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REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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KEMPER CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 6719 36-6169781
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
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ONE KEMPER DRIVE
LONG GROVE, ILLINOIS 60049-0001
(708) 320-4700
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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KATHLEEN A. GALLICHIO
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
KEMPER CORPORATION
ONE KEMPER DRIVE
LONG GROVE, ILLINOIS 60049-0001
(708) 320-4700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES OF COMMUNICATIONS TO:
JONATHAN A. KOFF
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603-4080
(312) 845-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
check the following box. /X/
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE(1) REGISTRATION FEE
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6.875% Notes Due 2003, Series A $200,000,000 100% $200,000,000 $68,966
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(1) Estimated solely for purposes of calculating the registration fee.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
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ITEM IN S-4 CAPTION IN PROSPECTUS
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A. INFORMATION ABOUT THE TRANSACTION
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1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Facing Page; Cross Reference Sheet; Outside
Front Cover Page of Prospectus.
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front and Outside Back Cover Pages
of Prospectus; Available Information; Table
of Contents.
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. Business Description; Certain Investment
Considerations; Ratio of Earnings to Fixed
Charges; Selected Historical Consolidated
Financial Information.
4. Terms of the Transaction................... Summary; Business Description; The Exchange
Offer; Description of the New Notes;
Certain Federal Income Tax Considerations.
5. Pro Forma Financial Information............ Not applicable.
6. Material Contracts With the Company Being
Acquired................................... Not applicable.
7. Additional Information Required For
Reoffering by Persons and Parties Deemed to
be Underwriters............................ Not applicable.
8. Interests of Named Experts and Counsel..... Not applicable.
9. Disclosure of Commission Position on
Indemnification For Securities Act
Liabilities................................ Not applicable.
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B. INFORMATION ABOUT THE REGISTRANT
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10. Information With Respect to S-3
Registrants................................ Summary; Available Information.
11. Incorporation of Certain Information by
Reference.................................. Available Information; Incorporation of
Certain Documents by Reference.
12. Information With Respect to S-2 or S-3
Registrants................................ Not applicable.
13. Incorporation of Certain Information by
Reference.................................. Not applicable.
14. Information With Respect to Registrants
Other Than S-2 or S-3 Registrants.......... Not applicable.
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C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
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15. Information With Respect to S-3
Companies.................................. Not applicable.
16. Information With Respect to S-2 or S-3
Companies.................................. Not applicable.
17. Information With Respect to Companies Other
Than S-2 or S-3 Companies.................. Not applicable.
18. Information if Proxies, Consents or
Authorizations Are to be Solicited......... Not applicable.
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited in
an Exchange Offer.......................... Not applicable.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy
nor shall there be any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED APRIL , 1994
PROSPECTUS
KEMPER CORPORATION
OFFER TO EXCHANGE ITS 6.875% NOTES DUE 2003, SERIES A,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT,
FOR ANY AND ALL OF ITS OUTSTANDING 6.875% NOTES DUE 2003.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK TIME,
ON MAY , 1994, UNLESS EXTENDED.
KEMPER CORPORATION, a Delaware corporation ("Kemper"), hereby offers, upon
the terms and subject to the conditions set forth in this Prospectus and in the
accompanying letter of transmittal (the "Letter of Transmittal") (which together
constitute the "Exchange Offer"), to exchange up to $200 million aggregate
principal amount of 6.875% Notes Due 2003, Series A (the "New Notes")of Kemper
for a like principal amount of Kemper's issued and outstanding 6.875% Notes Due
2003 (the "Existing Notes") with the holders thereof. The New Notes will be
issued under the Indenture dated as of September 15, 1993 (the "Indenture"),
between Kemper and The First National Bank of Chicago, as trustee, pursuant to
which the Existing Notes were issued, and will be general unsecured obligations
ranking pari passu with other unsecured and unsubordinated indebtedness of
Kemper. Because Kemper is a holding company, the New Notes are effectively
subordinated to indebtedness and other liabilities of Kemper's subsidiaries. The
terms of the New Notes are identical in all material respects to the terms of
the Existing Notes that are to be exchanged therefor, except that the New Notes
will not contain terms with respect to transfer restrictions or adjustments in
the interest rate. The Indenture does not contain a provision entitling the
holders of notes, at their option, to require Kemper to repurchase the notes
upon the occurrence of events which would result in a change of control of
Kemper. See "Description of the New Notes."
The Existing Notes were issued and sold on September 22, 1993 in a
transaction not registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemption provided by Section 4(2) of
the Securities Act. Accordingly, the Existing Notes may not be reoffered, resold
or otherwise pledged, hypothecated or transferred unless so registered or unless
an applicable exemption from the registration requirements of the Securities Act
is available. The New Notes are being offered hereunder pursuant to an option
available to Kemper under an exchange and registration agreement (the "Exchange
and Registration Agreement"), dated September 22, 1993, between Kemper and
Goldman, Sachs & Co. and Kemper Securities, Inc. (the "Initial Purchasers")
relating to the Existing Notes. See "The Exchange Offer -- Purpose of the
Exchange Offer." Based on no-action letters issued by the staff of the
Securities and Exchange Commission (the "Commission") to third parties, Kemper
believes that the New Notes issued pursuant to the Exchange Offer may be offered
for resale, resold and otherwise transferred by holders thereof (other than any
such holder that is an "affiliate" of Kemper within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such New
Notes are acquired in the ordinary course of any such holder's business and such
holder has no arrangement with any person to participate in the distribution
(within the meaning of the Securities Act) of such New Notes; provided, however,
that in addition to meeting certain conditions in the Exchange and Registration
Agreement, each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Existing Notes where such
Existing Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. Kemper has agreed that, for a period of
90 days after the date of this Prospectus, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
Holders of Existing Notes whose Existing Notes are not tendered and accepted
in the Exchange Offer will continue to hold such Existing Notes and will be
entitled to all the rights and preferences and will be subject to the
limitations applicable thereto under the indenture governing the Existing Notes
and the New Notes. Following consummation of the Exchange Offer, the holders of
Existing Notes will continue to be subject to the existing restrictions upon
transfer thereof and Kemper will have no obligation to file a registration
statement covering resales of Existing Notes not exchanged for New Notes in the
Exchange Offer for any reason, except in limited circumstances with respect to
Existing Notes held by certain broker-dealers, and, in any event after the
consummation of the Exchange Offer, the holders of Existing Notes not exchanged
for New Notes will no longer be entitled to the Step-Up in Interest Rate (as
defined in the Exchange and Registration Agreement) applicable to such Existing
Notes in the absence of registration. As of March 15, 1994, the Existing Notes
have been bearing interest at 7.375%. See "Exchange and Registration Agreement."
The Exchange Offer will expire at 5:00 P.M., New York time, on May , 1994,
unless extended in the sole discretion of Kemper (the "Expiration Date"). The
date of acceptance for exchange of the Existing Notes (the "Exchange Date") will
be the first business day following the Expiration Date. Existing Notes tendered
pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date; otherwise such tenders will be irrevocable.
Interest on each New Note will accrue from the last interest payment date on
which interest was paid on the Existing Note surrendered in exchange therefor.
No assurance can be given that an active market for the New Notes will
develop. Kemper does not intend to list the New Notes on any securities
exchange.
The New Notes will be available initially only in book-entry form. Kemper
expects that the New Notes issued pursuant to this Exchange Offer will be issued
in the form of global notes, which will be deposited with, or on behalf of, The
Depository Trust Company ("DTC") and registered in its name or in the name of
Cede & Co., its nominee. Beneficial interests in the global notes representing
the New Notes will be shown on, and transfers thereof will be effected through,
records maintained by DTC and its participants. See "Description of New
Notes -- Book-Entry System."
SEE "CERTAIN INVESTMENT CONSIDERATIONS" FOR A DESCRIPTION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS APRIL , 1994.
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FOR NORTH CAROLINA INVESTORS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR ADEQUACY OF
THIS DOCUMENT.
AVAILABLE INFORMATION
Kemper has filed with the Commission a registration statement on Form S-4
relating to the New Notes offered hereby (together with all amendments and
exhibits, the "Registration Statement") under the Securities Act. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed or incorporated by reference as an exhibit to the Registration
Statement, reference is made to such exhibit, and each such statement shall be
deemed qualified in its entirety by such reference.
Kemper is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Copies of such reports, proxy statements, other information and the
Registration Statement (and the exhibits and schedules thereto) can be obtained,
upon payment of prescribed fees, from the Public Reference Section of the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549. In addition, such reports, proxy statements, other information and
the Registration Statement (and the exhibits and schedules thereto) can be
copied and inspected at the Commission's public reference facilities referred to
above and at the Commission's Regional Offices at 7 World Trade Center (13th
floor), New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison, Suite 1400, Chicago, Illinois 60661. Kemper's common stock is listed on
the New York Stock Exchange, Inc. (the "NYSE"), and such reports, proxy
statements and other information concerning the Company should be available for
inspection at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
As used herein, unless the context otherwise requires, the term "Company"
refers to Kemper Corporation and its subsidiaries, and the term "Kemper" refers
to Kemper Corporation.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Kemper hereby incorporates by reference into this Prospectus the following
documents or information filed with the Commission:
(a) Kemper's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 filed on March 30, 1994 (the "Form 10-K"), including
those portions of Kemper's 1993 Annual Report to Stockholders which are
incorporated by reference in the Form 10-K;
(b) Kemper's 1994 Notice of Annual Meeting and Proxy Statement filed
on April 11, 1994, excluding the Report on Executive Compensation of the
Committee on Compensation and Organization and the performance graph
therein;
(c) Kemper's Current Report on Form 8-K filed January 18, 1994; and
(d) all documents filed by Kemper pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act on or after the date of this Prospectus and
prior to the termination of the offering made hereby.
Any statement contained herein or in any document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for the purpose of this Prospectus to the extent that a subsequent statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Kemper will provide without charge to each person to whom this Prospectus
is delivered, upon the written or oral request of any such person, a copy of any
or all of the information incorporated herein by reference other than exhibits
to such information (unless such exhibits are specifically incorporated by
reference into such information). Kemper's principal executive office is located
at One Kemper Drive in Long Grove, Illinois, 60049. Its telephone number is
(708) 320-4700. Requests for such copies should be directed to the Corporate
Secretary of Kemper at its principal executive office. To ensure timely delivery
of the documents, any request should be made by May , 1994 (five days prior to
the Expiration Date).
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SUMMARY
The following summary is qualified in its entirety by the detailed
information and the consolidated financial statements, including the notes
thereto, included or incorporated by reference in this Prospectus. See "Certain
Investment Considerations" for a discussion of certain factors to be considered
in connection with the Exchange Offer.
COMPANY OVERVIEW
A financial services organization, the Company categorizes its continuing
operations into four business segments: asset management, life insurance,
securities brokerage and real estate. With assets under management of $69.3
billion at December 31, 1993, Kemper Financial Services, Inc. is one of the
largest asset managers in the United States. INVEST Financial Corporation, an
approximate 95% owned subsidiary of Kemper Financial Services, Inc., distributes
mutual fund and annuity products through financial institutions. Kemper's life
insurance subsidiaries, Federal Kemper Life Assurance Company and Kemper
Investors Life Insurance Company, offer a variety of term and interest-sensitive
insurance products as well as fixed-rate and variable annuity contracts. The
Company's securities brokerage business, represented primarily by Kemper
Securities, Inc., principally consists of retail brokerage services. Kemper's
real estate subsidiaries include companies which act as general or limited
partners in and lenders to various joint ventures. The Company's discontinued
operations primarily consist of primary property-casualty insurance, reinsurance
and risk management subsidiaries divested in 1993.
[GRAPH]
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THE EXCHANGE OFFER
Securities Offered......... $200 million aggregate principal amount of 6.875%
Notes Due 2003, Series A (the "New Notes"). The
New Notes will be issued under the Indenture
dated as of September 15, 1993 (the "Indenture"),
between Kemper and The First National Bank of
Chicago, as trustee, pursuant to which Kemper's
outstanding 6.875% Notes Due 2003 were issued
(the "Existing Notes").
The terms of the New Notes are identical in all
material respects to the terms of the Existing
Notes that are to be exchanged therefor, except
that the New Notes will not contain terms with
respect to transfer restrictions or adjustments
in the interest rate. See "Description of the New
Notes."
As of March 15, 1994, the Existing Notes began
bearing interest at 7.375% pursuant to certain
Step-Up in Interest Rate provisions applicable in
the absence of registration. After consummation
of the Exchange Offer, the Step-Up in Interest
Rate will be rescinded and the Existing Notes
will bear interest at the original rate of
6.875%. See "Exchange and Registration
Agreement."
The Exchange Offer......... The New Notes are being offered in exchange for a
like principal amount of the Existing Notes.
Existing Notes are required to be exchanged in
minimum denominations of $100,000 and integral
multiples of $1,000 in excess thereof. Kemper has
elected to make the Exchange Offer pursuant to an
option under an exchange and registration
agreement (the "Exchange and Registration
Agreement"), dated September 22, 1993, between
Kemper and Goldman, Sachs & Co. and Kemper
Securities, Inc. (the "Initial Purchasers")
relating to the Existing Notes. For a description
of the procedures for tendering, see "The
Exchange Offer -- Tender Procedure."
Each broker-dealer that receives New Notes for its
own account in exchange for Existing Notes, where
such Existing Notes were acquired by such
broker-dealer as a result of market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See
"Plan of Distribution."
Expiration Date;
Withdrawal................. The Exchange Offer will expire at 5:00 P.M., New
York time, on May , 1994, or such later date
and time to which it may be extended in the sole
discretion of Kemper (the "Expiration Date"). The
date of acceptance for exchange of the Existing
Notes (the "Exchange Date") will be the first
business day following the Expiration Date.
Existing Notes tendered pursuant to the Exchange
Offer may be withdrawn at any time prior to the
Expiration Date. Any Existing Notes withdrawn or
not accepted for exchange for any reason (for
example, due to a failure to submit properly
completed documents) will be returned without
expense to the tendering holders thereof as
promptly as practicable after the expiration or
termination of the Exchange Offer. See "The
Exchange Offer -- Withdrawal Rights."
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Conditions to the Exchange
Offer.................... A minimum aggregate principal amount of $100,000
and integral multiples of $1,000 in excess
thereof of Existing Notes are required to be
tendered for exchange. For certain other
conditions, see "The Exchange Offer -- Conditions
to the Exchange Offer."
Certain Federal Income Tax
Considerations........... The exchange of the Existing Notes for the New
Notes should not be a taxable event to the
holder, and the holder should not recognize any
taxable gain or loss or any interest income as a
result of such exchange. See "Certain Federal
Income Tax Considerations."
Untendered or Not Accepted
Existing Notes........... After the consummation of the Exchange Offer,
Kemper will have no obligation to file a
registration statement covering resales of
Existing Notes not exchanged for New Notes in the
Exchange Offer for any reason, except in limited
circumstances with respect to Existing Notes held
by certain broker-dealers, and, in any event
after the consummation of the Exchange Offer, the
holders of untendered Existing Notes will no
longer be entitled to the Step-Up in Interest
Rate (as such terms are defined in the Exchange
and Registration Agreement) applicable to such
Existing Notes in the absence of registration.
Holders of Existing Notes who do not tender their
Existing Notes in the Exchange Offer or whose
Existing Notes are not accepted for exchange will
continue to hold such Existing Notes and will be
entitled to all the rights and preferences and
will be subject to the limitations applicable
thereto under the Indenture, except for any such
rights or limitations which, by their terms,
terminate or cease to be effective as a result of
this Exchange Offer. All untendered and tendered
but unaccepted Existing Notes will continue to be
subject to the restrictions on transfer provided
therein.
Exchange Agent............. First Chicago Trust Company of New York.
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TERMS OF THE NEW NOTES
The terms of the New Notes are identical in all material respects to the
terms of the Existing Notes except that the New Notes will not contain terms
with respect to transfer restrictions or adjustments in the interest rate.
Maturity Date.............. September 15, 2003.
Interest Payment Dates..... Interest on the New Notes, is payable semiannually
on March 15 and September 15 of each year.
Interest on each New Note will accrue from the
last interest payment date on which interest was
paid on the Existing Note surrendered in exchange
therefor. For a discussion of federal income tax
treatment, see "Certain Federal Income Tax
Considerations."
Redemption................. The New Notes are not subject to redemption prior
to maturity.
Sinking Fund............... None.
Ranking.................... The New Notes are general, unsecured obligations of
Kemper and will rank pari passu with other
unsecured and unsubordinated indebtedness of
Kemper. The New Notes are effectively
subordinated to indebtedness and other
liabilities of Kemper's subsidiaries.
Certain Covenants.......... The New Notes shall have the benefit of the
covenants contained in the Indenture, including
covenants relating to (i) the Company's ability
to incur, issue, assume or guarantee debt secured
by the assets of any Restricted Subsidiaries (as
defined in the Indenture) which are regulated
insurance companies, (ii) sales by the Company of
capital stock of Restricted Subsidiaries and
(iii) the consolidation, merger, conveyance,
transfer or lease of properties and assets of
Kemper.
Events of Default.......... Any one of the following events will constitute an
Event of Default under the Indenture with respect
to the New Notes: (i) default for 30 days in any
payment of interest of any New Note; (ii) default
in any payment of principal on any New Note when
due; (iii) default for 60 days after written
notice as provided in the Indenture in the
performance of any other covenant of Kemper in
the Indenture (other than a covenant or warranty
included in the Indenture solely for the benefit
of any series of securities other than the New
Notes); or (iv) certain events of bankruptcy,
insolvency or reorganization.
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The following event shall also constitute an Event
of Default with respect to the New Notes: an
event of default, as defined in any indentures or
instruments under which Kemper shall have
outstanding at least $25,000,000 aggregate
principal amount of indebtedness for money
borrowed, shall happen and be continuing and
either (i) such default results from the failure
to pay principal upon final maturity of such
indebtedness after expiration of any applicable
grace period or (ii) such indebtedness shall, as
a result thereof, have been accelerated so that
the same shall be or become due and payable prior
to the date on which the same would otherwise
have become due and payable, and such
acceleration shall not be rescinded or annulled
within 10 days after notice thereof shall have
been given, by registered or certified mail, to
Kemper by the Trustee, or to Kemper and the
Trustee by the holders of at least 25% in
aggregate principal amount of the New Notes at
the time outstanding; provided, however, that if
such event of default under such indentures or
instruments shall be remedied or cured by Kemper
in accordance with the terms thereof or waived by
the holders of such indebtedness, then even if
the New Notes shall have been accelerated (but
not paid) as provided under the Indenture, such
Event of Default shall be deemed likewise to have
been thereupon remedied, cured or waived and such
acceleration rescinded without further action
upon the part of either the Trustee or any
holders of the New Notes.
Use of Proceeds............ There will be no cash proceeds to Kemper from the
exchange pursuant to the Exchange Offer. Kemper
received net proceeds of approximately $195.5
million from the issuance and sale of the
Existing Notes which it used to repay short-term
indebtedness and to purchase certain real
estate-related investments from its life
insurance subsidiaries.
Certain Investment
Considerations........... Holders of the Existing Notes should consider
carefully the information set forth under
"Certain Investment Considerations" as well as
the other information set forth in this
Prospectus before tendering Existing Notes in
exchange for the New Notes.
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CERTAIN INVESTMENT CONSIDERATIONS
Each holder of the Existing Notes should consider carefully the specific
investment considerations set forth below as well as the other information
contained in this Prospectus before tendering Existing Notes in exchange for New
Notes offered hereby. The investment considerations set forth below are
generally applicable to the Existing Notes as well as the New Notes.
GECC'S UNSOLICITED PROPOSAL
On January 25, 1994, Gary Wendt, President and Chief Executive Officer of
General Electric Capital Corporation ("GECC"), a subsidiary of General Electric
Company ("GE"), telephoned David Mathis, Chairman of the Board and Chief
Executive Officer of Kemper, and asked to meet the next day merely to get
acquainted. Mr. Mathis agreed to the meeting. On January 26, 1994, Mr. Wendt
arrived with Silas Cathcart, a GE director, and Paul Street, Senior Vice
President of GECC. Contrary to his stated reason for proposing the meeting, Mr.
Wendt informed Mr. Mathis and Stephen Timbers, President and Chief Operating
Officer of Kemper, who also attended the meeting, that GECC was interested in
acquiring Kemper on a friendly basis for $45 per share, but would need to review
the Company's real estate portfolio before doing so. Following the meeting, Mr.
Wendt and other GECC representatives communicated again with Mr. Mathis and with
representatives of Kemper's financial advisor, Goldman, Sachs & Co. ("Goldman
Sachs"), in an effort to pursue an acquisition of Kemper.
At a special meeting of the Board of Directors held February 3, 1994, Mr.
Mathis and Kemper's legal and financial advisors reviewed with the Board GECC's
expression of interest and related matters, including whether or not a sale of
Kemper at this time was likely to be in the best interests of stockholders. The
next day Mr. Wendt again expressed GECC's interest in acquiring Kemper and
sought to arrange a meeting between John Welch, Jr., Chairman of the Board and
Chief Executive Officer of GE, and Mr. Mathis. Mr. Mathis said that the Company
was not for sale at this time and declined. Mr. Wendt stated that GECC would
continue to pursue the matter.
In a letter dated March 2, 1994, Mr. Welch reaffirmed GECC's intention to
acquire Kemper and made a firm proposal at a price of $55 per share, with the
possibility of a higher price based on limited due diligence of the Company,
particularly its real estate portfolio. In response, Mr. Mathis reiterated to
Mr. Welch Kemper's position that a sale at this time was not in the best
interests of its stockholders, but that the proposal would be reviewed more
formally at the Board's next meeting. At that meeting, held March 17, 1994, the
Board reviewed the Company's financial performance and future prospects, Goldman
Sachs advised the Board, based on its review of such financial and other
information, that in its opinion the GECC offer of $55 per share was inadequate
and, after extensive discussions among the directors and with Kemper's
representatives, the Board unanimously rejected GECC's proposal and determined
that the Company is not for sale at this time.
On March 24, 1994, GECC made a filing that indicated it would seek to elect
to the Board four former General Electric employees who are committed to a sale
or merger of Kemper for a price of at least $55 per share. On March 28, 1994,
Kemper made a filing that included the nomination of four incumbent directors,
including Mr. Mathis, and a response to GECC's unsolicited proposal. On or about
April 4, 1994, GECC distributed a definitive proxy statement with respect to its
proposal. On April 9, 1994, Kemper commenced mailing its definitive proxy
statement to stockholders.
The Indenture does not contain a provision entitling the holders of notes,
at their option, to require Kemper to repurchase the notes upon the occurrence
of events which would result in a change of control of the Company. See
"DESCRIPTION OF THE NOTES -- Restrictive Covenants -- Consolidation and Merger."
REAL ESTATE EXPOSURE
The $1.48 billion real estate portfolio held by the Company's continuing
operations constitutes 17.7 percent of its cash and invested assets at December
31, 1993, down from 25.9 percent at
8
<PAGE> 11
December 31, 1992. The portfolio consists of joint venture and third-party
mortgage loans and other real estate-related investments. The majority of the
Company's real estate loans are on properties or projects where the Company, its
former parent, Lumbermens Mutual Casualty Company ("Lumbermens"), or their
respective affiliates have taken ownership positions in joint ventures with a
small number of partners.
The Company has continued to fund both existing properties and legal
commitments. Total future legal commitments were $636.8 million at December 31,
1993. This amount represented a net decrease of $134.2 million since year-end
1992, largely due to fundings in 1993. As of December 31, 1993, the Company
expects to fund approximately $294.8 million of these legal commitments along
with providing working capital to existing projects. The commitments, along with
estimated costs to complete, are considered in the Company's evaluation of
reserves.
The Company monitors its real estate portfolio and identifies changes in
the relevant real estate marketplaces, the economy and each borrower's
circumstances. The Company's portfolio is distributed by property type and
geographic location. Real estate markets have been depressed in recent periods
in those areas where most of the Company's real estate portfolio is located.
Approximately half of the Company's real estate holdings are in California and
Illinois. About 10 percent are in Spain. In California, real estate market
conditions have continued to be worse than in many other areas of the country.
Undeveloped land, including the Spanish projects, represented approximately
20 percent of the Company's real estate portfolio at December 31, 1993. To
maximize the value of certain land and other projects, additional development is
proceeding or is planned. Such development of existing projects may continue to
require substantial funding, either from the Company or third parties. In the
present real estate markets, third-party financing can require credit enhancing
arrangements from the Company. The values of development projects are dependent
on a number of factors, including obtaining necessary permits and market demand
for the permitted use of the property. There can be no assurance that such
permits will be obtained as planned or at all, nor that such expenditures will
occur as scheduled, nor that the Company's plans with respect to such projects
may not change substantially.
The Company's real estate experience could continue to be adversely
affected by overbuilding and weak economic conditions in certain real estate
markets and by tight lending practices by banks and other lenders. Stagnant or
worsening economic conditions in the areas in which the Company has made loans,
or additional adverse information becoming known to the Company through its
regular reviews or otherwise, could result in higher levels of problem loans or
potential problem loans, reductions in the value of real estate collateral and
adjustments to the real estate reserve. Potential accounting impacts from the
Company's real estate portfolio could be material to the invested asset
portfolio and future results of operations.
Current conditions in the real estate markets are adversely affecting the
financial resources of certain of the Company's joint venture partners. Each
partner, however, remains active in the control of its respective joint
ventures. In evaluating a partner's ability to meet its financial commitments,
the Company considers the amount of all applicable debt and the value of all
properties within that portion of the Company's portfolio consisting of loans to
and investments in joint ventures with such partner. In 1993, the Company
decided to recognize 100 percent of the operating results of certain joint
ventures. The additional operating results are being recorded primarily by the
Company's real estate subsidiaries, which are the equity holders in such
ventures.
Based on the level of troubled real estate-related investments the Company
experienced in 1993 and 1992, the Company anticipates additional foreclosures
and deeds in lieu of foreclosures in 1994. Any consolidation accounting
resulting from foreclosures would add the related ventures' assets and senior
third-party liabilities to the Company's balance sheet and eliminate the
Company's loans to such ventures.
9
<PAGE> 12
Due to the adverse real estate environment affecting the Company's
portfolio in recent years, the Company has devoted significant attention to its
real estate portfolio, enhancing monitoring of the portfolio as well as
formulating specific action plans addressing nonperforming and potential problem
credits. Since 1991, the Company has intensified its attention to evaluating the
asset quality, cash flow and prospects associated with each of its projects.
The Company is analyzing various potential transactions designed to reduce
the level of real estate-related investments on the Company's balance sheet.
Specific types of transactions under consideration and previously utilized
include loan sales, property sales, mortgage refinancings and real estate
investment trusts.
CHANGES IN RATINGS
On March 18, 1993, Moody's Investors Service ("Moody's") placed its "Baa1"
senior debt rating of Kemper and financial strength ratings of the Company's two
life insurance subsidiaries under review for possible downgrade. On August 20,
1993, Moody's completed its review by downgrading Kemper's senior debt rating to
"Baa2" and Kemper's preferred stock rating to "Baa3" from "Baa2" while
confirming the "Baa1" financial strength ratings of the two life insurance
subsidiaries. On March 19, 1993, Standard & Poor's Corporation ("Standard &
Poor's") lowered the senior debt rating of Kemper to "BBB+" from "A-" and
removed Kemper from "Credit Watch" where it was placed in February of 1993. On
May 13, 1993, Standard & Poor's announced it had assigned a "BBB" rating to the
Company's Series E Preferred Stock issued in April 1993. On August 26, 1993,
Standard & Poor's lowered Kemper's senior debt rating to "BBB" and Kemper's
preferred stock rating to "BB+." On March 22, 1993, Duff & Phelps Inc. ("Duff &
Phelps") lowered its senior debt rating of Kemper from "A" to "A-", while the
claims-paying ability ratings of the Company's two life insurance subsidiaries,
Federal Kemper Life Assurance Company (rated "AA-") and Kemper Investors Life
Insurance Company (rated "A+"), remained unaffected by the Duff & Phelps action.
The Duff & Phelps ratings were all reaffirmed on July 20, 1993. On June 8, 1993,
A. M. Best Co. lowered the claims-paying ability ratings of both of the
Company's life insurance subsidiaries to "A-" from "A". On March 15, 1994,
Moody's, Standard & Poors and Duff & Phelps, citing the March 14, 1994
announcement by GECC of its unsolicited proposal to acquire Kemper and Kemper's
rejection of the proposal, placed their ratings of Kemper under "review with
direction uncertain", on "CreditWatch with developing implications" and on
"Rating Watch -- Uncertain", respectively.
Ratings have become an increasingly important factor in establishing the
competitive position of insurance companies. The ratings organizations continue
to review the financial performance and condition of insurers and their
investment portfolios, including those of the Company's life insurance
subsidiaries. Any reductions in Kemper's senior debt ratings could adversely
impact the Company's financial flexibility by limiting the Company's access to
capital or increasing its cost of borrowings. Any reductions in the life
insurance subsidiaries' claims-paying ability or financial strength ratings
could result in their products being less attractive to consumers.
Ratings reductions for Kemper or its subsidiaries and other financial
events can also trigger obligations to fund certain real estate-related
commitments to take out other lenders. In such events, those lenders can be
expected to renegotiate their loan terms, although they are not contractually
obligated to do so. Such circumstances could accelerate or increase the
Company's purchases of real estate-related assets from its regulated life
insurance subsidiaries to support further their respective statutory capital
positions.
No credit rating is a recommendation to buy, sell or hold securities. Each
rating is subject to revision or withdrawal at any time by the assigning rating
organization and should be evaluated independently of any other rating.
STRATEGIC TRANSACTIONS
As a holding company, Kemper regularly reviews the strategic fit of all its
businesses and may consider the acquisition or disposition of assets. Its
insurance subsidiaries may also consider effecting
10
<PAGE> 13
reinsurance transactions, and the Company may consider entering into joint
ventures or other transactions.
REGULATORY CONSIDERATIONS AND RISK-BASED CAPITAL
Regulatory authorities establish minimum liquidity and capital standards
for the Company's asset management, life insurance and securities brokerage
subsidiaries.
The Company's life insurance subsidiaries are generally subject to
regulation and supervision by the insurance departments of the jurisdictions in
which the subsidiaries are licensed to do business. These departments enforce
laws and regulations designed to assure that insurance companies maintain
adequate capital and surplus, manage investments according to prescribed
character, standards and limitations and comply with a variety of operational
standards. The departments also make periodic examinations of individual
companies and review annual and other reports on the financial condition of each
company operating within their respective jurisdictions. Regulations, which
often vary from state to state, cover most aspects of the insurance business,
including forms of policies and accounting and financial reporting procedures.
Under asset adequacy and risk-based capital rules adopted in 1993 in
Illinois (the domiciliary state of the Company's life insurance subsidiaries),
state regulators may mandate remedial action for inadequately reserved or
inadequately capitalized companies. The new asset adequacy rules are designed to
assure that reserves and assets are adequate to cover liabilities under a
variety of economic scenarios. The focus of the new capital rules is a
risk-based formula that applies prescribed factors to various risk elements in
an insurer's business and investments to develop a minimum capital requirement
designed to be proportional to the amount of risk assumed by the insurer. The
Company's life insurance subsidiaries have reserves and capital levels exceeding
any which would mandate action under the new rules.
HOLDING COMPANY LIQUIDITY
The major ongoing sources of the Company's liquidity are asset management
fees, securities brokerage commissions, collateralized bank borrowings by the
securities brokerage operations, collections of life insurance premium revenue,
deposits for annuities and interest-sensitive life contracts, investment income,
other operating revenue and cash provided from maturing or sold investments.
Kemper receives interest on loans, dividends and payments for federal income
taxes from its subsidiaries. Kemper, from time to time, borrows funds and issues
securities for cash. During 1993, Kemper received $380.3 million in cash from
the sales of discontinued property-casualty insurance operations.
The Company continues to use its resources for dividends to stockholders,
corporate interest and other holding company expenses, consolidated federal
income tax payments, common stock repurchases (treasury stock), acquisitions of
subsidiaries and additional investments in, or asset purchases from,
subsidiaries. In 1993, the Company provided $517.1 million in cash to the life
insurance subsidiaries by purchasing $447.1 million of certain real
estate-related investments from such subsidiaries and contributing $70.0 million
in capital to the life insurance segment. During the first quarter of 1994, the
Company purchased an additional $80.8 million of real estate-related investments
from its two life insurance subsidiaries and contributed $30.0 million to the
capital of one of the life subsidiaries by utilizing a dividend received from
the other. Through 1996, the Company expects to continue to make substantial
purchases of real estate-related investments from its life insurance
subsidiaries.
Since Kemper is a holding company, its rights and the rights of its
creditors, including the holders of the New Notes, to participate in the assets
of any subsidiary upon the latter's liquidation or recapitalization will be
subject to the prior claims of the subsidiary's creditors (including, in the
case of an insurance subsidiary, its policyholders, and in the case of an
investment advisor or broker-dealer subsidiary, its customers), except to the
extent that Kemper itself may be a creditor with recognized claims against the
subsidiary. In addition, there are certain regulatory limitations on the payment
of dividends and on loans and other transfers of funds to Kemper by certain of
its subsidiaries.
11
<PAGE> 14
Dividend distributions to stockholders from an insurance company are
restricted by state insurance laws. In Illinois, where Kemper's life insurance
subsidiaries are domiciled, if such dividend, together with other distributions
during the 12 preceding months, would exceed the greater of (a) ten percent of
the company's surplus as regards policyholders as of the preceding December 31,
or (b) the net income of the company for the preceding calendar year, then such
proposed dividend must be reported to the director of insurance at least 30 days
prior to the proposed payment date and may be paid only if not disapproved. In
Illinois, insurance laws also permit payment of dividends only out of earned
surplus, exclusive of all or most unrealized capital gains.
Dividend distributions from securities brokerage firms are restricted by
federal and state securities laws, the rules or regulations thereunder and/or
the rules and regulations of an exchange of which a firm is a member. The
Company's registered broker-dealer and investment adviser subsidiaries cannot
lawfully pay dividends that would either reduce their respective net capital
amounts below the minimum amounts required or cause certain net capital
decreases without prior regulatory approval.
The aggregate maximum dividend distribution that can be made to Kemper by
its asset management, life insurance and securities brokerage subsidiaries in
1994 without prior approval is $150.0 million.
LEGAL MATTERS
(a) In the fourth quarter of 1992, the Commission issued a formal order of
private investigation authorizing the Commission staff to investigate the
Company's real estate-related accounting and disclosure practices since January
1, 1989. The Company continues to cooperate with the Commission staff as the
investigation proceeds. The staff has not advised the Company whether it intends
to recommend that the Commission authorize an enforcement action against the
Company, and the Company does not know whether any such action will ultimately
result.
(b) In August 1993, a class action styled Tabankin, et al. v. Kemper
Short-Term Global Income Fund, et al. was filed in federal court in the Northern
District of Illinois on behalf of various investors in the Kemper Short-Term
Global Income Fund during the period from October 29, 1990 to December 31, 1992,
and in the Short-Term Global Income Portfolio of Kemper Investment Portfolios
(collectively with the Global Income Fund, the "Funds") during the period from
February 1, 1991 to December 31, 1992. The complaint alleges violations of
various federal securities laws and common law fraud based on alleged material
misstatements or omissions concerning the investment strategies of the Funds
arising out of declines in the share price (net asset value) of the Funds when
the value of the U.S. dollar rose against a number of European currencies in the
aftermath of the rejection of the Maastricht Treaty, the collapse of the
Exchange Rate Mechanism, and the resulting devaluation of European currencies in
the fall of 1992. Plaintiffs' claim for damages is unspecified.
In January 1994, the defendants' motion to dismiss was granted and judgment
entered with a memorandum opinion finding, among other things, that the Funds'
prospectuses adequately disclosed both the risks associated with the Funds'
investment strategies and the risks to net asset value which could arise from
currency devaluations. Plaintiffs moved for leave to file an amended complaint.
In March 1994, the district court granted plaintiffs' motion. In April 1994, the
defendants refiled their motion to dismiss. The Company believes it has
meritorious defenses and intends to vigorously defend this class action.
(c) In December 1993, a federal district court in Portland, Oregon entered
judgment on a May 1993 jury verdict against Boettcher & Company, a predecessor
firm of Kemper Securities, Inc. ("KSI"), in a class action lawsuit filed in 1988
by persons who purchased securities of Melridge, Inc. between November 1983 and
1987. If upheld on appeal, the judgment could result in liability of up to
approximately $57 million, depending on various factors including the amount of
written claims actually filed by class members, exclusive of any interest and
attorneys' fees that may be awarded on
12
<PAGE> 15
certain claims. In its verdict, the jury found Boettcher 30 percent at fault for
violations of federal and state securities laws in connection with certain
public offerings of Melridge common stock and convertible debentures in the
mid-1980s, as well as secondary market transactions in both securities. Certain
former Melridge executives were found 30 percent at fault for the violations,
and other defendants who had settled with the plaintiffs were found 40 percent
at fault. KSI has appealed the judgment and intends to vigorously pursue all
available legal remedies.
LACK OF PUBLIC MARKET
The New Notes are being offered to the holders of the Existing Notes. The
Existing Notes were offered and sold in September 1993 to the Initial Purchasers
in transactions not registered under the Securities Act in reliance upon the
exemption provided in Section 4(2) of the Securities Act. The Initial Purchasers
subsequently resold the Existing Notes to Qualified Institutional Buyers (as
defined in Rule 144A under the Securities Act), to a limited number of
institutional accredited investors within the meaning of Rule 501 under the
Securities Act and in offshore transactions in reliance on Regulation S under
the Securities Act. The Existing Notes are eligible and have been designated for
trading in the Private Offerings Resales and Trading through Automated Linkages
("PORTAL") System of the National Association of Securities Dealers, Inc.
The New Notes are a new issue of notes and there is currently no
established market for the New Notes, and there can be no assurance as to the
liquidity of any markets that may develop for the New Notes, the ability of
holders of the New Notes to sell their New Notes or the price at which such
holders would be able to sell their New Notes. If such markets were to exist,
the New Notes could trade at prices that may be higher or lower than the initial
market values thereof depending on many factors, including among other things,
the Company's results of operations, prevailing interest rates and the markets
for similar securities. See "Plan of Distribution" for certain information
pertaining to the market for the New Notes. Kemper does not intend to list the
New Notes on any securities exchange or to seek the admission of the New Notes
for quotation or trading in the National Association of Securities Dealers'
Automated Quotation System.
The liquidity of, and trading for, the New Notes also may be adversely
affected by general declines in the market for similar securities. Such a
decline may adversely affect such liquidity and trading markets independent of
the financial performance of, and prospects for, the Company.
EXCHANGE OFFER PROCEDURES; CONSEQUENCES OF THE EXCHANGE OFFER
TO NON-TENDERING HOLDERS OF THE EXISTING NOTES
Issuance of the New Notes in exchange for Existing Notes pursuant to the
Exchange Offer will be made only after a timely receipt by Kemper of such
Existing Notes, a properly completed and duly executed Letter of Transmittal and
all other required documents. Therefore, holders of Existing Notes desiring to
tender such Existing Notes in exchange for New Notes should allow sufficient
time to ensure timely delivery. Kemper is under no duty to give notification of
defects or irregularities with respect to the tenders of Existing Notes for
exchange. Existing Notes that are not tendered or are tendered but not accepted
(for example, due to a failure to submit properly completed documents) will,
following the consummation of the Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof and Kemper will have no further
obligation to provide for the registration under the Securities Act of such
Existing Notes. In addition, any holder of Existing Notes who tenders in the
Exchange Offer for the purpose of participating in a distribution of the New
Notes may be deemed to have received restricted securities and, if so, will be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction unless such resale
is exempt from such requirements. After consummation of the Exchange Offer, the
Step-Up in Interest Rate of 7.375% on any remaining Existing Notes will be
rescinded and the original interest rate of 6.875% will be reinstated. See "The
Exchange Offer."
Kemper may in the future seek to acquire untendered Existing Notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. Kemper has no present plan to acquire any Existing Notes which are
not tendered in the Exchange Offer.
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<PAGE> 16
BUSINESS DESCRIPTION
Kemper is a financial services holding company that gathers, manages and
protects the assets of individual, corporate and institutional clients. The
Company's continuing operations include asset management, life insurance,
securities brokerage and real estate subsidiaries. The principal executive
offices of the Company are located at One Kemper Drive, Long Grove, Illinois
60049-0001. Its telephone number is (708) 320-4700.
ASSET MANAGEMENT
Kemper Financial Services, Inc. ("KFS"), with $69.3 billion in assets under
management at December 31, 1993, is one of the nation's largest asset managers.
KFS's product offerings include the 12th largest money market portfolio in the
country and more than 30 fixed-income and equity mutual funds. KFS also offers
investment management and advisory services for individual and institutional
investors. KFS distributes its products and services primarily through regional
securities brokerage firms and wirehouses, banks and other financial
institutions, independent brokers and agents, financial planners and corporate
pension and profit-sharing plans.
INVEST Financial Corporation ("INVEST"), a KFS subsidiary, is also an
important distributor of Company products. INVEST, a registered broker-dealer,
is one of the nation's largest providers of financial products and services to
clients of financial institutions.
LIFE INSURANCE
Federal Kemper Life Assurance Company ("FKLA") is a leader in the term life
insurance market. FKLA's products are designed for individuals and small
business owners and include features such as premium guarantee levels and
premium reduction options. FKLA distributes its products through independent
general agents and various other channels.
Kemper Investors Life Insurance Company ("KILICO") specializes in variable
and fixed annuities. KILICO has offered products in the variable annuity
marketplace for more than ten years. KILICO markets its products primarily
through financial institutions, securities brokerage firms, financial planners
and other specialty distributors of financial products. In 1992, the management,
operations and employees of KILICO were integrated with those of FKLA to
increase efficiencies and coordinate strategic directions of both companies.
SECURITIES BROKERAGE
Kemper Securities, Inc. ("KSI") is a full-service securities brokerage
firm, providing a wide array of investment vehicles and advisory services to
individual, business and institutional investors. Although KSI's market focus is
primarily retail, the firm also provides investment banking services to
corporate and municipal clients. The firm is also one of the larger distributors
of KFS mutual funds and KILICO annuity products.
REAL ESTATE
This segment includes the Company's real estate subsidiaries. These
subsidiaries include companies which act as general or limited partners in and
lenders to various joint ventures.
OTHER OPERATIONS AND CORPORATE
This category includes the holding company income and expenses of Kemper
and Kemper Financial Companies, Inc.
DISCONTINUED OPERATIONS
The Company divested its primary property-casualty insurance, reinsurance
and risk management subsidiaries in the second half of 1993.
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<PAGE> 17
USE OF PROCEEDS
There will be no cash proceeds to Kemper from the exchange pursuant to the
Exchange Offer. Kemper received net proceeds of approximately $195.5 million
from the issuance and sale of the Existing Notes which it used to repay
short-term indebtedness and to purchase certain real estate-related investments
from its life insurance subsidiaries. Such short-term indebtedness was earlier
incurred by Kemper primarily to also purchase certain real estate-related
investments from its life insurance subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
(CONTINUING OPERATIONS)
The following table sets forth the ratio of earnings to fixed charges for
the continuing operations of the Company for the periods indicated. Earnings
represent consolidated earnings (losses) before income taxes and the cumulative
effect of accounting changes and fixed charges (excluding interest capitalized).
Fixed charges consist of interest and the portion of rental expense deemed
representative of the interest factor.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.............................. (a) (b) 1.9 (c) 2.3
Ratio, excluding interest expense on collateralized borrowings
of securities brokerage operations............................ (a) (b) 2.6 (c) 3.8
- ---------------
</TABLE>
(a) 1993 ratios are not shown since fixed charges exceeded available earnings by
approximately $111 million.
(b) 1992 ratios are not shown since fixed charges exceeded available earnings by
approximately $274 million.
(c) 1990 ratios are not shown since fixed charges exceeded available earnings by
approximately $69 million.
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<PAGE> 18
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT SHARE DATA AND ASSETS UNDER MANAGEMENT)
The following table sets forth selected consolidated financial and other
data of the Company. The selected statement of operations and balance sheet
data, insofar as it relates to each of the five years in the five-year period
ended December 31, 1993, have been derived from the Company's consolidated
financial statements, which for each such year have been audited by KPMG Peat
Marwick, independent certified public accountants. This information should be
read in conjunction with Management's Discussion and Analysis and the
Consolidated Financial Statements of the Company, including the notes thereto,
which are incorporated herein by reference to the Form 10-K. This information
has been restated to reflect the classification of certain subsidiaries as
discontinued operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1993 1992 1991 1990 1989
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
REVENUE
Insurance premium income..................................... $ 158 $ 136 $ 124 $ 112 $ 107
Net investment income........................................ 427 522 654 664 604
Asset management income...................................... 498 481 438 427 458
Securities brokerage income.................................. 640 639 632 597 637
Realized investment loss..................................... (256) (360) (108) (24) (4)
Other income................................................. 82 86 76 53 (11)
------ ------ ------ ------ ------
Total revenue....................................... 1,549 1,504 1,816 1,829 1,791
------ ------ ------ ------ ------
BENEFITS AND EXPENSES
Insurance claim costs and policyholder benefits.............. 514 598 640 604 527
Amortized policy acquisition costs........................... 60 67 48 59 58
Other operating costs and expenses........................... 1,084 1,114 1,016 1,224 1,015
------ ------ ------ ------ ------
Total expenses...................................... 1,658 1,779 1,704 1,887 1,600
------ ------ ------ ------ ------
Earnings (loss) from continuing operations
before income tax (benefit)................................ (109) (275) 112 (58) 191
Income tax (benefit)......................................... (20) (75) 36 13 67
------ ------ ------ ------ ------
Income (loss) from continuing operations................... (89) (200) 76 (71) 124
Income from discontinued operations.......................... 25 24 129 83 183
Gain on sale of discontinued operations to related party,
net of tax................................................. 205 -- -- -- --
Gain on other sales of discontinued operations, net of tax... 92 -- -- -- --
------ ------ ------ ------ ------
Income (loss) before cumulative effect of changes in
accounting principles.................................... 233 (176) 205 12 307
Cumulative effective of changes in accounting principles,
net of tax................................................. 2 (27) -- -- --
------ ------ ------ ------ ------
Net income (loss)................................... $ 235 $ (203) $ 205 $ 12 $ 307
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Average number of common and equivalent shares outstanding
(in thousands)............................................. 42,830 48,840 48,094 48,431 51,281
------ ------ ------ ------ ------
------ ------ ------ ------ ------
NET INCOME (LOSS) PER SHARE
Primary
Continuing operations........................................ $(2.80) $(4.39) $ 1.58 $(1.44) $ 2.39
Discontinued operations...................................... 7.86 .23 2.67 1.69 3.57
------ ------ ------ ------ ------
Net income (loss)................................... $ 5.06 $(4.16) $ 4.25 $ .25 $ 5.96
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Fully diluted
Continuing operations........................................ $(2.36) $(4.39) $ 1.58 $(1.44) $ 2.39
Discontinued operations...................................... 7.23 .23 2.67 1.69 3.57
------ ------ ------ ------ ------
Net income (loss)................................... $ 4.87 $(4.16) $ 4.25 $ .25 $ 5.96
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------
1993 1992 1991 1990 1989
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
Total assets........................................... $14,038 $13,176 $13,105 $12,164 $11,296
Notes payable.......................................... 349 396 242 288 488
Long-term debt......................................... 394 183 218 116 96
Convertible debentures of subsidiary................... 46 79 98 119 112
Preferred stock........................................ 361 101 1 1 2
Stockholders' equity................................... $ 1,619 $ 1,766 $ 1,839 $ 1,626 $ 1,724
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Investment portfolio -- continuing operations
Cash and short-term investments........................ $ 967 $ 541 $ 1,333 $ 315 $ 408
Fixed maturities....................................... 4,607
Investment-grade..................................... 5,106 4,116 3,019 3,013 (a)
Below investment-grade............................... 227 407 630 1,656 (a)
Equity securities...................................... 99 106 77 47 22
Mortgage loans
Joint venture........................................ 1,053 1,264 1,459 1,223 773
Third-party.......................................... 154 275 450 468 335
Other real estate-related investments.................. 272 413 403 428 (b)
Other invested assets.................................. 447 400 390 368 408
------- ------- ------- ------- -------
Total cash and invested assets................ $ 8,325 $ 7,522 $ 7,761 $ 7,518 $ 6,553
------- ------- ------- ------- -------
------- ------- ------- ------- -------
ASSETS UNDER MANAGEMENT (IN BILLIONS)
Mutual funds
Money market......................................... $ 12.3 $ 15.1 $ 17.6 $ 24.9 $ 21.5
Fixed-income......................................... 25.7 24.6 21.5 17.5 18.2
Equity............................................... 9.4 8.4 6.5 3.6 3.1
Investment advisory.................................... 4.7 4.3 4.5 3.1 2.6
Kemper Corporation affiliates.......................... 9.8 10.1 9.7 8.3 7.8
Lumbermens Mutual Casualty Company, its affiliates and
other................................................ 7.4 6.8 6.1 6.0 5.8
------- ------- ------- ------- -------
Total assets under management................. $ 69.3 $ 69.3 $ 65.9 $ 63.4 $ 59.0
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
- ---------------
(a) For 1989, the Company did not classify fixed maturities as
"investment-grade" or "below investment-grade."
(b) For 1989, the Company included other real estate-related investments in
other invested assets and fixed maturities.
17
<PAGE> 20
CAPITALIZATION
(IN MILLIONS)
The following table sets forth the consolidated short-term debt and
capitalization of Kemper and its subsidiaries at December 31, 1993.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-----------------
<S> <C>
Short-term debt:
Collateralized bank loans of securities brokerage operations............. $ 325.1
Other short-term debt.................................................... 24.1
---------
Total short-term debt............................................ $ 349.2
---------
Long-term debt:
6.875% Notes Due 2003.................................................... $ 200.0
8.80% Notes Due 1998..................................................... 110.8
Medium-term notes........................................................ 65.5
Other long-term debt..................................................... 17.7
Convertible debentures of subsidiary..................................... 45.6
---------
Total long-term debt............................................. $ 439.6
---------
Total short-term and long-term debt.............................. $ 788.8
---------
---------
Redeemable securities of subsidiary........................................ $ .2
---------
---------
Stockholders' equity:
Preferred stock.......................................................... $ 360.6
Common stock............................................................. 323.1
Additional paid-in capital............................................... 313.5
Unrealized loss on foreign currency transactions......................... (56.9)
Unrealized appreciation on investments................................... 155.0
Retained earnings........................................................ 1,549.6
Treasury shares, at cost................................................. (1,025.9)
---------
Total stockholders' equity....................................... $ 1,619.0
---------
Total capitalization (excludes total short-term debt)...................... $ 2,058.8
---------
---------
</TABLE>
18
<PAGE> 21
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Existing Notes were originally issued and sold to the Initial
Purchasers on September 22, 1993. The offer and sale of the Existing Notes to
the Initial Purchasers was not required to be registered under the Securities
Act in reliance upon the exemption provided by Section 4(2) of the Securities
Act. The Initial Purchasers subsequently resold the Existing Notes to Qualified
Institutional Buyers (as defined in Rule 144A under the Securities Act), to a
limited number of institutional accredited investors within the meaning of Rule
501 under the Securities Act and in offshore transactions in reliance on
Regulation S under the Securities Act. Prior to and as a condition to the
initial sale of the Existing Notes, Kemper entered into an exchange and
registration agreement (the "Exchange and Registration Agreement") dated
September 22, 1993, between Kemper and the Initial Purchasers pursuant to which
Kemper agreed with the Initial Purchasers, for the benefit of the holders of the
Existing Notes, to increase the initial interest rate on the Existing Notes by
0.50% per annum from 6.875% per annum (the "Initial Interest Rate") to 7.375%
per annum (the "Step-Up in Interest Rate") unless Kemper caused on or prior to
March 15, 1994 either (i) an exchange offer to be consummated, pursuant to which
new notes of Kemper covered by a registration statement and containing terms
identical in all material respects to the terms of the Existing Notes (except
that the new notes would not contain terms with respect to transfer restrictions
and adjustments in the interest rate) would be offered in exchange for Existing
Notes tendered at the option of the holders thereof, or (ii) a registration
statement covering resales of the Existing Notes to be filed and declared
effective under the Securities Act. The Exchange Offer contemplated by this
Prospectus is designed to satisfy the condition set forth in (i) of the
preceding sentence. The Step-Up in Interest Rate began accruing on March 15,
1994 and will be payable on September 15, 1994 and on each March 15 and
September 15 thereafter, except if rescinded as provided in the following
sentence. The Exchange and Registration Agreement provides that if after Kemper
becomes obligated to pay the Step-Up in Interest Rate, either the Exchange Offer
is consummated or a registration statement covering resales of the Existing
Notes is declared effective in accordance with the Exchange and Registration
Agreement, then, upon the happening of either of such events, the Step-Up in
Interest Rate on the Existing Notes will be permanently rescinded and the
Initial Interest Rate shall be reinstated as of the date of either of such
events.
The purpose of the Exchange Offer is to rescind the Step-Up in Interest
Rate on the Existing Notes and reinstate the Initial Interest Rate pursuant to
Kemper's option under the Exchange and Registration Agreement. Except as
provided under "Plan of Distribution" with respect to certain broker-dealers,
this Prospectus may not be used by any holder of the Existing Notes or any
holder of the New Notes to satisfy the registration and prospectus delivery
requirements under the Securities Act, if any, that may apply in connection with
any resale of such Existing Notes or New Notes. See "Terms of the Exchange"
below.
TERMS OF THE EXCHANGE
Kemper hereby offers to exchange, subject to the conditions set forth
herein and in the Letter of Transmittal accompanying this Prospectus, $1,000 in
principal amount of New Notes for each $1,000 in principal amount of the
Existing Notes. Existing Notes are required to be exchanged in minimum
denominations of $100,000 and integral multiples of $1,000 in excess thereof.
The terms of the New Notes are identical in all material respects to the terms
of the Existing Notes for which they may be exchanged pursuant to this Exchange
Offer, except that the New Notes will generally be freely transferable by
holders thereof, and will not be subject to adjustments in the interest rate.
The New Notes will evidence the same debt as the Existing Notes and will be
entitled to all of the benefits and restrictions/limitations applicable thereto
under the Indenture. See "Description of the New Notes."
Kemper has not requested, and does not intend to request, an interpretation
by the staff of the Commission with respect to whether the New Notes issued
pursuant to the Exchange Offer in
19
<PAGE> 22
exchange for the Existing Notes may be offered for sale, resold or otherwise
transferred by any holder without compliance with the registration and
prospectus delivery provisions of the Securities Act. Based on an interpretation
by the staff of the Commission set forth in a series of no-action letters issued
to third parties, Kemper believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Existing Notes may be offered for sale, resold
and otherwise transferred by any holder of such New Notes (other than any such
holder which is an "affiliate" of Kemper within the meaning of Rule 405 under
the Securities Act or certain broker-dealers as described below) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holder's business and such holder has no arrangement or understanding
with any person to participate in the distribution (within the meaning of the
Securities Act) of such New Notes. Any holder who tenders in the Exchange Offer
for the purpose of participating in a distribution of the New Notes cannot rely
on such interpretation by the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction unless an exemption exists. In order to
participate in the Exchange Offer, each broker-dealer that receives New Notes
for its own account in exchange for Existing Notes, where such Existing Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Existing Notes where such Existing Notes 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 90 days after the date
of this Prospectus, it will make this Prospectus available to any broker-dealer
for use in connection with any such resale. See "Plan of Distribution."
Interest on the New Notes shall accrue from the last interest payment date
on which interest was paid on the Existing Notes surrendered in exchange
therefor.
Tendering holders of the Existing Notes shall not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Existing Notes
pursuant to the Exchange Offer.
EXPIRATION DATE; EXTENSIONS; TERMINATIONS; AMENDMENTS
The Exchange Offer shall expire on the Expiration Date. The term
"Expiration Date" means 5:00 p.m., New York time, on May , 1994, unless Kemper
in its sole discretion extends the period during which the Exchange Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date on which the Exchange Offer, as so extended by Kemper, shall expire. Kemper
reserves the right to extend the Exchange Offer at any time and from time to
time by giving oral or written notice to First Chicago Trust Company of New York
(the "Exchange Agent") and by timely public announcement communicated, unless
otherwise required by applicable law or regulation, by making a release to the
Dow Jones News Service. During any extension of the Exchange Offer, all Existing
Notes previously tendered pursuant to the Exchange Offer will remain subject to
the Exchange Offer.
The Exchange Date will be the first business day following the Expiration
Date. Kemper expressly reserves the right to (i) terminate the Exchange Offer
and not accept for exchange any Existing Notes if either of the events set forth
below under "Conditions to the Exchange Offer" shall have occurred and shall not
have been waived by Kemper and (ii) amend the terms of the Exchange Offer in any
manner which, in its good faith judgment is advantageous to the holders of the
Existing Notes, whether before or after any tender of the Existing Notes. Unless
Kemper terminates the Exchange Offer prior to 5:00 p.m., New York time, on the
Expiration Date, Kemper will exchange the New Notes for the Existing Notes on
the Exchange Date.
20
<PAGE> 23
TENDER PROCEDURE
The tender to Kemper of Existing Notes by a holder thereof pursuant to one
of the procedures set forth below will constitute an agreement between such
holder and Kemper in accordance with the terms and subject to the conditions set
forth herein and in the Letter of Transmittal.
A holder of Existing Notes may tender the same by (i) properly completing
and signing the Letter of Transmittal or a facsimile thereof (all references in
this Prospectus to the Letter of Transmittal shall be deemed to include a
facsimile thereof) and delivering the same, together with the certificate or
certificates representing the Existing Notes being tendered and any required
signature guarantees, to the Exchange Agent at its address set forth on the back
cover of this Prospectus on or prior to the Expiration Date (or complying with
the procedure for book-entry transfer described below) or (ii) complying with
the guaranteed delivery procedures described below.
If tendered Existing Notes are registered in the name of the signer of the
Letter of Transmittal and the New Notes to be issued in exchange therefor are to
be issued (and any untendered Existing Notes are to be reissued) in the name of
the registered holder (which term, for the purposes described herein, shall
include any participant in The Depository Trust Company (also referred to as a
"book-entry transfer facility") whose name appears on a security listing as the
owner of Existing Notes), the signature of such signer need not be guaranteed.
In any other case, the tendered Existing Notes must be endorsed or accompanied
by written instruments of transfer in form satisfactory to Kemper and duly
executed by the registered holder and the signature on the endorsement or
instrument of transfer must be guaranteed by a commercial bank or trust company
located or having an office, branch, agency or correspondent in the United
States, or by a member firm of a registered national securities exchange or of
the National Association of Securities Dealers, Inc. (any of the foregoing
hereinafter referred to as an "Eligible Institution"). If the New Notes and/or
Existing Notes not exchanged are to be delivered to an address other than that
of the registered holder appearing on the note register for the Existing Notes,
the signature in the Letter of Transmittal, including that of any participant in
The Depository Trust Company, must be guaranteed by an Eligible Institution.
The method of delivery of Existing Notes and all other documents is at the
election and risk of the holder. If sent by mail, it is recommended that
registered mail, return receipt requested, be used, proper insurance obtained,
and the mailing to be made sufficiently in advance of the Expiration Date to
permit delivery to the Exchange Agent on or before the Expiration Date.
The Exchange Agent will make a request promptly after the date of this
Prospectus to establish accounts with respect to the Existing Notes at the
book-entry transfer facility for the purpose of facilitating the Exchange Offer,
and subject to the establishment thereof, any financial institution that is a
participant in the book-entry transfer facility's system may make book-entry
delivery of Existing Notes by causing such book-entry transfer facility to
transfer such Existing Notes into the Exchange Agent's account with respect to
the Existing Notes in accordance with the book-entry transfer facility's
procedures for such transfer. Although delivery of Existing Notes may be
effected through book-entry transfer into the Exchange Agent's accounts at the
book-entry transfer facility, an appropriate Letter of Transmittal with any
required signature guarantee and all other required documents must in each case
be transmitted to and received or confirmed by the Exchange Agent at its address
set forth on the back cover page of this Prospectus on or prior to the
Expiration Date, or, if the guaranteed delivery procedures described below are
complied with, within the time period provided under such procedures.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Existing Notes to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if the Exchange Agent has received at
its office listed on the back cover hereof on or prior to the Expiration Date a
letter, telegram or facsimile transmission (receipt confirmed by telephone and
an original delivered by guaranteed overnight courier) from an Eligible
Institution setting forth the name and address of the tendering holder, the
names in which the Existing Notes are registered and, if possible, the
certificate
21
<PAGE> 24
numbers of the Existing Notes to be tendered, and stating that the tender is
being made thereby and guaranteeing that within five New York Stock Exchange
trading days after the date of execution of such letter, telegram or facsimile
transmission by the Eligible Institution, the Existing Notes, in proper form for
transfer (or a confirmation of book-entry transfer of such Existing Notes into
the Exchange Agent's account at the book-entry transfer facility), will be
delivered by such Eligible Institution together with a properly completed and
duly executed Letter of Transmittal (and any other required documents). Unless
Existing Notes being tendered by the above-described method are deposited with
the Exchange Agent within the time period set forth above (accompanied or
preceded by a properly completed Letter of Transmittal and any other required
documents), Kemper may, at its option, reject the tender. Copies of a "Notice of
Guaranteed Delivery" which may be used by Eligible Institutions for the purposes
described in this paragraph are available from the Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Existing Notes (or a confirmation of book-entry transfer of
such Existing Notes into the Exchange Agent's account at the book-entry transfer
facility) is received by the Exchange Agent, or (ii) a Notice of Guaranteed
Delivery or letter, telegram or facsimile transmission to similar effect (as
provided above) from an Eligible Institution is received by the Exchange Agent.
Issuances of New Notes in exchange for Existing Notes tendered pursuant to a
Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to
similar effect (as provided above) by an Eligible Institution will be made only
against deposit of the Letter of Transmittal (and any other required documents)
and the tendered Existing Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Existing Notes will be
determined by Kemper in its sole discretion, whose determination will be final
and binding. Kemper reserves the absolute right to reject any or all tenders not
in proper form or the acceptance for exchange of which may, in the opinion of
Kemper's counsel, be unlawful. Kemper also reserves the absolute right to waive
any of the conditions of the Exchange Offer or any defect or irregularity in the
tender of any Existing Notes. None of Kemper, the Exchange Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Existing Notes for exchange (the "Transferor")
exchanges, assigns and transfers the Existing Notes to Kemper and irrevocably
constitutes and appoints the Exchange Agent as the Transferor's agent and
attorney-in-fact to cause the Existing Notes to be assigned, transferred and
exchanged. The Transferor represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Existing Notes and to
acquire New Notes issuable upon the exchange of such tendered Existing Notes,
and that, when the same are accepted for exchange, Kemper will acquire good and
unencumbered title to the tendered Existing Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim. The
Transferor also warrants that it will, upon request, execute and deliver any
additional documents deemed by the Exchange Agent or Kemper to be necessary or
desirable to complete the exchange, assignment and transfer of tendered Existing
Notes or transfer ownership of such Existing Notes on the account books
maintained by a book-entry transfer facility. The Transferor further agrees that
acceptance of any tendered Existing Notes by Kemper and the issuance of New
Notes in exchange therefor shall constitute performance in full by Kemper of its
obligations under the Exchange and Registration Agreement and that Kemper shall
have no further obligations or liabilities thereunder except as provided in said
agreement. All authority conferred by the Transferor will survive the death or
incapacity of the Transferor and every obligation of the Transferor shall be
binding upon the heirs, legal representatives, successors, assigns, executors
and administrators of such Transferor.
22
<PAGE> 25
The Transferor certifies that it is not an "affiliate" of Kemper within the
meaning of Rule 405 under the Securities Act and that it is acquiring the New
Notes offered hereby in the ordinary course of such Transferor's business and
that such Transferor has no arrangement with any person to participate in the
distribution of such New Notes. Each transferor which is a broker-dealer
receiving New Notes for its own account must represent that it acquired the
Existing Notes for its own account as a result of market-making activities or
other trading activities and it has not entered into any arrangement or
understanding with Kemper or an affiliate of Kemper to distribute the New Notes
received by it in the Exchange Offer. In addition, such broker-dealer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. By so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Existing Notes where such
Existing Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. Kemper will, for a period of 90 days
after the date of this Prospectus, make this Prospectus available to any
broker-dealer for use in connection with any such resale.
WITHDRAWAL RIGHTS
Tenders of Existing Notes pursuant to the Exchange Offer are irrevocable,
except that Existing Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date.
To be effective, a written, telegraphic, telex or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent at its
address set forth on the back cover of this Prospectus, and with respect to a
facsimile transmission, must be confirmed by telephone and an original delivered
by guaranteed overnight delivery. Any such notice of withdrawal must specify the
person named in the Letter of Transmittal as having tendered Existing Notes to
be withdrawn, the certificate numbers of Existing Notes to be withdrawn, the
principal amount of Existing Notes to be withdrawn, a statement that such holder
is withdrawing his election to have such Existing Notes exchanged, and the name
of the registered holder of such Existing Notes, and must be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
(including any required signature guarantees) or be accompanied by evidence
satisfactory to Kemper that the person withdrawing the tender has succeeded to
the beneficial ownership of the Existing Notes being withdrawn. The Exchange
Agent will return the properly withdrawn Existing Notes promptly following
receipt of notice of withdrawal. If Existing Notes have been tendered pursuant
to the procedure for book-entry transfer, any notice of withdrawal must specify
the name and number of the account at the book-entry transfer facility to be
credited with the withdrawn Existing Notes or otherwise comply with the book-
entry transfer facility procedure. All questions as to the validity of notices
of withdrawals, including time of receipt, will be determined by Kemper in its
sole discretion, and such determination will be final and binding on all
parties.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Existing Notes validly tendered and not withdrawn and
issuance of the New Notes will be made on the Exchange Date. For the purposes of
the Exchange Offer, Kemper shall be deemed to have accepted for exchange validly
tendered Existing Notes when, as and if Kemper has given written notice thereof
to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders of Existing
Notes for the purposes of receiving New Notes from Kemper and causing the
Existing Notes to be assigned, transferred and exchanged. Upon the terms and
subject to the conditions of the Exchange Offer, delivery of New Notes to be
issued in exchange for accepted Existing Notes will be made by the Exchange
Agent promptly after acceptance by Kemper of the tendered Existing Notes.
Tendered Existing Notes not
23
<PAGE> 26
accepted for exchange by Kemper (for example, due to either a failure to submit
properly completed documents or the occurrence of one of the events described in
"-- Conditions to the Exchange Offer" below) will be returned without expense to
the tendering holders promptly following the Expiration Date or, if Kemper
terminates the Exchange Offer prior to the Expiration Date, promptly after the
Exchange Offer is so terminated.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, Kemper will not be required to issue New Notes in respect
of any properly tendered Existing Notes not previously accepted and may
terminate the Exchange Offer (by oral or written notice to the Exchange Agent
and by timely public announcement communicated, unless otherwise required by
applicable law or regulation, by issuing a press release to the Dow Jones News
Service), or its option, modify or otherwise amend the Exchange Offer, if any of
the following events occur:
(a) any statute, rule or regulation shall have been enacted, or any
action shall have been taken by any court or governmental authority
which, in the sole judgment of Kemper, would prohibit, restrict or
otherwise render illegal, consummation of the Exchange Offer;
(b) there shall have occurred a change in the current
interpretation by the staff of the Commission that the New Notes issued
pursuant to the Exchange Offer in exchange for Existing Notes may be
offered for resale, resold and otherwise transferred by the holders
thereof (other than any such holder that is an "affiliate" of the
Corporation within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that such New Notes are
acquired in the ordinary course of such holders' business and such
holders have no arrangements with any person to participate in the
distribution of such New Notes;
(c) there shall have occurred a change in the current
interpretation by the staff of the Commission that the New Notes issued
pursuant to the Exchange Offer in exchange for Existing Notes may be
offered for resale, resold and otherwise transferred by holders who are
broker-dealers so long as the representations set forth elsewhere herein
are made by such broker-dealers; and
(d) if, at any time prior to the consummation of the Exchange
Offer, Kemper reasonably determines, in good faith, that the Commission
is unlikely to permit the consummation of the Exchange Offer.
Kemper expressly reserves the right to terminate the Exchange Offer and not
to accept for exchange any Existing Notes upon the occurrence of any of the
foregoing conditions (which represents all of the material conditions to the
acceptance by Kemper of properly tendered Existing Notes). In addition, Kemper
may amend the Exchange Offer at any time prior to the Expiration Date if any of
the conditions set forth above occurs.
The conditions specified above are for the sole benefit of Kemper and may
be waived by Kemper, in whole or in part, in its sole discretion. Any
determination made by Kemper concerning an event, development or circumstance
described or referred to above will be final and binding on all parties.
EXCHANGE AGENT
First Chicago Trust Company of New York has been appointed as the Exchange
Agent for the Exchange Offer. Letters of Transmittal must be addressed to the
Exchange Agent at its address set forth on the back cover page of this
Prospectus. The First National Bank of Chicago acts as Trustee under the
Indenture.
24
<PAGE> 27
Delivery to an address other than as set forth herein, or transmissions of
instructions via a facsimile or telex number other than the ones set forth
herein, will not constitute a valid delivery.
SOLICITATION OF TENDERS; EXPENSES
Kemper has not retained any dealer-manager or similar agent in connection
with the Exchange Offer and will not make any payments to brokers, dealers or
others for soliciting acceptances of the Exchange Offer. Kemper will, however,
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse it for reasonable out-of-pocket expenses in connection therewith.
Kemper will also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding
copies of this Prospectus and related documents to the beneficial owners of the
Existing Notes and in handling or forwarding tenders for their customers.
RELIANCE; COMPLIANCE
No person has been authorized to give any information or to make any
representation in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by Kemper. Neither the delivery of
this Prospectus nor any exchange made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of Kemper
since the respective dates as of which information is given herein. The Exchange
Offer is not being made to (nor will tenders be accepted from or on behalf of)
holders of Existing Notes in any jurisdiction in which the making of the
Exchange Offer or the acceptance thereof would not be in compliance with the
laws of such jurisdiction. However, Kemper may, at its discretion, take such
action as it may deem necessary to make the Exchange Offer in any such
jurisdiction and extend the Exchange Offer to holders of Existing Notes in such
jurisdiction. In any jurisdiction where the securities laws or the blue sky laws
require the Exchange Offer to be made by a licensed broker or dealer, the
Exchange Offer is being made on behalf of Kemper by one or more registered
brokers or dealers which are licensed under the laws of such jurisdiction.
OTHER
Participation in the Exchange Offer is voluntary, and holders should
carefully consider whether to accept. Holders of the Existing Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Existing Notes pursuant to the terms of, this Exchange Offer,
Kemper will have elected and completed an option contained in the Exchange and
Registration Agreement to rescind the Step-Up in Interest Rate. Holders of the
Existing Notes who either do not tender or tender but Kemper does not accept
their Existing Notes in the Exchange Offer will continue to hold such Existing
Notes and will be entitled to all the rights, and limitations applicable
thereto, under the Indenture, except for any such rights under the Exchange and
Registration Agreement which by their terms terminate or cease to have further
effectiveness as a result of the consummation of this Exchange Offer. All
untendered and tendered but unaccepted Existing Notes will continue to be
subject to the restrictions on transfer set forth in the Indenture.
Kemper may in the future seek to acquire untendered Existing Notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. Kemper has no present plan to acquire any Existing Notes which are
not tendered in the Exchange Offer.
25
<PAGE> 28
DESCRIPTION OF THE NEW NOTES
GENERAL
The New Notes will be issued under an Indenture dated as of September 15,
1993 (the "Indenture"), between Kemper and The First National Bank of Chicago,
as trustee (the "Trustee), a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and is available for
inspection at the Corporate Trust Office of the Trustee in Chicago, Illinois and
as described under "Available Information." The First National Bank of Chicago
will initially act as Paying Agent for the New Notes. The Indenture permits the
issuance of securities in addition to the New Notes, and all securities issuable
under the Indenture are referred to herein as the "Securities." The Indenture
will not limit the aggregate amount of Securities which may be issued
thereunder, and Securities may be issued thereunder from time to time in
separate series up to the aggregate amount from time to time authorized by
Kemper for each series. The Securities will be unsecured obligations of Kemper
and will rank on a parity with all other unsecured and unsubordinated
indebtedness of Kemper. Because Kemper is a holding company, the New Notes are
effectively subordinated to indebtedness and other liabilities of Kemper's
subsidiaries. The Indenture does not contain a provision entitling the holders
of notes, at their option, to require Kemper to repurchase the notes upon the
occurrence of events which would result in a change of control of Kemper.
The New Notes will constitute one series of Securities issued under the
Indenture. The statements under this caption are brief summaries of certain
provisions of the Indenture, do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all of the provisions of
the Indenture and the New Notes, including the definitions therein of certain
terms. Wherever particular sections of the Indenture or terms that are defined
in the Indenture are referred to, it is intended that such sections or defined
terms shall be incorporated herein by reference.
The New Notes will mature on September 15, 2003, and will be limited to an
aggregate principal amount of $200,000,000. The New Notes will accrue interest
from the last interest payment date on which interest was paid on the Existing
Notes surrendered in exchange therefor. The interest on the New Notes will be
payable semi-annually in arrears on March 15 and September 15 of each year,
commencing September 15, 1994, and at Maturity, at the rate of 6.875% per annum
until the principal thereof is paid or made available for payment. Interest will
be computed and paid on the basis of a 360-day year of twelve 30-day months.
Interest will be payable generally to the Person in whose name such New Note (or
any predecessor New Note) is registered at the close of business on the
preceding March 1 or September 1, as the case may be.
The New Notes are not redeemable prior to maturity and will not be subject
to the operation of any sinking fund.
The New Notes will be issued only in fully registered form without coupons,
in denominations of $100,000 and any amount in excess thereof which is an
integral multiple of $1,000. The New Notes will be denominated in U.S. dollars,
and payments of principal and interest will be made in U.S. dollars.
Principal and interest payable at Maturity on the New Notes will be made in
immediately available funds at the office or agency of the Paying Agent in
Chicago, Illinois and New York, New York, provided that the New Note is
presented to the Paying Agent at such office or agency in time for the Paying
Agent to make such payments in such funds in accordance with its normal
procedures. Interest (other than interest payable at Maturity) will be payable
at the above-mentioned office or agency of the Paying Agent, except that the
payment of interest may be made at the option of Kemper by check mailed to the
address of the Person entitled thereto as it appears in the Security Register.
The New Notes may be presented for registration of transfer or exchange at the
above-mentioned office or agency of the Paying Agent.
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RESTRICTIVE COVENANTS
Restrictions on Secured Indebtedness
The Indenture provides that Kemper will not, directly or indirectly, and
will not permit any Subsidiary (as defined below) to, directly or indirectly,
incur, issue, assume or guarantee any indebtedness for money borrowed, whether
or not evidenced by negotiable instruments or securities, or any notes, bonds,
debentures or similar evidences of indebtedness for money borrowed ("Debt"),
secured by a mortgage, pledge or a lien ("Mortgage") on any assets or property
of Kemper or any Restricted Subsidiary (as defined below) which is a regulated
insurance company ("Restricted Insurance Subsidiary") or any shares of capital
stock or Debt of any Restricted Insurance Subsidiary, without effectively
providing that the New Notes and all other securities outstanding ("Securities
Outstanding") under the Indenture shall be secured equally and ratably with (or
prior to) such secured Debt. This restriction will not apply, and there will be
excluded from secured Debt in any computation under such restriction, Debt
secured by (i) Mortgages existing on the date of the Indenture, (ii) Mortgages
in favor of Kemper or a Restricted Subsidiary, (iii) Mortgages in favor of any
governmental body to secure progress, advance or other payments pursuant to any
contract or provisions of any statute, (iv) Mortgages on real property or any
fixture or improvement thereon, whether or not existing at the time of
acquisition, provided that the principal amount of the Debt so secured does not
exceed the fair value of such property, (v) Mortgages securing obligations
issued by a State, territory or possession of the United States or any political
subdivision or instrumentality thereof to finance the construction or
acquisition of property, the interest on which obligations is not, in the
opinion of tax counsel of recognized standing or in a ruling of the Internal
Revenue Service, includable in the gross revenue of the holder thereof by reason
of Section 103(a)(1) of the Internal Revenue Code or any successor provision
thereto existing at the time of issuance, (vi) Mortgages on property, shares of
capital stock or Debt of any corporation existing at the time such corporation
becomes a Restricted Insurance Subsidiary, (vii) Mortgages on property, shares
of capital stock or Debt existing at the time of acquisition thereof by Kemper
or any Restricted Insurance Subsidiary (including, subject to the provisions
summarized under "Consolidation and Merger" below, acquisition through merger or
consolidation), (viii) Mortgages on property, shares of capital stock or Debt
hereafter acquired (or, in the case of property, constructed) by Kemper or any
Restricted Insurance Subsidiary and created prior to, at the time of, or within
120 days after, acquisition (or, in the case of property, the completion of
construction or commencement of commercial operation, whichever is later) to
secure or provide for the payment of all or any part of the purchase price (or,
in the case of property, the construction price) thereof or any indebtedness
incurred for that purpose, (ix) Mechanics', landlords', tax or other statutory
liens and deposits required or provided for under state insurance laws or
similar regulatory liens and deposits required or provided for under state
insurance laws or similar regulatory statutes, and (x) any extensions, renewals
or replacements of any Mortgage referred to in the foregoing clauses (i) through
(ix) inclusive. (Section 1008)
Restrictions on Sales of Capital Stock of Restricted Subsidiaries.
The Indenture provides that Kemper will not, directly or indirectly, sell,
transfer or otherwise dispose of (except to a Subsidiary), and it will not
permit any Subsidiary, directly or indirectly, to issue, sell, transfer or
otherwise dispose of (except to Kemper or to a Subsidiary), any shares of
capital stock of a Restricted Subsidiary unless such issuance, sale, transfer or
other disposition is either
(i) to employees of any Subsidiary or Subsidiaries pursuant to a plan
or agreement approved in a Board Resolution, or
(ii) for a consideration which in a Board Resolution is declared to be
at least equal to the fair value thereof.
The foregoing provisions shall not preclude any sale, transfer or other
disposition by Kemper or any Subsidiary of assets other than assets consisting
of the capital stock of any Restricted Subsidiary. (Section 1009)
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Consolidation and Merger
The Indenture will not prohibit Kemper from merging with any other
corporation provided that Kemper is the surviving corporation in the merger. So
long as any Securities shall be outstanding under the Indenture, Kemper shall
not consolidate with or merge into any other corporation or convey, transfer or
lease its properties and assets substantially as an entirety to any Person,
unless such successor corporation or Person shall be a corporation organized and
existing under the laws of the United States, any State thereof or the District
of Columbia, and such successor corporation shall expressly assume, by
supplemental indenture in form satisfactory to the Trustee, the due and punctual
payment of the principal and interest on the New Notes and the performance of
every covenant of the Indenture to be performed by Kemper. In addition, Kemper
or such successor corporation or Person, as the case may be, shall not,
immediately after such merger or consolidation, or such conveyance, transfer or
lease, be in default in the performance of any such covenant. If, upon any such
consolidation with or merger into any other corporation, or upon any such
conveyance, transfer or lease of its properties and assets substantially as an
entirety to any Person, the assets of Kemper would become subject to any
Mortgage which would not be permitted by Section 1008 of the Indenture, Kemper
or such successor corporation or Person, as the case may be, shall take such
steps as shall be necessary effectively to secure the New Notes and all other
Securities Outstanding under the Indenture equally and ratably with (or prior
to) all indebtedness secured thereby. (Article Eight)
RESTRICTED SUBSIDIARY DEFINED
"Restricted Subsidiary" is defined as any Subsidiary ("Subsidiary" being
defined as any corporation more than 50% of the voting stock of which is owned
by Kemper or by another Subsidiary), which is incorporated under the laws of any
state of the United States or of the District of Columbia, and which is either a
regulated insurance company or a regulated broker-dealer; provided, however,
that no such Subsidiary shall be a Restricted Subsidiary if either
(i)(a) the total assets of such Subsidiary are less than 10% of the
total assets of Kemper and its consolidated Subsidiaries (including such
Subsidiary) in each case as set forth on the most recent fiscal year-end
balance sheets of such Subsidiary and Kemper and its consolidated
Subsidiaries, respectively, computed in accordance with generally accepted
accounting principles, and (b) in the case of Kemper Financial Services,
Inc. ("KFS"), such Subsidiary contributed less than 10% of the gross
revenue of Kemper and its consolidated Subsidiaries (including KFS) during
the immediately preceding fiscal year of Kemper as set forth on the most
recent fiscal year-end statements of operations of KFS and Kemper and its
consolidated Subsidiaries, respectively, computed in accordance with
generally accepted accounting principles; or
(ii) the Board of Directors of Kemper determines that such Subsidiary
is not material to (a) the financial condition of Kemper and its
Subsidiaries taken as a whole and (b) Kemper's ability to repay the New
Notes and any other Securities Outstanding under the Indenture. (Section
101)
DEFEASANCE
Kemper may, at its option, discharge its indebtedness evidenced by the New
Notes and its obligations or certain of its obligations under the Indenture with
respect to the New Notes by depositing funds or obligations issued or guaranteed
by the United States of America with the Trustee.
DEFEASANCE AND DISCHARGE
The Indenture provides that Kemper will be discharged from any and all
obligations in respect of the New Notes (except for certain obligations to
register the transfer of, or to exchange, the New Notes, to replace stolen, lost
or mutilated Notes, to maintain paying agencies and to hold monies for payment
in trust) upon the deposit with the Trustee, in trust, of money and/or U.S.
Government Obligations which through the payment of interest and principal in
respect thereof in accordance with
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their terms will provide money in an amount sufficient to pay the principal of,
and each installment of interest on, the New Notes on the Stated Maturity of
such payments in accordance with the terms of the Indenture and the New Notes.
Such a trust may only be established if, among other things, (a) Kemper has
delivered to the Trustee an Opinion of Counsel to effect that (i) Kemper has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of the Indenture, there has been a change in
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of New Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such defeasance and will be subject to federal income tax on the same
amount, and in the same manner and at the same times, as would have been the
case if such defeasance had not occurred; and (b) the New Notes, if then listed
on the New York Stock Exchange, Inc., will not be delisted as a result of such
deposit, defeasance and discharge. In the event of any such defeasance and
discharge of the New Notes, Holders of such New Notes would be able to look only
to such trust fund for payment of principal and interest on their New Notes
until Maturity. (Section 403)
DEFEASANCE OF CERTAIN OBLIGATIONS
The Indenture provides that Kemper may omit to comply with the restrictive
covenants contained in Sections 1008 and 1009 (described in "Restrictions on
Secured Indebtedness" and "Restrictions on Sales of Capital Stock of Restricted
Subsidiaries" above), and any such omission shall not be an Event of Default
with respect to the New Notes, upon the deposit with the Trustee, in trust, of
money and/or U.S. Government Obligations which through the payment of interest
and principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of, and each installment of
interest on, the New Notes on the Stated Maturity of such payments in accordance
with the terms of the Indenture and the New Notes. The obligations of Kemper
under the Indenture and the New Notes other than with respect to the covenants
contained in Sections 1008 and 1009 of the Indenture shall remain in full force
and effect. Such a trust may only be established if, among other things, Kemper
has delivered to the Trustee an Opinion of Counsel to the effect that (i) the
Holders of the New Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and defeasance of certain
obligations and will be subject to federal income tax on the same amount, and in
the same manner and at the same times, as would have been the case if such
deposit and defeasance had not occurred, and (ii) the New Notes, if then listed
on the New York Stock Exchange, Inc., will not be delisted as a result of such
deposit and defeasance. (Section 1012)
In the event Kemper exercises its option to omit compliance with the
covenants contained in Sections 1008 and 1009 of the Indenture with respect to
the New Notes as described above and the New Notes are declared due and payable
because of the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations on deposit with the Trustee will be sufficient to pay
amounts due on the New Notes at the time of their Stated Maturity but may not be
sufficient to pay amounts due on the New Notes at the time of the acceleration
resulting from such Event of Default. Kemper shall in any event remain liable
for such payments as provided in the Indenture.
EVENTS OF DEFAULT
Any one of the following events will constitute an Event of Default under
the Indenture with respect to the New Notes: (i) default for 30 days in any
payment of interest on any New Note; (ii) default in any payment of principal on
any New Note when due; (iii) default for 60 days after written notice as
provided in the Indenture in the performance of any other covenant of Kemper in
the Indenture (other than a covenant or warranty included in the Indenture
solely for the benefit of any series of Securities other than the New Notes); or
(iv) certain events of bankruptcy, insolvency or reorganization. (Section 501)
In addition, the following event shall also constitute an Event of Default
with respect to the New Notes: an event of default, as defined in any indentures
or instruments under which Kemper shall
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have outstanding at least $25,000,000 aggregate principal amount of indebtedness
for money borrowed, shall happen and be continuing and either (i) such default
results from the failure to pay principal upon final maturity of such
indebtedness after expiration of any applicable grace period or (ii) such
indebtedness shall, as a result thereof, have been accelerated so that the same
shall be or become due and payable prior to the date on which the same would
otherwise have become due and payable, and such acceleration shall not be
rescinded or annulled within 10 days after notice thereof shall have been given,
by registered or certified mail, to Kemper by the Trustee, or to Kemper and the
Trustee by the holders of at least 25% in aggregate principal amount of the New
Notes at the time outstanding; provided, however, that if such event of default
under such indentures or instruments shall be remedied or cured by Kemper or
waived by the holders of such indebtedness, then even if the New Notes shall
have been accelerated as provided under the Indenture and provided that the New
Notes shall not have been repaid, such Event of Default shall be deemed likewise
to have been thereupon remedied, cured or waived and such acceleration rescinded
without further action upon the part of either the Trustee or any holders of the
New Notes.
If an Event of Default shall occur and be continuing with respect to the
New Notes, the Trustee or the Holders of not less than 25% in principal amount
of the outstanding New Notes may declare the principal amount of all of the New
Notes to be due and payable. At any time after a declaration of acceleration
with respect to the New Notes has been made, but before a judgment or decree
based on acceleration has been obtained, the Holders of a majority in principal
amount of the outstanding New Notes may, under certain circumstances, rescind
and annul such acceleration. (Section 502)
The Indenture provides that the Trustee shall be under no obligation
(subject to the duty of the Trustee during default to act with the required
standard of care) to exercise any of its rights or powers under the Indenture at
the request or direction of any of the Holders unless such Holders shall have
offered to the Trustee reasonable indemnity. (Sections 601, 603) Subject to such
provisions for indemnification of the Trustee, the Holders of a majority in
principal amount of the outstanding New Notes 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 the New Notes. (Section 512)
Kemper will be required to furnish to the Trustee annually a statement as
to the performance by Kemper of certain of its obligations under the Indenture
and as to any default in such performance.
MODIFICATION AND WAIVER
Modification and amendments of the Indenture may be made by Kemper and the
Trustee with the consent of the Holders of a majority in principal amount of the
outstanding Securities of each series affected by such modification or
amendment, provided that no modification or amendment may, without the consent
of the Holder of each outstanding New Note affected thereby, (a) change the
stated maturity date of the principal of, or any installment of principal of or
interest, if any, on, any Security, (b) reduce the principal amount of, or
premium or interest, if any, on any Security, (c) change any obligation of
Kemper to pay additional amounts, (d) reduce the amount of principal of an
original issue discount security payable upon acceleration of the maturity
thereof, (e) change the currency in which any New Note or any premium or
interest thereon is payable, (f) impair the right to institute suit for the
enforcement of any payment on or with respect to any Security, (g) reduce the
percentage amount of outstanding Securities of any series, the consent of whose
Holders is required for modification or amendment of the Indenture or for waiver
of compliance with certain provisions of the Indenture or for waiver of certain
defaults, (h) reduce the requirements contained in the Indenture for quorum or
voting (i) change any obligation of Kemper to maintain an office or agency in
the places and for the purposes required by the Indenture, or (j) modify any of
provisions (a)through (j) in this paragraph. (Section 902)
The Holders of a majority in principal amount of the outstanding New Notes
may on behalf of the Holders of all New Notes waive, insofar as the New Notes
are concerned, compliance by Kemper
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with certain restrictive provisions of the Indenture. (Section 1011) The Holders
of a majority in principal amount of the outstanding New Notes may on behalf of
the Holders of all New Notes waive any past default under the Indenture with
respect to the New Notes, except a default in the payment of the principal of or
any premium or interest, if any, on any New Note or in respect of a provision
which under the Indenture cannot be modified or amended without the consent of
the Holder of each outstanding New Note affected. (Section 513)
NOTICES
Notices to Holders of the New Notes will be given by mail to the addresses
of such Holders as they appear in the Security Register. (Section 106)
TITLE
Kemper, the Trustee and any agent of Kemper or the Trustee may treat the
registered owner of any New Note as the absolute owner thereof (whether or not
such New Note shall be overdue and notwithstanding any notice to the contrary)
for the purpose of making payment and for all other purposes. (Section 308)
REPLACEMENT OF NEW NOTES
Any mutilated New Note will be replaced by Kemper at the expense of the
Holder upon surrender of such New Note to the Trustee. New Notes that become
destroyed, stolen or lost will be replaced by Kemper at the expense of the
Holder upon delivery to the Trustee of the New Note or evidence of the
destruction, loss or theft thereof satisfactory to Kemper and the Trustee. In
the case of a destroyed, lost or stolen New Note, an indemnity satisfactory to
the Trustee and Kemper may be required at the expense of the Holder of such New
Note before a replacement New Note will be issued. (Section 306)
GOVERNING LAW
The Indenture and the New Notes will be governed by, and construed in
accordance with, the laws of the State of Illinois.
INFORMATION CONCERNING THE TRUSTEE
Kemper and its subsidiaries maintain deposit accounts and conduct banking
transactions with the Trustee in the ordinary course of business.
BOOK-ENTRY SYSTEM
The New Notes will be represented by one or more global New Notes in
definitive fully registered form without coupons, which will be registered in
the name of a nominee of The Depository Trust Company ("DTC") as depositary. The
global New Notes will, upon request, be exchangeable for other New Notes in
definitive, fully registered form without coupons in denominations of $100,000
and integral multiples of $1,000 in excess thereof, but only upon 10 days' prior
written notice to the Trustee given in accordance with DTC's customary
procedures. The global New Notes will also be exchangeable in certain other
limited circumstances. Kemper, the Trustee and any agent thereof will be
entitled to treat DTC's nominee as the sole owner and holder of the unexchanged
portion of the global New Notes for all purposes.
DTC has advised Kemper that it is a limited-purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC holds securities that its participants deposit with DTC. DTC
also
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facilitates the settlement among its participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. DTC participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the Commission.
Upon the issuance by Kemper of the New Notes represented by a global New
Note, DTC will credit, on its book-entry registration and transfer system, the
respective principal amounts of the New Notes represented by such global New
Note to the accounts of participants. Ownership of beneficial interests in a
global New Note will be limited to participants or persons that hold interests
through participants. Ownership of interests in the New Notes represented by a
global New Note will be shown on records maintained by DTC (with respect to
interests of participants in DTC) or by participants in DTC or persons that may
hold interests through such participants (with respect to persons other than
participants in DTC).
So long as DTC or its nominee is the registered owner of a global New Note,
DTC or its nominee, as the case may be, will be considered the sole registered
owner or registered holder of the New Notes represented by such global New Note
for all purposes under the Indenture. Owners of beneficial interests in New
Notes represented by such global New Notes will be entitled to receive physical
delivery of New Notes in definitive form as provided below in the event the
book-entry system is discontinued.
Payments of principal and interest on the New Notes represented by a global
New Note registered in the name of DTC or its nominee will be made by Kemper
through the Trustee to DTC or its nominee, as the case may be, as the registered
owner of such global New Note. Neither Kemper nor the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global New
Notes or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. Kemper expects that DTC, upon receipt of any
payment of principal or interest in respect of a global New Note, will credit
the accounts of the related participants with payment in amounts proportionate
to their respective holdings in principal amount of interests in such global New
Note as shown on the records of DTC. New Notes will be governed by standing
customer instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such participants.
If DTC is at any time unwilling or unable to continue as depositary of the
global New Notes and a successor depositary is not appointed by Kemper within 90
days, Kemper will issue New Notes in definitive, fully registered form without
coupons in exchange for the New Notes represented by one or more global New
Notes. In addition, Kemper may at any time and in its sole discretion determine
not to have any of the New Notes represented by one or more global New Notes,
and, in such event, will issue New Notes in definitive, fully registered form
without coupons in exchange for all of the global New Notes representing such
New Notes.
DESCRIPTION OF THE EXISTING NOTES
The terms of the Existing Notes are identical in all material respects to
the terms of the New Notes for which they may be exchanged pursuant to this
Exchange Offer, except that the Existing Notes contain terms with respect to
transfer restrictions (and therefore are not freely transferable by holders
thereof) and adjustments in the interest rate.
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EXCHANGE AND REGISTRATION AGREEMENT
Under the Exchange and Registration Agreement, one approach for Kemper to
rescind the Step-Up in Interest Rate and reinstate the Initial Interest Rate is
to file with the Commission and have declared effective, at Kemper's cost, a
registration statement with respect to an offer to exchange new notes of Kemper
to be issued under the Indenture, which have terms identical in all material
respects to the Existing Notes (except that the new notes will not contain terms
with respect to transfer restrictions or adjustments in the interest rate) for
Existing Notes. The Exchange Offer made pursuant to this Prospectus, if
consummated, will satisfy the applicable requirements of the Exchange and
Registration Agreement and will act to rescind the Step-Up in Interest Rate.
Pursuant to the Exchange and Registration Agreement, Kemper must keep the
Exchange Offer open for not less than 30 days (or longer if required by
applicable law) after the date notice of the Exchange Offer is mailed to the
registered holders of the Existing Notes. For each Existing Note surrendered to
Kemper pursuant to the Exchange Offer, the holder of such Existing Note will
receive a New Note having a principal amount equal to that of the surrendered
Existing Note. Interest on each New Note will accrue from the last interest
payment date on which interest was paid on the Existing Note surrendered in
exchange therefor. Except as noted below, based on existing Commission
interpretations, the Company believes that the New Notes would in general be
freely transferable after the Exchange Offer without further registration under
the Securities Act.
Each holder of Existing Notes who wishes to exchange such Existing Notes
for New Notes in the Exchange Offer will be required to represent that (i) such
holder is not an affiliate of Kemper, (ii) that any New Notes to be received by
such holder will be acquired in the ordinary course of its business, and (iii)
that such holder has no arrangement with any person to participate in a
distribution (within the meaning of the Securities Act) of the New Notes. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Existing Notes where such Existing Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. Kemper has agreed that, for a period of 90 days after the date of
this Prospectus, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution."
AFTER THE CONSUMMATION OF THE EXCHANGE OFFER, KEMPER WILL HAVE NO
OBLIGATION TO FILE A REGISTRATION STATEMENT COVERING RESALES OF EXISTING NOTES
NOT EXCHANGED FOR NEW NOTES IN THE EXCHANGE OFFER FOR ANY REASON, EXCEPT IN
LIMITED CIRCUMSTANCES WITH RESPECT TO EXISTING NOTES HELD BY CERTAIN BROKER-
DEALERS, AND, IN ANY EVENT AFTER THE CONSUMMATION OF THE EXCHANGE OFFER, THE
HOLDERS OF UNTENDERED EXISTING NOTES OR TENDERED BUT UNACCEPTED EXISTING NOTES
WILL NOT BE ENTITLED TO THE STEP-UP IN INTEREST RATE WITH RESPECT TO SUCH
EXISTING NOTES.
In the event that Kemper elects not to consummate an Exchange Offer for any
reason or the staff of the Commission does not permit Kemper to effect such an
Exchange Offer, as an alternative option under the Exchange and Registration
Agreement, Kemper may rescind the Step-Up in Interest Rate and reinstate the
Initial Interest Rate by filing, at its cost, a registration statement covering
resales of the Existing Notes by the holders thereof, and causing such
registration statement to be declared effective under the Securities Act and
keeping such registration statement effective until the earlier of (i) three
years after the date the Existing Notes were originally issued (September 22,
1996) or (ii) the date by which all Existing Notes have been resold pursuant to
the registration statement. Kemper would provide each holder of the Existing
Notes copies of a prospectus, notify each holder when such registration
statement for the Existing Notes has become effective and take certain other
actions as are required to permit resales of the Existing Notes. A holder of
Existing Notes who sells
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such Existing Notes pursuant to such registration statement generally would be
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, would be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Exchange and Registration Agreement which
are applicable to such a holder (including certain indemnification obligations).
The summary herein of certain provisions of the Exchange and Registration
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Exchange and
Registration Agreement, a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion addresses certain of the United States federal
income and estate tax considerations applicable to the ownership of New Notes.
The discussion set forth below is based upon currently existing provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), existing
regulations thereunder ("Treasury Regulations") and current administrative
rulings and court decisions, all of which may be repealed, revoked or modified
so as to make the ensuing analysis inapplicable.
EXCHANGE OF NEW NOTES
An exchange of Existing Notes for New Notes in the Exchange Offer should
not constitute a taxable event to holders. Consequently, no gain or loss will be
recognized by holders upon receipt of New Notes, the holding period of the New
Notes will include the holding period of the Existing Notes and the basis of the
New Notes will be the same as the basis of the Existing Notes immediately before
the exchange.
UNITED STATES TAXATION OF UNITED STATES HOLDERS
As used herein, the term "United States Holder" means a holder of a New
Note that is for United States federal income tax purposes (a) a citizen or
resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof or (c) an estate or trust the income of which is
subject to United States federal income taxation regardless of source.
Interest paid or payable on a New Note generally will be taxable to a
United States Holder as ordinary interest income, in accordance with such
holder's method of accounting for federal income tax purposes. However,
additional interest payable on September 15, 1994 on the Notes with respect to
the period between March 15 and the date the Notes are exchanged for the New
Notes will be subject to certain currently proposed and temporary regulations
relating to original issue discount (the "OID Regulations"). Under the OID
Regulations, a United States Holder will be required to include this additional
interest in income as of September 15, 1994, regardless of such holder's method
of accounting. In addition, OID on the New Notes (the excess of each $1,000 in
principal amount over the issue price per each $1,000 of $982.61) will be
characterized as de minimis under the OID Regulations. Holders should consult
their tax advisors as to the possible effect of the OID Regulations on the New
Notes.
UNITED STATES TAX CONSIDERATIONS FOR FOREIGN HOLDERS
As used herein, the term "United States Alien" means any person that is, as
to the United States, a foreign corporation, a nonresident alien individual, a
nonresident fiduciary of a foreign estate or trust or a foreign partnership one
or more of the members of which is, as to the United States, a foreign
corporation, a nonresident alien individual or a nonresident fiduciary of a
foreign estate or trust.
34
<PAGE> 37
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) withholding of United States federal income tax will not be
required with respect to the payment by Kemper of principal or interest on
a New Note owned by a United States Alien, provided that, in the case of
interest (i) the beneficial owner of the New Note does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of Kemper entitled to vote within the meaning of Section
871(h)(3) of the Code and the regulations thereunder, (ii) the beneficial
owner is not a controlled foreign corporation that is related to Kemper
through stock ownership, (iii) the beneficial owner is not a bank for
United States federal income tax purposes whose receipt of interest on a
New Note is described in Section 881(c)(3)(A) of the Code and (iv) the
beneficial owner satisfies the statement requirement described generally
below;
(b) no withholding of United States federal income tax will be
required with respect to any gain or income realized by a United States
Alien upon the sale, exchange or retirement of a New Note; and
(c) a New Note held by an individual who at the time of his death is a
United States Alien will not be subject to United States federal estate tax
as a result of such individual's death, provided that such individual does
not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of Kemper entitled to vote within the meaning
of Section 871(h)(3) of the Code and provided that the interest payments
with respect to such New Note would not have been, if received at the time
of such individual's death, effectively connected with the conduct of a
United States trade or business by such individual.
To qualify for the exemption from withholding tax referred to in (a)(iv)
above, the beneficial owner of the New Note, or a financial institution holding
the New Note on behalf of such owner, must provide Kemper, in accordance with
specified procedures, with a statement to the effect that the beneficial owner
is not a United States person, citizen or resident. Pursuant to current
temporary Treasury Regulations, these requirements will be met if (1) the
beneficial owner provides his name and address, and certifies, under the
penalties of perjury, that he is not a United States person (which certification
may be made on an Internal Revenue Service ("IRS") Form W-8 or a successor form
so designated by the IRS) or (2) a financial institution holding the New Note on
behalf of such owner certifies under penalties of perjury that such statement
has been received by it and furnishes Kemper with a copy thereof.
Payments to United States Aliens not meeting the requirements of paragraph
(a) above and thus subject to withholding of United States federal income tax
may nevertheless be exempt from such withholding if the beneficial owner of the
New Note properly completes, executes and delivers to Kemper (1) an IRS Form
1001 (or a successor form so designated by the IRS) claiming an exemption from
withholding under the benefit of a tax treaty or (2) an IRS Form 4224 (or a
successor form) stating that interest paid on the New Note is not subject to
withholding tax because it is effectively connected with the owner's conduct of
a trade or business in the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under certain circumstances, Kemper will have to report to the IRS payments
of principal and interest. In addition, a United States Holder may be subject to
"backup withholding" at the rate of 31% with respect to interest paid and OID
accrued on, or proceeds from the disposition of, the New Notes, unless such
United States Holder (i) is a corporation or comes within certain other exempt
categories, and when requested, demonstrates this fact; or (ii) provides a
correct taxpayer identification number, certifies as to no loss of exemption
from backup withholding and otherwise complies with applicable requirements of
the backup withholding rules. A United States Holder who does not provide the
correct taxpayer identification number may be subject to penalties imposed by
the IRS.
35
<PAGE> 38
Any amount withheld under these rules will be creditable against the United
States Holder's federal income tax liability.
Generally, no information reporting or backup withholding will be required
with respect to payments of principal or interest made by Kemper to United
States Aliens on New Notes with respect to which a statement described in
(a)(iv) above has been received and the payor does not have actual knowledge
that the holder is a United States person, or another exemption applies.
THE DISCUSSION SET FORTH IN THIS SECTION "CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS" IS INTENDED ONLY AS A SUMMARY AND DOES NOT PURPORT TO BE A
COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A DECISION
TO EXCHANGE THE NOTES. THE DISCUSSION DOES NOT ADDRESS TAX CONSEQUENCES ARISING
UNDER THE LAWS OF ANY STATE, LOCALITY, OR NON-UNITED STATES JURISDICTION. IT IS
RECOMMENDED THAT ALL PROSPECTIVE TENDERORS CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE TAX CONSIDERATIONS RELEVANT TO THEIR PARTICULAR CIRCUMSTANCES.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Existing Notes
where such Existing Notes were acquired as a result of market-making activities
or other trading activities. Kemper will, for a period of 90 days after the date
of this Prospectus, make this Prospectus, as amended or supplemented, available
to any broker-dealer for use in connection with any such resale.
Kemper will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is in fact an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the date of this Prospectus, Kemper 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. Kemper has agreed in the Exchange and Registration
Agreement to pay all expenses incident to the Exchange Offer other than
commissions or concessions of any brokers or dealers and will indemnify any
broker-dealer referred to herein against certain liabilities, including
liabilities under the Securities Act, and to contribute to payments any such
broker-dealer may be required to make in respect thereof. Pursuant to the
Exchange and Registration Agreement, each participating broker-dealer shall
indemnify the Company against certain liabilities, including liabilities under
the Securities Act, and to contribute, within certain limitations, to payments
the Company may be required to make in respect thereof.
36
<PAGE> 39
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon by
Kathleen A. Gallichio, Esq., General Counsel of Kemper Corporation.
EXPERTS
The consolidated financial statements and schedules of Kemper and its
subsidiaries as of December 31, 1993 and 1992 and for each of the years in the
three-year period ended December 31, 1993 that are incorporated in this
Prospectus by reference have been done so in reliance upon the report of KPMG
Peat Marwick, independent certified public accountants, also incorporated by
reference herein.
37
<PAGE> 40
NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY KEMPER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH
OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF KEMPER SINCE SUCH DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................... 3
Certain Investment Considerations..... 8
Business Description.................. 14
Use of Proceeds....................... 15
Ratio of Earnings to Fixed Charges.... 15
Selected Consolidated Financial
Information......................... 16
Capitalization........................ 18
The Exchange Offer.................... 19
Description of the New Notes.......... 26
Description of the Existing Notes..... 32
Exchange and Registration Agreement... 33
Certain Federal Income Tax
Considerations...................... 34
Plan of Distribution.................. 36
Legal Matters......................... 37
Experts............................... 37
</TABLE>
$200,000,000
KEMPER CORPORATION
6.875% NOTES DUE 2003,
SERIES A
[KEMPER LOGO]
------------------
PROSPECTUS
------------------
EXCHANGE AGENT
FIRST CHICAGO TRUST COMPANY OF NEW YORK
ATTENTION: CORPORATE TRUST OPERATIONS
14 WALL STREET
8TH FLOOR
NEW YORK, NEW YORK 10005
APRIL , 1994
<PAGE> 41
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant was organized under and is subject to the Delaware General
Corporation Law. Delaware law provides that officers and directors may receive
indemnification from their corporations for certain actual or threatened
lawsuits. Delaware law sets out the standard of conduct which the officers and
directors must meet in order to be indemnified, the parties who are to determine
whether the standard has been met, and the types of expenditures which will be
indemnified. Delaware law further provides that a corporation may purchase
indemnification insurance, such insurance providing indemnification for the
officers and directors whether or not the corporation would have the power to
indemnify them against such liability under the provisions of this Delaware law.
The Registrant has adopted a provision in its Bylaws which provides that
the Registrant will indemnify its officers and directors to the full extent
permitted by Delaware law. Furthermore, the Registrant is covered by insurance
which will reimburse it for amounts it is obligated to pay in lawsuits involving
officers and directors serving in such capacities in which the damages,
judgments, settlements, costs, charges or expenses incurred in connection with
the defense of the action, suit or proceeding are reimbursable pursuant to law.
The Registrant has adopted a provision in its Second Restated Certificate
of Incorporation, as amended, permitted under Section 102(b)(7) of the Delaware
General Corporation Law limiting its directors' liability to the Registrant or
its stockholders for monetary damages. This provision provides that a director
shall not be personally liable to the Registrant or its stockholders for
monetary damages for breach of the fiduciary duty as a director except for
liability (i) for a breach of director's duty of loyalty (for example, in a
situation involving a conflict of interest); (ii) for actions or omissions in
bad faith or involving intentional misconduct or a knowing violation of law;
(iii) for certain improper dividend transactions; or (iv) for any transaction
where a director derives an improper personal benefit. This provision would not
apply to limit the liability of a director for activities performed as an
officer of the Company and, since applicable by its terms only to monetary
damage recoveries, would not limit the ability of the Registrant or its
stockholders to obtain injunctive or other non-pecuniary relief against any or
all of the directors of the Registrant. While yet to be construed by the
Delaware courts, a provision of this type can be expected to limit the ability
of the Registrant or its stockholders to recover damages in the event a director
is negligent in the performance of his or her duties unless such negligence
involves any of the above-described four circumstances. The Registrant believes
this provision will enable it to continue to attract the best possible
candidates to serve on the Registrant's Board of Directors and will help ensure
the continued availability and should reduce the expense of its directors and
officers' liability and corporate reimbursement insurance coverages.
The Registrant has also entered into Director Indemnification Agreements
with each of its directors. Agreements of this type are contemplated by Section
145(f) of the Delaware General Corporation Law. The Registrant believes the
agreements are advisable to address the uncertainties and limitations under
Delaware law. The Director Indemnification Agreements predicate the availability
of indemnification on the directors having acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of the
Registrant. The agreements alter or clarify the statutory indemnity provisions
in the following respects: (i) indemnification to the fullest extent permitted
by applicable law is obligatory, rather than optional, even if a director is
unsuccessful on the merits; (ii) indemnification is explicitly provided for in
settlements of derivative actions; (iii) prompt payment of litigation expenses
is provided in advance of indemnification; (iv) prompt indemnification or
advances of expenses is provided unless a determination is made that the
director has not met the applicable statutory standard; (v) the director is
permitted to petition a court to determine whether such director's actions met
the standard required; and (vi) partial indemnification is permitted in the
event that the director is not entitled to full indemnification.
II-1
<PAGE> 42
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The following documents are the exhibits to this Registration Statement on
Form S-4.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -------
<S> <C>
(4) Instruments defining the rights of security holders, including indentures:
4.1(a) Indenture dated as of January 15, 1987 between Kemper Corporation and the
Chase Manhattan Bank, N.A., defining the rights of holders of certain debt
securities of Kemper Corporation, is incorporated herein by reference to
Exhibit No. 4.1 to Kemper Corporation's Form S-3 Registration Statement No.
33-7780 filed August 5, 1986.
4.1(b) First Supplemental Indenture, dated September 14, 1989, supplemental to the
Indenture described in Exhibit No. 4.1(a) hereof, is incorporated herein by
reference to Exhibit No. 4 to Kemper Corporation's Quarterly Report on Form
10-Q filed November 14, 1989.
4.1(c) Indenture dated as of September 15, 1993 between Kemper Corporation and The
First National Bank of Chicago, defining the rights of holders of certain
debt securities of Kemper Corporation, is incorporated herein by reference
to Exhibit 4.1(c) to Kemper Corporation's Annual Report on Form 10-K filed
March 30, 1994.
4.2(a) Form of certificate representing Kemper Corporation's Medium-Term Notes,
Series 1, is incorporated herein by reference to Exhibit No. 4.3 to Kemper
Corporation's Annual Report on Form 10-K filed March 31, 1987.
4.2(b) Form of certificate representing Kemper Corporation's Medium-Term Notes,
Series 2, is incorporated herein by reference to Exhibit No. 4 to Kemper
Corporation's Amendment No. 1 to Form S-3 Registration Statement No.
33-31083 filed September 21, 1989.
4.2(c) Form of certificate representing Kemper Corporation's 8.80% Notes Due 1998
is incorporated herein by reference to Exhibit No. 4.3(c) to Kemper
Corporation's Annual Report on Form 10-K filed March 30, 1992.
4.2(d) Form of certificates representing Kemper Corporation's 6.875% Notes Due
2003 is incorporated herein by reference to Exhibit No. 4.3(d) to Kemper
Corporation's Annual Report on Form 10-K filed March 30, 1994.
(5) Opinion re legality -- form of opinion to be delivered by Kathleen A.
Gallichio, Esq., General Counsel of Kemper Corporation, regarding legality
of the New Notes being registered...
(12) Statement re computation of ratios...
(15) Letter re unaudited interim financial information -- not applicable.
(23) Consents of experts and counsel -- KPMG Peat Marwick consent...
(24) Power of attorney -- a power of attorney is included at the signature page
of this Form S-4...
(25) Statement of eligibility of trustee -- Form T-1...
(26) Invitations for competitive bids -- not applicable.
(27) Financial Data Schedule -- not applicable.
(28) Information from reports furnished to state insurance regulatory
authorities -- not applicable.
(99) Additional Exhibits:
99.1 Form of Letter of Transmittal...
99.2 Exchange and Registration Agreement dated September 22, 1993 between Kemper
Corporation, and Goldman, Sachs & Co. and Kemper Securities, Inc...
</TABLE>
II-2
<PAGE> 43
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into this
Prospectus pursuant to Items 4, 10(b), 11 or 13 of this form within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date
of the Registration Statement through the date of responding to the
request.
(2) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made pursuant to this Registration Statement, a post-effective amendment
to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in this Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
II-3
<PAGE> 44
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints John H. Fitzpatrick,
Executive Vice President and Chief Financial Officer, and Kathleen A. Gallichio,
Senior Vice President, General Counsel and Corporate Secretary, his true and
lawful attorney-in-fact with authority together or individually to execute in
the name of each such signatory, and with authority to file with the Securities
and Exchange Commission, any and all amendments to this Registration Statement,
together with any exhibits thereto and other documents therewith, necessary or
advisable to enable Kemper Corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, which amendments may make such other
changes in the Registration Statement as the aforesaid attorney-in-fact
executing the same deems appropriate.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Kemper Corporation
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Long Grove, State of
Illinois, on the 15th day of April, 1994.
KEMPER CORPORATION
By: /s/ DAVID B. MATHIS
-------------------------------------
David B. Mathis
Chairman of the Board
and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF KEMPER
CORPORATION IN THE CAPACITIES INDICATED ON THE 15TH DAY OF APRIL, 1994.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
/s/ DAVID B. MATHIS Chairman of the Board, Chief Executive Officer
- ------------------------------------------------------ and Director
David B. Mathis
/s/ STEPHEN B. TIMBERS President, Chief Operating Officer
- ------------------------------------------------------ and Director
Stephen B. Timbers
/s/ JOHN H. FITZPATRICK Executive Vice President, Chief Financial Officer
- ------------------------------------------------------ and Director
John H. Fitzpatrick
/s/ CHARLES M. KIERSCHT Executive Vice President and Director
- ------------------------------------------------------
Charles M. Kierscht
/s/ JOSEPH R. SITAR Senior Vice President
- ------------------------------------------------------ and Chief Accounting Officer
Joseph R. Sitar
</TABLE>
II-4
<PAGE> 45
<TABLE>
<CAPTION>
SIGNATURE CAPACITIES
- --------- ----------
<S> <C>
/S/ JOHN T. CHAIN JR. Director
- ------------------------------------------------------
John T. Chain Jr.
/S/ J. REED COLEMAN Director
- ------------------------------------------------------
J. Reed Coleman
/S/ RAYMOND F. FARLEY Director
- ------------------------------------------------------
Raymond F. Farley
/S/ PETER B. HAMILTON Director
- ------------------------------------------------------
Peter B. Hamilton
/S/ GEORGE D. KENNEDY Director
- ------------------------------------------------------
George D. Kennedy
/S/ JOSEPH E. LUECKE Director
- ------------------------------------------------------
Joseph E. Luecke
/S/ RICHARD D. NORDMAN Director
- ------------------------------------------------------
Richard D. Nordman
/S/ KENNETH A. RANDALL Director
- ------------------------------------------------------
Kenneth A. Randall
/S/ DANIEL R. TOLL Director
- ------------------------------------------------------
Daniel R. Toll
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5
APRIL , 1994
Kemper Corporation
One Kemper Drive
Long Grove, Illinois 60049-0001
RE: REGISTRATION STATEMENT ON FORM S-4 (THE "REGISTRATION STATEMENT") RELATING
TO THE EXCHANGE OFFER OF $200,000,000 AGGREGATE PRINCIPAL AMOUNT OF 6.875%
NOTES DUE 2003, SERIES A
Ladies and Gentlemen:
I am General Counsel of Kemper Corporation (the "Company") and have acted
as counsel in connection with the proposed registration under the Securities Act
of 1933, as amended (the "Securities Act"), of $200,000,000 aggregate principal
amount of 6.875% Notes Due 2003, Series A (the "Notes"), to be issued pursuant
to the Indenture dated September 15, 1993 between the Company and The First
National Bank of Chicago, as Trustee (the "Indenture").
In rendering the following opinion, I have examined executed counterparts
of the Indenture and have assumed the due authorization, execution and delivery
of the Indenture by all parties thereto other than the Company. I have also
assumed that the Indenture constitutes the legal, valid and binding obligations
of all parties thereto other than the Company, enforceable against such parties
in accordance with its terms. I have reviewed certain corporate proceedings of
the Company and have examined originals or copies, certified to my satisfaction,
of such corporate records, certificates of public officials or representatives
of the Company and other documents as I have deemed necessary or advisable in
connection with rendering the opinion hereinafter set forth.
Based upon the foregoing and having regard of such legal considerations as
I have deemed relevant, I am of the opinion that, after the Registration
Statement shall have become effective under the Securities Act and the Indenture
shall have been qualified under the Trust Indenture Act of 1939, as amended, the
Notes, when authorized, issued, executed, authenticated and delivered in
accordance with the Indenture, will be legally issued and will constitute valid
and legally binding obligations of the Company, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and subject to general principles of equity.
The foregoing opinion is limited to the laws of the United States and the
State of Illinois and the General Corporation Law of the State of Delaware, and
I express no opinion with respect to the laws of any other state or
jurisdiction. I have also relied as to certain matters upon information obtained
from public officials believed by me to be responsible.
I express no opinion or belief as to the financial statements, the related
schedules or other financial data contained in the Registration Statement.
The opinion contained herein is limited to the matters covered therein as
of the date hereof, and I assume no responsibility for updating this opinion.
This opinion is not to be used or relied upon by any person or entity other than
the Company for any purpose without my prior written consent.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to me under the caption "Legal Matters"
in the Prospectus forming a part of the Registration Statement. In giving this
consent, I do not concede that I am an expert within the meaning of the
Securities Act or the rules or regulations thereunder.
Very truly yours,
Kathleen A. Gallichio
General Counsel
<PAGE> 1
EXHIBIT 12
KEMPER CORPORATION AND SUBSIDIARIES
CONTINUING OPERATIONS
COMPUTATION OF RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Earnings (loss) before income tax........... $(109,147) $(274,871) $112,095 $(58,302) $191,156
Add (deduct):
Fixed charges............................. 105,053 110,781 120,855 161,559 142,468
Other..................................... (1,709) 912 (3,615) (10,335) (2,943)
--------- --------- -------- -------- --------
Earnings (loss) before income tax, as
adjusted.................................. $ (5,803) $(163,178) $229,335 $ 92,922 $330,681
--------- --------- -------- -------- --------
--------- --------- -------- -------- --------
Fixed Charges:
Interest and amortization of debt
expense................................. $ 84,040 $ 92,977 $102,062 $142,337 $119,714
Portion of rents representative of
interest factor......................... 21,013 17,456 18,261 17,717 14,045
Increase in redemption value of
subsidiary's redeemable securities...... -- -- -- -- 6,824
Preferred stock dividend requirements of
subsidiary.............................. -- 348 532 1,505 1,885
--------- --------- -------- -------- --------
Total fixed charges......................... $ 105,053 $ 110,781 $120,855 $161,559 $142,468
--------- --------- -------- -------- --------
--------- --------- -------- -------- --------
Ratio of consolidated earnings from
continuing operations to fixed charges.... (0.06) (1.47) 1.90 0.58 2.32
--------- --------- -------- -------- --------
--------- --------- -------- -------- --------
</TABLE>
COMPUTATION OF RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES
EXCLUDING INTEREST EXPENSE ON COLLATERALIZED BORROWINGS OF
SECURITIES BROKERAGE OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Earnings (loss) before income tax........... $(109,147) $(274,871) $112,095 $(58,302) $191,156
Add (deduct):
Fixed charges............................. 64,927 64,357 66,639 91,620 68,089
Other..................................... (1,709) 912 (3,615) (10,335) (2,943)
--------- --------- -------- -------- --------
Earnings (loss) before income tax, as
adjusted.................................. $ (45,929) $(209,602) $175,119 $ 22,983 $256,302
--------- --------- -------- -------- --------
--------- --------- -------- -------- --------
Fixed charges:
Interest and amortization of debt
expense................................. $ 43,914 $ 46,553 $ 47,846 $ 72,398 $ 45,335
Portion of rents representative of
interest factor......................... 21,013 17,456 18,261 17,717 14,045
Increase in redemption value of
subsidiary's redeemable securities...... -- -- -- -- 6,824
Preferred stock dividend requirements of
subsidiary.............................. -- 348 532 1,505 1,885
--------- --------- -------- -------- --------
Total fixed charges......................... $ 64,927 $ 64,357 $ 66,639 $ 91,620 $ 68,089
--------- --------- -------- -------- --------
--------- --------- -------- -------- --------
Ratio of consolidated earnings from
continuing operations to fixed charges.... (0.71) (3.26) 2.63 0.25 3.76
--------- --------- -------- -------- --------
--------- --------- -------- -------- --------
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Kemper Corporation:
We consent to the use of our reports incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the Prospectus.
KPMG Peat Marwick
Chicago, Illinois
April 15, 1994
<PAGE> 1
EXHIBIT 25
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
---------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. employer identification
number)
ONE FIRST NATIONAL PLAZA, CHICAGO, 60670-0126
ILLINOIS (Zip Code)
(Address of principal executive
offices)
</TABLE>
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(Name, address and telephone number of agent for service)
---------------------
KEMPER CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 36-6169781
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
ONE KEMPER DRIVE 60049-0001
LONG GROVE, ILLINOIS (Zip Code)
(Address of principal executive
offices)
</TABLE>
6.875% NOTES DUE 2003, SERIES A
(Title of Indenture Securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C., Federal Deposit Insurance
Corporation, Washington, D.C., The Board of Governors of the Federal
Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE
TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS
STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the trustee now in effect.*
2. A copy of the certificates of authority of the trustee to commence
business.*
3. A copy of the authorization of the trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this Statement of Eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of Chicago
and State of Illinois, on the 12th day of April, 1994.
The First National Bank of Chicago,
Trustee,
By: /s/ JOHN R. PRENDIVILLE
John R. Prendiville
Vice President
* Exhibits 1, 2, 3, and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 12 of the Form T-1 of The First National
Bank of Chicago, filed as Exhibit 26(b) to the Registration Statement on Form
S-3 of Dow Capital B.V. and The Dow Chemical Company, filed with the
Securities and Exchange Commission on June 3, 1991 (Registration No.
33-36314).
2
<PAGE> 3
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(B) OF THE ACT
APRIL 12, 1994
Securities and Exchange Commission,
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Kemper
Corporation and The First National Bank of Chicago, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefore.
Very truly yours,
The First National Bank of Chicago
By: /s/ John R. Prendiville
__________________________________
John R. Prendiville
Vice President
3
<PAGE> 4
EXHIBIT 7
A copy of the latest report of conditions of the trustee published pursuant
to law or the requirements of its supervising or examining authority.
4
<PAGE> 5
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1993
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
SCHEDULE RC -- BALANCE SHEET
<TABLE>
<CAPTION>
C400
DOLLAR AMOUNTS ------------
IN THOUSANDS RCFD BIL MIL THOU <-
--------------- ---- ------------ -----
ASSETS
<S> <C> <C> <C> <C> <C> <C>
1. Cash and balances due from depository
institutions (from Schedule RCA-A):
a. Noninterest-bearing balances and
currency and coin(1)....................... 0081 3,552,441 1.a.
b. Interest-bearing balances(2)............ 0071 5,687,085 1.b.
2. Securities (from Schedule RC-B)............ 0390 470,252 2
3. Federal funds sold and securities purchased
under agreements to resell in domestic
offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal Funds sold...................... 0276 3,985,638 3.a.
b. Securities purchased under agreements to
resell..................................... 0277 880,886 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C)....................... RCFD 2122 13,308,340 4.a.
b. LESS: Allowance for loan and
lease losses............................... RCFD 3123 339,885 4.b.
c. LESS: Allocated transfer risk reserve... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned
income, allowance, and reserve (item 4.a
minus 4.b and 4.c)......................... 2125 12,968,455 4.d.
5. Assets held in trading accounts............ 2146 3,109,630 5.
6. Premises and fixed assets (including
capitalized leases)........................ 2145 497,559 6.
7. Other real estate owned (from
Schedule RC-M)............................. 2150 101,446 7.
8. Investments in unconsolidated subsidiaries
and associated companies (from
Schedule RC-M)............................. 2130 6,375 8.
9. Customers' liability to this bank on
acceptances outstanding.................... 2155 477,130 9.
10. Intangible assets (from Schedule RC-M)..... 2143 147,257 10.
11. Other assets (from Schedule RC-F).......... 2160 2,607,308 11.
12. Total assets (sum of items 1 through 11)... 2170 34,491,462 12.
</TABLE>
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
5
<PAGE> 6
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1993 -- CONTINUED
SCHEDULE RC -- BALANCE SHEET -- CONTINUED
<TABLE>
<CAPTION>
C400
DOLLAR AMOUNTS IN ------------
THOUSANDS RCFD BIL MIL THOU <-
---------------------- --------- ------------ -----
LIABILITIES
<S> <C> <C> <C> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals
of columns A and C from Schedule
RC-E, part 1)..................... RCON 2200 15,870,533 13.a.
(1) Noninterest-bearing(1)........ RCON 6631 7,494,138 13.a.(1)
(2) Interest-bearing............... RCON 6636 8,376,395 13.a.(2)
b. In foreign offices, Edge and
Agreement subsidiaries, and IBFs
(from Schedule RC-E, part II)..... RCFN 2200 7,254,022 13.b.
(1) Noninterest bearing........... RCFN 6631 352,283 13.b.(1)
(2) Interest-bearing.............. RCFN 6636 6,901,739 13.b.(2)
14. Federal funds purchased and
securities sold under agreements to
repurchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal funds purchased........... RCFD 0278 2,649,907 14.a.
b. Securities sold under agreements
to repurchase..................... RCFD 0279 171,899 14.b.
15. Demand notes issued to the U.S.
Treasury............................. RCON 2840 106,087 15.
16. Other borrowed money................. RCFD 2850 1,782,869 16.
17. Mortgage indebtedness and obligations
under capitalized leases............. RCFD 2910 267,000 17.
18. Bank's liability on acceptance
executed and outstanding............. RCFD 2920 477,130 18.
19. Subordinated notes and debentures.... RCFD 3200 1,175,000 19.
20. Other liabilities (from
Schedule RC-G)....................... RCFD 2930 2,049,329 20.
21. Total liabilities (sum of items 13
through 20).......................... RCFD 2948 31,803,776 21.
22. Limited-Life preferred stock and
related surplus...................... RCFD 3282 0 22.
<CAPTION>
EQUITY CAPITAL
<S> <C> <C> <C> <C>
23. Perpetual preferred stock and related
surplus.............................. RCFD 3838 0 23.
24. Common stock......................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related
to preferred stock).................. RCFD 3839 2,254,940 25.
26. a. Undivided profits and capital
reserves.......................... RCFD 3632 232,478 26.a.
b. LESS: Net unrealized loss on
marketable equity securities...... RCFD 0297 (299) 26.b.
27. Cumulative foreign currency
translation adjustments.............. RCFD 3284 (889) 27.
28. Total equity capital (sum of items 23
through 27).......................... RCFD 3210 2,687,686 28.
29. Total liabilities, limited-life
preferred stock, and equity capital
(sum of items 21, 22, and 28)........ RCFD 3300 34,491,462 29.
</TABLE>
6
<PAGE> 7
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1993 -- CONTINUED
SCHEDULE RC -- BALANCE SHEET -- CONTINUED
<TABLE>
Memorandum
<S> <C>
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external
auditors of any date during 1992............................. RCFA 6724
N/A M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may
be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ---------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
7
<PAGE> 1
EXHIBIT 99.1
KEMPER CORPORATION
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
6.875% NOTES DUE 2003
OF
KEMPER CORPORATION
FOR 6.875% NOTES
DUE 2003, SERIES A
PURSUANT TO THE PROSPECTUS
DATED APRIL , 1994
KEMPER CORPORATION WILL ACCEPT ALL EXISTING NOTES (AS HEREINAFTER DEFINED)
TENDERED AND NOT WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK TIME, ON MAY , 1994,
UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN AT ANY TIME
PRIOR TO 5:00 P.M., NEW YORK TIME, ON THE EXPIRATION DATE.
<TABLE>
<S> <C> <C>
The Exchange Agent is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Facsimile: By Certified mail or Overnight Courier: Confirm by Telephone:
(212) 240-8938 FIRST CHICAGO TRUST COMPANY OF NEW YORK (212) 240-8800
Attention: Corporate Trust Operations
14 Wall Street
8th Floor
New York, New York 10005
By Hand in New York:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Attention: Corporate Trust Operations
14 Wall Street
8th Floor
New York, New York 10005
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
<PAGE> 2
The undersigned acknowledges receipt of the Prospectus dated April , 1994
(the "Prospectus"), of KEMPER CORPORATION ("Kemper"), and this Letter of
Transmittal (the "Letter of Transmittal"), which together with the Prospectus
constitutes Kemper's offer (the "Exchange Offer") to exchange $1,000 principal
amount of its 6.875% Notes Due 2003, Series A ("New Notes") for each $1,000
principal amount of its outstanding 6.875% Notes Due 2003 ("Existing Notes").
Existing Notes are required to be exchanged in a minimum denomination of
$100,000 and integral multiples of $1,000 in excess thereof. Recipients of the
Prospectus should read the requirements described in such Prospectus with
respect to eligibility to participate in the Exchange Offer. Capitalized terms
used but not defined herein have the meaning given to them in the Prospectus.
This Letter of Transmittal is to be used only by a Holder of Existing Notes
(i) if certificates representing Existing Notes are to be forwarded herewith or
(ii) if delivery of Existing Notes is to be made by book-entry transfer to the
Exchange Agent's account at The Depository Trust Company ("DTC") pursuant to the
procedures set forth in the section of the Prospectus entitled "The Exchange
Offer -- Tender Procedure."
Any beneficial owner whose Existing Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered Holder of Existing Notes promptly and
instruct such registered Holder of Existing Notes to tender on behalf of the
beneficial owner. If such beneficial owner wishes to tender on his own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering his Existing Notes, either make appropriate
arrangements to register ownership of the Existing Notes in such beneficial
owner's name or obtain a properly completed bond power from the registered
Holder of Existing Notes. The transfer of record ownership may take considerable
time.
In order to properly complete this Letter of Transmittal, a Holder of
Existing Notes must (i) complete the box entitled "Description of Existing
Notes," (ii) if appropriate, check and complete the boxes relating to book-entry
transfer, guaranteed delivery, Special Issuance Instructions and Special
Delivery Instructions, (iii) sign the Letter of Transmittal by completing the
box entitled "Sign Here" and (iv) complete the Substitute Form W-9. Each Holder
of Existing Notes should carefully read the detailed instructions below prior to
completing this Letter of Transmittal.
Holders of Existing Notes who desire to tender their Existing Notes for
exchange and (i) whose Existing Notes are not immediately available, (ii) who
cannot deliver their Existing Notes and all other documents required hereby to
the Exchange Agent on or prior to the Expiration Date, or (iii) who are unable
to complete the procedure for book-entry transfer on a timely basis, must tender
the Existing Notes pursuant to the guaranteed delivery procedures set forth in
the section of the Prospectus entitled "The Exchange Offer -- Tender Procedure."
See Instruction 2.
Holders of Existing Notes who wish to tender their Existing Notes for
exchange must, at a minimum, complete columns (1) through (3) in the box below
entitled "Description of Existing Notes" and sign the box below entitled "Sign
Here". If only those columns are completed, such Holder of Existing Notes will
have tendered for exchange all Existing Notes listed in column (3) below. If the
Holder of Existing Notes wishes to tender for exchange less than all of such
Existing Notes, column (4) must be completed in full. In such case, such Holder
of Existing Notes should refer to Instruction 5.
2
<PAGE> 3
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF EXISTING NOTES
- ------------------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
PRINCIPAL AMOUNT
TENDERED FOR
EXCHANGE (ONLY
IF DIFFERENT
AMOUNT FROM
COLUMN (3))
(MUST BE IN
INTEGRAL MULTIPLES
EXISTING NOTE OF $1,000 AND
NUMBER(S)(1) IN A MINIMUM
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER OF EXISTING NOTE(S) (ATTACH SIGNED AGGREGATE DENOMINATION OF
(PLEASE FILL IN, IF BLANK) LIST IF NECESSARY) PRINCIPAL AMOUNT $100,000)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(1) Column (2) need not be completed by Holders of Existing Notes tendering
Existing Notes for exchange by book-entry transfer. Please check the
appropriate box below and provide the requested information.
(2) Column (4) need not be completed by Holders of Existing Notes who wish to
tender for exchange the principal amount of Existing Notes listed in
Column (3). Completion of column (4) will indicate that the Holder of
Existing Notes wishes to tender for exchange only the principal amount
of Existing Notes indicated in column (4).
/ / CHECK HERE IF TENDERED EXISTING NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT THE
DEPOSITORY TRUST COMPANY ("DTC").
Account Number
Transaction Code Number
/ / CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING
(FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name of Registered Holder of Existing Note(s)
Date of Execution of Notice of Guaranteed Delivery
Window Ticket Number (if available)
DTC Account Number (if delivered by book-entry transfer)
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
</TABLE>
3
<PAGE> 4
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY (i) if the
New Notes issued in exchange for
Existing Notes, certificates for
Existing Notes in a principal
amount not exchanged for New
Notes or Existing Notes (if any)
not tendered for exchange, are
to be issued in the name of
someone other than the
undersigned, or (ii) if Existing
Notes tendered by book-entry
transfer which are not exchanged
are to be returned by credit to
an account maintained at a Book
Entry Transfer Facility.
Issue to:
Name
(Please Print)
Address
(Include Zip Code)
(Taxpayer Identification or
Social Security No.)
Credit Existing Notes not
exchanged and delivered by
book-entry transfer to the DTC
account set forth below:
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY (i) if the
New Notes issued in exchange for
Existing Notes, certificates for
Existing Notes in a principal
amount not exchanged for New
Notes or Existing Notes (if any)
not tendered for exchange, are
to be mailed or delivered to
someone other than the
undersigned, or to the
undersigned at an address other
than the address shown below the
undersigned's signature.
Mail or deliver to:
Name
(Please Print)
Address
(Include Zip Code)
(Taxpayer Identification or
Social Security No.)
4
<PAGE> 5
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Pursuant to the offer by KEMPER CORPORATION ("Kemper"), upon the terms and
subject to the conditions set forth in the Prospectus dated April , 1994 (the
"Prospectus") and this Letter of Transmittal (the "Letter of Transmittal"),
which together with the Prospectus constitutes Kemper's offer (the "Exchange
Offer") to exchange $1,000 principal amount of its 6.875% Notes Due 2003, Series
A ("New Notes") for each $1,000 principal amount of its outstanding 6.875% Notes
Due 2003 (the "Existing Notes"). Existing Notes are required to be exchanged in
a minimum denomination of $100,000 and integral multiples of $1,000 in excess
thereof. The undersigned hereby tenders to Kemper for exchange the Existing
Notes indicated above.
By executing this Letter of Transmittal and subject to and effective upon
acceptance for exchange of the Existing Notes tendered for exchange herewith,
the undersigned will have irrevocably sold, assigned, transferred and exchanged,
to Kemper, all right, title and interest in, to and under all of the Existing
Notes tendered for exchange hereby, and hereby appoints the Exchange Agent as
the true and lawful agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as agent of Kemper) of such Holder of Existing Notes
with respect to such Existing Notes, with full power of substitution to (i)
deliver certificates representing such Existing Notes, or transfer ownership of
such Existing Notes on the account books maintained by DTC (together, in any
such case, with all accompanying evidences of transfer and authenticity), to
Kemper, (ii) present and deliver such Existing Notes for transfer on the books
of Kemper and (iii) receive all benefits and otherwise exercise all rights and
incidents of beneficial ownership with respect to such Existing Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed to be irrevocable and coupled with an
interest.
The undersigned hereby represents and warrants that the undersigned is the
owner, and has a net long position within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended ("Rule 14e-4") equal to or greater
than the principal amount of Existing Notes tendered hereby, and that when such
Existing Notes are accepted for exchange by Kemper, Kemper will acquire good and
marketable title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claims. The undersigned will, upon
receipt, execute and deliver any additional documents deemed by the Exchange
Agent or Kemper to be necessary or desirable to complete the exchange,
assignment and transfer of the Existing Notes tendered for exchange hereby.
The undersigned hereby further represents to Kemper that (i) the New Notes
to be acquired by the undersigned in exchange for the Existing Notes tendered
hereby and any beneficial owner(s) of such Existing Notes ("Beneficial
Owner(s)") in connection with the Exchange Offer will be acquired by the
undersigned and such Beneficial Owner(s) in the ordinary course of business of
the undersigned and such Beneficial Owner(s), (ii) the undersigned (if not a
broker-dealer referred to in the last sentence of this paragraph) and each
Beneficial Owner are not participating and do not intend to participate in the
distribution of the New Notes, (iii) the undersigned and each Beneficial Owner
have no arrangement or understanding with any person to participate in the
distribution of the New Notes, (iv) the undersigned and each Beneficial Owner
acknowledge and agree that any person participating in the Exchange Offer for
the purpose of distributing the New Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
"Securities Act") in connection with a secondary resale transaction of the New
Notes acquired by such person and cannot rely on the position of the staff of
the SEC set forth in no-action letters that are discussed in the Prospectus
under "The Exchange Offer -- Terms of the Exchange", (v) the undersigned and
each Beneficial Owner understand that a secondary resale transaction described
in clause (iv) above should be covered by an effective registration statement
containing the selling security holder information required by Item 507 of
Regulation S-K of the SEC and that Kemper has no
5
<PAGE> 6
obligation to file such a registration statement and (vi) neither the
undersigned nor any Beneficial Owner is an "affiliate" of Kemper, as defined
under Rule 405 of the Securities Act. If the undersigned is a broker-dealer that
will receive New Notes for its own account in exchange for Existing Notes that
were acquired as a result of market-making activities or other trading
activities, it represents that it acquired the Existing Notes for its own
account as a result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus in connection with any resale of
such New Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. In addition, if the undersigned is a
broker-dealer, it acknowledges that it has reviewed the Section entitled "Plan
of Distribution" in the Prospectus and that, solely with respect to the intended
method of resale by such broker-dealer, it is accurate.
For purposes of the Exchange Offer, Kemper will be deemed to have accepted
for exchange, and to have exchanged, validly tendered Existing Notes, if, as and
when Kemper gives oral or written notice thereof to the Exchange Agent. Tenders
of Existing Notes for exchange may be withdrawn at any time prior to 5:00 p.m.,
New York time, on the Expiration Date. See "The Exchange Offer -- Expiration
Date; Extensions; Terminations; Amendments" in the Prospectus. Any Existing
Notes tendered by the undersigned and not accepted for exchange will be returned
to the undersigned at the address set forth above unless otherwise indicated in
the box above entitled "Special Delivery Instructions."
The undersigned acknowledges that Kemper's acceptance of Existing Notes
validly tendered for exchange pursuant to any one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement between the undersigned
and Kemper upon the terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Existing Notes not tendered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in the box
entitled "Special Delivery Instructions," please mail any certificates for
Existing Notes not tendered or exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Issuance Instructions" and
"Special Delivery Instructions" are completed, please issue the certificates
representing the New Notes issued in exchange for the Existing Notes accepted
for exchange in the name(s) of, and return any Existing Notes not tendered for
exchange or not exchanged to, the person(s) so indicated. The undersigned
recognizes that Kemper has no obligation pursuant to the "Special Issuance
Instructions" and "Special Delivery Instructions" to transfer any Existing Notes
from the name of the Holder of Existing Notes thereof if Kemper does not accept
for exchange any of the Existing Notes so tendered for exchange.
A tender for exchange of Existing Notes pursuant to any one of the
procedures set forth in the section of the Prospectus entitled "The Exchange
Offer" will constitute the tendering Holder of Existing Notes' acceptance of the
terms and conditions of the Exchange Offer as well as the tendering Existing
Holder's representation and warranty that (i) such Holder of Existing Notes has
a net long position (within the meaning of Rule 14e-4) equal to or greater than
the principal amount of the Existing Notes being tendered hereby and (ii) the
tender of such Existing Notes complies with Rule 14e-4 (to the extent that Rule
14e-4 is applicable to such exchange).
In order to validly tender Existing Notes for exchange, Holders of Existing
Notes must complete, execute, and deliver this Letter of Transmittal.
Except as stated in the Prospectus, all authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned,
and any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
otherwise stated in the Prospectus, this tender for exchange of Existing Notes
is irrevocable.
6
<PAGE> 7
SIGN HERE
..........................................................
(Signature(s) of Owner(s))
Date:..................., 1994
Must be signed by the registered Holder of Existing
Notes exactly as name(s) appear(s) on certificate(s)
representing the Existing Notes or on a security
position listing or by person(s) authorized to
become registered Existing Note Holder(s) by
certificates and documents transmitted herewith. If
signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or
representative capacity, please provide the
following information. (See Instruction 6)
Name(s).............................................
....................................................
....................................................
(Please Print)
Capacity (full title)...............................
....................................................
....................................................
(Include Zip Code)
( )
........................... .....................
Area Code and Telephone No. Tax Identification or
Social Security Nos.
Please complete Substitute Form W-9
GUARANTEE OF SIGNATURE(S)
(SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY
INSTRUCTION 1)
Authorized Signature................................
Dated...............................................
Name................................................
(Please Print)
Title...............................................
Name of Firm .......................................
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
Section 1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm that is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office or correspondent in the United States (an "Eligible
Institution"). Signatures on this Letter of Transmittal need not be guaranteed
(i) if this Letter of Transmittal is signed by the registered holder(s) of the
Existing Notes tendered herewith and such registered holder(s) have not
completed the box entitled "Special Issuance Instructions" or the box entitled
"Special Delivery Instructions" on this Letter of Transmittal or (ii) if such
Existing Notes are tendered for the account of an Eligible Institution. IN ALL
OTHER CASES, ALL SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
Section 2. Delivery of this Letter of Transmittal and Existing Notes;
Guaranteed Delivery Procedure. This Letter of Transmittal is to be completed by
Holders of Existing Notes (i) if certificates are to be forwarded herewith or
(ii) if tenders are to be made pursuant to the procedures for tender by
book-entry transfer or guaranteed delivery set forth in the section of the
Prospectus entitled "The Exchange Offer." Certificates for all physically
tendered Existing Notes or any confirmation of a book-entry transfer (a
"Book-Entry Confirmation"), as well as a properly completed and duly executed
copy of this Letter of Transmittal or facsimile hereof, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth on the cover of this Letter of Transmittal prior to
5:00 p.m., New York time, on the Expiration Date. Holders of Existing Notes who
elect to tender Existing Notes and (i) whose Existing Notes are not immediately
available, (ii) who cannot deliver the Existing Notes or other required
documents to the Exchange Agent prior to 5:00 p.m., New York time on the
Expiration Date or (iii) who are unable to complete the procedure for book-entry
transfer on a timely basis, may have such tender effected if: (a) such tender is
made by or through an Eligible Institution; (b) prior to 5:00 p.m., New York
time, on the Expiration Date, the Exchange Agent has received from such Eligible
Institution a properly completed and duly executed Letter of Transmittal (or a
facsimile hereof) and Notice of Guaranteed Delivery (by telegram, telex,
facsimile transmission, mail or hand delivery) setting forth the name and
address of the holder of such Existing Notes and the principal amount of
Existing Notes tendered for exchange, stating that tender is being made thereby
and guaranteeing that, within five New York Stock Exchange trading days after
the Expiration Date, the certificates representing such Existing Notes (or a
Book-Entry Confirmation), in proper form for transfer, and any other documents
required by this Letter of Transmittal, will be deposited by such Eligible
Institution with the Exchange Agent; and (c) certificates for all tendered
Existing Notes, or a Book-Entry Confirmation, together with a copy of the
previously executed Letter of Transmittal and any other documents required by
this Letter of Transmittal are received by the Exchange Agent within five New
York Stock Exchange trading days after the Expiration Date.
THE METHOD OF DELIVERY OF EXISTING NOTES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER
OF EXISTING NOTES. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. NEITHER THIS LETTER OF TRANSMITTAL NOR ANY EXISTING
NOTES SHOULD BE SENT TO KEMPER OR THE TRUSTEE.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders of Existing Notes, by execution of this Letter of Transmittal
(or facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Existing Notes for exchange.
8
<PAGE> 9
Section 3. Inadequate Space. If the space provided in the box entitled
"Description of Existing Notes" above is inadequate, the certificate numbers and
principal amounts of the Existing Notes being tendered should be listed on a
separate signed schedule affixed hereto.
Section 4. Withdrawals. A tender of Existing Notes may be withdrawn at any
time prior to 5:00 p.m., New York time, on the Expiration Date by delivery of
written notice of withdrawal to the Exchange Agent at the address set forth on
the cover of this Letter of Transmittal. To be effective, a notice of withdrawal
of Existing Notes must (i) specify the name of the person who tendered the
Existing Notes to be withdrawn (the "Depositor"), (ii) identify the Existing
Notes to be withdrawn (including the certificate number or numbers and aggregate
principal amount of such Existing Notes), (iii) be signed by the Holder of
Existing Notes in the same manner as the original signature on the Letter of
Transmittal by which such Existing Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the transfer agent register the transfer of such Existing Notes into the
name of person withdrawing the tender and (iv) specify the name in which such
Existing Notes are to be registered, if different from that of the Depositor.
Withdrawals of tenders of Existing Notes may not be rescinded, and any Existing
Notes withdrawn will thereafter be deemed not validly tendered for purposes of
the Exchange Offer and no New Notes will be issued with respect thereto unless
the Existing Notes so withdrawn are validly retendered. Properly withdrawn
Existing Notes may be retendered by following one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer -- Tender Procedure"
at any time prior to 5:00 p.m., New York time, on the Expiration Date.
Section 5. Partial Tenders. (Not applicable to Holders of Existing Notes
who tender Existing Notes by book-entry transfer). Tenders of Existing Notes
will be accepted only in integral multiples of $1,000 principal amount and in a
minimum denomination of $100,000. If a tender for exchange is to be made with
respect to less than the entire principal amount of any Existing Notes, fill in
the principal amount of Existing Notes which are tendered for exchange in column
(4) of the box entitled "Description of Existing Notes," as more fully described
in the footnotes thereto. In case of a partial tender for exchange, a new
certificate, in fully registered form, for the remainder of the principal amount
of the Existing Notes, will be sent to the Holders of Existing Notes unless
otherwise indicated in the appropriate box on this Letter of Transmittal as
promptly as practicable after the expiration or termination of the Exchange
Offer.
Section 6. Signatures on this Letter of Transmittal, Powers of Attorney and
Endorsements. (a) The signature(s) of the Holder of Existing Notes on this
Letter of Transmittal must correspond with the name(s) as written on the face of
the Existing Notes without alteration, enlargement or any change whatsoever.
(b) If tendered Existing Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
(c) If any tendered Existing Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal and any necessary or required
documents as there are different registrations or certificates.
(d) When this Letter of Transmittal is signed by the Holder of Existing
Notes(s) of the Existing Notes listed and transmitted hereby, no endorsements of
Existing Notes or separate powers of attorney are required. If, however,
Existing Notes not tendered or not accepted, are to be issued or returned in the
name of a person other than the Holder of Existing Notes, then the Existing
Notes transmitted hereby must be endorsed or accompanied by appropriate powers
of attorney in a form satisfactory to Kemper, in either case signed exactly as
the name(s) of the Holder of Existing Notes appear(s) on the Existing Notes.
Signatures on such Existing Notes or powers of attorney must be guaranteed by an
Eligible Institution (unless signed by an Eligible Institution).
(e) If this Letter of Transmittal or Existing Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a
9
<PAGE> 10
fiduciary or representative capacity, such persons should so indicate when
signing, and proper evidence satisfactory to Kemper of their authority so to act
must be submitted.
(f) If this Letter of Transmittal is signed by a person other than the
registered Holder of Existing Notes listed, the Existing Notes must be endorsed
or accompanied by appropriate powers of attorney, in either case signed exactly
as the name(s) of the registered Holder of Existing Notes appear(s) on the
certificates. Signatures on such Existing Notes or powers of attorney must be
guaranteed by an Eligible Institution (unless signed by an Eligible
Institution).
Section 7. Tax Identification Number and Backup Withholding. Federal income
tax law of the United States requires that a holder of Existing Notes whose
Existing Notes are accepted for exchange provide Kemper with his correct
taxpayer identification number, which, in the case of a holder who is an
individual, is his social security number, or otherwise establish an exemption
from backup withholding. If Kemper is not provided with the correct taxpayer
identification number, the exchanging holder of Existing Notes may be subject to
a $50 penalty imposed by the Internal Revenue Service. In addition, interest on
the New Notes acquired pursuant to the Exchange Offer may be subject to backup
withholding in an amount equal to 31% percent of any interest payment. If
withholding occurs and results in an overpayment of taxes, a refund may be
obtained.
To prevent backup withholding, each exchanging holder of Existing Notes
subject to backup withholding must provide his correct taxpayer identification
number by completing the Substitute Form W-9 provided in this Letter of
Transmittal, certifying that the taxpayer identification number provided is
correct (or that the exchanging holder of Existing Notes is awaiting a taxpayer
identification number) and that either (a) the exchanging holder has not been
notified by the Internal Revenue Service that such holder is subject to backup
withholding as a result of failure to report all interest or dividends or (b)
the Internal Revenue Service has notified the exchanging holder that such holder
is no longer subject to backup withholding.
Certain exchanging holders of Existing Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding requirements. A foreign individual should certify, in accordance
with the enclosed Guidelines for Certification of Taxpayer Identification Number
on Form W-8, to such exempt status.
Section 8. Transfer Taxes. Except as set forth in this Instruction 7,
Kemper will pay all transfer taxes, if any, applicable to the transfer and
exchange of Existing Notes pursuant to the Exchange Offer. If, however, issuance
of New Notes is to be made to, or Existing Notes not tendered for exchange are
to be issued or returned in the name of, any person other than the Holder of
Existing Notes, the amount of any transfer taxes payable on account of the
transfer to such person will be imposed on and payable by the Holder of Existing
Notes tendering Existing Notes for exchange prior to the issuance of the New
Notes.
Section 9. Special Issuance and Delivery Instructions. If the New Notes are
to be issued, or if any Existing Notes not tendered for exchange are to be
issued or sent to someone other than the Holder of Existing Notes or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Holders of Existing Notes tendering Existing
Notes by book-entry transfer may request that Existing Notes not accepted be
credited to such account maintained at the Book-Entry Transfer Facility as such
Holder of Existing Notes may designate.
Section 10. Irregularities. All questions as to the form of documents and
the validity, eligibility (including time or receipt), acceptance and withdrawal
of Existing Notes will be determined by Kemper, in its sole discretion, whose
determination shall be final and binding. Kemper reserves the absolute right to
reject any or all tenders for exchange of any particular Existing Notes that are
not in proper form, or the acceptance of which would, in the opinion of Kemper
or its counsel, be unlawful. Kemper reserves the absolute right to waive any
defect, irregularity or condition of tender for exchange with regard to any
particular Existing Notes. Kemper's interpretation of the terms of, and
conditions to, the Exchange Offer (including the instructions herein) will be
final and binding. Unless
10
<PAGE> 11
waived, any defect or irregularities in connection with the Exchange Offer will
be cured within such time as Kemper shall determine. Neither Kemper, the
Exchange Agent or any other person shall be under any duty to give notice of any
defects or irregularities in Existing Notes tendered for exchange, nor shall any
of them incur any liability for failure to give such notice. A tender of
Existing Notes will not be deemed to have been made until all defects and
irregularities with respect to such tender have been cured or waived. Any
Existing Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in this Letter of Transmittal, as soon as practicable following the
Expiration Date.
Section 11. Waiver of Conditions. Kemper reserves the absolute right to
waive certain of the specified conditions as described under "The Exchange Offer
- -- Conditions to the Exchange Offer" in the Prospectus in the case of any
Existing Notes tendered (except as otherwise provided in the Prospectus).
Section 12. Mutilated, Lost, Stolen or Destroyed Existing Notes. If a
Holder of Existing Notes desires to tender Existing Notes pursuant to the
Exchange Offer, but the Existing Note has been mutilated, lost and stolen or
destroyed, such Holder of Existing Notes should write to or telephone the
Trustee at the address listed below, concerning the procedures for obtaining
replacement certificates for such Existing Notes, arranging for indemnification
or any other matter that requires handling by the Trustee:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, IL 60670-0126
(312) 407-1374
Section 13. Requests for Information or Additional Copies. Requests for
information or for additional copies of the Prospectus and this Letter of
Transmittal may be directed to the Exchange Agent at the address or telephone
number set forth on the cover of this Letter of Transmittal.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF
APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY TRANSFER
OR THE NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK TIME, ON THE
EXPIRATION DATE.
11
<PAGE> 12
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Holder of Existing Notes whose
tendered Existing Notes are accepted for exchange is required to provide Kemper
(as payor), through the Exchange Agent, with such Holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 or otherwise establish a
basis for exemption from backup withholding. If such Holder of Existing Notes is
an individual, the TIN is such Holder's social security number. If the Exchange
Agent is not provided with the correct taxpayer identification number, the
Holder of Existing Notes may be subject to a $50 penalty imposed by the Internal
Revenue Service. In addition, delivery of such Existing Note Holder's New Notes
may be subject to backup withholding.
Certain Holders of Existing Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt Holders of Existing Notes should
indicate their exempt status on Substitute Form W-9. A foreign individual may
qualify as an exempt recipient by submitting to the Exchange Agent a properly
completed Internal Revenue Service Form W-8 (which the Exchange Agent will
provide upon request) signed under penalty of perjury, attesting to the Holder's
exempt status. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, Kemper is required to withhold 31% of any
payment made to the Holder of Existing Notes or other payee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made with respect to
Existing Notes exchanged in the Exchange Offer, each Holder of Existing Notes is
required to provide the Exchange Agent with either: (i) the Holder's correct TIN
by completing the form below, certifying that the TIN provided on Substitute
Form W-9 is correct (or that such Holder of Existing Notes is awaiting a TIN)
and that (A) the Holder of Existing Notes has not been notified by the Internal
Revenue Service that he or she is subject to backup withholding as a result of a
failure to report all interest or dividends or (B) the Internal Revenue Service
has notified the Holder of Existing Notes that he or she is no longer subject to
backup withholding; or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder of Existing Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Existing Notes. If the Existing Notes are held in more than one
name or are not held in the name of the actual owner, consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional guidance regarding which number to report.
12
<PAGE> 13
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
SUBSTITUTE CERTIFY BY SIGNING AND DATING BELOW
FORMW-9 Social Security Number
OR
Employer Identification Number
-------------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
INTERNAL PART 2--Certification--Under Penalties of Perjury, I certify PART 3--
REVENUE SERVICE that: Awaiting TIN / /
PAYER'S REQUEST (1) The number shown on this form is my correct Taxpayer
FOR TAXPAYER Identification Number (or I am waiting for a number to be
IDENTIFICATION NUMBER (TIN) issued to me) and
(2) I am not subject to backup withholding either because I
have not been notified by the Internal Revenue Service ("IRS")
that I am subject to backup withholding as a result of a
failure to report all interests or dividends, or the IRS
has notified me that I am no longer subject to backup
withholding.
-------------------------------------------------------------------------------------------------
Certificate instructions--You must cross out item (2) in Part 2 if you have been notified by the
IRS that you are subject to backup withholding because of underreporting interest or dividends
on your tax return. However, if after being notified by the IRS that you are subject to backup
withholding you receive another notification from the IRS stating that you are no longer subject
to backup withholding, do not cross out item (2).
SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered
an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver such an application
in the near future. I understand that if I do not provide a taxpayer
identification number within sixty (60) days, 31% of all reportable payments
made to me thereafter will be withheld until I provide such a number.
Signature Date
- --------------------------------------------------------------------------------
13
<PAGE> 14
NOTICE OF GUARANTEED DELIVERY
TO BE USED IN CONNECTION WITH
KEMPER CORPORATION
OFFER TO EXCHANGE
$1,000 PRINCIPAL AMOUNT OF ITS
6.875% NOTES DUE 2003, SERIES A
FOR EACH
$1,000 PRINCIPAL AMOUNT OF ITS
6.875% NOTES DUE 2003
As set forth in the Prospectus dated April , 1994 (the "Prospectus") of
KEMPER CORPORATION ("Kemper"), in the section entitled "The Exchange Offer" and
in the accompanying Letter of Transmittal, which together with the Prospectus
constitutes Kemper's offer (the "Exchange Offer"), this form, or one
substantially equivalent hereto, must be used by any holder of Kemper's 6.875%
Notes Due 2003, (the "Existing Notes") who wishes to tender Existing Notes
pursuant to the Exchange Offer and (i) whose Existing Notes are not immediately
available, (ii) who cannot deliver the Existing Notes or other required
documents to the Exchange Agent prior to 5:00 p.m., New York time, on the
Expiration Date or (iii) who is unable to complete the book-entry transfer on a
timely basis. Such form may be delivered by facsimile transmission, if
applicable, mail or hand delivery to the Exchange Agent.
KEMPER WILL ACCEPT ALL EXISTING NOTES TENDERED PRIOR TO 5:00 P.M., NEW
YORK TIME, ON MAY , 1994 UNLESS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK TIME, ON
THE EXPIRATION DATE.
<TABLE>
<S> <C> <C>
The Exchange Agent is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Facsimile: By Certified mail or Overnight Courier: Confirm by Telephone:
(212) 240-8938 FIRST CHICAGO TRUST COMPANY OF NEW YORK (212) 240-8800
Attention: Corporate Trust Operations
14 Wall Street
8th Floor
New York, New York 10005
By Hand in New York:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Attention: Corporate Trust Operations
14 Wall Street
8th Floor
New York, New York 10005
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN TO THE ONE
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 15
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby represents that the undersigned owns, and has a net
long position (within the meaning of Rule 14e-4 under the Securities Exchange
Act of 1934, as amended ("Rule 14e-4")) equal to or greater than the principal
amount of the Existing Notes tendered hereby and hereby tenders to Kemper in
compliance with Rule 14e-4 and upon the terms and subject to the conditions set
forth in the Prospectus and the related Letter of Transmittal, receipt of which
is hereby acknowledged, the principal amount of Existing Notes specified below
pursuant to the guaranteed delivery procedures set forth under the section of
the Prospectus entitled "The Exchange Offer." The undersigned hereby tenders the
Existing Notes listed below:
<TABLE>
- -----------------------------------------------------------------------------------------------
<S> <C>
Existing Note Certificate Numbers
(if available) Principal Amount Tendered
If Existing Notes will be tendered by DTC
transfer: SIGN HERE
------------------------------------------
Account No. Signature(s)
-------------------------------
------------------------------------------
------------------------------------------
Name(s) (Please Print)
------------------------------------------
------------------------------------------
Address
------------------------------------------
City State Zip Code
------------------------------------------
Area Code and Telephone No.
Date:
-------------------------------------
</TABLE>
2
<PAGE> 16
GUARANTEE
(Not to be used for signature guaranty)
The undersigned, an institution which is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or is a commercial bank or trust company having an office or
correspondent in the United States (an "Eligible Institution"), guarantees (a)
that the above named person(s) has (have) a net long position (within the
meaning of Rule 14e-4) equal to or greater than the principal amount of the
Existing Notes tendered hereby, (b) that such tender of Existing Notes complies
with Rule 14e-4 and (c) that delivery to the Exchange Agent of either the
Existing Notes tendered hereby in proper form for transfer, or confirmation of
the book entry transfer of such Existing Notes into the Exchange Agent's account
at The Depository Trust Company pursuant to the procedure for book-entry
transfer set forth in the Prospectus, and any other documents required by the
Letter of Transmittal, all by 5:00 p.m., New York time, on the fifth New York
Stock Exchange trading day following the Expiration Date.
SIGN HERE
--------------------------------------
Eligible Institution (Please Print)
--------------------------------------
--------------------------------------
Signature(s)
--------------------------------------
--------------------------------------
Name(s) (Please Print)
--------------------------------------
--------------------------------------
Address
--------------------------------------
City State Zip Code
--------------------------------------
Area Code and Telephone No.
Date:
--------------------------------
DO NOT SEND EXISTING NOTES WITH THIS FORM, ACTUAL TENDER OF EXISTING NOTES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A COPY OF THE PREVIOUSLY
EXECUTED LETTER OF TRANSMITTAL.
3
<PAGE> 17
INSTRUCTIONS
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth on the cover hereof prior to 5:00 p.m., New York
time, on the Expiration Date. The method of delivery of this Notice of
Guaranteed Delivery and all other required documents to the Exchange Agent is at
the election and risk of the Holder but, except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
If such delivery is by mail, it is recommended that the Holder use properly
insured, registered mail with return receipt requested. For a full description
of the guaranteed delivery procedures, see the section of the Prospectus
entitled "The Exchange Offer." In all cases, sufficient time should be allowed
to assure timely delivery. No Notice of Guaranteed Delivery should be sent to
Kemper.
2. Signature on this Notice of Guaranteed Delivery; Guarantee of
Signatures. If this Notice of Guaranteed Delivery is signed by the registered
Holder(s) of the Existing Notes referred to herein, the signature must
correspond with the name(s) as written on the face of the Existing Notes without
alteration, enlargement or any change whatsoever.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered Holder(s) of any Existing Notes listed, this Notice of Guaranteed
Delivery must be accompanied by appropriate bond powers signed as the name(s) of
the registered Holder(s) appear(s) on the face of the Existing Notes without
alteration, enlargement or any change whatsoever.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing, and, unless waived by Kemper, evidence satisfactory to
Kemper of the authority so to act must be submitted with this Notice of
Guaranteed Delivery.
3. Requests for Assistance or Additional Copies. Questions and requests for
assistance or for additional copies of the Prospectus and the Letter of
Transmittal may be directed to the Exchange Agent at its address or telephone
number set forth on the cover hereof.
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EXHIBIT 99.2
EXCHANGE AND REGISTRATION AGREEMENT
EXCHANGE AND REGISTRATION AGREEMENT (the "Agreement") is made and entered
into this 22nd day of September 1993, between KEMPER CORPORATION, a Delaware
corporation (the "Company"), and GOLDMAN, SACHS & CO. and KEMPER SECURITIES,
INC., severally and not jointly (each a "Purchaser" and collectively, the
"Purchasers").
SECTION 1. CERTAIN DEFINITIONS.
Any capitalized terms used in this Agreement which are not defined herein
shall have the meanings given to those terms in the Securities (as defined
herein). For purposes of this Agreement, the following terms shall have the
following respective meanings:
(a) "Closing Date" shall mean September 22, 1993.
(b) "Commission" shall mean the Securities and Exchange Commission, or
any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular
purpose.
(c) "Effective Time", in the case of an Exchange Offer, shall mean the
date on which the Commission declares the Exchange Offer registration
statement effective or on which such registration statement otherwise
becomes effective and, in the case of a Shelf Registration, shall mean the
date on which the Commission declares the Shelf Registration effective or
on which the Shelf Registration otherwise becomes effective.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, or
any successor thereto, as the same shall be amended from time to time.
(e) "Exchange Offer" shall have the meaning assigned thereto in
Section 2(b) hereof.
(f) The term "holder" shall mean any person who, at the Closing Date,
owns any Registrable Securities and such of its respective successors and
assigns who acquire Registrable Securities, directly or indirectly, from
such person or from any successor or assign of such person.
(g) "Indenture" shall mean the Indenture, dated as of September 15,
1993, between the Company and The First National Bank of Chicago, as
Trustee.
(h) "Initial Interest Rate" shall have the meaning assigned thereto in
Section 2(a) hereof.
(i) The term "person" shall mean a corporation, association,
partnership, organization, business, individual, government or political
subdivision thereof or governmental agency.
(j) "Purchase Agreement" shall mean the Purchase Agreement, dated
September 15, 1993, among the Company and each of the Purchasers.
(k) "Registrable Securities" shall mean the Securities; provided,
however, that such Securities shall cease to be Registrable Securities when
(i) a registration statement registering resales of such Securities under
the Securities Act has been declared or becomes effective and such
Securities have been sold or otherwise transferred by the holder thereof
pursuant to such effective registration statement or (ii) such Securities
are eligible for resale pursuant to Rule 144 (or any successor provision)
promulgated under the Securities Act without restrictions on
transferability thereunder.
(l) "Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
(m) "Securities" shall mean, collectively, the 6.875% Notes Due 2003
of the Company issued and sold to the Purchasers on the Closing Date, and
Securities issued in exchange therefor or in lieu thereof pursuant to the
Indenture.
(n) "Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
<PAGE> 2
(o) "Shelf Registration" shall have the meaning assigned thereto in
Section 2(c) hereof.
(p) "Step-Up in Interest Rate" shall have the meaning assigned thereto
in Section 2(a) hereof.
(q) "Suspension Event" shall have the meaning assigned thereto in
Section 2(c) hereof.
(r) "Suspension Period" shall have the meaning assigned thereto in
Section 2(c) hereof.
(s) "Trust Indenture Act" shall mean the Trust Indenture Act of 1939,
or any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
SECTION 2. REGISTRATION UNDER THE SECURITIES ACT.
(a) The Company hereby confirms that, pursuant to the terms of the
Securities, the holders of the Registrable Securities shall be entitled to an
0.50% per annum increase in the initial interest rate on the Registrable
Securities from 6.875% per annum (the "Initial Interest Rate") to 7.375% per
annum (the "Step-Up in Interest Rate") unless the Company shall cause on or
prior to March 15, 1994 either (i) the Exchange Offer to be consummated or (ii)
the Shelf Registration to be filed and declared or otherwise become effective
under the Securities Act. The Step-Up in Interest Rate, if any, shall accrue
from March 15, 1994 and shall be payable on September 15, 1994 and on each March
15 and September 15 thereafter. However, if after the Company becomes obligated
to pay the Step-Up in Interest Rate, either the Exchange Offer is consummated or
the Shelf Registration has become or is declared effective under the Securities
Act, then, upon the happening of either of such events, the Step-Up in Interest
Rate on the Securities will be permanently rescinded and the Initial Interest
Rate will be reinstated as of the date of either of such events.
(b) In order for the Company to avoid the Step-Up in Interest Rate or
rescind the Step-Up in Interest Rate and reinstate the Initial Interest Rate,
the Company must file under the Securities Act a registration statement relating
to an offer to exchange (the "Exchange Offer") any and all of the Securities for
a like aggregate principal amount of a new series of debt securities of the
Company to be issued under the Indenture which are substantially identical to
the Securities (except that such debt securities will not contain terms with
respect to transfer restrictions or adjustments in the interest rate). Such
registration statement shall be on the appropriate form and the Company will
comply with all applicable tender offer rules and regulations under the Exchange
Act to the extent such rules and regulations relate to registered exchange
offers.
The debt securities received by holders in the Exchange Offer for
Registrable Securities will be, upon receipt, transferable by each such holder
(other than holders who fail to make or comply with the representations in the
following paragraph) without restriction under the Securities Act and the
Exchange Act and without material restrictions under the blue sky or securities
laws of a substantial proportion of the States. The Exchange Offer shall be
deemed to have been consummated upon the earlier to occur of (i) the Company
having exchanged such debt securities, transferable as provided in the
immediately preceding sentence, for all outstanding Registrable Securities
pursuant to the Exchange Offer or (ii) the Company having exchanged, pursuant to
the Exchange Offer, such debt securities, transferable as provided in the
immediately preceding sentence, for all Registrable Securities that have been
tendered and not withdrawn on or prior to the termination of the Exchange Offer.
The Company shall keep the Exchange Offer open for a period of not less than the
period required under applicable federal law (provided that in no event shall
such period be less than 30 days).
Each holder of Securities who wishes to exchange such Securities for new
debt securities in the Exchange Offer will, in addition to any other
representations required by the Company or the Commission in order to comply
with applicable law, be required to represent that (i) such holder is not an
affiliate of the Company, (ii) that any debt securities to be received by such
holder in the Exchange Offer will be acquired in the ordinary course of its
business, and (iii) that such holder has
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<PAGE> 3
no arrangement with any person to participate in a distribution (within the
meaning of the Securities Act) of the debt securities to be received in the
Exchange Offer; provided, however, that broker-dealers who satisfy the
conditions set forth in the following paragraph will be permitted to participate
in the Exchange Offer.
In connection with the Exchange Offer, the Company agrees to permit any
holder of Securities that is a broker or a dealer, which the parties agree shall
mean a broker or a dealer as defined in the Exchange Act (a "broker-dealer"),
who acquired Securities for its own account as a result of market-making
activities or other trading activities to exchange Securities for new debt
securities in the Exchange Offer if, at the time of the Exchange Offer: (i)
existing interpretations of the staff of the Commission permit broker-dealers to
participate in registered exchange offers, (ii) to the extent required by the
Commission, such broker-dealer represents, in addition to any other
representations required by the Company in order to comply with applicable law,
that it acquired such Securities for its own account as a result of
market-making activities or other trading activities and that such broker-dealer
has not entered into any arrangement or understanding with the Company or an
affiliate of the Company to distribute the new debt securities received by it in
the Exchange Offer and (iii) such broker-dealer furnishes to the Company in
writing a reasonable time prior to the effectiveness of the registration
statement relating to the Exchange Offer information to the extent required by
the Commission to be contained in the prospectus included in such registration
statement regarding such broker-dealer and such broker-dealer's intended method
of distribution of the new debt securities received by it in the Exchange Offer
and agrees to deliver such prospectus in connection with any resale of such new
debt securities.
The Company agrees, in the event any broker-dealer referred to in the
preceding paragraph shall have so requested a reasonable time prior to the
effectiveness of the registration statement relating to the Exchange Offer, (i)
to submit to the Commission a letter of representation, or such other
documentation as may be reasonably required by the Commission's staff, in order
for such broker-dealer to use the prospectus included in such registration
statement to meet any prospectus delivery requirement of up to 90 days after the
effective date of such registration statement, (ii) to use its best efforts to
include in such registration statement a prospectus for use in any resales by
such broker-dealer and (iii) to use its best efforts to keep such registration
statement effective for a period of 90 days after the effective date thereof.
(c) In the event the Company elects not to commence or consummate the
Exchange Offer for any reason or if prior to the consummation of the Exchange
Offer existing Commission interpretations are changed such that the debt
securities received by holders in the Exchange Offer for Registrable Securities
would not be, upon receipt, transferable by each such holder (other than holders
who fail to make or comply with the representations set forth in paragraph three
of Section 2(b) above and broker-dealers) without restriction under the
Securities Act, in order for the Company to avoid the Step-Up in Interest Rate
or rescind the Step Up in Interest Rate and reinstate the Initial Interest Rate,
the Company must file under the Securities Act a "shelf" registration statement
providing for the registration of, and the sale on a continuous or delayed basis
by the holders of, all of the Registrable Securities, pursuant to Rule 415 under
the Securities Act and/or any similar rule that may be adopted by the Commission
(the "Shelf Registration"). In such event, the Company agrees to use its best
efforts to keep such Shelf Registration continuously effective for a period
ending on the earlier of the third anniversary of the Closing Date or such time
as there are no longer any Registrable Securities. For the purposes of this
Section 2(c), the Company shall be deemed not to have used its best efforts to
keep the Shelf Registration effective during the requisite period if it
voluntarily takes any action that would result in holders of Registrable
Securities not being able to offer and sell such Registrable Securities during
that period, unless, in the Company's judgment, reasonably exercised, such
action is required by applicable law, including, but not limited to, reasonable
periods necessary to prepare appropriate disclosure; provided, that the
foregoing shall not apply to actions taken (or contemplated to be taken) by the
Company in good faith and for business reasons ( a "Suspension Event"). Any such
period during which the Company fails to keep the Shelf Registration effective
and usable for
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<PAGE> 4
offers and sales of Registrable Securities is referred to as a "Suspension
Period". A Suspension Period shall commence on and include the date that the
Company gives notice that the Shelf Registration is no longer effective or the
prospectus included therein is no longer usable for offers and sales of
Registrable Securities and shall end on the date when each holder of Registrable
Securities who wishes to resell such Registrable Securities pursuant to such
Shelf Registration either receives the copies of the supplemented or amended
prospectus contemplated by Section 3(d) hereof or is advised in writing by the
Company that use of the prospectus may be resumed.
(d) If one or more Suspension Periods occur, the three-year time period
provided for in Section 2(c) above shall be extended by the number of days
included in each such Suspension Period, but in no event shall the Company be
required to maintain the effectiveness of the Shelf Registration after the date
which is 42 months from the date such Shelf Registration is initially declared
effective by the Commission.
(e) Upon the consummation of the Exchange Offer, the Company will have no
obligation to file a Shelf Registration covering resales of Registrable
Securities not exchanged pursuant to the Exchange Offer; provided, however, that
if, upon the consummation of the Exchange Offer, broker-dealers who complied
with Section 2(b) but were not permitted by the Company to participate in the
Exchange Offer for any reason or if prior to the consummation of the Exchange
Offer existing Commission interpretations are changed such that broker-dealers
would not be permitted to participate in registered exchange offers, the Company
will be obligated to file a Shelf Registration with respect to Registrable
Securities held by such broker-dealers.
(f) Upon the consummation of the Exchange Offer, any holder of Registrable
Securities who did not exchange such Registrable Securities pursuant to the
Exchange Offer, including holders who fail to make or comply with the
representations in Section 2(b) and broker-dealers, will not be entitled to the
Step-Up in Interest Rate with respect to Registrable Securities held by such
holder.
SECTION 3. REGISTRATION PROCEDURES.
(a) Prior to or at the Effective Time of the Exchange Offer or a Shelf
Registration, as the case may be, the Company shall qualify the Indenture under
the Trust Indenture Act.
(b) 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.
(c) If the Company files the Shelf Registration in accordance with Section
2(c), the Company shall use its reasonable efforts to effect or cause such
registration to permit the sale of the Registrable Securities by the holders
thereof in accordance with the intended method or methods of distribution
thereof described in the Shelf Registration. In connection therewith, the
Company shall, as soon as reasonably possible:
(i) prepare and file with the Commission a registration statement with
respect to the Shelf Registration on any form which may be utilized by the
Company and which shall permit the disposition of the Registrable
Securities in accordance with the intended method or methods thereof, as
specified in writing by the holders of the Registrable Securities, and use
its reasonable efforts to cause such registration statement to become
effective as soon as reasonably possible thereafter;
(ii) prepare and file with the Commission such amendments,
post-effective amendments and supplements to such registration statement
and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such registration statement for the
applicable period specified herein and as may be required by the applicable
rules and regulations of the Commission and the instructions applicable to
the form of such registration statement, and furnish to the holders of the
Registrable Securities copies of any such supplement or amendment filed
with the Commission;
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<PAGE> 5
(iii) comply with the provisions of the Securities Act with respect to
the disposition of all of the Registrable Securities covered by any
registration statement in accordance with the intended methods of
disposition by the holders thereof set forth in such registration
statement;
(iv) provide (A) the holders of the Registrable Securities to be
included in such registration statement, (B) the underwriters (which term,
for purposes of this Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(11) of the Securities Act), if
any, thereof, (C) the sales or placement agent, if any, therefor, (D)
counsel for such underwriters or agent, and (E) not more than one counsel
for all the holders of such Registrable Securities to be included in such
registration statement the opportunity to participate in the preparation of
each prospectus included therein or filed with the Commission to the extent
such prospectus relates to them, and each amendment or supplement thereto
to the extent such amendment or supplement relates to them; provided,
however, that the Company shall be under no obligation to allow any
participation in the preparation of any Exchange Act document which the
Company may incorporate by reference in such registration statement;
(v) for a reasonable period prior to the filing of such registration
statement, and throughout the period the Shelf Registration is effective,
make available for inspection by the parties referred to in Section
3(c)(iv) above, who shall certify in writing to the Company that they have
a current intention to sell the Registrable Securities pursuant to the
Shelf Registration, such financial and other information and books and
records of the Company, and cause the officers, employees, counsel and
independent certified public accountants of the Company to respond to such
inquiries, as shall be reasonably necessary, in the judgment of the
respective counsels referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act;
provided, however, that each such party shall be required to maintain in
confidence and not to disclose to any other person any information or
records reasonably designated by the Company in writing as being
confidential or which in the circumstances should be understood as being
confidential, until such time as (A) such information becomes a matter of
public record (whether by virtue of its inclusion in such registration
statement or otherwise), or (B) such person shall be required so to
disclose such information pursuant to a subpoena or order of any court or
other governmental agency or body having jurisdiction over the matter
(subject to the requirements of such order, and only after such person
shall have given the Company prompt written notice of such requirement);
(vi) promptly notify the selling holders of Registrable Securities,
the sales or placement agent, if any, therefor and the managing underwriter
or underwriters, if any, thereof and confirm such advice in writing, (A)
when such registration statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been
filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective, (B) of the
issuance by the Commission of any stop order suspending the effectiveness
of such registration statement or the initiation or threatening of any
proceedings for that purpose, (C) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (D) at any time when a
prospectus is required to be delivered under the Securities Act, that (i) a
Suspension Event has occurred, (ii) such registration statement,
prospectus, prospectus amendment or supplement or post-effective amendment,
or any document incorporated by reference in any of the foregoing, contains
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing or (iii) the
representation and warranties of the Company contemplated by Section
3(c)(xv) or Section 5 hereof cease to be true and correct in all material
respects such that the Company is required to make changes in the
registration statement, prospectus, prospectus amendment or supplement or
post-effective amendment, or any document incorporated by reference in any
of the foregoing (which advice shall be accompanied
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<PAGE> 6
by an instruction to suspend the use of the prospectus until the requisite
changes have been made;
(vii) use its best efforts to (i) obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date and (ii)
rescind its suspension of the disposition of the Registrable Securities at
the earliest practicable date;
(viii) if requested in writing by any managing underwriter or
underwriters, any placement or sales agent or any holder of Registrable
Securities, promptly incorporate in a prospectus supplement or
post-effective amendment such information as is required by the applicable
rules and regulations of the Commission and, subject to the proviso in
Section 5(a) herein, as such managing underwriter or underwriters, such
agent or such holder specifies in writing should be included therein
relating to the terms of the sale of such Registrable Securities,
including, without limitation, information with respect to the principal
amount of Registrable Securities being sold by such holder or agent or to
any underwriters, the name and description of such holder, placement or
sales agent or underwriter, the offering price of such Registrable
Securities and any discount, commission or other compensation payable in
respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of the
Registrable Securities to be sold by such holder or agent or to such
underwriters; and make all required filings of such prospectus supplement
or post-effective amendment promptly after notification of the matters to
be incorporated in such prospectus supplement or post-effective amendment;
(ix) furnish to each holder of Registrable Securities, each placement
or sales agent, if any, therefor, each underwriter, if any, thereof and the
respective counsels referred to in Section 3(c)(iv) a conformed copy of
such registration statement, each such amendment or supplement thereto (in
each case including all exhibits thereto and documents incorporated by
reference therein) and such number of copies of such registration statement
(excluding exhibits thereto and documents incorporated by reference therein
unless specifically so requested by such holder, placement or sales agent
or underwriter, as the case may be) and of the prospectus included in such
registration statement (including each preliminary prospectus and any
summary prospectus), in conformity with the requirements of the Securities
Act, and such other documents, as such holder, placement or sales agent or
underwriter, if any, may reasonably request in order to facilitate the
offering and disposition of the Registrable Securities owned by such
holder, offered or sold by such placement or sales agent or underwritten by
such underwriter and permit such holder, agent and underwriter to satisfy
the prospectus delivery requirements of the Securities Act; and the Company
hereby consents to the use of such prospectus (including such preliminary
and summary prospectus) and any amendment or supplement thereto by each
such holder and by any such placement or sales agent and underwriter, in
each case in the form most recently provided to such party by the Company,
in connection with the offering and sale of the Registrable Securities
covered by the prospectus (including such preliminary and summary
prospectus) or any supplement or amendment thereto;
(x) use its best efforts to (A) register or qualify the Registrable
Securities to be included in such registration statement under such
insurance or securities laws or blue sky laws (or similar insurance laws)
of such jurisdictions as any holder of such Registrable Securities and each
placement or sales agent, if any, therefor and underwriter, if any, thereof
shall reasonably request, (B) keep such registrations or qualifications in
effect and comply with such laws so as to permit the continuance of offers,
sales and dealings therein in such jurisdictions during the period such
registration statement is required to be kept effective and for so long as
may be necessary to enable any such holder, agent or underwriter to
complete its distribution of Securities pursuant to such registration
statement and (C) take any and all other actions as may be reasonably
necessary to enable each such holder, agent, if any, and underwriter, if
any, to consummate the disposition in such jurisdictions of such
Registrable Securities; provided, however, that the
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Company shall not be required for any such purpose to (I) qualify as a
foreign corporation in any jurisdiction where it would not otherwise be
required to qualify but for the requirements of this Section 3(c)(x), (II)
consent to general service of process in any such jurisdiction or (III)
make any changes to the Company's Certificate of Incorporation or By-laws
or any agreement between the Company and its stockholders;
(xi) use its best efforts to obtain the consent or approval of each
United States governmental agency or authority, whether federal, state or
local, which may be required of the Company (i) to effect the Shelf
Registration or the offering or sale in connection therewith or (ii) to
enable the selling holder or holders to offer, or to consummate the
disposition of, their Registrable Securities;
(xii) cooperate with the holders of the Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of definitive forms of Registrable Securities to be sold, which
Registrable Securities shall be printed, lithographed or engraved, or
produced by any combination of such methods, and which shall not bear any
restrictive legends; and, in the case of an underwritten offering, enable
such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters may request at least two business
days prior to any sale of the Registrable Securities;
(xiii) provide a new CUSIP number for all Registrable Securities, not
later than the effective date of the Shelf Registration;
(xiv) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, including (without limitation)
customary provisions relating to indemnification and contribution, and take
such other actions in connection therewith as any holder of Registrable
Securities aggregating at least $66.6 million (or such lesser amount as the
Company may agree to) in aggregate principal amount of the then outstanding
Registrable Securities, or as the holders of Registrable Securities
aggregating at least $133.2 million (or such lesser amount as the Company
may agree to) in aggregate principal amount of the then outstanding
Registrable Securities, shall request in order to expedite or facilitate
the disposition of such Registrable Securities; provided that the Company
shall not be required to enter into any such agreement more than once with
respect to all of the Registrable Securities, and may delay entering into
such agreement until the consummation of any underwritten public offering
which the Company shall have then engaged;
(xv) whether or not an agreement of the type referred to in Section
3(c)(xiv) hereof is entered into and whether or not any portion of the
offering contemplated by such registration statement is an underwritten
offering or is made through a placement or sales agent or any other entity,
(A) make such representations and warranties to the holders of such
Registrable Securities and the placement or sales agent, if any, therefor
and the underwriters, if any, thereof in form, substance and scope as are
customarily made in connection with an offering of debt securities pursuant
to any appropriate agreement and/or to a registration statement filed on
the form applicable to the Shelf Registration; (B) obtain an opinion of
counsel to the Company, which may be the Company's general counsel (so long
as she or he is experienced in securities law matters), in customary form
and covering such matters, of the type customarily covered by such an
opinion, including customary exceptions, as the managing underwriters, if
any, as any holder of at least 25% in aggregate principal amount of the
Registrable Securities, and as the holders of at least a majority in
aggregate principal amount of the Registrable Securities may reasonably
request, addressed to such holder or holders and the placement or sales
agent, if any, therefor and the underwriters, if any, thereof and dated the
effective date of such registration statement (or if such registration
statement contemplates an underwritten offering of a part or all of the
Registrable Securities, dated the date of the closing under the
underwriting agreement relating thereto), 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 significant
subsidiaries
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<PAGE> 8
(as defined in Regulation S-X under the Securities Act); the qualification
of the Company and such significant subsidiaries to transact business as
foreign corporations in all material respects; the due authorization,
execution and delivery of this Agreement and of any agreement of the type
referred to in Section 3(c)(xiv) hereof; the due authorization, execution,
authentication and issuance, and the validity and enforceability, of the
Securities; the absence of material legal or governmental proceedings
involving the Company; the absence of a material breach by the Company or
its subsidiaries of, or a default under, agreements binding the Company or
any subsidiary in connection with the Shelf Registration and the offering
and sale of the Registrable Securities; the absence of governmental
approvals required to be obtained in connection with the Shelf
Registration, the offering and sale of the Registrable Securities, this
Agreement or any agreement of the type referred to in Section 3(c)(xiv)
hereof; and the compliance as to form of such 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. Such counsel shall also state that, as of the date of the
opinion and of the registration statement or most recent post-effective
amendment thereto, as the case may be, they have no reason to believe that
such registration statement and the prospectus included therein, as then
amended or supplemented, and the documents incorporated by reference
therein contained an untrue statement of a material fact or omitted to
state therein a material fact necessary to make the statements therein not
misleading (in the case of such documents, in the light of the
circumstances existing at the time that such documents were filed with the
Commission under the Exchange Act)); (C) to the extent then applicable,
subject to the receipt by the independent certified public accountants of
the Company of a letter or letters as described in paragraphs 6 and 7 of
the Statement on Auditing Standards No. 72 Letters for Underwriters and
Certain Other Requesting Parties or such other letter or letters as may be
otherwise required, obtain a "cold comfort" letter or letters from the
independent certified public accountants of the Company addressed to the
selling holders of Registrable Securities and the placement or sales agent,
if any, therefor and the underwriters, if any, thereof, dated (I) the
effective date of such registration statement and (II) the effective date
of any prospectus supplement to the prospectus included in such
registration statement or post-effective amendment to such registration
statement which includes unaudited or audited financial statements as of a
date or for a period subsequent to that of the latest such statements
included in such prospectus (and, if such registration statement
contemplates an underwritten offering pursuant to any prospectus supplement
to the prospectus included in such registration statement or post-effective
amendment to such registration statement which includes unaudited or
audited financial statements as of a date or for a period subsequent to
that of the latest such statements included in such prospectus, dated the
date of the closing under the underwriting agreement relating thereto),
such letter or letters to be in customary form and covering such matters of
the type customarily covered by letters of such type; (D) in connection
with every filing under the securities laws, deliver such documents and
certificates, including officers' certificates, as may be reasonably
requested by any holder of at least $50 million in aggregate principal
amount of the Registrable Securities being sold or by the holders of at
least a majority in aggregate principal amount of the Registrable
Securities being sold and the placement or sales agent, if any, therefor
and the managing underwriters, if any, thereof to evidence the accuracy of
the representations and warranties made pursuant to clause (A) above or
those contained in Section 5(a) hereof and the compliance with or
satisfaction of any agreements or conditions contained in the underwriting
agreement or other agreement entered into by the Company; and (E) undertake
such obligations relating to expense reimbursement, indemnification and
contribution as are provided in Section 6 hereof;
(xvi) notify in writing each holder of Registrable Securities of any
proposal by the Company to amend or waive any provision of this Agreement
pursuant to Section 9(i) hereof and of any amendment or waiver effected
pursuant thereto, each of which notices shall contain the text of the
amendment or waiver proposed or effected, as the case may be;
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<PAGE> 9
(xvii) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as
a member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the
By-Laws of the National Association of Securities Dealers, Inc. ("NASD"))
thereof, whether as a holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, assist such broker-dealer in complying with the
requirements of such Rules and By-Laws, including, without limitation, by
(A) if such Rules or By-Laws, including Schedule E thereto, shall so
require, engaging a "qualified independent underwriter" (as defined in such
Schedule) to participate in the preparation of the registration statement
relating to such Registrable 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
Registrable Securities, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided
in Section 6 hereof, and (C) 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 of Fair Practice of the NASD; and
(xviii) comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders as soon as
practicable but in any event not later than eighteen months after the
effective date of a registration statement, an earning statement of the
Company and its subsidiaries complying with Section 11(a) of the Securities
Act (including, at the option of the Company, Rule 158 thereunder).
(d) In the event that the Company would be required, pursuant to Section
3(c)(vi)(D) above, to notify the selling holders of Registrable Securities, the
placement or sales agent, if any, therefor and the managing underwriters, if
any, thereof, the Company shall, subject to the Company's right to declare a
Suspension Event pursuant to Section 2(c), without delay prepare and furnish to
each such holder, to each placement or sales agent, if any, and to each
underwriter, if any, a reasonable number of copies of a prospectus supplemented
or amended so that, as thereafter delivered to purchasers of Registrable
Securities, such prospectus shall not 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 in light of the circumstances then
existing. Each holder of Registrable Securities agrees that upon receipt of any
notice from the Company pursuant to Section 3(c)(vi)(C) or 3(c)(vi)(D) hereof,
such holder shall forthwith discontinue the disposition of Registrable
Securities pursuant to the registration statement applicable to such Registrable
Securities until such holder shall have received from the Company (i) notice
that the use of such prospectus could be resumed or (ii) copies of such amended
or supplemented prospectus, and if so directed by the Company, such holder shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
covering such Registrable Securities at the time of receipt of such notice.
(e) The Company may require each holder of Registrable Securities as to
which any registration is being effected to furnish to the Company in writing
such information regarding such holder and such holder's intended method of
distribution of such Registrable Securities as the Company may from time to time
reasonably request in writing, but only to the extent that such information is
required in order to comply with the Securities Act. Each such holder agrees to
notify the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such holder to the Company or of the
occurrence of any event in either case as a result of which any prospectus
relating to such registration contains or would contain an untrue statement of a
material fact regarding such holder or such holder's intended method of
distribution of such Registrable Securities or omits to state any material fact
regarding such holder or such holder's intended method of distribution of such
Registrable Securities required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and promptly to furnish to the Company any additional information required to
correct and update any previously furnished
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<PAGE> 10
information or required so that such prospectus shall not contain, with respect
to such holder or the distribution of such Registrable Securities, 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 in
light of the circumstances then existing.
SECTION 4. REGISTRATION EXPENSES.
The Company agrees to bear and to pay or cause to be paid promptly upon
request being made therefor all expenses incident to the Company's performance
of or compliance with this Agreement, including, without limitation, (a) all
Commission and any NASD registration and filing fees and expenses, (b) all fees
and expenses in connection with the qualification of the Securities for offering
and sale under the State securities and blue sky laws referred to in Section
3(c)(x) hereof, including reasonable fees and disbursements of counsel for the
placement or sales agent or underwriters in connection with such qualifications,
(c) all expenses relating to the preparation, printing, distribution and
reproduction of each registration statement required to be filed hereunder, each
prospectus included therein or prepared for distribution pursuant hereto, each
amendment or supplement to the foregoing, the certificates representing the
Securities and all other documents relating hereto, (d) messenger and delivery
expenses, (e) fees and expenses of the Trustee under the Indenture and of any
escrow agent or custodian, (f) internal expenses (including, without limitation,
all salaries and expenses of the Company's officers and employees performing
legal or accounting duties), (g) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company in connection with the
preparation of documents with respect to such registration (including the
expenses of any opinions or "cold comfort" letters required by or incident to
such performance and compliance), (h) fees, disbursements and expenses of any
"qualified independent underwriter" engaged pursuant to Section 3(c)(xvii)
hereof, (i) reasonable fees, disbursements and expenses of one counsel for the
holders of Registrable Securities retained in connection with such registration,
as selected by the holders of at least a majority in aggregate principal amount
of the Registrable Securities being registered, and (j) fees, expenses and
disbursements of any other persons, including special experts, retained by the
Company in connection with such registration (collectively, the "Registration
Expenses"). To the extent that any Registration Expenses are incurred, assumed
or paid by any holder of Registrable Securities or any placement or sales agent
therefor or underwriter thereof, the Company shall reimburse such person for the
full amount of the Registration Expenses so incurred, assumed or paid promptly
after receipt of a request therefor. Notwithstanding the foregoing, the holders
of the Registrable Securities being registered shall pay all agency fees and
commissions and underwriting discounts and commissions attributable to the sale
of such Registered Securities and the reasonable fees and disbursements of any
counsel or other advisors or experts retained by such holders (severally or
jointly), other than the counsel and experts specifically referred to above.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to, and agrees with, each of the
holders from time to time of Registrable Securities, including each of the
Purchasers as a holder of Registrable Securities, that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section 3(c)(ix) hereof and any further
amendments or supplements to any such registration statement or prospectus,
when it becomes effective or is filed with the Commission, as the case may
be, and, in the case of an underwritten offering of Registrable Securities,
at the time of the closing under the underwriting agreement relating
thereto will conform in all material respects to the requirements of the
Securities Act and the Trust Indenture Act and will not 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 at all times subsequent to the Effective Time when a
prospectus would be required to be delivered under the Securities Act,
other than from (i) such time as a notice has been given to holders of
Registrable Securities
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<PAGE> 11
pursuant to Section 3(c)(vi)(D) hereof until (ii) such time as the Company
furnishes an amended or supplemented prospectus pursuant to Section 3(d)
hereof, each such registration statement and each prospectus (including any
summary prospectus) contained therein or furnished pursuant to Section
3(c)(ix) hereof, as then amended or supplemented, will conform in all
material respects to the requirements of the Securities Act and the Trust
Indenture Act and will not 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 in the light of the
circumstances then existing; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing to
the Company by a holder of Registrable Securities or any underwriter or
placement agent with respect thereto expressly for use therein.
(b) Any documents incorporated by reference in any registration
statement referred to in Section 5(a) hereof, when they become or became
effective or are or were filed with the Commission, as the case may be,
will conform or conformed in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and none of such
documents will contain or contained an untrue statement of a material fact
or will omit or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a holder of Registrable
Securities or any underwriter or placement agent with respect thereto
expressly for use therein.
(c) The compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated will
not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or any
subsidiary is a party or by which the Company or any subsidiary is bound or
to which any of the property or assets of the Company or any subsidiary is
subject, nor will such action result in any violation of the provisions of
the Certificate of Incorporation, as amended, or the By-Laws of the Company
or any existing statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
subsidiary or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the consummation by
the Company of the transactions contemplated by this Agreement, except the
registration under the Securities Act of the Registrable Securities,
qualification of the Indenture under the Trust Indenture Act and such
consents, approvals, authorizations, registrations or qualifications as may
be required under State securities or blue sky laws in connection with the
offering and distribution of the Registrable Securities.
(d) This Agreement has been duly authorized, executed and delivered by
the Company.
SECTION 6. INDEMNIFICATION.
(a) Indemnification by the Company. Upon the registration of resales of the
Registrable Securities pursuant to Section 2(c) hereof and in consideration of
the agreements of the Purchasers and the holders contained herein, and as an
inducement to the Purchasers to purchase the Securities, the Company shall, and
it hereby agrees to, indemnify and hold harmless each of the Purchasers, as a
holder of Registrable Securities, and each of the other holders of Registrable
Securities to be included in such registration, and each person who participates
as a placement or sales agent or as an underwriter in any offering or sale of
such Registrable Securities, from and against any and all losses, claims,
damages and liabilities, joint or several, to which such holder, placement or
sales agent or underwriter may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages and liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any registration
statement under
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<PAGE> 12
which such Registrable Securities were registered under the Securities Act, or
any preliminary, final or summary prospectus contained therein or furnished by
the Company to any such holder, placement or sales agent or underwriter, or any
amendment or supplement thereto, or arise out of or are based upon any omission
or alleged omission to state therein a material fact necessary to make the
statements therein not misleading, and the Company shall, and it hereby agrees
to, reimburse without limitation such holder, such placement or sales agent and
such underwriter for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such action or claim as such
expenses are incurred promptly upon receipt of notice setting forth such
expenses; provided, however, that the Company shall not be liable in any such
case to the extent that any such losses, claims, damages or liabilities are
caused by an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, or preliminary, final or summary
prospectus, or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any of such indemnified persons
expressly for use therein; provided, further, that the Company shall not be
liable to any indemnified person to the extent such loss, claim, damage, or
liability results from the fact that there was not delivered by such indemnified
person a final prospectus the delivery of which would have avoided such loss,
claim, damage or liability and which was provided by the Company to such
indemnified person to permit the timely delivery thereof.
(b) Indemnification by the Holders and any Agents and Underwriters. As a
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 2(c) hereof and to entering into any underwriting
agreement with respect thereto, each holder of such Registrable Securities and
each underwriter named in any such underwriting agreement, severally and not
jointly, shall, and it hereby agrees to, (i) indemnify and hold harmless the
Company, and all other holders of Registrable Securities, against any losses,
claims, damages or liabilities to which the Company or such other holders of
Registrable Securities may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in such registration statement, or
any preliminary, final or summary prospectus contained therein or furnished by
the Company to any such holder, agent or underwriter, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such holder or
underwriter expressly for use therein, and (ii) reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim; provided, however, that no
such holder shall be liable to any person under this Section 6(b) for any amount
in excess of the dollar amount of the proceeds, net of any selling or
underwriting compensation, received by such holder from the sale of such
holder's Registrable Securities pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of written notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying party in writing of
the commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from liability which it may have to any indemnified
party other than under the indemnification provisions of or contemplated by
Sections 6(a) or 6(b) hereof. In case any such action shall be brought against
any indemnified party and it shall notify an indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, including
the employment of one counsel (or such additional counsel as necessary if one
counsel is unable to represent all such indemnified parties due to conflicts of
interest) reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel
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<PAGE> 13
to the indemnifying party), and, after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation.
(d) Contribution. Each party hereto, including any holder of Registrable
Securities to be included in such registration, agrees that, if for any reason
the indemnification provisions contemplated by Section 6(a) or Section 6(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which 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
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
Section 6(d) were determined by pro rata allocation (even if the holders or any
agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 6(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. 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. The holders'
and any underwriters' obligations in this Section 6(d) to contribute shall be
several in proportion to the principal amount of Registrable Securities
registered or underwritten, as the case may be, by them and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of
each holder, placement or sales agent and underwriter and each person, if any,
who controls any holder of Registrable Securities, placement or sales agent or
underwriter within the meaning of the Securities Act; and the obligations of the
holders, agents and any underwriters contemplated by this Section 6 shall be in
addition to any liability which the respective holder, agent or underwriter may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company (including any person who, with his consent,
is named in any registration statement as about to become a director of the
Company) and to each person, if any, who controls the Company within the meaning
of the Securities Act.
(f) With respect to the registration statement relating to the Exchange
Offer, if any, the Company, the broker-dealers referred to in the fourth
paragraph of Section 2(b) and holders who make and comply with the
representations set forth in the third paragraph of Section 2(b) and have a
prospectus delivery requirement under the Securities Act with respect to the new
debt securities received in connection with the Exchange Offer shall have the
benefit of and obligations under the indemnification and contribution provisions
set forth in this Section 6.
SECTION 7. UNDERWRITTEN REGISTRATIONS.
(a) Selection of Underwriters. If any of the Registrable Securities covered
by the Shelf Registration are to be sold pursuant to an underwritten offering,
the managing underwriter or underwriters
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<PAGE> 14
thereof shall be designated by the holders of at least a majority in aggregate
principal amount of the Registrable Securities to be included in such offering,
provided that such designated managing underwriter or underwriters is or are
reasonably acceptable to the Company.
(b) Participation by Holders. Each holder of Registrable Securities hereby
agrees with each other such holder that no such holder may participate in any
underwritten offering hereunder unless such holder (i) agrees to sell such
holder's Registrable Securities on the basis 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.
SECTION 8. RULE 144.
The Company covenants to the holders of Registrable Securities that the
Company shall timely file the reports required to be filed by it under the
Exchange Act or the Securities Act (including, but not limited to, the reports
under Section 13 and 15(d) of the Exchange Act referred to in subparagraph
(c)(1) of Rule 144 adopted by the Commission under the Securities Act) and the
rules and regulations adopted by the Commission thereunder, and shall take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitations of the exemption provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Securities, the Company shall deliver to such holder a written
statement as to whether it has complied with such requirements.
SECTION 9. MISCELLANEOUS.
(a) No Inconsistent Agreements. The Company represents, warrants, covenants
and agrees that it has not granted, and shall not grant, registration rights
with respect to Registrable Securities or any other securities which would be
inconsistent with the terms contained in this Agreement.
(b) Specific Performance. The parties hereto acknowledge that there may be
no adequate remedy at law if any party fails to perform any of its obligations
hereunder and that each party may be irreparably harmed by any such failure, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to compel specific
performance of the obligations of any other party under this Agreement in
accordance with the terms and conditions of this Agreement, in any court of the
United States or any State thereof having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, if delivered personally or by courier, or
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows: If to the Company, to it
at One Kemper Drive, Long Grove, Illinois 60049, Attention: General Counsel, and
if to a holder, to the address of such holder set forth in the security register
or other records of the Company, or to such other address as any party may have
furnished to the others in writing in accordance herewith, except that notices
of change of address shall be effective only upon receipt. This Agreement shall
inure to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties, including, without limitation and without
the need for an express assignment, subsequent holders of Registrable
Securities; provided that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Registrable Securities in violation
of the terms of the Purchase Agreement. If any transferee of any holder shall
acquire Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable Securities such
person shall be
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<PAGE> 15
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such persons shall be entitled to
receive the benefits hereof.
(d) Third Party Beneficiaries; Holders Entitled and Bound. Each of the
holders of Registrable Securities, including each of the Purchasers, severally
and not jointly and solely in its capacity as a holder of Registrable
Securities, shall be a third party beneficiary to the agreements made hereunder
between the Company, on the one hand, and the Purchasers, on the other hand. The
holders of the Registrable Securities are entitled to the benefits of, and are
bound by, this Agreement. Each of the holders of Registrable Securities shall
have the right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
holders of Registrable Securities hereunder, including the right of specific
performance as provided in Section 9(b) above. Without limiting the rights of
such holders as set forth in the preceding sentence, the parties hereto
acknowledge that the Trustee under the Indenture has the right to enforce the
terms of the Securities pursuant to the terms of the Indenture for the benefit
of the holders of the Registrable Securities.
(e) 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.
(f) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Agreement or made pursuant
hereto shall remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of any holder of
Registrable Securities, any director, officer or partner of such holder, any
agent or underwriter or any director, officer or partner thereof, or any
controlling person of any of the foregoing, and shall survive delivery of and
payment for the Registrable Securities pursuant to the Purchase Agreement and
the transfer and registration of Registrable Securities by such holder and the
consummation of an Exchange Offer.
(g) Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(h) Headings. The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
(i) Entire Agreement; Amendments. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a written
instrument duly executed by the Company and the holders of at least 66 2/3
percent in aggregate principal amount of the Registrable Securities at the time
outstanding. Each holder of any Registrable Securities at the time or thereafter
outstanding shall be bound by any amendment or waiver effected pursuant to this
Section 9(i), whether or not any notice, writing or marking indicating such
amendment or waiver appears on such Registrable Securities or is delivered to
such holder.
(j) Inspection. For so long as this Agreement shall be in effect, this
Agreement and a complete list of the names and addresses of all the holders of
Registrable Securities shall be made available for inspection and copying on any
business day by any holder of Registrable Securities at the offices of the
Company at the address thereof set forth in Section 9(c) above.
(k) Severability. In the event that any one or more of the provisions
contained in this Agreement, 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
KEMPER CORPORATION
By /s/ J.H. FITZPATRICK
Name: J.H. Fitzpatrick
Title: Executive Vice President
and Chief Financial
Officer
By /s/ J.W. BURNS
Name: J.W. Burns
Title: Treasurer and
Chief Accounting Officer
Confirmed and accepted as
of the date first
above written:
GOLDMAN, SACHS & CO.
/s/ GOLDMAN, SACHS & CO.
(Goldman, Sachs & Co.)
KEMPER SECURITIES, INC.
By /s/ CATHARINE E. WHITE
Name: Catharine E. White
Title: Managing Director
16
