising out of
the number of holders of the Company's securities.
(i) The Company is subject to and in full compliance with the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act.
(j) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any Securities (except as
contemplated by this Agreement).
(k) The Company has not taken, directly or indirectly, any action designed
to cause or which has constituted or which might reasonably be expected to cause
or result, under the Exchange Act or otherwise, in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.
(l) The information provided by the Company pursuant to Section 5(g) hereof
will not, at the date thereof, contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(m) Each of the Company and the Principal Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction in which it is chartered or organized with full
corporate power and authority to carry on the electric utility business in which
it is engaged, and is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction which requires such
qualification except where the failure to so qualify would not reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business,
42
except as set forth in or contemplated in the Final Memorandum (a "Material
Adverse Effect").
(n) All the outstanding shares of capital stock of the Principal Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Final Memorandum, all
outstanding shares of capital stock of the Principal Subsidiary owned by the
Company, as described in the Final Memorandum, are owned by it free and clear of
any perfected security interest or any other security interests, claims, liens
or encumbrances.
(o) The Company's authorized equity capitalization is as set forth in the
Final Memorandum, and the capital stock of the Company conforms in all material
respects to the description thereof contained in the Final Memorandum.
(p) The statements in the Final Memorandum under the headings "Certain U.S.
Federal Income Tax Considerations," "Description of Bonds," "Description of
Notes" and "Exchange Offers; Registration Rights" fairly summarize the matters
therein described.
(q) This Agreement has been duly authorized, executed and delivered by the
Company; the Indenture has been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery thereof by the
Trustee, constitutes a legal, valid, binding instrument enforceable against the
Company in accordance with its terms except that (x) the enforcement thereof may
be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights or remedies generally; (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought (regardless of whether enforcement is sought
in a proceeding at law or in equity); and (iii) any indemnification or
contribution provision that may be contrary to or inconsistent with public
policy and (y) the enforceability of provisions imposing liquidated damages,
penalties or an increase in interest rate upon the occurrence of certain events
may be limited in certain circumstances (collectively, the "Enforceability
Limitations"); the Securities have been duly authorized, and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchasers, will have been duly executed and
delivered by the Company and will constitute the legal, valid and binding
obligations of the Company entitled to the benefits of the Indenture subject to
the Enforceability Limitations; the Registration Rights Agreement has been duly
authorized and, when executed and delivered by the Company, will constitute the
legal, valid, binding and enforceable instrument of the Company subject to the
Enforceability Limitations; and the New Securities (as such term is defined in
the Registration Rights Agreement) have been duly
52
authorized by the Company for issuance and sale pursuant to the Indenture and
the Registration Rights Agreement, and such New Securities, when executed,
authenticated, issued and delivered in the manner provided for in the
Registration Rights Agreement and the Indenture against payment of consideration
therefor in the form of the Securities, will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms subject to the
Enforceability Limitations.
(r) No consent, approval, authorization, filing with or order of the State
Corporation Commission of the State of Kansas (the "KCC") or any court or
governmental agency or body is required in connection with the transactions
contemplated herein or in the Indenture or the Registration Rights Agreement,
except (i) the June 15, 2000 authorization from the Federal Energy Regulatory
Commission (the "FERC") in Federal Power Act docket numbers ES00-39-000 and
ES00-39-001 and the filing with the FERC of the reports required by 18 CFR
Section 34.10; (ii) such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Securities
by the Initial Purchasers in the manner contemplated herein and in the Final
Memorandum and the Registration Rights Agreement; and (iii) the filing with the
KCC of a copy of the registration statement contemplated by the Registration
Rights Agreement.
(s) Neither the execution and delivery of this Agreement, the Indenture or
the Registration Rights Agreement, the issue and sale of the Securities, nor the
consummation of any other of the transactions herein or therein contemplated,
nor the fulfillment of the terms hereof or thereof will conflict with, result in
a breach or violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or the Principal Subsidiary pursuant to: (i)
the charter or by-laws of the Company or the Principal Subsidiary; (ii) the
terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or the Principal Subsidiary is a party or bound
or to which its or their property is subject; or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or the Principal
Subsidiary of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company or the
Principal Subsidiary or any of its or their properties.
(t) The consolidated historical financial statements and schedules of the
Company and its consolidated subsidiaries included in the Final Memorandum
present fairly in all material respects the financial condition, results of
operations and cash flows of the Company as of the dates and for the periods
indicated, comply as to form with the applicable accounting requirements of the
Act and have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as otherwise
62
noted therein); the selected financial data set forth under the caption "Summary
Consolidated Financial Data" in the Final Memorandum fairly present, on the
basis stated in the Final Memorandum, the information included therein; the
information set forth under the captions "Summary Approximate Restricted Group
Pro Forma Financial Data" and "Summary Approximate Restricted Group EBITDA
Reconciliation" fairly present, on the basis stated in the Final Memorandum, the
information included therein; and the capitalization set forth under the columns
"Actual" and "As Adjusted" fairly present the information included therein.
(u) No action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its
subsidiaries or its or their property is pending or, to the best knowledge of
the Company, threatened that (i) could reasonably be expected to have a Material
Adverse Effect on the performance of this Agreement, the Indenture or the
Registration Rights Agreement, or the consummation of any of the transactions
contemplated hereby or thereby; or (ii) could reasonably be expected to have a
Material Adverse Effect, except as set forth in or contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto).
(v) Each of the Company and each of its subsidiaries owns or leases all
such properties as are necessary to the conduct of its operations as presently
conducted, except where the failure to own or lease such properties would not
reasonably be expected to have a Material Adverse Effect.
(w) Neither the Company nor the Principal Subsidiary is in violation or
default of (i) any provision of its charter or by-laws; (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to
which the Company or the Principal Subsidiary is a party or bound or to which
its property is subject; or (iii) any statute, law, rule, regulation, judgment,
order or decree applicable to the Company or the Principal Subsidiary of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or the Principal Subsidiary
or any of its properties, as applicable, except for violations or defaults which
would not reasonably be expected to have a Material Adverse Effect.
(x) Arthur Andersen LLP ("Arthur Andersen"), who have certified certain
financial statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated financial
statements and schedules included in the Final Memorandum, are independent
public accountants with respect to the Company within the meaning of the Act and
the applicable published rules and regulations thereunder.
72
(y) The Company has received from Arthur Andersen (i) a letter dated March
27, 2002 concerning Arthur Andersen's quality controls in connection with
Arthur Andersen's audit of the audited financial statements of the Company and
its consolidated subsidiaries included in the Final Memorandum (the "AA
Representation Letter"), including representations regarding the continuity of
Arthur Andersen's personnel working on the audit, the availability of national
office consultation and the availability of personnel at foreign affiliates of
Arthur Andersen to conduct relevant portions of the audit. The AA Representation
Letter has not been rescinded and the Company has no reason to believe that the
representations contained in the AA Representation Letter are not true and
correct in all respects.
(z) There are no stamp or other issuance or transfer taxes or duties or
other similar fees or charges required to be paid in connection with the
execution and delivery of this Agreement or the issuance or sale by the Company
of the Securities to the Initial Purchasers.
(aa) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not reasonably be
expected to have a Material Adverse Effect and except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or supplement
thereto)) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as would not reasonably be
expected to have a Material Adverse Effect and except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or supplement
thereto).
(bb) No labor problem or dispute with the employees of the Company or the
Principal Subsidiary exists or is threatened or imminent, and the Company is not
aware of any existing or imminent labor disturbance by the employees of any of
its or the Principal Subsidiary's principal suppliers, contractors or customers,
that would reasonably be expected to have a Material Adverse Effect, except as
set forth in or contemplated in the Final Memorandum (exclusive of any amendment
or supplement thereto).
(cc) The Company and the Principal Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; all policies of insurance and fidelity or surety bonds insuring the
Company or the Principal Subsidiary or their respective businesses, assets,
employees, officers and directors are in full force and effect; the Company and
the Principal Subsidiary are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the Company or
82
the Principal Subsidiary under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause; neither the Company nor
(cc) the Principal Subsidiary has been refused any insurance coverage
sought or applied for; and neither the Company nor the Principal Subsidiary has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not reasonably be expected to have a Material Adverse Effect and except as
set forth in or contemplated in the Final Memorandum (exclusive of any amendment
or supplement thereto).
(dd) The Principal Subsidiary is not currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on its capital stock, from repaying to the Company any loans or
advances to the Principal Subsidiary from the Company or from transferring any
of the Principal Subsidiary's property or assets to the Company, except as
described in or contemplated by the Final Memorandum.
(ee) Each of the Company and the Principal Subsidiary possesses valid and
subsisting franchises, certificates of convenience and authority, licenses and
permits authorizing it to carry on the electric utility business in which it is
engaged, subject to the expiration of the Principal Subsidiary's franchise
agreement with the City of Wichita, and neither the Company nor the Principal
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such franchise, certificate of convenience and authority,
license or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected to have a
Material Adverse Effect, except as set forth in or contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto).
(ff) The Company and the Principal Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(gg) The Company and the Principal Subsidiary are (i) in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
92
("Environmental Laws"); have received and are in compliance with all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses; and (iii) have not received notice of
any actual or potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes, pollutants or
contaminants, except where such non-compliance with Environmental Laws, failure
to receive required permits, licenses or other approvals, or liability would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, except as set forth in or contemplated in the Final Memorandum
(exclusive of any amendment or supplement thereto); except as set forth in the
Final Memorandum, neither the Company nor any of the subsidiaries has been named
as a "potentially responsible party" under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
(hh) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties); on the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect, except as set forth in or contemplated in the Final Memorandum
(exclusive of any amendment or supplement thereto).
(ii) The offerings are in the ordinary course of business of the Company
and the Company does not believe that an exemption from the July 20, 2001 Order
of the KCC is required.
Any certificate signed by any officer of the Company and delivered to the
Initial Purchasers or counsel for the Initial Purchasers in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Initial Purchaser.
2. Purchase and Sale. Subject to the terms and conditions and in reliance
--------------------
upon the representations and warranties herein set forth, the Company agrees to
sell to each Initial Purchaser, and each Initial Purchaser agrees, severally and
not jointly, to purchase from the Company, at a purchase price of 98.125% of the
principal amount thereof, the principal amount of Securities set forth opposite
such Initial Purchaser's name in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the Securities shall
-----------------------
102
be made at 10:00 A.M., New York City time, on May 10, 2002, or at such time on
such later date (not later than May 17, 2002) as the Initial Purchasers and the
Company shall agree, which date and time may be postponed by agreement between
the Initial Purchasers and the Company or as provided in Section 9 hereof (such
date and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the Initial
Purchasers for their respective accounts against payment by the several Initial
Purchasers of the purchase price thereof to or upon the order of the Company by
wire transfer payable in same-day funds to the account specified by the Company.
Delivery of the Securities shall be made through the facilities of The
Depository Trust Company.
4. Offering by Initial Purchasers. Each Initial Purchaser, severally and
---------------------------------
not jointly, represents and warrants to and agrees with the Company that:
(a) It has not offered or sold, and will not offer or sell, any Securities
except (i) to those it reasonably believes to be "Qualified Institutional
Buyers" (as defined in Rule 144A under the Act) and that, in connection with
each such sale, it has taken or will take reasonable steps to ensure that the
purchaser of such Securities is aware that such sale is being made in reliance
on Rule 144A or (ii) in accordance with the restrictions set forth in Exhibit A
hereto.
(b) Neither it nor any person acting on its behalf has made or will make
offers or sales of the Securities in the United States by means of any form of
general solicitation or general advertising (within the meaning of Regulation D)
in the United States.
5. Agreements. The Company agrees with each Initial Purchaser that:
----------
(a) The Company will furnish to each Initial Purchaser and to counsel for
the Initial Purchasers, without charge, during the period referred to in
paragraph (c) below, as many copies of the Final Memorandum and any amendments
and supplements thereto as it may reasonably request.
(b) The Company will not (except as is necessary to comply with applicable
law) amend or supplement the Final Memorandum, other than by filing documents
under the Exchange Act that are incorporated by reference therein, without the
prior written consent of the Initial Purchasers; provided, however, that, prior
-------- -------
to the completion of the distribution of the Securities by the Initial
Purchasers (as determined by the Initial Purchasers), the Company will not file
any document under the Exchange Act that is incorporated by reference in the
Final Memorandum unless, prior to such proposed filing, the Company has
furnished the Initial Purchasers with a copy of such document for their review
and the Initial Purchasers have not reasonably objected to the filing of such
document.
112
(c) If at any time prior to the completion of the distribution of the
Securities by the Initial Purchasers (as determined by the Initial Purchasers),
any event occurs as a result of which the Final Memorandum, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it should
be necessary to amend or supplement the Final Memorandum to comply with
applicable law, the Company promptly (i) will notify the Initial Purchasers of
any such event; (ii) subject to the requirements of paragraph (b) of this
Section 5, will prepare an amendment or supplement that will correct such
statement or omission or effect such compliance; and (iii) will supply any
supplemented or amended Final Memorandum to the several Initial Purchasers and
counsel for the Initial Purchasers without charge in such quantities as the
Initial Purchasers may reasonably request.
(d) The Company will not, and will not permit any of its Affiliates to,
resell any Securities (other than to other Affiliates) that have been acquired
by any of them.
(e) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf will, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances that would
require the registration of the Securities under the Act.
(f) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with any
offer or sale of the Securities in the United States.
(g) So long as any of the Securities are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, the Company will, during any period in
which it is not subject to and in compliance with Section 13 or 15(d) of the
Exchange Act or it is not exempt from such reporting requirements pursuant to
and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each
holder of such restricted securities and to each prospective purchaser (as
designated by such holder) of such restricted securities, upon the request of
such holder or prospective purchaser, any information required to be provided by
Rule 144A(d)(4) under the Act. This covenant is intended to be for the benefit
of the holders, and the prospective purchasers designated by such holders, from
time to time of such restricted securities.
(h) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf will engage in any directed selling efforts with respect
to the Securities, and each of them will comply with the offering restrictions
122
requirement of Regulation S. Terms used in this paragraph have the meanings
given to them by Regulation S.
(i) The Company will cooperate with the Initial Purchasers and use its best
efforts to permit the Securities to be eligible for clearance and settlement
through The Depository Trust Company.
(j) The Company will not for a period of 90 days following the Execution
Time, without the prior written consent of Salomon Smith Barney Inc., offer,
sell or contract to sell, or otherwise dispose of (or enter into any transaction
which is designed to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic disposition due
to cash settlement or otherwise) by the Company or any Affiliate of the Company
or any person in privity with the Company or any Affiliate of the Company),
directly or indirectly, or announce the offering of, any debt securities issued
or guaranteed by the Company (other than (i) the Securities; (ii) the Bonds Due
2007; and (iii) indebtedness under the Company's Credit Agreement dated as of
June 28, 2000, the Five-Year Competitive Advance and Revolving Credit Facility
Agreement dated as of March 17, 1998 and the WR Receivables Corporation Purchase
and Sale Agreement dated as of July 28, 2000); provided, however that the
Company may incur indebtedness under credit facilities that replace the credit
facilities described in clause (iii) above.
(k) The Company will not take, directly or indirectly, any action designed
to or which has constituted or which might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities.
(l) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation of the Registration Rights Agreement, the
issuance of the Securities and the fees of the Trustee; (ii) the preparation,
printing or reproduction of the Preliminary Memorandum and Final Memorandum and
each amendment or supplement to either of them; (iii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the Preliminary Memorandum and
Final Memorandum, and all amendments or supplements to either of them, as may,
in each case, be reasonably requested for use in connection with the offering
and sale of the Securities; (iv) the preparation, printing, authentication,
issuance and delivery of certificates for the Securities including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (v) the printing (or reproduction) and delivery of this Agreement
and all other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Securities; (vi) admitting the Securities
for trading in the PORTAL Market; (vii) the reasonable transportation and other
expenses incurred by or on behalf of
132
Company representatives (which shall exclude expenses of the Initial Purchasers)
in connection with presentations to prospective purchasers of the Securities;
(viii) the fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the Company; and
(ix) all other costs and expenses incident to the performance by the Company of
its obligations hereunder.
(m) The Company will cause Westar Industries, Inc., contemporaneously with
the consummation of the issuance of the Securities, to transfer to the Company
in exchange for equity, Company debt in an amount equal to the sum of any
offering expenses, Initial Purchasers' discounts, and the amount, if any, by
which the debt incurred under and in connection with the issuance of the
Securities and the Bonds Due 2007 exceeds the amount of the debt of the Company
retired by application of the proceeds of the sale of the Securities and the
Bonds Due 2007.
6. Conditions to the Obligations of the Initial Purchasers. The obligations
----------------------------------------------------------
of the Initial Purchasers to purchase the Securities shall be subject to the
accuracy of the representations and warranties on the part of the Company
contained herein at the Execution Time and the Closing Date, to the accuracy of
the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) The Initial Purchasers shall have received from Larry D. Irick, Esq.,
Vice President and Corporate Secretary of the Company, and from other counsel
(which may be Company counsel) acceptable to the Initial Purchasers, one or more
legal opinions, dated the Closing Date and addressed to the Initial Purchasers,
to the cumulative effect that:
(i) each of the Company and the Principal Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Kansas, with full corporate power and authority to own or
lease, as the case may be, and to operate its properties and conduct its
business as described in the Final Memorandum, and is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification and where the failure to be so
qualified would be materially adverse to the Company and its subsidiaries
considered as a whole;
(ii) each of the Company and the Principal Subsidiary possesses valid and
subsisting franchises, certificates of convenience and authority, licenses and
permits authorizing it to carry on the electric utility business in which it is
engaged, subject to the expiration of the Principal Subsidiary's franchise
agreement with the City of Wichita, in each case as described in the Final
Memorandum;
142
(iii) the Indenture has been duly authorized, executed and delivered, and
constitutes a legal, valid and binding instrument enforceable against the
Company in accordance with its terms subject to the Enforceability Limitations;
(iv) the Securities have been duly and validly authorized and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchasers under this Agreement,
will constitute legal, valid, binding and enforceable obligations of the Company
entitled to the benefits of the Indenture subject to the Enforceability
Limitations;
(v) the Registration Rights Agreement has been duly authorized, executed
and delivered and constitutes the legal, valid, binding and enforceable
instrument of the Company subject to the Enforceability Limitations;
(vi) neither the execution and delivery of the Indenture, the Registration
Rights Agreement, the Securities or this Agreement, nor the consummation of the
transactions therein contemplated, nor compliance with the terms and provisions
thereof, will conflict with, violate or result in a breach of any law, any
administrative regulation or any court decree known to such counsel to be
applicable to the Company or the Principal Subsidiary, conflict with or result
in a breach of any of the terms, conditions or provisions of the charter or
by-laws of the Company or the Principal Subsidiary or of any agreement or
instrument known to such counsel to which the Company or the Principal
Subsidiary is a party or by which the Company or the Principal Subsidiary is
bound or constitute a default thereunder;
(vii) this Agreement has been duly authorized, executed and delivered by
the Company;
(viii) the Securities, the Indenture and the Registration Rights Agreement
conform as to legal matters in all material respects with the statements
concerning them set forth in the Final Memorandum under the captions
"Description of Notes" and "Exchange Offers; Registration Rights," insofar as
such statements purport to summarize certain provisions;
(ix) an appropriate order has been entered by the FERC in Federal Power Act
dockets ES00-39-000 and ES00-39-001 authorizing the issuance and sale of the
Securities and the transactions related thereto as contemplated by this
Agreement and the Registration Rights Agreement, and no additional consent,
approval, authorization, filing with or order of
152
the FERC, the KCC or any court or governmental agency or body is required in
connection with the transactions contemplated herein or in the Indenture and the
Registration Rights Agreement, except (i) such as may be required under the blue
sky or securities laws of any jurisdiction in connection with the purchase and
sale of the Securities by the Initial Purchasers in the manner contemplated in
this Agreement and the Final Memorandum and the Registration Rights Agreement;
(ii) the filing with the FERC of the reports required by 18 CFR Section 34.10;
and (iii) the filing with the KCC of a copy of the registration statement
contemplated by the Registration Rights Agreement and such other approvals
(specified in such opinion) as have been obtained;
(x) to the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or the Principal
Subsidiary or its or their property that is not adequately disclosed in the
Final Memorandum, except in each case for such proceedings that, if the subject
of an unfavorable decision, ruling or finding would not singly or in the
aggregate, result in a material adverse change in the condition (final or
otherwise), prospects, earnings, business or properties of the Company and its
Restricted Subsidiaries, taken as a whole;
(xi) the statements in the Final Memorandum under the heading "Certain U.S.
Federal Income Tax Considerations" and the statements in the Company's Annual
Report on Form 10-K for the year ended December 31, 2001 (the "Annual Report")
under the heading "Legal Proceedings" fairly summarize the matters therein
described;
(xii) no facts have come to such counsel's attention that lead him to
believe that the Final Memorandum at the Execution Time and on the Closing Date
contained or contains any untrue statement of a material fact or omitted or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (in
each case, other than the statistical information, financial statements and
other financial information contained therein, as to which such counsel need
express no opinion);
(xiii) assuming the accuracy of the representations and warranties and
compliance with the agreements contained herein, no registration of the
Securities under the Act, and no qualification of an indenture under the Trust
Indenture Act, are required for the offer and sale by the Initial Purchasers of
the Securities in the manner contemplated by this Agreement; and
162
(xiv) the documents of the Company incorporated by reference in the Final
Memorandum, as of the respective dates on which they were filed with the
Commission pursuant to the Exchange Act, complied as to form in all material
respects with the Exchange Act and the applicable published rules and
regulations of the Commission under the Exchange Act.
In rendering such opinion, counsel may rely as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and public officials. References to the Final Memorandum in this Section 6(a)
include any amendment or supplement thereto at the Closing Date.
(b) The Company shall have requested and caused Morris, Laing, Evans, Brock
& Kennedy, Chartered, special counsel for the Company, to furnish to the Initial
Purchasers its opinion, dated the Closing Date, addressed to the Initial
Purchasers and in form reasonably satisfactory to the Initial Purchasers, to the
effect that:
(i) unless the issue and sale of the Securities pursuant to this
Agreement violates an existing valid order of the KCC, no consent,
approval, authorization, order, registration, waiver, exemption or
qualification of or with the KCC is required for the issue and sale of the
Securities by the Company pursuant to this Agreement;
(ii) the issue and sale of the Securities should not be interpreted by
the KCC to violate the July 20, 2001 Order of the KCC; and
(iii) if the KCC were to determine that the issue and sale of the
Securities violates the July 20, 2001 Order, (i) any such violation should
not affect the validity of the Securities; (ii) any such violation should
not impair the legal enforceability of such Securities; and (iii) the
Company should not be prevented from making timely payments of interest,
premium, if any, and principal pursuant to the terms of the Securities, or
otherwise complying with the terms of the Securities.
(c) The Initial Purchasers shall have received from Cahill Gordon &
Reindel, special counsel to the Company, a legal opinion dated the Closing Date
and addressed to the Initial Purchasers and in form reasonably satisfactory to
the Initial Purchasers, covering the matters referred to in clauses (iii), (iv),
(v), (vii), (viii), the statement with respect to "Certain U.S. Federal Income
Tax Considerations" in (xi) and (xiii) of Section 6(a) above. In rendering such
opinions, such counsel may rely as to matters of fact, to the extent they deem
proper on certificates of responsible officers of the Company and public
officials, and as to matters relating to the FERC authorization and Kansas law
(including matters relating to the KCC), upon the opinions rendered pursuant to
Sections 6(a)
172
and 6(b) above. In addition, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Company, counsel for the Company, representatives of the independent certified
public accountants for the Company and the Initial Purchasers at which
conferences the contents of the Final Memorandum were discussed and that
although they are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Final
Memorandum (except as to matters referred to in their opinion described in
clauses (viii) and (xi) referred to above, on the basis of the foregoing
(relying as to materiality to a large extent upon the opinions of officers,
counsel and other representatives of the Company), no facts came to their
attention which lead them to believe that the Final Memorandum, as of its date,
or (as amended or supplemented) as of the Closing Date, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (except in each case as
to the financial statements and other financial and statistical data contained
therein or incorporated by reference therein, with respect to which they need
make no comment).
(d) The Initial Purchasers shall have received from Sidley Austin Brown &
Wood LLP, counsel for the Initial Purchasers, such opinion or opinions, dated
the Closing Date and addressed to the Initial Purchasers, with respect to the
issuance and sale of the Securities, the Indenture, the Registration Rights
Agreement, the Final Memorandum (as amended or supplemented at the Closing Date)
and other related matters as the Initial Purchasers may reasonably require, and
the Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters. Sidley Austin Brown
& Wood LLP may rely on the opinion of one or more of the foregoing counsel for
the Company.
(e) The Company shall have furnished to the Initial Purchasers a
certificate of the Company, signed by two of its executive officers (one of whom
shall be a principal financial or accounting officer of the Company), dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Final Memorandum, any amendment or supplement to the Final
Memorandum and this Agreement and that:
(i) the representations and warranties of the Company in this Agreement are
true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date, and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied hereunder at or prior to the Closing
Date; and
(ii) since the date of the most recent financial statements included in the
Final Memorandum (exclusive of any amendment or supplement thereto),
182
there has been no material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated by the Final Memorandum (exclusive of any amendment or
supplement thereto).
(f) Subject to such modifications as the Initial Purchasers may, in their
discretion, deem acceptable to accommodate the current uncertainty relating to
the ongoing operations of Arthur Andersen, at the Execution Time and at the
Closing Date, the Company shall have requested and caused Arthur Andersen to
furnish to the Initial Purchasers letters, dated respectively as of the
Execution Time and as of the Closing Date, in form and substance satisfactory to
the Initial Purchasers, confirming that they are independent accountants within
the meaning of the Act and the Exchange Act and the applicable rules and
regulations thereunder, and that:
(i) in their opinion the audited financial statements and financial
statement schedules included or incorporated in the Final Memorandum and
reported on by them comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and the related
published rules and regulations thereunder;
(ii) on the basis of carrying out certain specified procedures (but
not an examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of the minutes
of the meetings of the stockholders, directors and committees thereof
committees of the Company and its subsidiaries; and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company and its subsidiaries as to transactions
and events subsequent to December 31, 2001, nothing came to their attention
which caused them to believe that:
(1) with respect to the period subsequent to December 31, 2001
there were any changes, at a specified date not more than five days
prior to the date of the letter, in the total long-term liabilities of
the Company and its subsidiaries or cumulative preferred stock or
common stock of the Company or decreases in the shareholders' equity
of the Company as compared with the amounts shown on the December 31,
2001 consolidated balance sheet included in the Annual Report, or for
the period from January 1, 2002 to such specified date there were any
decreases, as compared with the corresponding period in the preceding
year in total sales or earnings (loss) before income taxes or in total
or per
192
share amounts of net income of the Company and its subsidiaries,
except in all instances for changes or decreases set forth in such
letter (including decreases as a result of the impairment charge in
the first quarter of 2002 of approximately $657 million), in which
case the letter shall be accompanied by an explanation by the Company
as to the significance thereof unless said explanation is not deemed
necessary by the Initial Purchasers; or
(2) the information included under the headings "Selected
Financial Data" in the Annual Report is not in conformity with the
disclosure requirements of Regulation S-K; or
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and its subsidiaries) set forth in the Final Memorandum, the
information included in Items 1, 2, 6, 7 and 11 of the Annual Report agrees
with the accounting records of the Company and its subsidiaries, excluding
any questions of legal interpretation.
References to the Final Memorandum in this Section 6(f) include any
amendment or supplement thereto at the date of the applicable letter.
(g) On the Closing Date, the AA Representation Letter shall not have
been rescinded and the Company shall have no reason to believe that the
representations in the AA Representation Letter are not true and correct in
all respects.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum (exclusive of any
amendment or supplement thereto), there shall not have been (i) any change
or decrease specified in the letter or letters referred to in paragraph (f)
of this Section 6; or (ii) any change, or any development involving a
prospective change, in or affecting the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
Restricted Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto) the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the sole judgment of the Initial Purchasers, so
material and adverse as to make it impractical or inadvisable to market the
Securities as contemplated by the Final Memorandum (exclusive of any
amendment or supplement thereto).
202
(i) The Securities shall have been designated as PORTAL-eligible
securities in accordance with the rules and regulations of the NASD, and
the Securities shall be eligible for clearance and settlement through The
Depositary Trust Company.
(j) Subsequent to the Execution Time, there shall not have been any
(i) downgrading in the rating accorded the Company's debt securities by a
"nationally recognized securities rating organization," as that term is
defined by the Commission for purposes of its Rule 436(g)(2); and (ii) no
such rating organization shall have announced publicly that it has placed,
or informed the Company or the Initial Purchasers that it intends to place,
any of the Company's debt securities on what is commonly referred to as a
"watchlist" for possible downgrading, in a manner or to an extent
indicating a materially greater likelihood of a downgrading in rating as
described in clause (i) above occurring than was the case as of the date
hereof.
(k) Prior to the Closing Date, the Company shall have furnished to the
Initial Purchasers such further information, certificates and documents as
the Initial Purchasers may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Initial Purchasers and counsel for the Initial Purchasers,
this Agreement and all obligations of the Initial Purchasers hereunder may be
cancelled at, or at any time prior to, the Closing Date by the Initial
Purchasers. Notice of such cancellation shall be given to the Company in writing
or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 will be delivered
at the office of counsel for the Initial Purchasers, at 875 Third Avenue, New
York, NY 10021, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities provided for
-------------------------
herein is not consummated because any condition to the obligations of the
Initial Purchasers set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by any of
the Initial Purchasers, the Company will reimburse the Initial Purchasers
severally through Salomon Smith Barney Inc. on demand for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
212
indemnify and hold harmless each Initial Purchaser, the directors and officers
of each Initial Purchaser and each person who controls any Initial Purchaser
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Memorandum, the Final Memorandum (or
in any supplement or amendment thereto) or any information provided by the
Company to any holder or prospective purchaser of Securities pursuant to Section
5(g), or in any amendment thereof or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
-------- -------
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the Preliminary Memorandum or the Final Memorandum, or in any amendment thereof
or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Initial Purchasers
through the Initial Purchasers specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Initial Purchaser severally and not jointly agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers, and
each person who controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Initial Purchaser, but only with reference to written information relating
to such Initial Purchaser furnished to the Company by or on behalf of such
Initial Purchaser through the Initial Purchasers specifically for inclusion in
the Preliminary Memorandum or the Final Memorandum (or in any amendment or
supplement thereto). This indemnity agreement will be in addition to any
liability which any Initial Purchaser may otherwise have. The Company
acknowledges that the statements set forth in (i) the last paragraph of the
cover page regarding the delivery of the Securities, the fourth full paragraph
on page (ii) and the related disclosure on page 73 (in the third full paragraph
from the bottom of page 73) concerning stabilization, syndicate covering
transactions and penalty bids and, under the heading "Plan of Distribution";
(ii) the sentences related to concessions and reallowances; (iii) the paragraph
related to stabilization, syndicate covering transactions and penalty bids in
the Preliminary Memorandum and the Final Memorandum and (iv) paragraphs three,
five and seven under the heading "Plan of Distribution," constitute the only
information furnished in writing by or on behalf of the Initial Purchasers for
inclusion in the Preliminary Memorandum or the Final Memorandum (or in any
amendment or
222
supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses; and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
-------- -------
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest; (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party; (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action; or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Initial Purchasers agree to contribute
to the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or defending
same) (collectively "Losses") to which the Company and one or more of the
Initial Purchasers may be subject in such proportion as
232
is appropriate to reflect the relative benefits received by the Company on the
one hand and by the Initial Purchasers on the other from the offering of the
Securities; provided, however, that in no case shall any Initial Purchaser
-------- -------
(except as may be provided in any agreement among the Initial Purchasers
relating to the offering of the Securities) be responsible for any amount in
excess of the purchase discount or commission applicable to the Securities
purchased by such Initial Purchaser hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Initial Purchasers shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and of the Initial Purchasers on the other in connection
with the statements or omissions which resulted in such Losses, as well as any
other relevant equitable considerations. Benefits received by the Company shall
be deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by it, and benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions in each case set forth on the cover of the Final Memorandum.
Relative fault shall be determined by reference to, among other things, whether
any untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the
Company on the one hand or the Initial Purchasers on the other, the intent of
the parties and their relative knowledge, information and opportunity to correct
or prevent such untrue statement or omission. The Company and the Initial
Purchasers agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Initial Purchaser within the meaning of either the Act or the
Exchange Act and each director and officer of an Initial Purchaser shall have
the same rights to contribution as such Initial Purchaser, and each person who
controls the Company within the meaning of either the Act or the Exchange Act
and each officer and director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d). The Initial Purchasers' respective obligations
to contribute pursuant to this Section 8 are several in proportion to the
principal amount of Securities set forth opposite their respective names in
Schedule 1 hereto, and not joint.
9. Default by an Initial Purchaser. If any one or more Initial Purchasers
-------------------------------
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Initial Purchasers)
the Securities which the defaulting Initial Purchaser or
242
Initial Purchasers agreed but failed to purchase; provided, however, that in the
-------- -------
event that the aggregate amount of Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase shall exceed 10%
of the aggregate amount of Securities set forth in Schedule I hereto, the
remaining Initial Purchasers shall have the right to purchase all, but shall not
be under any obligation to purchase any, of the Securities, and if such
nondefaulting Initial Purchasers do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Initial
Purchaser or the Company. In the event of a default by any Initial Purchaser as
set forth in this Section 9, the Closing Date shall be postponed for such
period, not exceeding five Business Days, as the Initial Purchasers shall
determine in order that the required changes in the Final Memorandum or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Initial Purchaser of its liability, if
any, to the Company or any nondefaulting Initial Purchaser for damages
occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
-----------
absolute discretion of the Initial Purchasers, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange or trading in securities generally
on the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange; (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities; or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the judgment of the Initial Purchasers, impracticable or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by the
Final Memorandum (exclusive of any amendment or supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
------------------------------------------
representations, warranties, indemnities and other statements of the Company or
its officers and of the Initial Purchasers set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Initial Purchasers or the Company or any of the
officers, directors or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and effective
-------
only on receipt, and, if sent to the Initial Purchasers, will be mailed,
delivered or telefaxed to the Salomon Smith Barney Inc. General Counsel (fax
no.: (212) 816-7912) and confirmed to the General Counsel, Salomon Smith Barney
Inc. at 388 Greenwich Street, New York, New York 10013 Attention: General
Counsel; or, if sent to the Company, will be mailed, delivered or telefaxed to
Western Resources, Inc. Legal Department (fax no.: (785) 575-1936) and confirmed
to Mr. Larry D. Irick, Vice
252
President and Corporate Secretary, at 818 South Kansas Avenue, Topeka, Kansas
66612.
13. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 8 hereof, and, except
as expressly set forth in Section 5(h) hereof, no other person will have any
right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
--------------
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
16. Headings. The section headings used herein are for convenience only and
--------
shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this Agreement, shall
-----------
have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York, New York and Topeka,
Kansas.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean, the date and time that this Agreement is
executed and delivered by the parties hereto.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission
promulgated thereunder.
262
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Principal Subsidiary" shall mean Kansas Gas and Electric Company.
"Restricted Subsidiaries" shall have the same meaning as in the
Indenture.
"Regulation D" shall mean Regulation D under the Act.
"Regulation S" shall mean Regulation S under the Act.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
272
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
Agreement and your acceptance shall represent a binding agreement between the
Company and the several Initial Purchasers.
Very truly yours,
Western Resources, Inc.
By /s/ Paul R. Geist
----------------------------------
Name: Paul R. Geist
Title: Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Smith Barney Inc.
J.P. Morgan Securities Inc.
BNY Capital Markets, Inc.
By: Salomon Smith Barney Inc.
By /s/ Arthur Tildesley, Jr.
-------------------------------------
Name: Arthur Tildesley, Jr.
Title: Managing Director
For itself and the other several
Initial Purchasers named in
Schedule I to the foregoing
Agreement.
282
SCHEDULE I
Principal
Amount of Securities
Initial Purchasers to be Purchased
------------------ ---------------
Salomon Smith Barney Inc. ............................... $ 232,752,000
J.P. Morgan Securities Inc. ............................. 155,168,000
BNY Capital Markets, Inc. ............................... 12,080,000
-----------
Total............................................. $ 400,000,000
===========
EXHIBIT A
Selling Restrictions for Offers and
-----------------------------------
Sales outside the United States
-------------------------------
(1)(a) The Securities have not been and will not be registered under the
Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Act. Each Initial Purchaser represents and agrees that, except as otherwise
permitted by Section 4(a)(i) of the Agreement to which this is an exhibit, it
has offered and sold the Securities, and will offer and sell the Securities, (i)
as part of their distribution at any time; and (ii) otherwise until 40 days
after the later of the commencement of the offering and the Closing Date, only
in accordance with Rule 903 of Regulation S under the Act. Accordingly, each
Initial Purchaser represents and agrees that neither it, nor any of its
Affiliates nor any person acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities, and that
it and they have complied and will comply with the offering restrictions
requirement of Regulation S. Each Initial Purchaser agrees that, at or prior to
the confirmation of sale of Securities (other than a sale of Securities pursuant
to Section 4(a)(i) of the Agreement to which this is an exhibit), it shall have
sent to each distributor, dealer or person receiving a selling concession, fee
or other remuneration that purchases Securities from it during the distribution
compliance period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Act") and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons (i)
as part of their distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering and the closing date of
the offering, except in either case in accordance with Regulation S or Rule
144A under the Act. Terms used above have the meanings given to them by
Regulation S."
(b) Each Initial Purchaser also represents and agrees that it has not
entered and will not enter into any contractual arrangement with any
distributor with respect to the distribution of the Securities, except with
its Affiliates or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given to them by
Regulation S.
(2) Each Initial Purchaser, severally and not jointly, represents, warrants
and agrees that (i) it has not offered or sold and, prior to the date six months
after the Closing Date, will not offer or sell any Securities to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services and Markets Act 2000 (the "FSMA") with respect to anything done by it
in relation to the Securities in, from or otherwise involving
A-1
22
the United Kingdom; and (iii) it has only communicated, or caused to be
communicated, and will only communicate, or cause to be communicated, any
invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the FSMA) received by it in connection with the issue or sale of
the Securities in circumstances in which Section 21(1) of the FSMA does not
apply to the Company.
A-2
Exhibit 4.26
WESTERN RESOURCES, INC.
$ 365,000,000
First Mortgage Bonds, 7 7/8% Series Due 2007
REGISTRATION RIGHTS AGREEMENT
New York, New York
May 10, 2002
Salomon Smith Barney Inc.
J.P. Morgan Securities Inc.
BNY Capital Markets, Inc.
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Western Resources, Inc., a corporation organized under the laws of Kansas
(the "Company"), proposes to issue and sell to certain purchasers (the "Initial
Purchasers"), upon the terms set forth in a purchase agreement of even date
herewith (the "Purchase Agreement"), $365,000,000 principal amount of its First
Mortgage Bonds, 7 7/8% Series Due 2007 (the "Securities") relating to the
initial placement of the Securities (the "Initial Placement"). To induce the
Initial Purchasers to enter into the Purchase Agreement and to satisfy a
condition of your obligations thereunder, the Company agrees with you for your
benefit and the benefit of the holders from time to time of the Securities
(including the Initial Purchasers) (each a "Holder" and, together, the
"Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the following
meanings:
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person shall mean any other person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control of
a person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
2
"Broker-Dealer" shall mean any broker or dealer registered as such
under the Exchange Act.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in the City of New York.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Registration Period" shall mean the one-year period
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" shall mean a registration
statement of the Company on an appropriate form under the Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments thereto, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchanging Dealer" shall mean any Holder (which may include any
Initial Purchaser) that is a Broker-Dealer and elects to exchange for New
Securities any Securities that it acquired for its own account as a result of
market-making activities or other trading activities (but not directly from the
Company or any Affiliate of the Company) for New Securities.
"Final Memorandum" shall have the meaning set forth in the Purchase
Agreement.
"Holder" shall have the meaning set forth in the preamble hereto.
"Indenture" shall mean the Indenture of Mortgage and Deed of Trust
(the "Mortgage") dated as of July 1, 1939, between the Company and BNY Midwest
Trust Company, as successor to Harris Trust and Savings Bank, as trustee (the
"Trustee"), as amended and supplemented by a supplemental indenture, to be dated
as of May 10, 2002.
"Initial Placement" shall have the meaning set forth in the preamble
hereto.
"Initial Purchaser" shall have the meaning set forth in the preamble
hereto.
"Losses" shall have the meaning set forth in Section 6(d) hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Securities registered under a Registration
Statement.
"Managing Underwriters" shall mean the investment banker or investment
bankers and manager or managers that shall administer an underwritten offering.
3
"New Securities" shall mean debt securities of the Company identical
in all material respects to the Securities (except that the cash interest and
interest rate step-up provisions and the transfer restrictions shall be modified
or eliminated, as appropriate) and to be issued under the Indenture.
"New Securities Indenture" shall mean an indenture between the Company
and the New Securities Trustee, identical in all material respects to the
Indenture (except that the cash interest and interest rate step-up provisions
will be modified or eliminated, as appropriate).
"New Securities Trustee" shall mean a bank or trust company reasonably
satisfactory to the Initial Purchasers, as trustee with respect to the New
Securities under the New Securities Indenture.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or the New Securities covered by such
Registration Statement, and all amendments and supplements thereto and all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
hereto.
"Registered Exchange Offer" shall mean the proposed offer of the
Company to issue and deliver to the Holders of the Securities that are not
prohibited by any law or policy of the Commission from participating in such
offer, in exchange for the Securities, a like aggregate principal amount of the
New Securities.
"Registration Statement" shall mean any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, any amendments
and supplements to such registration statement, including post-effective
amendments (in each case including the Prospectus contained therein), all
exhibits thereto and all material incorporated by reference therein.
"Securities" shall have the meaning set forth in the preamble hereto.
"Shelf Registration" shall mean a registration effected pursuant to
Section 3 hereof.
"Shelf Registration Period" shall have the meaning set forth in
Section 3(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 3 hereof which
covers some or all of the Securities or New Securities, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
4
"Trustee" shall mean the trustee with respect to the Securities under
the Indenture.
"underwriter" shall mean any underwriter of Securities in connection
with an offering thereof under a Shelf Registration Statement.
(a) Registered Exchange Offer. The Company shall prepare and, not
later than 180 days following the date of the original issuance of the
Securities (or if such 180th day is not a Business Day, the next succeeding
Business Day), shall file with the Commission the Exchange Offer
Registration Statement with respect to the Registered Exchange Offer. The
Company shall use its best efforts to cause the Exchange Offer Registration
Statement to become effective under the Act within 270 days of the date of
the original issuance of the Securities (or if such 270th day is not a
Business Day, the next succeeding Business Day).
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange
Offer, it being the objective of such Registered Exchange Offer to enable
each Holder electing to exchange Securities for New Securities (assuming
that such Holder is not an Affiliate of the Company, acquires the New
Securities in the ordinary course of such Holder's business, has no
arrangements with any person to participate in the distribution of the New
Securities and is not prohibited by any law or policy of the Commission
from participating in the Registered Exchange Offer) to trade such New
Securities from and after their receipt without any limitations or
restrictions under the Act and without material restrictions under the
securities laws of a substantial proportion of the several states of the
United States. 1
(c) In connection with the Registered Exchange Offer, the Company
shall: 1
(i) mail to each Holder a copy of the Prospectus forming part of
the effective Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 20
Business Days and not more than 35 Business Days after the date notice
thereof is mailed to the Holders (or, in each case, longer if required
by applicable law);
(iii) use its best efforts to keep the Exchange Offer
Registration Statement continuously effective under the Act,
supplemented and amended as required, under the Act to ensure that it
is available for sales of New Securities by Exchanging Dealers during
the Exchange Offer Registration Period;
5
(iv) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan in New York
City, which may be the Trustee, the New Securities Trustee or an
Affiliate of either of them;
(v) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last Business
Day on which the Registered Exchange Offer is open;
(vi) prior to effectiveness of the Exchange Offer Registration
Statement, provide a supplemental letter to the Commission (A) stating
that the Company is conducting the Registered Exchange Offer in
reliance on the position of the Commission in Exxon Capital Holdings
Corporation (pub. avail. May 13, 1988) and Morgan Stanley and Co.,
Inc. (pub. avail. June 5, 1991); and (B) including a representation
that the Company has not entered into any arrangement or understanding
with any person to distribute the New Securities to be received in the
Registered Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Registered
Exchange Offer is acquiring the New Securities in the ordinary course
of business and has no arrangement or understanding with any person to
participate in the distribution of the New Securities;
(vii) notify each Holder that any Security not tendered by such
Holder in the Registered Exchange Offer will remain outstanding and
continue to accrue interest but will not retain any rights under this
Agreement (except in the case of the Initial Purchasers and Exchange
Dealers as provided herein); and
(viii) comply in all respects with all applicable laws.
(d) As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation in accordance with
Section 4(r) all Securities so accepted for exchange; and
(iii) unless the New Securities are to be issued in the form of
one or more global securities registered in the name of The Depository
Trust Company or its nominee, cause the New Securities Trustee
promptly to authenticate and deliver to each Holder of Securities a
principal amount of New Securities equal to the principal amount of
the Securities of such Holder so accepted for exchange.
(e) Each Holder hereby acknowledges and agrees that any Broker-Dealer
and any such Holder using the Registered Exchange Offer to participate in a
distribution of the New Securities (x) could not under Commission policy as
in effect on the date of this Agreement rely on the position of the
Commission in Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991) and
Exxon Capital Holdings Corporation (pub.
6
avail. May 13, 1988), as interpreted in the Commission's letter to Shearman
& Sterling dated July 2, 1993 and similar no-action letters; and (y) must
comply with the registration and prospectus deliveryrequirements of the Act
in connection with any secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K
under the Act if the resales are of New Securities obtained by such Holder
in exchange for Securities acquired by such Holder directly from the
Company or one of its Affiliates. Accordingly, each Holder participating in
the Registered Exchange Offer shall be required to represent to the Company
that, at the time of the consummation of the Registered Exchange Offer:
(i) any New Securities received by such Holder will be acquired
in the ordinary course of business;
(ii) such Holder will have no arrangement or understanding with
any person to participate in the distribution of the Securities or the
New Securities within the meaning of the Act; and
(iii) such Holder is not an Affiliate of the Company.
(f) If any Initial Purchaser determines that it is not eligible to
participate in the Registered Exchange Offer with respect to the exchange
of Securities constituting any portion of an unsold allotment, at the
request of such Initial Purchaser, the Company shall issue and deliver to
such Initial Purchaser or the person purchasing New Securities registered
under a Shelf Registration Statement as contemplated by Section 3 hereof
from such Initial Purchaser, in exchange for such Securities, a like
principal amount of New Securities. The Company shall use its best efforts
to cause the CUSIP Service Bureau to issue the same CUSIP number for such
New Securities as for New Securities issued pursuant to the Registered
Exchange Offer.
(g) Shelf Registration. If (i) due to any change in law or applicable
interpretations thereof by the Commission's staff, the Company determines
upon advice of its outside counsel that it is not permitted to effect the
Registered Exchange Offer as contemplated by Section 2 hereof; (ii) for any
other reason the Registered Exchange Offer is not consummated within 360
days of the date hereof; (iii) any Initial Purchaser so requests with
respect to Securities that are not eligible to be exchanged for New
Securities in the Registered Exchange Offer and that are held by it
following consummation of the Registered Exchange Offer; (iv) any Holder
(other than an Initial Purchaser) is not eligible to participate in the
Registered Exchange Offer other than by reason of such Holder being an
Affiliate of the Company; or (v) in the case of any Initial Purchaser that
participates in the Registered Exchange Offer or acquires New Securities
pursuant to Section 2(f) hereof, such Initial Purchaser does not receive
freely tradeable New Securities in exchange for Securities constituting any
portion of an unsold allotment (it being understood that (x) the
requirement that an Initial Purchaser deliver a Prospectus containing the
information required by Item 507 or 508 of Regulation S-K under the Act in
connection with sales of New Securities acquired in exchange for such
Securities shall
7
result in such New Securities being not "freely tradeable"; and (y) the
requirement that an Exchanging Dealer deliver a Prospectus in connection
with sales of New Securities acquired in the Registered Exchange Offer in
exchange for Securities acquired as a result of market-making activities or
other trading activities shall not result in such New Securities being not
"freely tradeable"), the Company shall effect a Shelf Registration
Statement in accordance with subsection (b) below.
(i) If required pursuant to subsection (a) above, the Company
shall as promptly as practicable (but in no event more than 60 days
after so required or requested pursuant to this Section 3), file with
the Commission and thereafter shall use its best efforts to cause to
be declared effective under the Act a Shelf Registration Statement
relating to the offer and sale of the Securities or the New
Securities, as applicable, by the Holders thereof from time to time in
accordance with the methods of distribution elected by such Holders
and set forth in such Shelf Registration Statement; provided, however,
that no Holder (other than an Initial Purchaser) shall be entitled to
have the Securities held by it covered by such Shelf Registration
Statement unless such Holder agrees in writing to be bound by all of
the provisions of this Agreement applicable to such Holder; and
provided further, that with respect to New Securities received by an
Initial Purchaser in exchange for Securities constituting any portion
of an unsold allotment, the Company may, if permitted by current
interpretations by the Commission's staff, file a post-effective
amendment to the Exchange Offer Registration Statement containing the
information required by Item 507 or 508 of Regulation S-K, as
applicable, in satisfaction of its obligations under this subsection
with respect thereto, and any such Exchange Offer Registration
Statement, as so amended, shall be referred to herein as, and governed
by the provisions herein applicable to, a Shelf Registration
Statement.
(ii) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and
amended as required by the Act, in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of two years
from the date the Shelf Registration Statement is declared effective
by the Commission or such shorter period that will terminate when all
the Securities or New Securities, as applicable, covered by the Shelf
Registration Statement have been sold pursuant to the Shelf
Registration Statement (in any such case, such period being called the
"Shelf Registration Period"). The Company shall be deemed not to have
used its best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any
action that would result in Holders of Securities covered thereby not
being able to offer and sell such Securities during that period,
unless (A) such action is required by applicable law; or (B) such
action is taken by the Company in good faith and for valid business
reasons (not including avoidance of the Company's obligations
hereunder), including the acquisition or divestiture of assets, so
long as the Company promptly thereafter complies with the requirements
of Section 4(k) hereof, if applicable.
8
(iii) The Company shall cause the Shelf Registration Statement
and the related Prospectus and any amendment or supplement thereto, as
of the effective date of the Shelf Registration Statement or such
amendment or supplement, (A) to comply in all material respects with
the applicable requirements of the Act and the rules and regulations
of the Commission; and (B) not to contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
2. Additional Registration Procedures. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply.
(a) The Company shall:
(i) furnish to you, not less than five Business Days prior to the
filing thereof with the Commission, a copy of any Exchange Offer
Registration Statement and any Shelf Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein (including all documents incorporated by
reference therein after the initial filing) and shall use its best
efforts to reflect in each such document, when so filed with the
Commission, such comments as you reasonably propose subject to the
Company's reasonable determinations as to the compliance with
applicable laws as provided in subsection (b) below;
(ii) include the information set forth in Annex A hereto on the
facing page of the Exchange Offer Registration Statement, in Annex B
hereto in the forepart of the Exchange Offer Registration Statement in
a section setting forth details of the Exchange Offer, in Annex C
hereto in the underwriting or plan of distribution section of the
Prospectus contained in the Exchange Offer Registration Statement, and
in Annex D hereto in the letter of transmittal delivered pursuant to
the Registered Exchange Offer;
(iii) if requested by an Initial Purchaser, include the
information required by Item 507 or 508 of Regulation S-K, as
applicable, in the Prospectus contained in the Exchange Offer
Registration Statement; and
(iv) in the case of a Shelf Registration Statement, include the
names of the Holders that propose to sell Securities pursuant to the
Shelf Registration Statement as selling security holders.
(b) The Company shall ensure that:
(i) any Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any amendment or supplement
thereto
9
complies in all material respects with the Act and the rules and
regulations thereunder; and
(ii) any Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(c) The Company shall advise you, the Holders of Securities covered by
any Shelf Registration Statement and any Exchanging Dealer under any
Exchange Offer Registration Statement that has provided in writing to the
Company a telephone or facsimile number and address for notices, and, if
requested by you or any such Holder or Exchanging Dealer, shall confirm
such advice in writing (which notice pursuant to clauses (ii)-(v) hereof
shall be accompanied by an instruction to suspend the use of the Prospectus
until the Company shall have remedied the basis for such suspension):
(i) when a Registration Statement and any amendment thereto has
been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for any amendment or
supplement to the Registration Statement or the Prospectus or for
additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and
(v) of the happening of any event that requires any change in the
Registration Statement or the Prospectus so that, as of such date, the
statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading.
(d) The Company shall use its best efforts to obtain the withdrawal of
any order suspending the effectiveness of any Registration Statement or the
qualification of the securities therein for sale in any jurisdiction at the
earliest possible time.
(e) The Company shall furnish to each Holder of Securities covered by
any Shelf Registration Statement, without charge, at least one copy of such
Shelf Registration Statement and any post-effective amendment thereto,
including all material incorporated therein by reference, and, if the
Holder so requests in writing, all exhibits thereto
10
(including exhibits incorporated by reference therein to the extent such
exhibits are not available on open access public retrieval systems).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Securities covered by any Shelf Registration Statement,
without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement and
any amendment or supplement thereto as such Holder may reasonably request.
The Company consents to the use of the Prospectus or any amendment or
supplement thereto by each of the selling Holders of securities in
connection with the offering and sale of the securities covered by the
Prospectus, or any amendment or supplement thereto, included in the Shelf
Registration Statement.
(g) The Company shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
all material incorporated by reference therein, and, if the Exchanging
Dealer so requests in writing, all exhibits thereto (including exhibits
incorporated by reference therein to the extent such exhibits are not
available on open access public retrieval systems).
(h) The Company shall promptly deliver to each Initial Purchaser, each
Exchanging Dealer and each other person required to deliver a Prospectus
during the Exchange Offer Registration Period, without charge, as many
copies of the Prospectus included in such Exchange Offer Registration
Statement and any amendment or supplement thereto as any such person may
reasonably request. The Company consents to the use of the Prospectus or
any amendment or supplement thereto by any Initial Purchaser, any
Exchanging Dealer and any such other person that may be required to deliver
a Prospectus following the Registered Exchange Offer in connection with the
offering and sale of the New Securities covered by the Prospectus, or any
amendment or supplement thereto, included in the Exchange Offer
Registration Statement.
(i) Prior to the Registered Exchange Offer or any other offering of
Securities pursuant to any Registration Statement, the Company shall
arrange, if necessary, for the qualification of the Securities or the New
Securities for sale under the laws of such jurisdictions as any Holder
shall reasonably request and will maintain such qualification in effect so
long as required; provided that in no event shall the Company be obligated
to qualify to do business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to service of process
in suits, other than those arising out of the Initial Placement, the
Registered Exchange Offer or any offering pursuant to a Shelf Registration
Statement, in any such jurisdiction where it is not then so subject.
(j) Unless the New Securities are to be issued in the form of one or
more global securities registered in the name of The Depository Trust
Company or its nominee, the Company shall cooperate with the Holders of
Securities to facilitate the timely preparation and delivery of
certificates representing New Securities or Securities to be issued or sold
pursuant to any Registration Statement free of any restrictive legends and
in such denominations and registered in such names as the Holders may
request.
11
(k) Upon the occurrence of any event contemplated by subsections
(c)(ii) through (v) above, the Company shall promptly prepare a
post-effective amendment to the applicable Registration Statement or an
amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to the Initial
Purchasers of the securities included therein, the Prospectus will not
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In such
circumstances, the period of effectiveness of the Exchange Offer
Registration Statement provided for in Section 2 and the Shelf Registration
Statement provided for in Section 3(b) shall each be extended by the number
of days from and including the date of the giving of a notice of suspension
pursuant to Section 4(c) to and including the date when the Initial
Purchasers, the Holders of the Securities and any known Exchanging Dealer
shall have received such amended or supplemented Prospectus pursuant to
this Section.
(l) Not later than the effective date of any Registration Statement,
the Company shall provide a CUSIP number for the Securities or the New
Securities, as the case may be, registered under such Registration
Statement and provide the Trustee with printed certificates for such
Securities or New Securities, in a form eligible for deposit with The
Depository Trust Company.
(m) The Company shall comply with all applicable rules and regulations
of the Commission and shall make generally available to its security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earnings statement satisfying the provisions of
Section 11(a) of the Act.
(n) The Company shall cause the Indenture or the New Securities
Indenture, as the case may be, to be qualified under the Trust Indenture
Act in a timely manner.
(o) The Company may require each Holder of securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such securities as
the Company may from time to time reasonably require for inclusion in such
Registration Statement. The Company may exclude from such Shelf
Registration Statement the Securities of any Holder that unreasonably fails
to furnish such information within a reasonable time after receiving such
request.
(p) In the case of any Shelf Registration Statement, the Company shall
enter into such and take all other appropriate actions (including if
requested an underwriting agreement in customary form) in order to expedite
or facilitate the registration or the disposition of the Securities or New
Securities, and in connection therewith, if an underwriting agreement is
entered into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 6 (or such
other provisions and procedures acceptable to the Majority Holders and the
Managing Underwriters, if any, with respect to all parties to be
indemnified pursuant to Section 6).
12
(q) In the case of any Shelf Registration Statement, the Company
shall:
(i) make reasonably available for inspection by the Holders of
Securities to be registered thereunder, any underwriter participating
in any disposition pursuant to such Registration Statement, and any
attorney, accountant or other agent retained by the Holders or any
such underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its
subsidiaries;
(ii) cause the Company's officers, directors and employees to
supply all relevant information reasonably requested by the Holders or
any such underwriter, attorney, accountant or agent in connection with
any such Registration Statement as is customary for similar due
diligence examinations; provided, however, that any information that
is designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall be kept
confidential by the Holders or any such underwriter, attorney,
accountant or agent, unless such disclosure is made in connection with
a court proceeding or required by law (in which case such Holder or
Underwriter shall notify the Company of such disclosure in sufficient
time to permit the Company to take legal action to limit such
disclosure), or such information becomes available to the public
generally or through a third party without an accompanying obligation
of confidentiality;
(iii) make such representations and warranties to the Holders of
Securities registered thereunder and the underwriters, if any, in
form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings and covering matters
including, but not limited to, those set forth in the Purchase
Agreement;
(iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the Managing Underwriters, if any)
addressed to each selling Holder and the underwriters, if any,
covering such matters as are customarily covered in opinions requested
in underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters;
(v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to each
selling Holder of Securities registered thereunder and the
underwriters, if any, in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
primary underwritten offerings; and
13
(vi) deliver such documents and certificates as may be reasonably
requested by the Majority Holders and the Managing Underwriters, if
any, including those to evidence compliance with Section 4(k) and with
any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company.
The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section
shall be performed at (A) the effectiveness of such Registration Statement and
each post-effective amendment thereto; and (B) each closing under any
underwriting or similar agreement as and to the extent required thereunder.
(a) In the case of any Exchange Offer Registration Statement, the
Company shall:
(i) make reasonably available for inspection by such Initial
Purchaser, and any attorney, accountant or other agent retained by
such Initial Purchaser, all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries;
(ii) cause the Company's officers, directors and employees to
supply all relevant information reasonably requested by such Initial
Purchaser or any such attorney, accountant or agent in connection with
any such Registration Statement as is customary for similar due
diligence examinations; provided, however, that any information that
is designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall be kept
confidential by such Initial Purchaser or any such attorney,
accountant or agent, unless such disclosure is made in connection with
a court proceeding or required by law (in which case such Holder or
Underwriter shall notify the Company of such disclosure in sufficient
time to permit the Company to take legal action to limit such
disclosure), or such information becomes available to the public
generally or through a third party without an accompanying obligation
of confidentiality;
(iii) make such representations and warranties to such Initial
Purchaser, in form, substance and scope as are customarily made by
issuers to underwriters in primary underwritten offerings and covering
matters including, but not limited to, those set forth in the Purchase
Agreement;
(iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to such Initial Purchaser and its
counsel, addressed to such Initial Purchaser, covering such matters as
are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by
such Initial Purchaser or its counsel;
(v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of
14
any business acquired by the Company for which financial statements
and financial data are, or are required to be, included in the
Registration Statement), addressed to such Initial Purchaser, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten
offerings, or if requested by such Initial Purchaser or its counsel in
lieu of a "cold comfort" letter, an agreed-upon procedures letter
under Statement on Auditing Standards No. 35, covering matters
requested by such Initial Purchaser or its counsel; and
(vi) deliver such documents and certificates as may be reasonably
requested by such Initial Purchaser or its counsel, including those to
evidence compliance with Section 4(k) and with conditions customarily
contained in underwriting agreements.
The foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of
this Section shall be performed at the close of the Registered Exchange Offer
and the effective date of any post-effective amendment to the Exchange Offer
Registration Statement.
(a) If a Registered Exchange Offer is to be consummated, upon delivery
of the Securities by Holders to the Company (or to such other person as
directed by the Company) in exchange for the New Securities, the Company
shall mark, or caused to be marked, on the Securities so exchanged that
such Securities are being canceled in exchange for the New Securities. In
no event shall the Securities be marked as paid or otherwise satisfied.
(b) The Company will use its best efforts (i) if the Securities have
been rated prior to the initial sale of such Securities, to confirm such
ratings will apply to the Securities or the New Securities, as the case may
be, covered by a Registration Statement; or (ii) if the Securities were not
previously rated, to cause the Securities covered by a Registration
Statement to be rated with at least one nationally recognized statistical
rating agency, if so requested by Majority Holders with respect to the
related Registration Statement or by any Managing Underwriters.
(c) In the event that any Broker-Dealer shall underwrite any
Securities or participate as a member of an underwriting syndicate or
selling group or "assist in the distribution" (within the meaning of the
Rules of Fair Practice and the By-Laws of the National Association of
Securities Dealers, Inc.) thereof, whether as a Holder of such Securities
or as an underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise assist such Broker-Dealer in complying with
the requirements of such Rules and By-Laws, including, without limitation,
by:
(i) if such Rules or By-Laws shall so require, engaging a
"qualified independent underwriter" (as defined in such Rules) to
participate in the preparation of the Registration Statement, to
exercise usual standards of due diligence with respect thereto and, if
any portion of the offering contemplated by
15
such Registration Statement is an underwritten offering or is made
through a placement or sales agent, to recommend the yield of such
Securities;
(ii) indemnifying any such qualified independent underwriter to
the extent of the indemnification of underwriters provided in
Section 6 hereof; and
(iii) providing such information to such Broker-Dealer as may be
required in order for such Broker-Dealer to comply with the
requirements of such Rules.
(d) The Company shall use its best efforts to take all other steps
necessary to effect the registration of the Securities or the New
Securities, as the case may be, covered by a Registration Statement.
2. Registration Expenses. The Company shall bear all expenses incurred
in connection with the performance of its obligations under Sections 2, 3 and 4
hereof and, in the event of any Shelf Registration Statement, will reimburse the
Holders for the reasonable fees and disbursements of one firm or counsel
designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchasers for the reasonable fees and
disbursements of counsel acting in connection therewith.
3. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Holder of
Securities or New Securities, as the case may be, covered by any
Registration Statement (including each Initial Purchaser and, with respect
to any Prospectus delivery as contemplated in Section 4(h) hereof, each
Exchanging Dealer), the directors, officers, employees and agents of each
such Holder and each person who controls any such Holder within the meaning
of either the Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement as
originally filed or in any amendment thereof, or in any preliminary
Prospectus or the Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and agrees to reimburse each
such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
the Company will not be liable in any case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any such Holder
specifically for inclusion therein. This
16
indemnity agreement will be in addition to any liability which the Company
may otherwise have.
The Company also agrees to indemnify or contribute as provided in
Section 6(d) to the Losses of any underwriter of Securities or New
Securities, as the case may be, registered under a Shelf Registration
Statement, their directors, officers, employees or agents and each person
who controls such underwriter on substantially the same basis as that of
the indemnification of the Initial Purchasers and the selling Holders
provided in this Section 6(a) and shall, if requested by any Holder, enter
into an underwriting agreement reflecting such agreement, as provided in
Section 4(o) hereof.
(a) Each Holder of securities covered by a Registration Statement
(including each Initial Purchaser and, with respect to any Prospectus
delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer)
severally and not jointly agrees to indemnify and hold harmless the Company
each of its directors each of its officers who signs such Registration
Statement and each person who controls the Company within the meaning of
either the Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Company to each such Holder, but only with reference to
written information relating to such Holder furnished to the Company by or
on behalf of such Holder specifically for inclusion in the documents
referred to in the foregoing indemnity. This indemnity agreement will be in
addition to any liability which any such Holder may otherwise have.
(b) Promptly after receipt by an indemnified party under this Section
6 or notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party in writing of the
commencement thereof; but the failure to so notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses; and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the right
to employ separate counsel (including local counsel), and the indemnifying
party shall bear the reasonable fees, costs and expenses of such separate
counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict
of interest; (ii) the actual or potential defendants in, or targets of, any
such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to
17
those available to the indemnifying party; (iii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
the institution of such action; or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.
(c) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 6 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party
shall have a joint and several obligation to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which such indemnified party may be subject in
such proportion as is appropriate to reflect the relative benefits received
by such indemnifying party, on the one hand, and such indemnified party, on
the other hand, from the Initial Placement and the Registration Statement
which resulted in such Losses; provided, however, that in no case shall any
Initial Purchaser or any subsequent Holder of any Security or New Security
be responsible, in the aggregate, for any amount in excess of the purchase
discount or commission applicable to such Security, or in the case of a New
Security, applicable to the Security that was exchangeable into such New
Security, as set forth on the cover page of the Final Memorandum, nor shall
any underwriter be responsible for any amount in excess of the underwriting
discount or commission applicable to the securities purchased by such
underwriter under the Registration Statement which resulted in such Losses.
If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the indemnifying party and the indemnified
party shall contribute in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the
other hand, in connection with the statements or omissions which resulted
in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the sum of
(x) the total net proceeds from the Initial Placement (before deducting
expenses) as set forth on the cover page of the Final Memorandum and (y)
the total amount of additional interest which the Company was not required
to pay as a result of registering the securities covered by the
Registration Statement which resulted in such Losses. Benefits received by
the Initial Purchasers shall be deemed to be equal to the total purchase
discounts and commissions as set forth on the cover page of the Final
Memorandum, and benefits received by any other Holders shall be deemed to
be equal to the value of receiving Securities or New Securities, as
applicable, registered under the Act. Benefits received by any underwriter
shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a
part of the Registration Statement which resulted in such
18
Losses. Relative fault shall be determined by reference to, among other
things, whether any alleged untrue statement or omission relates to
information provided by the indemnifying party, on the one hand, or by the
indemnified party, on the other hand, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties agree that it would
not be just and equitable if contribution were determined by pro rata
allocation (even if the Holders were treated as one entity for such
purpose) or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section, each person who
controls a Holder within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of such Holder shall have
the same rights to contribution as such Holder, and each person who
controls the Company within the meaning of either the Act or the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms
and conditions of this paragraph (d). The Initial Purchasers' and any
subsequent Holders' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the purchase discount or commission
applicable to such Security, or in the case of a New Security, applicable
to the Security that was exchangeable into such New Security, and not
joint.
(d) The provisions of this Section will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder
or the Company or any of the officers, directors or controlling Persons
referred to in this Section hereof, and will survive the sale by a Holder
of securities covered by a Registration Statement.
2. Underwritten Registrations.
(a) If any of the Securities or New Securities, as the case may be,
covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the Managing Underwriters shall be selected by the
Majority Holders.
(b) No person may participate in any underwritten offering pursuant to
any Shelf Registration Statement, unless such person (i) agrees to sell
such person's Securities or New Securities, as the case may be, on the
basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements; and (ii) completes
and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements.
3. No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
19
4. Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Majority Holders (or, after the consummation of any Registered Exchange Offer in
accordance with Section 2 hereof, of New Securities); provided that, with
respect to any matter that directly or indirectly affects the rights of any
Initial Purchaser hereunder, the Company shall obtain the written consent of
each such Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to departure from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose Securities or New Securities, as the case may be, are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of Securities or New Securities, as the case
may be, being sold rather than registered under such Registration Statement.
5. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier or air courier guaranteeing overnight delivery:
(a) if to a Holder, at the most current address given by such holder
to the Company in accordance with the provisions of this Section, which
address initially is, with respect to each Holder, the address of such
Holder maintained by the Registrar under the Indenture, with a copy in like
manner to Salomon Smith Barney Inc.;
(b) if to you, initially at the respective addresses set forth in the
Purchase Agreement; and
(c) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
The Initial Purchasers or the Company by notice to the other parties
may designate additional or different addresses for subsequent notices or
communications.
1. Successors. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties, including,
without the need for an express assignment or any consent by the Company
thereto, subsequent Holders of Securities and the New Securities. The Company
hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and the New Securities, and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.
2. Counterparts. This agreement may be signed in counterparts, each of
which shall be an original and all of which together shall constitute one and
the same agreement.
3. Headings. The headings used herein are for convenience only and
shall not affect the construction hereof.
20
4. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed in the State of New York.
5. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
6. Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
or New Securities is required hereunder, Securities or New Securities, as
applicable, held by the Company or its Affiliates (other than subsequent Holders
of Securities or New Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities or New
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
21
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Initial Purchasers.
Very truly yours,
Western Resources, Inc.
By: /s/ Paul R. Geist
-----------------------------
Name: Paul R. Geist
Title: Chief Financial Officer
and Senior Vice President
The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
SALOMON SMITH BARNEY INC.
J.P. MORGAN SECURITIES INC.
BNY CAPITAL MARKETS, INC.
By: SALOMON SMITH BARNEY INC.
By: /s/ Arthur H. Tildesley, Jr.
-------------------------------------------
Name: Arthur H. Tildesley, Jr.
Title: Managing Director
For itself and the other several Initial
Purchasers named in the Purchase Agreement.
22
ANNEX A
Each Broker-Dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Broker-Dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Broker-Dealer in connection
with resales of New Securities received in exchange for Securities where such
Securities were acquired by such Broker-Dealer as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date (as defined herein) and ending on the close of business one
year after the Expiration Date, it will make this Prospectus available to any
Broker-Dealer for use in connection with any such resale. See "Plan of
Distribution."
23
ANNEX B
Each Broker-Dealer that receives New Securities for its own account in
exchange for Securities, where such Securities were acquired by such
Broker-Dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Securities. See "Plan of Distribution."
24
ANNEX C
1. PLAN OF DISTRIBUTION
Each Broker-Dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Broker-Dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business one
year after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any Broker-Dealer for use in connection with any such
resale. In addition, until , 200 , all dealers effecting
transactions in the New Securities may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New
Securities by brokers-dealers. New Securities received by Broker-Dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Broker-Dealer and/or the purchasers of any such New
Securities. Any Broker-Dealer that resells New Securities that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Securities may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such Persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a Broker-Dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Broker-Dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holder of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the holders of the Securities (including any
Broker-Dealers) against certain liabilities, including liabilities under the
Securities Act.
[If applicable, add information required by Regulation S-K Items 507
and/or 508.]
25
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
Address:
Rider B
If the undersigned is not a Broker-Dealer, the undersigned represents
that it acquired the New Securities in the ordinary course of its business, it
is not engaged in, and does not intend to engage in, a distribution of New
Securities and it has no arrangements or understandings with any Person to
participate in a distribution of the New Securities. If the undersigned is a
Broker-Dealer that will receive New Securities for its own account in exchange
for Securities, it represents that the Securities to be exchanged for New
Securities were acquired by it as a result of market-making activities or other
trading activities and acknowledges that it will deliver a prospectus in
connection with any resale of such New Securities; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
Exhibit 4.27
WESTERN RESOURCES, INC.
$ 400,000,000
Senior Notes, 9 3/4% Series Due 2007
REGISTRATION RIGHTS AGREEMENT
New York, New York
May 10, 2002
Salomon Smith Barney Inc.
J.P. Morgan Securities Inc.
BNY Capital Markets, Inc.
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Western Resources, Inc., a corporation organized under the laws of
Kansas (the "Company"), proposes to issue and sell to certain purchasers (the
"Initial Purchasers"), upon the terms set forth in a purchase agreement of even
date herewith (the "Purchase Agreement"), $400,000,000 principal amount of its
Senior Notes, 9 3/4% Series Due 2007 (the "Securities") relating to the initial
placement of the Securities (the "Initial Placement"). To induce the Initial
Purchasers to enter into the Purchase Agreement and to satisfy a condition of
your obligations thereunder, the Company agrees with you for your benefit and
the benefit of the holders from time to time of the Securities (including the
Initial Purchasers) (each a "Holder" and, together, the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person shall mean any other
person that, directly or indirectly, is in control of, is controlled by, or is
under common control with, such specified person. For purposes of this
definition, control of a person shall mean the power, direct or indirect, to
direct or cause the direction of the management and policies of such person
whether by contract or otherwise; and the terms "controlling" and "controlled"
shall have meanings correlative to the foregoing.
2
"Broker-Dealer" shall mean any broker or dealer registered as
such under the Exchange Act.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in the City of New York.
"Commission" shall mean the Securities and Exchange
Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Exchange Offer Registration Period" shall mean the one-year
period following the consummation of the Registered Exchange Offer, exclusive of
any period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" shall mean a
registration statement of the Company on an appropriate form under the Act with
respect to the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments thereto, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchanging Dealer" shall mean any Holder (which may include
any Initial Purchaser) that is a Broker-Dealer and elects to exchange for New
Securities any Securities that it acquired for its own account as a result of
market-making activities or other trading activities (but not directly from the
Company or any Affiliate of the Company) for New Securities.
"Final Memorandum" shall have the meaning set forth in the
Purchase Agreement.
"Holder" shall have the meaning set forth in the preamble
hereto.
"Indenture" shall mean the Indenture relating to the
Securities, dated as of August 1, 1998, between the Company and Deutsche Bank
Trust Company Americas (formerly known as Bankers Trust Company), as trustee, as
the same may be amended from time to time in accordance with the terms thereof.
"Initial Placement" shall have the meaning set forth in the
preamble hereto.
"Initial Purchaser" shall have the meaning set forth in the
preamble hereto.
"Losses" shall have the meaning set forth in Section 6(d)
hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Securities registered under a Registration
Statement.
3
"Managing Underwriters" shall mean the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering.
"New Securities" shall mean debt securities of the Company
identical in all material respects to the Securities (except that the cash
interest and interest rate step-up provisions and the transfer restrictions
shall be modified or eliminated, as appropriate) and to be issued under the
Indenture.
"New Securities Trustee" shall mean a bank or trust company
reasonably satisfactory to the Initial Purchasers, as trustee with respect to
the New Securities.
"Prospectus" shall mean the prospectus included in any
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities or the New Securities covered
by such Registration Statement, and all amendments and supplements thereto and
all material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble hereto.
"Registered Exchange Offer" shall mean the proposed offer of
the Company to issue and deliver to the Holders of the Securities that are not
prohibited by any law or policy of the Commission from participating in such
offer, in exchange for the Securities, a like aggregate principal amount of the
New Securities.
"Registration Statement" shall mean any Exchange Offer
Registration Statement or Shelf Registration Statement that covers any of the
Securities or the New Securities pursuant to the provisions of this Agreement,
any amendments and supplements to such registration statement, including
post-effective amendments (in each case including the Prospectus contained
therein), all exhibits thereto and all material incorporated by reference
therein.
"Securities" shall have the meaning set forth in the preamble
hereto.
"Shelf Registration" shall mean a registration effected
pursuant to Section 3 hereof.
"Shelf Registration Period" shall have the meaning set forth
in Section 3(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 3
hereof which covers some or all of the Securities or New Securities, as
applicable, on an appropriate form under Rule 415 under the Act, or any similar
rule that may be adopted by the Commission, amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
4
"Trustee" shall mean the trustee with respect to the
Securities under the Indenture.
"underwriter" shall mean any underwriter of Securities in
connection with an offering thereof under a Shelf Registration Statement.
(a) Registered Exchange Offer. The Company shall prepare and,
not later than 180 days following the date of the original issuance of
the Securities (or if such 180th day is not a Business Day, the next
succeeding Business Day), shall file with the Commission the Exchange
Offer Registration Statement with respect to the Registered Exchange
Offer. The Company shall use its best efforts to cause the Exchange
Offer Registration Statement to become effective under the Act within
270 days of the date of the original issuance of the Securities (or if
such 270th day is not a Business Day, the next succeeding Business
Day).
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange
Offer, it being the objective of such Registered Exchange Offer to
enable each Holder electing to exchange Securities for New Securities
(assuming that such Holder is not an Affiliate of the Company, acquires
the New Securities in the ordinary course of such Holder's business,
has no arrangements with any person to participate in the distribution
of the New Securities and is not prohibited by any law or policy of the
Commission from participating in the Registered Exchange Offer) to
trade such New Securities from and after their receipt without any
limitations or restrictions under the Act and without material
restrictions under the securities laws of a substantial proportion of
the several states of the United States.
(c) In connection with the Registered Exchange Offer, the
Company shall:
(i) mail to each Holder a copy of the Prospectus
forming part of the effective Exchange Offer Registration
Statement, together with an appropriate letter of transmittal
and related documents;
(ii) keep the Registered Exchange Offer open for not
less than 20 Business Days and not more than 35 Business Days
after the date notice thereof is mailed to the Holders (or, in
each case, longer if required by applicable law);
(iii) use its best efforts to keep the Exchange Offer
Registration Statement continuously effective under the Act,
supplemented and amended as required, under the Act to ensure
that it is available for sales of New Securities by Exchanging
Dealers during the Exchange Offer Registration Period;
(iv) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough of
Manhattan in New York City, which may be the Trustee, the New
Securities Trustee or an Affiliate of either of them;
5
(v) permit Holders to withdraw tendered Securities at
any time prior to the close of business, New York time, on the
last Business Day on which the Registered Exchange Offer is
open;
(vi) prior to effectiveness of the Exchange Offer
Registration Statement, provide a supplemental letter to the
Commission (A) stating that the Company is conducting the
Registered Exchange Offer in reliance on the position of the
Commission in Exxon Capital Holdings Corporation (pub. avail.
May 13, 1988) and Morgan Stanley and Co., Inc. (pub. avail.
June 5, 1991); and (B) including a representation that the
Company has not entered into any arrangement or understanding
with any person to distribute the New Securities to be
received in the Registered Exchange Offer and that, to the
best of the Company's information and belief, each Holder
participating in the Registered Exchange Offer is acquiring
the New Securities in the ordinary course of business and has
no arrangement or understanding with any person to participate
in the distribution of the New Securities;
(vii) notify each Holder that any Security not
tendered by such Holder in the Registered Exchange Offer will
remain outstanding and continue to accrue interest but will
not retain any rights under this Agreement (except in the case
of the Initial Purchasers and Exchange Dealers as provided
herein); and
(viii) comply in all respects with all applicable
laws.
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(i) accept for exchange all Securities tendered and
not validly withdrawn pursuant to the Registered Exchange
Offer;
(ii) deliver to the Trustee for cancellation in
accordance with Section 4(r) all Securities so accepted for
exchange; and
(iii) unless the New Securities are to be issued in
the form of one or more global securities registered in the
name of The Depository Trust Company or its nominee, cause the
New Securities Trustee promptly to authenticate and deliver to
each Holder of Securities a principal amount of New Securities
equal to the principal amount of the Securities of such Holder
so accepted for exchange.
(e) Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Registered Exchange Offer
to participate in a distribution of the New Securities (x) could not
under Commission policy as in effect on the date of this Agreement rely
on the position of the Commission in Morgan Stanley and Co., Inc. (pub.
avail. June 5, 1991) and Exxon Capital Holdings Corporation (pub.
avail. May 13, 1988), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993 and similar no-action letters;
and (y) must comply with the registration and prospectus
6
delivery requirements of the Act in connection with any secondary
resale transaction which must be covered by an effective registration
statement containing the selling security holder information required
by Item 507 or 508, as applicable, of Regulation S-K under the Act if
the resales are of New Securities obtained by such Holder in exchange
for Securities acquired by such Holder directly from the Company or one
of its Affiliates.Accordingly, each Holder participating in the
Registered Exchange Offer shall be required to represent to the Company
that, at the time of the consummation of the Registered Exchange Offer:
(i) any New Securities received by such Holder will
be acquired in the ordinary course of business; 1
(ii) such Holder will have no arrangement or
understanding with any person to participate in the
distribution of the Securities or the New Securities within
the meaning of the Act; and
(iii) such Holder is not an Affiliate of the Company.
(f) If any Initial Purchaser determines that it is not
eligible to participate in the Registered Exchange Offer with respect
to the exchange of Securities constituting any portion of an unsold
allotment, at the request of such Initial Purchaser, the Company shall
issue and deliver to such Initial Purchaser or the person purchasing
New Securities registered under a Shelf Registration Statement as
contemplated by Section 3 hereof from such Initial Purchaser, in
exchange for such Securities, a like principal amount of New
Securities. The Company shall use its best efforts to cause the CUSIP
Service Bureau to issue the same CUSIP number for such New Securities
as for New Securities issued pursuant to the Registered Exchange Offer.
(g) Shelf Registration. If (i) due to any change in law or
applicable interpretations thereof by the Commission's staff, the
Company determines upon advice of its outside counsel that it is not
permitted to effect the Registered Exchange Offer as contemplated by
Section 2 hereof; (ii) for any other reason the Registered Exchange
Offer is not consummated within 315 days of the date hereof; (iii) any
Initial Purchaser so requests with respect to Securities that are not
eligible to be exchanged for New Securities in the Registered Exchange
Offer and that are held by it following consummation of the Registered
Exchange Offer; (iv) any Holder (other than an Initial Purchaser) is
not eligible to participate in the Registered Exchange Offer other than
by reason of such Holder being an Affiliate of the Company; or (v) in
the case of any Initial Purchaser that participates in the Registered
Exchange Offer or acquires New Securities pursuant to Section 2(f)
hereof, such Initial Purchaser does not receive freely tradeable New
Securities in exchange for Securities constituting any portion of an
unsold allotment (it being understood that (x) the requirement that an
Initial Purchaser deliver a Prospectus containing the information
required by Item 507 or 508 of Regulation S-K under the Act in
connection with sales of New Securities acquired in exchange for such
Securities shall result in such New Securities being not "freely
tradeable"; and (y) the requirement that an Exchanging Dealer deliver a
Prospectus in connection with sales of New Securities
7
acquired in the Registered Exchange Offer in exchange for Securities
acquired as a result of market-making activities or other trading
activities shall not result in such New Securities being not "freely
tradeable"), the Company shall effect a Shelf Registration Statement in
accordance with subsection (b) below.
(i) If required pursuant to subsection (a) above, The
Company shall as promptly as practicable (but in no event more
than 60 days after so required or requested pursuant to this
Section 3), file with the Commission and thereafter shall use
its best efforts to cause to be declared effective under the
Act a Shelf Registration Statement relating to the offer and
sale of the Securities or the New Securities, as applicable,
by the Holders thereof from time to time in accordance with
the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement; provided, however,
that no Holder (other than an Initial Purchaser) shall be
entitled to have the Securities held by it covered by such
Shelf Registration Statement unless such Holder agrees in
writing to be bound by all of the provisions of this Agreement
applicable to such Holder; and provided further, that with
respect to New Securities received by an Initial Purchaser in
exchange for Securities constituting any portion of an unsold
allotment, the Company may, if permitted by current
interpretations by the Commission's staff, file a
post-effective amendment to the Exchange Offer Registration
Statement containing the information required by Item 507 or
508 of Regulation S-K, as applicable, in satisfaction of its
obligations under this subsection with respect thereto, and
any such Exchange Offer Registration Statement, as so amended,
shall be referred to herein as, and governed by the provisions
herein applicable to, a Shelf Registration Statement.
(ii) The Company shall use its best efforts to keep
the Shelf Registration Statement continuously effective,
supplemented and amended as required by the Act, in order to
permit the Prospectus forming part thereof to be usable by
Holders for a period of two years from the date the Shelf
Registration Statement is declared effective by the Commission
or such shorter period that will terminate when all the
Securities or New Securities, as applicable, covered by the
Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement (in any such case, such period
being called the "Shelf Registration Period"). The Company
shall be deemed not to have used its best efforts to keep the
Shelf Registration Statement effective during the requisite
period if it voluntarily takes any action that would result in
Holders of Securities covered thereby not being able to offer
and sell such Securities during that period, unless (A) such
action is required by applicable law; or (B) such action is
taken by the Company in good faith and for valid business
reasons (not including avoidance of the Company's obligations
hereunder), including the acquisition or divestiture of
assets, so long as the Company promptly thereafter complies
with the requirements of Section 4(k) hereof, if applicable.
(iii) The Company shall cause the Shelf Registration
Statement and the related Prospectus and any amendment or
supplement thereto, as of the effective
8
date of the Shelf Registration Statement or such amendment or
supplement, (A) to comply in all material respects with the
applicable requirements of the Act and the rules and
regulations of the Commission; and (B) not to contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
2. Additional Registration Procedures. In connection with any
Shelf Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply.
(a) The Company shall:
(i) furnish to you, not less than five Business Days
prior to the filing thereof with the Commission, a copy of any
Exchange Offer Registration Statement and any Shelf
Registration Statement, and each amendment thereof and each
amendment or supplement, if any, to the Prospectus included
therein (including all documents incorporated by reference
therein after the initial filing) and shall use its best
efforts to reflect in each such document, when so filed with
the Commission, such comments as you reasonably propose
subject to the Company's reasonable determinations as to
compliance with applicable laws as provided in subsection (b)
below;
(ii) include the information set forth in Annex A
hereto on the facing page of the Exchange Offer Registration
Statement, in Annex B hereto in the forepart of the Exchange
Offer Registration Statement in a section setting forth
details of the Exchange Offer, in Annex C hereto in the
underwriting or plan of distribution section of the Prospectus
contained in the Exchange Offer Registration Statement, and in
Annex D hereto in the letter of transmittal delivered pursuant
to the Registered Exchange Offer;
(iii) if requested by an Initial Purchaser, include
the information required by Item 507 or 508 of Regulation S-K,
as applicable, in the Prospectus contained in the Exchange
Offer Registration Statement; and
(iv) in the case of a Shelf Registration Statement,
include the names of the Holders that propose to sell
Securities pursuant to the Shelf Registration Statement as
selling security holders.
(b) The Company shall ensure that:
(i) any Registration Statement and any amendment
thereto and any Prospectus forming part thereof and any
amendment or supplement thereto complies in all material
respects with the Act and the rules and regulations
thereunder; and
9
(ii) any Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading.
(c) The Company shall advise you, the Holders of Securities
covered by any Shelf Registration Statement and any Exchanging Dealer
under any Exchange Offer Registration Statement that has provided in
writing to the Company a telephone or facsimile number and address for
notices, and, if requested by you or any such Holder or Exchanging
Dealer, shall confirm such advice in writing (which notice pursuant to
clauses (ii)-(v) hereof shall be accompanied by an instruction to
suspend the use of the Prospectus until the Company shall have remedied
the basis for such suspension):
(i) when a Registration Statement and any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective;
(ii) of any request by the Commission for any
amendment or supplement to the Registration Statement or the
Prospectus or for additional information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
purpose;
(iv) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the securities included therein for sale in
any jurisdiction or the initiation of any proceeding for such
purpose; and
(v) of the happening of any event that requires any
change in the Registration Statement or the Prospectus so
that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required
to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading.
(d) The Company shall use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of any
Registration Statement or the qualification of the securities therein
for sale in any jurisdiction at the earliest possible time.
(e) The Company shall furnish to each Holder of Securities
covered by any Shelf Registration Statement, without charge, at least
one copy of such Shelf Registration Statement and any post-effective
amendment thereto, including all material incorporated therein by
reference, and, if the Holder so requests in writing, all exhibits
thereto (including exhibits incorporated by reference therein to the
extent such exhibits are not available on open access public retrieval
systems).
10
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities covered by any Shelf Registration
Statement, without charge, as many copies of the Prospectus (including
each preliminary Prospectus) included in such Shelf Registration
Statement and any amendment or supplement thereto as such Holder may
reasonably request. The Company consents to the use of the Prospectus
or any amendment or supplement thereto by each of the selling Holders
of securities in connection with the offering and sale of the
securities covered by the Prospectus, or any amendment or supplement
thereto, included in the Shelf Registration Statement.
(g) The Company shall furnish to each Exchanging Dealer which
so requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto,
including all material incorporated by reference therein, and, if the
Exchanging Dealer so requests in writing, all exhibits thereto
(including exhibits incorporated by reference therein to the extent
such exhibits are not available on open access public retrieval
systems).
(h) The Company shall promptly deliver to each Initial
Purchaser, each Exchanging Dealer and each other person required to
deliver a Prospectus during the Exchange Offer Registration Period,
without charge, as many copies of the Prospectus included in such
Exchange Offer Registration Statement and any amendment or supplement
thereto as any such person may reasonably request. The Company consents
to the use of the Prospectus or any amendment or supplement thereto by
any Initial Purchaser, any Exchanging Dealer and any such other person
that may be required to deliver a Prospectus following the Registered
Exchange Offer in connection with the offering and sale of the New
Securities covered by the Prospectus, or any amendment or supplement
thereto, included in the Exchange Offer Registration Statement.
(i) Prior to the Registered Exchange Offer or any
other offering of Securities pursuant to any Registration
Statement, the Company shall arrange, if necessary, for the
qualification of the Securities or the New Securities for sale
under the laws of such jurisdictions as any Holder shall
reasonably request and will maintain such qualification in
effect so long as required; provided that in no event shall
the Company be obligated to qualify to do business in any
jurisdiction where it is not then so qualified or to take any
action that would subject it to service of process in suits,
other than those arising out of the Initial Placement, the
Registered Exchange Offer or any offering pursuant to a Shelf
Registration Statement, in any such jurisdiction where it is
not then so subject.
(j) Unless the New Securities are to be issued in the form of
one or more global securities registered in the name of The Depository
Trust Company or its nominee, the Company shall cooperate with the
Holders of Securities to facilitate the timely preparation and delivery
of certificates representing New Securities or Securities to be issued
or sold pursuant to any Registration Statement free of any restrictive
legends and in such denominations and registered in such names as the
Holders may request.
(k) Upon the occurrence of any event contemplated by
subsections (c)(ii) through (v) above, the Company shall promptly
prepare a post-effective amendment to the
11
applicable Registration Statement or an amendment or supplement to the
related Prospectus or file any other required document so that, as
thereafter delivered to the Initial Purchasers of the securities
included therein, the Prospectus will not include an untrue statement
of a material fact or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading. In such circumstances, the period of
effectiveness of the Exchange Offer Registration Statement provided for
in Section 2 and the Shelf Registration Statement provided for in
Section 3(b) shall each be extended by the number of days from and
including the date of the giving of a notice of suspension pursuant to
Section 4(c) to and including the date when the Initial Purchasers, the
Holders of the Securities and any known Exchanging Dealer shall have
received such amended or supplemented Prospectus pursuant to this
Section.
(l) Not later than the effective date of any Registration
Statement, the Company shall provide a CUSIP number for the Securities
or the New Securities, as the case may be, registered under such
Registration Statement and provide the Trustee with printed
certificates for such Securities or New Securities, in a form eligible
for deposit with The Depository Trust Company.
(m) The Company shall comply with all applicable rules and
regulations of the Commission and shall make generally available to its
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the Act.
(n) The Company may require each Holder of securities to be
sold pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of
such securities as the Company may from time to time reasonably require
for inclusion in such Registration Statement. The Company may exclude
from such Shelf Registration Statement the Securities of any Holder
that unreasonably fails to furnish such information within a reasonable
time after receiving such request.
(o) In the case of any Shelf Registration Statement, the
Company shall enter into such and take all other appropriate actions
(including if requested an underwriting agreement in customary form) in
order to expedite or facilitate the registration or the disposition of
the Securities or New Securities, and in connection therewith, if an
underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures no less favorable than those
set forth in Section 6 (or such other provisions and procedures
acceptable to the Majority Holders and the Managing Underwriters, if
any, with respect to all parties to be indemnified pursuant to Section
6).
(p) In the case of any Shelf Registration Statement, the
Company shall:
(i) make reasonably available for inspection by the
Holders of Securities to be registered thereunder, any
underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other
agent
12
retained by the Holders or any such underwriter all relevant
financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and
employees to supply all relevant information reasonably
requested by the Holders or any such underwriter, attorney,
accountant or agent in connection with any such Registration
Statement as is customary for similar due diligence
examinations; provided, however, that any information that is
designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall
be kept confidential by the Holders or any such underwriter,
attorney, accountant or agent, unless such disclosure is made
in connection with a court proceeding or required by law (in
which case such Holder or Underwriter shall notify the Company
of such disclosure in sufficient time to permit the Company to
take legal action to limit such disclosure), or such
information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality;
(iii) make such representations and warranties to the
Holders of Securities registered thereunder and the
underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including, but not
limited to, those set forth in the Purchase Agreement;
(iv) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the
Managing Underwriters, if any) addressed to each selling
Holder and the underwriters, if any, covering such matters as
are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably
requested by such Holders and underwriters;
(v) obtain "cold comfort" letters and updates thereof
from the independent certified public accountants of the
Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial
statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each
selling Holder of Securities registered thereunder and the
underwriters, if any, in customary form and covering matters
of the type customarily covered in "cold comfort" letters in
connection with primary underwritten offerings; and
(vi) deliver such documents and certificates as may be
reasonably requested by the Majority Holders and the Managing
Underwriters, if any, including those to evidence compliance
with Section 4(k) and with any customary conditions contained
in the underwriting agreement or other agreement entered into
by the Company.
13
The actions set forth in clauses (iii), (iv), (v) and (vi) of this
Section shall be performed at (A) the effectiveness of such Registration
Statement and each post-effective amendment thereto; and (B) each closing under
any underwriting or similar agreement as and to the extent required thereunder.
(a) In the case of any Exchange Offer Registration Statement,
the Company shall:
(i) make reasonably available for inspection by such
Initial Purchaser, and any attorney, accountant or other agent
retained by such Initial Purchaser, all relevant financial and
other records, pertinent corporate documents and properties of
the Company and its subsidiaries;
(ii) cause the Company's officers, directors and
employees to supply all relevant information reasonably
requested by such Initial Purchaser or any such attorney,
accountant or agent in connection with any such Registration
Statement as is customary for similar due diligence
examinations; provided, however, that any information that is
designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall
be kept confidential by such Initial Purchaser or any such
attorney, accountant or agent, unless such disclosure is made
in connection with a court proceeding or required by law (in
which case such Holder or Underwriter shall notify the Company
of such disclosure in sufficient time to permit the Company to
take legal action to limit such disclosure), or such
information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality;
(iii) make such representations and warranties to
such Initial Purchaser, in form, substance and scope as are
customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including, but not
limited to, those set forth in the Purchase Agreement;
(iv) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to such
Initial Purchaser and its counsel, addressed to such Initial
Purchaser, covering such matters as are customarily covered in
opinions requested in underwritten offerings and such other
matters as may be reasonably requested by such Initial
Purchaser or its counsel;
(v) obtain "cold comfort" letters and updates thereof
from the independent certified public accountants of the
Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial
statements and financial data are, or are required to be,
included in the Registration Statement), addressed to such
Initial Purchaser, in customary form and covering matters of
the type customarily covered in "cold comfort" letters in
connection with primary underwritten offerings, or if
requested by such Initial Purchaser or its counsel in lieu of
a "cold comfort" letter, an agreed-upon procedures letter
under Statement
14
on Auditing Standards No. 35, covering matters requested by
such Initial Purchaser or its counsel; and
(vi) deliver such documents and certificates as may
be reasonably requested by such Initial Purchaser or its
counsel, including those to evidence compliancewith Section
4(k) and with conditions customarily contained in underwriting
agreements.
The foregoing actions set forth in clauses (iii), (iv), (v), and (vi)
of this Section shall be performed at the close of the Registered Exchange Offer
and the effective date of any post-effective amendment to the Exchange Offer
Registration Statement.
(a) If a Registered Exchange Offer is to be consummated, upon
delivery of the Securities by Holders to the Company (or to such other
person as directed by the Company) in exchange for the New Securities,
the Company shall mark, or cause to be marked, on the Securities so
exchanged that such Securities are being canceled in exchange for the
New Securities. In no event shall the Securities be marked as paid or
otherwise satisfied.
(b) The Company will use its best efforts (i) if the
Securities have been rated prior to the initial sale of such
Securities, to confirm such ratings will apply to the Securities or the
New Securities, as the case may be, covered by a Registration
Statement; or (ii) if the Securities were not previously rated, to
cause the Securities covered by a Registration Statement to be rated
with at least one nationally recognized statistical rating agency, if
so requested by Majority Holders with respect to the related
Registration Statement or by any Managing Underwriters.
(c) In the event that any Broker-Dealer shall underwrite any
Securities or participate as a member of an underwriting syndicate or
selling group or "assist in the distribution" (within the meaning of
the Rules of Fair Practice and the By-Laws of the National Association
of Securities Dealers, Inc.) thereof, whether as a Holder of such
Securities or as an underwriter, a placement or sales agent or a broker
or dealer in respect thereof, or otherwise assist such Broker-Dealer in
complying with the requirements of such Rules and By-Laws, including,
without limitation, by:
(i) if such Rules or By-Laws shall so require,
engaging a "qualified independent underwriter" (as defined in
such Rules) to participate in the preparation of the
Registration Statement, to exercise usual standards of due
diligence with respect thereto and, if any portion of the
offering contemplated by such Registration Statement is an
underwritten offering or is made through a placement or sales
agent, to recommend the yield of such Securities;
(ii) indemnifying any such qualified independent
underwriter to the extent of the indemnification of
underwriters provided in Section 6 hereof; and
15
(iii) providing such information to such
Broker-Dealer as may be required in order for such
Broker-Dealer to comply with the requirements of such Rules.
(d) The Company shall use its best efforts to take all other
steps necessary to effect the registration of the Securities or the New
Securities, as the case may be, covered by a Registration Statement.
2. Registration Expenses. The Company shall bear all expenses
incurred in connection with the performance of its obligations under Sections 2,
3 and 4 hereof and, in the event of any Shelf Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements of one firm or
counsel designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchasers for the reasonable fees and
disbursements of counsel acting in connection therewith.
3. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Holder of Securities or New Securities, as the case may be, covered by
any Registration Statement (including each Initial Purchaser and, with
respect to any Prospectus delivery as contemplated in Section 4(h)
hereof, each Exchanging Dealer), the directors, officers, employees and
agents of each such Holder and each person who controls any such Holder
within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement as originally filed or in
any amendment thereof, or in any preliminary Prospectus or the
Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any case to
the extent that any such loss, claim, damage or liability arises out of
or is based upon any such untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any such Holder specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the
Company may otherwise have.
The Company also agrees to indemnify or contribute as provided
in Section 6(d) to the Losses of any underwriter of Securities or New
Securities, as the case may be, registered under a Shelf Registration
Statement, their directors, officers, employees or agents and each
person who controls such underwriter on substantially the same basis as
16
that of the indemnification of the Initial Purchasers and the selling
Holders provided in this Section 6(a) and shall, if requested by any
Holder, enter into an underwriting agreement reflecting such agreement,
as provided in Section 4(o) hereof.
(a) Each Holder of securities covered by a Registration
Statement (including each Initial Purchaser and, with respect to any
Prospectus delivery as contemplated in Section 4(h) hereof, each
Exchanging Dealer) severally and not jointly agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers
who signs such Registration Statement and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to
the same extent as the foregoing indemnity from the Company to each
such Holder, but only with reference to written information relating to
such Holder furnished to the Company by or on behalf of such Holder
specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to
any liability which any such Holder may otherwise have.
(b) Promptly after receipt by an indemnified party under this
Section 6 or notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section, notify the indemnifying party in
writing of the commencement thereof; but the failure to so notify the
indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and
defenses; and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification
is sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained
by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of,
any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to
the indemnifying party; (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the
institution of such action; or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding
17
in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(c) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 6 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, then each applicable
indemnifying party shall have a joint and several obligation to
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively, "Losses") to which
such indemnified party may be subject in such proportion as is
appropriate to reflect the relative benefits received by such
indemnifying party, on the one hand, and such indemnified party, on the
other hand, from the Initial Placement and the Registration Statement
which resulted in such Losses; provided, however, that in no case shall
any Initial Purchaser or any subsequent Holder of any Security or New
Security be responsible, in the aggregate, for any amount in excess of
the purchase discount or commission applicable to such Security, or in
the case of a New Security, applicable to the Security that was
exchangeable into such New Security, as set forth on the cover page of
the Final Memorandum, nor shall any underwriter be responsible for any
amount in excess of the underwriting discount or commission applicable
to the securities purchased by such underwriter under the Registration
Statement which resulted in such Losses. If the allocation provided by
the immediately preceding sentence is unavailable for any reason, the
indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of such indemnifying party, on the one
hand, and such indemnified party, on the other hand, in connection with
the statements or omissions which resulted in such Losses as well as
any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the sum of (x) the total net
proceeds from the Initial Placement (before deducting expenses) as set
forth on the cover page of the Final Memorandum and (y) the total
amount of additional interest which the Company was not required to pay
as a result of registering the securities covered by the Registration
Statement which resulted in such Losses. Benefits received by the
Initial Purchasers shall be deemed to be equal to the total purchase
discounts and commissions as set forth on the cover page of the Final
Memorandum, and benefits received by any other Holders shall be deemed
to be equal to the value of receiving Securities or New Securities, as
applicable, registered under the Act. Benefits received by any
underwriter shall be deemed to be equal to the total underwriting
discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted
in such Losses. Relative fault shall be determined by reference to,
among other things, whether any alleged untrue statement or omission
relates to information provided by the indemnifying party, on the one
hand, or by the indemnified party, on the other hand, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation (even if the
Holders were treated as one entity for such purpose) or any other
method of allocation
18
which does not take account of the equitable considerations referred to
above. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of
this Section, each person who controls a Holder within the meaning of
either the Act or the Exchange Act and each director, officer, employee
and agent of such Holder shall have the same rights to contribution as
such Holder, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and
conditions of this paragraph (d). The Initial Purchasers' and any
subsequent Holders' respective obligations to contribute pursuant to
this Section 8 are several in proportion to the purchase discount or
commission applicable to such Security, or in the case of a New
Security, applicable to the Security that was exchangeable into such
New Security, and not joint.
(d) The provisions of this Section will remain in full force
and effect, regardless of any investigation made by or on behalf of any
Holder or the Company or any of the officers, directors or controlling
Persons referred to in this Section hereof, and will survive the sale
by a Holder of securities covered by a Registration Statement.
2. Underwritten Registrations.
(a) If any of the Securities or New Securities, as the case
may be, covered by any Shelf Registration Statement are to be sold in
an underwritten offering, the Managing Underwriters shall be selected
by the Majority Holders.
(b) No person may participate in any underwritten offering
pursuant to any Shelf Registration Statement, unless such person (i)
agrees to sell such person's Securities or New Securities, as the case
may be, on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements; and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting
arrangements.
3. No Inconsistent Agreements. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
4. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Majority Holders (or, after the consummation of any Registered
Exchange Offer in accordance with Section 2 hereof, of New Securities); provided
that, with respect to any matter that directly or indirectly affects the rights
of any Initial
19
Purchaser hereunder, the Company shall obtain the written consent of each such
Initial Purchaser against which such amendment, qualification, supplement,
waiver or consent is to be effective. Notwithstanding the foregoing (except the
foregoing proviso), a waiver or consent to departure from the provisions hereof
with respect to a matter that relates exclusively to the rights of Holders whose
Securities or New Securities, as the case may be, are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by the Majority Holders, determined on the
basis of Securities or New Securities, as the case may be, being sold rather
than registered under such Registration Statement.
5. Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier or air courier guaranteeing overnight delivery:
(a) if to a Holder, at the most current address given by such
holder to the Company in accordance with the provisions of this
Section, which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the Indenture,
with a copy in like manner to Salomon Smith Barney Inc.;
(b) if to you, initially at the respective addresses set forth
in the Purchase Agreement; and
(c) if to the Company, initially at its address set forth in
the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
The Initial Purchasers or the Company by notice to the other parties
may designate additional or different addresses for subsequent notices or
communications.
1. Successors. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Securities and the New
Securities. The Company hereby agrees to extend the benefits of this
Agreement to any Holder of Securities and the New Securities, and any
such Holder may specifically enforce the provisions of this Agreement
as if an original party hereto.
2. Counterparts. This agreement may be signed in counterparts,
each of which shall be an original and all of which together shall
constitute one and the same agreement.
3. Headings. The headings used herein are for convenience only
and shall not affect the construction hereof.
4. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed in the State of New
York.
20
5. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions hereof
shall not be in any way impaired or affected thereby, it being intended
that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.
6. Securities Held by the Company, etc. Whenever the consent
or approval of Holders of a specified percentage of principal amount of
Securities or New Securities is required hereunder, Securities or New
Securities, as applicable, held by the Company or its Affiliates (other
than subsequent Holders of Securities or New Securities if such
subsequent Holders are deemed to be Affiliates solely by reason of
their holdings of such Securities or New Securities) shall not be
counted in determining whether such consent or approval was given by
the Holders of such required percentage.
21
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Initial Purchasers.
Very truly yours,
Western Resources, Inc.
By: /s/ Paul R. Geist
--------------------------------------------
Name: Paul R. Geist
Title: Chief Financial Officer and
Senior Vice President
The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
SALOMON SMITH BARNEY INC.
J.P. MORGAN SECURITIES INC.
BNY CAPITAL MARKETS, INC.
By: SALOMON SMITH BARNEY INC.
By: /s/ Arthur H. Tildesley, Jr.
--------------------------------------------
Name: Arthur H. Tildesley, Jr.
Title: Managing Director
For itself and the other several Initial
Purchasers named in the Purchase Agreement.
22
ANNEX A
Each Broker-Dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Broker-Dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Broker-Dealer in connection
with resales of New Securities received in exchange for Securities where such
Securities were acquired by such Broker-Dealer as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date (as defined herein) and ending on the close of business one
year after the Expiration Date, it will make this Prospectus available to any
Broker-Dealer for use in connection with any such resale. See "Plan of
Distribution."
23
ANNEX B
Each Broker-Dealer that receives New Securities for its own account in
exchange for Securities, where such Securities were acquired by such
Broker-Dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Securities. See "Plan of Distribution."
24
ANNEX C
1. PLAN OF DISTRIBUTION
Each Broker-Dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Broker-Dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business one
year after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any Broker-Dealer for use in connection with any such
resale. In addition, until __________, 200__, all dealers effecting transactions
in the New Securities may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New
Securities by brokers-dealers. New Securities received by Broker-Dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Broker-Dealer and/or the purchasers of any such New
Securities. Any Broker-Dealer that resells New Securities that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Securities may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such Persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a Broker-Dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Broker-Dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holder of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the holders of the Securities (including any
Broker-Dealers) against certain liabilities, including liabilities under the
Securities Act.
[If applicable, add information required by Regulation S-K Items 507
and/or 508.]
25
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
Rider B
If the undersigned is not a Broker-Dealer, the undersigned represents
that it acquired the New Securities in the ordinary course of its business, it
is not engaged in, and does not intend to engage in, a distribution of New
Securities and it has no arrangements or understandings with any Person to
participate in a distribution of the New Securities. If the undersigned is a
Broker-Dealer that will receive New Securities for its own account in exchange
for Securities, it represents that the Securities to be exchanged for New
Securities were acquired by it as a result of market-making activities or other
trading activities and acknowledges that it will deliver a prospectus in
connection with any resale of such New Securities; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
Exhibit 4.28
[FACE OF BOND]
THIS BOND HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE
ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS BOND IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"), (2)
BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH BOND,
BEFORE THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS BOND (OR ANY
PREDECESSOR OF SUCH BOND), ONLY (A) TO THE COMPANY, (B) UNDER A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE BONDS ARE ELIGIBLE FOR RESALE UNDER RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) UNDER OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT OR (E) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT BEFORE ANY SUCH OFFER, SALE OR TRANSFER UNDER CLAUSES (D) OR
(E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED AFTER 40
CONSECUTIVE DAYS BEGINNING ON AND INCLUDING THE LATER OF (A) THE DAY ON WHICH
THE BONDS ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN
REGULATION S) AND (B) THE DATE OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT./1/
- --------
/1/ The above restrictions will not apply to any security on or after the
"Resale Restriction Termination Date" applicable to such Bond, or with respect
to any Bond which has been sold or otherwise transferred pursuant to Rule 144A
or a registration statement which has been declared effective under the
Securities Act. "Resale Restriction Termination Date" shall mean the date on
which the holding period under Rule 144(k) under the Securities Act expires with
respect to such Bond. Any Bond issued on or after the Resale Restriction
Termination Date need not contain this legend.
THIS BOND IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.
THIS BOND MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A BOND REGISTERED, AND NO
TRANSFER OF THIS BOND IN WHOLE OR IN PART MAY BE REGISTERED IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY BOND ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
2
CUSIP No. U95627 AA 0
WESTERN RESOURCES, INC.
(Incorporated under the laws of the State of Kansas)
$365,000,000 FIRST MORTGAGE BOND, 7 7/8% SERIES DUE 2007
DUE May 1, 2007
No. S-1 $2,585,000
WESTERN RESOURCES, INC., a corporation organized and existing under the
laws of the State of Kansas (hereinafter called the "Company", which term shall
include any successor corporation as defined in the Indenture as defined on the
reverse hereof and hereinafter referred to), for value received, hereby promises
to pay to CEDE & CO., or registered assigns, on the 1st day of May, 2007, the
sum of TWO MILLION FIVE HUNDRED EIGHTY FIVE THOUSAND ($2,585,000) in any coin or
currency of the United States of America which at the time of payment is legal
tender for public and private debts, and to pay interest thereon in like coin or
currency from the first day of May or November next preceding the date of this
Bond (as defined on the reverse hereof) next preceding the date thereof, unless
no interest has been paid on this Bond, in which case from May 10, 2002, at the
rate of seven and seven-eighths percent (7 7/8%) per annum, payable
semiannually, on the first days of May and November in each year, commencing
November 1, 2002, until maturity, or, if this Bond shall be duly called for
redemption or submitted for repurchase, until the redemption date or repurchase
date, as the case may be, or, if the Company shall default in the payment of the
principal or premium hereof, until, the Company's obligation with respect to the
payment of such principal or premium shall be discharged as provided in the
Indenture hereinafter mentioned. The interest payable on any interest payment
date as aforesaid will be paid to the person in whose name this Bond is
registered at the close of business on the tenth day next preceding such
interest payment date, or if such tenth day is not a business day, the business
day next preceding such tenth day (the "record date"), unless the Company shall
default in the payment of the interest due on such interest payment date, in
which case such defaulted interest shall be paid to the person in whose name
this Bond is registered on the date of payment of such defaulted interest.
Principal of, premium on, if any, and interest on, this Bond are payable at the
agency of the Company in the City of Chicago, Illinois in immediately available
funds, or at the option of the holder thereof at the agency of the Company in
the Borough of Manhattan, The City of New York, provided that at the option of
the Company interest may be paid by check mailed to the holder at such holder's
registered address.
The person in whose name this Bond is registered is entitled to the
benefits of a Registration Rights Agreement, dated as of May 10, 2002, among the
Company and the Initial Purchasers named therein (the "Registration Agreement").
Capitalized terms used in this paragraph but not defined herein have the
meanings assigned to them in the Registration
3
Agreement. In the event that (i) neither the Exchange Offer Registration
Statement nor the Shelf Registration Statement has been filed with the
Commission on or prior to the 180th day following the date of the original
issuance of the Bond, (ii) the Exchange Offer Registration Statement has not
been declared effective on or prior to the 270th day following the date of the
original issuance of the Bond, (iii) neither the Registered Exchange Offer has
been consummated nor the Shelf Registration Statement has been declared
effective on or prior to the 315th day following the date of the original
issuance of the Bond, or (iv) after either the Exchange Offer Registration
Statement or the Shelf Registration Statement has been declared effective, such
Registration Statement thereafter ceases to be effective or usable (subject to
certain exceptions) in connection with resales of the Bond in accordance with
and during the periods specified in the Registration Agreement (each such event
referred to in clauses (i) through (iv) above being referred to herein as
"Registration Default"), interest (the "Special Interest") shall accrue (in
addition to stated interest on the Bonds from and including the date on which
the first such Registration Default shall occur to but excluding the date on
which all Registration Defaults have been cured, at a rate per annum equal to
0.50% of the principal amount of the Bonds. Special Interest, if any, will be
payable in cash on each interest payment date to the persons in whose name this
Bond is registered on the applicable record date as provided above.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH
ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Bond shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
4
IN WITNESS WHEREOF, WESTERN RESOURCES, INC. has caused this Bond to be
signed in its name by its Chairman of the Board, President and Chief Executive
Officer or a Vice President, manually or by facsimile, and its corporate seal
(or a facsimile thereof) to be hereto affixed and attested by its Secretary or
an Assistant Secretary, manually or by facsimile.
Dated:
WESTERN RESOURCES, INC.
By /s/ Paul R. Geist
-----------------------------
Paul R. Geist
Senior Vice President and Chief Financial
Officer
Attest:
/s/ Larry D. Irick
- ---------------------------------
Larry D. Irick
Vice President, Corporate Secretary
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds, of the series designated herein, described
in the within-mentioned Mortgage and Deed of Trust of July 1, 1939 and
Supplemental Indenture dated as of May 10, 2002.
BNY MIDWEST TRUST COMPANY
As Trustee
By /s/ Judy Bartolini
-----------------------------
5
[REVERSE SIDE OF BOND]
This Bond is one of a duly authorized issue of Bonds of the Company (herein
called the "Bonds"), in unlimited aggregate principal amount, of the series
hereinafter specified, all issued and to be issued under and equally secured by
a Mortgage and Deed of Trust, dated July 1, 1939, executed by the Company to BNY
Midwest Trust Company (herein called the "Trustee"), as Trustee (as successor to
Harris Trust and Savings Bank), as amended by the indentures supplemental
thereto including the thirty-fifth indenture supplemental thereto dated as of
May 10, 2002 (herein called the "Supplemental Indenture"), between the Company
and the Trustee (said Mortgage and Deed of Trust, as so amended, being herein
called the "Indenture"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a description of the properties mortgaged
and pledged, the nature and extent of the security, the rights of the bearers or
registered owners of the Bonds and of the Trustee in respect thereto, and the
terms and conditions upon which the Bonds are, and are to be, secured. The Bonds
may be issued in series, for various principal sums, may mature at different
times, may bear interest at different rates and may otherwise vary as in the
Indenture provided. This Bond is one of a series designated as the "$365,000,000
First Mortgage Bonds, 7 7/8% Series Due 2007" (herein called "Bonds of the 2007
Series") of the Company, issued under and secured by the Indenture executed by
the Company to the Trustee.
To the extent permitted by, and as provided in the Indenture, modifications
or alterations of the Indenture or of any indenture supplemental thereto, and of
the rights and obligations of the Company and of the holders of the Bonds and
coupons, may be made with the consent of the Company by an affirmative vote of
not less than 60% in principal amount of the Bonds entitled to vote then
outstanding, at a meeting of Bondholders called and held as provided in the
Indenture, and by an affirmative vote of not less than 60% in principal amount
of the Bonds of any series entitled to vote then outstanding and affected by
such modification or alteration, in case one or more but less than all of the
series of Bonds then outstanding under the Indenture are so affected. No
modification or alteration shall be made which will affect the terms of payment
of the principal of or premium, if any, or interest on, this Bond, which are
unconditional. The Company has reserved the right to make certain amendments to
the Indenture, without any consent or other action by holders of the Bonds of
this series (i) to the extent necessary from time to time to qualify the
Indenture under the Trust Indenture Act of 1939, (ii) to delete the requirement
that the Company meet a net earnings test as a condition to authenticating
additional Bonds or merging into another company and (iii) to make certain other
amendments which make the provisions for the release of mortgaged property less
restrictive, all as more fully provided in the Indenture and in the Supplemental
Indenture. In addition, once all Bonds issued prior to January 1, 1997 are no
longer outstanding, the Company will be permitted to issue additional Bonds in
an amount equal to 70% of the value of net bondable property additions not
subject to an unfunded prior lien, as provided in the Original Indenture.
This Bond is subject to redemption at any time and from time to time prior
to maturity at the option of the Company at a price determined as provided in
the Supplemental Indenture. Such redemption in every case shall be effected upon
notice given by: (1) first class mail, postage prepaid, at least thirty days and
not more than sixty days prior to the redemption date, to the registered owners
of such Bonds at their addresses as the same shall appear on the transfer
register of the Company; and (2) stating, among other things, the redemption
price and date, in each case, subject to the conditions of and as more fully set
forth in the Indenture.
Upon the occurrence of a Change of Control (as defined in the Supplemental
Indenture), each holder of the Bonds shall have the right to require the Company
to repurchase all or any part of such holder's Bonds at a purchase price equal
to 101% of the principal, plus accrued and unpaid interest, if any, to the
purchase date as provided in the Supplemental Indenture. Within 30 days
following any Change of Control, the Company shall cause a notice of the Change
of Control Offer to be delivered in accordance with the procedures set forth in
the Supplemental Indenture.
In case an event of default, as defined in the Indenture, shall occur, the
principal of all of the Bonds at any such time outstanding under the Indenture
may be declared or may become due and payable, upon the conditions and in the
manner and with the effect provided in the Indenture. The Indenture provides
that such declaration may in certain events be waived by the holders of a
majority in principal amount of the Bonds outstanding.
This Bond is transferable by the registered owner hereof, in person or by
duly authorized attorney, on the books of the Company to be kept for that
purpose at the agency of the Company in the City of Chicago, Illinois, and at
the agency of the Company in the Borough of Manhattan, The City of New York,
upon surrender and cancellation of this Bond and on presentation of a duly
executed written instrument of transfer, and thereupon a new registered Bond or
Bonds of the same series, of the same aggregate principal amount and in
authorized denominations will be issued to the transferee or transferees in
exchange herefor; and this Bond, with or without others of like form and series,
may in like manner be exchanged for one or more new registered Bonds of the same
series of other authorized denominations but of the same aggregate principal
amount; all upon payment of the charges and subject to the terms and conditions
set forth in the Indenture.
No recourse shall be had for the payment of the principal of or premium, if
any, or interest on this Bond, or for any claim based hereon or on the Indenture
or any indenture supplemental thereto, against any incorporator, or against any
stockholder, director or officer, past, present or future, of the Company, or of
any predecessor or successor corporation, as such, either directly or through
the Company or any such predecessor or successor corporation, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability, whether at common law,
in equity, by any constitution, statute or otherwise, of incorporators,
stockholders, directors or officers being released by every owner hereof by the
acceptance of this Bond and as part of the consideration for the issue hereof,
and being likewise released by the terms of the Indenture.
No director, officer, employee or stockholder of the Company will have any
liability for any obligations of the Company under the Bonds or Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder by accepting a Bond waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Bonds. The waiver may not be effective to waive liabilities under the
federal securities laws. It is the view of the Securities and Exchange
Commission that this type of waiver is against public policy.
7
This Bond shall not be entitled to any benefit under the Indenture or any
indenture supplemental thereto, or become valid or obligatory for any purpose,
until BNY Midwest Trust Company, the Trustee (as successor to Harris Trust and
Savings Bank) under the Indenture, or a successor trustee thereto under the
Indenture, shall have signed the form of certificate endorsed hereon.
Customary abbreviations may be used in the name of a Bondholder or an
assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with right of survivorship and not as tenants
in common), CUST (=custodian), and U/G/M/A (=Uniform Gifts to Minors Act).
The Company will furnish to any Bondholder upon written request and without
charge a copy of the Indenture, which contains the text of this Bond in larger
type. Requests may be made to: Western Resources, Inc., 818 Kansas Avenue,
Topeka, Kansas, Attention: Corporate Secretary.
ASSIGNMENT FORM
To assign this Bond, fill in the form below:
I or we assign and transfer this Bond to
---------------------------------------
---------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
- ---------------------------------------------------------------------- ---------
- ---------------------------------------------------------------------- ---------
- ---------------------------------------------------------------------- ---------
- ---------------------------------------------------------------------- ---------
and irrevocably appoint agent to transfer this Bond
on the books of the Company. The agent may substitute another to act for him.
Date: Your Signature:
--------------- --------------------------------- ---------
--------------------------------- ---------
(Sign exactly as your name appears on the other side of this Bond)
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER RESTRICTED SECURITIES
This certificate relates to $ principal amount of $365,000,000 First
Mortgage Bonds, 7 7/8% Series Due 2007 held in (check applicable space)
book-entry or definitive form by the undersigned.
The undersigned has requested the Trustee by written order to exchange or
register the transfer of a Bond or Bonds.
In connection with any transfer of any of the Bonds evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Bonds are
being transferred in accordance with its terms:
CHECK ONE BOX BELOW
1. [ ] to the Company; or
1. [ ] to the Securities Registrar for the registration in the name
of the Holder, without transfer; or
1. [ ] inside the United States to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933) that purchases for
its own account or for the account of a qualified institutional buyer to whom
notice is given that such transfer is being made in reliance on Rule 144A, in
each case pursuant to and in compliance with Rule 144A under the Securities Act
of 1933; or
1. [ ] outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act of 1933 in compliance with
Rule 904 under the Securities Act of 1933 and such Bond shall be held
immediately after the transfer through Euroclear and Clearstream until the
expiration of the Restricted Period (as defined in the Indenture); or
1. [ ] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Bonds evidenced by this certificate in the name of any
Person other than the registered holder thereof; provided, however,
that if box (4) or (5) is checked, the Company and the Trustee may
require, prior to registering any such transfer of the Bonds, such
legal opinions, certifications and other information as the Company and
the Trustee have reasonably requested to confirm that such transfer is
being made pursuant to an exemption from or in a transaction not
subject to, the registration requirements of the Securities Act of
1933.
- ---------------------------------------------------------------------- ---------
------------------------------- ---------
Your Signature
- ---------------------------------------------------------------------- ---------
Signature Guarantee:
- ---------------------------------------------------------------------- ---------
Date:
---------------------------- ------------------------------- ---------
Signature must be guaranteed by a Signature of Signature
participant in a recognized signature Guarantor
guaranty medallion program or other
signature guarantor acceptable to the
Trustee
- ---------------------------------------------------------------------- ---------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Bond for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided Rule 144A.
Dated:
--------------------------- ------------------------------- ---------
NOTICE: To be executed by an
executive officer
EXHIBIT 5.1
OPINION OF LARRY D. IRICK, ESQ.
July [_], 2002
Westar Energy, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Re: $400,000,000 Senior Notes, 9 3/4% Series Due 2007, of
Westar Energy, Inc.
Ladies and Gentlemen:
I am Vice President and Corporate Secretary of, and have acted as
counsel for, Westar Energy, Inc., formerly known as Western Resources, Inc.,
(the "Company") in connection with the exchange by the Company of up to
$400,000,000 principal amount of its Senior Notes, 9-3/4 % Series Due 2007 (the
"Exchange Notes") for a like principal amount of the Company's issued and
outstanding Senior Notes, 9-3/4 % Series Due 2007 (the "Outstanding Notes").
I have reviewed and examined such records, documents, certificates and
other instruments and provisions of law as I have considered necessary or
desirable in order to enable me to render this opinion.
Upon the basis aforesaid, I hereby advise you as follows:
1. The Company is a corporation duly organized and validly existing
under the laws of the state of Kansas.
-2-
2. The Exchange Notes are to be issued pursuant to an Indenture dated
as of August 1, 1998 (the "Indenture,") between the Company and Deutsche Bank
Trust Company Americas (the "Notes Trustee"), and a Securities Resolution dated
as of May 10, 2002 (the "Securities Resolution,") creating the Exchange Notes.
The Indenture and the Securities Resolution have each been duly authorized,
executed and delivered and is a valid instrument legally binding upon the
Company.
3. Upon execution of the Exchange Notes by the proper officers of the
Company and the authentication thereof by the Notes Trustee in accordance with
the provision of the Indenture and the Securities Resolution, the Exchange Notes
will be duly authorized and issued and will constitute the legal, valid and
binding obligations of the Company and will be entitled to the benefits of the
Indenture except that (x) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights or remedies generally; (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought (regardless of whether enforcement is sought in a
proceeding at law or in equity); and (iii) any indemnification or contribution
provision that may be contrary to or inconsistent with public policy, and (y)
the enforceability of provisions imposing liquidated damages, penalties or an
increase in interest rate upon the occurrence of certain events may be limited
in certain circumstances.
I hereby consent to the filing of a copy of this opinion as an exhibit
to said Registration Statement. I also consent to the use of my name and the
making of the statements with respect to myself in the Registration Statement
and the Prospectus constituting a part thereof.
Very truly yours,
/s/ Larry D. Irick
-----------------------------
Larry D. Irick
EXHIBIT 5.2
OPINION OF LARRY D. IRICK, ESQ.
July [_], 2002
Westar Energy, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Re: $365,000,000 First Mortgage Bonds,
7 7/8% Series Due 2007, of Westar Energy, Inc.
Ladies and Gentlemen:
I am Vice President and Corporate Secretary of, and have acted as
counsel for, Westar Energy, Inc., formerly known as Western Resources, Inc.,
(the "Company") in connection with the exchange by the Company of up to
$365,000,000 principal amount of its First Mortgage Bonds, 7-7/8 % Series Due
2007 (the "Exchange Bonds") for a like principal amount of the Company's issued
and outstanding First Mortgage Bonds, 7-7/8 % Series Due 2007 (the "Outstanding
Bonds").
I have reviewed and examined such records, documents, certificates and
other instruments and provisions of law as I have considered necessary or
desirable in order to enable me to render this opinion.
Upon the basis aforesaid, I hereby advise you as follows:
1. The Company is a corporation duly organized and validly existing
under the laws of the state of Kansas.
-2-
2. The Exchange Bonds are to be issued under and secured by the
Mortgage and Deed of Trust, dated July 1, 1939, between the Company and BNY
Midwest Trust Company (the "Bonds Trustee"), as amended and supplemented by
thirty-four supplemental indentures thereto (such Mortgage and Deed of Trust, as
amended and supplemented by such thirty-four supplemental indentures, being
hereinafter called the "Mortgage"), and as further amended and supplemented by a
Thirty-Fifth Supplemental Indenture, dated as of May 10, 2002, (the
"Thirty-Fifth Supplemental Indenture") (the Mortgage, as amended and
supplemented by the Thirty-Fifth Supplemental Indenture, being hereinafter
called the "Amended Mortgage"). The Amended Mortgage has been duly authorized,
executed and delivered and is a valid instrument legally binding upon the
Company.
3. Upon execution of the Exchange Bonds by the proper officers of the
Company and the authentication thereof by the Trustee in accordance with the
provision of the Amended Mortgage, the Exchange Bonds will be duly authorized
and issued and will constitute the legal, valid and binding obligations of the
Company and will be entitled to the lien of and the benefits provided by the
Amended Mortgage except that (x) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights or remedies generally; (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought (regardless of whether enforcement is sought in a
proceeding at law or in equity); and (iii) any indemnification or contribution
provision that may be contrary to or inconsistent with public policy, and (y)
the enforceability of provisions imposing liquidated damages, penalties or an
increase in interest rate upon the occurrence of certain events may be limited
in certain circumstances.
I hereby consent to the filing of a copy of this opinion as an exhibit
to said Registration Statement. I also consent to the use of my name and the
making of the statements with respect to myself in the Registration Statement
and the Prospectus constituting a part thereof.
Very truly yours,
/s/ Larry D. Irick
-------------------------
Larry D. Irick
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
---------------------------
BNY MIDWEST TRUST COMPANY
(formerly known as CTC Illinois Trust Company)
(Exact name of trustee as specified in its charter)
Illinois 36-3800435
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
2 North LaSalle Street
Suite 1020
Chicago, Illinois 60602
(Address of principal executive offices) (Zip code)
---------------------------
WESTERN RESOURCES, INC.
(Exact name of obligor as specified in its charter)
Kansas 48-0290150
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
818 South Kansas Avenue
Topeka, Kansas 66612
(Address of principal executive offices) (Zip code)
---------------------------
First Mortgage Bonds, 7-7/8% Series Due 2007
(Title of the indenture securities)
================================================================================
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Office of Banks & Trust Companies of 500 E. Monroe Street
the State of Illinois Springfield, Illinois 62701-1532
Federal Reserve Bank of Chicago 230 S. LaSalle Street
Chicago, Illinois 60603
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of Articles of Incorporation of BNY Midwest Trust Company
(formerly CTC Illinois Trust Company, formerly Continental Trust
Company) as now in effect. (Exhibit 1 to Form T-1 filed with the
Registration Statement No. 333-47688.)
2,3. A copy of the Certificate of Authority of the Trustee as now in
effect, which contains the authority to commence business and a grant
of powers to exercise corporate trust powers. (Exhibit 2 to Form T-1
filed with the Registration Statement No. 333-47688.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with the Registration Statement No. 333-47688.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with the Registration Statement No.
333-47688.)
-2-
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, BNY Midwest Trust
Company, a corporation organized and existing under the laws of the State of
Illinois, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of
Chicago, and State of Illinois, on the 19th day of June, 2002.
BNY Midwest Trust Company
By: /s/ JUDY BARTOLINI
----------------------------------
Name: JUDY BARTOLINI
Title: VICE PRESIDENT
-4-
OFFICE OF BANKS AND REAL ESTATE
Bureau of Banks and Trust Companies
CONSOLIDATED REPORT OF CONDITION
OF
BNY Midwest Trust Company
209 West Jackson Boulevard
Suite 700
Chicago, Illinois 60606
Including the institution's domestic and foreign subsidiaries completed as of
the close of business on December 31, 2001, submitted in response to the call of
the Office of Banks and Real Estate of the State of Illinois.
ASSETS Thousands of Dollars
------ --------------------
1. Cash and Due from Depository Institutions .......... 11,694
2. U.S. Treasury Securities ........................... -0-
3. Obligations of States and Political Subdivisions ... -0-
4. Other Bonds, Notes and Debentures .................. -0-
5. Corporate Stock .................................... -0-
6. Trust Company Premises, Furniture, Fixtures and
Other Assets Representing Trust Company
Premises ........................................... 363
7. Leases and Lease Financing Receivables ............. -0-
8. Accounts Receivable ................................ 4,004
9. Other Assets .......................................
(Itemize amounts greater than 15% of Line 9)
Intangible Asset - Goodwill ............86,813
86,882
10. TOTAL ASSETS ....................................... 102,943
Page 1 of 3
OFFICE OF BANKS AND REAL ESTATE
Bureau of Banks and Trust Companies
CONSOLIDATED REPORT OF CONDITION
OF
BNY Midwest Trust Company
209 West Jackson Boulevard
Suite 700
Chicago, Illinois 60606
LIABILITIES Thousands of Dollars
----------- --------------------
11. Accounts Payable ................................... -0-
12. Taxes Payable ...................................... -0-
13. Other Liabilities for Borrowed Money ............... 25,425
14. Other Liabilities ..................................
(Itemize amounts greater than 15% of Line 14)
Reserve for Taxes ......................3,128
Taxes due to Parent Company ............1,923
Accrued Expenses .......................1,058
6,156
15. TOTAL LIABILITIES 31,581
EQUITY CAPITAL
--------------
16. Preferred Stock .................................... -0-
17. Common Stock ....................................... 2,000
18. Surplus ............................................ 62,130
19. Reserve for Operating Expenses ..................... -0-
20. Retained Earnings (Loss) ........................... 7,232
21. TOTAL EQUITY CAPITAL ............................... 71,362
22. TOTAL LIABILITIES AND EQUITY CAPITAL ............... 102,943
Page 2 of 3
I, Robert L. De Paola, Vice President
-----------------------------------------------------------------------------
(Name and Title of Officer Authorized to Sign Report)
of BNY Midwest Trust Company certify that the information contained in this
statement is accurate to the best of my knowledge and belief. I understand that
submission of false information with the intention to deceive the Commissioner
or his Administrative officers is a felony.
Robert L. DePaola
---------------------------------------------------
(Signature of Officer Authorized to Sign Report)
Sworn to and subscribed before me is 13/th/ day of February , 2002.
My Commission expires May 15, 2003.
Joseph A. Giacobino, Notary Public
-------------------
(Notary Seal)
Person to whom Supervisory Staff should direct questions concerning this report.
Christine Anderson (212) 503-4204
- --------------------------------------- ---------------------------------------
Name Telephone Number (Extension)
Page 3 of 3
EXHIBIT 25.2
-------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF
1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)
--------------------
DEUTSCHE BANK TRUST COMPANY AMERICAS
(formerly BANKERS TRUST COMPANY)
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
60 WALL STREET
NEW YORK, NEW YORK 10005
(Address of principal (Zip Code)
executive offices)
Deutsche Bank Trust Company Americas
Attention: Will Christoph
Legal Department
1301 6/th/ Avenue, 8/th/ Floor
New York, New York 10019
(212) 469-0378
(Name, address and telephone number of agent for service)
-------------------------------------
Westar Energy, Inc.
(Exact name of Registrant as specified in its charter)
Kansas 4931 48-0290150
(State or other jurisdiction (Primary Standard (IRS Employer
of incorporation or organization) Industrial Identification No.)
Classification Code
Number
Larry D. Irick, Esq.
Vice President and Corporate Secretary
Westar Energy, Inc
818 South Kansas Avenue
Topeka, Kansas 66612
(785) 575-6300
(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)
Debt Securities
(Title of the Indenture securities)
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
Name Address
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
Item 3. - 15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers Trust
Company dated August 6, 1998, Certificate of Amendment
of the Organization Certificate of Bankers Trust
Company dated September 25, 1998, and Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated December 16, 1998, copies attached.
Exhibit 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise corporate
trust powers - Incorporated herein by reference to
Exhibit 2 filed with Form T-1 Statement, Registration
No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust Company, as amended
on April 15, 2002. Copy attached.
-2-
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. - Incorporated herein by reference
to Exhibit 4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - The latest report of condition of Bankers Trust Company
dated as of March 31, 2002. Copy attached.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Deutsche Bank Trust Company Americas, a corporation
organized and existing under the laws of the State of New York, has duly caused
this statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State of New York,
on this 24/th/ day of June, 2002.
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: _______________________________
Susan Johnson
Vice President
-4-
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Deutsche Bank Trust Company Americas, a corporation
organized and existing under the laws of the State of New York, has duly caused
this statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State of New York,
on this 24/th/ day of June 2002.
DEUTSCHE BANK TRUST COMPANY AMERICAS
/s/ Susan Johnson
-----------------
By: Susan Johnson
Vice President
-5-
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated September 16, 1998, providing for an increase in
authorized capital stock from $3,001,666,670 consisting of 200,166,667 shares
with a par value of $10 each designated as Common Stock and 1,000 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$3,501,666,670 consisting of 200,166,667 shares with a par value of $10 each
designated as Common Stock and 1,500 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York,
this 25th day of September in the Year of our Lord
--------- ----------------
one thousand nine hundred and ninety-eight.
Manuel Kursky
-----------------------------------
Deputy Superintendent of Banks
RESTATED
ORGANIZATION
CERTIFICATE
OF
BANKERS TRUST COMPANY
----------------------------
Under Section 8007
Of the Banking Law
----------------------------
Bankers Trust Company
1301 6/th/ Avenue, 8/th/ Floor
New York, N.Y. 10019
Counterpart Filed in the Office of the Superintendent of Banks,
State of New York, August 31, 1998
RESTATED ORGANIZATION CERTIFICATE
OF
BANKERS TRUST
Under Section 8007 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary and a Vice President and an Assistant
Secretary of BANKERS TRUST COMPANY, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of the corporation was filed by
the Superintendent of Banks of the State of New York on March 5, 1903.
3. The text of the organization certificate, as amended
heretofore, is hereby restated without further amendment or change to read as
herein-set forth in full, to wit:
"Certificate of Organization
of
Bankers Trust Company
Know All Men By These Presents That we, the undersigned, James A. Blair,
James G. Cannon, E. C. Converse, Henry P. Davison, Granville W. Garth, A. Barton
Hepburn, Will Logan, Gates W. McGarrah, George W. Perkins, William H. Porter,
John F. Thompson, Albert H. Wiggin, Samuel Woolverton and Edward F. C. Young,
all being persons of full age and citizens of the United States, and a majority
of us being residents of the State of New York, desiring to form a corporation
to be known as a Trust Company, do hereby associate ourselves together for that
purpose under and pursuant to the laws of the State of New York, and for such
purpose we do hereby, under our respective hands and seals, execute and duly
acknowledge this Organization Certificate in duplicate, and hereby specifically
state as follows, to wit:
I. The name by which the said corporation shall be known is
Bankers Trust Company.
II. The place where its business is to be transacted is the City of
New York, in the State of New York.
III. Capital Stock: The amount of capital stock which the
corporation is hereafter to have is Three Billion One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars ($3,001,666,670), divided into
Two Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(200,166,667) shares with a par value of $10 each designated as Common Stock and
1,000 shares with a par value of One Million Dollars ($1,000,000) each
designated as Series Preferred Stock.
(a) Common Stock
1. Dividends: Subject to all of the rights of the Series Preferred
Stock, dividends may be declared and paid or set apart for payment upon the
Common Stock out of any assets or funds of the corporation legally available for
the payment of dividends.
2. Voting Rights: Except as otherwise expressly provided with
respect to the Series Preferred Stock or with respect to any series of the
Series Preferred Stock, the Common Stock shall have the exclusive right to vote
for the election of directors and for all other purposes, each holder of the
Common Stock being entitled to one vote for each share thereof held.
3. Liquidation: Upon any liquidation, dissolution or winding up
of the corporation, whether voluntary or involuntary, and after the holders of
the Series Preferred Stock of each series shall have been paid in full the
amounts to which they respectively shall be entitled, or a sum sufficient for
the payment in full set aside, the remaining net assets of the corporation shall
be distributed pro rata to the holders of the Common Stock in accordance with
their respective rights and interests, to the exclusion of the holders of the
Series Preferred Stock.
4. Preemptive Rights: No holder of Common Stock of the corporation shall
be entitled, as such, as a matter of right, to subscribe for or purchase any
part of any new or additional issue of stock of any class or series whatsoever,
any rights or options to purchase stock of any class or series whatsoever, or
any securities convertible into, exchangeable for or carrying rights or options
to purchase stock of any class or series whatsoever, whether now or hereafter
authorized, and whether issued for cash or other consideration, or by way of
dividend or other distribution.
(b) Series Preferred Stock
1. Board Authority: The Series Preferred Stock may be issued from
time to time by the Board of Directors as herein provided in one or more series.
The designations, relative rights, preferences and limitations of the Series
Preferred Stock, and particularly of the shares of each series thereof, may, to
the extent permitted by law, be similar to or may differ from those of any other
series. The Board of Directors of the corporation is hereby expressly granted
authority, subject to the provisions of this Article III, to issue from time to
time Series Preferred Stock in one or more series and to fix from time to time
before issuance thereof, by filing a certificate pursuant to the Banking Law,
the number of shares in each such series of such class and all designations,
relative rights (including the right, to the extent permitted by law, to convert
into shares of any class or into shares of any series of any class), preferences
and limitations of the shares in each such series, including, buy without
limiting the generality of the foregoing, the following:
(i) The number of shares to constitute such series (which
number may at any time, or from time to time, be increased or decreased
by the Board of Directors, notwithstanding that shares of the series
may be outstanding at the time of such increase or decrease, unless the
Board of Directors shall have otherwise provided in creating such
series) and the distinctive designation thereof;
(ii) The dividend rate on the shares of such series,
whether or not dividends on the shares of such series shall be
cumulative, and the date or dates, if any, from which dividends thereon
shall be cumulative;
(iii) Whether or not the share of such series shall be
redeemable, and, if redeemable, the date or dates upon or after which
they shall be redeemable, the amount or amounts per share (which shall
be, in the case of each share, not less than its preference upon
involuntary liquidation, plus an amount equal to all dividends thereon
accrued and unpaid, whether or not earned or declared) payable thereon
in the case of the redemption thereof, which amount may vary at
different redemption dates or otherwise as permitted by law;
(iv) The right, if any, of holders of shares of such series to
convert the same into, or exchange the same for, Common Stock or other
stock as permitted by law, and the terms and conditions of such
conversion or exchange, as well as provisions for adjustment of the
conversion rate in such events as the Board of Directors shall
determine;
(v) The amount per share payable on the shares of such
series upon the voluntary and involuntary liquidation, dissolution or
winding up of the corporation;
(vi) Whether the holders of shares of such series shall
have voting power, full or limited, in addition to the voting powers
provided by law and, in case additional voting powers are accorded, to
fix the extent thereof; and
(vii) Generally to fix the other rights and privileges and
any qualifications, limitations or restrictions of such rights and
privileges of such series, provided, however, that no such rights,
privileges, qualifications, limitations or restrictions shall be in
conflict with the organization certificate of the corporation or with
the resolution or resolutions adopted by the Board of Directors
providing for the issue of any series of which there are shares
outstanding.
All shares of Series Preferred Stock of the same series shall be
identical in all respects, except that shares of any one series issued at
different times may differ as to dates, if any, from which dividends thereon may
accumulate. All shares of Series Preferred Stock of all series shall be of equal
rank and shall be identical in all respects except that to the extent not
otherwise limited in this Article III any series may differ from any other
series with respect to any one or more of the designations, relative rights,
preferences and limitations described or referred to in subparagraphs (I) to
(vii) inclusive above.
2. Dividends: Dividends on the outstanding Series Preferred Stock
of each series shall be declared and paid or set apart for payment before any
dividends shall be declared and paid or set apart for payment on the Common
Stock with respect to the same quarterly dividend period. Dividends on any
shares of Series Preferred Stock shall be cumulative only if and to the extent
set forth in a certificate filed pursuant to law. After dividends on all shares
of Series Preferred Stock (including cumulative dividends if and to the extent
any such shares shall be entitled thereto) shall have been declared and paid or
set apart for payment with respect to any quarterly dividend period, then and
not otherwise so long as any shares of Series Preferred Stock shall remain
outstanding, dividends may be declared and paid or set apart for payment with
respect to the same quarterly dividend period on the Common Stock out the assets
or funds of the corporation legally available therefor.
All Shares of Series Preferred Stock of all series shall be of equal
rank, preference and priority as to dividends irrespective of whether or not the
rates of dividends to which the same shall be entitled shall be the same and
when the stated dividends are not paid in full, the shares of all series of the
Series Preferred Stock shall share ratably in the payment thereof in accordance
with the sums which would be payable on such shares if all dividends were paid
in full, provided, however, that any two or more series of the Series Preferred
Stock may differ from each other as to the existence and extent of the right to
cumulative dividends, as aforesaid.
3. Voting Rights: Except as otherwise specifically provided in
the certificate filed pursuant to law with respect to any series of the Series
Preferred Stock, or as otherwise provided by law, the Series Preferred Stock
shall not have any right to vote for the election of directors or for any other
purpose and the Common Stock shall have the exclusive right to vote for the
election of directors and for all other purposes.
4. Liquidation: In the event of any liquidation, dissolution or
winding up of the corporation, whether voluntary or involuntary, each series of
Series Preferred Stock shall have preference and priority over the Common Stock
for payment of the amount to which each outstanding series of Series Preferred
Stock shall be entitled in accordance with the provisions thereof and each
holder of Series Preferred Stock shall be entitled to be paid in full such
amount, or have a sum sufficient for the payment in full set aside, before any
payments shall be made to the holders of the Common Stock. If, upon liquidation,
dissolution or winding up of the corporation, the assets of the corporation or
proceeds thereof, distributable among the holders of the shares of all series of
the Series Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid, then such assets, or the proceeds thereof, shall be
distributed among such holders ratably in accordance with the respective amounts
which would be payable if all amounts payable thereon were paid in full. After
the payment to the holders of Series Preferred Stock of all such amounts to
which they are entitled, as above provided, the remaining assets and funds of
the corporation shall be divided and paid to the holders of the Common Stock.
5. Redemption: In the event that the Series Preferred Stock of any series
shall be made redeemable as provided in clause (iii) of paragraph 1 of section
(b) of this Article III, the corporation, at the option of the Board of
Directors, may redeem at any time or times, and from time to time, all or any
part of any one or more series of Series Preferred Stock outstanding by paying
for each share the then applicable redemption price fixed by the Board of
Directors as provided herein, plus an amount equal to accrued and unpaid
dividends to the date fixed for
redemption, upon such notice and terms as may be specifically provided in the
certificate filed pursuant to law with respect to the series.
6. Preemptive Rights: No holder of Series Preferred Stock of the
corporation shall be entitled, as such, as a matter or right, to subscribe for
or purchase any part of any new or additional issue of stock of any class or
series whatsoever, any rights or options to purchase stock of any class or
series whatsoever, or any securities convertible into, exchangeable for or
carrying rights or options to purchase stock of any class or series whatsoever,
whether now or hereafter authorized, and whether issued for cash or other
consideration, or by way of dividend.
(c) Provisions relating to Floating Rate Non-Cumulative Preferred
Stock, Series A. (Liquidation value $1,000,000 per share.)
1. Designation: The distinctive designation of the series
established hereby shall be "Floating Rate Non-Cumulative Preferred Stock,
Series A" (hereinafter called "Series A Preferred Stock").
2. Number: The number of shares of Series A Preferred Stock
shall initially be 250 shares. Shares of Series A Preferred Stock redeemed,
purchased or otherwise acquired by the corporation shall be cancelled and shall
revert to authorized but unissued Series Preferred Stock undesignated as to
series.
3. Dividends:
(a) Dividend Payments Dates. Holders of the Series A Preferred
Stock shall be entitled to receive non-cumulative cash dividends when, as and if
declared by the Board of Directors of the corporation, out of funds legally
available therefor, from the date of original issuance of such shares (the
"Issue Date") and such dividends will be payable on March 28, June 28, September
28 and December 28 of each year ("Dividend Payment Date") commencing September
28, 1990, at a rate per annum as determined in paragraph 3(b) below. The period
beginning on the Issue Date and ending on the day preceding the first Dividend
Payment Date and each successive period beginning on a Dividend Payment Date and
ending on the date preceding the next succeeding Dividend Payment Date is herein
called a "Dividend Period". If any Dividend Payment Date shall be, in The City
of New York, a Sunday or a legal holiday or a day on which banking institutions
are authorized by law to close, then payment will be postponed to the next
succeeding business day with the same force and effect as if made on the
Dividend Payment Date, and no interest shall accrue for such Dividend Period
after such Dividend Payment Date.
(b) Dividend Rate. The dividend rate from time to time payable in
respect of Series A Preferred Stock (the "Dividend Rate") shall be determined on
the basis of the following provisions:
(i) On the Dividend Determination Date, LIBOR will be determined
on the basis of the offered rates for deposits in U.S. dollars having a maturity
of three months commencing on the second London Business Day immediately
following such Dividend Determination Date, as such rates appear on the Reuters
Screen LIBO Page as of 11:00 A.M. London time, on such Dividend Determination
Date. If at least two such offered rates appear on the Reuters Screen LIBO Page,
LIBOR in respect of such Dividend Determination Dates will be the arithmetic
mean (rounded to the nearest one-hundredth of a percent, with five
one-thousandths of a percent rounded upwards) of such offered rates. If fewer
than those offered rates appear, LIBOR in respect of such Dividend Determination
Date will be determined as described in paragraph (ii) below.
(ii) On any Dividend Determination Date on which fewer than those offered
rates for the applicable maturity appear on the Reuters Screen LIBO Page as
specified in paragraph (I) above, LIBOR will be determined on the basis of the
rates at which deposits in U.S. dollars having a maturity of three months
commencing on the second London Business Day immediately following such Dividend
Determination Date and in a principal amount of not less than $1,000,000 that is
representative of a single transaction in such market at such time are offered
by three major banks in the London interbank market selected by the corporation
at approximately 11:00 A.M., London time, on such Dividend Determination Date to
prime banks in the London market. The corporation will request the principal
London office of each of such banks to provide a quotation of its rate. If at
least two such quotations are provided, LIBOR in respect of such Dividend
Determination Date will be the arithmetic mean (rounded to the nearest
one-hundredth of a percent, with five one-thousandths of a percent rounded
upwards) of such quotations. If fewer than two quotations are provided, LIBOR in
respect of such Dividend Determination Date will be the arithmetic mean (rounded
to the nearest one-hundredth of a percent, with five one-thousandths of a
percent rounded
upwards) of the rates quoted by three major banks in New York City selected by
the corporation at approximately 11:00 A.M., New York City time, on such
Dividend Determination Date for loans in U.S. dollars to leading European banks
having a maturity of three months commencing on the second London Business Day
immediately following such Dividend Determination Date and in a principal amount
of not less than $1,000,000 that is representative of a single transaction in
such market at such time; provided, however, that if the banks selected as
aforesaid by the corporation are not quoting as aforementioned in this sentence,
then, with respect to such Dividend Period, LIBOR for the preceding Dividend
Period will be continued as LIBOR for such Dividend Period.
(ii) The Dividend Rate for any Dividend Period shall be equal to
the lower of 18% or 50 basis points above LIBOR for such Dividend Period as
LIBOR is determined by sections (I) or (ii) above.
As used above, the term "Dividend Determination Date" shall mean, with respect
to any Dividend Period, the second London Business Day prior to the commencement
of such Dividend Period; and the term "London Business Day" shall mean any day
that is not a Saturday or Sunday and that, in New York City, is not a day on
which banking institutions generally are authorized or required by law or
executive order to close and that is a day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
4. Voting Rights: The holders of the Series A Preferred Stock
shall have the voting power and rights set forth in this paragraph 4 and shall
have no other voting power or rights except as otherwise may from time to time
be required by law.
So long as any shares of Series A Preferred Stock remain outstanding,
the corporation shall not, without the affirmative vote or consent of the
holders of at least a majority of the votes of the Series Preferred Stock
entitled to vote outstanding at the time, given in person or by proxy, either in
writing or by resolution adopted at a meeting at which the holders of Series A
Preferred Stock (alone or together with the holders of one or more other series
of Series Preferred Stock at the time outstanding and entitled to vote) vote
separately as a class, alter the provisions of the Series Preferred Stock so as
to materially adversely affect its rights; provided, however, that in the event
any such materially adverse alteration affects the rights of only the Series A
Preferred Stock, then the alteration may be effected with the vote or consent of
at least a majority of the votes of the Series A Preferred Stock; provided,
further, that an increase in the amount of the authorized Series Preferred Stock
and/or the creation and/or issuance of other series of Series Preferred Stock in
accordance with the organization certificate shall not be, nor be deemed to be,
materially adverse alterations. In connection with the exercise of the voting
rights contained in the preceding sentence, holders of all series of Series
Preferred Stock which are granted such voting rights (of which the Series A
Preferred Stock is the initial series) shall vote as a class (except as
specifically provided otherwise) and each holder of Series A Preferred Stock
shall have one vote for each share of stock held and each other series shall
have such number of votes, if any, for each share of stock held as may be
granted to them.
The foregoing voting provisions will not apply if, in connection with
the matters specified, provision is made for the redemption or retirement of all
outstanding Series A Preferred Stock.
5. Liquidation: Subject to the provisions of section (b) of this
Article III, upon any liquidation, dissolution or winding up of the corporation,
whether voluntary or involuntary, the holders of the Series A Preferred Stock
shall have preference and priority over the Common Stock for payment out of the
assets of the corporation or proceeds thereof, whether from capital or surplus,
of $1,000,000 per share (the "liquidation value") together with the amount of
all dividends accrued and unpaid thereon, and after such payment the holders of
Series A Preferred Stock shall be entitled to no other payments.
6. Redemption: Subject to the provisions of section (b) of this
Article III, Series A Preferred Stock may be redeemed, at the option of the
corporation in whole or part, at any time or from time to time at a redemption
price of $1,000,000 per share, in each case plus accrued and unpaid dividends to
the date of redemption.
At the option of the corporation, shares of Series A Preferred Stock
redeemed or otherwise acquired may be restored to the status of authorized but
unissued shares of Series Preferred Stock.
In the case of any redemption, the corporation shall give notice of
such redemption to the holders of the Series A Preferred Stock to be redeemed in
the following manner: a notice specifying the shares to be redeemed and the time
and place of redemption (and, if less than the total outstanding shares are to
be redeemed, specifying the
certificate numbers and number of shares to be redeemed) shall be mailed by
first class mail, addressed to the holders of record of the Series A Preferred
Stock to be redeemed at their respective addresses as the same shall appear upon
the books of the corporation, not more than sixty (60) days and not less than
thirty (30) days previous to the date fixed for redemption. In the event such
notice is not given to any shareholder such failure to give notice shall not
affect the notice given to other shareholders. If less than the whole amount of
outstanding Series A Preferred Stock is to be redeemed, the shares to be
redeemed shall be selected by lot or pro rata in any manner determined by
resolution of the Board of Directors to be fair and proper. From and after the
date fixed in any such notice as the date of redemption (unless default shall be
made by the corporation in providing moneys at the time and place of redemption
for the payment of the redemption price) all dividends upon the Series A
Preferred Stock so called for redemption shall cease to accrue, and all rights
of the holders of said Series A Preferred Stock as stockholders in the
corporation, except the right to receive the redemption price (without interest)
upon surrender of the certificate representing the Series A Preferred Stock so
called for redemption, duly endorsed for transfer, if required, shall cease and
terminate. The corporation's obligation to provide moneys in accordance with the
preceding sentence shall be deemed fulfilled if, on or before the redemption
date, the corporation shall deposit with a bank or trust company (which may be
an affiliate of the corporation) having an office in the Borough of Manhattan,
City of New York, having a capital and surplus of at least $5,000,000 funds
necessary for such redemption, in trust with irrevocable instructions that such
funds be applied to the redemption of the shares of Series A Preferred Stock so
called for redemption. Any interest accrued on such funds shall be paid to the
corporation from time to time. Any funds so deposited and unclaimed at the end
of two (2) years from such redemption date shall be released or repaid to the
corporation, after which the holders of such shares of Series A Preferred Stock
so called for redemption shall look only to the corporation for payment of the
redemption price.
IV. The name, residence and post office address of each
member of the corporation are as follows:
Name Residence Post Office Address
----
James A. Blair 9 West 50/th/ Street, 33 Wall Street,
Manhattan, New York City Manhattan, New York City
James G. Cannon 72 East 54/th/ Street, 14 Nassau Street,
Manhattan New York City Manhattan, New York City
E. C. Converse 3 East 78/th/ Street, 139 Broadway,
Manhattan, New York City Manhattan, New York City
Henry P. Davison Englewood, 2 Wall Street,
New Jersey Manhattan, New York City
Granville W. Garth 160 West 57/th/ Street, 33 Wall Street
Manhattan, New York City Manhattan, New York City
A. Barton Hepburn 205 West 57/th/ Street 83 Cedar Street
Manhattan, New York City Manhattan, New York City
William Logan Montclair, 13 Nassau Street
New Jersey Manhattan, New York City
George W. Perkins Riverdale, 23 Wall Street,
New York Manhattan, New York City
William H. Porter 56 East 67/th/ Street 270 Broadway,
Manhattan, New York City Manhattan, New York City
John F. Thompson Newark, 143 Liberty Street,
New Jersey Manhattan, New York City
Albert H. Wiggin 42 West 49/th/ Street, 214 Broadway,
Manhattan, New York City Manhattan, New York City
Samuel Woolverton Mount Vernon, 34 Wall Street,
New York Manhattan, New York City
Edward F.C. Young 85 Glenwood Avenue, 1 Exchange Place,
Jersey City, New Jersey Jersey City, New Jersey
V. The existence of the corporation shall be perpetual.
VI. The subscribers, the members of the said corporation, do, and
each for himself does, hereby declare that he will accept the responsibilities
and faithfully discharge the duties of a director therein, if elected to act as
such, when authorized accordance with the provisions of the Banking Law of the
State of New York.
VII. The number of directors of the corporation shall not be less
than 10 nor more than 25."
4. The foregoing restatement of the organization certificate was
authorized by the Board of Directors of the corporation at a meeting held on
July 21, 1998.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
6/th/ day of August, 1998.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
6th day of August, 1998.
James T. Byrne, Jr.
------------------------------------------
James T. Byrne, Jr.
Managing Director and Secretary
Lea Lahtinen
------------------------------------------
Lea Lahtinen
Vice President and Assistant Secretary
Lea Lahtinen
---------------------------------
Lea Lahtinen
State of New York )
) ss:
County of New York )
Lea Lahtinen, being duly sworn, deposes and says that she is a Vice
President and an Assistant Secretary of Bankers Trust Company, the corporation
described in the foregoing certificate; that she has read the foregoing
certificate and knows the contents thereof, and that the statements herein
contained are true.
Lea Lahtinen
---------------------------------
Lea Lahtinen
Sworn to before me
this 6th day of August, 1998.
Sandra L. West
- ---------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 1998
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "RESTATED ORGANIZATION
CERTIFICATE OF BANKERS TRUST COMPANY Under Section 8007 of the Banking Law,"
dated August 6, 1998, providing for the restatement of the Organization
Certificate and all amendments into a single certificate.
Witness, my hand and official seal of the Banking Department at the City of
New York,
this 31st day of August in the Year of our Lord one thousand
nine hundred and ninety-eight.
Manuel Kursky
---------------------------------
Deputy Superintendent of Banks
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
_________________________________
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and Secretary and a Vice President and an Assistant Secretary of
Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of March, 1903.
3. The organization certificate as heretofore amended is hereby
amended to increase the aggregate number of shares which the corporation shall
have authority to issue and to increase the amount of its authorized capital
stock in conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Three Billion, One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($3,001,666,670), divided into Two Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(200,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Three Billion, Five Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($3,501,666,670), divided into
Two Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (200,166,667) shares with a par value of $10 each
designated as Common Stock and 1500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
25th day of September, 1998
James T. Byrne, Jr.
--------------------------------------------
James T. Byrne, Jr.
Managing Director and Secretary
Lea Lahtinen
--------------------------------------------
Lea Lahtinen
Vice President and Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is a Vice
President and an Assistant Secretary of Bankers Trust Company, the corporation
described in the foregoing certificate; that she has read the foregoing
certificate and knows the contents thereof, and that the statements herein
contained are true.
Lea Lahtinen
-----------------------------------
Lea Lahtinen
Sworn to before me this 25/th/ day
of September, 1998
Sandra L. West
- ---------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 2000
State of New York,
Banking Department
I, P. VINCENT CONLON, Deputy Superintendent of Banks of the State of
New York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated December 16, 1998, providing for an increase in
authorized capital stock from $3,501,666,670 consisting of 200,166,667 shares
with a par value of $10 each designated as Common Stock and 1,500 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$3,627,308,670 consisting of 212,730,867 shares with a par value of $10 each
designated as Common Stock and 1,500 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of
New York,
this 18th day of December in the Year of our Lord one thousand
nine hundred and ninety-eight.
P. Vincent Conlon
---------------------------------
Deputy Superintendent of Banks
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and Secretary and a Vice President and an Assistant Secretary of
Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of March, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Three Billion, Five Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($3,501,666,670), divided into Two
Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(200,166,667) shares with a par value of $10 each designated as Common
Stock and 1500 shares with a par value of One Million Dollars ($1,000,000)
each designated as Series Preferred Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Three Billion, Six Hundred Twenty-Seven Million, Three Hundred
Eight Thousand, Six Hundred Seventy Dollars ($3,627,308,670), divided into
Two Hundred Twelve Million, Seven Hundred Thirty Thousand, Eight Hundred
Sixty- Seven (212,730,867) shares with a par value of $10 each designated
as Common Stock and 1500 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
5. The foregoing amendment of the organization certificate was authorized
by unanimous written consent signed by the holder of all outstanding shares
entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this 16th
day of December, 1998
James T. Byrne, Jr.
---------------------------------------
James T. Byrne, Jr.
Managing Director and Secretary
Lea Lahtinen
---------------------------------------
Lea Lahtinen
Vice President and Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is a Vice
President and an Assistant Secretary of Bankers Trust Company, the corporation
described in the foregoing certificate; that she has read the foregoing
certificate and knows the contents thereof, and that the statements herein
contained are true.
Lea Lahtinen
-----------------------------------
Lea Lahtinen
Sworn to before me this 16/th/ day
of December, 1998
Sandra L. West
- ---------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 2000
Legal Title of Bank: Deutsche Bank Trust Company Americas Call Date: 05/15/02 State#:36-4840
FFIEC 031
Address: 1301 6/th/ Avenue, 8/th/ Floor Vendor ID: D Cert#: 00623 Page RC-1
City, State ZIP: New York, NY 10019 Transit#: 21001003
11
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 2002
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
Dollar Amounts in Thousands | RCFD |
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin (1) | 0081 1,759,000 |1.a.
b. Interest-bearing balances (2) | 0071 513,000 |1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) | 1754 0 |2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) | 1773 95,000 |2.b.
3. Federal funds sold and securities purchased under agreements to resell | RCON |3.
a. Federal funds sold in domestic offices | B987 301,000 |3.a
| RCFD |
b. Securities purchased under agreements to resell (3) | B989 5,885,000 |3.b
4. Loans and lease financing receivables (from Schedule RC-C): | ////////////////// |
a. Loans and leases held for sale | 5369 0 |4.a.
b. Loans and leases, net unearned income B528 14,870,000 | ////////////////// |4.b.
c. LESS: Allowance for loan and lease losses 3123 542,000 | ////////////////// |4.c.
d. Loans and leases, net of unearned income and | ////////////////// |
allowance (item 4.b minus 4.c) | B529 14,328,000 |4.d.
5. Trading Assets (from schedule RC-D) | 3545 11,991,000 |5.
6. Premises and fixed assets (including capitalized leases) | 2145 653,000 |6.
7. Other real estate owned (from Schedule RC-M) | 2150 90,000 |7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) | 2130 2,944,000 |8.
9. Customers' liability to this bank on acceptances outstanding | 2155 46,000 |9.
10. Intangible assets | /////////////////// |
a. Goodwill | 3163 55,000 |10.a
b. Other intangible assets (from Schedule RC-M) | 0426 8,000 |10.b
11. Other assets (from Schedule RC-F) | 2160 2,188,000 |11.
12. Total assets (sum of items 1 through 11) | 2170 40,856,000 |12.
----------------------------
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
Legal Title of Bank: Deutsche Bank Trust Company Americas Call Date: 05/15/02 State#: 364840 FFIEC 031
Address: 1301 6/th/ Avenue, 8/th/ Floor Vendor ID: D Cert#: 00623 Page RC-2
City, State Zip: New York, NY 10019 Transit#: 21001003
12
Schedule RC--Continued
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
13. Deposits: | ///////////////////////|
a. In domestic offices (sum of totals of columns A and C from Schedule | |
RC-E, part I) | RCON 2200 10,998,000 |13.a.
(1) Noninterest-bearing(1) ............................. RCON 6631 3,157,000 | ////////////////////// |13.a.(1)
(2) Interest-bearing ................................... RCON 6636 7,831,000 | ////////////////////// |13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from | ///////////////////////|
Schedule RC-E part II) | RCFN 2200 8,815,000 |13.b.
(1) Noninterest-bearing ................................ RCFN 6631 1,011,000 | ////////////////////// |13.b.(1)
(2) Interest-bearing ................................... RCFN 6636 7,804,000 | ////////////////////// |13.b.(2)
14. Federal funds purchased and securities sold under agreements to | |
repurchase: | RCON |
a. Federal Funds purchased in domestic offices (2).......................................... | B993 8,039,000 |14.a
| RCFD |
b. Securities sold under agreements to repurchase (3) ...................................... | 8995 0 |14.b
15. Trading liabilities (from Schedule RC-D) ................................................... | RCFD 3548 582,000 |15.
16. Other borrowed money (includes mortgage indebtedness and obligations | |
under capitalized leases): | ////////////////////// |
(from Schedule RC-M): | RCFD 3190 3,015,000 |16.
17. Not Applicable. | ////////////////////// |17.
18. Bank's liability on acceptances executed and outstanding ................................... | RCFD 2920 46,000 |18.
19. Subordinated notes and debentures (2) ...................................................... | RCFD 3200 265,000 |19.
20. Other liabilities (from Schedule RC-G) ..................................................... | RCFD 2930 1,630,000 |20.
21. Total liabilities (sum of items 13 through 20) ............................................. | RCFD 2948 33,380,000 |21.
22. Minority interest in consolidated subsidiaries | RCFD 3000 630,000 |22.
| ////////////////////// |
EQUITY CAPITAL | ////////////////////// |
23. Perpetual preferred stock and related surplus .............................................. | RCFD 3838 1,500,000 |23.
24. Common stock ............................................................................... | RCFD 3230 2,127,000 |24.
25. Surplus (exclude all surplus related to preferred stock) ................................... | RCFD 3839 584,000 |25.
26. a. Retained earnings ....................................................................... | RCFD 3632 2,738,000 |26.a.
b. Accumulated other comprehensive Income (3) .............................................. | RCFD B530 (103,000)|26.b.
27. Other equity capital components (4) ........................................................ | RCFD A130 0 |27.
28. Total equity capital (sum of items 23 through 27) .......................................... | RCFD 3210 6,846,000 |28.
29. Total liabilities, minority interest, and equity capital (sum of items | |
21, 22, and 28) ........................................................................... | RCFD 3300 40,856,000 |29.
|________________________|
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external ------------------------
auditors as of any date during 2000 ....................................................... | RCFD 6724 1 | M.1
------------------------
1 = Independent audit of the bank conducted in accordance 5 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 6 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 7 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company external auditors
(but not on the bank separately) 8 = Other audit procedures (excluding tax preparation work)
3 = Attestation on bank management's assertion on the 9 = No external audit work
effectiveness of the bank's internal control over financial
reporting by a certified public accounting firm
4 = Directors' examination of the bank conducted in
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
______________________
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
(3) Includes net unrealized holding gains (losses) on available-for-sale
securities, accumulated net gains (losses) on cash flow hedges,
cumulative foreign currency translation adjustments, and minimum pension
liability adjustments.
(4) Includes treasury stock and unearned Employee Stock Plan shares.
DEUTSCHE BANK TRUST COMPANY AMERICAS
BY-LAWS
APRIL 15, 2002
Deutsche Bank Trust Company Americas
New York
BY-LAWS
of
Deutsche Bank Trust Company Americas
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, in
January of each year, for the election of directors and such other business as
may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer, the
President or any Co-President to call such meetings whenever requested in
writing to do so by stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or any Co-President or, in their
absence, the senior officer present, shall preside at meetings of the
stockholders and shall direct the proceedings and the order of business. The
Secretary shall act as secretary of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than seven nor more than fifteen, as may from time to time be fixed by
resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone, video
conference or similar communications equipment which allows all persons
participating in the meeting to hear each
1
other at the same time. Participation by such means shall constitute presence in
person at such a meeting.
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence the
President or any Co-President or, in their absence such other director as the
Board of Directors from time to time may designate shall preside at such
meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time provided, however, that the Board of Directors shall hold a regular meeting
not less than six times a year, provided that during any three consecutive
calendar months the Board of Directors shall meet at least once, and its
Executive Committee shall not be required to meet at least once in each thirty
day period during which the Board of Directors does not meet. Special meetings
of the Board of Directors may be called upon at least two day's notice whenever
it may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, the President or any Co-President or, in their absence, by such
other director as the Board of Directors may have designated pursuant to Section
3 of this Article, and shall be called upon like notice whenever any three of
the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board
2
shall preside at meetings of the Executive Committee. In his absence, the Chief
Executive Officer or, in his absence, the President or any Co-President or, in
their absence, such other member of the Committee as the Committee from time to
time may designate shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of who must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
3
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President, or
two or more Co-Presidents, and may also elect, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Managing Directors, one or more
Senior Vice Presidents, one or more Directors, one or more Vice Presidents, one
or more General Managers, a Secretary, a Controller, a Treasurer, a General
Counsel, a General Auditor, a General Credit Auditor, who need not be directors.
The officers of the corporation may also include such other officers or
assistant officers as shall from time to time be elected or appointed by the
Board. The Chairman of the Board or the Chief Executive Officer or, in their
absence, the President or any Co-President, or any Vice Chairman, may from time
to time appoint assistant officers. All officers elected or appointed by the
Board of Directors shall hold their respective offices during the pleasure of
the Board of Directors, and all assistant officers shall hold office at the
pleasure of the Board or the Chairman of the Board or the Chief Executive
Officer or, in their absence, the President, or any Co-President or any Vice
Chairman. The Board of Directors may require any and all officers and employees
to give security for the faithful performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board, or
President, or any Co-President, and such person shall have, subject to the
supervision and direction of the Board of Directors or the Executive Committee,
all of the powers vested in such Chief Executive Officer by law or by these
By-Laws, or which usually attach or pertain to such office. The other officers
shall have, subject to the supervision and direction of the Board of Directors
or the Executive Committee or the Chairman of the Board or, the Chief Executive
Officer, the powers vested by law or by these By-Laws in them as holders of
their respective offices and, in addition, shall perform such other duties as
shall be assigned to them by the Board of Directors or the Executive Committee
or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
Committee. The General Auditor shall have unrestricted access to all
4
records and premises of the Company and shall delegate such authority to his
subordinates. He shall have the duty to report to the Audit Committee on all
matters concerning the internal audit program and the adequacy of the system of
internal controls of the Company which he deems advisable or which the Audit
Committee may request. Additionally, the General Auditor shall have the duty of
reporting independently of all officers of the Company to the Audit Committee at
least quarterly on any matters concerning the internal audit program and the
adequacy of the system of internal controls of the Company that should be
brought to the attention of the directors except those matters responsibility
for which has been vested in the General Credit Auditor. Should the General
Auditor deem any matter to be of special immediate importance, he shall report
thereon forthwith to the Audit Committee. The General Auditor shall report to
the Chief Financial Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or
5
other enterprise, which any director or officer of the Company is servicing or
served in any capacity at the request of the Company by reason of the fact that
he, his testator or intestate, is or was a director or officer of the Company,
or is serving or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement, and costs, charges and expenses,
including attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company, evidenced by
a written communication signed by the Chairman of the Board, the Chief Executive
Officer, the President or any Co-President, and (ii) only if and to the extent
that, after making such efforts as the Chairman of the Board, the Chief
Executive Officer, the President or any Co-President shall deem adequate in the
circumstances, such person shall be unable to obtain indemnification from such
other enterprise or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the
6
extent permitted by law, or on the basis of the applicable law in effect at the
time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
7
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
8
I, Susan Johnson, Vice President of Deutsche Bank Trust Company Americas, New
York, New York, hereby certify that the foregoing is a complete, true and
correct copy of the By-Laws of Deutsche Bank Trust Company Americas, and that
the same are in full force and effect at this date.
__________________________________
Vice President
DATED: June 24, 2002
9
Exhibit 99.1
LETTER OF TRANSMITTAL
Westar Energy, Inc.
(formerly known as Western Resources, Inc.)
OFFER TO EXCHANGE ITS FIRST MORGAGE BONDS, 7-7/8% SERIES DUE 2007,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR
ANY AND ALL OF ITS ISSUED AND OUTSTANDING FIRST MORGAGE
BONDS, 7-7/8% SERIES DUE 2007
PURSUANT TO THE PROSPECTUS, DATED , 2002
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 2002, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
The Bank of New York, as Exchange Agent
By Registered or Certified Mail: By Overnight Courier and by Hand Delivery after By Hand Delivery to 4:30 p.m.:
4:30 p.m. on Expiration Date:
The Bank of New York The Bank of New York The Bank of New York
Corporate Trust Operations Corporate Trust Operations Corporate Trust Operations
Reorganization Unit Reorganization Unit Reorganization Unit
15 Broad Street, 16th Floor 15 Broad Street, 16th Floor 15 Broad Street, 16th Floor
New York, NY 10007 New York, NY 10007 New York, NY 10007
By Facsimile:
(212) 235-2261
Confirm by Telephone:
(212) 235-2363
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions other than as set forth above, will not
constitute a valid delivery.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 2002 (the "Prospectus"), of Westar Energy, Inc. (formerly
known as Western Resources, Inc.), a company organized under the laws of Kansas,
and this Letter of Transmittal, which together constitute the Company's offer
(the "Exchange Offer") to exchange up to $365,000,000 aggregate principal amount
of the Company's First Mortgage Bonds, 7-7/8% Series Due 2007 (the "Exchange
Bonds"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for a like principal amount of the Company's issued and
outstanding First Mortgage Bonds, 7-7/8% Series Due 2007 (the "Outstanding
Bonds"), which have not been so registered.
For each Outstanding Bond accepted for exchange, the registered holder of
such Outstanding Bond (collectively with all other registered holders of
Outstanding Bonds, the "Holders") will receive an Exchange Bond having a
principal amount equal to that of the surrendered Outstanding Bond. Registered
holders of Exchange Bonds on the relevant record date for the first interest
payment date following the consummation of the Exchange Offer will receive
interest accruing from the most recent date to which interest has been paid or,
if no interest has been paid, from May 10, 2002. Outstanding Bonds accepted for
exchange will cease to accrue interest from and after the date of consummation
of the Exchange Offer. Accordingly, Holders whose Outstanding Bonds are accepted
for exchange will not receive any payment in respect of accrued interest on such
Outstanding Bonds otherwise payable on any interest payment date the record date
for which occurs on or after consummation of the Exchange Offer.
This Letter of Transmittal is to be completed by a Holder of Outstanding
Bonds if either certificates for such Outstanding Bonds are available to be
forwarded herewith or tendered by book-entry transfer to the account maintained
by the Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in "The Exchange
Offer--Procedures for Tendering Outstanding Bonds" section of the Prospectus.
Holders of Outstanding Bonds whose certificates are not immediately available,
or who are unable to deliver their certificates or confirmation of the
book-entry tender of their Outstanding Bonds into the Exchange Agent's account
at the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter of Transmittal to the Exchange Agent on or
prior to the Expiration Date, must tender their Outstanding Bonds according to
the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus. See Instruction 1. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed
this Letter of Transmittal to indicate the action the undersigned desires
to take with respect to the Exchange Offer.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Outstanding Bonds indicated below. Subject to, and effective upon, the
acceptance for exchange of the Outstanding Bonds tendered hereby, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Company all right, title and interest in and to such Outstanding Bonds as are
being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Outstanding
Bonds tendered hereby and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim when the same are accepted by
the Company. The undersigned hereby further represents that any Exchange Bonds
acquired in exchange for Outstanding Bonds tendered hereby will have been
acquired in the ordinary course of business of the person receiving such
Exchange Bonds, whether or not such person is the undersigned, that neither the
Holder of such Outstanding Bonds nor any such other person has an arrangement or
understanding with any person to participate in a distribution of such Exchange
Bonds and that neither the Holder of such Outstanding Bonds nor any such other
person is an "affiliate" (as defined in Rule 405 under the Securities Act) of
the Company.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the Exchange Bonds issued pursuant to the Exchange Offer in
exchange for the Outstanding Bonds may be offered for resale, resold and
otherwise transferred by a Holder thereof (other than a Holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such Exchange Bonds are acquired in the
ordinary course of such Holder's business and such Holder has no arrangement
with any person to participate in a distribution of such Exchange Bonds.
However, the SEC has not considered the Exchange Offer in the context of a
no-action letter and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the Exchange Offer as in other
circumstances. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Bonds and has no arrangement or understanding to
participate in a distribution of Exchange Bonds. If any Holder is an affiliate
of the Company, is engaged in or intends to engage in, or has any arrangement or
understanding with any person to participate in, a distribution of the Exchange
Bonds to be acquired pursuant to the Exchange Offer, such Holder could not rely
on the applicable interpretations of the staff of the SEC and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive Exchange Bonds for its own account in exchange for Outstanding
Bonds that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Bonds. However, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Outstanding Bonds tendered hereby. All
authority conferred or agreed to be conferred in this Letter of Transmittal and
every obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in bankruptcy
and legal representatives of the undersigned and shall not be affected by, and
shall survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" herein, please issue the Exchange Bonds (and, if applicable,
substitute certificates representing Outstanding Bonds for any Outstanding Bonds
not exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Outstanding Bonds, please credit the account indicated below
maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions" herein, please
send the Exchange Bonds (and, if applicable, substitute certificates
representing Outstanding Bonds for any Outstanding Bonds not exchanged) to the
undersigned at the address shown in the box herein entitled "Description of
Outstanding Bonds Delivered."
THE UNDERSIGNED, BY COMPLETING THE BOX BELOW ENTITLED "DESCRIPTION OF
OUTSTANDING BONDS DELIVERED" AND SIGNING THIS LETTER, WILL BE DEEMED TO
HAVE TENDERED OUTSTANDING BONDS AS SET FORTH IN SUCH BOX.
List below the Outstanding Bonds to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
principal amount of Outstanding Bonds should be listed on a separate signed
schedule affixed hereto.
- -------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING BONDS DELIVERED
- -------------------------------------------------------------------------------------------------------------------
Name(s) and Address of Registered Holder(s) Aggregate Principal Amount
(Please fill-in, if blank) Certificate Number(s)* Principal Amount Tendered**
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Totals:
- -------------------------------------------------------------------------------------------------------------------
* Need not be completed if Outstanding Bonds are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to
have tendered ALL of the Outstanding Bonds represented by the listed
certificates. See Instruction 2. Outstanding Bonds tendered hereby must
be in denominations of principal amount of $1,000 and any integral
multiple thereof. See Instruction 1.
[_] CHECK HERE IF TENDERED OUTSTANDING BONDS ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT
WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
-----------------------------------------------
Account Number Transaction Code Number
--------------------------- --------
[_] CHECK HERE IF TENDERED OUTSTANDING BONDS ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name of Registered Holder
---------------------------------------------------
Window Ticket Number (if any)
-----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------
Name of Institution Which Guaranteed Delivery
-------------------------------
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number Transaction Code Number
--------------------------- ----------
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL
COPIES OF THE PROSPECTUS AND ANY AMENDMENTS OR SUPPLEMENTS THERETO.
(UNLESS OTHERWISE SPECIFIED, 10 ADDITIONAL COPIES WILL BE FURNISHED.)
Name
------------------------------------------------------------------------
Address
---------------------------------------------------------------------
- -------------------------------------------------------- -----------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if certificates for To be completed ONLY if certificates for
Outstanding Bonds not exchanged and/or Exchange Bonds Outstanding Bonds not exchanged and/or Exchange
are to be issued in the name of someone other than the Bonds are to be sent to someone other than the
person or persons whose signature(s) appear(s) on this person or persons whose signature(s) appear(s) on
Letter of Transmittal below or if Outstanding Bonds this Letter of Transmittal below or to such person
delivered by book-entry transfer which are not or persons at an address other than shown in the
accepted for exchange are to be returned by credit to box entitled "Description of Outstanding Bonds
an account maintained at the Book-Entry Transfer Delivered" on this Letter of Transmittal above.
Facility other than the account indicated above.
Issue Exchange Bonds and/or Outstanding Bonds to: Mail Exchange Bonds and/or Outstanding Bonds to:
Name: Name:
------------------------------------------------ ---------------------------------------------
(Please Type or Print) (Please Type or Print)
Address:
---------------------------------------------- Address:------------------------------------------
(Zip Code) (Zip Code)
[_] Credit unexchanged Outstanding Notes delivered
by book-entry transfer to the Book-Entry
Transfer Facility account set forth below.
- ------------------------------------------------------
(Book-Entry Transfer Facility Account)
- ------------------------------------------------------- ------------------------------------------------------
- --------------------------------------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
HEREOF (TOGETHER WITH THE CERTIFICATES FOR OUTSTANDING BONDS OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING
ANY BOX ABOVE
PLEASE SIGN HERE
(All Tendering Holders Must Complete This Letter of Transmittal
And The Accompanying Substitute Form W-9)
Dated: , 2002
---------------------------------------
X
-------------------------------------------------------------------------------
X
-------------------------------------------------------------------------------
(Signature(s)
Area Code and Telephone Number:
-------------------------------------------------
If a holder is tendering any Outstanding Bonds, this letter must be signed by
the Holder(s) as the name(s) appear(s) on the certificate(s) for the Outstanding
Bonds or by any person(s) authorized to become Holder(s) by endorsements and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, officer or other person acting in a fiduciary or
representative capacity, please set forth full title. See Instruction 3.
Name:
---------------------------------------------------------------------------
(Please Type or Print)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Telephone:
----------------------------------------------------------------------
SIGNATURE GUARANTEE (If required by Instruction 3)
Signature(s) Guarantees by an Eligible Institution:
-----------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name and Firm)
Dated: , 2002
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER TO EXCHANGE
THE FIRST MORTGAGE BONDS, 7-7/8% SERIES DUE 2007 OF WESTAR ENERGY, INC., WHICH
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY
AND ALL OF THE ISSUED AND OUTSTANDING FIRST MORTGAGE BONDS, 7-7/8% SERIES
DUE 2007 OF WESTAR ENERGY, INC.
1. Delivery Of This Letter And Outstanding Bonds; Guaranteed Delivery
Procedures.
This Letter of Transmittal is to be completed by Holders of Outstanding
Bonds either if certificates are to be forwarded herewith or if tenders are to
be made pursuant to the procedures for delivery by book-entry transfer set forth
in "The Exchange Offer--Procedures for Tendering Outstanding Bonds" section of
the Prospectus. Certificates for all physically tendered Outstanding Bonds, or
Book-Entry Confirmation, as the case may be, as well as a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile hereof) and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at the address set forth herein on or prior to the Expiration
Date, or the tendering holder must comply with the guaranteed delivery
procedures set forth below. Outstanding Bonds tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Outstanding Bonds are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Outstanding Bonds pursuant to the guaranteed delivery procedures
set forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution, (ii) on or prior to 5:00 p.m., New York City time, on the
Expiration Date, the Exchange Agent must receive from such Eligible Institution
a properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) and Notice of Guaranteed Delivery, substantially in the form provided
by the Company (by telegram, telex, facsimile transmission, mail or hand
delivery), setting forth the name and address of the holder of Outstanding Bonds
and the amount of Outstanding Bonds tendered, stating that the tender is being
made thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Outstanding Bonds, in proper form
for transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by this Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Outstanding Bonds, in proper form for transfer, or
Book-Entry Confirmation, as the case may be, and any other documents required by
this Letter of Transmittal, are deposited by the Eligible Institution within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
The method of delivery of this Letter of Transmittal, the Outstanding Bonds
and all other required documents is at the election and risk of the tendering
Holders, but delivery will be deemed made only upon actual receipt or
confirmation by the Exchange Agent. If Outstanding Bonds are sent by mail, it is
suggested that the mailing be registered mail, properly insured, with return
receipt requested, and made sufficiently in advance of the Expiration Date to
permit delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on
the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not Applicable to Holders Who Tender By Book-Entry
Transfer).
If less than all of the Outstanding Bonds evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Outstanding Bonds to be tendered in the box above
entitled "Description of Outstanding Bonds -- Principal Amount Tendered." A
reissued certificate representing the balance of nontendered Outstanding Bonds
will be sent to such tendering Holder, unless otherwise provided in the
appropriate box of this Letter of Transmittal, promptly after the Expiration
Date. See Instruction 4. All of the Outstanding Bonds delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
-2-
3. Signatures On This Letter, Bond Powers and Endorsements, Guarantee Of
Signatures.
If this Letter of Transmittal is signed by the Holder of the Outstanding
Bonds tendered hereby, the signature must correspond exactly with the name as
written on the face of the certificates without any change whatsoever.
If any tendered Outstanding Bonds are owned of record by two or more joint
owners, all of such owners must sign this Letter of Transmittal.
If any tendered Outstanding Bonds are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this letter as there are different registrations of
certificates.
When this Letter of Transmittal is signed by the Holder or Holders of the
Outstanding Bonds specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If however, the Exchange
Bonds are to be issued, or any untendered Outstanding Bonds are to be reissued,
to a person other than the Holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificates(s) must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the Holder
or Holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the Holder or Holders appear(s) on the
certificate(s) and signatures on such certificate(s) must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR OUTSTANDING BONDS OR SIGNATURES ON BOND
POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FINANCIAL
INSTITUTION (INCLUDING MOST BANKS, SAVINGS AND LOAN ASSOCIATIONS AND BROKERAGE
HOUSES) THAT IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION
PROGRAM, THE NEW YORK STOCK EXCHANGE MEDALLION SIGNATURE PROGRAM OR THE STOCK
EXCHANGES MEDALLION PROGRAM (EACH, AN "ELIGIBLE INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE OUTSTANDING BONDS ARE TENDERED: (I) BY A REGISTERED
HOLDER OF OUTSTANDING BONDS (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER,
INCLUDES ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME
APPEARS ON A SECURITY POSITION LISTING AS THE HOLDER OF SUCH OUTSTANDING BONDS)
WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR
"SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER OR (II) FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION.
4. Special Issuance and Delivery Instructions.
Tendering Holders of Outstanding Bonds should indicate in the
applicable box the name and address to which Exchange Bonds issued pursuant to
the Exchange Offer and/or substitute certificates evidencing Outstanding Bonds
not exchanged are to be issued or sent, if different from the name or address of
the person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification or social security number of the
person named must also be indicated. Holders tendering Outstanding Bonds by
book-entry transfer may request that Outstanding Bonds not exchanged be credited
to such account maintained at the Book-Entry Transfer Facility as such Holder
may designate hereon. If no such instructions are given, such Outstanding not
exchanged will be returned to the name and address of the person signing this
Letter of Transmittal.
5. Transfer Taxes.
-3-
The Company will pay all transfer taxes, if any, applicable to the transfer
of Outstanding Bonds to it or its order pursuant to the Exchange Offer. If,
however, Exchange Bonds and/or substitute Outstanding Bonds not exchanged are to
be delivered to, or are to be registered or issued in the name of, any person
other than the Holder of the Outstanding Bonds tendered hereby, or if tendered
Outstanding Bonds are registered in the name of any person other than the person
signing this Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the transfer of Outstanding Bonds to the Company or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed to such tendering Holder and the Exchange Agent will retain possession of
an amount of Exchange Bonds with a face amount equal to the amount of such
transfer taxes due by such tendering Holder pending receipt by the Exchange
Agent of the amount of such taxes.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Outstanding Bonds specified in this
Letter of Transmittal.
6. Waiver of Conditions.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
7. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders of Outstanding Bonds , by execution of this
Letter of Transmittal, shall waive any right to receive notice of the acceptance
of their Outstanding Bonds for exchange.
Although the Company intends to notify Holders of defects or irregularities
with respect to tenders of Outstanding Bonds, neither the Company, the Exchange
Agent nor any other person shall incur any liability for failure to give any
such notice.
8. Mutilated, Lost, Stolen or Destroyed Outstanding Bonds.
Any Holder whose Outstanding Bonds have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
9. Withdrawal of Tenders.
Tenders of Outstanding Bonds may be withdrawn at any time prior to 5:00
P.M., New York City time, on the Expiration Date. For a withdrawal to be
effective, a written notice of withdrawal must be received by the Exchange Agent
at one of the addresses set forth above. Any such notice of withdrawal must
specify the name of the person having tendered the Outstanding Bonds to be
withdrawn, identify the Outstanding Bonds to be withdrawn (including the
principal amount of such Outstanding Bonds ), and (where certificates for
Outstanding Bonds have been transmitted) specify the name in which such
Outstanding Bonds are registered, if different from that of the withdrawing
Holder. If certificates for Outstanding Bonds have been delivered or otherwise
identified to the Exchange Agent, then prior to the release of such certificates
the withdrawing Holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution unless such Holder is an Eligible
Institution in which case such guarantee will not be required. If Outstanding
Bonds have been tendered pursuant to the procedure for book-entry transfer
described above, any notice of withdrawal must specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Outstanding Bonds and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including time
of receipt) of such notices will be determined by the Company, whose
determination will be final and binding on all parties. Any Outstanding Bonds so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Outstanding Bonds which have been tendered
for exchange but which are not exchanged for any reason will be returned to the
Holder thereof without cost to such Holder (or, in the case of Outstanding
-4-
Bonds tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Outstanding Bonds will be credited to an account
maintained with such Book-Entry Transfer Facility for the Outstanding Bonds) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Outstanding Bonds may be retendered by
following one of the procedures set forth in "The Exchange Offer--Procedures for
Tendering Outstanding Bonds" section of the Prospectus at any time on or prior
to the Expiration Date.
10. Requests For Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus, this Letter of Transmittal and other
related documents may be directed to the Exchange Agent at the address indicated
above.
-5-
IMPORTANT TAX INFORMATION
Under current United States federal income tax law, a Holder of
Exchange Bonds is required to provide the Company (as payor) with such Holder's
correct taxpayer identification number ("TIN") on Substitute Form W-9 or
otherwise establish a basis for exemption from backup withholding to prevent
backup withholding on any Exchange Bonds delivered pursuant to the Exchange
Offer and any payments received in respect of the Exchange Bonds . If a Holder
of Exchange Bonds is an individual, the TIN is such holder's social security
number. If the Company is not provided with the correct taxpayer identification
number, a Holder of Exchange Bonds may be subject to a $50 penalty imposed by
the Internal Revenue Service. Accordingly, each prospective Holder of Exchange
Bonds to be issued pursuant to Special Issuance Instructions should complete the
attached Substitute Form W-9. The Substitute Form W-9 need not be completed if
the box entitled Special Issuance Instructions has not been completed.
Certain Holders of Exchange Bonds (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt prospective Holders of Exchange
Bonds should indicate their exempt status on Substitute Form W-9. A foreign
individual may qualify as an exempt recipient by submitting to the Company,
through the Exchange Agent, a properly completed Internal Revenue Service Form
W-8 BEN or Form W-8 ECI (which the Exchange Agent will provide upon request)
signed under penalty of perjury, attesting to the Holder's exempt status. See
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If backup withholding applies, the Company is required to withhold 30%
of any payment made to the Holder of Exchange Bonds or other payee. Backup
withholding is not an additional United States federal income tax. Rather, the
United States federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on any Exchange Bonds delivered pursuant
to the Exchange Offer and any payments received in respect of the Exchange Bonds
, each prospective Holder of Exchange Bonds to be issued pursuant to Special
Issuance Instructions should provide the Company, through the Exchange Agent,
with either: (i) such prospective Holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such prospective Holder is awaiting a TIN) and that (A) such prospective
Holder has not been notified by the Internal Revenue Service that he or she is
subject to backup withholding as a result of a failure to report all interest or
dividends or (B) the Internal Revenue Service has notified such prospective
Holder that he or she is no longer subject to backup withholding; or (ii) an
adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The prospective Holder of Exchange Bonds to be issued pursuant to
Special Issuance Instructions is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the
prospective record owner of the Exchange Bonds . If the Exchange Bonds will be
held in more than one name or are not held in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance regarding which number to
report.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE IMPORTANT TAX INFORMATION)
PAYOR'S NAME: THE BANK OF NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------
PART I--PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT OR INDICATE THAT TIN:------------------------------
YOU APPLIED FOR A TIN AND CERTIFY Social Security Number or
BY SIGNING AND DATING BELOW. Employer Identification Number
TIN Applied for [_]
--------------------------------------------------------------------------------------
Substitute PART 2--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
Form W-9 (1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be issued
Department of the Treasury to me);
Internal Revenue Service (2) I am not subject to backup withholding either because: (a) I am
exempt from backup withholding, or (b) I have not been notified by
the Internal Revenue Service (the "IRS") that I am subject to
Payor's Request for Taxpayer backup withholding as a result of a failure to report all interest or dividends,
Identification Number ("TIN") or (c) the IRS has notified me that I am no longer subject to backup
and Certification withholding; and
(3) any other information provided on this form is true and correct.
Signature: Date:
-------------------------- -----------------------------
- ------------------------------------------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have
been notified by the IRS that you are subject to backup withholding because
of underreporting of interest or dividends on your tax return and you have
not been notified by the IRS that you are no longer subject to backup
withholding.
NOTE: FAILURE BY A PROSPECTIVE HOLDER OF NEW BONDS TO BE ISSUED PURSUANT TO
THE SPECIAL ISSUANCE INSTRUCTIONS ABOVE TO COMPLETE AND RETURN THIS
FORM MAY RESULT IN BACKUP WITHHOLDING OF 30% OF THE NEW BONDS DELIVERED
TO YOU PURSUANT TO THE EXCHANGE OFFER AND ANY PAYMENTS RECEIVED BY YOU
IN RESPECT OF THE NEW BONDS. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 1 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 30% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
- --------------------------------- --------------------------------
Signature Date
- --------------------------------------------------------------------------------
Exhibit 99.2
LETTER OF TRANSMITTAL
Westar Energy, Inc.
(formerly known as Western Resources, Inc.)
OFFER TO EXCHANGE ITS SENIOR NOTES, SERIES 9-3/4% DUE 2007,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS ISSUED AND OUTSTANDING SENIOR NOTES,
SERIES 9-3/4% DUE 2007
PURSUANT TO THE PROSPECTUS, DATED , 2002
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
2002, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
Deutsche Bank Trust Company Americas, as Exchange Agent
By Registered or Certified Mail: By Overnight Courier and by Hand Delivery after By Hand Delivery to 4:30 p.m.:
4:30 p.m. on Expiration Date:
DB Services Tennessee, Inc. DB Services Tennessee, Inc. Deutsche Bank Trust Company
Reorganization Unit Reorganization Unit Americas
P.O. Box 292737 648 Grassmere Park Road c/o DTC Transfer Agent Services
Nashville, TN 37229-2737 Nashville, TN 37211 55 Water Street, 1st Floor
Jeannette Park Entrance
New York, NY 10041
By Facsimile:
(615) 835-3701
Confirm by Telephone:
(800) 735-7777
Delivery of this instrument to an address other than as set forth above,
or transmission of instructions other than as set forth above, will not
constitute a valid delivery.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 2002 (the "Prospectus"), of Westar Energy, Inc. (formerly
known as Western Resources, Inc.), a company organized under the laws of Kansas,
and this Letter of Transmittal, which together constitute the Company's offer
(the "Exchange Offer") to exchange up to $400,000,000 aggregate principal amount
of the Company's Senior Notes, 9-3/4% Series Due 2007 (the "Exchange Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like principal amount of the Company's issued and
outstanding Senior Notes, 9-3/4% Series Due 2007 (the "Outstanding Notes"),
which have not been so registered.
For each Outstanding Note accepted for exchange, the registered holder of
such Outstanding Note (collectively with all other registered holders of
Outstanding Notes, the "Holders") will receive an Exchange Note having a
principal amount equal to that of the surrendered Outstanding Note. Registered
holders of Exchange Notes on the relevant record date for the first interest
payment date following the consummation of the Exchange Offer will receive
interest accruing from the most recent date to which interest has been paid or,
if no interest has been paid, from May 10, 2002. Outstanding Notes accepted for
exchange will cease to accrue interest from and after the date of consummation
of the Exchange Offer. Accordingly, Holders whose Outstanding Notes are accepted
for exchange will not receive any payment in respect of accrued interest on such
Outstanding Notes otherwise payable on any interest payment date the record date
for which occurs on or after consummation of the Exchange Offer.
This Letter of Transmittal is to be completed by a Holder of Outstanding
Notes if either certificates for such Outstanding Notes are available to be
forwarded herewith or tendered by book-entry transfer to the account maintained
by the Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in "The Exchange
Offer--Procedures for Tendering Outstanding Notes" section of the Prospectus.
Holders of Outstanding Notes whose certificates are not immediately available,
or who are unable to deliver their certificates or confirmation of the
book-entry tender of their Outstanding Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter of Transmittal to the Exchange Agent on or
prior to the Expiration Date, must tender their Outstanding Notes according to
the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus. See Instruction 1. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this Letter
of Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Outstanding Notes indicated below. Subject to, and effective upon, the
acceptance for exchange of the Outstanding Notes tendered hereby, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Company all right, title and interest in and to such Outstanding Notes as are
being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Outstanding
Notes tendered hereby and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim when the same are accepted by
the Company. The undersigned hereby further represents that any Exchange Notes
acquired in exchange for Outstanding Notes tendered hereby will have been
acquired in the ordinary course of business of the person receiving such
Exchange Notes, whether or not such person is the undersigned, that neither the
Holder of such Outstanding Notes nor any such other person has an arrangement or
understanding with any person to participate in a distribution of such Exchange
Notes and that neither the Holder of such Outstanding Notes nor any such other
person is an "affiliate" (as defined in Rule 405 under the Securities Act) of
the Company.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Outstanding Notes may be offered for resale, resold and
otherwise transferred by a Holder thereof (other than a Holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such Holder's business and such Holder has no arrangement
with any person to participate in a distribution of such Exchange Notes.
However, the SEC has not considered the Exchange Offer in the context of a
no-action letter and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the Exchange Offer as in other
circumstances. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes and has no arrangement or understanding to
participate in a distribution of Exchange Notes. If any Holder is an affiliate
of the Company, is engaged in or intends to engage in, or has any arrangement or
understanding with any person to participate in, a distribution of the Exchange
Notes to be acquired pursuant to the Exchange Offer, such Holder could not rely
on the applicable interpretations of the staff of the SEC and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive Exchange Notes for its own account in exchange for Outstanding
Notes that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Notes. However, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Outstanding Notes tendered hereby. All
authority conferred or agreed to be conferred in this Letter of Transmittal and
every obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in bankruptcy
and legal representatives of the undersigned and shall not be affected by, and
shall survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" herein, please issue the Exchange Notes (and, if applicable,
substitute certificates representing Outstanding Notes for any Outstanding Notes
not exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Outstanding Notes, please credit the account indicated below
maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions" herein, please
send the Exchange Notes (and, if applicable, substitute certificates
representing Outstanding Notes for any Outstanding Notes not exchanged) to the
undersigned at the address shown in the box herein entitled "Description of
Outstanding Notes Delivered."
THE UNDERSIGNED, BY COMPLETING THE BOX BELOW ENTITLED "DESCRIPTION OF
OUTSTANDING NOTES DELIVERED" AND SIGNING THIS LETTER, WILL BE DEEMED TO
HAVE TENDERED OUTSTANDING NOTES AS SET FORTH IN SUCH BOX.
List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
principal amount of Outstanding Notes should be listed on a separate signed
schedule affixed hereto.
- -----------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES DELIVERED
- ------------------------------------------------------------------------------------------------------------------
Name(s) and Address of Registered Holder(s) Aggregate Principal Amount
(Please fill-in, if blank) Certificate Number(s)* Principal Amount Tendered**
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Totals:
- ------------------------------------------------------------------------------------------------------------------
* Need not be completed if Outstanding Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to
have tendered ALL of the Outstanding Notes represented by the listed
certificates. See Instruction 2. Outstanding Notes tendered hereby must
be in denominations of principal amount of $1,000 and any integral
multiple thereof. See Instruction 1.
[_] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT
WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
------------------------------------------
Account Number Transaction Code Number
--------------------------- ---------
[_] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name of Registered Holder
---------------------------------------------------
Window Ticket Number (if any)
-------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
----------------------
Name of Institution Which Guaranteed Delivery
---------------------------
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number Transaction Code Number
--------------------- --------------
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL
COPIES OF THE PROSPECTUS AND ANY AMENDMENTS OR SUPPLEMENTS THERETO.
(UNLESS OTHERWISE SPECIFIED, 10 ADDITIONAL COPIES WILL BE FURNISHED.)
Name
------------------------------------------------------------------------
Address
---------------------------------------------------------------------
- -------------------------------------------------------- -----------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if certificates for To be completed ONLY if certificates for
Outstanding Notes not exchanged and/or Exchange Notes Outstanding Notes not exchanged and/or Exchange
are to be issued in the name of someone other than the Notes are to be sent to someone other than the
person or persons whose signature(s) appear(s) on this person or persons whose signature(s) appear(s) on
Letter of Transmittal below or if Outstanding Notes this Letter of Transmittal below or to such person
delivered by book-entry transfer which are not or persons at an address other than shown in the
accepted for exchange are to be returned by credit to box entitled "Description of Outstanding Notes
an account maintained at the Book-Entry Transfer Delivered" on this Letter of Transmittal above.
Facility other than the account indicated above.
Issue Exchange Notes and/or Outstanding Notes to: Mail Exchange Notes and/or Outstanding Notes to:
Name: Name:
------------------------------------------------ -----------------------------------------------
(Please Type or Print) (Please Type or Print)
Address: Address:
--------------------------------------------- ---------------------------------------------
(Zip Code) (Zip Code)
[_] Credit unexchanged Outstanding Notes delivered by
book-entry transfer to the Book-Entry Transfer Facility
account set forth below.
- -----------------------------------------------------
(Book-Entry Transfer Facility Account)
- -------------------------------------------------------- -----------------------------------------------------
- --------------------------------------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
HEREOF (TOGETHER WITH THE CERTIFICATES FOR OUTSTANDING NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING
ANY BOX ABOVE
PLEASE SIGN HERE
(All Tendering Holders Must Complete This Letter of Transmittal
And The Accompanying Substitute Form W-9)
Dated: , 2002
-------------------------------------------------
X
------------------------------------------------------------------------------
X
------------------------------------------------------------------------------
(Signature(s)
Area Code and Telephone Number:
------------------------------------------------
If a holder is tendering any Outstanding Notes, this letter must be signed by
the Holder(s) as the name(s) appear(s) on the certificate(s) for the Outstanding
Notes or by any person(s) authorized to become Holder(s) by endorsements and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, officer or other person acting in a fiduciary or
representative capacity, please set forth full title. See Instruction 3.
Name:
----------------------------------------------------------------------------
(Please Type or Print)
Capacity (full title):
` ----------------------------------------------------------
Address:
------------------------------------------------------------------------
Telephone:
----------------------------------------------------------------------
SIGNATURE GUARANTEE (If required by Instruction 3)
Signature(s) Guarantees by an Eligible Institution:
-----------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name and Firm)
Dated: , 2002
---------------------------------------------------------------
- --------------------------------------------------------------------------------
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER TO EXCHANGE
SENIOR NOTES, 9-3/4% SERIES DUE 2007 OF WESTAR ENERGY, INC., WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR
ANY AND ALL OF THE ISSUED AND OUTSTANDING SENIOR NOTES, 9-3/4%
SERIES DUE 2007 OF WESTAR ENERGY, INC.
1. Delivery Of This Letter And Outstanding Notes; Guaranteed Delivery
Procedures.
This Letter of Transmittal is to be completed by Holders of Outstanding
Notes either if certificates are to be forwarded herewith or if tenders are to
be made pursuant to the procedures for delivery by book-entry transfer set forth
in "The Exchange Offer--Procedures for Tendering Outstanding Notes" section of
the Prospectus. Certificates for all physically tendered Outstanding Notes, or
Book-Entry Confirmation, as the case may be, as well as a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile hereof) and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at the address set forth herein on or prior to the Expiration
Date, or the tendering holder must comply with the guaranteed delivery
procedures set forth below. Outstanding Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Outstanding Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Outstanding Notes pursuant to the guaranteed delivery procedures
set forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution, (ii) on or prior to 5:00 p.m., New York City time, on the
Expiration Date, the Exchange Agent must receive from such Eligible Institution
a properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) and Notice of Guaranteed Delivery, substantially in the form provided
by the Company (by telegram, telex, facsimile transmission, mail or hand
delivery), setting forth the name and address of the holder of Outstanding Notes
and the amount of Outstanding Notes tendered, stating that the tender is being
made thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Outstanding Notes, in proper form
for transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by this Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Outstanding Notes, in proper form for transfer, or
Book-Entry Confirmation, as the case may be, and any other documents required by
this Letter of Transmittal, are deposited by the Eligible Institution within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
The method of delivery of this Letter of Transmittal, the Outstanding Notes
and all other required documents is at the election and risk of the tendering
Holders, but delivery will be deemed made only upon actual receipt or
confirmation by the Exchange Agent. If Outstanding Notes are sent by mail, it is
suggested that the mailing be registered mail, properly insured, with return
receipt requested, and made sufficiently in advance of the Expiration Date to
permit delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on
the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not Applicable to Holders Who Tender By Book-Entry
Transfer).
If less than all of the Outstanding Notes evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Outstanding Notes to be tendered in the box above
entitled "Description of Outstanding Notes -- Principal Amount Tendered." A
reissued certificate representing the balance of nontendered Outstanding Notes
will be sent to such tendering Holder, unless otherwise provided in the
appropriate box of this Letter of Transmittal, promptly after the Expiration
Date. See Instruction 4. All of the Outstanding Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
3. Signatures On This Letter, Bond Powers and Endorsements, Guarantee Of
Signatures.
-2-
If this Letter of Transmittal is signed by the Holder of the Outstanding
Notes tendered hereby, the signature must correspond exactly with the name as
written on the face of the certificates without any change whatsoever.
If any tendered Outstanding Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter of Transmittal.
If any tendered Outstanding Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this letter as there are different registrations of
certificates.
When this Letter of Transmittal is signed by the Holder or Holders of the
Outstanding Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If however, the Exchange
Notes are to be issued, or any untendered Outstanding Notes are to be reissued,
to a person other than the Holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificates(s) must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the Holder
or Holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the Holder or Holders appear(s) on the
certificate(s) and signatures on such certificate(s) must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR OUTSTANDING NOTES OR SIGNATURES ON BOND
POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FINANCIAL
INSTITUTION (INCLUDING MOST BANKS, SAVINGS AND LOAN ASSOCIATIONS AND BROKERAGE
HOUSES) THAT IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION
PROGRAM, THE NEW YORK STOCK EXCHANGE MEDALLION SIGNATURE PROGRAM OR THE STOCK
EXCHANGES MEDALLION PROGRAM (EACH, AN "ELIGIBLE INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE OUTSTANDING NOTES ARE TENDERED: (I) BY A REGISTERED
HOLDER OF OUTSTANDING NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER,
INCLUDES ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME
APPEARS ON A SECURITY POSITION LISTING AS THE HOLDER OF SUCH OUTSTANDING NOTES)
WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR
"SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER OR (II) FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION.
4. Special Issuance and Delivery Instructions.
Tendering Holders of Outstanding Notes should indicate in the applicable
box the name and address to which Exchange Notes issued pursuant to the Exchange
Offer and/or substitute certificates evidencing Outstanding Notes not exchanged
are to be issued or sent, if different from the name or address of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the employer identification or social security number of the person named must
also be indicated. Holders tendering Outstanding Notes by book-entry transfer
may request that Outstanding Notes not exchanged be credited to such account
maintained at the Book-Entry Transfer Facility as such Holder may designate
hereon. If no such instructions are given, such Outstanding Notes not exchanged
will be returned to the name and address of the person signing this Letter of
Transmittal.
5. Transfer Taxes.
-3-
The Company will pay all transfer taxes, if any, applicable to the transfer
of Outstanding Notes to it or its order pursuant to the Exchange Offer. If,
however, Exchange Notes and/or substitute Outstanding Notes not exchanged are to
be delivered to, or are to be registered or issued in the name of, any person
other than the Holder of the Outstanding Notes tendered hereby, or if tendered
Outstanding Notes are registered in the name of any person other than the person
signing this Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the transfer of Outstanding Notes to the Company or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed to such tendering Holder and the Exchange Agent will retain possession of
an amount of Exchange Notes with a face amount equal to the amount of such
transfer taxes due by such tendering Holder pending receipt by the Exchange
Agent of the amount of such taxes.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Outstanding Notes specified in this
Letter of Transmittal.
6. Waiver of Conditions.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
7. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders of Outstanding Notes, by execution of this
Letter of Transmittal, shall waive any right to receive notice of the acceptance
of their Outstanding Notes for exchange.
Although the Company intends to notify Holders of defects or irregularities
with respect to tenders of Outstanding Notes, neither the Company, the Exchange
Agent nor any other person shall incur any liability for failure to give any
such notice.
8. Mutilated, Lost, Stolen or Destroyed Outstanding Notes.
Any Holder whose Outstanding Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
9. Withdrawal of Tenders.
Tenders of Outstanding Notes may be withdrawn at any time prior to 5:00
P.M., New York City time, on the Expiration Date. For a withdrawal to be
effective, a written notice of withdrawal must be received by the Exchange Agent
at one of the addresses set forth above. Any such notice of withdrawal must
specify the name of the person having tendered the Outstanding Notes to be
withdrawn, identify the Outstanding Notes to be withdrawn (including the
principal amount of such Outstanding Notes), and (where certificates for
Outstanding Notes have been transmitted) specify the name in which such
Outstanding Notes are registered, if different from that of the withdrawing
Holder. If certificates for Outstanding Notes have been delivered or otherwise
identified to the Exchange Agent, then prior to the release of such certificates
the withdrawing Holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution unless such Holder is an Eligible
Institution in which case such guarantee will not be required. If Outstanding
Notes have been tendered pursuant to the procedure for book-entry transfer
described above, any notice of withdrawal must specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Outstanding Notes and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including time
of receipt) of such notices will be determined by the Company, whose
determination will be final and binding on all parties. Any Outstanding Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Outstanding Notes which have been tendered
for exchange but which are not exchanged for any reason will be returned to the
Holder thereof without cost to such Holder (or, in the case of Outstanding
-4-
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Outstanding Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Outstanding Notes) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Outstanding Notes may be retendered by
following one of the procedures set forth in "The Exchange Offer--Procedures
for Tendering Outstanding Notes" section of the Prospectus at any time on or
prior to the Expiration Date.
10. Requests For Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus, this Letter of Transmittal and other
related documents may be directed to the Exchange Agent at the address indicated
above.
-5-
IMPORTANT TAX INFORMATION
Under current United States federal income tax law, a Holder of Exchange
Notes is required to provide the Company (as payor) with such Holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 or otherwise
establish a basis for exemption from backup withholding to prevent backup
withholding on any Exchange Notes delivered pursuant to the Exchange Offer and
any payments received in respect of the Exchange Notes. If a Holder of Exchange
Notes is an individual, the TIN is such holder's social security number. If the
Company is not provided with the correct taxpayer identification number, a
Holder of Exchange Notes may be subject to a $50 penalty imposed by the Internal
Revenue Service. Accordingly, each prospective Holder of Exchange Notes to be
issued pursuant to Special Issuance Instructions should complete the attached
Substitute Form W-9. The Substitute Form W-9 need not be completed if the box
entitled Special Issuance Instructions has not been completed.
Certain Holders of Exchange Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt prospective Holders of Exchange
Notes should indicate their exempt status on Substitute Form W-9. A foreign
individual may qualify as an exempt recipient by submitting to the Company,
through the Exchange Agent, a properly completed Internal Revenue Service Form
W-8 BEN or Form W-8 ECI (which the Exchange Agent will provide upon request)
signed under penalty of perjury, attesting to the Holder's exempt status. See
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If backup withholding applies, the Company is required to withhold 30% of
any payment made to the Holder of Exchange Notes or other payee. Backup
withholding is not an additional United States federal income tax. Rather, the
United States federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on any Exchange Notes delivered pursuant to
the Exchange Offer and any payments received in respect of the Exchange Notes,
each prospective Holder of Exchange Notes to be issued pursuant to Special
Issuance Instructions should provide the Company, through the Exchange Agent,
with either: (i) such prospective Holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such prospective Holder is awaiting a TIN) and that (A) such prospective
Holder has not been notified by the Internal Revenue Service that he or she is
subject to backup withholding as a result of a failure to report all interest or
dividends or (B) the Internal Revenue Service has notified such prospective
Holder that he or she is no longer subject to backup withholding; or (ii) an
adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The prospective Holder of Exchange Notes to be issued pursuant to Special
Issuance Instructions is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the prospective
record owner of the Exchange Notes. If the Exchange Notes will be held in more
than one name or are not held in the name of the actual owner, consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional guidance regarding which number to report.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE IMPORTANT TAX INFORMATION)
PAYOR'S NAME: THE BANK OF NEW YORK
- -------------------------------------------------------------------------------------------------------------------
PART I--PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT OR INDICATE THAT TIN:--------------------------------
YOU APPLIED FOR A TIN AND CERTIFY Social Security Number or
BY SIGNING AND DATING BELOW. Employer Identification Number
TIN Applied for [_]
---------------------------------------------------------------------------
Substitute PART 2--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
Form W-9 (1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be issued
Department of the Treasury to me);
Internal Revenue Service (2) I am not subject to backup withholding either because: (a) I am
exempt from backup withholding, or (b) I have not been notified by
the Internal Revenue Service (the "IRS") that I am subject to
Payor's Request for Taxpayer backup withholding as a result of a failure to report all interest
Identification Number ("TIN") or dividends, or (c) the IRS has notified me that I am no longer
and Certification subject to backup withholding; and
(3) any other information provided on this form is true and correct.
Signature: Date:
-------------------------- ---------------------------
- -------------------------------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and you have not been
notified by the IRS that you are no longer subject to backup withholding.
NOTE: FAILURE BY A PROSPECTIVE HOLDER OF NEW NOTES TO BE ISSUED PURSUANT TO
THE SPECIAL ISSUANCE INSTRUCTIONS ABOVE TO COMPLETE AND RETURN THIS
FORM MAY RESULT IN BACKUP WITHHOLDING OF 30% OF THE NEW NOTES DELIVERED
TO YOU PURSUANT TO THE EXCHANGE OFFER AND ANY PAYMENTS RECEIVED BY YOU
IN RESPECT OF THE NEW NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 1 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 30% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
--------------------------- ---------------------------
Signature Date
- --------------------------------------------------------------------------------
