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Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
or
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification Number
03-33207 GREAT PLAINS ENERGY INCORPORATED 43-1916803
(A Missouri Corporation)
1201 Walnut Street
Kansas City, Missouri 64106
(816) 556-2200
1-707 KANSAS CITY POWER & LIGHT COMPANY 44-0308720
(A Missouri Corporation)
1201 Walnut Street
Kansas City, Missouri 64106
(816) 556-2200
Each of the following classes or series of securities registered pursuant to
Section 12(b) of the Act is registered on the New York Stock Exchange:
Registrant Title of each class
Great Plains
Energy Incorporated Cumulative Preferred Stock
par value $100 per share 3.80%
Cumulative Preferred Stock
par value $100 per share 4.50%
Cumulative Preferred Stock
par value $100 per share 4.35%
Common Stock without par value
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares outstanding of the registrant's Common stock at May 8,
2002, was 61,908,574 shares.
GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or acronyms that
are found throughout this report:
Abbreviation or
Acronym Definition
Clean Air Act Clean Air Act Amendments of 1990
CO2 Carbon Dioxide
Consolidated KCP&L KCP&L and its subsidiary HSS
COLI Corporate Owned Life Insurance
DIP Debtor-in-Possession
DTI DTI Holdings, Inc. and its subsidiary Digital Teleport Inc.
EIRR Environmental Improvement Revenue Refunding
EPA Environmental Protection Agency
EPS Earnings per share
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
GPP Great Plains Power Incorporated, a subsidiary of Great
Plains Energy Incorporated
HSS Home Service Solutions Inc., a subsidiary of KCP&L
KCC The State Corporation Commission of the State of Kansas
KCP&L Kansas City Power & Light Company, a regulated electric
utility subsidiary of Great
Plains Energy Incorporated
MACT Maximum Achievable Control Technology
MISO Midwest Independent System Operator
MPSC Missouri Public Service Commission
NEIL Nuclear Electric Insurance Limited
NOx Nitrogen Oxide
PCBs Polychlorinated biphenyls
RSAE R.S. Andrews Enterprises, Inc. a consumer services company
in which HSS owns a 72%
equity interest
RTO Regional Transmission Organization
SPP Southwest Power Pool
SFAS Statement of Financial Accounting Standards
WCNOC Wolf Creek Nuclear Operating Corporation
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
GREAT PLAINS ENERGY
Consolidated Balance Sheets
(Unaudited)
March 31 December 31
2002 2001
- --------------------------------------------------------------------------------
(thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 23,453 $ 29,034
Receivables 155,609 152,114
Fuel inventories, at average cost 25,453 22,246
Materials and supplies, at average cost 52,346 50,696
Current income taxes 48,519 31,031
Deferred income taxes 3,433 5,061
Other 12,685 19,167
------ ------
Total 321,498 309,349
- --------------------------------------------------------------------------------
Nonutility Property and Investments
Affordable housing limited partnerships 74,921 81,136
Gas property and investments 45,869 43,385
Nuclear decommissioning trust fund 64,135 61,766
Other 71,628 64,519
------ ------
Total 256,553 250,806
- --------------------------------------------------------------------------------
Utility Plant, at Original Cost
Electric 4,376,024 4,332,464
Less-accumulated depreciation 1,824,703 1,793,786
--------- ---------
Net utility plant in service 2,551,321 2,538,678
Construction work in progress 42,387 51,265
Nuclear fuel, net of amortization of
$130,857 and $127,101 30,730 33,771
------ ------
Total 2,624,438 2,623,714
- --------------------------------------------------------------------------------
Deferred Charges
Regulatory assets 141,362 124,406
Prepaid pension costs 87,739 88,337
Goodwill 37,066 37,066
Other deferred charges 37,182 30,724
------ ------
Total 303,349 280,533
- --------------------------------------------------------------------------------
Total $3,505,838 $3,464,402
================================================================================
LIABILITIES AND CAPITALIZATION
Current Liabilities
Notes payable $ 182,439 $ 144,404
Commercial paper 31,388 62,000
Current maturities of long-term debt 38,768 238,767
EIRR bonds classified as current 177,500 177,500
Accounts payable 186,429 173,956
Accrued taxes 25,553 14,324
Accrued interest 19,030 13,262
Accrued payroll and vacations 23,833 26,422
Accrued refueling outage costs 8,805 12,979
Other 26,437 35,810
------ ------
Total 720,182 899,424
- --------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Deferred income taxes 606,900 594,704
Deferred investment tax credits 44,702 45,748
Accrued nuclear decommissioning costs 65,415 63,040
Other 120,542 114,085
------- -------
Total 837,559 817,577
- --------------------------------------------------------------------------------
Capitalization (see statements) 1,948,097 1,747,401
- --------------------------------------------------------------------------------
Commitments and Contingencies (Note 5)
- --------------------------------------------------------------------------------
Total $3,505,838 $3,464,402
================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
1
GREAT PLAINS ENERGY
Consolidated Statements of Capitalization
(Unaudited)
March 31 December 31
2002 2001
- --------------------------------------------------------------------------------
(thousands)
Long-term Debt (excluding current maturities)
General Mortgage Bonds
Medium-Term Notes due 2003-08,
7.28% weighted-average rate $ 179,000 $ 179,000
2.72%* and 2.71%** EIRR bonds due 2012-23 158,768 158,768
EIRR bonds classified as current liabilities (31,000) (31,000)
Senior Notes
7.125% due 2005 250,000 250,000
6.500% due 2011 150,000 150,000
6.000% due 2007 225,000 -
Unamortized discount (1,084) (660)
EIRR bonds
3.25%*** Series A & B due 2015 106,500 106,500
3.25%*** Series D due 2017 40,000 40,000
EIRR bonds classified as current liabilities (146,500) (146,500)
4.50%*** Series C due 2017 50,000 50,000
Subsidiary Obligations
R.S. Andrews Enterprises, Inc. long-term debt
8.02%* and 8.14%** weighted-average rate
due 2003-07 3,022 2,832
Affordable Housing Notes
8.16% weighted-average rate due 2003-08 19,746 19,746
------ ------
Total 1,003,452 778,686
- --------------------------------------------------------------------------------
Company-obligated Mandatorily Redeemable Preferred
Securities of a trust holding solely KCP&L
Subordinated Debentures 150,000 150,000
- --------------------------------------------------------------------------------
Cumulative Preferred Stock
$100 Par Value
3.80% - 100,000 shares issued 10,000 10,000
4.50% - 100,000 shares issued 10,000 10,000
4.20% - 70,000 shares issued 7,000 7,000
4.35% - 120,000 shares issued 12,000 12,000
------ ------
Total 39,000 39,000
- --------------------------------------------------------------------------------
Common Stock Equity
Common stock-150,000,000 shares authorized
without par value 61,908,726 shares issued,
stated value 449,697 449,697
Capital stock premium and expense (1,632) (1,656)
Retained earnings (see statements) 315,829 344,815
Accumulated other comprehensive loss
Loss on derivative hedging instruments (7,218) (12,110)
Minimum pension liability (1,031) (1,031)
------ ------
Total 755,645 779,715
- --------------------------------------------------------------------------------
Total $ 1,948,097 $ 1,747,401
================================================================================
* Variable rate securities, weighted-average rate as of March 31, 2002
** Variable rate securities, weighted-average rate as of December 31, 2001
*** Variable rate securities, weighted-average rate as of March 31, 2002 and
December 31, 2001
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
2
GREAT PLAINS ENERGY
Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31 2002 2001
- --------------------------------------------------------------------------------
(thousands)
Operating Revenues
Electric revenues - KCP&L $ 198,909 $ 198,822
Electric revenues - Strategic Energy 151,814 50,315
Other revenues 13,883 31,053
------ ------
Total 364,606 280,190
- --------------------------------------------------------------------------------
Operating Expenses
Fuel 34,007 32,714
Purchased power - KCP&L 10,931 24,170
Purchased power - Strategic Energy 130,792 44,529
Gas purchased and production expenses 852 12,155
Other 77,204 79,800
Maintenance 34,934 21,309
Depreciation and depletion 37,431 36,631
(Gain) Loss on property 41 (1,308)
General taxes 23,161 22,852
------ ------
Total 349,353 272,852
- --------------------------------------------------------------------------------
Operating income 15,253 7,338
Loss from equity investments (316) (536)
Minority interest in subsidiaries (2,437) 2,785
Non-operating income 1,217 3,516
Non-operating expenses (8,382) (7,481)
Interest charges 20,798 24,221
- --------------------------------------------------------------------------------
Loss before income taxes (15,463) (18,599)
Income taxes (12,566) (15,627)
- --------------------------------------------------------------------------------
Loss before extraordinary item (2,897) (2,972)
Early extinguishment of debt, net of income taxes - 15,872
- --------------------------------------------------------------------------------
Net income (loss) (2,897) 12,900
Preferred stock dividend requirements 412 412
------ ------
Earnings (Loss) available for common stock $ (3,309) $ 12,488
================================================================================
Average number of common shares outstanding 61,884 61,853
Basic and diluted loss per common share $ (0.05) $ (0.06)
before extraordinary item
Early extinguishment of debt - 0.26
------ ------
Basic and diluted earnings (loss) per common share $ (0.05) $ 0.20
Cash dividends per common share $ 0.415 $ 0.415
================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
3
GREAT PLAINS ENERGY
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31 2002 2001
- --------------------------------------------------------------------------------
(thousands)
Cash Flows from Operating Activities
Net income (loss) $ (2,897) $ 12,900
Adjustments to reconcile income to net cash
from operating activities:
Early extinguishment of debt,
net of income taxes - (15,872)
Depreciation and depletion 37,431 36,631
Amortization of:
Nuclear fuel 3,756 4,159
Other 2,251 3,930
Deferred income taxes (net) 10,451 (1,585)
Investment tax credit amortization (1,046) (1,072)
Loss from equity investments 316 536
(Gain) Loss on property 41 (1,308)
Allowance for equity funds used
during construction 12 (2,308)
Deferred storm costs (18,114) -
Other operating activities (Note 2) 7,744 (51,527)
----- -------
Net cash from operating activities 39,945 (15,516)
- --------------------------------------------------------------------------------
Cash Flows from Investing Activities
Utility capital expenditures (36,678) (73,838)
Allowance for borrowed funds used
during construction (270) (4,118)
Purchases of investments (2,435) (36,284)
Purchases of nonutility property (5,080) (17,921)
Proceeds from sale of assets 296 9,478
Hawthorn No. 5 partial insurance recovery - 15,000
Loan to DTI prior to majority ownership - (94,000)
Other investing activities (5,440) 420
------ ------
Net cash from investing activities (49,607) (201,263)
- --------------------------------------------------------------------------------
Cash Flows from Financing Activities
Issuance of long-term debt 224,730 111,500
Repayment of long-term debt (200,000) (40,127)
Net change in short-term borrowings 7,423 148,159
Dividends paid (26,089) (26,082)
Other financing activities (1,983) (144)
------ ----
Net cash from financing activities 4,081 193,306
- --------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents (5,581) (23,473)
Cash and Cash Equivalents at Beginning of Year 29,034 34,877
------ ------
Cash and Cash Equivalents at End of Period $ 23,453 $ 11,404
================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
4
GREAT PLAINS ENERGY
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended
March 31
2002 2001
- --------------------------------------------------------------------------------
(thousands)
Net income (loss) $ (2,897) $ 12,900
-------- --------
Other comprehensive income (loss):
Gain (loss) on derivative hedging instruments 5,843 (2,590)
Income taxes (2,391) 1,080
-------- --------
Net gain (loss) on derivative hedging instruments 3,452 (1,510)
-------- --------
Reclassification to revenues and expenses, net of tax 1,440 (4,007)
-------- --------
Comprehensive income before cumulative
effect of a change in accounting principles,
net of income taxes 1,995 7,383
Cumulative effect to January 1, 2001, of a change
in accounting principles, net of income taxes - 17,443
-------- --------
Comprehensive income $ 1,995 $ 24,826
================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
GREAT PLAINS ENERGY
Consolidated Statements of Retained Earnings
(Unaudited)
Three Months Ended
March 31
2002 2001
- --------------------------------------------------------------------------------
(thousands)
Beginning balance $ 344,815 $ 473,321
Net income (loss) (2,897) 12,900
--------- ---------
341,918 486,221
Dividends declared
Preferred stock - at required rates 412 412
Common stock 25,677 25,670
--------- ---------
Ending balance $ 315,829 $ 460,139
================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
5
KANSAS CITY POWER & LIGHT COMPANY
Consolidated Balance Sheets
(Unaudited)
March 31 December 31
2002 2001
- --------------------------------------------------------------------------------
(thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 827 $ 962
Receivables 49,484 62,511
Fuel inventories, at average cost 25,453 22,246
Materials and supplies, at average cost 52,346 50,696
Current income taxes 14,085 -
Deferred income taxes 3,433 5,061
Other 9,967 11,484
------- -------
Total 155,595 152,960
- --------------------------------------------------------------------------------
Nonutility Property and Investments
Nuclear decommissioning trust fund 64,135 61,766
Other 47,224 40,797
------- -------
Total 111,359 102,563
- --------------------------------------------------------------------------------
Utility Plant, at Original Cost
Electric 4,376,024 4,332,464
Less-accumulated depreciation 1,824,703 1,793,786
--------- ---------
Net utility plant in service 2,551,321 2,538,678
Construction work in progress 42,387 51,265
Nuclear fuel, net of amortization of
$130,857 and $127,101 30,730 33,771
--------- ---------
Total 2,624,438 2,623,714
- --------------------------------------------------------------------------------
Deferred Charges
Regulatory assets 141,362 124,406
Prepaid pension costs 87,739 88,337
Goodwill 22,952 22,952
Other deferred charges 29,949 30,724
------- -------
Total 282,002 266,419
- --------------------------------------------------------------------------------
Total $3,173,394 $3,145,656
================================================================================
LIABILITIES AND CAPITALIZATION
Current Liabilities
Notes payable $ 22,439 $ 20,404
Commercial paper 31,388 62,000
Current maturities of long-term debt 27,384 227,383
EIRR bonds classified as current 177,500 177,500
Accounts payable 114,979 113,029
Accrued taxes 24,674 15,895
Accrued interest 16,716 11,327
Accrued payroll and vacations 22,603 22,581
Accrued refueling outage costs 8,805 12,979
Other 13,421 14,562
------- -------
Total 459,909 677,660
- --------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Deferred income taxes 641,418 630,699
Deferred investment tax credits 44,702 45,748
Accrued nuclear decommisioning costs 65,415 63,040
Other 81,111 75,186
------- -------
Total 832,646 814,673
- --------------------------------------------------------------------------------
Capitalization (see statements) 1,880,839 1,653,323
- --------------------------------------------------------------------------------
Commitments and Contingencies (Note 5)
- --------------------------------------------------------------------------------
Total $3,173,394 $3,145,656
================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
6
KANSAS CITY POWER & LIGHT COMPANY
Consolidated Statements of Capitalization
(Unaudited)
March 31 December 31
2002 2001
- --------------------------------------------------------------------------------
(thousands)
Long-term Debt (excluding current maturities)
General Mortgage Bonds
Medium-Term Notes due 2003-08,
7.28% weighted-average rate $ 179,000 $ 179,000
2.72* and 2.71%** EIRR bonds due 2012-23 158,768 158,768
EIRR bonds classified as current liabilities (31,000) (31,000)
Senior Notes
7.125% due 2005 250,000 250,000
6.500% due 2011 150,000 150,000
6.000% due 2007 225,000 -
Unamortized discount (1,084) (660)
EIRR bonds
3.25%*** Series A & B due 2015 106,500 106,500
3.25%*** Series D due 2017 40,000 40,000
EIRR bonds classified as current liabilities (146,500) (146,500)
4.50%*** Series C due 2017 50,000 50,000
Subsidiary Obligations
R.S. Andrews Enterprises, Inc. long-term debt
8.02%* and 8.14%** weighted-average
rate due 2003-07 3,022 2,832
------- -------
Total 983,706 758,940
- --------------------------------------------------------------------------------
Company-obligated Mandatorily Redeemable Preferred
Securities of a trust holding solely KCPL
Subordinated Debentures 150,000 150,000
- --------------------------------------------------------------------------------
Common Stock Equity
Common stock-1,000 shares authorized
without par value 1 share issued,
stated value 562,041 526,041
Retained earnings (see statements) 185,866 219,524
Accumulated other comprehensive loss
Loss on derivative hedging instruments 257 (151)
Minimum pension liability (1,031) (1,031)
------- -------
Total 747,133 744,383
- --------------------------------------------------------------------------------
Total $ 1,880,839 $ 1,653,323
================================================================================
* Variable rate securities, weighted-average rate as of March 31, 2002
** Variable rate securities, weighted-average rate as of December 31, 2001
*** Variable rate securities, weighted-average rate as of March 31, 2002 and
December 31, 2001
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
7
KANSAS CITY POWER & LIGHT COMPANY
Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31 2002 2001
- --------------------------------------------------------------------------------
(thousands)
Operating Revenues
Electric sales revenues $ 198,909 $ 249,137
Other revenues 13,276 31,053
------- -------
Total 212,185 280,190
- --------------------------------------------------------------------------------
Operating Expenses
Fuel 34,007 32,714
Purchased power 10,931 68,699
Gas purchased and production expenses - 12,155
Other 66,069 79,800
Maintenance 34,897 21,309
Depreciation and depletion 36,879 36,631
Gain on property (122) (1,308)
General taxes 22,823 22,852
------- -------
Total 205,484 272,852
- --------------------------------------------------------------------------------
Operating income 6,701 7,338
Losses from equity investments - (536)
Minority interest in subsidiaries - 2,785
Non-operating income 861 3,516
Non-operating expenses (2,657) (7,481)
Interest charges 19,412 24,221
- --------------------------------------------------------------------------------
Loss before income taxes and extraordinary item (14,507) (18,599)
Income taxes (6,526) (15,627)
- --------------------------------------------------------------------------------
Loss before extraordinary item (7,981) (2,972)
Early extinguishment of debt, net of income taxes - 15,872
------- -------
Net income (loss) (7,981) 12,900
Preferred stock dividend requirements - 412
------- -------
Earnings (loss) available for common stock $ (7,981) $ 12,488
================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
8
KANSAS CITY POWER & LIGHT COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31 2002 2001
- --------------------------------------------------------------------------------
(thousands)
Cash Flows from Operating Activities
Net income (loss) $ (7,981) $ 12,900
Adjustments to reconcile income to net cash
from operating activities:
Early extinguishment of debt,
net of income taxes - (15,872)
Depreciation and depletion 36,879 36,631
Amortization of:
Nuclear fuel 3,756 4,159
Other 1,522 3,930
Deferred income taxes (net) 12,110 (1,585)
Investment tax credit amortization (1,046) (1,072)
Loss from equity investments - 536
(Gain) Loss on property (122) (1,308)
Allowance for equity funds used
during construction 12 (2,308)
Deferred storm costs (18,114) -
Other operating activities (Note 2) 13,292 (51,527)
------ -------
Net cash from operating activities 40,308 (15,516)
- --------------------------------------------------------------------------------
Cash Flows from Investing Activities
Utility capital expenditures (36,678) (73,838)
Allowance for borrowed funds used during construction (270) (4,118)
Purchases of investments (855) (36,284)
Purchases of nonutility property (1,376) (17,921)
Proceeds from sale of assets - 9,478
Hawthorn No. 5 partial insurance recovery - 15,000
Loan to DTI prior to majority ownership - (94,000)
Other investing activities (6,329) 420
------- --------
Net cash from investing activities (45,508) (201,263)
- --------------------------------------------------------------------------------
Cash Flows from Financing Activities
Issuance of long-term debt 224,730 111,500
Repayment of long-term debt (200,000) (40,127)
Net change in short-term borrowings (28,577) 148,159
Dividends paid - (26,082)
Dividends paid to Great Plains Energy (25,677) -
Equity contribution from Great Plains Energy 36,000 -
Other financing activities (1,411) (144)
------ ----
Net cash from financing activities 5,065 193,306
- --------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents (135) (23,473)
Cash and Cash Equivalents at Beginning of Year 962 34,877
--- ------
Cash and Cash Equivalents at End of Period $ 827 $ 11,404
================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
9
KANSAS CITY POWER & LIGHT COMPANY
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended
March 31
2002 2001
- --------------------------------------------------------------------------------
(thousands)
Net income (loss) $ (7,981) $ 12,900
-------- --------
Other comprehensive income (loss):
Gain (loss) on derivative hedging instruments 608 (2,590)
Income taxes (237) 1,080
-------- --------
Net gain (loss) on derivative hedging instruments 371 (1,510)
-------- --------
Reclassification to revenues and expenses, net of tax 37 (4,007)
-------- --------
Comprehensive income (loss) before cumulative
effect of a change in accounting principles,
net of income taxes (7,573) 7,383
Cumulative effect to January 1, 2001, of a change
in accounting principles, net of income taxes - 17,443
-------- --------
Comprehensive income (loss) $ (7,573) $ 24,826
================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
KANSAS CITY POWER & LIGHT COMPANY
Consolidated Statements of Retained Earnings
(Unaudited)
Three Months Ended
March 31
2002 2001
(thousands)
Beginning balance $ 219,524 $ 473,321
Net income (loss) (7,981) 12,900
------- -------
211,543 486,221
Dividends declared
Preferred stock - at required rates - 412
Common stock - 25,670
Common stock held by Great Plains Energy 25,677 -
------- -------
Ending balance $ 185,866 $ 460,139
================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
10
Great Plains Energy and Consolidated KCP&L separately file this combined
Quarterly Report on Form 10-Q. Information contained herein relating to an
individual registrant is filed by such registrant on its own behalf. Each
registrant makes representations only as to information relating to itself.
This report should be read in its entirety. No one section of the report deals
with all aspects of the subject matter.
CAUTIONARY STATEMENTS REGARDING CERTAIN FORWARD-LOOKING INFORMATION
Statements made in this report that are not based on historical facts are
forward-looking, may involve risks and uncertainties, and are intended to be as
of the date when made. In connection with the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, the registrants are providing
a number of important factors that could cause actual results to differ
materially from provided forward-looking information. These important factors
include:
o future economic conditions in the regional, national and international markets
o state, federal and foreign regulation
o weather conditions including weather-related damage
o cost of fuel
o financial market conditions including, but not limited to, changes in
interest rates
o inflation rates
o increased competition including, but not limited to, the deregulation of the
electric utility industry and the entry of new competitors
o ability to carry out marketing and sales plans
o ability to achieve generation planning goals and the occurrence of unplanned
generation outages
o nuclear operations
o ability to enter new markets successfully and capitalize on growth
opportunities in nonregulated businesses
o adverse changes in applicable laws, regulations or rules governing
environmental regulations (including air quality), tax or accounting matters
o delays in the anticipated in-service dates of additional generating capacity
o performance of projects undertaken by our non-regulated businesses and the
success of efforts to invest in and develop new opportunities
o non-performance of counterparties
o availability and cost of capital and
o other risks and uncertainties.
This list of factors is not all-inclusive because it is not possible to predict
all possible factors.
11
GREAT PLAINS ENERGY INCORPORATED
KANSAS CITY POWER & LIGHT COMPANY
Notes to Consolidated Financial Statements
In management's opinion, the consolidated interim financial statements reflect
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the results of operations for the interim periods presented.
These statements and notes should be read in connection with the financial
statements and related notes included in our combined 2001 annual report on Form
10-K.
The notes to consolidated financial statements that follow are a combined
presentation for Great Plains Energy and consolidated KCP&L, both registrants
under this filing.
1. Organization
Great Plains Energy (The Company)
Great Plains Energy's consolidated financial statements include consolidated
KCP&L, KLT Inc. and GPP. KLT Inc.'s major holdings consist of Strategic Energy,
KLT Gas, and investments in affordable housing limited partnerships. GPP, formed
in 2001, will be a competitive generator that will sell to the wholesale market.
Effective October 1, 2001, KCP&L dividended its 100% ownership of KLT Inc. and
GPP to Great Plains Energy. As a result, those companies are subsidiaries of
Great Plains Energy and are not included in consolidated KCP&L's results of
operations and financial position since that date. The presentation of the prior
year results of operations for Great Plains Energy is provided for comparative
purposes and is identical to the results of operations for consolidated KCP&L,
prior to formation of the holding company, presented for that year. Intercompany
balances and transactions have been eliminated in consolidation.
Consolidated KCP&L
KCP&L's consolidated financial statements include its wholly owned subsidiary
HSS. HSS has two subsidiaries: Worry Free Service, Inc. and RSAE. In addition,
KCP&L's consolidated results of operations include KLT Inc. and GPP for all
periods prior to the October 1, 2001, formation of the holding company.
12
2. SUPPLEMENTAL CASH FLOW INFORMATION
Great Plains Energy Other Operating Activities
Three Months Ended
March 31
2002 2001
Cash flows affected by changes in: (thousands)
Receivables $ (3,495) $ 6,498
Fuel inventories (3,170) 1,409
Materials and supplies (1,650) (541)
Accounts payable 12,473 (58,611)
Accrued taxes and current income taxes (6,259) (257)
Accrued interest 5,768 1,486
Wolf Creek refueling outage accrual (4,174) 2,835
Pension and postretirement benefit obligations 2,281 (2,800)
Other 5,970 (1,546)
Total other operating activities $ 7,744 $(51,527)
Cash paid during the period:
Interest $ 14,995 $ 22,181
Income taxes $ - $ 145
Consolidated KCP&L Other Operating Activities
Three Months Ended
March 31
2002 2001
Cash flows affected by changes in: (thousands)
Receivables $ 13,027 $ 6,498
Fuel inventories (3,170) 1,409
Materials and supplies (1,650) (541)
Accounts payable 1,950 (58,611)
Accrued taxes and current income taxes (5,306) (257)
Accrued interest 5,389 1,486
Wolf Creek refueling outage accrual (4,174) 2,835
Pension and postretirement benefit obligations 2,281 (2,800)
Other 4,945 (1,546)
Total other operating activities $ 13,292 $(51,527)
Cash paid during the period:
Interest $ 13,502 $ 22,181
Income taxes $ - $ 145
13
During the first quarter of 2001, KLT Telecom, a wholly owned subsidiary of KLT
Inc., increased its equity ownership in DTI to a majority ownership and HSS
increased its equity ownership in RSAE to a majority ownership. The effect of
these transactions is summarized in the tables that follow. The initial
consolidation of DTI (February 8, 2001) and RSAE (January 1, 2001) are excluded
from both Great Plains Energy and KCP&L's consolidated statement of cash flows
for the three months ended March 31, 2001. See Note 9. for discussion of DTI's
bankruptcy.
DTI RSAE
(thousands)
Cash paid to obtain majority ownership $ (39,855) $ (560)
Subsidiary cash 4,557 1,053
Purchase of DTI and RSAE, net of cash received $ (35,298) $ 493
Initial consolidation of subsidiaries:
Assets
Cash $ 4,557 $ 1,053
Receivables 1,012 4,078
Other nonutility property and investments 363,825 6,267
Goodwill 62,974 24,496
Other assets 5,143 3,919
Eliminate equity investment (67,660) (7,200)
Total assets $ 369,851 $ 32,613
Liabilities
Notes payable $ 5,300 $ 10,057
Accounts payable 31,299 6,219
Accrued taxes 2,414 24
Deferred income taxes 7,437 -
Other liabilities and deferred credits 46,531 13,418
Loan from KLT Telecom (a) 94,000 -
Long-term debt 182,870 2,895
Total liabilities $ 369,851 $ 32,613
(a)KLT Telecom provided a $94 million loan to DTI for the completion of the
tender offer of 50.4 percent of DTI's Senior Discount Notes prior to
increasing its DTI investment to a majority ownership.
3. CAPITALIZATION
During the first quarter of 2002, Great Plains Energy terminated its $129
million bridge revolving credit facility. Great Plains Energy replaced the
bridge facility with a $205 million syndicated 364-day, revolving credit
facility with a group of banks. At March 31, 2002, Great Plains Energy had $160
million of borrowings outstanding under the facility.
In March 2002, KCP&L issued $225 million of 6.0% unsecured senior notes through
a private placement expiring in 2007. The proceeds from the issuance were
primarily used to refinance maturing unsecured medium-term notes. During the
second quarter of 2002, KCP&L, pursuant to its obligations under a registration
rights agreement entered into in connection with the private placement, plans to
file an S-4 registration statement offering to exchange up to $225 million of
new 6.0% unsecured senior notes for the $225 million privately placed notes. The
new notes will carry the same terms and conditions as the privately placed issue
and will generally be freely tradable.
14
In March 2002, Great Plains Energy made a $36 million capital contribution to
KCP&L increasing capital stock premium and expense to $75 million.
Great Plains Energy filed an S-3 registration statement on April 29, 2002, which
will allow for the issuance of an aggregate amount up to $300 million of any
combination of senior debt securities, subordinated debt securities, trust
preferred securities, convertible securities, or common stock. Great Plains
Energy has announced its plans to issue additional common equity in 2002.
4. SEGMENT AND RELATED INFORMATION
Great Plains Energy
Great Plains Energy has three reportable segments based on its method of
internal reporting, which generally segregates the reportable segments based on
products and services, management responsibility and regulation. Segment
information is provided for the following: (1) KCP&L is the regulated electric
utility which generates, transmits and distributes electricity; (2) KLT Inc. is
an investment company focusing on energy-related ventures that are unregulated
with high growth potential; such as energy services, natural gas development and
production and affordable housing limited partnerships; and (3) HSS holds
investments in two businesses focusing primarily in residential services.
"Other" includes the operations of GPP, a competitive generator that will focus
on development, production and trading of wholesale electric capacity and
energy, unallocated corporate charges and intercompany eliminations. The summary
of significant accounting policies applies to all of the reportable segments.
Segment performance is evaluated based on net income.
The tables below reflect summarized financial information concerning Great
Plains Energy's reportable segments. Prior year information has been restated to
conform to the current presentation.
For the three months ended Great
March 31, 2002 Plains
KCP&L HSS KLT Inc. Other Energy
(millions)
Operating revenues $ 198.9 $ 13.3 $ 152.4 $ - $ 364.6
Fuel (34.0) - - - (34.0)
Purchased power (10.9) - (130.8) - (141.7)
Other (a) (110.8) (13.0) (11.5) (0.9) (136.2)
Depreciation and depletion (35.8) (1.1) (0.5) - (37.4)
Gain (loss) on property - 0.1 (0.1) - -
Loss from equity investments - - (0.3) - (0.3)
Non-operating income (expenses) (1.9) 0.1 (7.7) (0.2) (9.7)
Interest charges (19.0) (0.4) (1.3) (0.1) (20.8)
Income taxes 6.6 (0.1) 5.6 0.5 12.6
Net income (loss) $ (6.9) $ (1.1) $ 5.8 $(0.7) $ (2.9)
15
Favorable/(unfavorable) variance Great
between three months ended Plains
March 31, 2002 and March 31, 2001 KCP&L HSS KLT Inc. Other Energy
(millions)
Operating revenues $ 0.1 $ (3.4) $ 87.7 $ - $ 84.4
Fuel (1.3) - - - (1.3)
Purchased power 13.3 - (86.3) - (73.0)
Other (a) (17.8) 7.8 10.8 (0.9) (0.1)
Depreciation and depletion (3.1) (0.5) 2.8 - (0.8)
Gain (loss) on property - 0.1 (1.4) - (1.3)
Loss from equity investments - 0.1 0.1 - 0.2
Non-operating income (expenses) 1.3 (2.2) (7.3) (0.2) (8.4)
Interest charges 0.4 - 3.1 (0.1) 3.4
Income taxes 2.3 (1.1) (4.7) 0.5 (3.0)
Early extinguishment of debt - - (15.9) - (15.9)
Net income (loss) $ (4.8) $ 0.8 $ (11.1) $ (0.7) $ (15.8)
For the three months ended Great
March 31, 2001 Plains
KCP&L HSS KLT Inc. Other Energy
(millions)
Operating revenues $198.8 $ 16.7 $ 64.7 $ - $280.2
Fuel (32.7) - - - (32.7)
Purchased power (24.2) - (44.5) - (68.7)
Other (a) (93.0) (20.8) (22.3) - (136.1)
Depreciation and depletion (32.7) (0.6) (3.3) - (36.6)
Gain on property - - 1.3 - 1.3
Loss from equity investments - (0.1) (0.4) - (0.5)
Non-operating income (expenses) (3.2) 2.3 (0.4) - (1.3)
Interest charges (19.4) (0.4) (4.4) - (24.2)
Income taxes 4.3 1.0 10.3 - 15.6
Early extinguishment of debt - - 15.9 - 15.9
Net income (loss) $ (2.1) $ (1.9) $ 16.9 $ - $ 12.9
(a) Other includes gas purchased and production expenses, telecommunications
expenses, other operating, maintenance and general tax expenses.
The following table provides additional detail on the operations of the KLT Inc.
segment.
For the three months ended
March 31, 2002 DTI(a) SEL(b) KLT Gas Other KLT Inc.
(millions)
Operating revenues $ - $152.2 $ 0.2 $ - $152.4
Purchased power - (130.8) - - (130.8)
Other - (7.0) (2.5) (2.0) (11.5)
Depreciation and depletion - (0.2) (0.3) - (0.5)
Loss on property - - (0.1) - (0.1)
Loss from equity investments - - - (0.3) (0.3)
Non-operating income (expenses) - (2.4) 0.3 (5.6) (7.7)
Interest charges - (0.1) - (1.2) (1.3)
Income taxes - (4.8) 2.3 8.1 5.6
Net income (loss) $ - $ 6.9 $ (0.1) $(1.0) $ 5.8
16
For the three months ended
March 31, 2001 DTI(a) SEL(b) KLT Gas Oher KLT Inc.
(millions)
Operating revenues $ 2.3 $ 60.9 $ 1.5 $ - $ 64.7
Purchased power - (44.5) - - (44.5)
Other (3.8) (14.3) (2.7) (1.5) (22.3)
Depreciation and depletion (2.6) - (0.6) (0.1) (3.3)
Gain on property - - 1.3 - 1.3
Gain (loss) from equity
investments - - 0.1 (0.5) (0.4)
Non-operating income (expenses) 0.9 (0.3) - (1.0) (0.4)
Interest charges (4.0) (0.1) - (0.3) (4.4)
Income taxes 2.8 (0.7) 1.8 6.4 10.3
Early extinguishment of debt 15.9 - - - 15.9
Net income $11.5 $ 1.0 $ 1.4 $ 3.0 $ 16.9
(a) KLT Inc. acquired a majority ownership in DTI in February 2001. Prior
to this, the investment in DTI was recorded on an equity basis. On
December 31, 2001, DTI filed voluntary petitions for bankruptcy. DTI's
reorganization under Chapter 11 of the U.S. Bankruptcy Code continues
in process. As a result of DTI's filing for bankruptcy protection, and
KLT Telecom's resultant loss of control, KLT Telecom has not included
in its results for the three months ended March 31, 2002, the ongoing
earnings or loss incurred by DTI.
(b) Represents Strategic Energy's impact on KLT Inc.'s results of operations for
the periods presented.
Consolidated KCP&L
On October 1, 2001, consolidated KCP&L dividended its ownership interest in KLT
Inc. and GPP to Great Plains Energy. As a result, those companies are direct
subsidiaries of Great Plains Energy and are not included in consolidated KCP&L's
results of operations and financial position since October 1, 2001.
The table below reflects summarized financial information for the three months
ended March 31, 2002, concerning consolidated KCP&L's reportable segments. For
the three months ended March 31, 2001, consolidated KCP&L's segment information
is identical to the Great Plains Energy segment information presented above.
For the three months ended Consolidated
March 31, 2002 KCP&L HSS KCP&L
(millions)
Operating revenues $ 198.9 $ 13.3 $ 212.2
Fuel (34.0) - (34.0)
Purchased power (10.9) - (10.9)
Other (a) (110.8) (13.0) (123.8)
Depreciation and depletion (35.8) (1.1) (36.9)
Gain on property - 0.1 0.1
Non-operating income (expenses) (1.9) 0.1 (1.8)
Interest charges (19.0) (0.4) (19.4)
Income taxes 6.6 (0.1) 6.5
Net income (loss) $ (6.9) $ (1.1) $ (8.0)
(a) Other includes other operating, maintenance and general tax expenses.
17
For the three months ended Great
March 31 Plains
KCP&L HSS KLT Inc. Other Energy
2002 (millions)
Assets $3,116.0 $57.4 $ 332.0 $0.4 $ 3,505.8
Capital and investment
expenditures 37.5 1.4 5.0 0.3 44.2
2001
Assets $2,997.4 $57.0 $ 737.4 $0.1 $ 3,791.9
Net equity method investments (b) - - 24.1 - 24.1
Capital and investment
expenditures 74.7 (0.5) 53.8 - 128.0
(b) Excluding affordable housing limited partnerships.
5. COMMITMENTS AND CONTINGENCIES
Nuclear Liability and Insurance
Liability Insurance
The Price-Anderson Act currently limits the combined public liability of nuclear
reactor owners to $9.5 billion for claims that could arise from a single nuclear
incident. The owners of Wolf Creek (the Owners) carry the maximum available
commercial insurance of $0.2 billion. Secondary Financial Protection, an
assessment plan mandated by the NRC, provides insurance for the $9.3 billion
balance.
Under Secondary Financial Protection, if there were a catastrophic nuclear
incident involving any of the nation's licensed reactors, the Owners would be
subject to a maximum retrospective assessment per incident of up to $88 million
($41 million, KCP&L's 47% share). The Owners are jointly and severally liable
for these charges, payable at a rate not to exceed $10 million ($5 million,
KCP&L's 47% share) per incident per year, excluding applicable premium taxes.
The assessment, most recently revised in 1998, is subject to an inflation
adjustment every five years based on the Consumer Price Index.
Property, Decontamination, Premature Decommissioning and Extra Expense Insurance
The Owners also carry $2.8 billion ($1.3 billion, KCP&L's 47% share) of property
damage, decontamination and premature decommissioning insurance for loss
resulting from damage to the Wolf Creek facilities. NEIL provides this
insurance.
In the event of an accident, insurance proceeds must first be used for reactor
stabilization and NRC mandated site decontamination. KCP&L's share of any
remaining proceeds can be used for further decontamination, property damage
restoration and premature decommissioning costs. Premature decommissioning
coverage applies only if an accident at Wolf Creek exceeds $500 million in
property damage and decontamination expenses, and only after trust funds have
been exhausted.
The Owners also carry additional insurance from NEIL to cover costs of
replacement power and other extra expenses incurred in the event of a prolonged
outage resulting from accidental property damage at Wolf Creek.
Under all NEIL policies, KCP&L is subject to retrospective assessments if NEIL
losses, for each policy year, exceed the accumulated funds available to the
insurer under that policy. The estimated maximum amount of retrospective
assessments to KCP&L under the current policies could total about $10.7 million.
In the event of a catastrophic loss at Wolf Creek, the insurance coverage may
not be adequate to cover property damage and extra expenses incurred. Uninsured
losses, to the extent not recovered through
18
rates, would be assumed by KCP&L and could have a material, adverse effect on
its financial condition, results of operations and cash flows.
Low-Level Waste
The Low-Level Radioactive Waste Policy Amendments Act of 1985 mandated that the
various states, individually or through interstate compacts, develop alternative
low-level radioactive waste disposal facilities. The states of Kansas, Nebraska,
Arkansas, Louisiana and Oklahoma formed the Central Interstate Low-Level
Radioactive Waste Compact and selected a site in northern Nebraska to locate a
disposal facility. WCNOC and the owners of the other five nuclear units in the
compact provided most of the pre-construction financing for this project.
KCP&L's net investment on its books at March 31, 2002 and December 31, 2001, was
$7.4 million.
Significant opposition to the project has been raised by Nebraska officials and
residents in the area of the proposed facility, and attempts have been made
through litigation and proposed legislation in Nebraska to slow down or stop
development of the facility. On December 18, 1998, the application for a license
to construct this project was denied. This issue is being addressed in the
courts. The passage of time, as well as developments in pending legal
proceedings, has increased the chances for reversal of the license denial.
In May 1999, the Nebraska legislature passed a bill withdrawing Nebraska from
the Compact. In August 1999, the Nebraska Governor gave official notice of the
withdrawal to the other member states. Withdrawal will not be effective for five
years and will not, of itself, nullify the site license proceeding.
Environmental Matters
KCP&L's operations are subject to regulation by federal, state and local
authorities with regard to air and other environmental matters. The generation
and transmission of electricity produces and requires disposal of certain
hazardous products which are subject to these laws and regulations. In addition
to imposing continuing compliance obligations, these laws and regulations
authorize the imposition of substantial penalties for noncompliance, including
fines, injunctive relief and other sanctions. Failure to comply with these laws
and regulations could have a material adverse affect on KCP&L.
KCP&L operates in an environmentally responsible manner and seeks to use current
technology to avoid and treat contamination. KCP&L regularly conducts
environmental audits designed to ensure compliance with governmental regulations
and to detect contamination. Governmental bodies, however, may impose additional
or more rigid environmental regulations that could require substantial changes
to operations or facilities at a significant cost. Expenditures to comply with
environmental laws and regulations have not been material in amount and are not
expected to be material in the upcoming years with the exception of the issues
discussed below.
Certain Air Toxic Substances
In July 2000, the National Research Council published its findings of a study
under the Clean Air Act which stated that power plants that burn fossil fuels,
particularly coal, generate the greatest amount of mercury emissions. As a
result, in December 2000, the EPA announced it would propose Maximum Achievable
Control Technology (MACT) requirements by December 2003 to reduce mercury
emissions and issue final rules by December 2004. Until the rules are proposed,
KCP&L cannot predict the likelihood or compliance costs of such regulations.
Air Particulate Matter
In July 1997, the EPA revised ozone and particulate matter air quality standards
creating a new eight-hour ozone standard and establishing a new standard for
particulate matter less than 2.5 microns in diameter. These standards were
challenged in the U. S. Court of Appeals for the District of Columbia (Appeals
Court) that decided against the EPA. Upon further appeal, the U. S. Supreme
Court reviewed
19
the standards and remanded the case back to the Appeals Court for further
review, including a review of whether the standards were arbitrary and
capricious. On March 26, 2002, the Appeals Court issued its 3 to 0 decision on
challenges to the 8-hour ozone and PM-2.5 national ambient air quality standards
(NAAQS). This ruling denies all state, industry and environmental groups
petitions for review and thus upheld as valid the EPA's new 8-hour ozone and
PM-2.5 NAAQS. In so doing, the court held that the EPA acted consistently with
the Clean Air Act in setting the standards at the levels it chose and the EPA's
actions were reasonable and not arbitrary and capricious, and cited the
deference given the Agency's decision-making authority. The court stated that
the extensive records established for each rule supported the EPA's actions in
both rulemakings.
This ruling by the Appeals Court removed the last major hurdle to the EPA's
implementation of stricter ambient air quality standards for ozone and fine
particles. If required to be implemented, the impact on KCP&L and all other
utilities that use fossil fuels could be substantial. In addition, the EPA is
conducting a three-year study of fine particulate ambient air levels. Until this
testing and review period has been completed, KCP&L cannot determine additional
compliance costs, if any, associated with the new particulate regulations.
Nitrogen Oxide
The EPA announced in 1998 regulations implementing reductions in NOx emissions.
These regulations initially called for 22 states, including Missouri, to submit
plans for controlling NOx emissions. The regulations require a significant
reduction in NOx emissions from 1990 levels at KCP&L's Missouri coal-fired
plants by the year 2003.
In December 1998, KCP&L and several other western Missouri utilities filed suit
against the EPA over the inclusion of western Missouri in the NOx reduction
program based on the 1-hour NOx standard. On March 3, 2000, a three-judge panel
of the District of Columbia Circuit of the U.S. Court of Appeals sent the NOx
rules related to Missouri back to the EPA, stating the EPA failed to prove that
fossil plants in the western part of Missouri significantly contribute to ozone
formation in downwind states. On March 5, 2001, the U.S. Supreme Court denied
certiorari, making the decision of the Court of Appeals final.
In the February 22, 2002, Federal Register, the EPA issued proposed Phase II NOx
SIP Call regulation which specifically excludes the fossil plants in the western
part of Missouri from the NOx SIP Call. Official comments to the EPA's proposed
regulation will be received until April 29, 2002.
If required to be implemented, KCP&L would need to incur significant capital
costs, purchase power or purchase NOx emission allowances. Preliminary analysis
of the regulations indicates that selective catalytic reduction technology, as
well as other changes, may be required for some of the KCP&L units. Currently,
KCP&L estimates that additional capital expenditures to comply with these
regulations could range from $40 million to $60 million. Operations and
maintenance expenses could also increase by more than $2.5 million per year.
KCP&L continues to refine these preliminary estimates and explore alternatives.
The ultimate cost of these regulations, if any, could be significantly different
from the amounts estimated above.
Carbon Dioxide
At a December 1997 meeting in Kyoto, Japan, delegates from 167 nations,
including the United States, agreed to a treaty (Kyoto Protocol) that would
require a seven percent reduction in United States carbon dioxide (CO2)
emissions below 1990 levels. Although the United States agreed to the Kyoto
Protocol, the treaty has not been sent to Congress for ratification. The
financial impact on KCP&L of future requirements in the reduction of CO2
emissions cannot be determined until specific regulations are adopted.
20
Proposed Water Use Regulations
In February 2002, the EPA issued proposed rules related to certain existing
power producing facilities that employ cooling water intake structures that
withdraw 50 million gallons or more per day and use 25% or more of that water
for cooling purposes. The EPA must take final action by August 2003. KCP&L will
continue to monitor the progress of this rulemaking. The impact of these
proposed rules has not yet been quantified, however, KCP&L's generating stations
would be affected.
KCP&L Leases
In 2001, KCP&L entered into a synthetic lease arrangement with a Trust (Lessor)
to finance the purchase, installation, assembly and construction of five
combustion turbines and related property and equipment that will add 385
megawatts of peaking capacity (the "Project). The Trust is a special-purpose
entity and has an aggregate financing commitment from third-party equity and
debt participants (Investors) of $200 million. In accordance with SFAS No. 13
"Accounting for Leases," and related EITF issues (including EITF Issue No.
90-15, "Impact of Non-substantive Lessors, Residual Value Guarantees, and Other
Provisions in Leasing Transactions" and EITF Issue No. 97-10, "The Effect of
Lessee Involvement in Asset Construction"), the Project and related lease
obligations are not included in KCP&L's consolidated balance sheet. The Lessor
has appointed KCP&L as supervisory agent responsible for completing construction
of the Project by no later than June 2004. The initial lease term is
approximately three and one quarter years, beginning at the date of construction
completion, which is expected to be October 2003. At the end of the lease term
(October 2006), KCP&L may choose to sell the Project for the Lessor,
guaranteeing to the Lessor a residual value for the Project in an amount which
may be up to 83.21% of the project cost. If KCP&L does not elect the sale
option, KCP&L must either extend the lease, if it can obtain the consent of the
Lessor, or purchase the Project for the then outstanding project cost. KCP&L
also has contingent obligations to the Lessor upon an event of a default during
both the construction period and lease period. Upon a default in the
construction period, KCP&L's maximum obligation to the Lessor equals (i) in the
circumstances of bankruptcy, fraud, illegal acts, misapplication of funds and
willful misconduct, 100% of then-incurred project costs, and (ii) in all other
circumstances, an amount which may be up to 89.9% of then-incurred project costs
that are capitalizable in accordance with GAAP. At March 31, 2002, cumulative
project costs were approximately $74.7 million. Upon a default during the lease
period, KCP&L's maximum obligation to the Lessor equals 100% of project costs.
KCP&L's rental obligation, which reflects interest payments only, totals
approximately $35.5 million in the aggregate.
During the first quarter of 2002, the FASB considered proposed approaches
related to identifying and accounting for special-purpose entities. One approach
being considered is to require consolidation of a special-purpose entity if the
equity investment held by third-party owners in the special-purpose entity is
less than 10% of total capitalization. Special-purpose entities in existence at
the date of adoption of this interpretation will likely be consolidated by the
primary beneficiary.
Strategic Energy Purchased Power Energy Commitments
Strategic Energy has entered into agreements to purchase electricity at various
fixed prices to meet estimated supply requirements for 2002 through 2007.
Commitments at March 31, 2002, under these agreements total $374.1 million in
2002, $344.8 million in 2003, $221.3 million in 2004, $185.2 million in 2005,
$23.2 million in 2006 and $1.1 million in 2007. See Note 8 for further
discussion.
Put Option Held by Minority Interests in Strategic Energy
KLT Inc., through one of its subsidiaries, owns 82.75% of Strategic Energy.
Certain employees of Strategic Energy and other investors have a put option to
sell all or part of their interests in Strategic Energy (currently 11.45%) at
any time within the 90 days following January 31, 2004, under certain
circumstances, at fair market value. Fair market value will be determined by the
mutual agreement of the parties, or if an agreement cannot be reached, then by
third party appraisal.
21
6. GOODWILL
SFAS No. 142, "Goodwill and Other Intangible Assets"
The Company adopted SFAS No. 142 on January 1, 2002. Under the new pronouncement
an initial impairment test (comparison of the fair value of a reporting unit to
its carrying amount) must be done on all goodwill within six months of initially
applying the statement and then at least annually, thereafter. Also, goodwill is
no longer amortized. Strategic Energy's valuation is complete and no impairment
of the $14 million of goodwill will be recorded. Valuations of RSAE are in
process and will be utilized to assess impairment, if any, of its $23 million of
goodwill. Transition adjustments for the adoption of SFAS No. 142, if any, will
be recorded by June 30, 2002. Goodwill amortization for the three months ended
March 31, 2001, was immaterial.
7. RECEIVABLES
March 31 December 31
2002 2001
(thousands)
Kansas City Power & Light Receivables Company $ 14,645 $ 25,723
KCP&L other receivables 34,839 36,788
Consolidated KCP&L receivables 49,484 62,511
Great Plains Energy other receivables 106,125 89,603
Great Plains Energy receivables $ 155,609 $ 152,114
KCP&L has a revolving agreement to sell all of its right, title and interest in
the majority of its customer accounts receivable to Kansas City Power & Light
Receivables Company, a special purpose entity established to purchase customer
accounts receivable from KCP&L. Accounts receivable sold under the revolving
agreement between Kansas City Power & Light Receivables Company and KCP&L
totaled $84.6 million at March 31, 2002 and $95.7 million at December 31, 2001.
In consideration of receivables sold in excess of $70 million (cash value of the
sale), KCP&L received a subordinated note from Kansas City Power & Light
Receivables Company.
KCP&L other receivables at March 31, 2002, consist primarily of receivables from
partners in jointly-owned electric utility plants, bulk power sales receivables
and accounts receivable held by RSAE and Worry Free. Great Plains Energy other
receivables at March 31, 2002, consist of accounts receivable held by KLT Inc.
and its subsidiaries, including receivables of $104.3 million held by Strategic
Energy.
8. DERIVATIVE FINANCIAL INSTRUMENTS
On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended. SFAS No. 133 requires that
every derivative instrument be recorded on the balance sheet as an asset or
liability measured at its fair value and that changes in the fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met.
SFAS No. 133 requires that as of the date of initial adoption, the difference
between the fair market value of derivative instruments recorded on the balance
sheet and the previous carrying amount of those derivatives be reported in net
income or other comprehensive income, as appropriate, as a cumulative effect of
a change in accounting principle. The adoption of SFAS No. 133 on January 1,
2001, required the Company to record a $0.2 million expense, net of $0.1 million
of income tax. The Company did not reflect this immaterial amount as a
cumulative effect. This entry increased interest expense by $0.6 million and
reduced purchased power expense by $0.3 million. The Company also recorded $17.4
million, net of $12.6 million of income tax, as a cumulative effect of a change
in
22
accounting principle applicable to comprehensive income for its cash flow
hedges. Cash flow hedges are derivative instruments used to mitigate the
exposure to variability in expected future cash flows attributable to a
particular risk.
Derivative Instruments and Hedging Activities
The Company's activities expose it to a variety of market risks including
interest rates and commodity prices. Management has established risk management
policies and strategies to reduce the potentially adverse effects that the
volatility of the markets may have on its operating results.
The Company's interest rate risk management strategy uses derivative instruments
to minimize significant, unanticipated earnings fluctuations caused by
interest-rate volatility on a portion of its variable rate debt. The Company
maintains commodity-price risk management strategies that use derivative
instruments to minimize significant, unanticipated earnings fluctuations caused
by commodity price volatility.
The Company's risk management activities, including the use of derivatives, are
subject to the management, direction and control of internal Risk Management
Committees.
Interest Rate Risk Management
KCP&L utilizes interest rate management derivatives to reduce a portion of
KCP&L's interest rate risk by converting a portion of its variable interest rate
payments into fixed interest rate payments.
KCP&L entered into interest rate swap agreements to fix the interest rate on $30
million of floating-rate long-term debt. These swaps do not qualify for hedge
accounting. The swap agreements terminate in 2003 and effectively fix the
interest to a weighted-average rate of 3.88%. The fair market values of these
agreements are recorded as current assets and liabilities and adjustments to
interest expense on the income statement. Changes in the fair market value of
these instruments are recorded in the income statement.
Commodity Risk Management
KCP&L's risk management policy is to use derivative hedge instruments to
mitigate its exposure to market price fluctuations on its projected gas
generation requirements for retail and firm wholesale sales. These hedging
instruments are designated as cash flow hedges. The fair market value of these
instruments is recorded as current assets and current liabilities. When the gas
is purchased and to the extent the hedge is effective at mitigating the impact
of a change in the purchase price of gas, the amounts in other comprehensive
income are reclassified to the consolidated income statement. To the extent that
the hedges are not effective, the ineffective portion of the changes in fair
market value are recorded directly in fuel expense.
Strategic Energy maintains a commodity-price risk management strategy that uses
forward physical energy purchases and derivative instruments to minimize
significant, unanticipated earnings fluctuations caused by commodity-price
volatility. An option that was designated as a cash flow hedge expired on
December 31, 2001. The option allowed Strategic Energy to purchase up to 270
megawatts of power at a fixed rate of $21 per mwh. The fair market value of this
option and swap agreements designated as cash flow hedges at January 1, 2001,
was recorded as a current asset and a cumulative effect of a change in
accounting principle in comprehensive income.
Supplying electricity to retail customers under fixed rate contracts requires
Strategic Energy to match customers' demand with fixed price purchases. In
certain markets where Strategic Energy operates, there is limited availability
of forward fixed price power contracts. By entering into swap contracts for a
portion of its forecasted purchases in these markets, the future purchase price
of electricity is effectively fixed under these swap contracts protecting
Strategic Energy from price volatility. The swap contracts
23
limit the unfavorable effect that price increases will have on electricity
purchases. Under SFAS No. 133, the majority of the swap agreements are
designated as cash flow hedges resulting in the difference between the market
value of energy and the hedge value being recorded as comprehensive
income(loss). To the extent that the hedges are not effective, the ineffective
portion of the changes in fair market value will be recorded directly in
purchased power. At March 31, 2002, the accumulated comprehensive loss, net of
income taxes and minority interest, reflected in Great Plains Energy's
consolidated statement of capitalization reflected a $7.4 million loss related
to such cash flow hedges. However, most of the energy hedged with the swaps has
been sold to customers through contracts at prices different than the fair
market value used to value the swaps. Therefore, Strategic Energy does not
anticipate incurring any of the losses represented in comprehensive income.
The remaining swap agreements do not qualify for hedge accounting. The fair
market value of these swaps at January 1, 2001, was recorded as an asset or
liability on the consolidated balance sheet and an adjustment to the cost of
purchased power. The change in the fair market value and future changes in the
fair market values of these swaps will also be recorded in purchased power.
KLT Gas' risk management policy is to use firm sales agreements or financial
hedge instruments to mitigate its exposure to market price fluctuations on up to
85% of its daily natural gas production. These hedging instruments are
designated as cash flow hedges. The fair market value of these instruments at
January 1, 2001, was recorded as current assets and current liabilities, as
applicable, and the cumulative effect of a change in an accounting principle in
comprehensive income. When the gas is sold and to the extent the hedge is
effective at mitigating the impact of a change in the sales price of gas, the
amounts in other comprehensive income are reclassified to the consolidated
income statement. To the extent that the hedges are not effective, the
ineffective portion of the changes in fair market value are recorded directly in
gas revenues.
KLT Gas unwound the majority of its gas hedge derivatives with an offsetting
swap transaction during the second quarter of 2001 primarily due to declining
production at its gas properties. This transaction did not qualify for hedge
accounting. The fair market value of the swap has been recorded in gas revenues.
The amounts recorded related to the cash flow hedges are summarized below.
Great Plains Energy activity for the three months ended March 31, 2002
Increase
(Decrease) in
December 31 Comprehensive March 31
2001 Income Reclassified 2002
Assets (millions)
Other current assets $ (0.2) $0.9 $ 0.1 $0.8
Other deferred debits - 0.3 - 0.3
Liabilities and capitalization
Other current liabilities (12.7) 2.4 2.9 (7.4)
Other comprehensive
income 12.1 (3.4) (1.5) 7.2
Deferred income taxes 8.5 (2.4) (1.0) 5.1
Other deferred credits (7.7) 2.2 (0.5) (6.0)
24
Consolidated KCP&L activity for the three months ended March 31, 2002
Increase
(Decrease) in
December 31 Comprehensive March 31
2001 Income Reclassified 2002
Assets (millions)
Other current assets $ (0.2) $0.5 $ 0.1 $0.4
Liabilities and capitalization
Other current liabilities (0.1) 0.1 - -
Other comprehensive
income 0.2 (0.4) (0.1) (0.3)
Deferred income taxes 0.1 (0.2) - (0.1)
Great Plains Energy and Consolidated KCP&L activity for the three months ended March 31, 2001
Cumulative Increase
Effect to (Decrease) in
January 1, Comprehensive March 31
2001 Income Reclassified 2001
Assets (millions)
Other current assets $44.5 $ (3.5) $ (10.9) $30.1
Liabilities and capitalization
Other current liabilities (6.8) 0.3 2.1 (4.4)
Other comprehensive (17.4) 1.5 4.0 (11.9)
income
Deferred income taxes (12.7) 1.1 2.9 (8.7)
Other deferred credits (7.6) 0.6 1.9 (5.1)
Reclassified to earnings for the three months ended March 31,
Great Plains Energy Consolidated KCP&L
2002 2001 2002 2001
(millions)
Gas revenues $ - $ 2.1 $ - $ 2.1
Fuel expense 0.1 - 0.1 -
Purchased power expense 2.9 (10.9) - (10.9)
Minority interest (0.5) 1.9 - 1.9
Income taxes (1.0) 2.9 - 2.9
Other comprehensive income $1.5 $ (4.0) $ 0.1 $ (4.0)
9. DTI HOLDINGS, INC. AND SUBSIDIARIES
On December 31, 2001, DTI, a subsidiary of KLT Telecom, filed voluntary
petitions for bankruptcy. DTI's reorganization under Chapter 11 of the U.S.
Bankruptcy Code continues in process. Timing of completion of the bankruptcy
process has yet to be determined. During the first quarter of 2002, the
bankruptcy court approved $5 million in DIP financing to be provided by KLT
Telecom. To-date, none of the DIP financing has been borrowed by DTI. As a
result of DTI's filing for bankruptcy protection and KLT Telecom's resultant
loss of control, KLT Telecom has not included in its results for the three
months ended March 31, 2002, the ongoing earnings or loss incurred by DTI.
25
10. KCP&L JANUARY ICE STORM
At the end of January 2002, the most damaging ice storm in Kansas City history
caused roughly 285,000 customer outages throughout the KCP&L territory.
Incremental costs incurred during the first quarter of 2002 related to the
January ice storm were approximately $45.4 million of which $12.5 million were
capital expenditures and therefore recorded to utility plant. KCP&L expensed
$14.8 million ($0.15 per share) for the Kansas jurisdictional portion of the
storm costs and deferred as a regulatory asset $18.1 million of the storm costs
applicable to Missouri. KCP&L has reached a stipulation and agreement with the
KCC staff and the Citizens Utility Ratepayers Board that would result in a rate
moratorium until 2006 in return for KCP&L's agreement to not seek reimbursement
for storm-related costs, and implement a $5 million revenue reduction in 2003.
Additionally, KCP&L agreed to determine depreciation expense of the Wolf Creek
nuclear generating station using a 60 year life instead of a 40 year life
effective January 2003, which will result in a reduction of expense and revenue
by $7 million to $8 million in 2003. KCP&L also agreed to file a rate case by
May 15, 2006. The stipulation and agreement has been filed with the KCC and is
subject to its approval.
Additionally, on April 24, 2002, KCP&L filed a request for an accounting
authority order, which does not affect rates, with the MPSC for deferral and
amortization over a five-year period of the $18.1 million Missouri
jurisdictional portion of the storm costs. KCP&L defers, on the balance sheet,
items when allowed by a commissions' rate order or when it is probable, based on
regulatory past practices, that future rates will recover the amortization of
the deferred costs. Therefore, once the order is received from the MPSC, KCP&L
will begin amortizing the Missouri storm expense. The impact is expected to be
$2.1 million ($0.02 per share) in 2002 and $3.6 million ($0.04 per share)
annually for the remainder of the amortization period. However, if the MPSC does
not grant the accounting authority order, KCP&L will expense the entire $18.1
million.
26
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Management's Discussion and Analysis of Financial Condition and Results of
Operations that follow are a combined presentation for Great Plains Energy and
KCP&L, both registrants under this filing. The discussion and analysis by
management focuses on those factors that had a material effect on the financial
condition and results of operations of the registrants during the periods
presented. It should be read in conjunction with the accompanying Financial
Statements and Notes. Note 4. Segment and Related Information summarizes the
income statement by segment.
Great Plains Energy Incorporated
Effective October 1, 2001, Great Plains Energy became the holding company of the
following subsidiaries:
o KCP&L, an integrated electric utility in the states of Missouri and Kansas,
focused on providing reliable, low-cost electricity to retail customers;
o HSS, an unregulated subsidiary of KCP&L, holds investments in two
businesses, Worry Free Service, Inc. and RSAE, focusing primarily
in residential services;
o GPP, a competitive generator that will focus on development, production and
trading of wholesale electric capacity and energy; and
o KLT Inc., an investment company focusing on energy-related ventures that
are unregulated with high growth potential. KLT Inc.'s major holdings
consist of Strategic Energy, KLT Gas and affordable housing limited
partnerships.
Effective October 1, 2001, all outstanding KCP&L shares were exchanged one for
one for shares of Great Plains Energy. The Great Plains Energy trading symbol
"GXP" replaced the KCP&L trading symbol "KLT" on the New York Stock Exchange.
27
Great Plains Energy Consolidated Earnings Overview
Great Plains Energy's earnings decreased from $12.5 million, or $0.20 per share
for the three months ended March 31, 2001, to a loss of $3.3 million, or $(0.05)
per share, for the same period of 2002. The following table provides an overview
of the contributions to earnings for the three months ended March 31, 2002 and
2001.
Three Months Ended
March 31
2002 2001
Consolidated KCP&L
KCP&L $ (0.11) $ (0.04)
HSS (0.02) (0.03)
Consolidated KCP&L (0.13) (0.07)
KLT Inc.
Excluding extraordinary item 0.09 0.01
Extraordinary item:
Early extinguishment of debt - 0.26
KLT Inc. 0.09 0.27
GPP and other (0.01) -
Reported Consolidated EPS $ (0.05) $ 0.20
The decrease in consolidated KCP&L's earnings for the three months ended March
31, 2002, compared to the same period of 2001, is the result of expensing $14.8
million for the Kansas jurisdictional portion of the January 2002 ice storm and
increased pension expense, partially offset by improved operating performance of
KCP&L driven by the return to service of Hawthorn No. 5 in June 2001. Strategic
Energy's strong growth was the primary reason for the increased earnings for KLT
Inc. for the three months ended March 31, 2002, compared to the same period of
2001, excluding the extraordinary item in 2001.
On February 1, 2001, DTI, an equity investment of KLT Telecom on that date,
completed a tender offer for 50.4% of its outstanding senior discount notes.
This transaction resulted in a $15.9 million ($0.26 per share) extraordinary
gain on the early extinguishment of debt.
On December 31, 2001, DTI filed voluntary petitions for bankruptcy. As a result
of DTI's filing for bankruptcy protection, and KLT Telecom's resultant loss of
control, KLT Telecom has not included in its results for the three months ended
March 31, 2002, the ongoing earnings or loss incurred by DTI.
For further discussion regarding each segment's contribution to consolidated
EPS, see its respective Earnings Overview section below.
Consolidated KCP&L
The following discussion of KCP&L results of operations excludes the results of
operations for KLT Inc., which was transferred to Great Plains Energy on October
1, 2001, and discusses HSS separately. KCP&L's Consolidated Income Statement,
however, includes KLT Inc.'s results of operations for the three months ended
March 31, 2001, and HSS' results of operations in both periods. Consequently,
the KCP&L discussion should be read in conjunction with the
28
information provided in Note 4 of the notes to consolidated financial statements
which provides financial information for the relevant periods for KCP&L, HSS and
KLT Inc. separately.
KCP&L Operations
KCP&L Business Overview
KCP&L, a regulated utility, consists of two business units - power and delivery.
The power business unit has over 3,700 megawatts of generating capacity. During
2001, KCP&L entered into a $200 million, five-year construction and synthetic
operating lease transaction for five combustion turbines that will add 385
megawatts of peaking capacity. Site preparation will begin in 2002 for the
arrival of the first combustion turbine in 2003. The operating lease may be
amended to transfer the right to use some or all of the units to GPP. If
transferred, a significant portion of the output from some of these units may be
sold to KCP&L.
The delivery business unit consists of transmission and distribution facilities
that serve over 475,000 customers as of March 31, 2002. Historically, load
growth has increased annually by approximately 2.0% to 2.5% through increased
customer usage and additional customers. Rates charged for electricity are below
the national average and KCP&L's reliability of service is above the national
average.
KCP&L has an obligation, under FERC Order 2000, to join a FERC approved RTO.
RTOs combine regional transmission operations of utility businesses into an
organization that schedules transmission services and monitors the energy market
to ensure regional transmission reliability and non-discriminatory access. KCP&L
is a member of the SPP. During the first quarter of 2002, the SPP and the MISO
voted to consolidate the two organizations to create a larger Midwestern RTO, a
non-profit organization that will operate in twenty states and one Canadian
province. The consolidation is expected to be completed during the third quarter
of 2002 but is subject to FERC approval. FERC has already approved an RTO
proposal submitted by the MISO.
KCP&L Earnings Overview
KCP&L's contribution to earnings was a loss of $0.11 for the three months ended
March 31, 2002, compared to a loss of $0.04 for the same period of 2001. The
following table and discussion highlight significant factors affecting the
change in KCP&L's EPS contribution for the periods indicated.
Three months ended March 31, 2002 compared to March 31, 2001
Revenue, net of fuel and purchased power $ 0.12
Kansas jurisdictional portion of the January 2002 ice storm (0.15)
Pension expense (0.04)
Increased depreciation (0.03)
Other 0.03
Reported Consolidated EPS $(0.07)
Earnings per share decreased $0.07 for the three months ended primarily due to
expensing the Kansas jurisdictional portion of the January 2002 ice storm and
increased pension expense. These costs were partially offset by improved
operating performance of KCP&L driven by the return to service of Hawthorn No. 5
in June 2001.
29
KCP&L Electric Sales Revenues and Megawatt-hour (mwh) Sales
Total revenues were consistent for the three months ended March 31, 2002,
compared to the same period of 2001. Decreased retail sales were offset by
increased bulk power sales. However, the price per bulk power kwh sold decreased
for the three months ended March 31, 2002, compared to the same period of 2001.
KCP&L Electric Sales Revenues
Three Months Ended
March 31 %
2002 2001 Change
Retail sales (millions)
Residential $69.8 $70.8 (1)%
Commercial 86.5 84.1 3 %
Industrial 19.8 27.2 (27)%
Other 2.2 2.0 4 %
Total retail 178.3 184.1 (3)%
Sales for resale
Bulk power sales 16.6 10.2 63 %
Other 0.9 1.2 (22)%
Other revenues 3.1 3.3 (6)%
KCP&L electric revenues $198.9 $198.8 - %
KCP&L Megawatt-hour (mwh) Sales
Three Months Ended
March 31 %
2002 2001 Change
Retail sales (thousands)
Residential 1,069 1,114 (4)%
Commercial 1,556 1,544 1 %
Industrial 426 567 (25)%
Other 22 20 6 %
Total retail 3,073 3,245 (5)%
Sales for resale
Bulk power sales 825 395 109 %
Other 30 31 (4)%
KCP&L electric sales 3,928 3,671 7 %
The decrease in retail revenues and mwh sales for the three months ended March
31, 2002, compared to the same period of 2001 is primarily due to the impact of
mild weather on residential mwh sales, cost reductions implemented by large
industrial customers and the bankruptcy of one major industrial customer in
early 2001. Load growth resulting from higher usage-per-customer and the
addition of new customers partially offset the decreases. Less than 1% of
revenues include an automatic fuel adjustment provision.
Bulk power sales vary with system requirements, generating unit and purchased
power availability, fuel costs and requirements of other electric systems. The
significant increase in bulk power mwh sales for the three months ended March
31, 2002, compared to the same period of 2001, was primarily attributable to the
return to service of Hawthorn No. 5 in June 2001. The average price per mwh of
bulk power sales decreased 22% for the three months
30
ended March 31, 2002, compared to the same period of 2001, partially offsetting
the effect of the increased bulk power mwh sales on revenues.
KCP&L has reached a stipulation and agreement with the KCC staff and the
Citizens Utility Ratepayers Board that would result in a rate moratorium until
2006 in return for KCP&L's agreement to not seek reimbursement for storm-related
costs, and implement a $5 million revenue reduction in 2003. Additionally, KCP&L
agreed to determine depreciation expense of the Wolf Creek nuclear generating
station using a 60 year life instead of a 40 year life effective January 2003,
which results in a reduction of expense and revenue by approximately $7 million
to $8 million in 2003. KCP&L also agreed to file a rate case by May 15, 2006.
The stipulation and agreement has been filed with the KCC and is subject to its
approval.
KCP&L Fuel and Purchased Power
KCP&L fuel costs increased $1.3 million for the three months ended March 31,
2002, compared to the same period of 2001, primarily because of a 13% increase
in mwh's generated partially offset by a 5% reduction in the fuel cost per
mmBtu. The increase in mwh's generated and a portion of the reduction in the
fuel cost per mmBtu is primarily due to the return to service of Hawthorn No. 5,
a coal-fired unit, in June 2001. Coal has a significantly lower cost per mmBtu
than oil. Significantly lower natural gas prices for the three months ended
March 31, 2002, compared to the same period of 2001 also contributed to the
lower fuel cost per mmBtu.
Fossil plants represented 72% of total generation and the nuclear plant about
28% for the three months ended March 31, 2002, compared to 65% and 35% for the
same period of 2001. The change in the fuel mix is due to Wolf Creek's refueling
and maintenance outage discussed below. Nuclear fuel costs per mmBtu remain
substantially less than the mmBtu price of coal. KCP&L expects its cost of
nuclear fuel to remain fairly constant through the year 2003. KCP&L's
procurement strategies continue to provide delivered coal costs below the
regional average.
Purchased power expenses decreased $13.3 million for the three months ended
March 31, 2002, compared to the same period of 2001 due to a 39% decrease in
mwh's purchased due to increased availability of KCP&L's generating units. In
addition, purchased power average prices were down 47% for the three months
ended March 31, 2002, compared to the same period of 2001. However, the cost per
mwh for purchased power is still significantly higher than the fuel cost per mwh
of coal and nuclear generation.
KCP&L Other (including operating, maintenance and general taxes)
KCP&L's other expenses increased $17.8 million for the three months ended March
31, 2002, compared to the same period of 2001 primarily due to the following:
o pension expense increased by $4.0 million mostly due to a significant
decline in the market value of plan assets at the end of the plan's year,
September 30, 2001; and
o maintenance expense increased due to expensing $14.8 million for the Kansas
jurisdictional portion of the January ice storm.
Depreciation
KCP&L's depreciation expense increased $3.1 million for the three months ended
March 31, 2002, compared to the same period of 2001, primarily due to increased
capital additions relating to Hawthorn No. 5, which was placed in service in
June 2001, and the purchase of the previously leased Hawthorn No. 6 turbine at
the end of the third quarter of 2001.
31
Minority Interest in Subsidiaries
For the three months ended March 31, 2002, minority interest in income of
subsidiaries decreased $2.8 million from the three months ended March 31, 2001,
primarily due to the losses of RSAE reducing HSS' minority interest to zero and
Strategic Energy's minority interest no longer being included in the KCP&L
consolidated income statement due to the formation of the holding company.
KCP&L Interest Charges
KCP&L's interest charges decreased $0.4 million for the three months ended March
31, 2002, compared to the same period of 2001, due to decreases in long-term and
short-term debt expense partially offset by a decrease in the allowance for
borrowed funds used during construction.
Long-term debt interest expense
KCP&L's long-term debt interest expense decreased $2.6 million for the three
months ended March 31, 2002, compared to the same period of 2001 due to
decreases in variable interest rates, partially offset by higher average levels
of long-term debt outstanding. The higher average levels of debt primarily
reflect the issuances of $375.0 million of unsecured, fixed-rate senior notes
partially offset by $240.0 million of scheduled debt repayments since March 31,
2001.
Capitalized interest
Allowance for borrowed funds used during construction decreased $3.8 million for
the three months ended March 31, 2002, compared to the same period of 2001
because of decreased construction work in progress primarily due to the return
to service of Hawthorn No. 5 in June 2001
Short-term debt interest expense
KCP&L's short-term debt interest expense decreased by $1.9 million to $0.5
million for the three months ended March 31, 2002, from $2.4 million for the
three months ended March 31, 2001, due to significantly lower interest rates on
commercial paper and significantly lower average levels of outstanding
commercial paper. KCP&L had $31.4 million of commercial paper outstanding at
March 31, 2002 and $198.8 million of commercial paper outstanding at March 31,
2001.
Wolf Creek
Wolf Creek represents about 15% of KCP&L's generating capacity. The plant's
operating performance has remained strong over the last three years,
contributing an average of 29% of KCP&L's annual mwh generation while operating
at an average capacity of 92%. Wolf Creek has the lowest fuel cost per mmBtu of
any of KCP&L's generating units.
KCP&L accrues the incremental operating, maintenance and replacement power costs
for planned outages evenly over the unit's operating cycle, normally 18 months.
As actual outage expenses are incurred, the refueling liability and related
deferred tax asset are reduced. Wolf Creek returned to service on April 27,
2002, following a 35-day refueling and maintenance outage that began on March
23, 2002. The outage had been projected to be 30 days. One of the reasons for
the delay was the failure of a reactor coolant pump motor. During the outage, a
complete inspection of the reactor vessel head indicated no corrosion or other
problems of the type experienced at the Davis-Besse nuclear plant in Ohio. The
next outage is scheduled for the fall of 2003.
32
Ownership and operation of a nuclear generating unit exposes KCP&L to risks
regarding decommissioning costs at the end of the unit's life and to potential
retrospective assessments and property losses in excess of insurance coverage.
HSS Operations
HSS, an unregulated subsidiary of KCP&L, holds investments in businesses
primarily in residential services. HSS is comprised of two subsidiaries, RSAE
and Worry Free Services, Inc.
KCP&L's cash investment in HSS was $46.9 million at March 31, 2002, and December
31, 2001. HSS' loss for the three months ended March 31, 2002, totaled $1.1
million ($0.02 per share) compared to a loss of $1.9 million ($0.03 per share)
for the three months ended March 31, 2001. HSS' decreased loss for the three
months ended March 31, 2002, was primarily due to decreased losses associated
with its ownership in RSAE. Through March 31, 2002, KCP&L's accumulated losses
were $24.7 million on its investment in HSS.
HSS' minority interest in RSAE was reduced to zero during 2001 as a result of
losses. For the three months ended March 31, 2002, HSS recorded a $1.2 million
loss from its investment in RSAE. As long as RSAE is consolidated, future losses
by RSAE will be recorded in HSS' income statement at 100% which will further
decrease the investment below zero.
RSAE increased its line of credit to $25.0 million during the first quarter
2002. At March 31, 2002, RSAE had $22.4 million outstanding under the line of
credit. RSAE used the additional borrowings to repay a $1.3 million loan from
HSS during the first quarter of 2002.
KLT Inc. Operations
KLT Inc. Business Overview
KLT Inc. is an unregulated subsidiary that pursues energy-related ventures in
high growth businesses. Existing ventures include natural gas development and
production, energy services and affordable housing limited partnerships. The
Company's cash investment in KLT Inc. was $150.0 million at March 31, 2002, and
December 31, 2001.
Natural Gas Development and Production - KLT Gas
KLT Gas' business strategy is to acquire and develop early stage coalbed methane
properties. KLT Gas believes that coalbed methane production provides an
economically attractive alternative source of supply to meet the growing demand
for natural gas in North America and has built a knowledge base in coalbed
methane production and reserves evaluation. Therefore, KLT Gas focuses on
coalbed methane - a niche in the natural gas industry where it believes its
expertise provides a competitive advantage. Because it has a longer, predictable
reserve life and lower development cost, coalbed methane is inherently lower
risk than conventional gas exploration.
Although gas prices have been volatile recently, KLT Gas continues to believe
that the long-term future price scenarios for natural gas appear strong.
Environmental concerns and the increased demand for natural gas for new electric
generating capacity are contributing to this projected growth in demand.
33
KLT Gas' properties are located in Colorado, Texas, Wyoming, Kansas, and
Nebraska. These leased properties cover approximately 244,000 undeveloped acres.
The development of this acreage is in accordance with KLT Gas' exploration plan
and capital budget. KLT Gas has revised its capital expenditure estimates based
on changes in market conditions to about $7 million, $40 million, $36 million
and $9 million for the years 2002 through 2005, respectively. The timing of the
development may vary from current plans based upon obtaining the required
environmental and regulatory approvals and permits and future changes in market
conditions.
Energy Management Service - Strategic Energy
Strategic Energy provides power supply coordination services, purchasing
electricity and reselling it to retail and wholesale customers in several
deregulated electricity markets, including Pennsylvania, southern California,
Ohio, New York, Massachusetts and Texas. Strategic Energy also provides
strategic planning and consulting services in the natural gas and electricity
markets. In the first quarter of 2001, KLT Energy Services exchanged its
ownership of $4.7 million of preferred stock in another energy service company
for additional ownership in Strategic Energy. This transaction increased KLT
Energy Services ownership of Strategic Energy from 72% to 83%.
Strategic Energy currently provides power supply coordination services on behalf
of approximately 21,500 commercial and small manufacturing accounts. One to five
year contracts are entered into with customers to supply electricity and manage
their energy needs. In return, Strategic Energy receives an ongoing management
fee plus the contracted price for the electricity.
Strategic Energy's customer base is very diverse. Customers include numerous
Fortune 500 companies, school districts, and governmental entities. Based on
current signed contracts and expected usage, Strategic Energy forecasts a peak
load of 2,354 megawatts. The largest concentration of the forecasted load, 746
megawatts, is in southern California.
Strategic Energy enters into forward contracts to purchase fixed quantities of
electricity at fixed prices that match the forecasted sales of electricity to
retail end users. At March 31, 2002, Strategic Energy had entered into forward
contracts with multiple suppliers. Should the supplier default or not deliver,
Strategic Energy would be exposed to market fluctuations, and possible losses,
to the extent that the then current market price differed from the fixed forward
contract price.
Strategic Energy monitors this risk by evaluating the credit quality of its
suppliers on a routine basis as part of its risk management policy and
practices. At March 31, 2002, Strategic Energy's five largest suppliers under
forward supply contracts represented 77% of the total future committed
purchases.
Strategic Energy maintains a commodity-price risk management strategy that uses
forward physical energy purchases and derivative instruments to minimize
significant, unanticipated earnings fluctuations caused by commodity-price
volatility. Supplying electricity to retail customers under fixed rate contracts
requires Strategic Energy to match customers' demand with fixed price purchases.
In certain markets where Strategic Energy operates, there is limited
availability of forward fixed price power contracts. By entering into swap
contracts for a portion of its forecasted purchases in these markets, the future
purchase price of electricity is effectively fixed under these swap contracts.
The swap contracts limit the unfavorable effect that price increases will have
on electricity purchases. Under SFAS No. 133, the majority of the swap
agreements are designated as cash flow hedges resulting in the difference
between the market
34
value of energy and the hedge value being recorded as comprehensive
income(loss). At March 31, 2002, the accumulated comprehensive loss, net of
income taxes and minority interest, reflected in Great Plains Energy's
consolidated statement of capitalization reflected a $7.4 million loss related
to such cash flow hedges. However, most of the energy hedged with the swaps has
been sold to customers through contracts at prices different than the fair
market value used to value the swaps. Therefore, Strategic Energy does not
anticipate incurring the losses represented in comprehensive income.
Investments in Affordable Housing Limited Partnerships - KLT Investments
At March 31, 2002, KLT Investments had $74.9 million in affordable housing
limited partnerships. About 66% of these investments were recorded at cost; the
equity method was used for the remainder. Tax expense is reduced in the year tax
credits are generated. The investments generate future cash flows from tax
credits and tax losses of the partnerships. The investments also generate cash
flows from the sales of the properties. For most investments, tax credits are
received over ten years. A change in accounting principle relating to
investments made after May 19, 1995, requires the use of the equity method when
a company owns more than 5% in a limited partnership investment. Of the
investments recorded at cost, $47.6 million exceed this 5% level but were made
before May 19, 1995.
On a quarterly basis, KLT Investments compares the cost of those properties
accounted for by the cost method to the total of projected residual value of the
properties and remaining tax credits to be received. Estimated residual values
are based on studies performed by an independent firm. Based on the latest
comparison, KLT Investments reduced its investments in affordable housing
limited partnerships by $5.3 million during the first quarter of 2002. KLT
Investments estimates that additional reductions in affordable housing
investments will approximate $4 million in the remainder of 2002. Projected
annual reductions of the carrying value for the years 2003 through 2006 total
$12 million, $8 million, $7 million and $6 million, respectively. Even after
these reductions, earnings from affordable housing are expected to be positive
for the next five years.
These projections are based on the latest information available but the ultimate
amount and timing of actual reductions made could be significantly different
from the above estimates.
DTI Bankruptcy Update
On December 31, 2001, a subsidiary of KLT Telecom, DTI filed voluntary petitions
for bankruptcy. DTI's reorganization under Chapter 11 of the U.S. Bankruptcy
Code continues in process. Timing of completion of the bankruptcy process has
yet to be determined. During the first quarter of 2002, the bankruptcy court
approved $5 million DIP financing to be provided by KLT Telecom. To-date, none
of the DIP financing has been borrowed by DTI. As a result of DTI's filing for
bankruptcy protection and KLT Telecom's resultant loss of control, KLT Telecom
has not included for the three months ended March 31, 2002, the ongoing earnings
or loss incurred by DTI.
35
KLT Inc. Earnings Overview
The following table and discussion highlight significant factors affecting KLT
Inc.'s effect on consolidated EPS for the three months ended March 31, 2002 and
March 31, 2001.
Three Months Ended
March 31
2002 2001
Strategic Energy $ 0.11 $ 0.02
DTI
Operations 2/8/02 to 12/31/01 - (0.07)
Gain on early extinguishment of debt and equity
losses prior to majority ownership - 0.26
KLT Gas - 0.02
KLT Investments - 0.05
Other (0.02) (0.01)
KLT Inc. EPS $ 0.09 $ 0.27
Strategic Energy
Strategic Energy's increase in earnings per share for the three months ended
March 31, 2002, compared to the same period of 2001, is due to continued strong
growth in its electric energy management business.
DTI
On February 1, 2001, DTI, an equity investment of KLT Telecom on that date,
completed a tender offer for 50.4% of its outstanding senior discount notes.
This transaction resulted in a $15.9 million ($0.26 per share) extraordinary
gain on the early extinguishment of debt.
KLT Gas
KLT Gas is currently developing production properties following its most recent
sale of property during the second quarter of 2001.
KLT Investments
During the three months ended March 31, 2002, KLT Investments Inc. recorded
earnings of approximately $0.05 per share before it reduced its investments in
affordable housing limited partnerships by $5.3 million before taxes ($0.05 per
share). No reduction to its investments in affordable housing limited
partnerships was recognized during the same period of 2001.
36
KLT Inc. Revenues
Three Months Ended
March 31 %
2002 2001 Change
(millions)
DTI $ - $ 2.3 n/a
Strategic Energy
Electric - Retail 144.6 36.6 295 %
Electric - Wholesale 7.2 13.7 (47)%
Gas and other 0.4 10.6 (96)%
KLT Gas 0.2 1.5 (87)%
KLT Inc. Revenues $152.4 $64.7 136 %
Strategic Energy currently serves approximately 21,500 commercial and small
manufacturing accounts, compared to about 8,000 accounts for the similar period
in 2001. From the beginning of 2002, Strategic Energy added about 2,000
commercial and small manufacturing accounts. Total megawatt-hour (mwh) sales for
the three months ended March 31, 2002 increased to 2,240,321 mwh's from 728,997
mwh's for the same period in 2001. In addition, based on current signed
contracts and expected usage, Strategic Energy forecasts a peak load of 2,354
megawatts compared to a peak load of 2,268 megawatts at the beginning of 2002.
Strategic Energy's wholesale revenues decreased for the three months ended March
31, 2002, compared to the same period of 2001, primarily due to large block
sales of power during the first quarter of 2001 purchased under an option which
expired at the end of 2001. Strategic Energy purchases energy in the wholesale
markets to meet its customers' energy needs. For sales during peak periods,
Strategic Energy purchases small blocks of power prior to the sales contract in
order to quote stable pricing to potential new customers. Power purchased in
excess of retail sales is sold in the wholesale markets.
Strategic Energy provides to its customers periodic price reductions, billing
credits or cash payments resulting from favorable experience in its power supply
coordination efforts. The amounts credited back to the customer are treated as a
reduction of electricity energy sales when it is determined to be payable.
During the fourth quarter of 2001, Strategic Energy phased out its natural gas
retail supply service in order to focus on consulting, which resulted in a
decrease in gas and other sales revenues for the three months ended March 31,
2002, compared to the same period of 2001.
KLT Gas revenues decreased for the three months ended March 31, 2002, compared
to the same period of 2001, primarily due to declining production at KLT Gas'
Southwest Texas property.
KLT Inc. Non-operating Income (Expenses)
The unfavorable change in non-operating income (expenses) for the three months
ended March 31, 2002, compared to the same period of 2001, was primarily due to
KLT Investments' $5.3 million reduction in the carrying value of affordable
housing limited partnerships.
37
KLT Inc. Income Taxes
KLT Inc. income taxes vary with the level of taxable income. Additionally, KLT
Inc. accrued tax credits of $6.2 million for the three months ended March 31,
2002, and $6.6 million for the three months ended March 31, 2001. These tax
credits are related to investments in affordable housing limited partnerships
and natural gas properties.
Other Consolidated Discussion
Significant Balance Sheet Changes
(March 31, 2002 compared to December 31, 2001)
o Great Plains Energy and consolidated KCP&L current income taxes
(receivable) increased reflecting the tax benefit associated with KCP&L
net losses including deducting deferred and capitalized storm costs.
o Great Plains Energy affordable housing limited partnerships decreased
$6.2 million primarily due to a reduction in the valuation of the
properties held by KLT Inc.
o Great Plains Energy other nonutility property and investments increased
$7.1 million primarily because consolidated KCP&L increased $6.4
million. Consolidated KCP&L's other nonutility property and investments
increased primarily due to a $2.9 million increase in the cash
surrender value of KCP&L's COLI and a $3.5 million increase in property
at RSAE to record vehicles under a capital lease.
o Great Plains Energy and consolidated KCP&L combined electric utility
plant and construction work in progress increased $34.7 million
primarily due to $12.5 million of capital expenditures due to the
January ice storm and $22.2 million for other utility capital
expenditures.
o Great Plains Energy and consolidated KCP&L regulatory assets increased
$17.0 million primarily due to deferral of $18.1 million of the January
ice storm costs applicable to Missouri customers.
o Great Plains Energy notes payable increased $38.0 million due to
increased borrowings by Great Plains Energy on its short-term credit
facility for general corporate purposes.
o Great Plains Energy and consolidated KCP&L commercial paper decreased
$30.6 million primarily due to the repayment of KCP&L commercial paper
with the proceeds from a Great Plains Energy capital infusion.
o Great Plains Energy and consolidated KCP&L current maturities of
long-term debt decreased $200.0 million due to the refinancing of
$200.0 million of maturing KCP&L medium-term notes with the issuance of
KCP&L unsecured senior notes.
o Great Plains Energy accounts payable increased $12.5 million primarily
due to increased accounts payable at Strategic Energy. Approximately $8
million of the increase at Strategic Energy is due to an increase in
accrued customer credits to approximately $13 million at March 31,
2002. Strategic Energy provides to its customers periodic price
reductions, billing credits or cash payments resulting from favorable
experience in its power supply coordination efforts.
o Great Plains Energy accrued taxes increased $11.2 million and
consolidated KCP&L accrued taxes increased $8.8 million primarily due
to an $11.1 million increase in KCP&L accrued property taxes.
o Great Plains Energy and consolidated KCP&L accrued interest increased
primarily due to the timing of interest payments on KCP&L long-term
debt.
o Great Plains Energy other current liabilities decreased primarily due
to the fluctuation in the fair value of Strategic Energy's derivatives.
38
Capital Requirements and Liquidity
Great Plains Energy operates through its subsidiaries and has no material assets
other than the stock of its subsidiaries. Great Plains Energy's ability to make
payments on its debt securities and its ability to pay dividends is dependent on
its receipt of dividends from its subsidiaries or proceeds from the sale of its
securities.
Great Plains Energy's liquid resources at March 31, 2002, included cash flows
from operations of subsidiaries and $216.1 million of unused bank lines of
credit. The unused lines consisted of $159.8 million from KCP&L's short-term
bank lines of credit, $1.3 million from RSAE's bank credit agreement, $10.0
million from Strategic Energy's bank line of credit, and $45.0 million from
Great Plains Energy's revolving credit facility.
During the first quarter of 2002, Great Plains Energy terminated its $129
million bridge revolving credit facility and replaced it with a $205 million
364-day revolving credit facility syndicated with a group of banks. The
revolving credit facility contains a Material Adverse Change (MAC) clause that
requires Great Plains Energy to represent, prior to receiving any funding, that
no MAC has occurred. Great Plains Energy's available liquidity under both
facilities is not impacted by a decline in credit ratings unless the downgrade
occurs in the context of a merger, consolidation or sale.
KCP&L's primary sources of liquidity are cash flows from operations and
bilateral credit lines totaling $191.0 million with eight banks (as of March 31,
2002). KCP&L uses these lines to provide support for its issuance of commercial
paper, $31.4 million of which was outstanding at March 31, 2002. These bank
facilities are each for a 364-day term and mature at various times throughout
the year. KCP&L has MAC clauses in two agreements covering $50.0 million of
available bilateral credit lines. These two agreements require KCP&L to
represent, prior to receiving any funding, that no MAC has occurred. KCP&L's
available liquidity under these facilities is not impacted by a decline in
credit ratings unless the downgrade occurs in the context of a merger,
consolidation or sale.
In connection with the corporate reorganization, agreements KCP&L had with KLT
Investments Inc., a wholly owned subsidiary of KLT Inc., associated with notes
KLT Investments Inc. issued to acquire its affordable housing investments were
amended to replace KCP&L with Great Plains Energy. Great Plains Energy agreed
not to take certain actions including, but not limited to, merging, dissolving
or causing the dissolution of KLT Investments Inc., or withdrawing amounts from
KLT Investments Inc. if the withdrawals would result in KLT Investments Inc. to
not be in compliance with minimum net worth and cash balance requirements. The
amendment also gives KLT Investments Inc.'s lenders the right to have KLT
Investments Inc. repurchase the notes if Great Plains Energy's senior debt
rating falls below investment grade, or if Great Plains Energy ceases to own at
least 80% of KCP&L's stock. At March 31, 2002, KLT Investments Inc. had $31.1
million in outstanding notes, including current maturities.
Pursuant to agreements with the MPSC and the KCC, KCP&L has maintained its
common equity at not less than 35 percent of total capitalization. Additionally,
Great Plains Energy has maintained its consolidated common equity at no less
than 30 percent of total consolidated capitalization. For the purposes of this
calculation, capitalization is defined as common equity, preferred stock,
long-term debt and short-term debt in excess of construction work in progress.
Great Plains Energy's consolidated statements of cash flows include consolidated
KCP&L, KLT Inc. and GPP. KCP&L's consolidated statements of cash flows include
its wholly owned subsidiary HSS. In addition, KCP&L's consolidated statements of
cash flows include KLT Inc.
39
and GPP for all the periods prior to the October 1,
2001 formation of the holding company. The presentation of the prior year
statement of cash flows for Great Plains Energy is provided for comparative
purposes and is identical to the statement of cash flows for consolidated KCP&L,
prior to the formation of the holding company.
Great Plains Energy and consolidated KCP&L generated positive cash flows from
operating activities for the three months ended March 31, 2002. The increase for
Great Plains Energy and consolidated KCP&L over the same period of 2001 is
attributable to changes in working capital detailed in Note 2 to the
consolidated financial statements. The individual components of working capital
vary with normal business cycles and operations. Also, the timing of the Wolf
Creek outage affects the refueling outage accrual, deferred income taxes and
amortization of nuclear fuel.
Cash used for investing activities varies with the timing of utility capital
expenditures and purchases of investments and nonutility property. Investing
activities are offset by the proceeds from the sale of properties and insurance
recoveries. Partially because of the June 2001 completion of the rebuild of
Hawthorn No. 5, utility capital expenditures for the three months ended March
31, 2002, decreased $37.2 million and the allowance for borrowed funds used
during construction decreased $3.8 million from the first quarter of 2001. Cash
used for purchases of investments and nonutility property for the three months
ended March 31, 2002, compared to the same period of 2001, decreased primarily
reflecting KLT Telecom's 2001 investments in DTI and DTI purchases of
telecommunications property.
Cash from Great Plains Energy and consolidated KCP&L financing activities
decreased for the three months ended March 31, 2002 compared to the same period
of 2001, primarily because the net changes in short-term borrowings.
Additionally, long-term debt issuances, net of repayments decreased $46.6
million. These decreases reflect decreased investing activities in utility
capital expenditures, nonutility property and investments discussed above.
KCP&L expects to meet day-to-day operating requirements, construction
requirements (excluding new generating capacity) and dividends with
internally-generated funds. However, it might not be able to meet these
requirements with internally-generated funds because of the effect of inflation
on operating expenses, the level of mwh sales, regulatory actions, compliance
with future environmental regulations and the availability of generating units.
The funds Great Plains Energy and consolidated KCP&L need to retire $434 million
and $403 million, respectively, of maturing debt through the year 2006 are
expected to be provided from operations, the issuance of long and short-term
debt and/or the issuance of equity or equity-linked instruments. In addition,
the Company may issue debt, equity and/or equity-linked instruments to finance
growth or take advantage of new opportunities.
In March 2002, KCP&L issued $225 million of 6.0% unsecured senior notes through
a private placement expiring in 2007. The proceeds from the issuance were
primarily used to refinance maturing unsecured medium-term notes. During the
second quarter of 2002, KCP&L, pursuant to its obligations under a registration
rights agreement entered into in connection with the private placement, plans to
file an S-4 registration statement offering to exchange up to $225 million of
new 6.0% unsecured senior notes for the $225 million privately placed notes. The
new notes will carry the same terms and conditions as the privately placed issue
and will generally be freely tradable.
Great Plains Energy filed an S-3 registration statement on April 29, 2002, which
will allow for the issuance of an aggregate amount up to $300 million of any
combination of senior debt
40
securities, subordinated debt securities, trust preferred securities,
convertible securities, or common stock. Great Plains Energy has announced its
plans to issue additional common equity in 2002.
Supplemental Capital Requirements and Liquidity Information Update
Great Plains Energy's other long-term contractual cash obligations, net have
increased approximately 20% since December 31, 2001. The increase is primarily
for new Strategic Energy purchased power contracts in the years 2003 through
2006 supporting the growth in their energy management business.
Great Plains Energy's guarantees in total have not increased substantially since
December 31, 2001. However, during the first quarter of 2002, approximately $41
million of KLT Inc.'s guarantees related to Strategic Energy have been replaced
by Great Plains Energy guarantees. There was also an increase to $25 million
from $22 million at December 31, 2001, in RSAE's line of credit with a
commercial bank, which Great Plains Energy supports through an agreement that
ensures adequate capital to operate.
Environmental Matters
The Company's operations comply with federal, state and local environmental laws
and regulations. The generation and transmission of electricity produces and
requires disposal of certain products and by-products, including PCBs, asbestos
and other hazardous materials. The Superfund law imposes strict joint and
several liability for those who generate, transport or deposit hazardous waste.
In addition, the current owner of contaminated property, as well as prior owners
since the time of contamination, may be liable for cleanup costs.
Environmental audits are conducted to detect contamination and ensure compliance
with governmental regulations. However, compliance programs need to meet new and
future environmental laws, as well as regulations governing water and air
quality, including carbon dioxide emissions, nitrogen oxide emissions, hazardous
waste handling and disposal, toxic substances and the effects of electromagnetic
fields. Therefore, compliance programs could require substantial changes to
operations or facilities (see Note 5 to the consolidated financial statements).
Critical Accounting Policies Update
KCP&L is regulated and follows SFAS No. 71, "Accounting for Certain Types of
Regulation", which applies to regulated entities with rates that are designed to
recover the costs of providing service. Accordingly, KCP&L defers on the balance
sheet items when allowed by a commission's rate order or when it is probable,
based on regulatory past practices, that future rates will recover the
amortization of the deferred costs. If SFAS No. 71 were not applicable,
regulatory assets would be written off. At March 31, 2002, KCP&L had $141.4
million of unamortized regulatory assets.
On April 24, 2002, KCP&L filed a request for an accounting authority order,which
does not affect rates, with the MPSC for deferral and amortization over a
five-year period of the $18.1 million Missouri jurisdictional portion of the
January 2002 ice storm costs. Once the order is received from the MPSC, KCP&L
will begin amortizing the Missouri portion of the storm costs. The impact is
expected to be $2.1 million ($0.02 per share) in 2002 and $3.6 million ($0.04
per share) annually for the remainder of the amortization period. However, if
the MPSC does not grant the accounting authority order, KCP&L will expense the
entire $18.1 million.
41
The Company adopted SFAS No. 142 on January 1, 2002. Under the new pronouncement
an initial impairment test (comparison of the fair value of a reporting unit to
its carrying amount) must be done on all goodwill within six months of initially
applying the statement and then at least annually, thereafter. Also, goodwill is
no longer amortized. Strategic Energy's valuation is complete and no impairment
of the $14 million of goodwill will be recorded. Valuations of RSAE are in
process and will be utilized to assess impairment, if any, of its $23 million of
goodwill. Transition adjustments for the adoption of SFAS No. 142, if any, will
be recorded by June 30, 2002.
42
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Great Plains Energy and consolidated KCP&L are exposed to market risks
associated with commodity price and supply, interest rates and equity prices.
Market risks are handled in accordance with established policies, which may
include entering into various derivative transactions. In the normal course of
business, Great Plains Energy and consolidated KCP&L also face risks that are
either non-financial or non-quantifiable. Such risks principally include
business, legal, operational and credit risks and are not represented in the
following analysis.
Great Plains Energy and consolidated KCP&L interim period disclosures about
market risk included in quarterly reports on Form 10-Q address material changes,
if any from the most recently filed annual report on Form 10-K. Therefore,
interim period disclosures should be read in connection with the quantitative
and qualitative disclosures about market risk included in our 2001 annual report
on Form 10-K. There have been no material changes in Great Plains Energy's or
consolidated KCP&L's market risk since December 31, 2001.
43
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
________
GREAT PLAINS ENERGY INCORPORATED
________________________________
EXHIBIT
NO.
_______
10.1.a. Support Agreement between Great Plains Energy
Incorporated and R. S. Andrews Enterprises, Inc.
dated October 25, 2001.
10.2.a. Guarantee and Suretyship Agreement between Great
Plains Energy Incorporated and PNC Bank dated
March 8, 2002.
10.3.a. Credit Agreement dated March 13, 2002 between
Great Plains Energy Incorporated, BNP Paribas,
Bank One of America, N.A., and Bank One, N.A.
10.4.a. Guarantee between Great Plains Energy Incorporated
and Williams Energy Incorporated dated April 1,
2002.
KANSAS CITY POWER & LIGHT COMPANY
_________________________________
EXHIBIT
NO.
_______
4.1.b. Indenture dated March 1, 2002 between The Bank of
New York and Kansas City Power & Light Company.
4.2.b Registration Rights Agreement dated March 13, 2002
between Kansas City Power & Light Company, Banc of
America Securities LLC and BNP Paribas Securities
Corp.
REPORTS ON FORM 8-K
___________________
GREAT PLAINS ENERGY INCORPORATED
________________________________
Great Plains Energy Incorporated filed a report on Form
8-K dated February 8, 2002, on February 15, 2002, regarding a
change in its certifying accountant.
Great Plains Energy Incorporated filed a report on Form
8-K/A dated February 8, 2002 on February 26, 2002, regarding
a change in its certifying accountant.
Great Plains Energy Incorporated filed a report on Form
8-K dated April 24, 2002, on April 25, 2002, including a
press release regarding first quarter results and
accompanying financials.
44
KANSAS CITY POWER & LIGHT COMPANY
_________________________________
Kansas City Power & Light Company filed a report on Form
8-K dated February 8, 2002, on February 15, 2002, regarding a
change in its certifying accountant.
Kansas City Power & Light Company filed a report on Form
8-K/A dated February 8, 2002 on February 26, 2002, regarding
a change in its certifying accountant.
45
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, Great Plains Energy Incorporated and Kansas
City Power & Light Company have duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
GREAT PLAINS ENERGY INCORPORATED
Dated: May 10, 2002 By: /s/Bernard J. Beaudoin
(Bernard J. Beaudoin)
(Chief Executive Officer)
Dated: May 10, 2002 By: /s/Neil Roadman
(Neil Roadman)
(Principal Accounting Officer)
KANSAS CITY POWER & LIGHT COMPANY
Dated: May 10, 2002 By: /s/Bernard J. Beaudoin
(Bernard J. Beaudoin)
(Chief Executive Officer)
Dated: May 10, 2002 By: /s/Neil Roadman
(Neil Roadman)
(Principal Accounting Officer)
Exhibit 10.1.a.
SUPPORT AGREEMENT
BETWEEN
GREAT PLAINS ENERGY INCORPORATED
AND
R.S. ANDREWS ENTERPRISES, INC.
This SUPPORT AGREEMENT (this "Agreement"), made as of the
25th day of October, 2001, is by and between GREAT PLAINS ENERGY
INCORPORATED ("Parent") and R.S. ANDREWS ENTERPRISES, INC.
("RSAE").
WITNESSETH:
WHEREAS, Parent is the indirect owner of 100% of the
outstanding common stock of Home Service Solutions, Inc. ("HSS")
and HSS is the owner of 72% of the outstanding Series A and
Series B Convertible Preferred Stock and Common Stock of RSAE;
WHEREAS, RSAE currently maintains, and intends to incur
additional indebtedness ("Debt") under that certain Credit
Agreement, dated as of March 17, 2000 (as the same may be amended
or otherwise modified from time to time, the "Credit Agreement"),
among RSAE, various financial institutions (together with their
successors and assigns, "Lenders") and LaSalle Bank National
Association, as agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, the "Agent"),
thereby enabling RSAE to obtain financing for itself;
WHEREAS, Parent and RSAE desire to take certain actions to
enhance and maintain the financial condition of RSAE as
hereinafter set forth in order to enable RSAE to both maintain
and incur such Debt on more advantageous and reasonable terms
than would otherwise be
available; and
WHEREAS, the Agent and the Lenders will rely upon this
Agreement in both maintaining and making additional loans and
extensions of credit to RSAE;
NOW, THEREFORE, in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
1. STOCK OWNERSHIP. During the term of this Agreement,
Parent will own, directly or indirectly, free and clear of any
security interest, lien or encumbrance, all of the voting capital
stock of HSS now or hereafter issued and outstanding. During the
term of this Agreement, Parent will cause HSS to own, free and
clear of any security interest, lien or encumbrance, at least 51%
of the voting capital stock of RSAE now or hereafter issued and
outstanding.
2. NET WORTH. Parent agrees that it intends to cause both
HSS and RSAE to have at all times a positive tangible net worth
(stockholders' equity less intangible assets), as determined in
accordance with generally accepted accounting principles, except
that such determination shall be made on an unconsolidated basis.
3. LIQUIDITY. If, during the term of this Agreement, RSAE
is unable to make timely payment of interest or principal on any
Debt, Parent promptly shall provide to RSAE, at its request or
the request of the Agent or any Lender, such funds (in the form
of cash or liquid assets) as equity or, if Parent and RSAE
shall agree, as a loan. If such funds are advanced to RSAE as a
loan, such loan shall be on such terms and conditions, including
maturity and rate of interest, as Parent and RSAE shall agree;
provided, however, that any such loan shall be unsecured and
right of payment of any such loan shall be postponed and
subordinated to the prior payment in full in cash of all Debt
and the termination of all commitments to lend under the Credit
Agreement pursuant to subordination provisions in form and
substance satisfactory to the Agent. Notwithstanding any payments
made by or for the account of Parent pursuant to this Section
3, Parent shall not be subrogated to any of the rights of
the Agent or the Lenders until the payment in full in cash of
all Debt and the termination of all commitments to lend under
the Credit Agreement.
4. WAIVERS. Parent hereby waives any failure or delay on
the part of RSAE in asserting or enforcing any of its rights or
in making any claims or demands hereunder. RSAE and the Lenders
may at any time, without notice to (except as set forth below) or
consent by Parent and without affecting or impairing RSAE's or
the Lenders' rights or Parent's obligations hereunder, do any of
the following with respect to any Debt:
(a) retain or obtain security interest in any property
to secure any of the Debt,
(b) retain or obtain the primary or secondary
obligation of any other obligor or obligator with respect to
any of the Debt,
(c) extend or renew for one or more periods (whether or
not longer than the original period), alter or exchange any
Debt, or release or compromise any obligation of any nature
of any obligor with respect to any Debt,
(d) release its security interest in, or surrender,
release or permit any substitution or exchange for, all or
any part of any property securing any Debt, or extend or
renew for one or more periods (whether or not longer than
the original period) or release, compromise, alter or
exchange any obligations of any nature of any obligor with
respect to any such property,
(e) amend the Credit Agreement or any related document
from time to time in any manner, and
(f) extend loans and other financial accommodations to
either HSS or RSAE in addition to the Debt.
The Agent will endeavor to provide notice to Parent of any
loans or other financial accommodations described in clause (f)
above of which the Agent has knowledge; provided that failure to
give such notice shall not affect the obligations of Parent
hereunder.
5. TERMINATION; AMENDMENT. The Agreement may be amended or
terminated at any time by written amendment or agreement signed
by each party; provided, however, that:
(a) no modification of or amendment to this Agreement
may be made in a manner that adversely affects the rights of
the Lenders unless (i) such modification or amendment occurs
after all Debt shall have been paid in full in cash and the
Lenders have no further commitment to make advances under
the Credit Agreement or (ii) all Lenders consent in advance
and in writing to such modification or amendment;
(b) this Agreement may be terminated only after all
Debt shall have been paid in full and the Lenders have no
further commitment to make advances under the Credit
Agreement; and
(c) notwithstanding any prior termination of this
Agreement in accordance with clause (b) above, if at any
time all or any part of any payment theretofore applied by
the Agent or any Lender to the Debt is or must be rescinded
or returned by the Agent or any Lender for any reason
(including, without limitation, the insolvency, bankruptcy
or reorganization of RSAE or Parent), such Debt shall be
deemed to have continued in existence and this Agreement
shall be reinstated, all as though such application by the
Agent or such Lender had not been made.
6. RIGHTS AND REMEDIES OF THE AGENT. The Agent shall have
the right to demand that RSAE exercise any and all of its rights
and remedies under this Agreement, and, if RSAE fails or refuses
to take timely action to exercise its rights and remedies
hereunder or if RSAE defaults in the timely payment of interest,
fees or principal on any Debt when due, the Agent may proceed
directly against Parent to exercise RSAE's rights and remedies
hereunder (including, without limitation, any and all rights of
RSAE to demand or otherwise require payment of any amount under,
or performance of any provision of, this Agreement) or to obtain
payment of such defaulted interest, fees or principal owed to any
Lender, and Parent shall comply and cooperate in all respects
with any such exercise and shall, if the Agent so requests, pay
any such amounts directly to the Agent. Anything herein to the
contrary notwithstanding, the Agent and the Lenders may proceed
to enforce this Agreement against the undersigned, without
pursuing or exhausting any right or remedy which the Agent or the
Lenders may have against RSAE or any other person, firm or
corporation.
7. Representations and Warranties. Each of the undersigned
represents and warrants for the benefit of the Agent and the
Lenders that: a) this Agreement has been duly authorized,
executed and delivered by such undersigned, is in full force and
effect and is binding upon and enforceable against such
undersigned in accordance with its terms; and (b) Parent has no
defense, setoff or counterclaim arising under this Agreement.
Parent acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the
Credit Agreement.
8. NOTICES. Any notice, instruction, request, consent,
demand or other communication required or contemplated by this
Agreement shall be in writing, shall be given or made or
communicated by United States mail, facsimile transmission or
hand delivery,
addressed as follows:
If to Parent: GREAT PLAINS ENERGY INCORPORATED
1201 Walnut, 20 th Floor
Kansas City, Missouri 64141
Attention: Treasurer
Facsimile: (816) 556-2996
If to RSAE: R.S. ANDREWS ENTERPRISES, INC.
3510 DeKalb Tech Parkway
Atlanta, Georgia 30340
Attention: James A. Tramonte, Esq.
Facsimile: (770) 454-4636
9. SUCCESSORS. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and is
also intended for the benefit of the Agent and the Lenders (the
"Benefitted Parties"), notwithstanding that such Benefitted
Parties are not parties hereto, each Benefitted Party shall be
entitled to the full benefits of this Agreement and to enforce
the covenants and agreements contained herein. This Agreement is
not intended for the benefit of any person other than the
Benefitted Parties, and shall not confer or be deemed to confer
upon any other such person any benefits, rights or remedies
hereunder.
10. GOVERNING LAW. This Agreement shall be governed by the
internal laws of the State of Missouri.
11. REMEDIES. The parties to this Agreement acknowledge and
agree that breach of any of the covenants of Parent set forth
herein may not be compensable by payment of money damages and,
therefore, that the covenants of Parent set forth herein may be
enforced in equity by a decree requiring specific performance.
Such remedies shall be cumulative and non-exclusive and shall be
in addition to any other rights and remedies RSAE may have under
this Agreement.
12. COSTS AND EXPENSES. After the occurrence of an Event of
Default (as defined in the Credit Agreement), Parent agrees that
it will pay all reasonable out-of-pocket expenses, legal fees and
legal costs incurred by RSAE, the Agent or any Lender in
protecting and enforcing its rights hereunder or in connection
herewith.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers as of the date
first above written.
GREAT PLAINS ENERGY INCORPORATED
By:/s/ Andrea F. Bielsker
Its: V.P.-Finance, CFO and Treasurer
R.S. ANDREWS ENTERPRISES, INC.
By:/s/Charles J. Cansler
Its: CFO
By: /s/ J. Tramonte
Its: Secretary
Exhibit 10.2.a.
GUARANTY AND SURETYSHIP AGREEMENT
THIS GUARANTY AND SURETYSHIP AGREEMENT (this "GUARANTY") is made
and entered into as of this 8th day of March, 2002, by GREAT PLAINS
ENERGY INCORPORATED (the "GUARANTOR"), with an address at 1201 Walnut
Street, Kansas City, MO 64106, in consideration of the extension of
credit by PNC BANK, NATIONAL ASSOCIATION (the "BANK"), with an address
at One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222, to
STRATEGIC ENERGY, L.L.C. (the "BORROWER"), and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged.
1. GUARANTY OF OBLIGATIONS. The Guarantor hereby guarantees,
and becomes surety for, the prompt payment of all debts, liabilities
and financial obligations owing by the Borrower to the Bank or to any
other direct or indirect subsidiary of The PNC Financial Services
Group, Inc., of any kind or nature, present or future (including any
interest accruing thereon after maturity, or after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in
such proceeding), arising under or related to (x) that certain Letter
Agreement governing a $25,000,000 committed line of credit for the
issuance of standby letters of credit between the Borrower and the
Bank, dated March 30, 2001, as amended on or about the date herewith,
(y) each letter of credit issued by the Bank on account of the
Borrower pursuant to such Letter Agreement, and (z) that certain
Reimbursement Agreement for Standby Letter(s) of Credit executed by
the Borrower in favor of the Bank, dated November 14, 2000, as amended
(but only as it pertains to the Letter Agreement and letters of credit
issued pursuant to such Letter Agreement), and any amendments,
extensions, renewals or increases of any of the foregoing and all
costs and expenses of the Bank incurred in the documentation,
negotiation, modification, enforcement, collection or otherwise in
connection with any of the foregoing, including reasonable attorneys'
fees and expenses (hereinafter referred to collectively as the
"OBLIGATIONS"). If the Borrower defaults under any such Obligations,
the Guarantor will pay the amount due to the Bank. Notwithstanding
anything contained in this Guaranty to the contrary, in the event that
the Borrower is required to make a payment to cash-collateralize any
Letters of Credit in accordance with the terms of the Reimbursement
Agreement,
(a) the Guarantor shall not be required to provide cash
collateral for the Letters of Credit unless one of the following
events shall have occurred:
(1) the Guarantor shall fail, at any time, to cause the
ratio of (i) Total Indebtedness (as defined on Schedule A
hereto) to (ii) Total Capitalization (as defined on Schedule
A hereto) to be less than or equal to 0.65 to 1.0;
(2) the Guarantor shall permit the Interest Coverage Ratio
(as defined on Schedule A hereto) as of the end of any
fiscal quarter of the Guarantor to be less than 2.0 to 1.0;
(3) an "Event of Default" shall occur under this Guaranty;
or
(4) the Borrower or the Guarantor shall dissolve, terminate
its existence, become insolvent, have a receiver appointed
for it or any part of its property, make an assignment for
the benefit of creditors, or be subject to any proceedings
under any bankruptcy or insolvency laws; then
(b) the amount of cash collateral to be provided by the
Guarantor shall be limited to one hundred percent (100%) of the
undrawn face amount of the outstanding Letters of Credit;
provided that the Guarantor shall continue to be obligated to pay, to
the extent not paid by the Borrower, all other Obligations (including
without limitation, all fees charged in connection with the issuance
of the Letters of Credit and all reasonable attorneys fees and
expenses) whether or not cash collateral shall have been provided to
the Bank by the Guarantor or any other party.
2. NATURE OF GUARANTY; WAIVERS. This is a guaranty of payment
and not of collection and the Bank shall not be required, as a
condition of the Guarantor's liability, to make any demand upon or to
pursue any of its rights against the Borrower, or to pursue any rights
which may be available to it with respect to any other person who may
be liable for the payment of the Obligations.
This is an absolute, unconditional, irrevocable and continuing
guaranty and will remain in full force and effect until all of the
Obligations have been indefeasibly paid in full, and the Bank has
terminated this Guaranty. This Guaranty will remain in full force and
effect even if there is no principal balance outstanding under the
Obligations at a particular time or from time to time. This Guaranty
will not be affected by any surrender, exchange, acceptance,
compromise or release by the Bank of any other party, or any other
guaranty or any security held by it for any of the Obligations, by any
failure of the Bank to take any steps to perfect or maintain its lien
or security interest in or to preserve its rights to any security or
other collateral for any of the Obligations or any guaranty, or by any
irregularity, unenforceability or invalidity of any of the Obligations
or
any part thereof or any security or other guaranty thereof. The
Guarantor's obligations hereunder shall not be affected, modified or
impaired by any counterclaim, set-off, deduction or defense based upon
any claim the Guarantor may have against the Borrower or the Bank,
except payment or performance of the Obligations.
Notice of acceptance of this Guaranty, notice of extensions of
credit to the Borrower from time to time, notice of default,
diligence, presentment, notice of dishonor, protest, demand for
payment, and any defense based upon the Bank's failure to comply with
the notice requirements of the applicable version of Uniform
Commercial Code 9-504 are hereby waived. The Guarantor waives all
defenses based on suretyship or impairment of collateral.
The Bank at any time and from time to time, without the consent
of the Guarantor, and without impairing or releasing, discharging or
modifying the Guarantor's liabilities hereunder, may (a) change the
manner, place, time or terms of payment or performance of or interest
rates on, or other terms relating to, any of the Obligations;
(b) renew, substitute, modify, amend or alter, or grant consents or
waivers relating to any of the Obligations, any other guaranties, or
any security for any Obligations or guaranties; (c) apply any and all
payments by whomever paid or however realized including any proceeds
of any collateral, to any Obligations of the Borrower in such order,
manner and amount as the Bank may determine in its sole discretion;
(d) settle, compromise or deal with any other person, including the
Borrower or the Guarantor, with respect to any Obligations in such
manner as the Bank deems appropriate in its sole discretion;
(e) substitute, exchange or release any security or guaranty; or (f)
take such actions and exercise such remedies hereunder as provided
herein. The Bank shall provide the Guarantor with prompt notice of
the occurrence of any actions within the scope of clauses (a) through
(f) of this paragraph; provided, however, that failure to provide such
notice shall not affect the validity of said actions or the
Obligations of the Guarantor under this Guaranty.
3. REPAYMENTS OR RECOVERY FROM THE BANK. If any demand is made
at any time upon the Bank for the repayment or recovery of any amount
received by it in payment or on account of any of the Obligations and
if the Bank repays all or any part of such amount by reason of any
judgment, decree or order of any court or administrative body or by
reason of any settlement or compromise of any such demand, the
Guarantor will be and remain liable hereunder for the amount so repaid
or recovered to the same extent as if such amount had never been
received originally by the Bank. The provisions of this section will
be and remain effective notwithstanding any contrary action which may
have been taken by the Guarantor in reliance upon such payment, and
any such contrary action so taken will be without prejudice to the
Bank's rights hereunder and will be deemed to have been conditioned
upon such payment having become final and irrevocable.
4. FINANCIAL STATEMENTS. Unless compliance is waived in
writing by the Bank or until all of the Obligations have been paid in
full, the Guarantor will promptly submit to the Bank copies of its
Annual Report on Form 10-K and its Quarterly Report on Form 10-Q.
5. ENFORCEABILITY OF OBLIGATIONS. No modification, limitation
or discharge of the Obligations arising out of or by virtue of any
bankruptcy, reorganization or similar proceeding for relief of debtors
under federal or state law will affect, modify, limit or discharge the
Guarantor's liability in any manner whatsoever and this Guaranty will
remain and continue in full force and effect and will be enforceable
against the Guarantor to the same extent and with the same force and
effect as if any such proceeding had not been instituted. The
Guarantor waives all rights and benefits which might accrue to it by
reason of any such proceeding and will be liable to the full extent
hereunder, irrespective of any modification, limitation or discharge
of the liability of the Borrower that may result from any such
proceeding.
6. EVENTS OF DEFAULT. The occurrence of any of the following
shall be an "EVENT OF DEFAULT": (i) the Guarantor's failure to perform
any of its obligations hereunder (including without limitation, the
Guarantor's obligation to provide cash collateral for the Letters of
Credit pursuant to the terms of Section 1 above); (ii) the falsity,
inaccuracy or material breach by the Guarantor of any written
warranty, representation or statement made or furnished to the Bank by
or on behalf of the Guarantor; or (iii) the termination or attempted
termination of this Guaranty. Upon the occurrence of any Event of
Default, (a) the Guarantor shall pay to the Bank the amount of the
Obligations; or (b) on demand of the Bank, the Guarantor shall
immediately deposit with the Bank, in U.S. dollars, all amounts due or
to become due under the Obligations, and the Bank may at any time use
such funds to repay the Obligations; or (c) the Bank in its discretion
may exercise with respect to any collateral any one or more of the
rights and remedies provided a secured party under the applicable
version of the Uniform Commercial Code; or (d) the Bank in its
discretion may exercise from time to time any other rights and
remedies available to it at law, in equity or otherwise.
7. COSTS. To the extent that the Bank incurs any costs or
expenses in protecting or enforcing its rights under the Obligations
or this Guaranty, including reasonable attorneys' fees and the costs
and expenses of litigation, such costs and expenses will be due on
demand, will be included in the Obligations and will bear interest
from the incurring or payment thereof at the Default Rate (as defined
in any of the Obligations).
8. POSTPONEMENT OF SUBROGATION. Until the Obligations are
indefeasibly paid in full, the Guarantor postpones and subordinates in
favor of the Bank any and all rights which the Guarantor may have to
(a) assert any claim against the Borrower based on subrogation rights
with respect to payments made hereunder, and (b) any realization on
any property of the Borrower, including participation in any
marshalling of the Borrower's assets.
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9. NOTICES. All notices, demands, requests, consents,
approvals and other communications required or permitted hereunder
must be in writing and will be effective upon receipt. Such notices
and other communications may be hand-delivered, sent by facsimile
transmission with confirmation of delivery and a copy sent by first-
class mail, or sent by nationally recognized overnight courier
service, to the addresses for the Bank and the Guarantor set forth
above or to such other address as one may give to the other in writing
for such purpose.
10. PRESERVATION OF RIGHTS. No delay or omission on the Bank's
part to exercise any right or power arising hereunder will impair any
such right or power or be considered a waiver of any such right or
power, nor will the Bank's action or inaction impair any such right or
power. The Bank's rights and remedies hereunder are cumulative and
not exclusive of any other rights or remedies which the Bank may have
under other agreements, at law or in equity. The Bank may proceed in
any order against the Borrower, the Guarantor or any other obligor of,
or collateral securing, the Obligations.
11. ILLEGALITY. In case any one or more of the provisions
contained in this Guaranty should be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected
or impaired thereby.
12. CHANGES IN WRITING. No modification, amendment or waiver of
any provision of this Guaranty nor consent to any departure by the
Guarantor therefrom will be effective unless made in a writing signed
by the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No
notice to or demand on the Guarantor in any case will entitle the
Guarantor to any other or further notice or demand in the same,
similar or other circumstance.
13. ENTIRE AGREEMENT. This Guaranty (including the documents
and instruments referred to herein) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both
written and oral, between the Guarantor and the Bank with respect to
the subject matter hereof; provided, however, that this Guaranty is in
addition to, and not in substitution for, any other guarantees from
the Guarantor to the Bank.
14. SUCCESSORS AND ASSIGNS. This Guaranty will be binding upon
and inure to the benefit of the Guarantor and the Bank and their
respective heirs, executors, administrators, successors and assigns;
PROVIDED, HOWEVER, that the Guarantor may not assign this Guaranty in
whole or in part without the Bank's prior written consent and the Bank
at any time may assign this Guaranty in whole or in part.
15. INTERPRETATION. In this Guaranty, unless the Bank and the
Guarantor otherwise agree in writing, the singular includes the plural
and the plural the singular; references to statutes are to be
construed as including all statutory provisions consolidating,
amending or replacing the statute referred to; the word "or" shall be
deemed to include "and/or", the words "including", "includes" and
"include" shall be deemed to be followed by the words "without
limitation"; and references to sections or exhibits are to those of
this Guaranty unless otherwise indicated. Section headings in this
Guaranty are included for convenience of reference only and shall not
constitute a part of this Guaranty for any other purpose. If this
Guaranty is executed by more than one party as Guarantor, the
obligations of such persons or entities will be joint and several.
16. INDEMNITY. The Guarantor agrees to indemnify each of the
Bank, its directors, officers and employees and each legal entity, if
any, who controls the Bank (the "INDEMNIFIED PARTIES") and to hold
each Indemnified Party harmless from and against any and all claims,
damages, losses, liabilities and expenses (including all fees and
charges of internal or external counsel with whom any Indemnified
Party may consult and all expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be
asserted against any Indemnified Party as a result of the execution of
or performance under this Guaranty; PROVIDED, HOWEVER, that the
foregoing indemnity agreement shall not apply to claims, damages,
losses, liabilities and expenses solely attributable to an Indemnified
Party's gross negligence or willful misconduct. The indemnity
agreement contained in this Section shall survive the termination of
this Guaranty. The Guarantor may participate at its expense in the
defense of any such claim.
17. GOVERNING LAW AND JURISDICTION. This Guaranty has been
delivered to and accepted by the Bank and will be deemed to be made in
the Commonwealth of Pennsylvania. THIS GUARANTY WILL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE BANK AND THE GUARANTOR
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA, EXCLUDING ITS CONFLICT OF LAWS RULES. The Guarantor
hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court in the county or judicial district where the Bank's
office indicated above is located; provided that nothing contained in
this Guaranty will prevent the Bank from bringing any action,
enforcing any award or judgment or exercising any rights against the
Guarantor individually, against any security or against any property
of the Guarantor within any other county, state or other foreign or
domestic jurisdiction. The Guarantor acknowledges and agrees that the
venue provided above is the most convenient forum for both the Bank
and the Guarantor. The Guarantor waives any objection to venue and
any objection based on a more convenient forum in any action
instituted under this Guaranty.
18. EQUAL CREDIT OPPORTUNITY ACT. If the Guarantor is not an
"applicant for credit" under Section 202.2 (e) of the Equal Credit
Opportunity Act of 1974 ("ECOA"), the Guarantor acknowledges that (i)
this Guaranty has been executed to
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provide credit support for the Obligations, and (ii) the Guarantor was
not required to execute this Guaranty in violation of Section 202.7(d)
of the ECOA.
19. WAIVER OF JURY TRIAL. THE GUARANTOR IRREVOCABLY WAIVES ANY
AND ALL RIGHT THE GUARANTOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS GUARANTY, ANY
DOCUMENTS EXECUTED IN CONNECTION WITH THIS GUARANTY OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE GUARANTOR ACKNOWLEDGES
THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
THE GUARANTOR ACKNOWLEDGES THAT IT HAS READ AND UNDERSTOOD ALL
THE PROVISIONS OF THIS GUARANTY, INCLUDING THE WAIVER OF JURY TRIAL,
AND HAS BEEN ADVISED BY COUNSEL AS NECESSARY OR APPROPRIATE.
WITNESS the due execution hereof as a document under seal, as of the
date first written above, with the intent to be legally bound hereby.
GREAT PLAINS ENERGY INCORPORATED
Attest: ___________________ By: ___________________________
(SEAL)
Print Name: _______________ Print Name: ___________________
Title: ____________________ Title: ________________________
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SCHEDULE A
To
GUARANTY AND SURETYSHIP AGREEMENT
DEFINED TERMS
"ATTRIBUTABLE INDEBTEDNESS" means, on any date, (a) in respect of any
Capitalized Lease Obligation of any person, the capitalized amount
thereof that would appear on a balance sheet of such person prepared
as of such date in accordance with GAAP, and (b) in respect of any
Synthetic Lease Obligation, the capitalized amount of the remaining
lease payments under the relevant lease that would appear on a balance
sheet of such person prepared as of such date in accordance with GAAP
if such lease were accounted for as a Capitalized Lease.
"CAPITALIZED LEASE" of a person means any lease of property by such
person as lessee which would be capitalized on a balance sheet of such
person prepared in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" of a person means the amount of the
obligations of such person under Capitalized Leases which would be
shown as a liability on a balance sheet of such person prepared in
accordance with GAAP.
"CONSOLIDATED EBITDA" means, for any period, for the Guarantor and its
Consolidated Subsidiaries, an amount equal to the result of (i)
Consolidated Net Income PLUS (ii) Consolidated Interest charges PLUS
(iii) the amount of taxes, based on or measured by income, used or
included in the determination of such Consolidated Net Income PLUS
(iv) the amount of depreciation and amortization expense deducted in
determining such Consolidated Net Income PLUS (v) all other non-cash
items that reduce Consolidated Net Income for such period MINUS (vi)
all non-cash items that increase Consolidated Net Income for such
period.
"CONSOLIDATED INTEREST CHARGES" means, for the Guarantor and its
Consolidated Subsidiaries for any period, the sum of (i) all interest,
premium payments, fees, charges and related expenses of the Guarantor
and it Consolidated Subsidiaries in connection with borrowed money
(including capitalized interest) or in connection with the deferred
purchase price of assets, in each case to the extent treated as
interest in accordance with GAAP, and (ii) the portion of rent expense
of the Guarantor and its Consolidated Subsidiaries with respect to
such period under capital leases that is treated as interest in
accordance with GAAP. It is understood and agreed that Consolidated
Interest Charges shall not include any obligations of the Guarantor or
any Consolidated Subsidiary with respect to subordinated, deferrable
interest debt securities, and any related securities issued by a trust
or other special purpose entity in connection therewith.
"CONSOLIDATED NET INCOME" means, for any period, for the Guarantor and
its Consolidated Subsidiaries, the net income of the Guarantor and its
Consolidated Subsidiaries from continuing operation, excluding
extraordinary items for that period.
"CONSOLIDATED SUBSIDIARIES" means, as to any person, each Subsidiary
of such person (whether now existing or hereafter created or acquired)
the financial statement of which shall be (or should have been)
consolidated with the financial statements of such person in
accordance with GAAP.
"CONTINGENT OBLIGATION" of a person means any agreement, undertaking
or arrangement by which such person assumes, guarantees, endorses,
contingently agrees to purchase or provide fund for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or
liability of any other person, or agrees to maintain the net worth or
working capital or otherwise becomes or is contingently liable upon,
the obligation or liability of any other person, or agrees to maintain
the net worth or working capital or other financical condition of any
other person, or otherwise assures any creditor of such other person
against loss.
"INDEBTEDNESS" means, as to any person at any particular time, all of
the following, without duplication, to the extent recourse may be had
to the assets or properties of such person in respect thereof: (i) all
obligations of such person for borrowed money and all obligations of
such person evidenced by bonds, debentures, notes, loan agreements or
other similar instruments; (ii) any direct or contingent obligations
of such person in the aggregate in excess of $2,000,000 arising under
letters of credit (including standby and commercial), banker's
acceptances, bank guaranties, surety bonds and similar instruments;
(ii) net obligations of such person under Swap Contracts; (iv) all
obligations of such Persons to pay the deferred purchase price of
property or services (except trade accounts payable arising, and
accrued expenses incurred, in the ordinary course of business), and
indebtedness (excluding prepaid interest thereon) secured by a lien on
property owned or being purchased by
-5-
such person (including indebtedness arising under conditional sales or
other title retention agreements), whether or not such indebtedness
shall have been assumed by such person or is limited in recourse; (v)
cCapitalized lLease oObligations and sSynthetic lLease oObligations of
such person; and (vi) all Contingent Obligations of such person in
respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any person shall include
the Indebtedness of any partnership or joint venture in which such
person is a general partner or a joint venturer, unless such
Indebtedness is non-recourse to such person. It is understood and
agreed that Indebtedness (including Contingent Obligations) shall not
include any obligations of the Guarantor with respect to subordinated,
deferrable interest debt securities, and any related securities issued
by a trust or other special purpose entity in connection therewith, as
long as the maturity date of such debt is subsequent to the scheduled
facility termination date for the Guarantor's existing Credit
Agreement; PROVIDED that the amount of mandatory principal
amortization or defeasance of such debt prior to the scheduled
facility termination date shall be included in this definition of
Indebtedness. The amount of any cCapitalized lLease oObligation ofr
Synthetic Lease Obligation as of any date shall be deemed to be the
amount of aAttributable iIndebtedness in respect thereof as of such
date.
"INTEREST COVERAGE RATIO" means, as of any date of determination, the
ratio of (a) Consolidated EBITDA for the period of the four prior
fiscal quarters ending on such date to (b) Consolidated Interest
Charges during such period.
"PROJECT FINANCE SUBSIDIARY" means any Subsidiary that meets the
following requirements: (i) it is primarily engaged, directly or
indirectly, in the ownership, operation and/or financing of
independent power production and related facilities and assets; and
(ii) neither the Guarantor nor any other Subsidiary (other than
another Project Finance Subsidiary) has any liability, contingent or
otherwise, for the Indebtedness or other obligations of such
Subsidiary (other than non-recourse liability resulting from the
pledge of stock of such Subsidiary).
"SHAREHOLDERS' EQUITY" means, as of any date of determination for the
Borrower and its Consolidated Subsidiaries on a consolidated basis,
shareholders' equity as of that date determined in accordance with
GAAP.
"SWAP CONTRACT" means (i) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or forward
bond index transactions, collar transactions, currency swap
transaction, cross-currency rate swap transaction, currency options,
spot contracts, or any other similar transactions or any combination
of any of the foregoing (including any option to enter into any of the
foregoing), whether or not any such transaction is governed by or
subject to any master agreement, and (ii) any and all transactions of
any kind, and the related confirmations, which are subject to the
terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such master agreement, together with any
related schedules, a "Master Agreement"), including any such
obligations or liabilities under any Master Agreement.
"SYNTHETIC LEASE OBLIGATION" means the monetary obligation of a person
under (a) a so-called synthetic or off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property
creating obligations that do not appear on the balance sheet of such
person but which, upon the insolvency or bankruptcy of such person,
would be characterized as the indebtedness of such person (without
regard to accounting treatment).
"TOTAL CAPITALIZATION" means Total Indebtedness of the guarantor and
its Consolidated Subsidiaries plus the sum of (i) Shareholder's Equity
and (ii) to the extent not otherwise included in Indebtedness or
Shareholder's Equity, preferred and preference stock and securities of
the Guarantor and its Subsidiaries included in a consolidated balance
sheet of the Guarantor and its Consolidated Subsidiaries in accordance
with GAAP.
"TOTAL INDEBTEDNESS" means all Indebtedness of the Guarantor and its
Consolidated Subsidiaries on a consolidated basis, excluding (i)
Indebtedness arising under Swap Contracts entered into in the ordinary
course of business to hedge bona fide transactions and business risks
and not for speculation, (ii) Indebtedness of Project Finance
Subsidiaries, (iii) Contingent Obligations incurred after May 15, 1996
with respect to Indebtedness of Strategic Energy, L.L.C. in an
aggregate amount not exceeding $275,000,000 and (iv) Indebtedness of
KLT Investments Inc. incurred in connection with the acquisition and
maintenance of its interest (whether direct or indirect) in low income
housing projects.
-6-
Exhibit 10.3.a.
CREDIT AGREEMENT
Dated as of March 13, 2002
among
GREAT PLAINS ENERGY INCORPORATED,
CERTAIN LENDERS,
BNP PARIBAS,
as Syndication Agent,
BANK OF AMERICA, N.A.,
as Co-Documentation Agent,
THE BANK OF NEW YORK,
as Co-Documentation Agent,
and
BANK ONE, NA,
as Administrative Agent
BANC ONE CAPITAL MARKETS,
INC.
Lead Arranger and Sole Book
Manager
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS 1
1.1. Definitions 1
1.2. Accounting Principles 11
ARTICLE II THE CREDITS 12
2.1. Commitment 12
2.2. Required Payments; Termination. 12
2.3. Ratable Loans 12
2.4. Types of Advances; Minimum Amount 12
2.5. Facility Fee; Utilization Fee 12
2.6. Changes in Aggregate Commitment 12
2.7. Optional Principal Payments 13
2.8. Method of Selecting Types and Interest
Periods for New Advances 13
2.9. Conversion and Continuation of Outstanding
Advances 14
2.10. Changes in Interest Rate, etc. 14
2.11. Rates Applicable After Default 15
2.12. Method of Payment 15
2.13. Noteless Agreement; Evidence of Indebtedness 15
2.14. Telephonic Notices 16
2.15. Interest Payment Dates; Interest and Fee
Basis 16
2.16. Notification of Advances, Interest Rates,
Prepayments and Commitment Reductions 16
2.17. Lending Installations 17
2.18. Non-Receipt of Funds by the Administrative
Agent 17
ARTICLE III YIELD PROTECTION; TAXES 17
3.1. Yield Protection 17
3.2. Changes in Capital Adequacy Regulations 18
3.3. Availability of Types of Advances 18
3.4. Funding Indemnification 19
3.5. Taxes 19
3.6. Lender Statements; Survival of Indemnity 21
ARTICLE IV CONDITIONS PRECEDENT 21
4.1. Initial Advance 21
4.2. Each Advance 22
ARTICLE V REPRESENTATIONS AND WARRANTIES 23
5.1. Existence and Standing 23
5.2. Authorization and Validity 23
5.3. No Conflict; Government Consent 23
5.4. Financial Statements 23
5.5. Material Adverse Change 24
5.6. Taxes 24
i
TABLE OF CONTENTS
(continued)
Page
5.7. Litigation; etc 24
5.8. ERISA 24
5.9. Accuracy of Information 24
5.10. Regulation U 25
5.11. Material Agreements 25
5.12. Compliance With Laws 25
5.13. Ownership of Properties 25
5.14. Plan Assets; Prohibited Transactions 25
5.15. Environmental Matters 25
5.16. Investment Company Act 25
5.17. Public Utility Holding Company Act 25
5.18. Pari Passu Indebtedness 25
5.19. Solvency 26
ARTICLE VI COVENANTS 26
6.1. Financial Reporting 26
6.2. Permits, Etc. 27
6.3. Use of Proceeds 27
6.4. Notice of Default 28
6.5. Conduct of Business 28
6.6. Taxes 28
6.7. Insurance 28
6.8. Compliance with Laws 28
6.9. Maintenance of Properties; Books of Record 28
6.10. Inspection 29
6.11. Consolidations, Mergers and Sale of Assets 29
6.12. Liens 30
6.13. Affiliates 32
6.14. ERISA 32
6.15. Total Indebtedness to Total Capitalization 32
6.16. Interest Coverage Ratio 33
6.17. Restrictions on Subsidiary Dividends 33
ARTICLE VII DEFAULTS 33
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND 35
REMEDIES
8.1. Acceleration 35
8.2. Amendments 35
8.3. Preservation of Rights 36
ARTICLE IX GENERAL PROVISIONS 36
9.1. Survival of Representations 36
9.2. Governmental Regulation 36
9.3. Headings 36
9.4. Entire Agreement 36
ii
TABLE OF CONTENTS
(continued)
Page
9.5. Several Obligations; Benefits of this
Agreement 36
9.6. Expenses; Indemnification 37
9.7. Numbers of Documents 37
9.8. Accounting 38
9.9. Severability of Provisions 38
9.10. Nonliability of Lenders 38
9.11. Confidentiality 38
9.12. Nonreliance 38
ARTICLE X THE ADMINISTRATIVE AGENT 39
10.1. Appointment; Nature of Relationship 39
10.2. Powers 39
10.3. General Immunity 39
10.4. No Responsibility for Loans, Recitals, etc. 39
10.5. Action on Instructions of Lenders 40
10.6. Employment of Agents and Counsel 40
10.7. Reliance on Documents; Counsel 40
10.8. Administrative Agent's Reimbursement and 40
10.9. Notice of Default 41
10.10. Rights as a Lender 41
10.11. Lender Credit Decision 41
10.12. Successor Administrative Agent 41
10.13. Administrative Agent's Fee 42
10.14. Delegation to Affiliates 42
ARTICLE XI SETOFF; RATABLE PAYMENTS 43
11.1. Setoff 43
11.2. Ratable Payments 43
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; 43
PARTICIPATIONS
12.1. Successors and Assigns 43
12.2. Participations 44
12.3. Assignments 44
12.4. Dissemination of Information 45
12.5. Tax Treatment 46
ARTICLE XIII NOTICES 46
13.1. Notices 46
13.2. Change of Address 46
ARTICLE XIV COUNTERPARTS 46
ARTICLE XV OTHER AGENTS 47
iii
TABLE OF CONTENTS
(continued)
Page
ARTICLE XVI CHOICE OF LAW; CONSENT TO JURISDICTION; 48
WAIVER OF JURY TRIAL
16.1 Choice of Law 48
16.2 Consent to Jurisdiction 48
16.3 Waiver of Jury Trial 48
iv
TABLE OF CONTENTS
Page
PRICING SCHEDULE
SCHEDULE I (COMMITMENTS)
SCHEDULE 6.12 (LIENS)
SCHEDULE 6.17 (AGREEMENTS RESTRICTING SUBSIDIARY DIVIDENDS)
EXHIBIT A (FORM OF OPINION)
EXHIBIT B (FORM OF COMPLIANCE CERTIFICATE)
EXHIBIT C (FORM OF ASSIGNMENT AGREEMENT)
EXHIBIT D (FORM OF LOAN/CREDIT RELATED MONEY TRANSFER
INSTRUCTION)
EXHIBIT E (FORM OF NOTE)
EXHIBIT F (FORM OF INCREASE REQUEST)
v
CREDIT AGREEMENT
This Agreement dated as of March 13, 2002 is among Great
Plains Energy Incorporated, a Missouri corporation, the Lenders
and Bank One, NA, as Administrative Agent. The parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. As used in this Agreement, the following
terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of such terms):
"Administrative Agent" means Bank One, NA in its capacity
as contractual representative of the Lenders pursuant to ARTICLE
X, and not in its individual capacity as a Lender, and any
successor Administrative Agent appointed pursuant to ARTICLE X.
"Advance" means a borrowing hereunder (or conversion or
continuation thereof) consisting of the aggregate amount of the
several Loans made on the same Borrowing Date (or date of
conversion or continuation) by the Lenders to the Borrower of the
same Type and, in the case of Eurodollar Advances, for the same
Interest Period.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control
with such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by"
and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether
through the ownership of voting securities or by contract or
otherwise.
"Aggregate Commitment" means the aggregate of the
Commitments of all Lenders, as changed from time to time pursuant
to the terms hereof.
"Agreement" means this credit agreement, as it may be
amended or modified and in effect from time to time.
"Alternate Base Rate" means, for any day, a rate of interest
per annum equal to the higher of (i) the Prime Rate for such day
and (ii) the sum of the Federal Funds Effective Rate for such day
plus 1/2% per annum.
"Applicable Margin" means, with respect to Advances of any
Type at any time, the percentage rate per annum which is
applicable at such time with respect to Advances of such Type as
set forth in the Pricing Schedule.
"Arranger" means Banc One Capital Markets, Inc., a Delaware
corporation, and its successors.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Attributable Indebtedness" means, on any date, (a) in
respect of any Capitalized Lease Obligation of any Person, the
capitalized amount thereof that would appear on a balance sheet
of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the
capitalized amount of the remaining lease payments under the
relevant lease that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such
lease were accounted for as a Capitalized Lease.
"Authorized Officer" means any of the President, any Vice
President, the chief financial officer or the Treasurer of the
Borrower, in each case acting singly.
"Bank One" means Bank One, NA in its individual capacity,
and its successors.
"Borrower" means Great Plains Energy Incorporated, a
Missouri corporation, and its permitted successors and assigns.
"Borrowing Date" means a date on which an Advance is made
hereunder.
"Borrowing Notice" is defined in SECTION 2.8.
"Business Day" means (i) with respect to any borrowing,
payment or rate selection of Eurodollar Advances, a day (other
than a Saturday or Sunday) on which banks generally are open in
Chicago and New York for the conduct of substantially all of
their commercial lending activities and on which dealings in
United States dollars are carried on in the London interbank
market and (ii) for all other purposes, a day (other than a
Saturday or Sunday) on which banks generally are open in Chicago
for the conduct of substantially all of their commercial lending
activities.
"Capitalized Lease" of a Person means any lease of Property
by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which
would be shown as a liability on a balance sheet of such Person
prepared in accordance with GAAP.
"Change of Control" means an event or series of events by
which:
(i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, but
excluding any employee benefit plan of the Borrower or its
Subsidiaries, or any Person acting in its capacity as trustee,
agent or other fiduciary or administrator of any such plan)
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-
5 under the Securities Exchange Act of 1934, directly or
indirectly, of 33 1/3% or more of the equity interests of the
Borrower; or
Page 2
(ii) during any period of 12 consecutive months (or such lesser
period of time as shall have elapsed since the formation of the
Borrower), a majority of the members of the board of directors or
other equivalent governing body of the Borrower ceases to be
composed of individuals (x) who were members of that board or
equivalent governing body on the first day of such period, (y)
whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause
(x) above constituting at the time of such election or nomination
at least a majority of that board or equivalent governing body or
(z) whose election or nomination to that board or other
equivalent governing body was approved by individuals referred to
in clauses (x) and (y) above constituting at the time of such
election or nomination at least a majority of that board or
equivalent governing body.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such
Lender to make Loans in an aggregate amount not exceeding the
amount set forth on SCHEDULE I hereto or as set forth in any
Notice of Assignment relating to any assignment that has become
effective pursuant to SECTION 12.3.2, as such amount may be
modified from time to time pursuant to the terms hereof.
"Consolidated EBITDA" means, for any period, for the
Borrower and its Consolidated Subsidiaries, an amount equal to
the result of (i) Consolidated Net Income PLUS (ii) Consolidated
Interest Charges PLUS (iii) the amount of taxes, based on or
measured by income, used or included in the determination of such
Consolidated Net Income PLUS (iv) the amount of depreciation and
amortization expense deducted in determining such Consolidated
Net Income PLUS (v) all other non-cash items that reduce
Consolidated Net Income for such period MINUS (vi) all non-cash
items that increase Consolidated Net Income for such period.
"Consolidated Interest Charges" means, for the Borrower and
its Consolidated Subsidiaries for any period, the sum of (i) all
interest, premium payments, fees, charges and related expenses of
the Borrower and its Consolidated Subsidiaries in connection with
borrowed money (including capitalized interest) or in connection
with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, and (ii) the
portion of rent expense of the Borrower and its Consolidated
Subsidiaries with respect to such period under capital leases
that is treated as interest in accordance with GAAP. It is
understood and agreed that Consolidated Interest Charges shall
not include any obligations of the Borrower or any Consolidated
Subsidiary with respect to subordinated, deferrable interest debt
securities, and any related securities issued by a trust or other
special purpose entity in connection therewith, as long as the
maturity date of such debt securities is subsequent to the
scheduled Facility Termination Date.
"Consolidated Net Income" means, for any period, for the
Borrower and its Consolidated Subsidiaries, the net income of the
Borrower and its Consolidated Subsidiaries from continuing
operations, excluding extraordinary items for that period.
"Consolidated Subsidiaries" means, as to any Person, each
Subsidiary of such Person (whether now existing or hereafter
created or acquired) the financial statements of which shall be
Page 3
(or should have been) consolidated with the financial statements
of such Person in accordance with GAAP.
"Consolidated Tangible Net Worth" means, as of any date of
determination, for the Borrower and its Consolidated
Subsidiaries, Shareholders' Equity of the Borrower and its
Consolidated Subsidiaries on that date MINUS the Intangible
Assets of the Borrower and its Consolidated Subsidiaries on that
date.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any
creditor of such other Person against loss.
"Controlled Group" means all members of a controlled group
of corporations or other business entities and all trades or
businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in SECTION 2.9.
"Default" means an event described in ARTICLE VII.
"DTI" means DTI Holdings, Inc.
"DTI Company" means any of DTI and any of its Subsidiaries.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, plans,
injunctions, permits, concessions, grants, franchises, licenses,
agreements and other governmental restrictions relating to (i)
the protection of the environment, (ii) the effect of the
environment on human health, (iii) emissions, discharges or
releases of pollutants, contaminants, hazardous substances or
wastes into surface water, ground water or land, or (iv) the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any rule or regulation
issued thereunder.
"Eurodollar Advance" means an Advance which bears interest
at the applicable Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar
Advance for the relevant Interest Period, the applicable British
Bankers' Association Interest Settlement Rate for deposits in
U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m.
(London time) two Business Days prior to the first day of such
Interest Period, and having a maturity equal to such Interest
Period; PROVIDED that, (i) if Reuters Screen FRBD is not
available to the Administrative Agent
Page 4
for any reason, the applicable Eurodollar Base Rate for the
relevant Interest Period shall instead be the applicable British
Bankers' Association Interest Settlement Rate for deposits in
U.S. dollars as reported by any other generally recognized
financial information service as of 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, and
having a maturity equal to such Interest Period, and (ii) if no
such British Bankers' Association Interest Settlement Rate is
available to the Administrative Agent, the applicable Eurodollar
Base Rate for the relevant Interest Period shall instead be the
rate determined by the Administrative Agent to be the rate at
which Bank One or one of its Affiliate banks offers to place
deposits in U.S. dollars with first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, in
the approximate amount of Bank One's relevant Eurodollar Loan and
having a maturity equal to such Interest Period.
"Eurodollar Loan" means a Loan which bears interest at the
applicable Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar
Advance or Eurodollar Loan for the relevant Interest Period, the
sum of (i) the quotient of (a) the Eurodollar Base Rate
applicable to such Interest Period, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such
Interest Period, plus (ii) the Applicable Margin. The Eurodollar
Rate shall be rounded to the next higher multiple of 1/16 of 1%
if the rate is not such a multiple.
"Excluded Taxes" means, in the case of each Lender or
applicable Lending Installation and the Administrative Agent,
taxes imposed on its overall net income, and franchise taxes
imposed on it, by (i) the jurisdiction under the laws of which
such Lender or the Administrative Agent is incorporated or
organized or (ii) the jurisdiction in which the Administrative
Agent's or such Lender's principal executive office or such
Lender's applicable Lending Installation is located.
"Exhibit" refers to an exhibit to this Agreement, unless
another document is specifically referenced.
"Facility Fee Rate" means, at any time, the percentage rate
per annum at which facility fees are accruing at such time as set
forth in the Pricing Schedule.
"Facility Termination Date" means March 12, 2003 or any
earlier date on which the Aggregate Commitment is reduced to zero
or otherwise terminated pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an
interest rate per annum equal to the weighted average of the
rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business
Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the
quotations at approximately 10:00 a.m. (Chicago time) on such day
on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by
the Administrative Agent in its sole discretion.
"Floating Rate" means, for any day, a rate per annum equal to the
sum of (i) the Alternate Base Rate for such day plus (ii) the
Applicable Margin, in each case changing when and as the
Alternate Base Rate changes.
Page 5
"Floating Rate Advance" means an Advance which bears
interest at the Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at
the Floating Rate.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and statements of the Financial
Accounting Standards Board.
"Indebtedness" means, as to any Person at a particular time,
all of the following, without duplication, to the extent recourse
may be had to the assets or properties of such Person in respect
thereof: (i) all obligations of such Person for borrowed money
and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments;
(ii) any direct or contingent obligations of such Person in the
aggregate in excess of $2,000,000 arising under letters of credit
(including standby and commercial), banker's acceptances, bank
guaranties, surety bonds and similar instruments; (iii) net
obligations of such Person under Swap Contracts; (iv) all
obligations of such Person to pay the deferred purchase price of
property or services (except trade accounts payable arising, and
accrued expenses incurred, in the ordinary course of business),
and indebtedness (excluding prepaid interest thereon) secured by
a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness
shall have been assumed by such Person or is limited in recourse;
(v) Capitalized Lease Obligations and Synthetic Lease Obligations
of such Person; and (vi) all Contingent Obligations of such
Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint
venture in which such Person is a general partner or a joint
venturer, unless such Indebtedness is non-recourse to such
Person. It is understood and agreed that Indebtedness (including
Contingent Obligations) shall not include any obligations of the
Borrower with respect to subordinated, deferrable interest debt
securities, and any related securities issued by a trust or other
special purpose entity in connection therewith, as long as the
maturity date of such debt is subsequent to the scheduled
Facility Termination Date; PROVIDED that the amount of mandatory
principal amortization or defeasance of such debt prior to the
scheduled Facility Termination Date shall be included in this
definition of Indebtedness. The amount of any Capitalized Lease
Obligation or Synthetic Lease Obligation as of any date shall be
deemed to be the amount of Attributable Indebtedness in respect
thereof as of such date.
"Interest Coverage Ratio" means, as of any date of
determination, the ratio of (a) Consolidated EBITDA for the
period of the four prior fiscal quarters ending on such date to
(b) Consolidated Interest Charges during such period.
"Interest Period" means, with respect to a Eurodollar
Advance, a period of one, two, three or six months commencing on
a Business Day selected by the Borrower pursuant to this
Agreement. Such Interest Period shall end on the day which
corresponds numerically to such date one, two, three or six
months thereafter; PROVIDED, HOWEVER, that if there is no such
numerically corresponding day in such next, second, third or
sixth succeeding month, such Interest Period shall end on the
last Business Day of such next, second, third or sixth succeeding
month. If an Interest Period would otherwise end on a day which
is not a Business Day, such
Page 6
Interest Period shall end on the next succeeding Business Day;
PROVIDED, HOWEVER, that if said next succeeding Business Day
falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"KCPL" means Kansas City Power & Light Company, a Missouri
corporation.
"Lenders" means the lending institutions listed on the
signature pages of this Agreement and their respective successors
and assigns.
"Lending Installation" means, with respect to a Lender or
the Administrative Agent, the office, branch, subsidiary or
affiliate of such Lender or the Administrative Agent listed on
the signature pages hereof or on a Schedule or otherwise selected
by such Lender or the Administrative Agent pursuant to SECTION
2.17.
"Lien" means any lien (statutory or other), mortgage,
pledge, hypothecation, assignment, deposit arrangement,
encumbrance or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other
title retention agreement).
"Loan" means, with respect to a Lender, such Lender's loan
made pursuant to ARTICLE II (or any conversion or continuation
thereof).
"Loan Documents" means this Agreement and each Note issued
pursuant to SECTION 2.13.
"Material Adverse Effect" means a material adverse effect on
(i) the business, Property, condition (financial or otherwise),
results of operations, or prospects of the Borrower and its
Subsidiaries taken as a whole, (ii) the ability of the Borrower
to perform its obligations under the Loan Documents or (iii) the
validity or enforceability of any of the Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders
thereunder.
"Material Indebtedness" is defined in SECTION 7.5.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a Plan maintained pursuant to a
collective bargaining agreement or any other arrangement to which
the Borrower or any member of the Controlled Group is a party to
which more than one employer is obligated to make contributions.
"Non-U.S. Lender" is defined in SECTION 3.5(IV).
"Note" is defined in SECTION 2.13.
"Notice of Assignment" is defined in SECTION 12.3.2.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Loans, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other
Page 7
obligations of the Borrower to the Lenders or to any Lender, the
Administrative Agent or any indemnified party arising under the
Loan Documents.
"Other Taxes" is defined in SECTION 3.5(II).
"Participants" is defined in SECTION 12.2.1.
"Payment Date" means the last Business Day of each March,
June, September and December.
"PBGC" means the Pension Benefit Guaranty Corporation, or
any successor thereto.
"Person" means any natural person, corporation, firm, joint
venture, partnership, limited liability company, association,
enterprise, trust or other entity or organization, or any
government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code as to which the Borrower
or any member of the Controlled Group may have any liability.
"Pricing Schedule" means the Schedule attached hereto
identified as such.
"Prime Rate" means a rate per annum equal to the prime rate
of interest announced by Bank One or its parent from time to time
(which is not necessarily the lowest rate charged to any
customer), changing when and as said prime rate changes.
"Project Finance Subsidiary" means any Subsidiary that meets
the following requirements: (i) it is primarily engaged, directly
or indirectly, in the ownership, operation and/or financing of
independent power production and related facilities and assets;
and (ii) neither the Borrower nor any other Subsidiary (other
than another Project Finance Subsidiary) has any liability,
contingent or otherwise, for the Indebtedness or other
obligations of such Subsidiary (other than non-recourse liability
resulting from the pledge of stock of such Subsidiary).
"Property" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person,
or other assets owned, leased or operated by such Person.
"PUHCA" means the Public Utility Holding Company Act of
1935, as amended.
"Purchasers" is defined in SECTION 12.3.1.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and
any successor thereto or other regulation or official
interpretation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve
System.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and
any successor or other regulation or official interpretation of
said Board of Governors relating to the extension of credit by
banks for the
Page 8
purpose of purchasing or carrying margin stocks applicable to
member banks of the Federal Reserve System.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such
section, with respect to a Plan, excluding, however, such events
as to which the PBGC has by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event; PROVIDED, HOWEVER, that a failure
to meet the minimum funding standard of Section 412 of the Code
and of Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at
least 51% of the Aggregate Commitment or, if the Aggregate
Commitment has been terminated, Lenders in the aggregate holding
at least 51% of the aggregate unpaid principal amount of the
outstanding Advances.
"Reserve Requirement" means, with respect to an Interest
Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on Eurocurrency liabilities.
"S&P" means Standard and Poor's Ratings Services, a division
of The McGraw Hill Companies, Inc.
"Schedule" refers to a specific schedule to this Agreement,
unless another document is specifically referenced.
"SEC" means the Securities and Exchange Commission.
"SEC Order" means the order issued by the SEC to the
Borrower and various Affiliates dated September 7, 2001 (Release
No. 35-27436; 70-9861), or an extension, renewal or replacement
of such order in form and substance satisfactory to the Lenders.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Shareholders' Equity" means, as of any date of
determination for the Borrower and its Consolidated Subsidiaries
on a consolidated basis, shareholders' equity as of that date
determined in accordance with GAAP.
"Significant Subsidiary" means, at any time, KCPL and each other
Subsidiary of the Borrower which (a) as of the date of
determination, owns consolidated assets equal to or greater than
15% of the consolidated assets of the Borrower and its
Subsidiaries or (b) which had consolidated net income from
continuing operations (excluding extraordinary items) during the
four most recently ended fiscal quarters equal to or greater than
15% of the sum of (i) Consolidated Net Income during such period
plus (ii) for any period ending prior to December 31, 2002, the
amount designated as "Net DTI Impairment Charge" in the footnotes
to the Borrower's statement of income delivered to the Agent for
the fiscal year ended December 31, 2001.
Page 9
"Single Employer Plan" means a Plan maintained by the
Borrower or any member of the Controlled Group for employees of
the Borrower or any member of the Controlled Group.
"Subsidiary" of a Person means (i) any corporation more than
50% of the outstanding securities having ordinary voting power of
which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries
or by such Person and one or more of its Subsidiaries, or (ii)
any partnership, limited liability company, association, joint
venture or similar business organization more than 50% of the
ownership interests having ordinary voting power of which shall
at the time be so owned or controlled; PROVIDED that no DTI
Company will be considered a Subsidiary of the Borrower for
purposes of this Agreement. Unless otherwise expressly provided,
all references herein to a "Subsidiary" shall mean a Subsidiary
of the Borrower.
"Substantial Portion" means, with respect to the Property of
the Borrower and its Subsidiaries, Property which (i) represents
more than 10% of the consolidated assets of the Borrower and its
Consolidated Subsidiaries as would be shown in the consolidated
financial statements of the Borrower and its Consolidated
Subsidiaries as at the beginning of the twelve-month period
ending with the month in which such determination is made, or
(ii) is responsible for more than 10% of the consolidated net
sales or of the Consolidated Net Income of the Borrower and its
Consolidated Subsidiaries as reflected in the financial
statements referred to in clause (i) above.
"Swap Contract" means (i) any and all rate swap
transactions, basis swaps, credit derivative transactions,
forward rate transactions, commodity swaps, commodity options,
forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or
forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange
transactions, cap transaction, floor transactions, collar
transactions, currency swap transactions, cross-currency rate
swap transactions, currency options, spot contracts, or any other
similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to
any master agreement, and (ii) any and all transactions of any
kind, and the related confirmations, which are subject to the
terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master
Agreement"), including any such obligations or liabilities under
any Master Agreement.
"Synthetic Lease Obligation" means the monetary obligation
of a Person under (a) a so-called synthetic or off-balance sheet
or tax retention lease, or (b) an agreement for the use or
possession of property creating obligations that do not appear on
the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting
treatment).
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and any and
all liabilities with respect to the foregoing, but excluding
Excluded Taxes.
Page 10
"`34 Act Reports" means the periodic reports of the Borrower
filed with the SEC on Forms 10K, 10Q and 8K (or any successor
forms thereto).
"Total Capitalization" means Total Indebtedness of the
Borrower and its Consolidated Subsidiaries plus the sum of (i)
Shareholder's Equity and (ii) to the extent not otherwise
included in Indebtedness or Shareholder's Equity, preferred and
preference stock and securities of the Borrower and its
Subsidiaries included in a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries in accordance with
GAAP.
"Total Indebtedness" means all Indebtedness of the Borrower
and its Consolidated Subsidiaries on a consolidated basis,
excluding (i) Indebtedness arising under Swap Contracts entered
into in the ordinary course of business to hedge bona fide
transactions and business risks and not for speculation, (ii)
Indebtedness of Project Finance Subsidiaries, (iii) Contingent
Obligations incurred after May 15, 1996 with respect to
Indebtedness of Strategic Energy, L.L.C. in an aggregate amount
not exceeding $275,000,000 and (iv) Indebtedness of KLT
Investments Inc. incurred in connection with the acquisition and
maintenance of its interests (whether direct or indirect) in low
income housing projects.
"Transferee" is defined in SECTION 12.4.
"Type" means, with respect to any Advance, its nature as a
Floating Rate Advance or a Eurodollar Advance.
"Unmatured Default" means an event which but for the lapse
of time or the giving of notice, or both, would constitute a
Default.
"Utilization Fee Rate" means, at any time, the percentage
rate per annum at which utilization fees are accruing at such
time as set forth in the Pricing Schedule.
"Wholly-Owned Subsidiary" of a Person means (i) any
Subsidiary all of the outstanding voting securities of which
shall at the time be owned or controlled, directly or indirectly,
by such Person or one or more Wholly-Owned Subsidiaries of such
Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, limited
liability company, association, joint venture or similar business
organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or
controlled.
1.2. ACCOUNTING PRINCIPLES. Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall
be construed, and all financial computations required under this
Agreement shall be made, in accordance with GAAP, consistently
applied; PROVIDED that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any
covenant in SECTION 6 to eliminate the effect of any change in
GAAP on the operation of such covenant (or if the Administrative
Agent notifies the Borrower that the Required Lenders wish to
amend any covenant in SECTION 6 for such purpose), then the
Borrower's compliance with such covenant shall be determined on
the basis of GAAP in effect immediately before the relevant
change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to
the Borrower and the Required Lenders.
Page 11
ARTICLE II
THE CREDITS
2.1. COMMITMENT. From and including the date of this Agreement
and prior to the Facility Termination Date, subject to the terms
and conditions set forth in this Agreement, each Lender severally
agrees to make Loans to the Borrower from time to time in amounts
not to exceed in the aggregate at any one time outstanding the
amount of its Commitment. Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow at any
time prior to the Facility Termination Date. The Commitments
shall expire on the Facility Termination Date.
2.2. REQUIRED PAYMENTS; TERMINATION. All outstanding Advances
and all other unpaid Obligations shall be paid in full by the
Borrower on the Facility Termination Date.
2.3. RATABLE LOANS. Each Advance hereunder shall consist of
Loans made from the several Lenders ratably in proportion to the
ratio that their respective Commitments bear to the Aggregate
Commitment.
2.4. TYPES OF ADVANCES; MINIMUM AMOUNT. The Advances may be
Floating Rate Advances or Eurodollar Advances, or a combination
thereof, selected by the Borrower in accordance with SECTIONS 2.8
and 2.9. Each Eurodollar Advance shall be in the minimum amount
of $5,000,000 or a higher integral multiple of $1,000,000, and
each Floating Rate Advance shall be in the minimum amount of
$1,000,000 or an integral multiple thereof.
2.5. FACILITY FEE; UTILIZATION FEE. The Borrower agrees to pay
to the Administrative Agent for the account of each Lender (a) a
facility fee at a per annum rate equal to the Facility Fee Rate
on such Lender's Commitment (regardless of usage) from the date
hereof to and including the Facility Termination Date, payable on
each Payment Date hereafter and on the Facility Termination Date,
and (b) for any date on which the aggregate amount of outstanding
Loans exceeds 33% of the Aggregate Commitment, a utilization fee
at a per annum rate equal to the Utilization Fee Rate on such
Lender's outstanding Loans, payable on each Payment Date
hereafter, on the Facility Termination Date and, if applicable,
thereafter on demand.
2.6. CHANGES IN AGGREGATE COMMITMENT.
(a) The Borrower may permanently reduce the Aggregate Commitment
in whole, or in part ratably among the Lenders in integral
multiples of $5,000,000, upon at least three Business Days' prior
written notice to the Administrative Agent, which notice shall
specify the amount of any such reduction; PROVIDED, HOWEVER, that
the amount of the Aggregate Commitment may not be reduced below
the aggregate principal amount of the outstanding Advances. All
accrued facility fees and utilization fees shall be payable on
the effective date of any termination of the obligations of the
Lenders to make Loans hereunder.
(b) The Borrower may, from time to time, by means of a letter
delivered to the Administrative Agent substantially in the form
of Exhibit F, request that the Aggregate Commitment be increased
to up to $225,000,000 (less the amount of any previous reductions
of
Page 12
the Aggregate Commitment pursuant to clause (a) above) by (a)
increasing the Commitment of one or more Lenders which have
agreed to such increase and/or (b) adding one or more commercial
banks or other Persons as a party hereto (each an "Additional
Lender") with a Commitment in an amount agreed to by any such
Additional Lender; PROVIDED that no Additional Lender shall be
added as a party hereto without the written consent of the
Administrative Agent (which shall not be unreasonably withheld)
or if an Unmatured Default or a Default exists. Any increase in
the Aggregate Commitment pursuant to this clause (b) shall be
effective three Business Days after the date on which the
Administrative Agent has received and accepted the applicable
increase letter in the form of Annex 1 to Exhibit F (in the case
of an increase in the Commitment of an existing Lender) or
assumption letter in the form of Annex 2 to Exhibit F (in the
case of the addition of a commercial bank or other Person as a
new Lender). The Administrative Agent shall promptly notify the
Borrower and the Lenders of any increase in the amount of the
Aggregate Commitment pursuant to this clause (b) and of the
Commitment of each Lender after giving effect thereto. The
Borrower acknowledges that, in order to maintain Advances in
accordance with each Lender's pro-rata share of all outstanding
Advances prior to any increase in the Aggregate Commitment
pursuant to this clause (b), a reallocation of the Commitments as
a result of a non-pro-rata increase in the Aggregate Commitment
may require prepayment of all or portions of certain Advances on
the date of such increase (and any such prepayment shall be
subject to the provisions of SECTION 3.4).
2.7. OPTIONAL PRINCIPAL PAYMENTS.
(a) The Borrower may from time to time prepay Floating Rate
Advances upon one Business Day's prior notice to the
Administrative Agent, without penalty or premium. Each partial
prepayment of Floating Rate Advances shall be in a minimum
aggregate amount of $1,000,000 or an integral multiple thereof.
(b) The Borrower may from time to time prepay Eurodollar
Advances (subject to the payment of any funding indemnification
amounts required by SECTION 3.4) upon three Business Days' prior
notice to the Administrative Agent, without penalty or premium.
Each partial prepayment of Eurodollar Advances shall be in a
minimum aggregate amount of $5,000,000 or a higher integral
multiple of $1,000,000.
2.8. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW
ADVANCES. The Borrower shall select the Type of Advance and, in
the case of each Eurodollar Advance, the Interest Period
applicable thereto from time to time. The Borrower shall give
the Administrative Agent irrevocable notice (a "Borrowing
Notice") not later than 11:00 a.m. (Chicago time) on the
Borrowing Date of each Floating Rate Advance and not later than
11:00 a.m. (Chicago time) three Business Days before the
Borrowing Date for each Eurodollar Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of
suchAdvance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(vi) in the case of each Eurodollar Advance, the
Interest Period applicable thereto.
Page 13
Not later than noon (Chicago time) on each Borrowing Date, each
Lender shall make available its Loan or Loans in funds
immediately available in Chicago to the Administrative Agent at
its address specified pursuant to ARTICLE XIII. The
Administrative Agent will make the funds so received from the
Lenders available to the Borrower at the Administrative Agent's
aforesaid address.
2.9. CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES.
Floating Rate Advances shall continue as Floating Rate Advances
unless and until such Floating Rate Advances are converted into
Eurodollar Advances pursuant to this SECTION 2.9 or are repaid in
accordance with SECTION 2.7. Each Eurodollar Advance shall
continue as a Eurodollar Advance until the end of the then
applicable Interest Period therefor, at which time such
Eurodollar Advance shall be automatically converted into a
Floating Rate Advance unless (x) such Eurodollar Advance is or
was repaid in accordance with SECTION 2.7 or (y) the Borrower
shall have given the Administrative Agent a
Conversion/Continuation Notice (as defined below) requesting
that, at the end of such Interest Period, such Eurodollar Advance
continue as a Eurodollar Advance for the same or another Interest
Period. Subject to the terms of SECTION 2.4, the Borrower may
elect from time to time to convert all or any part of a Floating
Rate Advance into a Eurodollar Advance. The Borrower shall give
the Administrative Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a
Floating Rate Advance into a Eurodollar Advance or continuation
of a Eurodollar Advance not later than 10:00 a.m. (Chicago time)
at least three Business Days prior to the date of the requested
conversion or continuation, specifying:
(i) the requested date, which shall be a Business Day, of
such conversion or continuation,
(ii) the aggregate amount and Type of the Advance which is
to be converted or continued, and
(iii) the amount of such Advance which is to be converted
into or continued as a Eurodollar Advance and the
duration of the Interest Period applicable thereto.
2.10. CHANGES IN INTEREST RATE, ETC Each Floating Rate
Advance shall bear interest on the outstanding principal amount
thereof, for each day from and including the date such Advance is
made or is automatically converted from a Eurodollar Advance into
a Floating Rate Advance pursuant to SECTION 2.9, to but excluding
the date it is paid or is converted into a Eurodollar Advance
pursuant to SECTION 2.9 hereof, at a rate per annum equal to the
Floating Rate for such day. Changes in the rate of interest on
that portion of any Advance maintained as a Floating Rate Advance
will take effect simultaneously with each change in the Alternate
Base Rate. Each Eurodollar Advance shall bear interest on the
outstanding principal amount thereof from and including the first
day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest
rate determined by the Administrative Agent as applicable to such
Eurodollar Advance based upon the Borrower's selections under
SECTIONS 2.8 and 2.9 and otherwise in accordance with the terms
hereof. No Interest Period may end after the Facility
Termination Date.
Page 14
2.11. RATES APPLICABLE AFTER DEFAULT. Notwithstanding
anything to the contrary contained in SECTION 2.8 or 2.9, during
the continuance of a Default or Unmatured Default the Required
Lenders may, at their option, by notice to the Borrower (which
notice may be revoked at the option of the Required Lenders
notwithstanding any provision of SECTION 8.2 requiring unanimous
consent of the Lenders to changes in interest rates), declare
that no Advance may be made as, converted into or continued as a
Eurodollar Advance. During the continuance of a Default the
Required Lenders may, at their option, by notice to the Borrower
(which notice may be revoked at the option of the Required
Lenders notwithstanding any provision of SECTION 8.2 requiring
unanimous consent of the Lenders to changes in interest rates),
declare that (i) each Eurodollar Advance shall bear interest for
the remainder of the applicable Interest Period at the rate
otherwise applicable to such Interest Period plus 2% per annum
and (ii) each Floating Rate Advance shall bear interest at a rate
per annum equal to the Floating Rate in effect from time to time
plus 2% per annum; PROVIDED that, during the continuance of a
Default under SECTION 7.6 or 7.7, the interest rates set forth in
clauses (i) and (ii) above shall be applicable to all Advances
without any election or action on the part of the Administrative
Agent or any Lender.
2.12. METHOD OF PAYMENT. All payments of the Obligations
hereunder shall be made, without setoff, deduction, or
counterclaim, in immediately available funds to the
Administrative Agent at the Administrative Agent's address
specified pursuant to ARTICLE XIII, or at any other Lending
Installation of the Administrative Agent specified in writing by
the Administrative Agent to the Borrower, by noon (Chicago time)
on the date when due and shall be applied ratably by the
Administrative Agent among the Lenders. Each payment delivered
to the Administrative Agent for the account of any Lender shall
be delivered promptly by the Administrative Agent to such Lender
in the same type of funds that the Administrative Agent received
at its address specified pursuant to ARTICLE XIII or at any
Lending Installation specified in a notice received by the
Administrative Agent from such Lender.
2.13. NOTELESS AGREEMENT; EVIDENCE OF INDEBTEDNESS. (i)
Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the
Borrower to such Lender resulting from each Loan made by such
Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time
hereunder.
(ii) The Administrative Agent shall also maintain accounts in
which it will record (a) the amount of each Loan made
hereunder, the Type thereof and the Interest Period
with respect thereto, (b) the amount of any principal
or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (c) the
amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender's share
thereof.
(iii) The entries maintained in the accounts maintained
pursuant to paragraphs (i) and (ii) above shall be PRIMA
FACIE evidence of the existence and amounts of the
Obligations therein recorded; PROVIDED, HOWEVER, that the
failure of the Administrative Agent or any Lender to
maintain such accounts or any error therein shall not
in any manner affect the obligation of the Borrower to
repay the Obligations in accordance with their terms.
Page 15
(iv) Any Lender may request that its Loans be evidenced by a
promissory note substantially in the form of Exhibit E (a
"Note"). In such event, the Borrower shall prepare, execute
and deliver to such Lender a Note payable to the order of
such Lender. Thereafter, the Loans evidenced by such Note and
interest thereon shall at all times (including after any
assignment pursuant to SECTION 12.3) be represented by one or
more Notes payable to the order of the payee named therein or
any assignee pursuant to SECTION 12.3, except to the extent
that any such Lender or assignee subsequently returns any
such Note for cancellation and requests that such Loans once
again be evidenced as described in paragraphs (i) and
(ii) above.
2.14. TELEPHONIC NOTICES. The Borrower hereby authorizes the
Lenders and the Administrative Agent to extend, convert or
continue Advances, effect selections of Types of Advances and to
transfer funds based on telephonic notices made by any person or
persons the Administrative Agent or any Lender in good faith
believes to be acting on behalf of the Borrower. The Borrower
agrees to deliver promptly to the Administrative Agent a written
confirmation, if such confirmation is requested by the
Administrative Agent or any Lender, of each telephonic notice
signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the
Administrative Agent and the Lenders, the records of the
Administrative Agent and the Lenders shall govern absent manifest
error.
2.15. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS.
Interest accrued on each Floating Rate Advance shall be payable
on each Payment Date, commencing with the first such date to
occur after the date hereof and at maturity. Interest accrued on
each Eurodollar Advance shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurodollar
Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Eurodollar Advance having an
Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest
Period. All computations of interest for Floating Rate Loans
when the Alternate Base Rate is determined by the Prime Rate
shall be made on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed. All other computations of
interest and fees shall be calculated for actual days elapsed on
the basis of a 360-day year. Interest shall be payable for the
day an Advance is made but not for the day of any payment on the
amount paid if payment is received prior to noon (Chicago time)
at the place of payment (it being understood that the
Administrative Agent shall be deemed to have received a payment
prior to noon (Chicago time) if (x) the Borrower has provided the
Administrative Agent with evidence satisfactory to the
Administrative Agent that the Borrower has initiated a wire
transfer of such payment prior to such time and (y) the
Administrative Agent actually receives such payment on the same
Business Day on which such wire transfer was initiated). If any
payment of principal of or interest on an Advance shall become
due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in
computing interest in connection with such payment.
2.16. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS
AND COMMITMENT REDUCTIONS. Promptly after receipt thereof, the
Administrative Agent will notify each Lender of the contents of
each Aggregate Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by
it hereunder. The
Page 16
Administrative Agent will notify each Lender of the interest rate
applicable to each Eurodollar Advance promptly upon determination
of such interest rate and will give each Lender prompt notice of
each change in the Alternate Base Rate.
2.17. LENDING INSTALLATIONS. Each Lender may book its Loans
at any Lending Installation selected by such Lender and may
change its Lending Installation from time to time. All terms of
this Agreement shall apply to any such Lending Installation and
the Loans and any Notes issued hereunder shall be deemed held by
each Lender for the benefit of such Lending Installation. Each
Lender may, by written notice to the Administrative Agent and the
Borrower in accordance with ARTICLE XIII, designate replacement
or additional Lending Installations through which Loans will be
made by it and for whose account Loan payments are to be made.
2.18. NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT.
Unless the Borrower or a Lender, as the case may be, notifies the
Administrative Agent prior to the date on which it is scheduled
to make payment to the Administrative Agent of (i) in the case of
a Lender, the proceeds of a Loan or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the
Administrative Agent for the account of the Lenders, that it does
not intend to make such payment, the Administrative Agent may
assume that such payment has been made. The Administrative Agent
may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such
assumption. If such Lender or the Borrower, as the case may be,
has not in fact made such payment to the Administrative Agent,
the recipient of such payment shall, on demand by the
Administrative Agent, repay to the Administrative Agent the
amount so made available together with interest thereon in
respect of each day during the period commencing on the date such
amount was so made available by the Administrative Agent until
the date the Administrative Agent recovers such amount at a rate
per annum equal to (x) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day or (y) in the case of
payment by the Borrower, the interest rate applicable to the
relevant Loan.
ARTICLE III
YIELD PROTECTION; TAXES
3.1. YIELD PROTECTION. If, on or after the date of this
Agreement, the adoption of any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any change
in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender or any
applicable Lending Installation with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency:
(i) subjects any Lender or any applicable Lending Installation
to any Taxes, or changes the basis of taxation of payments
(other than with respect to Excluded Taxes) to any Lender
in respect of its Eurodollar Loans, or
Page 17
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender, or any
applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest
rate applicable to Eurodollar Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining its Eurodollar
Loans or reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with its
Eurodollar Loans or requires any Lender or any applicable
Lending Installation to make any payment calculated by
reference to the amount of Eurodollar Loans held or interest
received by it, by an amount deemed material by such Lender,
and the result of any of the foregoing is to increase the cost to such
Lender or applicable Lending Installation of making or maintaining its
Eurodollar Loans or Commitment or to reduce the return received by such
Lender or applicable Lending Installation in connection with such
Eurodollar Loans or Commitment, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or reduction
in amount received.
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender
determines the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such
Lender or any corporation controlling such Lender is increased as
a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary
to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender determines is
attributable to this Agreement, its Loans or its Commitment to
make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "Change" means (i) any change
after the date of this Agreement in (or in the interpretation of)
the Risk-Based Capital Guidelines or (ii) any adoption of or
change in (or any change in the interpretation of) any other law,
governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having
the force of law) after the date of this Agreement which affects
the amount of capital required or expected to be maintained by
any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means
(x) the risk-based capital guidelines in effect in the United
States on the date of this Agreement, including transition rules,
and (y) the corresponding capital regulations promulgated by
regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards," including transition
rules, and any amendments to such regulations adopted prior to
the date of this Agreement.
3.3. AVAILABILITY OF TYPES OF ADVANCES. If (i) any Lender
determines that maintenance of its Eurodollar Loans at a suitable
Lending Installation would violate any applicable law, rule,
regulation, or directive, whether or not having the force of law,
(ii) the Required Lenders determine that (a) deposits of a type
and maturity appropriate to match fund Eurodollar Advances are
not available or (b) the interest rate applicable to a Type of
Advance
Page 18
does not accurately reflect the cost of making or maintaining
such Advance or (iii) the Administrative Agent determines that
adequate and reasonable means do not exist for determining the
Eurodollar Base Rate, then the Administrative Agent shall suspend
the availability of the affected Type of Advance and, in the case
of clause (i), require any affected Eurodollar Advances to be
repaid or converted to Floating Rate Advances, subject to the
payment of any funding indemnification amounts required by
SECTION 3.4.
3.4. FUNDING INDEMNIFICATION. If any conversion, prepayment or
payment of a Eurodollar Advance occurs on a date which is not the
last day of the applicable Interest Period, whether because of
acceleration, prepayment or otherwise, or a Eurodollar Advance is
not made, paid, continued or converted on the date or in the
amount specified by the Borrower for any reason other than
default by the Lenders, the Borrower will indemnify each Lender
for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or
employing deposits acquired to fund or maintain such Eurodollar
Advance.
3.5. TAXES. (i) All payments by the Borrower to or for the
account of any Lender or the Administrative Agent hereunder or
under any Note shall be made free and clear of and without
deduction for any and all Taxes. If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Lender or the Administrative Agent, (a)
the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable
to additional sums payable under this SECTION 3.5) such Lender or
the Administrative Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions
been made, (b) the Borrower shall make such deductions, (c) the
Borrower shall pay the full amount deducted to the relevant
authority in accordance with applicable law and (d) the Borrower
shall furnish to the Administrative Agent the original copy of a
receipt evidencing payment thereof within 30 days after such
payment is made.
(ii) In addition, the Borrower hereby agrees to pay any present
or future stamp or documentary taxes and any other excise
or property taxes, charges or similar levies which arise
from any payment made hereunder or under any Note or from
the execution or delivery of, or otherwise with respect to,
this Agreement or any Note ("Other Taxes").
(iii) The Borrower hereby agrees to indemnify the Administrative
Agent and each Lender for the full amount of Taxes
or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed on amounts payable under this SECTION 3.5)
paid by the Administrative Agent or such Lender and any
liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. Payments due under this
indemnification shall be made within 30 days of the date the
Administrative Agent or such Lender makes demand therefor
pursuant to SECTION 3.6.
(iv) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof (each a "Non-U.S. Lender")
agrees that it will, not less than ten Business Days after the
date of this Agreement (or, if later, the date it becomes a party
hereto), (i) deliver to each of the Borrower and the
Page 19
Administrative Agent two duly completed copies of
United States Internal Revenue Service Form W-8BEN or
W-8ECI, certifying in either case that such Lender is
entitled to receive payments under this Agreement
without deduction or withholding of any United States
federal income taxes, and (ii) deliver to each of the
Borrower and the Administrative Agent a United States
Internal Revenue Form W-8BEN or W-9, as the case may
be, and certify that it is entitled to an exemption
from United States backup withholding tax. Each Non-
U.S. Lender further undertakes to deliver to each of
the Borrower and the Administrative Agent (x) renewals
or additional copies of such form (or any successor
form) on or before the date that such form expires or
becomes obsolete, and (y) after the occurrence of any
event requiring a change in the most recent forms so
delivered by it, such additional forms or amendments
thereto as may be reasonably requested by the Borrower
or the Administrative Agent. All forms or amendments
described in the preceding sentence shall certify that
such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any
United States federal income taxes, UNLESS an event
(including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which
renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering
any such form or amendment with respect to it and such
Lender advises the Borrower and the Administrative
Agent that it is not capable of receiving payments
without any deduction or withholding of United States
federal income tax.
(iv) For any period during which a Non-U.S. Lender has failed to
provide the Borrower with an appropriate form pursuant to clause
(iv), above (unless such failure is due to a change in treaty,
law or regulation, or any change in the interpretation or
administration thereof by any governmental authority, occurring
subsequent to the date on which a form originally was required to
be provided), such Non-U.S. Lender shall not be entitled to
indemnification under this SECTION 3.5 with respect to Taxes
imposed by the United States; PROVIDED that, should a Non-U.S.
Lender which is otherwise exempt from or subject to a reduced
rate of withholding tax become subject to Taxes because of its
failure to deliver a form required under clause (iv), above, the
Borrower shall take such steps as such Non-U.S. Lender shall
reasonably request to assist such Non-U.S. Lender to recover such
Taxes.
(v) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or
any Note pursuant to the law of any relevant jurisdiction or any
treaty shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed
documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate.
Page 20
3.6. LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent
reasonably possible and upon the request of the Borrower, each
Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the
Borrower to such Lender under SECTIONS 3.1, 3.2 and 3.5 or to
avoid the unavailability of Eurodollar Advances under SECTION
3.3, so long as such designation is not, in the judgment of such
Lender, disadvantageous to such Lender. Each Lender shall
deliver a written statement of such Lender to the Borrower (with
a copy to the Administrative Agent) as to the amount due, if any,
under SECTION 3.1, 3.2, 3.4 or 3.5. Such written statement shall
set forth in reasonable detail the calculations upon which such
Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in
connection with a Eurodollar Loan shall be calculated as though
each Lender funded its Eurodollar Loan through the purchase of a
deposit of the type and maturity corresponding to the deposit
used as a reference in determining the Eurodollar Rate applicable
to such Loan, whether in fact that is the case or not. Unless
otherwise provided herein, the amount specified in the written
statement of any Lender shall be payable on demand after receipt
by the Borrower of such written statement. The obligations of
the Borrower under SECTIONS 3.1, 3.2, 3.4 and 3.5 shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. INITIAL ADVANCE. The Lenders shall not be required to make
the initial Advance hereunder until the Borrower has furnished
the Administrative Agent with (a) all fees required to be paid to
the Lenders on the date hereof, (b) evidence that the Borrower's
existing credit facility with Bank One, NA has been (or,
concurrently with the initial Advance hereunder, will be) paid in
full and (c) all of the following, in form and substance
satisfactory to the Administrative Agent and each Lender, and in
sufficient copies for each Lender:
(i) Copies of the articles or certificate of incorporation of
the Borrower, together with all amendments, certified by the
Secretary or an Assistant Secretary of the Borrower, and a
certificate of good standing, certified by the appropriate
governmental officer in its jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or an Assistant Secretary
of the Borrower, of its by-laws and of its Board of Directors'
resolutions and of resolutions or actions of any other body
authorizing the execution of the Loan Documents to which the
Borrower is a party.
(iii) An incumbency certificate, executed by the Secretary or
an Assistant Secretary of the Borrower, which shall identify by
name and title and bear the signatures of the Authorized Officers
and any other officers of the Borrower authorized to sign the
Loan Documents to which the Borrower is a party, upon which
certificate the Administrative Agent and the Lenders shall be
entitled to rely until informed of any change in writing by the
Borrower.
Page 21
(iv) A certificate, signed by the chief accounting officer or the
chief financial officer of the Borrower, stating that on the
initial Borrowing Date no Default or Unmatured Default has
occurred and is continuing.
(v) A written opinion of the Borrower's counsel, addressed to
the Administrative Agent and the Lenders in substantially the
form of Exhibit A.
(vi) Executed counterparts of this Agreement executed by the
Borrower and each Lender.
(vii) Any Notes requested by a Lender pursuant to SECTION
2.13 payable to the order of each such requesting Lender.
(viii) A copy of the SEC Order authorizing the Borrower to
incur the Indebtedness contemplated by the Loan Documents,
certified by the Secretary or an Assistant Secretary of the
Borrower.
(ix) Written money transfer instructions, in substantially the
form of Exhibit D, addressed to the Administrative Agent and
signed by an Authorized Officer who has executed and delivered an
incumbency certificate in accordance with the terms hereof,
together with such other related money transfer authorizations as
the Administrative Agent may have reasonably requested.
(x) Such other documents as any Lender or its counsel may have
reasonably requested.
4.2. EACH ADVANCE. The Lenders shall not be required to make any
Advance (other than an Advance that, after giving effect thereto
and to the application of the proceeds thereof, does not increase
the aggregate amount of outstanding Advances), unless on the
applicable Borrowing Date:
(i) there exists no Default or Unmatured Default.
(ii) the representations and warranties contained in ARTICLE V
are true and correct as of such Borrowing Date except to the
extent any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation or
warranty shall have been true and correct on and as of such
earlier date.
(iii) the SEC Order shall not have expired or been revoked
and shall permit the Borrower to incur the Indebtedness evidenced
by such Advance. The Borrower shall, upon request, provide the
Administrative Agent with evidence satisfactory to the
Administrative Agent that, after giving effect to such Advance,
the aggregate amount of short-term debt instruments issued by the
Borrower in reliance upon the SEC Order shall not exceed the
maximum amount of Indebtedness authorized by the SEC Order.
Page 22
Each delivery of a Borrowing Notice shall constitute a
representation and warranty by the Borrower that the conditions
contained in SECTIONS 4.2(I) and (II) have been satisfied. Any
Lender may require delivery of a duly completed compliance
certificate in substantially the form of Exhibit B as a condition
to making an Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. EXISTENCE AND STANDING. Each of the Borrower and its
Significant Subsidiaries is a corporation, partnership (in the
case of Subsidiaries only) or limited liability company duly and
properly incorporated or organized, as the case may be, validly
existing and (to the extent such concept applies to such entity)
in good standing under the laws of its jurisdiction of
incorporation or organization and has all requisite authority to
conduct its business in each jurisdiction in which its business
is conducted.
5.2. AUTHORIZATION AND VALIDITY. The Borrower has the power and
authority and legal right to execute and deliver the Loan
Documents and to perform its obligations thereunder. The
execution and delivery by the Borrower of the Loan Documents and
the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings, and the Loan
Documents constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with
their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally.
5.3. NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and
delivery by the Borrower of the Loan Documents, nor the
consummation of the transactions therein contemplated, nor
compliance with the provisions thereof will violate (i) any law,
rule, regulation, order, writ, judgment, injunction, decree or
award binding on the Borrower or (ii) the Borrower's articles or
certificate of incorporation or by-laws or (iii) the provisions
of any indenture, instrument or agreement to which the Borrower
is a party or is subject, or by which it, or its Property, is
bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien in,
of or on the Property of the Borrower pursuant to the terms of
any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of,
or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or
authority, or any subdivision thereof, which has not been
obtained by the Borrower, is required to be obtained by the
Borrower in connection with the execution and delivery of the
Loan Documents, the borrowings under this Agreement, the payment
and performance by the Borrower of the Obligations or the
legality, validity, binding effect or enforceability of any of
the Loan Documents.
5.4. FINANCIAL STATEMENTS. The December 31, 2000, March 31,
2001, June 30, 2001, September 30, 2001 and December 31, 2001
consolidated financial statements of KCPL and its Subsidiaries
heretofore delivered to the Lenders were prepared in accordance
with GAAP
Page 23
and fairly present the consolidated financial condition and
operations of the Borrower and its Subsidiaries at such date and
the consolidated results of their operations for the period then
ended subject, in the case of the March 31, 2001, June 30, 2001,
September 30, 2001 and December 31, 2001 financial statements, to
normal year-end adjustments.
5.5. MATERIAL ADVERSE CHANGE. Since December 31, 2001, there has
been no change in the business, Property, prospects, condition
(financial or otherwise) or results of operations of the Borrower
and its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect.
5.6. TAXES. The Borrower and its Significant Subsidiaries have
filed all United States federal tax returns and all other
material tax returns which are required to be filed and have paid
all taxes due and payable pursuant to said returns or pursuant to
any assessment received by the Borrower or any of its Significant
Subsidiaries, except such taxes, if any, as are being contested
in good faith and as to which adequate reserves have been
provided in accordance with GAAP and as to which no Lien exists.
No tax liens have been filed and no material claims are being
asserted against the Borrower or any Significant Subsidiary with
respect to any such taxes. The charges, accruals and reserves on
the books of the Borrower and its Significant Subsidiaries in
respect of any taxes or other governmental charges are adequate.
5.7. LITIGATION; ETC. Except as set forth in the Borrower's `34
Act Reports, there is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the knowledge
of any of their officers, threatened against or affecting the
Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect or which seeks to
prevent, enjoin or delay the making of any Loans. Other than any
liability incident to any litigation, arbitration or proceeding
which could not reasonably be expected to have a Material Adverse
Effect, the Borrower has no material contingent obligations not
provided for or disclosed in the financial statements referred to
in SECTION 5.4.
5.8. ERISA. The Borrower and each other member of the Controlled
Group has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and is
in compliance in all material respects with the presently
applicable provisions of ERISA and the Code with respect to each
Plan. Neither the Borrower nor any other member of the
Controlled Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Code in respect of any Plan,
(ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan, or made any amendment to any Plan which has
resulted or could result in the imposition of a Lien or the
posting of a bond or other security under ERISA or the Code or
(iii) incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.
5.9. ACCURACY OF INFORMATION. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the
Administrative Agent or to any Lender in connection with the
negotiation of, or compliance with, the Loan Documents contained
any material misstatement of fact or omitted to state a material
fact or any fact necessary to make the statements contained
therein not misleading.
Page 24
5.10. REGULATION U. The Borrower is not engaged and will not
engage, principally or as one of its important activities, in the
business of purchasing or carrying margin stock (as defined in
Regulation U), or extending credit for the purpose of purchasing
or carrying margin stock. Margin stock constitutes less than 25%
of the value of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge or other
restriction hereunder.
5.11. MATERIAL AGREEMENTS. Neither the Borrower nor any
Subsidiary is a party to any agreement or instrument or subject
to any charter or other corporate restriction which is reasonably
likely to have a Material Adverse Effect. Neither the Borrower
nor any Subsidiary is in default in the performance, observance
or fulfillment of any of the obligations, covenants or conditions
contained in any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect.
5.12. COMPLIANCE WITH LAWS. The Borrower and its
Subsidiaries have complied with all applicable statutes, rules,
regulations, orders and restrictions of any domestic or foreign
government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or
the ownership of their respective Property except for any failure
to comply with any of the foregoing which could not reasonably be
expected to have a Material Adverse Effect.
5.13. OWNERSHIP OF PROPERTIES. On the date of this
Agreement, the Borrower and its Significant Subsidiaries will
have good title, free of all Liens other than those permitted by
SECTION 6.12, to all of the Property and assets reflected in the
Borrower's most recent consolidated financial statements provided
to the Administrative Agent as owned by the Borrower and its
Subsidiaries.
5.14. PLAN ASSETS; PROHIBITED TRANSACTIONS. The Borrower is
not an entity deemed to hold "plan assets" within the meaning of
29 C.F.R. 2510.3-101 of an employee benefit plan (as defined in
Section 3(3) of ERISA) which is subject to Title I of ERISA or
any plan (within the meaning of Section 4975 of the Code), and
neither the execution of this Agreement nor the making of Loans
hereunder gives rise to a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
5.15. ENVIRONMENTAL MATTERS. Except as set forth in the
Borrower's `34 Act Reports, there are no known risks and
liabilities accruing to the Borrower or any of its Subsidiaries
due to Environmental Laws that could reasonably be expected to
have a Material Adverse Effect.
5.16. INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
5.17. PUBLIC UTILITY HOLDING COMPANY ACT. The Borrower is a
"holding company" within the meaning of PUHCA.
PARI PASSU INDEBTEDNESS. The Indebtedness under the Loan
Documents ranks at least PARI PASSU with all other unsecured
Indebtedness of the Borrower.
Page 25
5.18. SOLVENCY. As of the date hereof and after giving
effect to the consummation of the transactions contemplated by
the Loan Documents, the Borrower and each Significant Subsidiary
is solvent. For purposes of the preceding sentence, solvent
means (a) the fair saleable value (on a going concern basis) of
the Borrower's assets or a Significant Subsidiary's assets, as
applicable, exceed its liabilities, contingent or otherwise,
fairly valued, (b) such Person will be able to pay its debts as
they become due and (c) such Person will not be left with
unreasonably small capital as is necessary to satisfy all of its
current and reasonably anticipated obligations giving due
consideration to the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities
will be computed at the amount which, in light of all the facts
and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured
liability. The Borrower is not entering into the Loan Documents
with the actual intent to hinder, delay or defraud its current or
future creditors, nor does the Borrower intend to or believe that
it will incur, as a result of entering into this Agreement and
the other Loan Documents, debts beyond its ability to repay.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required
Lenders shall otherwise consent in writing:
6.1. FINANCIAL REPORTING. The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and
administered in accordance with generally accepted accounting
principles, and furnish to the Lenders:
(i) Within 90 days after the close of each of its fiscal years,
an unqualified audit report certified by a firm of independent
certified public accountants which is a member of the "Big Five,"
prepared in accordance with GAAP on a consolidated basis for
itself and its Consolidated Subsidiaries, including balance
sheets as of the end of such period and related statements of
income, retained earnings and cash flows, accompanied by any
management letter prepared by said accountants.
(ii) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, for itself and its
Consolidated Subsidiaries, either (a) consolidated and
consolidating unaudited balance sheets as at the close of each
such period and consolidated and consolidating profit and loss
and reconciliation of surplus statements and a statement of cash
flows for the period from the beginning of such fiscal year to
the end of such quarter, all certified by its chief accounting
officer or chief financial officer or (b) if the Borrower is then
a "registrant" within the meaning of Rule 1-01 of Regulation S-X
of the SEC and required to file a report on Form 10-Q with the
SEC, a copy of the Borrower's report on Form 10-Q for such
quarterly period.
Page 26
(iii) Together with the financial statements required under
SECTIONS 6.1(I) and (II), a compliance certificate in
substantially the form of Exhibit B signed by its chief
accounting officer or chief financial officer setting forth
calculations of the financial covenants contained in SECTION 6
and stating that no Default or Unmatured Default exists, or if
any Default or Unmatured Default exists, stating the nature and
status thereof.
(iv) As soon as possible and in any event within 10 days after
the Borrower or any ERISA Affiliate knows that any Reportable
Event has occurred with respect to any Plan, a statement, signed
by the chief accounting or financial officer of the Borrower,
describing said Reportable Event and the action which the
Borrower or such ERISA Affiliate proposes to take with respect
thereto.
(v) As soon as possible and in any event within two days after
receipt of notice by the Borrower or any ERISA Affiliate of the
PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan, a copy of such notice.
(vi) Promptly upon the furnishing thereof to the shareholders of
the Borrower, copies of all financial statements, reports and
proxy statements so furnished.
(vii) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or other
regular reports which the Borrower files with the SEC.
(viii) As soon as possible, and in any event within three days
after an Authorized Officer of the Borrower shall have knowledge
thereof, notice of any change by Moody's or S&P in the senior
unsecured debt rating of the Borrower.
(ix) Such other information (including non-financial information)
as the Administrative Agent or any Lender may from time to time
reasonably request.
The statements and reports required to be furnished by the
Borrower pursuant to CLAUSES (VI) and (VII) above shall be deemed
furnished for such purpose upon becoming publicly available on
the SEC's EDGAR web page.
6.2. PERMITS, ETC. The Borrower will, and will cause each
Significant Subsidiary to, take all reasonable action to maintain
all rights, privileges, permits, licenses and franchises
necessary or desirable in the normal conduct of its business,
except to the extent failure to do so could not reasonably be
expected to have a Material Adverse Effect; and preserve or renew
all of its registered patents, trademarks, trade names and
service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
6.3. USE OF PROCEEDS. The Borrower will use the proceeds of the
Advances (i) to repay its outstanding credit facility agented by
Bank One, NA, and (ii) for the general corporate and working
capital purposes of the Borrower and its Subsidiaries, including
support for the Borrower's commercial paper. The Borrower will
not use any of the proceeds of the Advances to purchase or carry
any margin stock (as defined in Regulation U) or to extend credit
for the purpose of purchasing or carrying margin stock. The
Borrower will not permit margin
Page 27
stock to constitute 25% or more of the value of those assets of
the Borrower and its Subsidiaries which are subject to any
limitation on sale, pledge or other restriction hereunder.
6.4. NOTICE OF DEFAULT. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of
the occurrence of any Default or Unmatured Default and of any
other development, financial or otherwise, which could reasonably
be expected to have a Material Adverse Effect.
6.5. CONDUCT OF BUSINESS. The Borrower will, and will cause each
Significant Subsidiary to, carry on and conduct its business in
substantially the same manner and in substantially the same
fields of enterprise as it is presently conducted and do all
things necessary to remain duly incorporated or organized,
validly existing and (to the extent such concept applies to such
entity) in good standing as a domestic corporation, partnership
or limited liability company in its jurisdiction of incorporation
or organization, as the case may be, and maintain all requisite
authority to conduct its business in each jurisdiction in which
its business is conducted.
6.6. TAXES. The Borrower will, and will cause each Significant
Subsidiary to, timely file United States federal and applicable
foreign, state and local tax returns required by law and pay when
due all taxes, assessments and governmental charges and levies
upon it or its income, profits or Property, except those which
are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves have been set aside in
accordance with GAAP.
6.7. INSURANCE. The Borrower will, and will cause each
Significant Subsidiary to, maintain with financially sound and
reputable insurance companies that are not Affiliates of the
Borrower or its Subsidiaries (other than any captive insurance
company) insurance on all their Properties and business against
loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types
and in such amounts as are customarily carried under similar
circumstances by such other Persons, and the Borrower will
furnish to any Lender upon request full information as to the
insurance carried. Such insurance may be subject to
co-insurance, deductibility or similar clauses which, in effect,
result in self-insurance of certain losses; provided that such
self-insurance is in accord with the customary industry practices
for Persons in the same or similar businesses and adequate
insurance reserves are maintained in connection with such
self-insurance to the extent required by GAAP.
6.8. COMPLIANCE WITH LAWS. The Borrower will, and will cause
each Significant Subsidiary to, comply with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject including, without limitation,
all Environmental Laws, the failure to comply with which could
reasonably be expected to have a Material Adverse Effect.
6.9. MAINTENANCE OF PROPERTIES; BOOKS OF RECORD. The Borrower
will, and will cause each Significant Subsidiary to, (i) do all
things necessary to maintain, preserve, protect and keep its
Property in good repair, working order and condition, and make
all necessary and proper repairs, renewals and replacements so
that its business carried on in connection therewith may be
properly conducted at all times and (ii) keep proper books of
record and account, in which full and correct entries shall be
made of all material financial transactions and the assets and
business
Page 28
of the Borrower and each Significant Subsidiary in accordance
with GAAP; PROVIDED that nothing in this Section shall prevent
the Borrower or any Significant Subsidiary from discontinuing the
operation or maintenance of any of its Property or equipment if
such discontinuance is, in the judgment of such Person, desirable
in the conduct of its business.
6.10. INSPECTION. The Borrower will, and if a Default or
Event of Default exists, will cause each Subsidiary to, permit
the Administrative Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, books
and financial records of such Person, to examine and make copies
of the books of accounts and other financial records of such
Person, and to discuss the affairs, finances and accounts of such
Person with, and to be advised as to the same by, such Person's
officers at such reasonable times and intervals as the
Administrative Agent or any Lender may designate. After the
occurrence and during the continuance of a Default, any such
inspection shall be at the Borrower's expense; at all other
times, the Borrower shall not be liable to pay the expenses of
the Administrative Agent or any Lender in connection with such
inspections.
6.11. CONSOLIDATIONS, MERGERS AND SALE OF ASSETS. The
Borrower will not, nor will it permit any Significant Subsidiary
(other than any Project Finance Subsidiary) to, sell, lease,
transfer, or otherwise dispose of all or substantially all of its
assets (whether by a single transaction or a number of related
transactions and whether at one time or over a period of time) or
consolidate with or merge into any Person or permit any Person to
merge into it, except
(i) A Wholly-Owned Subsidiary may be merged into the Borrower.
(ii) Any Significant Subsidiary may sell all or substantially all
of its assets to, or consolidate or merge into, another
Significant Subsidiary; PROVIDED that, immediately before and
any Default or Unmatured Default.
(iii) Strategic Energy, L.L.C. may sell accounts receivable
and contracts that generate accounts receivable, and KCPL may
sell accounts receivable, in each case pursuant to one or more
securitization transactions.
(iv) The Borrower may sell all or substantially all of its assets
to, or consolidate with or merge into, any other corporation, or
permit another corporation to merge into it; PROVIDED, HOWEVER,
that (a) the surviving corporation, if such surviving corporation
is not the Borrower, or the transferee corporation in the case of
a sale of all or substantially all of the Borrower's assets (1)
shall be a corporation organized and existing under the laws of
the United States of America or a state thereof or the District
of Columbia, and (2) shall expressly assume in writing the due
and punctual payment of the Obligations and the due and punctual
performance of and compliance with all of the terms of this
Agreement and the other Loan Documents to be performed or
complied with by the Borrower, (b) immediately before and after
such merger, consolidation or sale, there shall not exist any
Default or Unmatured Default and (c) the surviving corporation of
such merger or consolidation, or the transferee corporation of
the assets of the Borrower, as applicable, has, both immediately
before and after such merger,
Page 29
consolidation or sale, a Moody's Rating of Baa3 or
better or an S&P Rating of BBB - or better.
Notwithstanding the foregoing, the Borrower and its Consolidated
Subsidiaries (excluding Project Finance Subsidiaries) will not
convey, transfer, lease or otherwise dispose of (whether in one
transaction or a series of transactions, but excluding sales of
inventory in the ordinary course of business and sales of assets
permitted by clause (iii) above) in the aggregate within any 12-
month period, more than 20% of the aggregate book value of the
assets of the Borrower and its Consolidated Subsidiaries
(excluding Project Finance Subsidiaries) as calculated as of the
end of the most recent fiscal quarter.
6.12. LIENS. The Borrower will not, nor will it permit any
Significant Subsidiary (other than any Project Finance
Subsidiary) to, create, incur, or suffer to exist any Lien in, of
or on the Property of the Borrower or any of its Significant
Subsidiaries (other than any Project Finance Subsidiary), except:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property 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 and
for which adequate reserves in accordance with GAAP shall have
been set aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business which secure payment of obligations not more
than 60 days past due or which are being contested in good faith
by appropriate proceedings and for which adequate reserves shall
have been set aside on its books.
(iii) Liens arising out of pledges or deposits in the
ordinary course of business under worker's compensation laws,
unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation, other
than any Lien imposed under ERISA.
(iv) 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 and which are not substantial in amount and do not in
any material way affect the marketability of the same or
interfere with the use thereof in the business of the Borrower or
its Significant Subsidiaries.
(v) The Lien of the General Mortgage Indenture and Deed of Trust
Dated December 1, 1986 from KCPL to UMB, N.A.
(vi) Liens existing on the date hereof and, in the case of any
Significant Subsidiary other than KCPL, described in SCHEDULE
6.12 and any renewal or extension thereof; PROVIDED that the
Property covered thereby is not increased and any renewal or
extension of the obligations secured or benefited thereby is
permitted by this Agreement.
Page 30
(vii) Judgment Liens which secure payment of legal
obligations that would not constitute a Default under SECTION
7.9.
(viii) Liens on Property acquired by the Borrower or a
Significant Subsidiary after the date hereof, existing on such
Property at the time of acquisition thereof (and not created in
anticipation thereof); PROVIDED that in any such case no such
Lien shall extend to or cover any other Property of the Borrower
or such Significant Subsidiary, as the case may be.
(ix) Deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business by
the Borrower or any Significant Subsidiary.
(x) Purchase money security interests on any Property acquired
or held by such Person in the ordinary course of business,
securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring such Property;
PROVIDED that (a) such Lien attaches to such Property
concurrently with or within 90 days after the acquisition
thereof, (b) such Lien attaches solely to the Property so
acquired in such transaction and (c) the principal amount of the
Indebtedness secured thereby does not exceed the cost or fair
market value determined at the date of incurrence, whichever is
lower, of the Property being acquired on the date of acquisition.
(xi) Liens on or over gas, oil, coal, fissionable material, or
other fuel or fuel products as security for any obligations
incurred by such Person for the sole purpose of financing the
acquisition or storage of such fuel or fuel products or, with
respect to nuclear fuel, the processing, reprocessing, sorting,
storage and disposal thereof.
(xii) Liens on (including Liens arising out of the sale of)
accounts receivable and/or contracts which will give rise to
accounts receivable of KCPL and Strategic Energy, L.L.C.; and
other Liens on (including Liens arising out of the sale of)
accounts receivable and/or contracts which will give rise to
accounts receivable of the Borrower or any Subsidiary in an
aggregate amount not at any time exceeding $10,000,000.
(xiii) Liens on Property of KLT Gas Inc. and its Subsidiaries
in favor of operators and non-operators under joint operating
agreements, pooling orders or agreements, unitization agreements
or similar contractual arrangements arising in the ordinary
course of the business of such Person relating to the development
or operation of oil and gas Properties to secure amounts owing,
which amounts are not yet due or are being contested in good
faith by appropriate proceedings if adequate reserves are
maintained on the books of such Person in accordance with GAAP.
(xiv) Liens on Property of KLT Gas Inc. and its Subsidiaries
under production sales agreements, division orders, operating
agreements and other agreements customary in the oil and gas
business for processing, production and selling
Page 31
hydrocarbons; PROVIDED that such Liens do not secure
obligations to deliver hydrocarbons at some future date
without receiving full payment therefor within 90 days
of delivery.
(xv) Liens on Property or assets of a Significant Subsidiary
securing obligations owing to the Borrower or any Significant
Subsidiary (other than a Project Finance Subsidiary).
(xvi) Liens on the stock or other equity interests of any
Project Finance Subsidiary to secure obligations of such Project
Finance Subsidiary (provided that the agreement under which any
such Lien is created shall expressly state that it is non-
recourse to the pledgor).
(xvii) Liens which would otherwise not be permitted by CLAUSES
(I) through (XVI) securing additional Indebtedness of the
Borrower or a Significant Subsidiary (other than a Project
Finance Subsidiary); PROVIDED that after giving effect thereto
the aggregate unpaid principal amount of Indebtedness (including,
without limitation, Capitalized Lease Obligations) of the
Borrower and its Significant Subsidiaries (other than any Project
Finance Subsidiary) (including prepayment premiums and penalties)
secured by Liens permitted by this CLAUSE (XVII) shall not exceed
the greater of (a) $50,000,000 and (b) 10% of Consolidated
Tangible Net Worth.
6.13. AFFILIATES. Except to the extent required by
applicable law with respect to transactions among the Borrower
and its Subsidiaries (excluding any Project Finance Subsidiary),
the Borrower will not, and will not permit any Subsidiary (other
than any Project Finance Subsidiary) to, enter into any
transaction (including, without limitation, the purchase or sale
of any Property or service) with, or make any payment or transfer
to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than the Borrower or
such Subsidiary would obtain in a comparable arms-length
transaction.
6.14. ERISA. The Borrower will not, nor will it permit any
Significant Subsidiary to, (i) voluntarily terminate any Plan, so
as to result in any material liability of the Borrower or any
Significant Subsidiary to the PBGC or (ii) enter into any
Prohibited Transaction (as defined in Section 4975 of the Code
and in Section 406 of ERISA) involving any Plan which results in
any material liability of the Borrower or any Significant
Subsidiary or (iii) cause any occurrence of any Reportable Event
which results in any material liability of the Borrower or any
Significant Subsidiary to the PBGC or (iv) allow or suffer to
exist any other event or condition known to the Borrower which
results in any material liability of the Borrower or any
Significant Subsidiary to the PBGC.
6.15. TOTAL INDEBTEDNESS TO TOTAL CAPITALIZATION. The
Borrower shall at all times cause the ratio of (i) Total
Indebtedness to (ii) Total Capitalization to be less than or
equal to 0.65 to 1.0.
Page 32
6.16. INTEREST COVERAGE RATIO. The Borrower shall not permit
the Interest Coverage Ratio as of the end of any fiscal quarter
of the Borrower to be less than 2.0 to 1.0.
6.17. RESTRICTIONS ON SUBSIDIARY DIVIDENDS. Except as
described in SCHEDULE 6.17 (provided that the restrictions
described therein are removed prior to June 11, 2002), the
Borrower will not, nor will it permit any Significant Subsidiary
(other than any Project Finance Subsidiary) to, be a party to any
agreement prohibiting or restricting the ability of such
Significant Subsidiary to declare or pay dividends to the
Borrower.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events
shall constitute a Default:
7.1. Any representation or warranty made or deemed made by or
on behalf of the Borrower to the Lenders or the Administrative Agent
under or in connection with this Agreement, any Loan, or any
certificate or information delivered in connection with this
Agreement or any other Loan Document shall be materially false on
the date as of which made.
7.2. Nonpayment of principal of any Loan when due or nonpayment
of interest upon any Loan or of any fee or other obligation under
any of the Loan Documents within five days after the same becomes
due.
7.3. The breach by the Borrower of any of the terms or
provisions of SECTION 6.3, 6.10 (with respect to the Borrower and its
Significant Subsidiaries only), 6.11, 6.12, 6.13, 6.15, 6.16 or
6.17.
7.4. The breach by the Borrower (other than a breach which
constitutes a Default under another Section of this ARTICLE VII)
of any of the terms or provisions of this Agreement which is not
remedied within 30 days after the earlier of (a) the Borrower
becoming aware of such breach and (b) receipt by the Borrower of
written notice from the Administrative Agent or any Lender;
PROVIDED that if such breach is capable of cure but (i) cannot be
cured by payment of money and (ii) cannot be cured by diligent
efforts within such 30-day period, but such diligent efforts
shall be properly commenced within such 30-day period and the
Borrower is diligently pursuing, and shall continue to pursue
diligently, remedy of such failure, the cure period shall be
extended for an additional 90 days, but in no event beyond the
Facility Termination Date.
7.5. Failure of the Borrower or any of its Significant
Subsidiaries to pay when due any Indebtedness aggregating in
excess of $25,000,000 ("Material Indebtedness"); or the default
by the Borrower or any of its Significant Subsidiaries in the
performance of any term, provision or condition contained in any
agreement under which any such Material Indebtedness was created
or is governed, or any other event shall occur or condition
exist, the effect of which default or event is to cause, or to
permit the holder or holders of such Material Indebtedness to
cause, such Material Indebtedness to become due prior to its
stated maturity; or any Material Indebtedness of the Borrower or
any of its Significant Subsidiaries shall be declared to be due
and payable or required to be prepaid or repurchased (other than
by a regularly scheduled payment) prior to the
Page 33
stated maturity thereof; or the Borrower or any of its
Significant Subsidiaries shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.
7.6. The Borrower or any of its Significant Subsidiaries shall
(i) have an order for relief entered with respect to it under the
Federal bankruptcy laws as now or hereafter in effect, (ii) make
an assignment for the benefit of creditors, (iii) apply for,
seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any
proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or
fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any
corporate, partnership or limited liability company action to
authorize or effect any of the foregoing actions set forth in
this SECTION 7.6 or (vi) fail to contest in good faith any
appointment or proceeding described in SECTION 7.7.
7.7. Without the application, approval or consent of the
Borrower or any of its Subsidiaries, a receiver, trustee, examiner,
liquidator or similar official shall be appointed for the
Borrower or any of its Subsidiaries or any Substantial Portion of
its Property, or a proceeding described in SECTION 7.6(IV) shall
be instituted against the Borrower or any of its Subsidiaries and
such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 30 consecutive
days.
7.8. Any court, government or governmental agency shall
condemn, seize or otherwise appropriate, or take custody or control
of, all or any portion of the Property of the Borrower and its
Subsidiaries which, when taken together with all other Property
of the Borrower and its Subsidiaries so condemned, seized,
appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such
action occurs, constitutes a Substantial Portion.
7.9. The Borrower or any of its Significant Subsidiaries
shall fail within 30 days to pay, bond or otherwise discharge (i)
any judgment or order for the payment of money in excess of
$25,000,000 (either singly or in the aggregate with other such
judgments) or (ii) any non-monetary final judgment that has, or
could reasonably be expected to have, a Material Adverse Effect,
in either case which is not stayed on appeal or otherwise being
appropriately contested in good faith.
7.10. A Change of Control shall occur.
7.11. A Reportable Event shall have occurred with respect
to a Plan which could reasonably be expected to have a Material
Adverse Effect and, 30 days after notice thereof shall have been
given to the Borrower by the Administrative Agent or any Lender,
such Reportable Event shall still exist.
Page 34
7.12. Any authorization or approval or other action by any
governmental authority or regulatory body required for the
execution, delivery or performance of this Agreement or any other
Loan Document by the Borrower shall fail to have been obtained or
be terminated, revoked or rescinded or shall otherwise no longer
be in full force and effect, and such occurrence shall (i)
adversely affect the enforceability of the Loan Documents against
the Borrower and (ii) to the extent that such occurrence can be
cured, shall continue for five days.
7.13. The Borrower shall fail to own, directly or indirectly,
all of the outstanding stock of KCPL which, in the absence of any
contingency, has the right to vote in an election of directors of
KCPL.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. ACCELERATION. If any Default described in SECTION 7.6 or
7.7 occurs with respect to the Borrower, the obligations of the
Lenders to make Loans hereunder shall automatically terminate and
the Obligations shall immediately become due and payable without
any election or action on the part of the Administrative Agent or
any Lender. If any other Default occurs, the Required Lenders
(or the Administrative Agent with the consent of the Required
Lenders) may terminate or suspend the obligations of the Lenders
to make Loans hereunder, or declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which the Borrower hereby expressly
waives.
If (a) within 30 days after acceleration of the maturity of
the Obligations or termination of the obligations of the Lenders
to make Loans hereunder as a result of any Default (other than
any Default as described in SECTION 7.6 or 7.7 with respect to
the Borrower) and (b) before any judgment or decree for the
payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so
direct, the Administrative Agent shall, by notice to the
Borrower, rescind and annul such acceleration and/or termination.
8.2. AMENDMENTS. Subject to the provisions of this ARTICLE VIII,
the Required Lenders (or the Administrative Agent with the
consent in writing of the Required Lenders) and the Borrower may
enter into agreements supplemental hereto for the purpose of
adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower
hereunder or waiving any Default hereunder; PROVIDED, HOWEVER,
that no such supplemental agreement shall, without the consent of
all of the Lenders:
(i) Extend the final maturity of any Loan to a date after the
Facility Termination Date, or forgive all or any portion of
the principal amount thereof, or reduce the rate or extend
the time of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of
Required Lenders.
Page 35
(iii) Extend the Facility Termination Date, or reduce the
amount or extend the payment date for, the mandatory payments
required under SECTION 2.2, or increase the amount of the
Commitment of any Lender hereunder, or permit the Borrower to
assign its rights under this Agreement.
(iv) Amend this SECTION 8.2.
No amendment of any provision of this Agreement relating to the
Administrative Agent shall be effective without the written
consent of the Administrative Agent. The Administrative Agent
may waive payment of the fee required under SECTION 12.3.2
without obtaining the consent of any other party to this
Agreement.
8.3. PRESERVATION OF RIGHTS. No delay or omission of the Lenders
or the Administrative Agent to exercise any right under the Loan
Documents shall impair such right or be construed to be a waiver
of any Default or an acquiescence therein, and the making of a
Loan notwithstanding the existence of a Default or the inability
of the Borrower to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or
partial exercise of any such right shall not preclude other or
further exercise thereof or the exercise of any other right, and
no waiver, amendment or other variation of the terms, conditions
or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to
SECTION 8.2, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan
Documents or by law afforded shall be cumulative and all shall be
available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. SURVIVAL OF REPRESENTATIONS. All representations and
warranties of the Borrower contained in this Agreement shall
survive the making of the Loans herein contemplated.
9.2. GOVERNMENTAL REGULATION. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be
obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or
regulation.
9.3. HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the
interpretation of any of the provisions of the Loan Documents.
9.4. ENTIRE AGREEMENT. The Loan Documents embody the entire
agreement and understanding among the Borrower, the
Administrative Agent and the Lenders and supersede all prior
agreements and understandings among the Borrower, the
Administrative Agent and the Lenders relating to the subject
matter thereof other than the fee letter described in SECTION
10.13.
Page 36
9.5. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The
respective obligations of the Lenders hereunder are several and
not joint and no Lender shall be the partner or agent of any
other (except to the extent to which the Administrative Agent is
authorized to act as such). The failure of any Lender to perform
any of its obligations hereunder shall not relieve any other
Lender from any of its obligations hereunder. This Agreement
shall not be construed so as to confer any right or benefit upon
any Person other than the parties to this Agreement and their
respective successors and assigns; PROVIDED, HOWEVER, that the
parties hereto expressly agree that the Arranger shall enjoy the
benefits of the provisions of SECTIONS 9.6, 9.10 and 10.11 to the
extent specifically set forth therein and shall have the right to
enforce such provisions on its own behalf and in its own name to
the same extent as if it were a party to this Agreement.
9.6. EXPENSES; INDEMNIFICATION.
(i) The Borrower shall reimburse the Administrative Agent and
the Arranger for any reasonable costs and expenses (including
fees and charges of outside counsel for the Administrative Agent)
paid or incurred by the Administrative Agent or the Arranger in
connection with the preparation, negotiation, execution,
delivery, syndication, distribution (including, without
limitation, via the internet), review, amendment, modification,
and administration of the Loan Documents. The Borrower also
agrees to reimburse the Administrative Agent, the Arranger and
the Lenders for any reasonable costs, internal charges and
expenses (including fees and charges of attorneys for the
Administrative Agent, the Arranger and the Lenders, which
attorneys may be employees of the Administrative Agent, the
Arranger or the Lenders) paid or incurred by the Administrative
Agent, the Arranger or any Lender in connection with the
collection and enforcement, attempted enforcement, and
preservation of rights and remedies under, of the Loan Documents
(including all such costs and expenses incurred during any
"workout" or restructuring in respect of the Obligations and
during any legal proceeding).
(ii) The Borrower hereby further agrees to indemnify the
Administrative Agent, the Arranger, each Lender, their respective
affiliates and the directors, officers and employees of the
foregoing against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor
whether or not the Administrative Agent, the Arranger or any
Lender is a party thereto) which any of them may pay or incur
arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or
indirect application or proposed application of the proceeds of
any Loan hereunder except to the extent that they are determined
in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or
willful misconduct of the party seeking indemnification. The
obligations of the Borrower under this SECTION 9.6 shall survive
the payment of the Obligations and termination of this Agreement.
Page 37
9.7. NUMBERS OF DOCUMENTS. All statements, notices, closing
documents, and requests hereunder shall be furnished to the
Administrative Agent with sufficient counterparts so that the
Administrative Agent may furnish one to each of the Lenders.
9.8. ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance
with GAAP.
9.9. SEVERABILITY OF PROVISIONS. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or
invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
9.10. NONLIABILITY OF LENDERS. The relationship between the
Borrower on the one hand and the Lenders and the Administrative
Agent on the other hand shall be solely that of borrower and
lender. Neither the Administrative Agent, the Arranger nor any
Lender shall have any fiduciary responsibilities to the Borrower.
Neither the Administrative Agent, the Arranger nor any Lender
undertakes any responsibility to the Borrower to review or inform
the Borrower of any matter in connection with any phase of the
Borrower's business or operations. The Borrower agrees that
neither the Administrative Agent, the Arranger nor any Lender
shall have liability to the Borrower (whether sounding in tort,
contract or otherwise) for losses suffered by the Borrower in
connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the
Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-
appealable judgment by a court of competent jurisdiction that
such losses resulted from the gross negligence or willful
misconduct of the party from which recovery is sought. Neither
the Administrative Agent, the Arranger nor any Lender shall have
any liability with respect to, and the Borrower hereby waives,
releases and agrees not to sue for, any special, indirect or
consequential damages suffered by the Borrower in connection
with, arising out of, or in any way related to the Loan Documents
or the transactions contemplated thereby.
9.11. CONFIDENTIALITY. Each Lender agrees to hold any
confidential information which it may receive from the Borrower,
any Subsidiary or any DTI Company pursuant to this Agreement in
confidence, except for disclosure (i) to its Affiliates and to
other Lenders and their respective Affiliates, (ii) to legal
counsel, accountants, and other professional advisors to that
Lender or to a Transferee, (iii) to regulatory officials, (iv) to
any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection
with any legal proceeding to which that Lender is a party, (vi)
permitted by SECTION 12.4, and (vii) to the extent such
information (a) becomes publicly available other than as a result
of a breach of this Section or (b) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis
from a source other than the Borrower, any Subsidiary or any DTI
Company.
9.12. NONRELIANCE. Each Lender hereby represents that it is
not relying on or looking to any margin stock (as defined in
Regulation U of the Board of Governors of the Federal Reserve
System) for the repayment of the Loans provided for herein.
Page 38
ARTICLE X
THE ADMINISTRATIVE AGENT
10.1. APPOINTMENT; NATURE OF RELATIONSHIP. Bank One is
hereby appointed by each of the Lenders as its contractual
representative (herein referred to as the "Administrative Agent")
hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Administrative Agent to act as
the contractual representative of such Lender with the rights and
duties expressly set forth herein and in the other Loan
Documents. The Administrative Agent agrees to act as such
contractual representative upon the express conditions contained
in this ARTICLE X. Notwithstanding the use of the defined term
"Administrative Agent," it is expressly understood and agreed
that the Administrative Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any
other Loan Document and that the Administrative Agent is merely
acting as the contractual representative of the Lenders with only
those duties as are expressly set forth in this Agreement and the
other Loan Documents. In its capacity as the Lenders'
contractual representative, the Administrative Agent (i) does not
hereby assume any fiduciary duties to any of the Lenders and (ii)
is acting as an independent contractor, the rights and duties of
which are limited to those expressly set forth in this Agreement
and the other Loan Documents. Each of the Lenders hereby agrees
to assert no claim against the Administrative Agent on any agency
theory or any other theory of liability for breach of fiduciary
duty, all of which claims each Lender hereby waives.
10.2. POWERS. The Administrative Agent shall have and may
exercise such powers under the Loan Documents as are specifically
delegated to the Administrative Agent by the terms of each
thereof, together with such powers as are reasonably incidental
thereto. The Administrative Agent shall have no implied duties
to the Lenders, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by the
Loan Documents to be taken by the Administrative Agent.
10.3. GENERAL IMMUNITY. Neither the Administrative Agent
nor any of its directors, officers, agents or employees shall be
liable to the Borrower or any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other
Loan Document or in connection herewith or therewith except to
the extent such action or inaction is determined in a final non-
appealable judgment by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of such
Person.
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither
the Administrative Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to
ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of
the covenants or agreements of any obligor under any Loan
Document, including, without limitation, any agreement by an
obligor to furnish information directly to each Lender; (iii) the
satisfaction of any condition specified in ARTICLE IV, except
receipt of items required to be delivered solely to the
Administrative Agent; (iv) the existence or possible existence of
any Default or Unmatured Default; (v) the validity,
enforceability, effectiveness,
Page 39
sufficiency or genuineness of any Loan Document or any other
instrument or writing furnished in connection therewith; (vi) the
value, sufficiency, creation, perfection or priority of any Lien
in any collateral security; or (vii) the financial condition of
the Borrower or any guarantor of any of the Obligations or of any
of the Borrower's or any such guarantor's respective
Subsidiaries. The Administrative Agent shall have no duty to
disclose to the Lenders information that is not required to be
furnished by the Borrower to the Administrative Agent at such
time, but is voluntarily furnished by the Borrower to the
Administrative Agent (either in its capacity as Administrative
Agent or in its individual capacity).
10.5. ACTION ON INSTRUCTIONS OF LENDERS. The Administrative
Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and under any other Loan
Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the
Lenders. The Lenders hereby acknowledge that the Administrative
Agent shall be under no duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of this
Agreement or any other Loan Document unless it shall be requested
in writing to do so by the Required Lenders. The Administrative
Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it
shall first be indemnified to its satisfaction by the Lenders pro
rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
10.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Administrative
Agent may execute any of its duties as Administrative Agent
hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. The Administrative Agent shall be entitled
to advice of counsel concerning the contractual arrangement
between the Administrative Agent and the Lenders and all matters
pertaining to the Administrative Agent's duties hereunder and
under any other Loan Document.
10.7. RELIANCE ON DOCUMENTS; COUNSEL. The Administrative
Agent shall be entitled to rely upon any Note, notice, consent,
certificate, affidavit, letter, telegram, statement, paper or
document believed by it to be genuine and correct and to have
been signed or sent by the proper person or persons, and, in
respect to legal matters, upon the opinion of counsel selected by
the Administrative Agent, which counsel may be employees of the
Administrative Agent.
10.8. ADMINISTRATIVE AGENT'S REIMBURSEMENT AND
INDEMNIFICATION. The Lenders agree to reimburse and indemnify
the Administrative Agent ratably in proportion to their
respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior
to such termination) (i) for any amounts not reimbursed by the
Borrower for which the Administrative Agent is entitled to
reimbursement by the Borrower under the Loan Documents, (ii) for
any other expenses incurred by the Administrative Agent on behalf
of the Lenders, in connection with the preparation, execution,
delivery, administration and enforcement of the Loan Documents
(including, without limitation, for any expenses incurred by the
Administrative Agent in connection with any dispute between the
Administrative Agent and any Lender or between two or more of the
Lenders) and (iii) for any liabilities, obligations,
Page 40
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the
Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby (including,
without limitation, for any such amounts incurred by or asserted
against the Administrative Agent in connection with any dispute
between the Administrative Agent and any Lender or between two or
more of the Lenders), or the enforcement of any of the terms of
the Loan Documents or of any such other documents; PROVIDED that
no Lender shall be liable for any of the foregoing to the extent
any of the foregoing is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from the
gross negligence or willful misconduct of the Administrative
Agent. The obligations of the Lenders under this SECTION 10.8
shall survive payment of the Obligations and termination of this
Agreement.
10.9. NOTICE OF DEFAULT. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any
Default or Unmatured Default hereunder unless the Administrative
Agent has received written notice from a Lender or the Borrower
referring to this Agreement describing such Default or Unmatured
Default and stating that such notice is a "notice of default".
In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give prompt notice thereof
to the Lenders.
10.10. RIGHTS AS A LENDER. In the event the Administrative
Agent is a Lender, the Administrative Agent shall have the same
rights and powers hereunder and under any other Loan Document
with respect to its Commitment and its Loans as any Lender and
may exercise the same as though it were not the Administrative
Agent, and the term "Lender" or "Lenders" shall, at any time when
the Administrative Agent is a Lender, unless the context
otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent and its Affiliates
may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity or other transaction, in addition
to those contemplated by this Agreement or any other Loan
Document, with the Borrower or any of its Subsidiaries in which
the Borrower or such Subsidiary is not restricted hereby from
engaging with any other Person.
10.11. LENDER CREDIT DECISION. Each Lender acknowledges
that it has, independently and without reliance upon the
Administrative Agent, the Arranger or any other Lender and based
on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance
upon the Administrative Agent, the Arranger or any other Lender
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and
the other Loan Documents.
10.12. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative
Agent may resign at any time by giving written notice thereof to
the Lenders and the Borrower, such resignation to be effective
upon the appointment of a successor Administrative Agent or, if
no successor Administrative Agent has been appointed, 45 days
after the retiring Administrative Agent gives notice of its
intention to resign. The Administrative Agent may be removed at
any time with or without cause by written notice received by the
Administrative Agent from the Required
Page 41
Lenders, such removal to be effective on the date specified by
the Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, on behalf of
the Borrower and the Lenders, a successor Administrative Agent.
If no successor Administrative Agent shall have been so appointed
by the Required Lenders within 30 days after the resigning
Administrative Agent's giving notice of its intention to resign,
then the resigning Administrative Agent may appoint, on behalf of
the Borrower and the Lenders, a successor Administrative Agent.
Notwithstanding the previous sentence, the Administrative Agent
may at any time without the consent of the Borrower or any
Lender, appoint any of its Affiliates which is a commercial bank
as a successor Administrative Agent hereunder. If the
Administrative Agent has resigned or been removed and no
successor Administrative Agent has been appointed within the
applicable time period, the Lenders may perform all the duties of
the Administrative Agent hereunder and the Borrower shall make
all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the
Lenders. No successor Administrative Agent shall be deemed to be
appointed hereunder until such successor Administrative Agent has
accepted the appointment. Any such successor Administrative
Agent shall be a commercial bank having capital and retained
earnings of at least $100,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the resigning or removed
Administrative Agent. Upon the effectiveness of the resignation
or removal of the Administrative Agent, the resigning or removed
Administrative Agent shall be discharged from its duties and
obligations hereunder and under the Loan Documents. After the
effectiveness of the resignation or removal of an Administrative
Agent, the provisions of this ARTICLE X shall continue in effect
for the benefit of such Administrative Agent in respect of any
actions taken or omitted to be taken by it while it was acting as
the Administrative Agent hereunder and under the other Loan
Documents. In the event that there is a successor to the
Administrative Agent by merger, or the Administrative Agent
assigns its duties and obligations to an Affiliate pursuant to
this SECTION 10.12, then the term "Prime Rate" as used in this
Agreement shall mean the prime rate, base rate or other analogous
rate of the new Administrative Agent.
10.13. ADMINISTRATIVE AGENT'S FEE. The Borrower agrees to pay
to the Administrative Agent, for its own account, the fees agreed
to by the Borrower and the Administrative Agent pursuant to that
certain letter agreement dated October 2, 2001 or as otherwise
agreed from time to time.
10.14. DELEGATION TO AFFILIATES. The Borrower and the Lenders
agree that the Administrative Agent may delegate any of its
duties under this Agreement to any of its Affiliates. Any such
Affiliate (and such Affiliate's directors, officers, agents and
employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the
indemnification, waiver and other protective provisions to which
the Administrative Agent is entitled under ARTICLES IX and X.
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ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. SETOFF. In addition to, and without limitation of,
any rights of the Lenders under applicable law, if the Borrower
becomes insolvent, however evidenced, or any Default occurs, any
and all deposits (including all account balances, whether
provisional or final and whether or not collected or available)
and any other Indebtedness at any time held or owing by any
Lender or any Affiliate of any Lender to or for the credit or
account of the Borrower may be offset and applied toward the
payment of the Obligations owing to such Lender, whether or not
the Obligations, or any part hereof, shall then be due.
11.2. RATABLE PAYMENTS. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than
payments received pursuant to SECTION 3.1, 3.2, 3.4 or 3.5) in a
greater proportion than that received by any other Lender, such
Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of the Loans. If any
Lender, whether in connection with setoff or amounts which might
be subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans.
In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of
the Loan Documents shall be binding upon and inure to the benefit
of the Borrower and the Lenders and their respective successors
and assigns, except that (i) the Borrower shall not have the
right to assign its rights or obligations under the Loan
Documents and (ii) any assignment by any Lender must be made in
compliance with SECTION 12.3. Notwithstanding clause (ii) of
this Section, any Lender may at any time, without the consent of
the Borrower or the Administrative Agent, assign all or any
portion of its rights under this Agreement and any Note to a
Federal Reserve Bank; PROVIDED, HOWEVER, that no such assignment
to a Federal Reserve Bank shall release the transferor Lender
from its obligations hereunder. The Administrative Agent may
treat the Person which made any Loan or which holds any Note as
the owner thereof for all purposes hereof unless and until such
Person complies with SECTION 12.3 in the case of an assignment
thereof or, in the case of any other transfer, a written notice
of the transfer is filed with the Administrative Agent. Any
assignee or transferee of the rights to any Loan or any Note
agrees by acceptance of such transfer or assignment to be bound
by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the
owner of the rights to any Loan (whether or not a Note
Page 43
has been issued in evidence thereof), shall be conclusive and
binding on any subsequent holder, transferee or assignee of the
rights to such Loan.
12.2. PARTICIPATIONS.
12.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Lender may,
in the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other
Persons ("Participants") participating interests in any Loan
owing to such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest, right and/or obligation of
such Lender under the Loan Documents. In the event of any such
sale by a Lender of participating interests to a Participant, such
Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations,
such Lender shall remain the owner of its Loans and the holder of
any Note issued to it in evidence thereof for all purposes under
the Loan Documents, all amounts payable by the Borrower under
this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the
Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and
obligations under the Loan Documents.
12.2.2. VOTING RIGHTS. Each Lender shall retain the sole
right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Loan
Documents other than any amendment, modification or waiver with
respect to any Loan or Commitment in which such Participant has
an interest which forgives principal, interest or fees or reduces
the interest rate or fees payable with respect to any such Loan
or Commitment, extends the Facility Termination Date or postpones
any date fixed for any regularly-scheduled payment of principal
of, or interest or fees on, any such Loan or Commitment.
12.2.3. BENEFIT OF SETOFF. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided
in SECTION 11.1 in respect of its participating interest in
amounts owing under the Loan Documents to the same extent as if
the amount of its participating interest were owing directly to
it as a Lender under the Loan Documents; PROVIDED that each
Lender shall retain the right of setoff provided in Section 11.1
with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of
setoff provided in SECTION 11.1, agrees to share with each
Lender, any amount received pursuant to the exercise of its right
of setoff, such amounts to be shared in accordance with SECTION
11.2 as if each Participant were a Lender.
12.3. ASSIGNMENTS.
12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the
ordinary course of its business and in accordance with applicable
law, at any time assign to one or more banks or other entities
("Purchasers") all or any part of its rights and obligations
under the Loan Documents. Such assignment shall be substantially
in the form of Exhibit C or in such other form as may be agreed
to by the parties thereto. The consent of the Borrower and
Page 44
the Administrative Agent shall be required prior to an
assignment becoming effective with respect to a Purchaser
which is not a Lender or an Affiliate thereof; PROVIDED,
HOWEVER, that if a Default has occurred and is continuing,
the consent of the Borrower shall not be required. Such
consent shall not be unreasonably withheld or delayed. Each
such assignment shall (unless each of the Borrower and the
Administrative Agent otherwise consents or such assignment
is to an Affiliate of a Lender) be in an amount not less
than the lesser of (i) $5,000,000 or (ii) the remaining
amount of the assigning Lender's Commitment (calculated as
at the date of such assignment) or outstanding Loans (if
such Lender's Commitment has been terminated).
12.3.2. EFFECT OF ASSIGNMENT; EFFECTIVE DATE. Upon (i)
delivery to the Administrative Agent of a notice of assignment,
substantially in the form attached as SCHEDULE I to EXHIBIT C (a
"Notice of Assignment"), together with each consent required by
SECTION 12.3.1, and (ii) payment of a $4,000 fee to the
Administrative Agent for processing such assignment, (A) such
assignment shall become effective on the effective date specified
in such Notice of Assignment and (B) the transferor Lender shall,
to the extent provided in such Notice of Assignment, be released
from its obligations under this Agreement (and in the case of a
Notice of Assignment covering all of the transferor Lender's
rights and obligations under this Agreement, such transferor
Lender shall cease to be a party hereto). The Notice of
Assignment shall contain a representation by the Purchaser to the
effect that none of the consideration used to make the purchase
of the Commitment and the Loans under the applicable assignment
agreement are "plan assets" as defined under ERISA and that the
rights and interests of the Purchaser in and under the Loan
Documents will not be "plan assets" under ERISA. On and after
the effective date of such assignment, such Purchaser shall for
all purposes be a Lender party to this Agreement and any other
Loan Document executed by or on behalf of the Lenders and shall
have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the
Lenders or the Administrative Agent shall be required to release
the transferor Lender with respect to the percentage of the
Aggregate Commitment and the Loans assigned to such Purchaser.
Upon the consummation of any assignment to a Purchaser pursuant
to this SECTION 12.3.2, the transferor Lender, the Administrative
Agent and the Borrower shall, if the transferor Lender or the
Purchaser desires that its Loans be evidenced by Notes, make
appropriate arrangements so that new Notes or, as appropriate,
replacement Notes are issued to such transferor Lender and new
Notes or, as appropriate, replacement Notes, are issued to such
Purchaser, in each case in principal amounts reflecting their
respective Commitments, as adjusted pursuant to such assignment.
12.4. DISSEMINATION OF INFORMATION. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any
other Person acquiring an interest in the Loan Documents by
operation of law (each a "Transferee") and any prospective
Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its
Subsidiaries; PROVIDED that each Transferee and prospective
Transferee agrees to be bound by SECTION 9.11.
Page 45
12.5. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws
of any jurisdiction other than the United States or any State
thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply
with the provisions of SECTION 3.5(IV).
ARTICLE XIII
NOTICES
13.1. NOTICES. Except as otherwise permitted by SECTION 2.14
with respect to borrowing notices, all notices, requests and
other communications to any party hereunder shall be in writing
(including electronic transmission, facsimile transmission or
similar writing) and shall be given to such party: (i) in the
case of the Borrower or the Administrative Agent, at its address
or facsimile number set forth on the signature pages hereof, (ii)
in the case of any Lender, at its address or facsimile number set
forth below its signature hereto or (iii) in the case of any
party, at such other address or facsimile number as such party
may hereafter specify for the purpose by notice to the
Administrative Agent and the Borrower in accordance with the
provisions of this SECTION 13.1. Each such notice, request or
other communication shall be effective (a) if given by facsimile
transmission, when transmitted to the facsimile number specified
in this Section and confirmation of receipt is received, (b) if
given by mail, 72 hours after such communication is deposited in
the mails with first class postage prepaid, addressed as
aforesaid, or (c) if given by any other means, when delivered
(or, in the case of electronic transmission, received) at the
address specified in this Section; PROVIDED that notices to the
Administrative Agent under ARTICLE II shall not be effective
until received.
13.2. CHANGE OF ADDRESS. The Borrower, the Administrative
Agent and any Lender may each change the address for service of
notice upon it by a notice in writing to the other parties
hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. This Agreement shall
be effective when it has been executed by the Borrower, the
Administrative Agent and the Lenders and each party has notified
the Administrative Agent by facsimile transmission or telephone
that it has taken such action.
Page 46
ARTICLE XV
OTHER AGENTS
No Lender identified on the cover page, the signature pages
or otherwise in this Agreement, or in any document related
hereto, as being the "Syndication Agent" or a "Co-Documentation
Agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement in such capacity
other than those applicable to all Lenders. Each Lender
acknowledges that it has not relied, and will not rely, on the
Syndication Agent or any Co-Documentation Agent in deciding to
enter into this Agreement or in taking or refraining from taking
any action hereunder or pursuant hereto.
Page 47
ARTICLE XVI
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
16.1. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.
16.2. CONSENT TO JURISDICTION. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO,
ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST
THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN
CHICAGO, ILLINOIS.
16.3. WAIVER OF JURY TRIAL. THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVE TRIAL BY JURY
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
Page 48
IN WITNESS WHEREOF, the Borrower, the Lenders and the
Administrative Agent have executed this Agreement as of the date
first above written.
GREAT PLAINS ENERGY INCORPORATED
By: /s/Andrea F. Bielsker
Title: Vice President-Finance, Chief
Financial Officer and Treasurer
Address:
1200 Walnut
Kansas City, Missouri 64141
Attention: Andrea F. Bielsker, Treasurer
Telephone: 816-556-2595
Fax: 816-556-2992
Email: ANDREA.BIELSKER@KCPL.COM
Signature Page 1
BANK ONE, NA (Main Office Chicago),
as Administrative Agent and as a Lender
By: /s/Mary Lu D.Cramer
Title: Director
Address:
1 Bank One Plaza
Chicago, Illinois 60670
Attention: MaryLu Cramer
Telephone: 312-732-7579
Fax: 312-732-3055
Email: MARY_LU_CRAMER@BANKONE.COM
Operations Contact:
Attention: Claudia Kech
Telephone: 312-732-1031
Fax: 312-732-4840
Email: CLAUDIA_KECH@BANKONE.COM
Signature Page 2
BNP PARIBAS, as Syndication Agent and as
a Lender
By: /s/Gina Clemente
Title: Director
By: /s/Francis Ballard
Title: Director
Address:
787 Seventh Avenue
New York, NY 10019
Attention: Frank DeLaney
Telephone: 212-841-2845
Fax: 212-841-2052
Email:
frank.delaney@americas.bnpparibas.com
Operations Contact:
Attention: Tecla Hurley
Telephone: 212-471-6651
Fax: 212-471-6697
Email:
tecla.hurley@americas.bnpparibas.com
Signature Page 3
BANK OF AMERICA, N.A., as Co-
Documentation Agent and as a Lender
By: /s/Michelle Schoenfeld
Title: Principal
Address:
100 N. Tryon Street
NC1-007-16-13
Charlotte, NC 28255
Attention: Michelle Schoenfeld
Telephone: 704-386-1432
Fax: 704-386-1319
Email:
michelle.a.schoenfeld@bankofamerica.com
Operations Contact:
Attention: Hari Kalyandurg
Telephone: 214-209-2354
Fax: 214-290-9413
Email:
HARI.S.KALYANDURG@BANKOFAMERICA.COM
Signature Page 4
THE BANK OF NEW YORK, as Co-
Documentation Agent and as a Lender
By: /s/Nathan S. Howard
Title: Vice President
Address:
One Wall Street
New York, NY 10286
Attention: Nathan S. Howard
Telephone: 212-635-7916
Fax: 212-635-7923
Email: nhoward@bankofny.com
Operations Contact:
Attention: Kareen Sinclair
Telephone: 212-635-7532
Fax: 212-635-7923
Signature Page 5
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH
By: /s/Hereward Drummond
Title: Senior Vice President
By: /s/James H. Boyle
Title: Vice President
Address:
560 Lexington Avenue
New York, NY 10022
Attention: James P. Monaghan
Telephone: 212-310-3962
Fax: 212-310-9868
Operations Contact:
Attention: Patricia Sanchez
Telephone: 212-310-9810
Fax: 212-310-9930
Signature Page 6
PNC BANK, NATIONAL ASSOCIATION
By: /s/Thomas A. Majeski
Title: Vice President
Address:
One PNC Plaza
3rd Floor
249 Fifth Avenue
Pittsburgh, PA 15222
Attention: R. Kane Kiester
Telephone: 412-762-4221
Fax: 412-705-3231
Email: rkane.kiester@pncbank.com
Operations Contact:
Attention: Tina Lanuka
Telephone: 412-768-5876
Fax: 412-768-4586
Email: TINA.LANUKA@PNCBANK.COM
Signature Page 7
Exhibit 10.4.a.
GUARANTY
This Guaranty, dated as of April 1, 2002, is made by Great
Plains Energy Incorporated (herein called "Guarantor"), a
Missouri corporation with its principal place of business located
at 1201 Walnut, Kansas City, Missouri 64106, in favor of Williams
Energy Marketing & Trading Company (herein called "Creditor")
with its principal place of business located at One Williams
Center, Tulsa, Oklahoma 74172.
In order to induce Creditor to enter into, from time to
time, agreements or contracts (herein collectively called the
"Agreements") with Strategic Energy, L.L.C. (herein called
"Debtor"), a Delaware limited liability company and a related
company of Guarantor (Guarantor has an indirect ownership
interest in Debtor), with its principal place of business located
at Two Gateway Center, Pittsburgh, PA 15222, Guarantor
acknowledges adequate consideration and hereby agrees as follows:
Section 1. Guaranty. Guarantor hereby unconditionally
guarantees the punctual and complete payment when due (whether at
stated maturity, by acceleration or otherwise), of any and all
indebtedness, liabilities, and obligations under the Agreements
of Debtor to Creditor now or hereafter existing, whether absolute
or contingent, joint and/or several, secured or unsecured, direct
or indirect (all such indebtedness, liabilities and obligations
are being herein collectively called the "Obligations"). This
Guaranty is a guarantee of payment and not of collection.
Guarantor acknowledges that it is jointly and severally liable
for payment of the Obligations.
Section 2. Demands. If Debtor fails or refuses to pay any
Obligations when due, and Creditor elects to exercise its rights
under this Guaranty, Creditor shall make a demand upon Guarantor
(hereinafter referred to as a "Payment Demand"). A Payment
Demand shall be in writing and shall reasonably and briefly
specify in what manner and what amount Debtor has failed to pay
and an explanation of why such payment is due, with a specific
statement that Creditor is calling upon Guarantor to pay under
this Guaranty. A Payment Demand satisfying the foregoing
requirements when delivered to Guarantor pursuant to Section 7 of
this Guaranty shall be required with respect to Obligations
before Guarantor is required to pay such Obligations hereunder
and shall be deemed sufficient notice to Guarantor that it must
pay the Obligations within thirty (30) days after its receipt of
the Payment Demand. A single written Payment Demand that
complies with the terms of this Section 2 shall be effective as
to any specific failure to pay during the continuance of such
failure to pay, until Debtor or Guarantor has cured such failure
to pay, and additional written demands concerning such failure to
pay shall not be required until such failure to pay is cured.
Section 3. Waiver. Except as otherwise provided in
Sections 2, 5 or 8 hereof, Guarantor hereby waives:
(a) notice of acceptance of this Guaranty, of the
creation and/or existence of any of the Obligations and of
any action by Creditor in reliance hereon or in connection
herewith;
(b) promptness, diligence, presentment, demand for
payment, notice of
Page 1
dishonor or nonpayment, protest and notice of protest with
respect to the Obligations; and
(c) any requirement that suit be brought against, or
any other action by Creditor be taken against, or any notice
of default or other notice be given to, or any demand be
made on, the Debtor or any other person, or that any other
action be taken or not taken as a condition to Guarantor's
obligations under this Guaranty or as a condition to
enforcement of this Guaranty against Guarantor.
Except as to applicable statutes of limitation or repose, no
delay of Creditor in the exercise of, or failure to exercise, any
rights hereunder shall operate as a waiver of such rights, a
waiver of any other rights or a release of Guarantor from any
obligations hereunder.
Guarantor consents to the renewal, compromise, extension,
acceleration or other changes in the time of payment of or other
changes in the terms of the Obligations, or any part thereof or
any changes or modifications to the terms of the Agreements
(collectively, "Changes"); however, such consent shall not be
deemed to add to, delete from, or modify any of the terms and
conditions of this Guaranty. Creditor shall take reasonable
efforts to seasonably notify Guarantor of any Changes; provided
that Creditor's failure to provide such notice shall not affect
the validity or effectiveness of such Changes or Guarantor's
obligations hereunder.
Section 4. Representations and Warranties. Guarantor
hereby represents and warrants to Creditor as follows:
(a) Guarantor is a corporation, duly organized,
validly existing and in good standing under the laws of the
state of its organization, and is duly qualified and in good
standing in each jurisdiction where the nature of its
business or the character of the assets and properties owned
or held under lease by it requires such qualification,
except where the failure to so qualify could not reasonably
be expected to have a material adverse effect on Guarantor.
Guarantor has all requisite power and authority,
organizational or otherwise, to conduct in all material
respects its business and to own, or hold under lease, its
material assets or properties and to execute and deliver,
and perform all of its obligations under this Guaranty;
(b) The execution, delivery and performance by
Guarantor of this Guaranty are within the Guarantor's
organizational powers, have been duly authorized by all
necessary corporate action and do not contravene the
organizing documents of Guarantor or any law or material
contractual restriction binding on or affecting Guarantor;
and
(c) This Guaranty is the legal, valid and binding
obligation of Guarantor enforceable against the Guarantor in
accordance with its terms except as the enforceability of
this Guaranty may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors rights generally and by
general principles of equity.
Section 5. Setoffs and Counterclaims. Without limiting
Guarantor's own defenses and rights hereunder, Guarantor reserves
to itself all rights, setoffs, counterclaims and other defenses
Page 2
to which Debtor or any other affiliate of Guarantor is or may be
entitled to, relating to or arising from or out of the Agreements
or otherwise, except for defenses relating to, arising from or
out of the bankruptcy, insolvency, dissolution or liquidation of
Debtor.
Section 6. Amendments, etc. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by
Guarantor therefrom shall in any event be effective unless the
same shall be in writing and signed by Creditor, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 7. Addresses for Notices. All notices and other
communications provided for hereunder (collectively called
"Notice") shall be in writing and delivered personally or mailed
by certified mail, postage prepaid and return receipt requested,
or by telegram or telecopier, as follows:
To Guarantor: Great Plains Energy Incorporated
1201 Walnut
Kansas City, MO 64106
Fax No.: (816) 556-2992
Attn: Treasurer
To Creditor: Williams Energy Marketing &
Trading Company
One Williams Center
Tulsa, OK 74172
Fax No.: (918) 573-1935
Attn: Contract Management
Notice given by personal delivery or mail shall be effective
upon actual receipt. Notice given by telegram or telecopier
shall be effective upon actual receipt if received during the
recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received
during the recipient's normal business hours. All Notices by
telegram or telecopier shall be confirmed promptly after
transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given
to it by giving notice as provided above of such change of
address.
Section 8. No Waiver; Remedies. Except as to applicable
statutes of limitation or repose, no failure on the part of
Creditor to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
Section 9. Continuing Guaranty; Termination. This Guaranty
is an absolute and continuing guaranty, except as specifically
set forth herein. This Guaranty shall terminate on the first to
occur of (a) ten (10) days after Creditor receives written notice
from Guarantor of such termination, (b) the full payment of all
Obligations, and (c) March 31, 2003 (the "Termination Date").
Except as set forth in the next sentence, from and after the
Termination Date, Guarantor shall have no liability whatsoever
for any Obligations created or incurred either before, on or
Page 3
after the Termination Date. Notwithstanding the preceding
sentence, (i) no termination of this Guaranty pursuant to clause
(a) of this Section 9 shall affect Guarantor's obligations
hereunder for any Obligations created or incurred on or before
the Termination Date, and (ii) this Guaranty shall continue to be
effective or reinstated, as the case may be, if at any time
payment of the Obligations created or incurred on or before the
Termination Date, or any part thereof, is rescinded or must
otherwise be returned by Creditor upon the insolvency, bankruptcy
or reorganization of Debtor or otherwise, all as though such
payment had not been made. Guarantor's obligations hereunder may
not be assigned without Creditor's written consent. This
Guaranty shall be binding upon Guarantor, its successors and
assigns, and shall inure to the benefit of and be enforceable by
Creditor and its successors and assigns.
Section 10. Governing Law. This Guaranty and the rights
and obligations of the parties hereunder shall be governed by and
construed in accordance with the laws of the State of Missouri,
without reference to conflict of laws principles of said state.
Section 11. Limitation on Guarantor's Liability.
Notwithstanding anything herein to the contrary, the liability of
Guarantor under this Guaranty shall be limited to the following:
(a) Guarantor's liability hereunder shall be and is
specifically limited to payments expressly required to be
made by Debtor under the Agreements, but in no event shall
Guarantor be liable or otherwise subject hereunder to any
indirect, special, incidental, consequential, exemplary,
punitive or tort damages, costs, attorney's fees and
expenses or loss of profits; and
(b) Guarantor's aggregate liability to Creditor under
this Guaranty is limited to and shall not exceed Sixteen
Million Dollars ($16,000,000.00).
Section 12. Entire Agreement. This Guaranty embodies the
entire agreement and understanding between Guarantor and Creditor
and supersedes all prior and contemporaneous agreements and
understandings relating to the subject matter hereof. The
headings in this Guaranty are for purposes of reference only, and
shall not affect the meaning hereof.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
duly executed and delivered by its duly authorized officer as of
the date first above written.
GREAT PLAINS ENERGY INCORPORATED
By: /s/ Andrea F. Bielsker
Name: Andrea F. Bielsker
Title: vice President - Finance,
Chief Financial Officer
and Treasurer
Page 4
Exhibit 4.1.b.
- -----------------------------------------------------------------
- -----------------------------------------------------------------
KANSAS CITY POWER & LIGHT COMPANY
AND
THE BANK OF NEW YORK,
TRUSTEE
INDENTURE
DATED AS OF MARCH 1, 2002
------------
PROVIDING FOR THE ISSUANCE OF
DEBT SECURITIES
- -----------------------------------------------------------------
- -----------------------------------------------------------------
CROSS REFERENCE SHEET*
Between
Provisions of Trust Indenture Act of 1939,
As Amended.
and
Indenture dated as of February , 2000 between
Kansas City Power & Light Company
and The Bank of New York,
Trustee
SECTION OF ACT SECTION OF INDENTURE
-------------- --------------------
310 (a) (1) and (2) 4.04 and 7.08
310 (a) (3) and (4) Not Applicable
310 (b) 7.07 and 7.09(b)
310 (c) Not Applicable
311 (a) and (b) 7.12
311 (c) Not Applicable
312 (a) 5.01 and 5.02 (a)
312 (b) and (c) 5.02 (b) and (c)
313 (a) (1), (2), (3), (5), 5.04 (a)
(6) and (7)
313 (a) (6) Not Applicable
313 (b) (1) Not Applicable
313 (b) (2) 5.04 (b)
313 (c) 5.04 (b)
313 (d) 5.04 (c)
314 (a) 5.03
314 (b) Not Applicable
314 (c) (1) and (2) 15.06
314 (c) (3) Not Applicable
314 (d) Not Applicable
314 (e) 15.06
314 (f) Not Applicable
315 (a), (c) and (d) 7.01
315 (b) 6.07
315 (e) 6.08
316 (a) (1) 6.06
316 (a) (2) Omitted
316 (a) last paragraph 8.04
316 (b) 6.04
317 (a) 6.02
317 (b) 4.05 and 7.05
318 (a) 15.07
- ------------
* This Cross Reference Sheet is not part of the Indenture.
- i -
Page
----
TABLE OF CONTENTS*
---------------
PARTIES 1
RECITALS 1
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Certain Terms Defined 1
Affiliate 1
Board of Directors 2
Board Resolution 2
Business Day 2
Company 2
Company Order 2
Corporation 2
Depositary 2
Event of Default 3
Global Security 3
Indenture 3
Interest 3
Interest Payment Date 3
Officers' Certificate 3
Opinion of Counsel 3
Original Issue Discount Security 3
Outstanding 4
Person 4
Principal Office of the Company 4
Qualifying Generation Facilities 4
Record Date 5
Registered Holder 5
Responsible Officer 5
Securityholder 5
Security Register 5
Successor 5
Trustee 5
Trust Indenture Act 6
Vice President 6
- -----------
* The Table of Contents is not part of the Indenture.
- ii -
Page
----
ARTICLE TWO
ISSUE, DESCRIPTION, EXECUTION, EXCHANGE AND
REGISTRATION OF TRANSFER OF SECURITIES
SECTION 2.01. Authentication, Delivery and Dating 6
SECTION 2.02. Forms Generally 7
SECTION 2.03. Amount; Terms of Series 9
SECTION 2.04. Execution 11
SECTION 2.05. Exchange, Registration and Registration of
Transfer 11
SECTION 2.06. Temporary Securities 13
SECTION 2.07. Mutilated, Destroyed, Lost and Stolen
Securities 13
SECTION 2.08. Cancellation of Surrendered Securities;
Destruction Thereof 14
SECTION 2.09. Extension of Interest Payment Period 14
ARTICLE THREE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 3.01. Applicability of Right of Redemption 15
SECTION 3.02. Election to Redeem; Notice of Redemption;
Partial Redemption 15
SECTION 3.03. Payment of Securities Called for Redemption 16
SECTION 3.04. Applicability of Sinking Fund 16
SECTION 3.05. Satisfaction of Mandatory Sinking Fund
Payments with Securities 17
SECTION 3.06. Redemption of Securities for Sinking Funds 17
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Principal, Premium, if any, and
Interest 18
SECTION 4.02. Office or Agency for Certain Purposes 18
SECTION 4.03. Maintenance of Corporate Existence 18
SECTION 4.04. Appointments to Fill Vacancies in Trustee's
Office 18
SECTION 4.05. Provisions as to Paying Agent 18
SECTION 4.06. Annual Officers' Certificate to Trustee 19
SECTION 4.07. Reports to Be Furnished Securityholders 20
SECTION 4.08. Further Assurances 20
ARTICLE FIVE
SECURITYHOLDERS' LISTS, COMMUNICATIONS TO SECURITYHOLDERS,
AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 5.01. Company to Furnish Trustee Information
as to Names and Addresses of Securityholders 20
SECTION 5.02. Preservation of Information;
Communications to Securityholders 20
- iii -
Page
----
SECTION 5.03. Reports by Company 21
SECTION 5.04. Reports by Trustee 21
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 6.01. Events of Default Defined; Acceleration
of Maturity; Waiver of Default 21
SECTION 6.02. Collection of Indebtedness by Trustee;
Trustee May Prove Debt 23
SECTION 6.03. Application of Proceeds 25
SECTION 6.04. Limitations on Suits by Securityholders 25
SECTION 6.05. Powers and Remedies Cumulative; Delay or
Omission Not Waiver 26
SECTION 6.06. Control by Securityholders; Waiver of Default 26
SECTION 6.07. Trustee to Give Notice of Defaults Known to
It, but May Withhold in Certain Circumstances 26
SECTION 6.08. Right of Court to Require Filing of
Undertaking to Pay Costs 27
ARTICLE SEVEN
CONCERNING THE TRUSTEE
SECTION 7.01. Duties and Responsibilities of Trustee 27
SECTION 7.02. Certain Rights of Trustee 28
SECTION 7.03. Trustee Not Responsible for Recitals, etc. 30
SECTION 7.04. Trustee and Others May Hold Securities 30
SECTION 7.05. Moneys Held by Trustee or Paying Agent 30
SECTION 7.06. Compensation of Trustee and Its Lien 30
SECTION 7.07. Disqualification; Conflicting Interests 31
SECTION 7.08. Persons Eligible for Appointment as Trustee 31
SECTION 7.09. Resignation and Removal of Trustee;
Appointment of Successor 31
SECTION 7.10. Acceptance of Appointment by Successor Trustee 32
SECTION 7.11. Merger, Conversion or Consolidation of Trustee 33
SECTION 7.12. Preferential Collection of Claims Against
Company 33
ARTICLE EIGHT
CONCERNING THE SECURITYHOLDERS
SECTION 8.01. Evidence of Action Taken by Securityholders 34
SECTION 8.02. Proof of Execution of Instruments and of
Holding of Securities 34
SECTION 8.03 Registered Holders of Securities May Be
Treated As Owners 35
SECTION 8.04. Securities Owned by Company Deemed Not
Outstanding 35
SECTION 8.05. Right of Revocation of Action Taken 35
- iv -
Page
----
ARTICLE NINE
SECURITYHOLDERS' MEETINGS
SECTION 9.01. Purposes for Which Securityholders' Meetings
May Be Called 36
SECTION 9.02. Call of Meetings by Trustee 36
SECTION 9.03. Company and Securityholders May Call Meeting 36
SECTION 9.04. Persons Entitled to Vote at Meeting 37
SECTION 9.05. Determination of Voting Rights; Conduct and
Adjournment of Meeting 37
SECTION 9.06. Counting Vote and Recording Action of Meeting 38
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 10.01. Supplemental Indentures Without Consent of
Securityholders 38
SECTION 10.02. Supplemental Indentures With Consent of
Securityholders 39
SECTION 10.03. Effect of Supplemental Indentures 40
SECTION 10.04. Notation on Securities in Respect of
Supplemental Indentures 40
SECTION 10.05. Opinion of Counsel to Be Given Trustee 41
ARTICLE ELEVEN
CONSOLIDATION, MERGER AND SALE
SECTION 11.01. Company May Consolidate or Merge, etc. 41
SECTION 11.02. Conditions to Consolidation or Merger, etc. 41
SECTION 11.03. Documents and Opinion to Be Furnished to the
Trustee 42
ARTICLE TWELVE
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE; UNCLAIMED MONEYS
SECTION 12.01. Satisfaction and Discharge of Indenture 43
SECTION 12.02. Defeasance 43
SECTION 12.03. Application by Trustee of Funds Deposited
for Payment of Securities 43
SECTION 12.04. Repayment of Moneys Held by Paying Agent 44
SECTION 12.05. Return of Unclaimed Moneys 44
ARTICLE THIRTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 13.01. Personal Immunity from Liability of
Incorporators, Stockholders, etc. 44
- v -
Page
----
ARTICLE FOURTEEN
SUBORDINATION
SECTION 14.01. Securities Subordinated to Senior
Indebtedness 44
SECTION 14.02. Events of Subordination 45
SECTION 14.03. Subrogation 46
SECTION 14.04. Obligation of Company Unconditional 46
SECTION 14.05. Payments on Subordinated Securities Permitted 47
SECTION 14.06. Effectuation of Subordination by Trustee 47
SECTION 14.07. Knowledge of Trustee 47
SECTION 14.08. Trustee's Relation to Senior Indebtedness 48
SECTION 14.09. Rights of Holders of Senior Indebtedness Not
Impaired 48
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
SECTION 15.01. Successors 48
SECTION 15.02. Benefits of Indenture Restricted to Parties
and Securityholders 48
SECTION 15.03. Payments Due on Sundays and Holidays 49
SECTION 15.04. Notices and Demands on Company and Trustee 49
SECTION 15.05. Law of New York to Govern 49
SECTION 15.06. Officers' Certificates and Opinions of
Counsel; Statements to Be Contained Therein 49
SECTION 15.07. Conflict of any Provision of Indenture with
Trust Indenture Act of 1939 50
SECTION 15.08. Counterparts 50
SECTION 15.09. Severability 50
TESTIMONIUM 51
SIGNATURES AND SEALS 51
ACKNOWLEDGMENTS 52
-1-
THIS INDENTURE, dated as of March 1, 2002, between
KANSAS CITY POWER & LIGHT COMPANY, a corporation organized and
existing under the laws of the State of Missouri (herein called
the "Company"), and The Bank of New York, a banking corporation
organized and existing under the laws of the State of New York
(herein called the "Trustee"):
WHEREAS, the Company has duly authorized the execution
and delivery of this Indenture to provide for the issuance in one
or more series from time to time of its debentures, notes or
other evidences of indebtedness (hereinafter called the
"Securities") and to provide the general terms and conditions
upon which the Securities are to be authenticated, issued and
delivered;
WHEREAS, the Trustee has power to enter into this
Indenture and to accept and execute the trusts herein created;
and
WHEREAS, the Company represents that all acts and
things necessary to make the Securities, when executed by the
Company and authenticated and delivered by the Trustee as in this
Indenture provided, and duly issued by the Company, the valid,
binding and legal obligations of the Company will, at the time of
such execution, authentication and delivery, have been done and
performed; that all acts and things necessary to constitute these
presents a valid indenture and agreement according to its terms
have been done and performed; that the execution of this
Indenture by the Company has in all respects been duly
authorized; and that the issue hereunder of the Securities will,
at the time of the issue thereof, have in all respects been duly
authorized; and the Company, in the exercise of each and every
legal right and power in it vested, executes this Indenture and
proposes to make, execute, issue and deliver the Securities;
NOW, THEREFORE:
In consideration of the premises, of the purchase and
acceptance of the Securities by the holders thereof and of the
sum of $1 duly paid by the Trustee at the execution of these
presents, the receipt whereof is hereby acknowledged, the Company
covenants and agrees with the Trustee, for the equal and
proportionate benefit of the respective holders from time to time
of the Securities or of any series thereof, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Certain Terms Defined. The
following terms (except as herein otherwise expressly provided or
unless the context otherwise requires) for all purposes of this
Indenture and of any indenture supplemental hereto shall have the
respective meanings specified in this Section. All other terms
used in this Indenture which are defined (either directly or by
reference) in the Trust Indenture Act (except as herein otherwise
expressly provided or unless the context otherwise requires)
shall have the meanings so assigned to such terms.
Affiliate:
The term "Affiliate" of the Company shall mean any
company that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the Company.
-2-
Board of Directors:
The term "Board of Directors" shall mean the Board of
Directors of the Company or any duly authorized committee of such
Board.
Board Resolution:
The term "Board Resolution" means a copy of a
resolution or resolutions certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
Business Day:
The term "Business Day" means, with respect to any
series of Securities, any day other than (i) a Saturday or Sunday
or (ii) a day on which banking institutions in the Borough of
Manhattan, the City of New York and the State of New York or the
State of Missouri, are authorized or obligated by law or
executive order to close.
Company:
The term "Company" shall mean the person named as the
Company in the first paragraph of this instrument until a
successor corporation shall have become such pursuant to Article
Eleven of this Indenture, and thereafter "Company" shall mean
such successor corporation.
Company Order:
The term "Company Order" shall mean the written order,
request or instruction of the Company signed on behalf of the
Company by its Chairman of the Board, Vice Chairman, President or
a Vice President and by its Treasurer or an Assistant Treasurer
or its Secretary or an Assistant Secretary.
Corporation:
The term "corporation" shall mean any corporation,
voluntary association, joint stock company, business trust or
other similar organization.
Depositary:
The term "Depositary" shall mean, with respect to the
Securities of any series issuable or issued in whole or in part
in the form of one or more Global Securities, the person
designated as Depositary by the Company pursuant to Section 2.03
until a successor Depositary shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter
"Depositary" shall mean or include each person who is then a
Depositary hereunder, and if at any time there is more than one
such person, "Depositary" as used with respect to the Securities
of any such series shall mean the Depositary with respect to the
Securities of that series.
-3-
Event of Default:
The term "Event of Default" shall mean any event
specified in Section 6.01, continued for the period of time, if
any, and after the giving of the notice, if any, therein
designated.
Global Security:
The term "Global Security" shall mean a Security
evidencing all or part of a series of Securities issued to a
Depositary for such series in accordance with Section 2.01.
Indenture:
The term "Indenture" shall mean this instrument as
originally executed or as it may from time to time be
supplemented and amended by one or more indentures supplemental
hereto pursuant to Article Ten hereof and shall include the form
and terms of particular series of Securities established as
contemplated in Section 2.03.
Interest:
The term "interest", when used with respect to an
Original Issue Discount Security which by its terms bears
interest only after maturity, shall mean interest payable after
maturity, at the rate prescribed in such Original Issue Discount
Security.
Interest Payment Date:
The term "interest payment date" when used with respect
to any Security or any installment of interest thereon shall mean
the date specified in such Security as the fixed date on which
such installment of interest is due and payable.
Officers' Certificate:
The term "Officers' Certificate" shall mean a
certificate signed by the Chairman of the Board, Vice Chairman,
President or any Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of
the Company.
Opinion of Counsel:
The term "Opinion of Counsel" shall mean an opinion in
writing signed by legal counsel, who may be an employee of or of
counsel to the Company.
Original Issue Discount Security:
The term "Original Issue Discount Security" shall mean
any Security that provides for an amount less than the principal
thereof to be due and payable upon a declaration of acceleration
of the maturity thereof pursuant to Section 6.01.
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Outstanding:
The term "outstanding", when used with reference to
Securities, shall, subject to the provisions of Section 8.04,
mean, as of any particular time, all Securities theretofore
authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities or portions thereof for the payment or
redemption of which moneys, or as provided in Section 12.02
hereof, direct obligations of the United States of America,
in the necessary amount shall have been deposited in trust
with the Trustee or with any paying agent (other than the
Company) or shall have been set aside and segregated in
trust by the Company (if the Company shall act as its own
paying agent), provided that if such Securities are to be
redeemed prior to the maturity thereof, notice of such
redemption shall have been given as in Article Three
provided, or provision satisfactory to the Trustee shall
have been made for giving such notice); and
(c) Securities which have been paid pursuant to
Section 2.07 or in exchange for or in lieu of which other
Securities shall have been authenticated and delivered
pursuant to Section 2.07;
provided, however, that in determining whether the holders of the
requisite principal amount of Outstanding Securities have taken
any action, given any request, demand, authorization, direction,
notice, consent or waiver hereunder or whether a quorum is
present at a meeting of Securityholders, the principal amount of
an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that
would be due and payable as of the date of such determination
upon acceleration of the maturity thereof pursuant to Section
6.01.
Person:
The term "person" shall mean an individual, a
corporation, a partnership, a trust, an unincorporated
organization or a government or any agency or political
subdivision thereof.
Principal Office of the Company:
The term "principal office of the Company" shall mean
the principal office of the Company as shall be specified from
time to time in a Company Order delivered to the Trustee. Any
such Company Order may specify a principal office of the Company
for one or more purposes under this Indenture and such Company
Order or one or more other Company Orders may specify one or more
other principal offices of the Company for one or more other
purposes under this Indenture.
Qualifying Generation Facilities:
The term "Qualifying Generation Facilities" shall mean
real and personal property of the Company used by the Company for
the generation of electric energy, but not real and personal
property used for the transmission or distribution of electric
energy, and shall include,
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without limitation, the assets included on the Company's
financial statements comprising the electric generating
facilities listed under Item 2 "Properties - Generation
Resources" (or equivalent section contained therein) in the
Company's most current Annual Report on Form 10-K (the "Form 10-
K") and any similar facilities for the generation of electric
energy acquired by the Company subsequent to the filing of the
Form 10-K.
Record Date:
The term "record date" shall mean, with respect to any
interest payable on any Security on any interest payment date,
the close of business on the date specified in such Security or,
in the case of defaulted interest, the close of business on any
subsequent record date established as provided in Section 2.02
(in each case whether or not such day is a Business Day).
Registered Holder:
The term "registered holder", "Securityholder",
"holder" or other similar term shall mean the person or persons
in whose name or names a particular Security shall be registered
upon the Security Register.
Responsible Officer:
The term "Responsible Officer", when used with respect
to the Trustee, shall mean any officer within the corporate trust
department of the Trustee, including any vice president,
assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or
to whom any corporate trust matter is referred because of such
person's knowledge of and familiarity with the particular
subject.
Securityholder:
The term "Securityholder" shall have the meaning
specified under the term "registered holder".
Security Register:
The term "Security Register" shall have the meaning
specified in Section 2.05.
Successor:
The term "Successor" shall have the meaning specified
in Section 11.02.
Trustee:
The term "Trustee" shall mean the person named as
Trustee in the first paragraph of this instrument and, subject to
the provisions of Article Seven of this Indenture, shall also
include its successors and assigns, and if at any time there is
more than one trustee, "Trustee" as used with respect to the
Securities of any series shall mean the trustee with respect to
Securities of that series.
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Trust Indenture Act:
The term "Trust Indenture Act" shall mean the Trust
Indenture Act of 1939 as in force at the date as of which this
instrument was executed, except as provided in Section 10.02;
provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to
the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.
Vice President:
The term "Vice President", when used with respect to
the Company, shall mean any Vice President, any Senior Vice
President, any Executive Vice President and any Senior Executive
Vice President of the Company.
ARTICLE TWO
ISSUE, DESCRIPTION, EXECUTION, EXCHANGE AND
REGISTRATION OF TRANSFER OF SECURITIES
SECTION 2.01. Authentication, Delivery and Dating.
At any time and from time to time after the execution and
delivery of this instrument, the Company may deliver Securities
of any series executed by the Company to the Trustee for
authentication. The Trustee shall thereupon authenticate and
deliver such Securities upon receipt of, and pursuant to, a
Company Order, without any further action by the Company. In
authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and
(subject to Section 7.01) shall be fully protected in relying
upon:
(a) a Board Resolution relating thereto and, if
applicable, an appropriate record of any action taken
pursuant to such resolution, certified by the Secretary or
an Assistant Secretary of the Company;
(b) an executed supplemental indenture, if any;
(c) an Officers' Certificate, dated the date such
Officers' Certificate is delivered to the Trustee, prepared
in accordance with Section 15.06; and
(d) an Opinion of Counsel prepared in accordance with
Section 15.06, which shall also state:
(1) that the form and terms of such Securities
have been established by or pursuant to one or more
Board Resolutions, by a supplemental indenture as
permitted by Section 10.01(e), or by both such
resolution or resolutions and such supplemental
indenture, in conformity with the provisions of this
Indenture;
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(2) that the supplemental indenture, if any, when
executed and delivered by the Company and the Trustee,
will constitute a valid and legally binding obligation
of the Company; and
(3) that such Securities, when authenticated and
delivered by the Trustee and issued by the Company in
the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable
in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or
affecting the enforcement of creditors' rights and to
general equity principles.
The Trustee shall have the right to decline to
authenticate and deliver any Securities under this Section if the
issue of such Securities pursuant to this Indenture will affect
the Trustee's own rights, duties or immunities under the
Securities and this Indenture or otherwise in a manner which is
not reasonably acceptable to the Trustee.
If the Company shall establish pursuant to Section 2.03
that the Securities of a series are to be issued in whole or in
part in the form of one or more Global Securities, then the
Company shall execute and the Trustee upon receipt of, and
pursuant to, a Company Order, shall, in accordance with this
Section, authenticate and deliver one or more Global Securities
that (i) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of the Outstanding
Securities of such series to be represented by one or more Global
Securities, (ii) shall be registered in the name of the
Depositary for such Global Security or Global Securities or the
nominee of such Depositary, and (iii) shall be delivered by the
Trustee to such Depositary or pursuant to such Depositary's
instruction.
Each Depositary designated pursuant to Section 2.03 for
a Global Security must, at the time of its designation and at all
times while it serves as Depositary, be a clearing agency
registered under the Securities Exchange Act of 1934, as amended,
and any other applicable statute or regulation.
Each Security shall be dated the date of its
authentication.
Notwithstanding the provisions of this Section and
Section 2.03, if all Securities of a series are not to be
originally issued at one time, it shall not be necessary to
deliver the Officers' Certificate otherwise required pursuant to
Section 2.03 or the Company Order, Board Resolution, Officers'
Certificate and Opinion of Counsel otherwise required pursuant to
this Section at or prior to the time of authentication of each
Security of such series if such documents are delivered at or
prior to the authentication upon original issuance of the first
Security of such series to be issued. After any such first
delivery, any separate written request by the Company that the
Trustee authenticate Securities of such series for original issue
will be deemed to be a certificate by the Company that all
conditions precedent provided for in this Indenture relating to
the authentication and delivery of such Securities continue to
have been compiled with.
SECTION 2.02. Forms Generally. The Securities of
each series shall be issuable in registered form without coupons
and shall be in substantially the form as shall be established by
or pursuant to one or more Board Resolutions or in one or more
indentures supplemental hereto, in each case with such
appropriate insertions, omissions, substitutions and
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other variations as are required or permitted by this Indenture,
and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as the officers of the
Company executing the same may approve (execution thereof to be
conclusive evidence of such approval) and as are not inconsistent
with the provisions of this Indenture, or as may be required to
comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on
which the Securities may be listed, or to conform to usage. The
Securities shall be issued, except as otherwise provided with
respect to any series of Securities pursuant to Section 2.03, in
the denomination of $1,000 and any larger denomination which is
an integral multiple of $1,000 approved by the Company, such
approval to be evidenced by the execution thereof.
The person in whose name any Security is registered at
the close of business on any record date with respect to any
interest payment date shall be entitled to receive the interest
payable on such interest payment date, notwithstanding the
cancellation of such Security upon any transfer or exchange
subsequent to such record date and prior to such interest payment
date, unless such Security is redeemed on a date fixed for
redemption after such record date and prior to such interest
payment date; provided, however, that if and to the extent the
Company shall fail to pay on any interest payment date the
interest due on such date, such defaulted interest shall be paid
to the persons in whose names outstanding Securities are
registered at the close of business on the tenth day preceding
the date of payment of such defaulted interest or, at the
election of the Company, to the persons in whose names
outstanding Securities are registered on a subsequent record date
established by notice given by mail by or on behalf of the
Company to the holders of such Securities not less than 10 days
preceding such subsequent record date, which subsequent record
date shall precede by at least 10 days the date of payment of
such defaulted interest. Such notice shall be given to the
persons in whose names such outstanding Securities are registered
at the close of business on the fifth Business Day next preceding
the date of the mailing of such notice.
Except as otherwise provided with respect to any series
of Securities pursuant to Section 2.03, interest on the
Securities of each series shall be computed on the basis of a 360-
day year consisting of twelve 30-day months.
The definitive Securities shall be printed,
lithographed or engraved or produced by any combination of these
methods on a steel engraved border or steel engraved borders or
may be produced in any other manner, all as determined by the
officers executing such Securities, as evidenced by their
execution of such Securities.
The Trustee's certificate of authentication on all
Securities shall be in substantially the following form:
This is one of the Securities of the series
designated herein issued under the Indenture described
herein.
THE BANK OF NEW YORK,
as Trustee
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By ________________________
Authorized Signatory
Dated _____________________
SECTION 2.03. Amount; Terms of Series. The
aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is not limited.
The Securities may be issued in one or more series.
There shall be established by or pursuant to one or more Board
Resolutions, and set forth in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series:
(a) the title of the Securities of the series (which
shall distinguish the Securities of the series from the
Securities of all other series, except to the extent that
additional Securities of an existing series are being
issued);
(b) any limit upon the aggregate principal amount of
the Securities of the series which may be outstanding under
this Indenture (except as otherwise provided in Sections
2.05, 2.06 and 2.07);
(c) the date or dates on which the principal of and
premium, if any, on the Securities of the series is payable;
(d) the rate or rates at which the Securities of the
series shall bear interest, if any, or the method by which
such rate or rates shall be determined, the date or dates
from which such interest shall accrue, or the method by
which such date or dates shall be determined, the interest
payment dates on which any such interest shall be payable
and the record dates for the determination of holders to
whom interest of any interest payment date is payable, the
basis of computation of interest (if other than as provided
in Section 2.02), and the right, if any, to extend or
advance the maturity of the Securities and the conditions to
such extension or advancement;
(e) if the amount of payments of the principal of,
premium, if any, or interest, if any, on the Securities of
the series may be determined with reference to an index,
formula, or other method, the manner in which such amounts
shall be determined;
(f) the place or places where the principal of,
premium, if any, and interest on Securities of the series
shall be payable;
(g) the price or prices at which, the period or
periods within which and the terms and conditions upon which
Securities of the series may be redeemed, in whole or in
part, at the option of the Company;
(h) the obligation, if any, of the Company to redeem,
purchase or repay Securities of the series pursuant to any
sinking fund or analogous provisions or at the option of a
holder thereof and the price or prices at which, the period
or periods within which and the terms and conditions upon
which Securities of the series shall be redeemed, purchased
or repaid, in whole or in part, pursuant to such obligation;
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(i) whether the Securities of the series shall be
issued in whole or in part in the form of one or more Global
Securities and, in such case, the Depositary for such Global
Security or Global Securities;
(j) if other than the principal amount thereof, the
portion of the principal amount of any Securities which
shall be payable upon declaration of acceleration of
maturity thereof pursuant to Section 6.01;
(k) if other than denomination of $1,000 or any
integral multiple thereof, the denominations in which
Securities of the series shall be issuable;
(l) if the provisions of Section 12.02 are to apply to
the Securities of the series, a statement indicating the
same;
(m) if the provisions of Section 2.09 are to apply to
the Securities of the series, the terms upon which the
Company may elect to defer the payment of interest on an
interest payment date;
(n) if the provisions of Article Fourteen are to apply
to the Securities of the series, a statement indicating the
same;
(o) if the Securities of such series are to be
deposited as trust assets in a trust, the name of the
applicable trust into which the Securities of such series
are to be deposited;
(p) any exchangeability, conversion, prepayment or
tender provisions (whether at the option of the Company or a
holder of Securities) of the Securities, including
exchangeability, conversion, prepayment or tender date or
dates of such series, if any, and the price or prices and
other terms and conditions applicable to the exchange,
conversion, prepayment or tender (including any premium);
(q) any restriction or condition on the
transferability of a series of Securities;
(r) the terms and conditions, if any, pursuant to
which the Securities of the series are to be secured; and
(s) any other terms of the Securities of the series,
including additional covenants of the Company and specific
modifications, additions or deletions in the Events of
Default applicable to the series from those set forth in
Section 6.01 (which terms shall not be inconsistent with the
provisions of this Indenture or adversely affect the rights
of the holders of any other series of Securities then
outstanding).
All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise
be provided by or pursuant to any such Board Resolution, and set
forth in such Officers' Certificate, or in any such indenture
supplemental hereto.
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SECTION 2.04. Execution. The Securities shall be
signed on behalf of the Company by the Chairman or President or
any Vice President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the Company, under
its corporate seal. Such signatures may be manual or facsimile
signatures of the present or any future such authorized officers
and may be imprinted or otherwise reproduced on the Securities.
The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced
on the Securities.
Only such Securities as shall bear thereon a
certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee, shall be entitled
to the benefits of this Indenture or be valid or obligatory for
any purpose. Such certificate by the Trustee upon any Security
executed by the Company shall be conclusive evidence that the
Security so authenticated has been duly authenticated and
delivered hereunder.
In case any officer of the Company who shall have
signed any of the Securities either manually or by facsimile
signature shall cease to be such officer before the Securities so
signed shall have been authenticated and delivered by the
Trustee, or disposed of by the Company, such Securities
nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Securities had not ceased to be
such officer of the Company; and any Security may be signed on
behalf of the Company by such person as, at the actual date of
the execution of such Security, shall be the proper officers of
the Company, although at the date of the execution of this
Indenture any such person was not such officer.
SECTION 2.05. Exchange, Registration and
Registration of Transfer. The Company shall keep, at the office
or agency to be maintained by the Company in accordance with
Section 4.02, a register or registers (herein sometimes referred
to collectively as the "Security Register") in which, subject to
such reasonable regulations as it may prescribe, the Company
shall provide for the registration of each series of the
Securities and for the registration of transfers of Securities of
each series as in this Article provided. The Security Register
shall be in written form or convertible into written form without
unreasonable delay, and shall be open for inspection by the
Trustee at all reasonable times. Subject to the provisions of
the last paragraph of this Section 2.05, upon surrender for
registration of transfer of any Security of any series at the
office or agency maintained in accordance with Section 4.02, the
Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees,
one or more new Securities of the same series and of like tenor,
or any authorized denominations and of a like aggregate principal
amount and maturity.
At the option of the holder thereof, Securities of any
series (except a Global Security) may be exchanged for other
Securities of the same series and of like tenor, of any
authorized denominations and of a like aggregate principal amount
and maturity, upon surrender of the Securities to be exchanged at
the office or agency maintained in accordance with Section 4.02.
Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the holder making the exchange is
entitled to receive.
Notwithstanding any other provision of this Section,
unless and until it is exchanged in whole or in part for
Securities in definitive form, a Global Security representing all
or a portion of the Securities of a series may not be transferred
except as a whole by the Depositary for such series to a nominee
of such Depositary or by a nominee of such Depositary to
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such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for
such series or a nominee of such successor Depositary.
If at any time the Depositary for the Securities of a
series notifies the Company that it is unwilling or unable to
continue as Depositary for the Securities of such series or if at
any time the Depositary for the Securities of such series shall
no longer be eligible under Section 2.01, the Company shall
appoint a successor Depositary with respect to the Securities of
such series. If a successor Depositary for the Securities of
such series is not appointed by the Company within 90 days after
the Company receives such notice or becomes aware of such
ineligibility, the Company's election pursuant to Section 2.03(i)
shall no longer be effective with respect to the Securities of
such series and the Company will execute, and the Trustee, upon
receipt of, and pursuant to a Company Order will authenticate and
deliver Securities of such series in definitive form in an
aggregate principal amount equal to the principal amount of the
Global Security or Global Securities representing such series in
exchange for such Global Security or Global Securities.
The Company may at any time in its sole discretion
determine that the Securities of any series issued in the form of
one or more Global Securities shall no longer be represented by
such Global Security or Global Securities. In such event the
Company will execute, and the Trustee, upon receipt of, and
pursuant to, a Company Order will authenticate and deliver
Securities of such series in definitive form and in aggregate
principal amount equal to the principal amount of the Global
Security or Global Securities representing such series in
exchange for such Global Security or Global Securities.
If specified by the Company pursuant to Section 2.03
with respect to a series of Securities, the Depositary for such
series of Securities may surrender a Global Security for such
series of Securities in exchange in whole or in part for
Securities of such series in definitive form on such terms as are
acceptable to the Company and such Depositary. Thereupon, the
Company shall execute, and the Trustee shall authenticate and
deliver, without service charge,
(i) to each person specified by such
Depositary a new Security or Securities of the
same series, in definitive form, of any authorized
denomination as requested by such person in
aggregate principal amount equal to and in
exchange for such person's beneficial interest in
the Global Security; and
(ii) to such Depositary a new Global Security
in a denomination equal to the difference, if any,
between the principal amount of the surrendered
Global Security and the aggregate principal amount
of Securities delivered to holders thereof
pursuant to the immediately preceding clause (i)
of this Section.
Upon exchange of a Global Security for Securities in
definitive form, such Global Security shall be cancelled by the
Trustee. Securities issued in exchange for a Global Security
pursuant to this Section shall be registered in such names and in
such authorized denominations as the Depositary for such Global
Security shall instruct the Trustee. The Trustee shall deliver
such Securities to the persons in whose names such Securities are
so registered.
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All Securities issued upon any registration of transfer
or exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration or transfer or exchange.
All Securities presented or surrendered for
registration of transfer, exchange or payment shall (if so
required by the Company or the Trustee) be duly endorsed by, or
be accompanied by a written instrument or instruments of
transfer, in form satisfactory to the Company and the Trustee,
duly executed by the registered holder or by his attorney duly
authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto.
The Company shall not be required (a) to issue,
register the transfer of or exchange Securities of any series for
a period of 15 days next preceding any selection of Securities of
such series to be redeemed, or (b) to register the transfer of or
exchange any Security or portion thereof called or selected for
redemption.
SECTION 2.06. Temporary Securities. Pending the
preparation of definitive Securities of any series, the Company
may execute and the Trustee shall authenticate and deliver
temporary Securities of such series (printed, lithographed or
typewritten) of any authorized denomination, and substantially in
the form of the definitive Securities of such series, but with
such omission, insertions and variations as may be appropriate
for temporary Securities, all as may be determined by the
Company. Temporary Securities may be issued without a recital of
specific redemption prices and may contain such reference to any
provisions of this Indenture as may be appropriate. Every
temporary Security shall be authenticated by the Trustee upon the
same conditions and in substantially the same manner, and with
like effect, as the definitive Securities of such series.
Without unnecessary delay the Company will execute and will
furnish definitive Securities of each series and thereupon any or
all temporary Securities of such series may be surrendered in
exchange therefor, at the principal office of the Company, and,
subject to Section 2.05 hereof, the Company shall execute and the
Trustee shall authenticate and deliver in exchange for such
temporary Securities an equal aggregate principal amount of
definitive Securities of such series of authorized denominations.
Until so exchanged, the temporary Securities shall be entitled to
the same benefits under this Indenture, and shall be subject to
the same provisions hereof (except as provided in this Section),
as definitive Securities of such series authenticated and
delivered hereunder.
SECTION 2.07. Mutilated, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall
become mutilated or be destroyed, lost or stolen, the Company in
the case of a mutilated Security shall, and in the case of a
destroyed, lost or stolen Security in its discretion may,
execute, and upon the Company's request the Trustee shall
authenticate and deliver, a new Security of the same series and
bearing a number not contemporaneously outstanding, in exchange
and in substitution for the mutilated Security, or in lieu of and
in substitution for the Security so destroyed, lost or stolen.
The applicant for a substitute Security shall first furnish to
the Company and to the Trustee such security or indemnity as may
be required by them to save each of them harmless, and, in every
case of destruction, loss or theft, the applicant shall also
first furnish to the Company and to the Trustee
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evidence to their satisfaction of the destruction, loss or theft
of such Security and of the ownership thereof. The Trustee may
authenticate any such substitute Security and deliver the same
upon the written request or authorization of the Company. Upon
the issue of any substitute Security, the Company may require the
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and
any other expenses connected therewith. If any Security that has
become, or is about to become, due and payable is mutilated, or
is destroyed, lost or stolen, the Company may, instead of issuing
a substitute Security, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated
Security) if the applicant for such payment shall furnish to the
Company and to the Trustee such security or indemnity as they may
require to save each of them harmless, and, in case of
destruction, loss or theft, evidence to the satisfaction of the
Company and the Trustee of the destruction, loss or theft of such
Security and of the ownership thereof.
Every substitute Security issued pursuant to this
Section shall constitute an additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen
Security shall be found at any time, and shall be entitled to all
the benefits of this Indenture equally and proportionately with
any and all other Securities of the same series duly issued
hereunder. All Securities shall be held and owned upon the
express condition that the foregoing provisions are exclusive
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities, and shall preclude any and
all other rights or remedies, notwithstanding any law or statute
existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other
securities without their surrender.
SECTION 2.08. Cancellation of Surrendered
Securities; Destruction Thereof. All Securities surrendered for
the purpose of payment, redemption, exchange or registration of
transfer or for credit against any sinking fund payment, shall,
if surrendered to the Company or any paying agent, promptly be
delivered to the Trustee for cancellation, or, if surrendered to
the Trustee, shall be cancelled by it, and no Securities shall be
issued in lieu thereof except as expressly permitted by any of
the provisions of this Indenture. Upon the request of the
Company, the Trustee shall deliver to the Company cancelled
Securities held by the Trustee, or, in the absence of such
request, the Trustee may destroy the same and deliver a
certificate of such destruction to the Company. If the Company
shall acquire any of the Securities, however, such acquisition
shall not operate as a satisfaction of the indebtedness
represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation.
SECTION 2.09. Extension of Interest Payment Period.
With respect to Securities of any series as to which, pursuant to
Section 2.03(m), it has been established that this Section 2.09
applies, subject to such terms as may be established pursuant to
Section 2.03(m), the Company may at any time and from time to
time, so long as no Event of Default shall have occurred and be
continuing with respect to the Securities of any series
hereunder, elect to extend interest payment periods or defer the
payment of interest on an interest payment date, and such
election shall not be an Event of Default with respect to the
Securities of any series.
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ARTICLE THREE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 3.01. Applicability of Right of Redemption.
Redemption of Securities (other than pursuant to a sinking fund
or analogous provision) permitted by the terms of any series of
Securities shall be made in accordance with such terms and
Sections 3.02 and 3.03; provided, however, that if any such terms
of a series of Securities shall conflict with any provision of
this Article, the terms of such series shall govern.
SECTION 3.02. Election to Redeem; Notice of
Redemption; Partial Redemption. The election of the Company to
redeem any Securities of any series shall be authorized by a
Board Resolution and evidenced by an Officers' Certificate. In
case the Company shall desire to exercise such right to redeem
all, or, as the case may be, any part of the Securities of any
series in accordance with the right reserved so to do, it shall
give notice of such redemption to holders of the Securities to be
redeemed as hereinafter in this Section provided.
Notice of redemption to the holders of Securities to be
redeemed as a whole or in part shall be given by mailing of a
notice of such redemption not less than 30 nor more than 60 days
prior to the date fixed for redemption to the registered holders
of Securities to be redeemed in whole or in part at their last
addresses as they shall appear upon the Security Register. Such
mailing shall be by first-class mail postage prepaid. The notice
if mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the registered
holder receives the notice. In any case, the failure to give
such notice by mail, or any defect in such notice, to the
registered holder of any Security designated for redemption in
whole or in part shall not affect the validity of the proceedings
for redemption of any other Security.
Each such notice of redemption shall specify the date
fixed for redemption and the price at which Securities are to be
redeemed, shall state that the conditions precedent to such
redemption, if any, have occurred and describe the same, and
shall state that payment of the redemption price of the
Securities to be redeemed, together with accrued interest thereon
to the date fixed for redemption (except that if such redemption
date is an interest payment date, the interest due on such date
with respect to a particular Security shall be payable to the
holder of such Security on the record date for such interest
payment date), will be made at the office or agency to be
maintained by the Company in accordance with Section 4.02 upon
presentation and surrender of such Securities and that from and
after said date interest thereon will cease to accrue. If less
than all the Securities of a series are to be redeemed, the
notice to each registered holder of Securities to be redeemed
shall identify such registered holder's Securities to be redeemed
as a whole or in part. In case any Security is to be redeemed in
part only, the notice which relates to such Securities shall
state the portion of the principal amount to be redeemed, and
that on and after the redemption date, upon surrender or such
Security, a new Security or Securities of the same series in
principal amount equal to the unredeemed portion thereof will be
issued.
To the extent that the Securities of any series have
different terms, the Company shall designate the Securities to be
redeemed if less than all of the series is to be redeemed. If
less than all the Securities of a series having the same terms
are to be redeemed, the Company shall give the Trustee, not less
than 45 days (or such lesser number of days as the Trustee shall
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approve) prior to the date fixed by the Company for the
redemption of Securities, written notice of the aggregate amount
of the Securities to be redeemed, and thereupon the Trustee shall
select, in such manner as in its sole discretion it shall deem
appropriate and fair, the Securities of such series or portions
(equal to the minimum authorized denomination for Securities of
that series or any integral multiple thereof) thereof to be
redeemed, and shall thereafter promptly notify the Company and
any paying agent in writing of the Securities of such series of
portions thereof to be redeemed.
Any notice of redemption to be mailed by the Company
pursuant to this Section shall be prepared by the Company and
mailed, at the Company's direction, by the Trustee in the name
and at the expense of the Company.
SECTION 3.03. Payment of Securities Called for
Redemption. If notice of redemption shall have been given in the
manner provided in Section 3.02, the Securities or portions of
Securities specified in such notice shall become due and payable
on the date and at the place stated in such notice at the
applicable redemption price, together with interest accrued
thereon to the date fixed for redemption (except that if such
redemption date is an interest payment date the interest due on
such date shall be payable to the holder of such Security on the
record date for such interest payment date), and on and after
such date of redemption (unless the Company shall default in the
payment of such Securities or portions thereof at the redemption
price, together with interest accrued thereon to the date fixed
for redemption) interest on the Securities or portions of
Securities so called for redemption shall cease to accrue, and
such Securities and portions of Securities shall be deemed not to
be outstanding hereunder and shall not be entitled to any benefit
under this Indenture except to receive payment of the redemption
price, together with accrued interest thereon to the date fixed
for redemption. On presentation and surrender of such Securities
on or after said date at said place of payment in said notice
specified, the said Securities or specified portions thereof
shall be paid and redeemed by the Company at the applicable
redemption price, together (subject to the right of the holder on
the record date if such redemption date is an interest payment
date) with interest accrued thereon to the date fixed for
redemption.
Upon presentation and surrender of any Security which
is to be redeemed in part only, the Company shall execute and the
Trustee shall authenticate and deliver to the holder thereof, at
the expense of the Company, a new Security or Securities of the
same series of authorized denominations in principal amount equal
to the unredeemed portion of the Security so surrendered.
SECTION 3.04. Applicability of Sinking Fund.
Redemption of Securities permitted or required pursuant to a
sinking fund for the retirement of Securities of a series by the
terms of such series of Securities shall be made in accordance
with such terms of such series of Securities and this Article;
provided, however, that if any such terms of a series of
Securities shall conflict with any provision of this Article, the
terms of such series shall govern.
The minimum amount of any sinking fund payment provided
for by the terms of Securities of any series is herein referred
to as a "mandatory sinking fund payment", and any payment in
excess of such minimum amount provided for the by terms of
Securities of any series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of
Securities of any series, the cash amount of any mandatory
sinking fund payment may be subject to reduction as provided in
Section 3.05.
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SECTION 3.05. Satisfaction of Mandatory Sinking
Fund Payments with Securities. Subject to Section 3.06, in lieu
of making all or any part of any mandatory sinking fund payment
with respect to any Securities of a series in cash, the Company
may at its option (a) deliver to the Trustee Securities of that
series theretofore purchased or otherwise acquired by the
Company, or (b) receive credit for the principal amount of
Securities of that series which have been previously delivered to
the Trustee by the Company or redeemed either at the election of
the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments
pursuant to the terms of such Securities; provided that such
Securities have not been previously so credited. Such Securities
shall be received and credited for such purpose by the Trustee at
the redemption price specified in such Securities for redemption
through operation of the sinking fund and the cash amount of such
mandatory sinking fund payment shall be reduced accordingly.
SECTION 3.06. Redemption of Securities for Sinking
Funds. Not less than 60 days prior to each sinking fund payment
date for any series of Securities, the Company will deliver to
the Trustee a Company Order specifying the amount of the next
ensuing sinking fund payment for that series pursuant to the
terms of that series, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied through delivery and/or crediting of
Securities of that series pursuant to Section 3.05 (which
Securities will, if not previously delivered, accompany such
Company Order) and whether the Company intends to exercise its
right to make a permitted optional sinking fund payment with
respect to such series. Such Company Order shall be irrevocable,
and upon its delivery the Company shall be obligated to make the
cash payment or payments therein referred to, if any, prior to
such sinking fund payment date. In the case of the failure of
the Company to deliver such Company Order, the sinking fund
payment due with respect to the next sinking fund payment date
for that series of Securities shall be paid entirely in cash and
shall be sufficient to redeem the principal amount of such
Securities subject to a mandatory sinking fund payment without
the option to deliver or credit Securities as provided in Section
3.05 and without the right to make any optional sinking fund
payment with respect to such series.
Any sinking fund payment or payments (mandatory or
optional) made in cash, plus any unused balance of any preceding
sinking fund payments made in cash, which shall equal or exceed
$100,000 (or a lesser sum if the Company shall so request) with
respect to the Securities of any particular series shall be
applied by the Trustee, a paying agent or the Company, if it acts
as its own paying agent, on the sinking fund payment date next
following the date of such payment to the redemption of such
Securities at the redemption price specified in such Securities
for operation of the sinking fund, together with accrued interest
to the sinking fund payment date. Any sinking fund moneys not so
applied or allocated to the redemption of Securities shall be
added to the next cash sinking fund payment received by the
Trustee, such paying agent or the Company for such series and,
together with such payment, shall be applied in accordance with
the provisions of this Section. Any and all sinking fund moneys
with respect to the Securities of any particular series held by
the Trustee, such paying agent or the Company on the last sinking
fund payment date with respect to Securities of such series and
not held for the payment or redemption of particular Securities
shall be applied by the Trustee, such paying agent or the
Company, together with other moneys, if necessary, to be
deposited sufficient for the purpose, to the payment of principal
of such Securities at maturity.
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Not more than 60 days and not less than 45 days prior
to each sinking fund payment date the Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in
accordance with Section 3.02. The Company shall cause notice of
the redemption thereof to be given not less than 30 nor more than
60 days prior to the sinking fund payment date in the manner
provided in Section 3.02, except that the notice of redemption
shall also state that the Securities of such series are being
redeemed by operation of the sinking fund and the sinking fund
payment date. Such notice having been duly given, the redemption
of such Securities shall be made on the sinking fund payment date
upon the terms and in the manner stated in Section 3.03.
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Principal, Premium, if
any, and Interest. The Company covenants and agrees for the
benefit of each series of Securities that it will duly and
punctually pay or cause to be paid the principal of and premium,
if any, and interest, if any, on each of the Securities of that
series at the times and places and in the manner provided herein
and in the Securities of that series.
SECTION 4.02. Office or Agency for Certain
Purposes. The Company will maintain an office or agency (or
offices or agencies) where the Securities may be presented for
registration of transfer and exchange as in this Indenture
provided, and where notices and demands to or upon the Company in
respect of the Securities or of this Indenture may be served and
where the Securities may be presented for payment. The principal
office of the Company shall be such office or agency unless the
Company shall maintain some other office or agency for such
purposes and shall give the Trustee and the registered holders of
the Securities written notice of the location thereof.
SECTION 4.03. Maintenance of Corporate Existence.
The Company will preserve its corporate existence, but this
covenant shall not require the Company to continue its corporate
existence in the event of a consolidation or merger of the
Company in accordance with the provisions of Article Eleven
hereof as a result of which the Company shall lose its corporate
identity, or in the event of a sale or conveyance of the property
of the Company as an entirety or substantially as an entirety in
accordance with the provisions of said Article Eleven.
SECTION 4.04. Appointments to Fill Vacancies in
Trustee's Office. The Company, whenever necessary to avoid or
fill a vacancy in the office of Trustee, will appoint, in the
manner provided in Section 7.09, a Trustee, so that there shall
at all times be a Trustee hereunder.
SECTION 4.05. Provisions as to Paying Agent. (a)
If the Company shall act as its own paying agent with respect to
any series of Securities, it will, on or before each due date of
the principal of or premium, if any, or interest, if any, on the
Securities of that series, set aside, segregate and hold in trust
for the benefit of the holders of such Securities or of the
Trustee, as the case may be, a sum sufficient to pay such
principal or premium, if any, or interest so becoming due and
will notify the Trustee of any failure to take such action and of
any failure by
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the Company (or by any other obligor on the Securities of that
series) to make any payment of the principal of or premium, if
any, or interest on the Securities of such series when the same
shall be due and payable.
(b) Whenever the Company shall have one or more paying
agents, other than the Company, for any series of Securities, it
will, on or before each due date of the principal of or premium,
if any, or interest, if any, on any Securities of that series,
deposit with a paying agent a sum sufficient to pay the principal
and premium, if any, or interest so becoming due, such sum to be
held in trust for the benefit of the holders of such Securities,
and (unless such paying agent is the Trustee) the Company will
notify the Trustee of such action or the failure to take such
action.
(c) If the Company shall appoint a paying agent other
than the Trustee or the Company with respect to any series of
Securities, it will cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall
agree with the Trustee, subject to this Section that such agent
will:
(1) hold all sums held by it as such agent for
the payment of the principal of or premium, if any, or
interest on the Securities of such series (whether such sums
have been paid to it by the Company or by any other obligor
on the Securities of such series) in trust for the benefit
of the holders of the Securities of such series or of the
Trustee, as the case may be;
(2) give the Trustee notice of any default by the
Company (or by any other obligor on the Securities of such
series) in the making of any payment of the principal of or
premium, if any, or interest on the Securities of such
series when the same shall be due and payable; and
(3) at any time during the continuance of any
such default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by
such paying agent.
(d) Anything in this Section to the contrary
notwithstanding, the Company may, at any time, for the purpose of
obtaining a satisfaction and discharge of this Indenture, or for
any other reason, pay or cause to be paid to the Trustee all sums
held in trust by it, or by any paying agent hereunder, as
required by this Section, such sums to be held by the Trustee
upon the trusts herein contained.
(e) Anything in this Section to the contrary
notwithstanding, the agreement to hold sums in trust as provided
in this Section is subject to Sections 12.04 and 12.05.
SECTION 4.06. Annual Officers' Certificate to
Trustee. The Company will deliver to the Trustee prior to
November 1 in each year, an Officers' Certificate stating that in
the course of the performance by the signers of their duties as
officers of the Company they would normally obtain knowledge of
any default by the Company in the performance of any covenants
contained in Sections 4.03 and 11.02, stating whether or not they
have obtained knowledge of any such default and, if so,
specifying each such default of which the signers have knowledge
and the nature thereof.
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SECTION 4.07. Reports to Be Furnished
Securityholders. The Company will transmit or cause to be
transmitted to the Securityholders, as soon as practicable after
the mailing of such material to its stockholders, copies of all
annual financial reports distributed to its stockholders
generally. Reports pursuant to this Section shall be transmitted
by mail to all registered holders of Securities, as the names and
addresses of such holders appear upon the Security Register.
SECTION 4.08. Further Assurances. From time to
time whenever reasonably demanded by the Trustee, the Company
will make, execute and deliver or cause to be made, executed and
delivered any and all such further and other instruments and
assurances as may be reasonably necessary or proper to carry out
the intention or facilitate the performance of the terms of this
Indenture.
ARTICLE FIVE
SECURITYHOLDERS' LISTS, COMMUNICATIONS TO SECURITYHOLDERS, AND
REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 5.01. Company to Furnish Trustee
Information as to Names and Addresses of Securityholders. The
Company shall furnish or cause to be furnished to the Trustee:
(a) on June 15 and December 15 in each year (beginning
with June 15, 2002), a list in such form as the Trustee may
reasonably require of the names and addresses of the holders of
each series of Securities as of a date not more than 15 days
prior to the time such list is furnished, and
(b) at such other times as the Trustee may request in
writing within 30 days after receipt by the Company of any such
request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished, provided
that, if and so long as the Trustee is the sole Security
registrar, no such list need be furnished.
SECTION 5.02. Preservation of Information;
Communications to Securityholders. (a) The Trustee shall
preserve, in as current a form as is reasonably practicable, the
names and addresses of the holders of each series of Securities
received by it in the capacity of Security registrar and the
names and addresses of holders of each series of Securities
contained in the most recent list furnished to it under Section
5.01. The Trustee may destroy any such list upon receipt of a
new list so furnished.
(b) The rights of Securityholders to communicate with
other Securityholders with respect to their rights under this
Indenture or under the Securities, and the corresponding rights
and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
(c) Each and every holder of Securities, by receiving
and holding the same, agrees with the Company and the Trustee
that neither the Company nor the Trustee nor any paying agent or
other agent of either of them shall be held accountable by reason
of the disclosure of any such information as to the names and
addresses of the holders of Securities made pursuant to the Trust
Indenture Act, regardless of the source from which such
information
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was derived, and that the Trustee shall not be held accountable
by reason of mailing any material pursuant to a request made
pursuant to the Trust Indenture Act.
SECTION 5.03. Reports by Company. The Company
shall file with the Trustee and the Securities and Exchange
Commission, and transmit to Securityholders, such information,
documents and other reports, and such summaries thereof, as may
be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with
said Commission pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, shall be filed with the Trustee
within 15 days after the same is so required to be filed with
said Commission. Delivery of any information, documents and
reports by the Company to the Trustee pursuant to the provisions
of this Section 5.03 is for informational purposes only and the
Trustee's receipt of same shall not constitute constructive
notice of any information contained therein or determinable from
information contained therein, including the Company's compliance
with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 5.04. Reports by Trustee. (a) The Trustee
shall transmit to Securityholders such reports concerning the
Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto. If required by Section 313(a)
of the Trust Indenture Act, the Trustee shall, within sixty days
after each October 15 following the execution and delivery of
this instrument deliver to Securityholders a brief report, dated
as of such October 15, which complies with the provisions of such
Section 313(a).
(b) The Trustee shall transmit the reports required by
Section 313(b) of the Trust Indenture Act in accordance with
Section 313(c) of the Trust Indenture Act.
(c) A copy of each such report shall, at the time of
such transmission to Securityholders, be filed by the Trustee
with each stock exchange upon which any Securities are listed and
also with the Securities and Exchange Commission. If the Company
lists the Securities of any series on any stock exchange, it will
promptly so notify the Trustee.
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 6.01. Events of Default Defined;
Acceleration of Maturity; Waiver of Default. In case one or more
of the following shall have occurred and be continuing with
respect to the Securities of any series, it shall be an event of
default of such series (unless it is specifically deleted in a
supplemental indenture or Board Resolution under which such
series of Securities is issued or has been modified in any such
supplemental indenture), that is to say:
(a) default in the payment of any installment of
interest upon any Security of such series as and when the
same shall become due and payable, and continuance of such
default for a period of 30 days, provided, however, that a
valid extension of the interest
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payment period or deferral of interest payment by the
Company as contemplated in Section 2.09 shall not constitute
a failure to pay interest for this purpose; or
(b) default in the payment of the principal of or
premium, if any, on any Security of such series as and when
the same shall become due and payable either at maturity,
upon redemption, by declaration or otherwise, and
continuance of such default for a period of one Business
Day; or
(c) failure on the part of the Company duly to observe
or perform any other of the covenants or agreements on the
part of the Company contained in the Securities of such
series or in this Indenture (other than a covenant or
agreement which has been expressly included in the
Securities or in this Indenture solely for the benefit of a
series of Securities other than that series) for a period of
60 days after the date on which written notice of such
failure, requiring the Company to remedy the same and
stating that such notice is a "Notice of Default" hereunder,
shall have been given to the Company by the Trustee, or to
the Company and the Trustee by the holders of a least 33% in
aggregate principal amount of the Securities of such series
at the time outstanding; or
(d) if a decree or order for relief shall be entered
by a court of competent jurisdiction in respect of the
Company in an involuntary case under any applicable
bankruptcy, insolvency or other similar law nor or hereafter
in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of
the Company or of a major part of its property, or ordering
the winding up or liquidation of the Company's affairs, and
such decree or order shall remain unstayed and in effect for
a period of 60 consecutive days; or
(e) if the Company shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar
law nor or hereafter in effect, or the Company shall consent
to the entry by order of a court of competent jurisdiction
of a decree or order in respect of the Company in an
involuntary case or proceeding under any applicable
bankruptcy, insolvency or other similar law nor or hereafter
in effect or to the commencement of any bankruptcy or
insolvency proceeding against the Company; or
(f) if the Company shall make an assignment for the
benefit of its creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or
shall consent to the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency of it or
of a major part of its property; or
(g) the occurrence of any other Event of Default with
respect to Securities of such series as provided in a
supplemental indenture applicable to such series of
Securities pursuant to Section 10.01(d);
then and in each and every such case, unless the principal of the
Securities of such series shall have already become due and
payable, either the Trustee or the holders of not less than 33%
in aggregate principal amount of the Securities of such series
then outstanding hereunder, by notice in writing to the Company
(and to the Trustee if given by Securityholders), may declare the
principal of all the Securities of such series to be due and
payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable, anything in this
Indenture or in the Securities of such series contained to the
contrary notwithstanding.
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Payment of principal and interest on such Securities shall remain
subordinated to the extent provided in Article Fourteen,
notwithstanding that such amount shall become immediately due and
payable as herein provided. This provision, however, is subject
to the condition that if, at any time after the principal of the
Securities of such series shall have been so declared due and
payable, and before any sale of property under any judgment or
decree for the payment of the moneys due shall have been obtained
or entered as hereinafter provided, the Company shall pay or
shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Securities of such
series and the principal of and premium, if any, on any and all
Securities of such series which shall have become due otherwise
than by declaration (with interest on overdue installments of
interest, to the extent legally enforceable under applicable law,
and on such principal of and premium, if any, on each Security of
such series at the rate borne by such Security to the date of
such payment or deposit) and all amounts then due and payable to
the Trustee hereunder, including the reasonable compensation of
the Trustee, its agents, attorneys and counsel, and any and all
defaults under this Indenture, other than the nonpayment of
principal on Securities of such series which shall have become
due by declaration, shall have been remedied -- then, and in
every such case the holders of a majority in aggregate principal
amount of the Securities of such series then outstanding, by
written notice to the Company and to the Trustee, may on behalf
of the holders of all of the Securities of such series waive all
defaults and rescind and annul such declaration and its
consequences; but no such waiver or rescission and annulment
shall extend to or shall affect any subsequent default, or shall
impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any
right under this Indenture for the holders of Securities of any
series and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the
Trustee, then and in every such case the Company, the Trustee and
the holders of the Securities of such series shall be restored
respectively to their several positions and rights hereunder, and
all rights, remedies and powers of the Company, the Trustee and
the holders of the Securities of such series shall continue as
though no such proceedings had been taken.
The Company and the Trustee may, to the extent provided
in Section 10.01, enter into one or more indentures supplemental
hereto with respect to any series of the Securities which may
provide for additional, different or fewer Events of Default with
respect to such series of Securities.
SECTION 6.02. Collection of Indebtedness by
Trustee; Trustee May Prove Debt. The Company covenants that (1)
in case default shall be made in the payment of any installment
of interest on any of the Securities, as and when the same shall
become due and payable, and such default shall have continued for
a period of 30 days, or (2) in case default shall be made in the
payment of the principal of or premium, if any, on any of the
Securities when and as the same shall have become due and
payable, whether upon maturity of the Securities or upon
redemption or upon declaration or otherwise -- then, upon demand
of the Trustee, the Company will pay to the Trustee, for the
benefit of holders of such Securities, the whole amount that then
shall have become due and payable on such Securities for
principal and premium, if any, and interest, with interest upon
the overdue principal and premium, if any, of each such Security
and (to the extent legally enforceable under applicable law) upon
installments of interest, at the rate borne by such Security;
and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation of the Trustee,
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its agents, attorneys and counsel, and any expenses or
liabilities incurred by the Trustee hereunder other than through
its own negligence or bad faith.
In case the Company shall fail forthwith to pay such
amounts upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled and empowered to
institute any action or proceedings at law or in equity against
the Company or other obligor on such Securities for the
collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or
such other obligor upon such Securities and collect in the manner
provided by law out of the property of the Company or such other
obligor upon such Securities, wherever situated, the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings for the
bankruptcy or for the reorganization of the Company or any other
obligor upon the Securities of any series under Title 11 of the
United States Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law relative to the
Company or such other obligor, its creditors or its property, or
in case a receiver or trustee shall have been appointed for its
property or in case of any other judicial proceedings relative to
the Company or other obligor upon the Securities of any series,
its creditors or its property, the Trustee, irrespective of
whether the principal of the Securities of any series shall then
be due and payable as therein expressed, upon redemption or by
declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to this Section, shall be
entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole
amount of principal, premium, if any, and interest owing and
unpaid in respect of the Securities of any series, and to file
such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and of the
Securityholders of any series allowed in any judicial proceeding
relative to the Company or other obligor upon the Securities of
any series, its creditors, or its property, and to collect and
receive any moneys or other property payable or deliverable on
any such claims, and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or
trustee in bankruptcy or reorganization is hereby authorized by
each of the Securityholders to make such payments to the Trustee,
and, in the event that the Trustee shall consent to the making of
such payments directly to the Securityholders, to pay to the
Trustee any amount due it for compensation and expenses,
including counsel fees incurred by it up to the date of such
distribution.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities of any series, may be
enforced by the Trustee without the possession of any of the
Securities of such series, or the production thereof in any
proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the
ratable benefit of the holders of the Securities of such series.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this
Indenture to which the Trustee shall be a party), the Trustee
shall be held to represent all the holders of the Securities of a
series, and it shall not be necessary to make any holders of the
Securities of such series parties to any such proceedings.
In case of an Event of Default hereunder with respect
to Securities of a particular series, the Trustee may, but unless
first requested so to do by the holders of at least a majority in
aggregate principal amount of the Securities of such series at
the time outstanding and furnished
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with reasonable indemnity against all costs, expenses and
liabilities shall not (subject to the provisions of Section 7.01)
be under any obligation to, proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate
judicial proceedings as are necessary to protect and enforce any
of such rights, either by suit in equity or by action at law or
by proceedings in bankruptcy or otherwise, whether for the
specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in
this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law. Nothing
herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of the
holder of any Security any plan of reorganization, arrangement,
adjustment or composition affecting the Securities of any series
or the rights of any holder thereof, or to authorize the Trustee
to vote in respect of the claim of any holder of any Security in
any such proceeding.
SECTION 6.03. Application of Proceeds. Any moneys
collected by the Trustee with respect to a series of Securities
pursuant to Section 6.02 shall be applied in the order following,
at the date or dates fixed by the Trustee for the distribution of
such moneys:
FIRST: To the payment of all costs and expenses
in connection with the collection of such moneys, and
all amounts payable to the Trustee under Section 7.06;
SECOND: To the payment of all Senior
Indebtedness of the Company if and to the extent
required by Article Fourteen;
THIRD: To the payment of the entire
amounts then due and unpaid upon the Securities in
respect of which or for the benefit of which such
moneys shall have been collected, without any
preference or priority, ratably according to the
amounts due and payable upon such Securities upon
presentation of the several Securities and notation of
such payment thereon, if partly paid, and upon
surrender thereof, if fully paid;
FOURTH: To the Company.
SECTION 6.04. Limitations on Suits by
Securityholders. No holder of any Security of any series shall
have any right by virtue or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity
or at law upon or under or with respect to this Indenture or for
the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the
Trustee written notice of default and of the continuance thereof
with respect to the Securities of that series, and unless also
the holders of not less than 33% in aggregate principal amount of
the Securities of that series then outstanding shall have made
written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for 60 days after
its receipt of such notice, request and offer of indemnity, shall
have failed to institute any such action, suit or proceeding and
no direction inconsistent with such written request shall have
been given to the Trustee pursuant to Section 6.06, it being
understood and intended, and being expressly covenanted by the
holder of every Security of such series with every other holder
of Securities of such series and the Trustee, that no one or more
holders of Securities of such series shall have any right in any
manner whatever
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by virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of the holders of any
other of such Securities or to obtain or seek to obtain priority
over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all holders of
Securities of such series. For the protection and enforcement of
this Section, each and every Securityholder and the Trustee shall
be entitled to such relief as can be given either at law or in
equity.
Notwithstanding any other provision of this Indenture,
but subject to Article Fourteen, the right of any holder of any
Security to receive payment of the principal of and premium, if
any, and interest on such Security, on or after the respective
due dates expressed in such Security, or to institute suit for
the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of
such holder.
SECTION 6.05. Powers and Remedies Cumulative; Delay
or Omission Not Waiver. All powers and remedies given by this
Article to the Trustee or to the holders of Securities of any
series shall, to the extent permitted by law and subject to
Section 6.04, be deemed cumulative and not exclusive of any
thereof or of any other powers and remedies available to the
Trustee or such Securityholders by judicial proceedings or
otherwise, to enforce the performance or observance of the
covenants and agreements contained in this indenture, and no
delay or omission of the Trustee or of any holder of the
Securities of any series to exercise any right or power accruing
upon any default occurring and continuing as aforesaid, shall
impair any such right or power, or shall be construed to be a
waiver of any such default or an acquiescence therein; and,
subject to Section 6.04, every power and remedy given by this
Article or by law to the Trustee or to such Securityholders may
be exercised from time to time, and as often as shall be deemed
expedient by the Trustee or by such Securityholders.
SECTION 6.06. Control by Securityholders; Waiver of
Default. The holders of a majority in aggregate principal amount
of the Securities of any series at the time outstanding shall
have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee with
respect to Securities of such series; provided, however, that
such direction shall not be otherwise than in accordance with law
and the provisions of this Indenture; and provided further, that
nothing in this Indenture shall impair the right of the Trustee
to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by such Securityholders. The
holders of a majority in aggregate principal amount of the
Securities of any series at the time outstanding may on behalf of
the holders of all of the Securities of such series waive any
past default in the performance of any of the covenants contained
herein or established pursuant to Section 2.01 with respect to
the Securities of such series and its consequences, except a
default in the payment of the principal of or premium, if any, or
interest on any of the Securities of such series. In the case of
any such waiver, the Company, the Trustee and the holders of the
Securities of such series shall be restored to their former
positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or impair any
right consequent thereon.
SECTION 6.07. Trustee to Give Notice of Defaults
Known to It, but May Withhold in Certain Circumstances. The
Trustee shall, within 90 days after the occurrence of a default
with respect to the Securities of any series, give to the
Securityholders of such series, in the manner and to the extent
required to do so by the Trust Indenture Act, notice of all
defaults actually known to a Responsible Officer of the Trustee,
unless such defaults shall have been
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cured before the giving of such notice (the term "defaults" for
the purposes of this Section being hereby defined to be the
events specified in Sections 6.01(a), (b), (c), (d), (e), (f)
and (g) with respect to Securities of such series not
including periods of grace, if any, provided for therein
and irrespective of the giving of them written notice
specified in subparagraph (c) of Section 6.01); provided,
however, that in case of any default of the character specified
in subparagraph (c) of Section 6.01 no such notice shall be given
until at least sixty (60) days after the occurrence thereof; and
provided further, that, except in the case of default in the
payment of the principal of or premium, if any, or interest on
any of the Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board
of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the
interests of the Securityholders of such series.
SECTION 6.08. Right of Court to Require Filing of
Undertaking to Pay Costs. All parties to this Indenture agree,
and each holder of any Security by his acceptance thereof shall
be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees and reasonable
expenses, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses
made by such party litigant; but this Section shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in principal amount of the Securities of
any series outstanding, or to any suit instituted by any
Securityholder of any series for the enforcement of the payment
of the principal of or premium, if any, or interest on any
Security of such series, on or after the due dates expressed in
such Security.
ARTICLE SEVEN
CONCERNING THE TRUSTEE
SECTION 7.01. Duties and Responsibilities of
Trustee. With respect to the holders of any series of Securities
issued hereunder, the Trustee, prior to the occurrence of an
Event of Default with respect to the Securities of that series
and after the curing or waiving of all Events of Default which
may have occurred with respect to such series, undertakes to
perform such duties and only such duties as are specifically set
forth in this Indenture and no implied covenants or obligations
shall be read into this Indenture against the Trustee. In case
an Event of Default with respect to Securities of any series has
occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this
Indenture with respect to such series and use the same degree of
care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct,
except that:
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(a) prior to the occurrence of an Event of Default
with respect to the Securities of any series and after the
curing or waiving of all such Events of Default with respect
to such series which may have occurred:
(1) the duties and obligations of the Trustee
with respect to the Securities of that series shall be
determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except
for the performance of such duties and obligations as
are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any
such certificates or opinions which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to
the requirements of this Indenture (but need not
confirm or investigate the accuracy of any mathematical
calculations or other facts stated therein);
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or
Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
and
(c) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the direction of the registered holders
given as provided in Section 6.06 relating to the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to
it.
SECTION 7.02. Certain Rights of Trustee. Except as
otherwise provided in Section 7.01:
(a) the Trustee may conclusively rely and shall be
protected in acting, or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture Security, other evidence of indebtedness or other
paper or document (whether in its original or facsimile
form) believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request, direction, order or demand of the
Company mentioned herein shall be sufficiently evidenced to
the Trustee by a Company Order (unless other evidence
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in respect thereof be herein specifically prescribed); and
any resolution of the Board of Directors shall be
sufficiently evidenced to the Trustee by a Board Resolution;
(c) the Trustee may consult with counsel of its own
selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance
thereon;
(d) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request, order or direction of any of the
Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to
the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred by the
Trustee in complying with such request, order or direction;
(e) whenever in the administration of the provisions
of this Indenture the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of bad faith on
the part of the Trustee, be deemed to be conclusively proved
and established by an Officers' Certificate delivered to the
Trustee and such certificate, in the absence of bad faith on
the part of the Trustee, shall be full warrant to the
Trustee for any action taken, suffered or omitted by it
under the provisions of this Indenture in good faith and in
reliance thereon;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture Securityholder, other
evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such inquiry or
investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such inquiry or
investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent
or attorney at the expense of the Company and shall incur no
liability or additional liability of any kind by reason of
such inquiry or investigation;
(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys, and the
Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by
it with due care hereunder;
(h) the Trustee shall not be charged with knowledge of
any Event of Default with respect to the Securities of any
series for which it is acting as Trustee unless either (1) a
Responsible Officer of the Trustee shall have actual
knowledge of the Event of Default or (2) written notice of
such Event of Default shall have been given to the Trustee
by the Company, any other obligor on such Securities or by
any holder of such Securities; and
(i) the rights, privileges, protections, immunities
and benefits given to the Trustee hereunder, including,
without limitation, its rights to compensation,
reimbursement and indemnification under Section 7.06, are
hereby extended and also
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made applicable to, and shall be enforceable by, the Trustee
in each of its other capacities hereunder.
SECTION 7.03. Trustee Not Responsible for Recitals,
etc. The recitals contained herein and in the Securities, except
the Trustee's certificate of authentication and the
representation as to the power of the Trustee to enter into this
Indenture and accept and execute the trusts hereby created, shall
be taken as the statements of the Company, and the Trustee
assumes no responsibility for the correctness of the same. The
Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee
shall not be accountable for the use or application by the
Company of any of the Securities or of the proceeds of such
Securities.
SECTION 7.04. Trustee and Others May Hold
Securities. Subject to Sections 7.07 and 7.12, the Trustee or
any paying agent or Security registrar or any other agent of the
Company or the Trustee, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise
deal with the Company or other obligor on the Securities with the
same rights it would have if it were not Trustee, paying agent,
Security registrar or such other agent.
SECTION 7.05. Moneys Held by Trustee or Paying
Agent. Subject to Sections 12.04 and 12.05, all moneys received
by the Trustee or any paying agent shall, until used or applied
as herein provided, be held in trust for the purposes for which
they were received, but any paying agent that is a bank need not
segregate such moneys from other funds except to the extent
required by law and shall not be invested. Neither the Trustee
nor any paying agent shall be under any liability for interest on
any moneys received by it hereunder except such as it may agree
with the Company to pay thereon. So long as no Event of Default
with respect to Securities of any series, other than an Event of
Default under subparagraph (c) of Section 6.01, shall have
occurred and be continuing, all interest allowed on any such
moneys shall be paid from time to time upon the written order of
the Company, signed by its President, or any Vice President or
its Treasurer or an Assistant Treasurer.
SECTION 7.06. Compensation and Indemnification of
Trustee and Its Lien. The Company covenants and agrees to pay to
the Trustee from time to time, and the Trustee shall be entitled
to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an
express trust), and, except as herein otherwise expressly
provided, the Company will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable
compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such
expense, disbursement or advance as shall be caused by its own
negligence or bad faith. The Company also covenants and agrees
to fully indemnify the Trustee and any predecessor Trustee for,
and to hold it harmless against, any and all loss, liability,
claim, damage or expense incurred without negligence or bad faith
on the part of the Trustee, arising out of or in connection with
the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself
against any claim or liability whether asserted by the Company,
any Holder or any other Person. The obligations of the Company
under this Section shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a
lien prior to that of the Securities upon all property and funds
held or collected by the Trustee as such, except funds held in
trust for the benefit of the holders of particular Securities.
"Trustee" for
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purposes of this Section shall include (i) the Trustee in each of
its other capacities hereunder and (ii) any predecessor Trustee;
provided, however, that the negligence, willful misconduct or bad
faith of any Trustee hereunder shall not affect the rights of any
other Trustee hereunder.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 6.01,
the expenses (including the reasonable charges and expenses of
its counsel) and the compensation for the services are intended
to constitute expenses of administration under any bankruptcy
law.
The provisions of this Section 7.06 shall survive the
termination for any reason of this Indenture and the resignation
or removal of the Trustee.
SECTION 7.07. Disqualification; Conflicting
Interests. If the Trustee shall have or acquire any conflicting
interest within the meaning of the Trust Indenture Act, it shall
either eliminate such conflicting interest or resign to the
extent, in the manner and with the effect, and subject to the
conditions, provided in the Trust Indenture Act and this
Indenture. To the extent permitted by such Act, the Trustee
shall not be deemed to have a conflicting interest by virtue of
being a trustee (i) under this Indenture with respect to
Securities of more than one series. Nothing herein shall prevent
the Trustee from filing with the Securities and Exchange
Commission the application referred to in the second to last
paragraph of Section 310(b) of the Trust Indenture Act.
SECTION 7.08. Persons Eligible for Appointment as
Trustee. The Trustee hereunder shall at all times be a
corporation organized and doing business under the laws of the
United States or any State or territory thereof or of the
District of Columbia authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of
at least $50,000,000, subject to supervision or examination by
Federal, state, territorial, or District of Columbia authority.
If such corporation publishes reports of condition at least
annually, pursuant to law or the requirements of the aforesaid
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in
accordance with this Section, the Trustee shall resign
immediately in the manner and with the effect specified in
Section 7.09.
SECTION 7.09. Resignation and Removal of Trustee;
Appointment of Successor. (a) The Trustee, or any trustee or
trustees hereafter appointed, may at any time resign with respect
to any one or more or all series of Securities by giving written
notice to the Company and by mailing notice of such resignation,
to the holders of Securities of that or those series at their
last addresses as they shall appear on the Security Register.
Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee or trustees with respect to
the applicable series by written instrument executed by order of
the Board of Directors, one copy of which instrument shall be
delivered to the resigning trustee and one copy to the successor
trustee. If no successor trustee shall have been so appointed
with respect to a particular series and have accepted appointment
within 30 days after the mailing of such notice of resignation,
the resigning trustee may petition at the expense of the Company
any court of competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has been a bona fide
holder of a Security or Securities of the applicable series for
at least 6 months may, subject to Section 6.08, on behalf of
himself and all others similarly situated, petition any
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such court for the appointment of a successor trustee. Such
court may thereupon after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) If at any time:
(1) the Trustee shall fail to comply with Section
7.07(a) after written request therefor by the Company
or by any Securityholder who has been a bona fide
holder of a Security or Securities for at least 6
months, or
(2) the Trustee shall cease to be eligible under
Section 7.08 and shall fail to resign after written
request therefor by the Company or by any such
Securityholder, or
(3) the Trustee shall become incapable of acting,
or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or
liquidation;
then, in any such case, the Company may remove the Trustee with
respect to the applicable series of Securities, and appoint a
successor trustee by written instrument, in duplicate, executed
by order of the Board of Directors of the Company, one copy of
which instrument shall be delivered to the trustee so removed and
one copy to the successor trustee, or, subject to Section 6.08,
any Securityholder who has been a bona fide holder of a Security
or Securities of any such series for at least 6 months may, on
behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor trustee with respect to such
series. Such court may thereupon after such notice, if any, as
it may deem proper and prescribe, remove the Trustee and appoint
a successor trustee with respect to such series.
(c) The holders of a majority in aggregate principal
amount of the Securities of any series at the time outstanding
may at any time remove the Trustee with respect to that series
and appoint with respect to such series a successor trustee by
delivering to the trustee so removed, to the successor trustee so
appointed and to the Company, the evidence provided for in
Section 8.01 of the action taken by the Securityholders.
(d) Any resignation or removal of the Trustee and any
appointment of a successor trustee pursuant to this Section shall
become effective upon acceptance of appointment by the successor
trustee as provided in Section 7.10.
SECTION 7.10. Acceptance of Appointment by
Successor Trustee. Any successor trustee appointed under Section
7.09 shall execute, acknowledge and deliver to the Company and to
its predecessor trustee with respect to any or all applicable
series an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts, duties and obligations with respect to
such series of its predecessor hereunder, with like effect as if
originally named as trustee herein; but, nevertheless, on the
written request of the Company or of the successor trustee, the
trustee ceasing to act shall, upon payment of any amounts then
due it pursuant to the provisions of Section 7.06, execute and
deliver an instrument transferring to such
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successor trustee all the rights, powers and trusts with respect
to such series of the trustee so ceasing to act. Upon request of
any such successor trustee, the Company shall execute any and all
instruments in writing for more fully and certainly vesting in
and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a
lien upon all property or funds held or collected by such trustee
to secure any amounts then due it pursuant to Section 7.06.
In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not
all) series, the Company, the predecessor Trustee and each
successor Trustee with respect to the Securities of any
applicable series shall execute and deliver an indenture
supplemental hereto which shall contain such provisions as shall
be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the predecessor Trustee with respect
to the Securities of any series as to which the predecessor
Trustee is not retiring shall continue to be vested in the
predecessor Trustee, and shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for
or facilitate the administration of the trusts hereunder by more
than one trustee, it being understood that nothing herein or in
such supplemental indenture shall constitute such Trustees co-
trustees of the same trust and that each such Trustee shall be
trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such
Trustee.
No successor Trustee with respect to any series of
Securities shall accept appointment as provided in this Section
unless at the time of such acceptance such successor Trustee
shall with respect to such series be qualified under Section 7.07
and eligible under Section 7.08.
Upon acceptance of appointment by a successor Trustee
with respect to the Securities of any series, the Company shall
mail notice of the succession of such Trustee hereunder to the
holders of Securities of such series at their last addresses as
they shall appear on the Security Register. If the Company fails
to mail such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall
cause such notice to be mailed at the expense of the Company.
SECTION 7.11. Merger, Conversion or Consolidation
of Trustee. Any person into which the Trustee may be merged or
converted or with which it may be consolidated, or any person
resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any person succeeding to all or
substantially all the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such
person shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
SECTION 7.12. Preferential Collection of Claims
Against Company. If the Trustee shall be or become a creditor of
the Company or any other obligor upon the Securities (other than
by reason of a relationship described in Section 311(b) of the
Trust Indenture Act), the Trustee shall be subject to any and all
applicable provisions of the Trust Indenture Act regarding the
collection of claims against the Company or such other obligor.
For purposes of Section 311(b) of the Trust Indenture Act:
(a) The term "cash transaction" shall mean any
transaction in which full payment for goods or securities
sold is made within 7 days after delivery of the goods
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or securities in currency or in checks or other orders drawn
upon banks or bankers and payable upon demand.
(b) The term "self-liquidating paper" shall mean
any draft, bill of exchange, acceptance or obligation which
is made, drawn, negotiated or incurred by the Company for
the purpose of financing the purchase, processing,
manufacture, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing
title to, possession of, or a lien upon, the goods, wares or
merchandise or the receivables or proceeds arising from the
sale of the goods, wares or merchandise previously
constituting the security, provided the security is received
by the Trustee simultaneously with the creation of the
creditor relationship with the Company arising from the
making, drawing, negotiating or incurring of the draft, bill
of exchange, acceptance or obligation.
ARTICLE EIGHT
CONCERNING THE SECURITYHOLDERS
SECTION 8.01. Evidence of Action Taken by
Securityholders. Whenever in this Indenture it is provided that
the holders of a specified percentage or a majority in aggregate
principal amount of the Securities or of any series of Securities
may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the
taking of any other action) the fact that at the time of taking
any such action the holders of such specified percentage or
majority have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed
by Securityholders in person or by agent or proxy appointed in
writing, or (b) by the record of the holders of Securities voting
in favor thereof at any meeting of Securityholders duly called
and held in accordance with the provisions of Article Nine, or
(c) by a combination of such instrument or instruments and any
such record of such a meeting of Securityholders.
SECTION 8.02. Proof of Execution of Instruments and
of Holding of Securities. Subject to the provisions of Sections
7.01, 7.02 and 9.05, proof of the execution of any instrument by
a Securityholder or his agent or proxy and proof of the holding
by any person of any of the Securities shall be sufficient if
made in the following manner:
The fact and date of the execution by any such person
of any instrument may be proved by the certificate of any notary
public or other officer authorized to take acknowledgments of
deeds to be recorded in any State within the United States, that
the person executing such instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to such
execution sworn to before any such notary or other such officer.
Where such execution is by an officer of a corporation or
association or a member of a partnership on behalf of such
corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his
authority. The fact and the date of the execution of any such
instrument may also be proved in any other manner which the
Trustee may deem sufficient.
The ownership of Securities may be proved by the
Security Register or by a certificate of the Security registrar.
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The Trustee may require such additional proof, if any,
of any material referred to in this Section as it shall deem
necessary.
The record of any Securityholders' meeting shall be
proved as provided in Section 9.06.
SECTION 8.03. Registered Holders of Securities May
Be Treated as Owners. The Company, the Trustee, any paying
agent, and any Security registrar may deem and treat the person
in whose name any Security shall be registered upon the Security
Register as the absolute owner of such Security (whether or not
such Security shall be overdue and notwithstanding any notice of
ownership or writing thereon made by anyone other than the
Security registrar) for the purpose of receiving payment thereof
or on account thereof and of interest thereon as herein provided
and for all other purposes, and neither the Company nor the
Trustee nor any paying agent nor any Security registrar shall be
affected by any notice to the contrary. All such payments so
made to any such registered holder for the time being, or upon
his order, shall be valid, and, to the extent of the sum or sums
so paid, effectual to satisfy and discharge the liability for
moneys payable upon any such Security.
SECTION 8.04. Securities Owned by Company Deemed
Not Outstanding. In determining whether the holders of the
requisite aggregate principal amount of Securities have concurred
in any direction, consent or waiver under this Indenture,
Securities which are owned by the Company or any other obligor on
the Securities or by any person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Company or any other obligor on the Securities
shall be disregarded and deemed not to be outstanding for the
purpose of any such determination, except that for the purposes
of determining whether the Trustee shall be protected in relying
on any such direction, consent or waiver, only Securities which a
Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as outstanding for the
purposes of this Section, if the pledgee shall establish to the
satisfaction of the Trustee that the pledgee has the right to
vote such Securities and that the pledgee is not a person
directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any such
other obligor. Subject to the provisions of Section 7.01, in
case of a dispute as to such right, any decision by the Trustee,
taken upon the advice of counsel, shall be full protection to the
Trustee.
SECTION 8.05. Right of Revocation of Action Taken.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 8.01, of the taking of any action
by the holders of the percentage in aggregate principal amount of
the Securities or of any series of Securities specified in this
Indenture in connection with such action, any holder of a
Security the serial number of which is shown by the evidence to
be included in the Securities the holders of which have consented
to such action may, by filing written notice with the Trustee at
its principal office and upon proof of holding as provided in
Section 8.02, revoke such action so far as concerns such
Security. Except as aforesaid, any such action taken by the
holder of any Security shall be conclusive and binding upon such
holder and upon all future holders and owners of such Security,
and of any Security issued in exchange therefor or in place
thereof, irrespective of whether or not any notation in regard
thereto is made upon such Security or any Security issued in
exchange therefor or in place thereof. Any action taken by the
holders of the percentage in aggregate principal amount of the
Securities specified in this Indenture in
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connection with such action shall be conclusively binding upon
the Company, the Trustee and the holders of all the Securities.
ARTICLE NINE
SECURITYHOLDERS' MEETINGS
SECTION 9.01. Purposes for Which Securityholders'
Meetings May Be Called. A meeting of Securityholders may be
called at any time and from time to time pursuant to this Article
for any of the following purposes:
(1) to give any notice to the Company or to the
Trustee, or to give any directions to the Trustee, or to
waive or to consent to the waiving of any default hereunder
and its consequences, or to take any other action authorized
to be taken by Securityholders pursuant to Article Six;
(2) to remove the Trustee and appoint a successor
trustee pursuant to Article Seven;
(3) to consent to the execution of an indenture
or indentures supplemental hereto pursuant to Section 10.02;
or
(4) to take any other action authorized to be
taken by or on behalf of the holders of any specified
aggregate principal amount of the Securities under any other
provision of this Indenture or under applicable law.
SECTION 9.02. Call of Meetings by Trustee. The
Trustee may at any time call a meeting of Securityholders of any
series to be held at any such time and at such place in the
Borough of Manhattan, The City of New York, as the Trustee shall
determine. Notice of every meeting of Securityholders, setting
forth the time and the place of such meeting and in general terms
the action proposed to be taken at such meeting, shall be mailed
by the Trustee, first-class postage prepaid, not less than 20 nor
more than 180 days prior to the date fixed for the meeting, to
the holders of Securities of such series at their last addresses
as they shall appear upon the Security Register.
SECTION 9.03. Company and Securityholders May Call
Meeting. In case the Company, pursuant to a resolution of its
Board of Directors, or the holders of at least 10% in aggregate
principal amount of the Securities of any series then
outstanding, shall have requested the Trustee to call a meeting
of Securityholders of such series, by written request setting
forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have made the mailing of the
notice of such meeting within 20 days after receipt of such
request, then the Company or the holders of such Securities in
the amount above specified may determine the time and the place
in said Borough of Manhattan for such meeting and may call such
meeting to take any action authorized in Section 9.01, by mailing
notice thereof as provided in Section 9.02.
SECTION 9.04. Persons Entitled to Vote at Meeting.
To be entitled to vote at any meeting of Securityholders of a
series a person shall be (a) a registered holder of one or more
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Securities of such series or (b) a person appointed by an
instrument in writing as proxy for the holder or holders of such
Securities by a registered holder of one or more such Securities.
The only persons who shall be entitled to be present or to speak
at any meeting of Securityholders shall be the persons entitled
to vote at such meeting and their counsel and any representatives
of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 9.05. Determination of Voting Rights;
Conduct and Adjournment of Meeting. Notwithstanding any other
provisions of this Indenture, the Trustee may make such
reasonable regulations as it may deem advisable for any meeting
of Securityholders, in regard to proof of the holding of
Securities and of the appointment of proxies, and in regard to
the appointment and duties of inspectors of votes, the submission
and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct
of the meeting as it shall think fit. Such regulations may
provide that written instruments appointing proxies, regular on
their face, may be presumed valid and genuine without the proof
specified in Section 8.02 or other proof. Except as otherwise
permitted or required by any such regulations, the holding of
Securities shall be proved in the manner specified in Section
8.02 and the appointment of any proxy shall be proved in the
manner specified in said Section 8.02 or by having the signature
of the person executing the proxy witnessed or guaranteed by any
bank, banker, trust company or firm satisfactory to the Trustee.
The Trustee shall, by an instrument in writing, appoint
a temporary chairman of the meeting, unless the meeting shall
have been called by the Company or by Securityholders as provided
in Section 9.03, in which case the Company or the Securityholders
calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of
the holders of a majority in principal amount of the Securities
represented at the meeting and entitled to vote.
Subject to the provisions of Section 8.04, at any
meeting any Securityholder of a series or proxy shall be entitled
to one vote for each $1,000 principal amount of Securities of
such series held or represented by him (in the case of Original
Issue Discount Securities, such principal amount is the amount
that would be due and payable upon the acceleration of the
maturity thereof pursuant to Section 6.01) provided, however,
that no vote shall be cast or counted at any meeting in respect
of any Security challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of
Securities of such series held by him or instruments in writing
as aforesaid duly designating him as the person to vote on behalf
of other Securityholders of such series. Any meeting of
Securityholders duly called pursuant to Section 9.02 or 9.03 may
be adjourned from time to time, and the meeting may be held as so
adjourned without further notice.
At any meeting, the presence of persons holding or
representing Securities in an aggregate principal amount
sufficient to take action upon the business for the transaction
of which such meeting was called shall be necessary to constitute
a quorum; but, if less than a quorum be present, the persons
holding or representing a majority of the Securities represented
at the meeting may adjourn such meeting with the same effect, for
all intents and purposes, as though a quorum had been present.
SECTION 9.06. Counting Vote and Recording Action of
Meeting. The vote upon any resolution submitted to any meeting
of Securityholders of a series shall be by written ballots on
which shall be subscribed the signatures of the holders of
Securities of such series or
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of their representatives by proxy and the serial number or
numbers of the Securities of such series held or represented by
them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with
the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in
duplicate of the proceedings of each meeting of Securityholders
shall be prepared by the secretary of the meeting and there shall
be attached to said record the original reports of the inspectors
of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice
was mailed as provided in Sections 9.02 and 9.03. The record
shall show the serial numbers of the Securities voting in favor
of or against any resolution. The record shall be signed and
verified by the affidavits of the permanent chairman and
secretary of the meeting and one of the duplicates shall be
delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting.
Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 10.01. Supplemental Indentures Without
Consent of Securityholders. Without the consent of any holders
of the Securities, the Company, when authorized by a resolution
of its Board of Directors, and the Trustee may from time to time
and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as it shall be in force at the date of
execution of such indenture or indentures) for one or more of the
following purposes:
(a) to evidence the succession of another
corporation to the Company, or successive successions, and
the assumption by the Successor of the covenants, agreements
and obligations of the Company pursuant to Article Eleven;
(b) to add to the covenants and agreements of the
Company such further covenants, agreements, restrictions or
conditions for the protection of the holders of the
Securities of all or any series as its Board of Directors
and the Trustee shall consider to be for the protection of
the holders of Securities of such series (and if such
covenants, agreements, restrictions or conditions are to be
for the benefit of less than all series of Securities,
stating that such covenants, agreements, restrictions or
conditions are expressly being included for the benefit of
such series), and to make the occurrence, or the occurrence
and continuance, of a default in any of such additional
covenants, agreements, restrictions or conditions a default
or an Event of Default permitting the enforcement of all or
any of the several remedies provided in this Indenture as
herein set forth; provided, however, that in respect of any
such additional covenant, agreement, restriction or
condition such supplemental indenture may provide for a
particular period of grace after default (which period may
be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon
such default or may
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limit the remedies available to the Trustee upon such
default or may limit the right of the holders of Securities
to waive such default;
(c) to add, delete or modify any Events of
Default with respect to all or any series of the Securities,
the form and terms of which are being established pursuant
to such supplemental indenture as permitted in Sections
2.01, 2.02 and 2.03 (and, if any such event of default is
applicable to fewer than all such series of the Securities,
specifying the series to which such event of default is
applicable), and to specify the rights and remedies of the
Trustee and the holders of such Securities in connection
therewith;
(d) to cure any ambiguity or to correct or
supplement any provision contained herein or in any
supplemental indenture which may be defective or
inconsistent with any other provisions contained herein or
in any supplemental indenture, or to make any other
addition, modification or elimination as shall not be
inconsistent with the provisions of this Indenture or any
supplemental indenture and shall not adversely affect the
interests of the holders of the Securities;
(e) to establish the form and terms of the
Securities of any series as permitted in Sections 2.01, 2.02
and 2.03, or to authorize the issuance of additional
Securities of a series previously authorized or to add to
the conditions, limitations or restrictions on the
authorized amount, terms of purposes of issue,
authentication or delivery of the Securities of any series,
as herein set forth, or other conditions, limitations or
restrictions thereafter to be observed; and
(f) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with respect to
the Securities of one or more series and to add to or change
any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of
the trusts hereunder by more than one trustee, pursuant to
the requirements of Section 7.10.
The Trustee is hereby authorized to join with the
Company in the execution of any such supplemental indenture, to
make any further appropriate agreements and stipulations which
may be therein contained but the Trustee shall not be obligated
to enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture
or otherwise.
Any supplemental indenture authorized by the provisions
of this Section shall be executed by the Company and the Trustee
and shall not require the consent of the holders of any of the
Securities at the time outstanding, notwithstanding Section
10.02.
SECTION 10.02. Supplemental Indentures With Consent
of Securityholders. With the consent (evidenced as provided in
Section 8.01) of the holders of not less than a majority in
aggregate principal amount of the Securities of any series at the
time outstanding, the Company, when authorized by a resolution of
its Board of Directors, and the Trustee may from time to time and
at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust
Indenture Act as it shall be in force at the date of execution of
such indenture or indentures) for the purpose, with respect to
Securities of such series, of adding any provisions to or
changing in any manner or eliminating any of the
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provisions of this Indenture or of any supplemental indenture or
of modifying in any manner the rights of the holders of the
Securities of such series; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity, or
the earlier optional date of maturity, if any, of any Security,
or reduce the principal amount thereof or the premium thereon, if
any, or reduce the rate, or make the principal thereof or
premium, if any, or interest thereon payable in any coin or
currency other than that provided in such Security without the
consent of the holder of each Security so affected, or (ii)
reduce the principal amount of Securities of any series, the
holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of all Securities
of such series then outstanding.
Upon the request of the Company, accompanied by a Board
Resolution authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of
the consent of the Securityholders as aforesaid, the Trustee
shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the
Trustee's own rights, duties or immunities under this Indenture
or otherwise, in which case the Trustee may in its discretion but
shall not be obligated to enter into such supplemental indenture.
A supplemental indenture which changes or eliminates
any provision of this Indenture or of any series of Securities
which has expressly been included solely for the benefit of one
or more particular series of Securities, or which modifies the
rights of holders of Securities of such series with respect to
such provision, shall be deemed not to affect the rights under
this Indenture of the holders of Securities of any other series.
It shall not be necessary for the consent of the
Securityholders under this Section to approve the particular form
of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Company and the
Trustee of any supplemental indenture under this Section, the
Company shall mail a notice, setting forth in general terms the
substance of such supplemental indenture, to the holders of
Securities at their last addresses as they shall appear on the
Security Register. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 10.03. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture pursuant to the
provisions of this Article, this Indenture shall be and be deemed
to be modified and amended in accordance therewith and the
respective rights, limitation of rights, obligations, duties and
immunities under this Indenture of the Trustee, the Company and
the holders of Securities shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of
any such supplemental indenture shall be and be deemed to be part
of the terms and conditions of this Indenture for any and all
purposes.
SECTION 10.04. Notation on Securities in Respect of
Supplemental Indentures. Securities authenticated and delivered
after the execution of any supplemental indenture pursuant to the
provisions of this Article or after any action taken at a
Securityholders' meeting pursuant to the provisions of Article
Nine may, and if required by the Trustee shall, bear a notation
in form approved by the Trustee as to any matter provided for in
such supplemental
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indenture or as to any such action. If the Company and the
Trustee shall so determine, new Securities of any series
so modified as to conform, in the opinion of the Company and the
Trustee, to any modification of this Indenture contained in any
such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the
Securities of such series then outstanding.
SECTION 10.05. Opinion of Counsel to Be Given
Trustee. Prior to executing any supplemental indenture, the
Trustee shall be provided an Opinion of Counsel as conclusive
evidence that any such supplemental indenture is authorized by
the terms of this Indenture and that it is proper for the Trustee
under the provisions of this Article to join in the execution
thereof.
ARTICLE ELEVEN
CONSOLIDATION, MERGER AND SALE
SECTION 11.01. Company May Consolidate or Merge,
etc. Subject to the provisions of Section 11.02, nothing
contained in this Indenture shall prevent any consolidation of
the Company with or the merger of the Company into any other
corporation, or any merger of any other corporation into the
Company, or successive consolidations or mergers to which the
Company or its successor or successors shall be a party or
parties, or shall prevent any sale, transfer or lease of the
properties of the Company as an entirety or substantially as an
entirety to any other corporation lawfully entitled to acquire
the same.
SECTION 11.02. Conditions to Consolidation or
Merger, etc. The Company covenants and agrees that it will not
consolidate with or merge into any other corporation, or sell,
transfer or lease its properties as an entirety or substantially
as an entirety to any person unless, and the Company covenants
and agrees that any such consolidation, merger, sale, transfer or
lease shall be upon the conditions that (i) the successor
corporation formed by or surviving any such consolidation or
merger or the person to which such sale, transfer or lease shall
have been made (the "Successor") shall be a corporation organized
and existing under the laws of the United States of America or a
state thereof, (ii) the due and punctual payment of the principal
of and premium, if any, and interest on the Securities according
to their tenor, and the due and punctual performance and
observance of all the terms, covenants and conditions of this
Indenture, the Securities and all indentures supplemental hereto
to be performed or observed by the Company shall, by an indenture
supplemental hereto, executed and delivered to the Trustee, be
expressly assumed by the Successor, as fully and effectually as
if such Successor had been an original party hereto, and (iii)
immediately after such merger, consolidation, sale, transfer or
lease, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall
have occurred and be continuing.
The Successor, other than a Successor by reason of a
lease of the Company's properties, upon executing such indenture
supplemental hereto, in form satisfactory to the Trustee, shall
succeed to and be substituted for the Company with the same
effect as if it had been an original party hereto, thus relieving
the Company of all liabilities hereunder and under the
Securities, and the Successor shall possess and from time to time
may exercise each and every power hereunder of the Company, and
may execute and deliver Securities hereunder, either
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in the name of the Company or the Successor, and any act or
proceeding required by this Indenture to be done or performed by
any board or officer of the Company may be done or performed with
like force and effect by the like board or officer of the
Successor.
The foregoing to the contrary notwithstanding, the
Company may sell, transfer or lease Qualifying Generation
Facilities to any Affiliate of the Company and such sale,
transfer or lease shall not be subject to the foregoing
requirements of this Section 11.02, provided that the assets
subject to such sales, transfers or leases occurring after the
date of this Indenture shall not in the aggregate represent
assets with a depreciated value on the books of the Company,
calculated with respect to such assets at the time of each such
sale, transfer or lease, in excess of 65% of the depreciated
value on the books of the Company of its total assets as set
in its most recent report filed on Form 10-K or 10-Q.
SECTION 11.03. Documents and Opinion to Be
Furnished to the Trustee. The Company covenants and agrees that
if it shall consolidate with or merge into any other corporation
or if it shall sell, transfer or lease its properties, as an
entirety or substantially as an entirety, the Company will
promptly furnish to the Trustee:
(1) A certificate signed by the President or a
Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the
Successor stating that the covenants of the Company
contained in Section 11.02 have been complied with;
(2) An executed counterpart of any instrument or
instruments executed by the Company or the Successor in the
performance of such covenants; and
(3) An Opinion of Counsel stating that in the
opinion of such counsel such covenants have been complied
with and that any instrument or instruments executed by the
Company or the Successor in the performance of such
covenants comply with the requirements of such covenants.
Each certificate, instrument and opinion furnished to
the Trustee pursuant to the provisions of this Section shall
conform to the requirements of Section 15.06.
Subject to the provisions of Sections 7.01 and 7.02,
the Trustee may receive an Opinion of Counsel conforming to the
requirements of Section 15.06 as conclusive evidence that any
such consolidation, merger, sale, transfer or lease, any such
assumption and any such supplemental indenture or other
instrument or instruments comply with the provisions of this
Article.
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ARTICLE TWELVE
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE; UNCLAIMED MONEYS
SECTION 12.01. Satisfaction and Discharge of
Indenture. If (a) the Company shall deliver to the Trustee for
cancellation all outstanding Securities, or (b) all outstanding
Securities not delivered to the Trustee for cancellation shall
have become due and payable, or are by their terms to become due
and payable within one year or are to be called for redemption
within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption and the Company shall
deposit with the Trustee as trust funds the entire amount
sufficient to pay at maturity or upon redemption all such
Securities not delivered to the Trustee for cancellation,
including principal and premium, if any, and interest due or to
become due to such date of maturity or redemption, and if in
either case the Company shall also pay or cause to be paid all
other sums payable hereunder by the Company, then this Indenture
shall cease to be of further effect, and the Trustee, on demand
of the Company and at the cost and expense of the Company, shall
execute proper instruments acknowledging satisfaction of and
discharging this Indenture. The Company agrees to reimburse the
Trustee for any costs or expenses thereafter reasonably and
properly incurred by the Trustee without negligence or bad faith
in connection with this Indenture or the Securities.
SECTION 12.02. Defeasance. Provided that the same
has been duly authorized with respect to Securities of a
particular series pursuant to Section 2.03(1), if, at any time
after the date hereof, the Company shall deposit with the
Trustee, in trust for the benefit of the holders thereof, (i)
funds sufficient to pay, or (ii) such amount of direct
noncallable obligations of, or noncallable obligations the
payment of principal of and interest on which is fully guaranteed
by, the United States of America, or to the payment of which
obligations or guarantees the full faith and credit of the United
States of America is pledged, as will, or will together with the
income thereon without consideration of any reinvestment thereof,
be sufficient to pay all sums due for principal of, premium, if
any, and interest on the Securities of such series, as they shall
become due from time to time, and shall pay all costs, charges
and expenses incurred or to be incurred by the Trustee in
relation thereto or in carrying out the provisions of this
Indenture, this Indenture shall cease to be of further effect
with respect to Securities of such series (except as to (i)
rights of registration of transfer, substitution and exchange of
Securities of such series, (ii) rights of holders to receive
payments of, principal of, premium, if any, and interest on the
Securities of such series as they shall become due from time to
time and other rights, duties and obligations of Securityholders
as beneficiaries hereof with respect to the amounts so deposited
with the Trustee, and (iii) the rights, obligations and
immunities of the Trustee hereunder (for which purposes the
Securities of such series shall be deemed outstanding)), and the
Trustee, on the written request of the Company, accompanied by
the Officers' Certificate and Opinion of Counsel required by
Section 15.06, shall execute and deliver to the Company such
instruments as shall be requisite to evidence the satisfaction
thereof with respect to Securities of such series.
SECTION 12.03. Application by Trustee of Funds
Deposited for Payment of Securities. All moneys deposited with
the Trustee pursuant to Sections 12.01 and 12.02, or received by
the Trustee in respect of obligations deposited with the Trustee
pursuant to Section 12.02 shall be held in trust and applied by
it to the payment, either directly or through any paying agent
(including the Company acting as its own paying agent), to the
holders of the particular
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Securities, for the payment of which such moneys have been
deposited with the Trustee, of all sums due and to become due
thereon for principal, premium, if any, and interest.
SECTION 12.04. Repayment of Moneys Held by Paying
Agent. In connection with the satisfaction and discharge of
this Indenture all moneys then held by any paying agent, other
than the Trustee, under this Indenture shall, upon and in
accordance with demand of the Company, be paid to the Trustee and
thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 12.05. Return of Unclaimed Moneys. Any
moneys deposited with the Trustee or any paying agent not applied
but remaining unclaimed by the holders of Securities for 2 years
after the date upon which the principal of and premium, if any,
or interest on such Securities shall have become due and payable
shall be repaid to the Company by the Trustee or such paying
agent on written demand; and the holder of any of the Securities
entitled to receive such payment shall thereafter look only to
the Company for the payment thereof and all liability of the
Trustee or any such paying agent with respect to such moneys
shall thereupon cease. In the absence of any such Company Order,
the Trustee or any such paying agent shall from time to time
deliver such unclaimed funds to, or as directed by, the pertinent
escheat authority, as identified by the Trustee or such paying
agent in its sole discretion, pursuant to and in accordance with
applicable unclaimed property laws, rules or regulations. Any
such delivery shall be in accordance with the customary practices
and procedures of the Trustee or such paying agent and the
escheat authority and, upon any such delivery, all liability of
the Trustee and such paying agent with respect to such unclaimed
funds shall thereupon cease.
ARTICLE THIRTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 13.01. Personal Immunity from Liability of
Incorporators, Stockholders, etc. No recourse under or upon any
obligation, covenant or agreement of this Indenture or any
indenture supplemental hereto, or of any Security, or for any
claim based thereon or otherwise in respect thereof, shall be had
against any incorporator or against any past, present or future
stockholder, officer or member of the Board of Directors, as
such, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all
such liability and any and all such claims being hereby expressly
waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issue of the
Securities.
ARTICLE FOURTEEN
SUBORDINATION
SECTION 14.01. Securities Subordinated to Senior
Indebtedness. With respect to Securities of any series as to
which, pursuant to Section 2.03(n), it has been established that
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this Article Fourteen applies (herein called the "Subordinated
Securities"), the Company covenants and agrees, and each holder
of Subordinated Securities, by his acceptance thereof, likewise
covenants and agrees, that the indebtedness represented by the
Subordinated Securities and the payment of the principal of,
premium, if any, and interest on each and all of the Subordinated
Securities are hereby expressly subordinate and junior to the
extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of all Senior Indebtedness.
"Senior Indebtedness" means all indebtedness of the Company for
the repayment of money borrowed (whether or not represented by
bonds, debentures, notes or other securities) other than the
indebtedness evidenced by the Subordinated Securities and any
indebtedness subordinated to, or subordinated on parity with, the
Subordinated Securities. "Senior Indebtedness" does not include
customer deposits or other amounts securing obligations of others
to the Company.
SECTION 14.02. Events of Subordination. In the
event (a) of any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the
Company, whether in bankruptcy, insolvency, reorganization or
receivership proceedings or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities
of the Company or otherwise, except a distribution in connection
with a consolidation, merger or sale, transfer or lease of the
properties of the Company which complies with the requirements of
Section 11.02, or (b) of any default by the Company in the
payment of principal, premium, interest or any other payment due
on any Senior Indebtedness, or in the event that the maturity of
any Senior Indebtedness has been accelerated because of a
default, and such default shall not have been rescinded, then:
(1) in the circumstance described in the
foregoing clause (a) the holders of all Senior
Indebtedness, and in the circumstance described in the
foregoing clause (b) the holders of all Senior
Indebtedness outstanding at the time the principal of
such Senior Indebtedness shall have been so declared
due and payable, shall first be entitled to receive
payment of the full amount due thereon in respect of
principal, premium, if any, and interest, or provision
shall be made for such amount in money or money's
worth, before the holders of any of the Subordinated
Securities are entitled to receive any payment on
account of the principal of, premium, if any, or
interest on the indebtedness evidenced by the
Subordinated Securities;
(2) any payment by, or distribution of
assets of, the Company of any kind or character,
whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted
or securities of the Company or any other corporation
provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at
least to the extent provided in this Article with
respect to the Subordinated Securities, to the payment
of all Senior Indebtedness, provided that the rights of
the holders of the Senior Indebtedness are not altered
by such reorganization or readjustment), to which the
holders of any of the Subordinated Securities or the
Trustee would be entitled except for the provisions of
this Article shall be paid or delivered by the person
making such payment or distribution, whether a trustee
in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of such Senior
Indebtedness or their representative or representatives
or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior
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Indebtedness may have been issued, ratably according to
the aggregate amounts remaining unpaid on account of
such Senior Indebtedness held or represented by each,
to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid after giving
effect to any concurrent payment or distribution (or
provision therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is
made to the holders of the indebtedness evidenced by
the Subordinated Securities or to the Trustee under
this Indenture; and
(3) in the event that, notwithstanding the
foregoing, any payment by, or distribution of assets
of, the Company of any kind of character, whether in
cash, property or securities (other than securities of
the Company as reorganized or readjusted or securities
of the Company or any other corporation provided for by
a plan of reorganization or readjustment the payment of
which is subordinate, at least to the extent provided
in this Article with respect to the Subordinated
Securities, to the payment of all Senior Indebtedness,
provided that the rights of the holders of Senior
Indebtedness are not altered by such reorganization or
readjustment), shall be received by the Trustee or the
holders of any of the Subordinated Securities before
all Senior Indebtedness is paid in full, such payment
or distribution shall be paid over to the holders of
such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of
such Senior Indebtedness may have been issued, ratably
as aforesaid, for application to the payment of all
Senior Indebtedness remaining unpaid until all such
Senior Indebtedness shall have been paid in full, after
giving effect to any concurrent payment or distribution
(or provision therefor) to the holders of such Senior
Indebtedness.
SECTION 14.03. Subrogation. Subject to the payment
in full of all Senior Indebtedness, the rights of the holders of
the Subordinated Securities shall be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments or
distribution of cash, property or securities of the Company
applicable to such Senior Indebtedness until all amounts owing on
the Subordinated Securities shall be paid in full, and, as among
the Company, its creditors other than holders of such Senior
Indebtedness, and the holders of the Subordinated Securities, no
such payment or distribution made to the holders of Senior
Indebtedness by virtue of this article which otherwise would have
been made to the holders of the Subordinated Securities shall be
deemed to be a payment by the Company on account of such Senior
Indebtedness, it being understood that the provisions of this
Article are and are intended solely for the purpose of defining
the relative rights of the holders of the Subordinated
Securities, on the one hand, and the holders of Senior
Indebtedness, on the other hand.
SECTION 14.04. Obligation of Company Unconditional.
Nothing contained in this Article or elsewhere in this Indenture
or in the Subordinated Securities is intended to or shall impair,
as among the Company, its creditors other than the holders of
Senior Indebtedness, and the holders of the Subordinated
Securities the obligation of the Company, which is absolute and
unconditional to pay to the holders of the Subordinated
Securities the principal of, premium, if any, and interest on the
Subordinated Securities as and when the same shall become due and
payable in accordance with their terms, or is intended to or
shall affect the relative rights of the holders of the
Subordinated Securities and creditors of the Company other than
the holders of Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or the holder of any
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Subordinated Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article of the holders
of Senior Indebtedness in respect of cash, property or securities
of the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the
Company referred to in this Article, the Trustee and the holders
of the Subordinated Securities shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in
which any such dissolution, winding up, liquidation or
reorganization proceeding affecting the affairs of the Company is
pending or upon a certificate of the trustee in bankruptcy,
receiver, assignee for the benefit of creditors, liquidating
trustee or agent or other Person making any payment or
distribution, delivered to the Trustee or to the holders of the
Subordinated Securities, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution,
the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount
paid or distributed thereon and all other facts pertinent thereto
or to this Article. In the event that the Trustee determines, in
good faith, that further evidence is required with respect to the
right of any person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this
Section, the Trustee may request such person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, as to the extent to
which such Person is entitled to participate in such payment or
distribution, and as to other facts pertinent to the right of
such Person under this Section, and if such evidence is not
furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to
receive such payment.
SECTION 14.05. Payments on Subordinated Securities
Permitted. Nothing contained in this Article or elsewhere in
this Indenture, or in any of the Subordinated Securities, shall
affect the obligation of the Company to make, or prevent the
Company from making, payments of the principal of, premium, if
any, or interest on the Subordinated Securities in accordance
with the provision hereof and thereof, or shall prevent the
Trustee or any paying agent of the Company from applying any
moneys deposited with it hereunder to the payment of the
principal of, premium, if any, or interest on the Subordinated
Securities, in each case except as otherwise provided in this
Article.
SECTION 14.06. Effectuation of Subordination by
Trustee. Each holder of Subordinated Securities, by his
acceptance thereof, authorizes and directs the Trustee in his
behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such
purposes.
SECTION 14.07. Knowledge of Trustee.
Notwithstanding the provisions of this Article or any other
provisions of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts which would prohibit
the making of any payment of moneys to or by the Trustee, or the
taking of any other action by the Trustee (and shall not be
liable for making such payment or taking such action), unless and
until a Responsible Officer of the Trustee having responsibility
for the administration of the trust established by this Indenture
shall have received written notice thereof from the Company, any
holder of Subordinated Securities, any paying agent of the
Company or any holder or representative of any class of Senior
Indebtedness, and, prior to the receipt of any such written
notice, the Trustee shall be entitled in all respects to assume
that no such facts exist; provided that, if prior to the third
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Business Day preceding the date upon which by the terms hereof
any monies become payable for any purpose (including, without
limitation, the payment of either the principal of or interest on
any Subordinated Security), or the date of the execution of an
instrument pursuant to Section 12.02 acknowledging satisfaction
and discharge of this Indenture, a Responsible Officer of the
Trustee shall not have received with respect to such monies or to
such funds or obligations deposited pursuant to Section 12.02,
the notice provided for in this Section 14.07, then, anything
herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such monies or
such funds or obligations and apply the same to the purpose for
which they were received and shall not be affected by any notice
to the contrary which may be received by it on or after such
date.
SECTION 14.08. Trustee's Relation to Senior
Indebtedness. The Trustee shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness
at the time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in Section 7.12 or elsewhere in
this Indenture shall deprive the Trustee of any of its rights as
such holder. Nothing in this Article shall apply to claims of or
payments to the Trustee under or pursuant to Section 7.06.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this
Article, and no implied covenants or obligations with respect to
the holders of Senior Indebtedness shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Senior Indebtedness,
and the Trustee shall not be liable to any holder of Senior
Indebtedness, if it shall mistakenly pay over or deliver to
holders of Subordinated Securities, the Company or any other
Person monies or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article or
otherwise.
SECTION 14.09. Rights of Holders of Senior
Indebtedness Not Impaired. No right of any present or future
holder of any Senior Indebtedness to enforce the subordination
herein shall at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of the Company or by any
noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
SECTION 15.01. Successors. All the covenants,
stipulations, promises and agreements in this Indenture contained
by or in behalf of the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 15.02. Benefits of Indenture Restricted to
Parties and Securityholders. Nothing in this Indenture or in
the Securities, expressed or implied, shall give or be construed
to give to any person, other than the Company, the Trustee and
the Securityholders, any legal or equitable right, remedy or
claim under or in respect of this Indenture.
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SECTION 15.03. Payments Due on Sundays and
Holidays. In any case where the date of maturity of principal
of or interest on any Securities or the date fixed for redemption
of any Securities shall be a Sunday or legal holiday or a day on
which banking institutions in the City of New York are authorized
by law to close, unless otherwise provided in a supplemental
indenture relating to a series of Securities, payment of interest
or principal and premium, if any, may be made on the next
succeeding Business Day with the same force and effect as if made
on the date of maturity or the date fixed for redemption and no
interest shall accrue for the period after such date.
SECTION 15.04. Notices and Demands on Company and
Trustee. Any notice, request or demand which by any provision
of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Securities on the Company
shall be in writing and shall be deemed to have been sufficiently
given or served, for all purposes, if given or served at, or sent
by registered mail to, the principal office of the Company (until
another address is filed in writing by the Company with the
Trustee). Any notice, direction, request or demand by any
Securityholder to or upon the Trustee shall be in writing and
shall be deemed to have been sufficiently given or made, for all
purposes, if given or made at, or sent by registered mail to, the
office of the Trustee located at 101 Barclay Street, New York,
New York 10286, Attention: Corporate Trust Administration, or at
any other address previously furnished in writing to the Company
by the Trustee. Any notice required or permitted to be mailed to
a Securityholder by the Company or the Trustee pursuant to the
provisions of this Indenture shall be in writing and shall be
deemed to be properly mailed by being deposited, first class mail
postage prepaid, in a post office letter box in the United States
addressed to such Securityholder at the address of such holder as
shown on the Security Register.
SECTION 15.05. Law of New York to Govern. This
Indenture and each Security shall be deemed to be a contract made
under the law of the State of New York, and for all purposes
shall be construed in accordance with the law of said State.
SECTION 15.06. Officers' Certificates and Opinions
of Counsel; Statements to Be Contained Therein. Upon any
application or demand by the Company to the Trustee to take any
action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating
that all conditions precedent provided for in this Indenture
relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel
all such conditions precedent have been complied with, except
that in the case of any such application or demand as to which
the furnishing of such documents is specifically required by any
provision of this Indenture relative to such particular
application or demand, no additional certificate or opinion need
be furnished.
Each certificate or opinion provided for in this
Indenture, and delivered to the Trustee with respect to
compliance with a condition or covenant provided for in this
Indenture, shall include (1) a statement that the person making
such certificate or opinion has read such covenant or condition
and the definitions herein relating thereto; (2) a brief
statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based; (3) a statement that, in
the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition
has been complied with;
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and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 15.07. Conflict of any Provision of
Indenture with Trust Indenture Act. If and to the extent that
any provision of this Indenture (or any provision of the terms of
a series of Securities) limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which
is required or deemed to be included in this Indenture by any of
the provisions of the Trust Indenture Act, the provision or
requirement of the Trust Indenture Act shall control.
SECTION 15.08. Counterparts. This Indenture may be
executed in any number of counterparts, each of which shall be an
original; but such counterparts shall together constitute but one
and the same instrument.
SECTION 15.09. Severability. If any provision of
this Indenture shall be held or deemed to be or shall, in fact,
be inoperative or unenforceable as applied in any particular case
in any jurisdiction or jurisdictions or in all jurisdictions, or
in all cases because it conflicts with any other provision or
provisions hereof or any constitution or statute or rule of
public policy or for any other reason, such circumstances shall
not have the effect of rendering the provision in question
inoperative or unenforceable in any other case or circumstance,
or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent
whatever.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above
written.
KANSAS CITY POWER & LIGHT COMPANY
By /s/Andrea F. Bielsker
Name: Andrea F. Bielsker
Title: Vice President-Finance,
Chief Financial Officer and
Treasurer
[CORPORATE SEAL]
ATTEST:
/s/Jeanie Sell Latz
Name: Jeanie Sell Latz
Title: Secretary
THE BANK OF NEW YORK,
Trustee
By /s/Robert A. Massimillo
Name: Robert A. Massimillo
Title: Vice President
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STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
On the day of February, 2002 before me personally came Andrea F. Bielsker,
to me known, who, being by me duly sworn, did depose and say that she
is a Vice President of KANSAS CITY POWER & LIGHT COMPANY, one of the
corporations described in and which executed the above instrument; that
she knows the corporate seal of said corporation; that the seal
affixed to the said instrument is such corporate seal; that it
was so affixed by authority of the Board of Directors of said
corporation; and that she signed her name thereto by like
authority.
[NOTORIAL SEAL]
/s/Jacquetta L. Hartman
Notary Public
Jacquetta L. Hartman
Notary Pulbic - Notary Seal
STATE OF MISSOURI
RAY COUNTY
MY COMMISSION EXP APR 8, 2004
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STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
On the day of February, 2002 before me personally came Jeanie Sell Latz,
to me known, who, being by me duly sworn, did depose and say that she
is a Secretary of KANSAS CITY POWER & LIGHT COMPANY, one of the
corporations described in and which executed the above instrument;
that she knows the corporate seal of said corporation; that the seal
affixed to the said instrument is such corporate seal; that it
was so affixed by authority of the Board of Directors of said
corporation; and that she signed her name thereto by like
authority.
[NOTORIAL SEAL]
/s/Jacquetta L. Hartman
Notary Public
Jacquetta L. Hartman
Notary Pulbic - Notary Seal
STATE OF MISSOURI
RAY COUNTY
MY COMMISSION EXP APR 8, 2004
Exhibit 4.2.b.
$225,000,000
KANSAS CITY POWER & LIGHT COMPANY
6.00% SENIOR NOTES DUE 2007, SERIES A
REGISTRATION RIGHTS AGREEMENT
March 13, 2002
Banc of America Securities LLC
Bank of America Corporate Center,
100 North Tyron Street,
Charlotte, NC 28255
BNP Paribas Securities Corp.
787 Seventh Avenue
New York, NY 10019
As Representatives of the Several Initial Purchasers
Ladies and Gentlemen:
Kansas City Power & Light Company, a Missouri
corporation (the "Company"), proposes to issue and sell to
Banc of America Securities LLC and BNP Paribas Securities
Corp., as joint book-running managers (the
"Representatives") on behalf of Banc One Capital Markets,
Inc., BNY Capital Markets, Inc. and Scotia Capital (USA)
Inc. (collectively, including the Representatives, the
"Initial Purchasers"), upon the terms set forth in a
purchase agreement, dated March 8, 2002 (the "Purchase
Agreement"), $225,000,000 aggregate principal amount of its
6.00% Senior Notes due 2007, Series A (the "Initial
Securities"). The Initial Securities will be issued
pursuant to an Indenture, dated as March 1, 2002 (the
"Indenture"), between the Company and The Bank of New York,
as trustee (the "Trustee"). As an inducement to the
Initial Purchasers to enter into the Purchase Agreement, the
Company agrees with the Initial Purchasers, for the benefit
of the Initial Purchasers and the holders of the Securities
(as defined below) (collectively the "Holders"), as follows:
1. REGISTERED EXCHANGE OFFER Unless not permitted
by applicable law (after the Company has complied with the
ultimate paragraph of this Section 1), the Company shall
prepare and, not later than 90 days (such 90th day being
a "Filing Deadline") after the date on which the
Initial Purchasers purchase the Initial Securities
pursuant to the Purchase Agreement (the "Closing Date"),
file with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Exchange Offer
Registration Statement") on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"),
with respect to a proposed offer (the "Registered Exchange
Offer") to the Holders of Transfer Restricted Securities (as
defined in Section 6 hereof), who are not prohibited by any
law or policy of the Commission from
participating in the Registered Exchange Offer, to issue
and deliver to such Holders, in exchange for the
Initial Securities, a like aggregate principal amount of
debt securities of the Company issued under the
Indenture, identical in all material respects to the
Initial Securities and registered under the Securities
Act (the "Exchange Securities"). The Company
shall use its best efforts to (i) cause such Exchange Offer
Registration Statement to become effective under the
Securities Act within 180 days after the Closing Date (such
180th day being an "Effectiveness Deadline") and (ii) keep
the Exchange Offer Registration Statement effective for not
less than 20 business days (or longer, if required by
applicable law) after the date notice of the Registered
Exchange Offer is mailed to the Holders (such period being
called the "Exchange Offer Registration Period").
If the Company commences the Registered Exchange
Offer, the Company (i) will be entitled to consummate the
Registered Exchange Offer 30 days after such commencement
(provided that the Company has accepted all the Initial
Securities theretofore validly tendered in accordance with
the terms of the Registered Exchange Offer), (ii) will keep
the Registered Exchange Offer open for not less than 20
business days (or longer if required by applicable law)
after the date on which notice of the Registered Exchange
Offer is mailed, and (iii) will be required to consummate
the Registered Exchange Offer no later than 30 days after
the date on which the Exchange Offer Registration Statement
is declared effective (such 30th day being the "Consummation
Deadline").
Following the declaration of 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 of Transfer Restricted Securities electing to
exchange the Initial Securities for Exchange Securities
(assuming that such Holder is not an affiliate of the
Company within the meaning of the Securities Act, acquires
the Exchange Securities in the ordinary course of such
Holder's business and has no arrangements with any person to
participate in the distribution of the Exchange Securities
and is not prohibited by any law or policy of the Commission
from participating in the Registered Exchange Offer) to
trade such Exchange Securities from and after their receipt
without any limitations or restrictions under the Securities
Act and without material restrictions under the securities
laws of the several states of the United States.
The Company acknowledges that, pursuant to current
interpretations by the Commission's staff of Section 5 of
the Securities Act, in the absence of an applicable
exemption therefrom, (i) each Holder which is a broker-
dealer electing to exchange Initial Securities, acquired for
its own account as a result of market making activities or
other trading activities, for Exchange Securities (an
"Exchanging Dealer"), is required to deliver a prospectus
containing the information set forth in (a) Annex A hereto
on the cover, (b) Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer"
section, and (c) Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with
a sale of any such Exchange Securities received by such
Exchanging Dealer pursuant to the Registered Exchange Offer
and (ii) an Initial Purchaser that elects to sell Securities
(as defined below) acquired in exchange
2
for Initial Securities constituting any portion of an unsold
allotment, is required to deliver a prospectus containing the
information required by Items 507 or 508 of Regulation S-K
under the Securities Act, as applicable, in connection with
such sale.
The Company shall use its best efforts to keep the
Exchange Offer Registration Statement effective and to amend
and supplement the prospectus contained therein, in order to
permit such prospectus to be lawfully delivered by all
persons subject to the prospectus delivery requirements of
the Securities Act for such period of time as such persons
must comply with such requirements in order to resell the
Exchange Securities; PROVIDED, HOWEVER, that (i) in the case
where such prospectus and any amendment or supplement
thereto must be delivered by an Exchanging Dealer or an
Initial Purchaser, such period shall be the lesser of 180
days and the date on which all Exchanging Dealers and the
Initial Purchasers have sold all Exchange Securities held by
them (unless such period is extended pursuant to Section
3(j) below) and (ii) the Company shall make such prospectus
and any amendment or supplement thereto available to any
broker-dealer for use in connection with any resale of any
Exchange Securities for a period of not less than 180 days
after the consummation of the Registered Exchange Offer.
If, upon consummation of the Registered Exchange
Offer, any Initial Purchaser holds Initial Securities
acquired by it as part of its initial distribution, the
Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall
issue and deliver to such Initial Purchaser upon the written
request of such Initial Purchaser, in exchange (the "Private
Exchange") for the Initial Securities held by such Initial
Purchaser, a like principal amount of debt securities of the
Company issued under the Indenture and identical in all
material respects to the Initial Securities (the "Private
Exchange Securities"). The Initial Securities, the Exchange
Securities and the Private Exchange Securities are herein
collectively called the "Securities".
In connection with the Registered Exchange Offer,
the Company shall:
(a) mail to each Holder a copy of the prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and
related documents;
(b) keep the Registered Exchange Offer open for not
less than 20 business days (or longer, if required by
applicable law) after the date notice thereof is mailed to
the Holders;
(c) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough of
Manhattan, The City of New York, which may be the Trustee or
an affiliate of the Trustee;
(d) 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 shall remain open; and
3
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the
Registered Exchange Offer or the Private Exchange, as the
case may be, the Company shall:
(x) accept for exchange all the Securities
validly tendered and not withdrawn pursuant to the
Registered Exchange Offer and the Private Exchange;
(y) deliver to the Trustee for cancellation all
the Initial Securities so accepted for exchange; and
(z) cause the Trustee to authenticate and deliver
promptly to each Holder of the Initial Securities,
Exchange Securities or Private Exchange Securities, as
the case may be, equal in principal amount to the
Initial Securities of such Holder so accepted for
exchange.
The Indenture will provide that the Exchange
Securities will not be subject to the transfer restrictions
set forth in the Indenture and that all the Securities will
vote and consent together on all matters as one class and
that none of the Securities will have the right to vote or
consent as a class separate from one another on any matter.
Interest on each Exchange Security and Private
Exchange Security issued pursuant to the Registered Exchange
Offer and in the Private Exchange will accrue from the last
interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if
no interest has been paid on the Initial Securities, from
the date of original issue of the Initial Securities.
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 Exchange Securities received by such
Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding
with any person to participate in the distribution of the
Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an "affiliate,"
as defined in Rule 405 of the Securities Act, of the Company
or if it is an affiliate, such Holder will comply with the
registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder
is not a broker-dealer, that it is not engaged in, and does
not intend to engage in, the distribution of the Exchange
Securities and (v) if such Holder is a broker-dealer, that
it will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a
result of market-making activities or other trading
activities and that it will be required to acknowledge that
it will deliver a prospectus in connection with any resale
of such Exchange Securities.
Notwithstanding any other provisions hereof, the
Company will ensure that (i) any Exchange Offer Registration
Statement and any amendment thereto and any prospectus
forming part thereof and any supplement thereto complies in
all material respects with the Securities Act and the rules
and regulations thereunder, (ii) any Exchange Offer
Registration Statement and any amendment thereto does not,
when it
4
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 and (iii) any prospectus forming part
of any Exchange Offer Registration Statement, and any
supplement to such prospectus, does not include an 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.
If following the date hereof there has been
announced a change in Commission policy with respect to
exchange offers that in the reasonable opinion of counsel to
the Company raises a substantial question as to whether the
Registered Exchange Offer is permitted by applicable federal
law, the Company will seek a no-action letter or other
favorable decision from the Commission allowing the Company
to consummate the Registered Exchange Offer. The Company
will pursue the issuance of such a decision to the
Commission staff level. In connection with the foregoing,
the Company will take all such other actions as may be
requested by the Commission or otherwise required in
connection with the issuance of such decision, including
without limitation (i) participating in telephonic
conferences with the Commission, (ii) delivering to the
Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which
such counsel has concluded that the Registered Exchange
Offer should be permitted and (iii) diligently pursuing a
resolution (which need not be favorable) by the Commission
staff.
2. SHELF REGISTRATION. If, (i) because of any
change in law or in applicable interpretations thereof by
the staff of the Commission, the Company is not
permitted to effect a Registered Exchange Offer,
as contemplated by Section 1 hereof, (ii) the
Registered Exchange Offer is not consummated by the 210th
day after the Closing Date, (iii) any Initial Purchaser so
requests with respect to the Initial Securities (or the
Private Exchange Securities) not eligible to be exchanged
for Exchange Securities in the Registered Exchange Offer and
held by it following consummation of the Registered Exchange
Offer or (iv) any Holder (other than an Exchanging Dealer)
is not eligible to participate in the Registered Exchange
Offer or, in the case of any Holder (other than an
Exchanging Dealer) that participates in the Registered
Exchange Offer, such Holder does not receive freely
tradeable Exchange Securities on the date of the exchange
and any such Holder so requests, the Company shall take the
following actions (the date on which any of the conditions
described in the foregoing clauses (i) through (iv) occur,
including in the case of clauses (iii) or (iv) the receipt
of the required notice, being a "Trigger Date"):
(a) The Company shall promptly (but in no event
more than 90 days after the Trigger Date (such 90th day being
a "Filing Deadline")) file with the Commission and thereafter
use its best efforts to cause to be declared effective no
later than 180 days after the Trigger Date (such 180th day
being an "Effectiveness Deadline") a registration statement
(the "Shelf Registration Statement" and, together with the
Exchange Offer Registration Statement, a "Registration
Statement") on an appropriate form under the Securities Act
relating to the offer and sale of the Transfer Restricted
Securities by the Holders thereof from time to time in
accordance with the methods of distribution set forth in the
Shelf Registration Statement and Rule 415 under the
5
Securities Act (hereinafter, the "Shelf Registration");
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 the provisions
of this Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the
Shelf Registration Statement continuously effective in order
to permit the prospectus included therein to be lawfully
delivered by the Holders of the relevant Securities, for a
period of two years (or for such longer period if extended
pursuant to Section 3(j) below) from the date of its
effectiveness or such shorter period that will terminate
when all the Securities covered by the Shelf Registration
Statement (i) have been sold pursuant thereto or (ii) are no
longer restricted securities (as defined in Rule 144 under
the Securities Act, or any successor rule thereof). 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 such action is required by applicable law.
(c) Notwithstanding any other provisions of this
Agreement to the contrary, 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, amendment or supplement,
(i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and
regulations of the Commission and (ii) 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 light of the
circumstances under which they were made, not misleading.
3. REGISTRATION PROCEDURES. In connection with any
Shelf Registration contemplated by Section 2 hereof and,
to the extent applicable, any Registered Exchange Offer
contemplated by Section 1 hereof, the following provisions
shall apply:
(a) The Company shall (i) furnish to each Initial
Purchaser, prior to the filing thereof with the Commission,
a copy of the Registration Statement and each amendment
thereof and each supplement, if any, to the prospectus
included therein and, in the event that an Initial Purchaser
(with respect to any portion of an unsold allotment from the
original offering) is participating in the Registered
Exchange Offer or the Shelf Registration Statement, the
Company shall use its best efforts to reflect in each such
document, when so filed with the Commission, such comments
as such Initial Purchaser reasonably may propose; (ii)
include the information set forth in Annex A hereto on the
cover, in Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section and
in Annex C hereto in the "Plan of Distribution" section of
the prospectus forming a part of the Exchange Offer
Registration Statement and include the information set forth
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 Items 507 or 508 of Regulation S-K under the
6
Securities Act, as applicable, in the prospectus forming a
part of the Exchange Offer Registration Statement; (iv)
include within the prospectus contained in the Exchange
Offer Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial
Purchasers, which shall contain a summary statement of the
positions taken or policies made by the staff of the
Commission with respect to the potential "underwriter"
status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of Exchange
Securities received by such broker-dealer in the Registered
Exchange Offer (a "Participating Broker-Dealer"), whether
such positions or policies have been publicly disseminated
by the staff of the Commission or such positions or
policies, in the reasonable judgment of the Initial
Purchasers based upon advice of counsel (which may be in-
house counsel), represent the prevailing views of the staff
of the Commission; and (v) in the case of a Shelf
Registration Statement, include the names of the Holders who
propose to sell Securities pursuant to the Shelf
Registration Statement as selling securityholders.
(b) The Company shall give written notice to
the Initial Purchasers, the Holders of the Securities and
any Participating Broker-Dealer from whom the Company has
received prior written notice that it will be a
Participating Broker-Dealer in the Registered Exchange Offer
(which notice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the
prospectus until the requisite changes have been made):
(i) when the Registration Statement or 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
amendments or supplements to the Registration Statement
or the prospectus included therein 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 or its
legal counsel of any notification with respect to the
suspension of the qualification of the Securities for
sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires
the Company to make changes in the Registration Statement
or the prospectus in order that the Registration Statement
or the prospectus do not contain an untrue statement of
a material fact nor 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 light of the
circumstances under which they were made) not misleading.
7
(c) The Company shall make every reasonable effort to
obtain the withdrawal at the earliest possible time, of any
order suspending the effectiveness of the Registration
Statement.
(d) The Company shall furnish to each Holder of
Securities included within the coverage of the Shelf Registration,
without charge, at least one copy of the Shelf Registration
Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the
Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference);
provided that documents incorporated by reference that are
available on Commission's web site need not be provided by
the Company.
(e) The Company shall deliver to each Exchanging Dealer
and each Initial Purchaser, and to any other Holder who so
requests, without charge, at least one copy of the Exchange
Offer Registration Statement and any post-effective
amendment thereto, including financial statements and
schedules, and, if any Initial Purchaser or any such Holder
requests, all exhibits thereto (including those incorporated
by reference); provided that documents incorporated by
reference that are available on Commission's web site need
not be provided by the Company.
(f) The Company shall, during the Shelf Registration
Period, deliver to each Holder of Securities included within
the coverage of the Shelf Registration, without charge, as
many copies of the prospectus (including each preliminary
prospectus) included in the Shelf Registration Statement and
any amendment or supplement thereto as such person may
reasonably request. The Company consents, subject to the
provisions of this Agreement, to the use of the prospectus
or any amendment or supplement thereto by each of the
selling Holders of the 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 deliver to each Initial Purchaser,
any Exchanging Dealer, any Participating Broker-Dealer and
such other persons required to deliver a prospectus
following the Registered Exchange Offer, without charge, as
many copies of the final prospectus included in the Exchange
Offer Registration Statement and any amendment or supplement
thereto as such persons may reasonably request. The Company
consents, subject to the provisions of this Agreement, to
the use of the prospectus or any amendment or supplement
thereto by any Initial Purchaser, if necessary, any
Participating Broker-Dealer and such other persons required
to deliver a prospectus following the Registered Exchange
Offer in connection with the offering and sale of the
Exchange Securities covered by the prospectus, or any
amendment or supplement thereto, included in such Exchange
Offer Registration Statement.
(h) Prior to any public offering of the Securities
pursuant to any Registration Statement the Company shall
register or qualify or cooperate with the Holders of the
Securities included therein and their respective counsel in
connection with the registration or qualification of the
Securities for offer and sale under the securities or "blue sky"
laws of such states of the United States as any Holder of the
Securities
8
reasonably requests in writing and do any and all
other acts or things necessary or advisable to enable the
offer and sale in such jurisdictions of the Securities
covered by such Registration Statement; PROVIDED, HOWEVER,
that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it is not
then so qualified or (ii) take any action which would
subject it to general service of process or to taxation in
any jurisdiction where it is not then so subject.
(i) The Company shall cooperate with the Holders
of the Securities to facilitate the timely preparation and
delivery of certificates representing the Securities to be
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 a reasonable period
of time prior to sales of the Securities pursuant to such
Registration Statement.
(j) Upon the occurrence of any event contemplated by
paragraphs (ii) through (v) of Section 3(b) above during the
period for which the Company is required to maintain an
effective Registration Statement, the Company shall promptly
prepare and file a post-effective amendment to the
Registration Statement or a supplement to the related
prospectus and any other required document so that, as
thereafter delivered to Holders of the Securities or
purchasers of Securities, the prospectus will not contain an
untrue statement of a material fact or omit to state any
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. If the Company
notifies the Initial Purchasers, the Holders of the
Securities and any known Participating Broker-Dealer in
accordance with paragraphs (ii) through (v) of Section 3(b)
above to suspend the use of the prospectus until the
requisite changes to the prospectus have been made, then the
Initial Purchasers, the Holders of the Securities and any
such Participating Broker-Dealers shall suspend use of such
prospectus, and the period of effectiveness of the Shelf
Registration Statement provided for in Section 2(b) above
and the Exchange Offer Registration Statement provided for
in Section 1 above shall each be extended by the number of
days from and including the date of the giving of such
notice to and including the date when the Initial
Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer shall have received such amended
or supplemented prospectus pursuant to this Section 3(j).
(k) Not later than the effective date of the
applicable Registration Statement, the Company will provide
a CUSIP number for the Initial Securities, the Exchange
Securities or the Private Exchange Securities, as the case
may be, and provide the applicable trustee with printed
certificates for the Initial Securities, the Exchange
Securities or the Private Exchange Securities, as the case
may be, in a form eligible for deposit with The Depository
Trust Company.
(l) The Company will comply with all rules and
regulations of the Commission to the extent and so long as
they are applicable to the Registered Exchange Offer or the
Shelf Registration and will make generally available to its
security holders (or otherwise provide in accordance with
Section 11(a) of the Securities Act) an earnings statement
satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year)
9
beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the
Registration Statement, which statement shall cover such 12-
month period.
(m) The Company shall cause the Indenture to be
qualified under the Trust Indenture Act of 1939, as amended, in
a timely manner and containing such changes, if any, as shall
be necessary for such qualification. In the event that such
qualification would require the appointment of a new trustee
under the Indenture, the Company shall appoint a new trustee
thereunder pursuant to the applicable provisions of the
Indenture.
(n) The Company may require each Holder of Securities
to be sold pursuant to the Shelf Registration Statement to
furnish to the Company such information regarding the Holder
and the distribution of the Securities as the Company may from
time to time reasonably require for inclusion in the Shelf
Registration Statement, and the Company may exclude from
such registration the Securities of any Holder that
unreasonably fails to furnish such information within a
reasonable time after receiving such request.
(o) The Company shall enter into such customary
agreements (including, if requested, an underwriting agreement
in customary form) and take all such other action, if any, as
any Holder of the Securities shall reasonably request in
order to facilitate the disposition of the Securities
pursuant to any Shelf Registration.
(p) In the case of any Shelf Registration, the Company
shall (i) make reasonably available for inspection by the
Holders of the Securities, any underwriter participating in
any disposition pursuant to the Shelf Registration Statement
and any attorney, accountant or other agent retained by the
Holders of the Securities or any such underwriter all
relevant financial and other records, pertinent corporate
documents and properties of the Company and (ii) cause the
Company's officers, employees, accountants and auditors to
supply all relevant information reasonably requested by the
Holders of the Securities or any such underwriter, attorney,
accountant or agent in connection with the Shelf
Registration Statement, in each case, as shall be reasonably
necessary to enable such persons, to conduct a reasonable
investigation within the meaning of Section 11 of the
Securities Act; PROVIDED, HOWEVER, that the foregoing
inspection and information gathering shall be coordinated on
behalf of the Initial Purchasers by you and on behalf of the
other parties, by one counsel designated by and on behalf of
such other parties as described in Section 4 hereof.
(q) In the case of any Shelf Registration, the
Company, if requested by any Holder of Securities covered
thereby, shall cause (i) its counsel to deliver an opinion
and updates thereof relating to the Securities in customary
form addressed to such Holders and the managing underwriters,
if any, thereof and dated, in the case of the initial opinion,
the effective date of such Shelf Registration Statement (it
being agreed that the matters to be covered by such opinion
shall include, without limitation, the due incorporation and
good standing of the Company and its subsidiaries; the
qualification of the Company and its subsidiaries to
transact business as foreign corporations; the due
10
authorization, execution and delivery of the relevant
agreement of the type referred to in Section 3(o) hereof;
the due authorization, execution, authentication and
issuance, and the validity and enforceability, of the
applicable Securities; the absence of material legal or
governmental proceedings involving the Company and its
subsidiaries; the absence of governmental approvals required
to be obtained in connection with the Shelf Registration
Statement, the offering and sale of the applicable
Securities, or any agreement of the type referred to in
Section 3(o) hereof; the compliance as to form of such Shelf
Registration Statement and any documents incorporated by
reference therein and of the Indenture with the requirements
of the Securities Act and the Trust Indenture Act,
respectively; and, as of the date of the opinion and as of
the effective date of the Shelf Registration Statement or
most recent post-effective amendment thereto, as the case
may be, the absence from such Shelf Registration Statement
and the prospectus included therein, as then amended or
supplemented, and from any documents incorporated by
reference therein of an untrue statement of a material fact
or the omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading (in the case of any such documents,
in the light of the circumstances existing at the time that
such documents were filed with the Commission under the
Exchange Act); (ii) its officers to execute and deliver all
customary documents and certificates and updates thereof
requested by any underwriters of the applicable Securities
and (iii) its independent public accountants and the
independent public accountants with respect to any other
entity for which financial information is provided in the
Shelf Registration Statement to provide to the selling
Holders of the applicable Securities and any underwriter
therefor a comfort letter in customary form and covering
matters of the type customarily covered in comfort letters
in connection with primary underwritten offerings, subject
to receipt of appropriate documentation as contemplated, and
only if permitted, by Statement of Auditing Standards No.
72.
(r) In the case of the Registered Exchange Offer,
if requested by any Initial Purchaser or any known
Participating Broker-Dealer, the Company shall cause (i) its
counsel to deliver to such Initial Purchaser or such
Participating Broker-Dealer a signed opinion in the form set
forth in Section 6 of the Purchase Agreement with such
changes as are customary in connection with the preparation
of a Registration Statement and (ii) its independent public
accountants and the independent public accountants with
respect to any other entity for which financial information
is provided in the Registration Statement to deliver to such
Initial Purchaser or such Participating Broker-Dealer a
comfort letter, in customary form, meeting the requirements
as to the substance thereof as set forth in Section 6 of the
Purchase Agreement, with appropriate date changes.
(s) If a Registered Exchange Offer or a Private
Exchange is to be consummated, upon delivery of the Initial
Securities by Holders to the Company (or to such other Person
as directed by the Company) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case
may be, the Company shall mark, or caused to be marked, on
the Initial Securities so exchanged that such Initial
Securities are being canceled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case
may be; in no event shall the Initial Securities be marked
as paid or otherwise satisfied.
11
(t) The Company will use its best efforts to (a) if
the Initial Securities have been rated prior to the initial
sale of such Initial Securities, confirm such ratings will
apply to the Securities covered by a Registration Statement,
or (b) if the Initial Securities were not previously rated,
cause the Securities covered by a Registration Statement to
be rated with the appropriate rating agencies, if so
requested by Holders of a majority in aggregate principal
amount of Securities covered by such Registration Statement,
or by the managing underwriters, if any.
(u) In the event that any broker-dealer registered
under the Exchange Act 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 Conduct Rules (the "Rules") of the National
Association of Securities Dealers, Inc. ("NASD")) 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, the Company will assist such broker-
dealer in complying with the requirements of such Rules,
including, without limitation, by (i) if such Rules,
including Rule 2720, shall so require, engaging a "qualified
independent underwriter" (as defined in Rule 2720) to
participate in the preparation of the Registration Statement
relating to such Securities, to exercise usual standards of
due diligence in 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 5 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 the Rules.
(v) The Company shall use its best efforts to take
all other steps necessary to effect the registration of the
Securities covered by a Registration Statement contemplated
hereby.
4. REGISTRATION EXPENSES.
(A) All expenses incident to the Company's performance of
and compliance with this Agreement will be borne by the
Company, regardless of whether a Registration Statement is
ever filed or becomes effective, including without
limitation;
(i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal
securities and state "blue sky" or securities laws;
(iii) all expenses of printing (including printing
certificates for the Securities to be issued in the
Registered Exchange Offer and the Private Exchange and
printing of Prospectuses), messenger and delivery services
and telephone;
12
(iv) all fees and disbursements of counsel for the
Company;
(v) all application and filing fees in connection
with listing the Exchange Securities on a national securities
exchange or automated quotation system pursuant to the
requirements hereof; and
(vi) all fees and disbursements of independent
certified public accountants of the Company (including the
expenses of any special audit and comfort letters required by
or incident to such performance).
The Company will bear its internal expenses (including,
without limitation, all salaries and expenses of its
officers and employees performing legal or accounting
duties), the expenses of any annual audit and the fees and
expenses of any person, including special experts, retained
by the Company.
(b) In connection with any Registration Statement required
by this Agreement, the Company will reimburse the Initial
Purchasers and the Holders of Transfer Restricted Securities
who are tendering Initial Securities in the Registered
Exchange Offer and/or selling or reselling Securities
pursuant to the "Plan of Distribution" contained in the
Exchange Offer Registration Statement or the Shelf
Registration Statement, as applicable, for the reasonable
fees and disbursements of not more than one counsel who
shall be chosen by the Representatives.
5. INDEMNIFICATION.
(A) The Company agrees to indemnify and hold harmless each
Holder of the Securities, any Participating Broker-Dealer
and each person, if any, who controls such Holder or such
Participating Broker-Dealer within the meaning of the
Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are
referred to collectively as the "Indemnified Parties") from
and against any losses, claims, damages or liabilities,
joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages,
liabilities or actions relating to purchases and sales of
the Securities) to which each Indemnified Party may become
subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement or prospectus or
in any amendment or supplement thereto or in any preliminary
prospectus relating to a Shelf Registration, 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 shall reimburse, as incurred, the Indemnified Parties
for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof;
provided, however, that (i) the Company shall not be liable
in any such case to the extent that such loss, claim, damage
or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged
omission made in a Registration Statement or prospectus or
in any amendment or supplement thereto or in any preliminary
prospectus relating to a Shelf Registration in reliance upon
and in conformity with written information pertaining to
such Holder and furnished to the Company by or on behalf of
such Holder specifically for inclusion therein and (ii) with
13
respect to any untrue statement or omission or alleged
untrue statement or omission made in any preliminary
prospectus relating to a Shelf Registration Statement, the
indemnity agreement contained in this subsection (a) shall
not inure to the benefit of any Holder or Participating
Broker-Dealer from whom the person asserting any such
losses, claims, damages or liabilities purchased the
Securities concerned, to the extent that a prospectus
relating to such Securities was required to be delivered by
such Holder or Participating Broker-Dealer under the
Securities Act in connection with such purchase and any such
loss, claim, damage or liability of such Holder or
Participating Broker-Dealer results from the fact that there
was not sent or given to such person, at or prior to the
written confirmation of the sale of such Securities to such
person, a copy of the final prospectus if the Company had
previously furnished copies thereof to such Holder or
Participating Broker-Dealer; PROVIDED FURTHER, HOWEVER, that
this indemnity agreement will be in addition to any
liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify
underwriters, their officers and directors and each person
who controls such underwriters within the meaning of the
Securities Act or the Exchange Act to the same extent as
provided above with respect to the indemnification of the
Holders of the Securities if requested by such Holders.
(b) Each Holder of the Securities, severally and not
jointly, will indemnify and hold harmless the Company and
each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act from and
against any losses, claims, damages or liabilities or any
actions in respect thereof, to which the Company or any such
controlling person may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or
prospectus or in any amendment or supplement thereto or in
any preliminary prospectus relating to a Shelf Registration,
or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make
the statements therein not misleading, but in each case only
to the extent that the untrue statement or omission or
alleged untrue statement or omission was made in reliance
upon and in conformity with written information pertaining
to such Holder and furnished to the Company by or on behalf
of such Holder specifically for inclusion therein; and,
subject to the limitation set forth immediately preceding
this clause, shall reimburse, as incurred, the Company for
any legal or other expenses reasonably incurred by the
Company or any such controlling person in connection with
investigating or defending any loss, claim, damage,
liability or action in respect thereof. This indemnity
agreement will be in addition to any liability which such
Holder may otherwise have to the Company or any of its
controlling persons.
(c) Promptly after receipt by an indemnified party
under this Section 5 of notice of the commencement of any
action or proceeding (including a governmental investigation),
such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party 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. In case any such action is brought against any
indemnified party, the indemnifying party will be
14
entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party, to assume the
defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying
party to such indemnified party of its election so to assume
the defense thereof the indemnifying party will not be
liable to such indemnified party under this Section 5 for
any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified
party in connection with the defense thereof. No
indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any
indemnified party is or could have been a party and
indemnity could have been sought hereunder by such
indemnified party unless such settlement (i) includes an
unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such
action, and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on
behalf of any indemnified party.
(d) If the indemnification provided for in this
Section 5 is unavailable or insufficient to hold harmless an
indemnified party under subsections (a) or (b) above, then
each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the
losses, claims, damages or liabilities (or actions in
respect thereof) referred to in subsection (a) or (b) above
in such proportion as is appropriate to reflect the relative
fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with
the statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect
thereof) as well as any other relevant equitable
considerations. The relative fault of the parties shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact
relates to information supplied by the Company on the one
hand or such Holder or such other indemnified party, as the
case may be, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct
or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any action or
claim which is the subject of this subsection (d). No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this
paragraph (d), each person, if any, who controls such
indemnified party within the meaning of the Securities Act
or the Exchange Act shall have the same rights to
contribution as such indemnified party and each person, if
any, who controls the Company within the meaning of the
Securities Act or the Exchange Act shall have the same
rights to contribution as the Company.
(e) The agreements contained in this Section 5
shall survive the sale of the Securities pursuant to a
Registration Statement and shall remain in full force and
effect, regardless of any termination or cancellation of
this Agreement or any investigation made by or on behalf of
any indemnified party.
15
6. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES.
(A) Additional interest (the "Additional Interest") with
respect to the Securities shall be assessed as follows if
any of the following events occur (each such event in
clauses (i) through (iv) below being herein called a
"Registration Default"):
(i) any Registration Statement required by this
Agreement is not filed with the Commission on or prior to
the applicable Filing Deadline;
(ii) any Registration Statement required by this
Agreement Is not declared effective by the Commission on
or prior to the applicable Effectiveness Deadline;
(iii) the Registered Exchange Offer has not been
consummated on or prior to the Consummation Deadline; or
(iv) any Registration Statement required by this
Agreement has been declared effective by the Commission
but (A) such Registration Statement thereafter ceases to
be effective or (B) such Registration Statement or the
related prospectus ceases to be usable in connection with
resales of Transfer Restricted Securities during the
periods specified herein because either (1) any event
occurs as a result of which the related prospectus forming
part of such Registration Statement 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 (2) it shall be necessary to amend such
Registration Statement or supplement the related prospectus,
to comply with the Securities Act or the Exchange Act or
the respective rules thereunder.
Each of the foregoing will constitute a Registration Default
whatever the reason for any such event and whether it is
voluntary or involuntary or is beyond the control of the
Company or pursuant to operation of law or as a result of
any action or inaction by the Commission .
Additional Interest shall accrue on the Transfer Restricted
Securities over and above the interest set forth in the
title of the Transfer Restricted Securities from and
including the date on which any such Registration Default
shall occur to but excluding the date on which all such
Registration Defaults have been cured, at a rate of 0.25%
per annum (the "Additional Interest Rate") for the first 90-
day period immediately following the occurrence of such
Registration Default. The Additional Interest Rate shall
increase by an additional 0.25% per annum with respect to
each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum Additional
Interest Rate of 1.0% per annum.
(b) A Registration Default referred to in Section
6(a)(iv) hereof shall be deemed not to have occurred and be
continuing in relation to a Shelf Registration Statement or
the related prospectus if (i) such Registration Default has
occurred solely as a result of (x) the filing of a post-
effective amendment to such Shelf Registration
16
Statement to incorporate annual audited financial information
with respect to the Company where such post-effective amendment
is not yet effective and needs to be declared effective to
permit Holders to use the related prospectus or (y) other
material events, with respect to the Company that would need
to be described in such Shelf Registration Statement or the
related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or
supplement such Shelf Registration Statement and related
prospectus to describe such events; PROVIDED, HOWEVER, that
in any case if such Registration Default occurs for a
continuous period in excess of 30 days, Additional Interest
shall be payable in accordance with the above paragraph from
the day such Registration Default occurs until such
Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to
Section 6(a) will be payable on the regular interest payment
dates and in the same manner as regular interest payments on
the Securities. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest
Rate by the principal amount of the Securities and further
multiplied by a fraction, the numerator of which is the
number of days such Additional Interest Rate was applicable
during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator
of which is 360.
(d) "Transfer Restricted Securities" means each Security
until (i) the date on which such Security has been exchanged
by a person other than a broker-dealer for a freely
transferable Exchange Security in the Registered Exchange
Offer, (ii) following the exchange by a broker-dealer in the
Registered Exchange Offer of an Initial Security for an
Exchange Note, the date on which such Exchange Note is sold
to a purchaser who receives from such broker-dealer on or
prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement,
(iii) the date on which such Security has been effectively
registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the
date on which such Security is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable
pursuant to Rule 144(k) under the Securities Act.
7. RULES 144 AND 144A. The Company shall use its
best efforts to file the reports required to be filed by it
under the Securities Act and the Exchange Act in a timely
manner and, if at any time the Company is not required to
file such reports, it will, upon the request of any Holder of
Securities, make publicly available other information so long
as necessary to permit sales of their securities pursuant to
Rules 144 and 144A. The Company covenants that it will
take such further action as any Holder of Securities may
reasonably request, all to the extent required from time to
time to enable such Holder to sell Securities without
registration under the Securities Act within the limitation
of the exemptions provided by Rules 144 and 144A (including
the requirements of Rule 144A(d)(4)). The Company will
provide a copy of this Agreement to prospective purchasers
of Initial Securities identified to the Company by the
Initial Purchasers upon request. Upon the request of any
Holder of Initial Securities, the Company shall deliver to
such Holder a written statement as to whether it has
complied with such requirements.
17
Notwithstanding the foregoing, nothing in this Section 7
shall be deemed to require the Company to register any of
its securities pursuant to the Exchange Act.
8. UNDERWRITTEN REGISTRATIONS. If any of the
Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager
or managers that will administer the offering ("Managing
Underwriters") will be selected by the Holders of a
majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering.
No person may participate in any underwritten
registration hereunder unless such person (i) agrees to sell
such person's Transfer Restricted Securities 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.
9. MISCELLANEOUS.
(A) REMEDIES. The Company acknowledges and agrees
that any failure by the Company to comply with its obligations
under Section 1 and 2 hereof may result in material irreparable
injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations
under Sections 1 and 2 hereof. The Company further agrees
to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(B) NO INCONSISTENT AGREEMENTS. The Company will not
on or after the date of this Agreement enter into any agreement
with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to
the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders
of the Company's securities under any agreement in effect on
the date hereof.
(C) AMENDMENTS AND WAIVERS. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof
may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of
the Securities affected by such amendment, modification,
supplement, waiver or consents. Without the consent of the
Holder of each Security, however, no modification may change
the provisions relating to the payment of Additional
Interest.
(D) NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing
by hand delivery, first-class mail, facsimile transmission,
or air courier which guarantees overnight delivery:
18
(1) if to a Holder of the Securities, at the
most current address given by such Holder to the Company.
(2) if to the Initial Purchasers;
Banc of America Securities LLC,
Bank of America Corporate Center,
100 North Tyron Street,
Charlotte, NC 29255
Attention: Investment Banking Department -
Transactions Advisory Group,
Facsimile: 704-388-9939; and
BNP Paribas Securities Corp.,
787 Seventh Avenue,
New York, NY 10019
Attention: Corporate Bond Syndicate Desk,
Facsimile: 212-841-3930,
or at such other address as such party may designate from
time to time by notice duly given in accordance with the
terms of this Section 9.
(3) if to the Company, at its address as follows:
Kansas City Power & Light Company,
1201 Walnut Street,
Kansas City, Missouri 64106-2124,
Attention: Treasurer,
Facsimile: (816) 556-2992
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged by recipient's facsimile machine operator, if
sent by facsimile transmission; and on the day delivered, if sent by
overnight air courier guaranteeing next day delivery.
(E) THIRD PARTY BENEFICIARIES. The Holders shall be third
party beneficiaries to the agreements made hereunder between
the Company, on the one hand, and the Initial Purchasers, on
the other hand, and shall have the right to enforce such
agreements directly to the extent they may deem such
enforcement necessary or advisable to protect their rights
or the rights of Holders hereunder.
(F) SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Company and its successors and assigns.
(G) COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall
constitute one and the same agreement.
19
(H) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(I) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
(J) SEVERABILITY. If any one or more of the provisions
contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(K) SECURITIES HELD BY THE COMPANY. Whenever the consent
or approval of Holders of a specified percentage of principal amount
of Securities is required hereunder, Securities held by the
Company or its affiliates (other than subsequent Holders of
Securities if such subsequent Holders are deemed to be affiliates
solely by reason of their holdings of such Securities) shall not
be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
20
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to
the Company a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement
among the several Initial Purchasers and the Company in
accordance with its terms.
Very truly yours,
KANSAS CITY POWER & LIGHT COMPANY
By: /s/ Andrea F. Bielsker
Name: Andrea F. Bielsker
Title: Vice President-Finance, Chief
Financial Officer and Treasurer
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
BANC OF AMERICA SECURITIES LLC
BNP PARIBAS SECURITIES CORP.
BANC ONE CAPITAL MARKETS, INC.
BNY CAPITAL MARKETS, INC.
SCOTIA CAPITAL (USA) INC.
By: BANC OF AMERICA SECURITIES LLC
By: /s/ Lily Chang
Name: Lily Chang
Title: Principal
By: BNP PARIBAS SECURITES CORP.
By: /s/ Christine M. Smith Howard
Name: Christine M. Smith Howard
Title: Authorized Signatory
ANNEX A
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. 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 Exchange Securities
received in exchange for Initial Securities where such
Initial Securities were acquired by such broker-dealer as a
result of market-making activities or other trading
activities. The Company has agreed that, for a period of
180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of
Distribution."
22
ANNEX B
Each broker-dealer that receives Exchange
Securities for its own account in exchange for Initial
Securities, where such Initial 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."
23
ANNEX C
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
Initial Securities where such Initial Securities were
acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a
period of 180 days 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 Exchange Securities
may be required to deliver a prospectus.(1)
The Company 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 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 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 on any such
resale of Exchange Securities and any commission 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 180 days 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 Holders of the Securities)
other than commissions or concessions of any brokers or
dealers and will indemnify the Holders of the
_______________________________
(1) In addition, the legend required by Item 502(e) of
Regulation S-K will appear on the inside front cover page of
the Exchange Offer prospectus below the Table of Contents.
24
Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
25
ANNEX D
[ ] 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: ________________________
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 Securities. If the
undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial
Securities that were acquired as a result of market-making
activities or other trading activities, it acknowledges that
it will deliver a prospectus in connection with any resale
of such Exchange 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.
26