SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Fee required)
For the fiscal year ended December 31, 1995
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No fee required)
For the transition period from _______________ to _______________
Commission File No. 0-692
NORTHWESTERN PUBLIC SERVICE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 46-0172280
(State of Incorporation) (IRS Employer Identification No.)
33 Third Street SE
Huron, South Dakota 57350-1318
(Address of principal office) (Zip Code)
605-352-8411
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $3.50 par value New York Stock Exchange
Company Obligated Mandatorily Redeemable New York Stock Exchange
Security of Trust Holding Solely Parent
Debentures, $25.00 liquidation amount
(Title of each class) (Name of each exchange
on which registered)
Securities registered pursuant to Section 12(g) of the Act:
Preferred Stock, Par Value $100
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. ( X ) Yes ( ) No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
State the aggregate market value of the voting stock held by
nonaffiliated of the registrant:
$258,181,300 as of February 15, 1996
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
Common Stock, Par Value $3.50
8,920,122 shares outstanding at February 15, 1996
DOCUMENTS INCORPORATED BY REFERENCE:
1995 Annual Report to Stockholders . . . . . . . . Parts I and II
Proxy Statement for 1996 Annual Meeting . . . . . . . . Parts I and III
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Northwestern Public Service Company (Company) is an energy
distribution company with core operations engaged in the electric, natural
gas, and propane businesses. The Company generates and distributes
electric energy to 55,310 customers in more than 100 communities and
adjacent rural areas located in eastern South Dakota. The Company also
purchases, distributes, sells, and transports natural gas to 76,464
customers in four communities in Nebraska and more than 50 communities in
eastern South Dakota.
In August 1995, the Company acquired Synergy Group, Inc., a retail
propane distributor with operations in the eastern and south-central
regions of the United States. Late in 1995, two smaller propane companies
were acquired: Myers Propane Gas Company and Western Gas. Propane
complements the Company's electric and natural gas distribution businesses
and adds geographical diversity to its operations with 184,500 customers in
17 states.
Through its other subsidiaries, the Company is engaged in additional
nonregulated operations as more fully discussed in the section entitled
"Nonregulated Operations". The Company was incorporated under the laws of
the State of Delaware in 1923 and is qualified to conduct its utility
business in the states of South Dakota, Nebraska, Iowa, and North Dakota.
The Company does not serve any utility customers in North Dakota or Iowa.
The Company has its principal office at 33 Third Street SE, Huron, South
Dakota 57350-1318. Its telephone number is 605-352-8411.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Financial information about industry segments is incorporated by
reference to Note 11 of the "Notes to Consolidated Financial Statements" on
page 17 of the financial section of the Company's 1995 Annual Report to
Stockholders, filed as an Exhibit hereto.
NARRATIVE DESCRIPTION OF BUSINESS
Pursuant to the South Dakota Public Utilities Act, the South Dakota
Public Utilities Commission (PUC) assigned as the Company's electric
service territory the communities and adjacent rural areas in which the
Company provides electric service in South Dakota. The Company has the
right to provide electric service to present and future electric customers
in its assigned service territory for so long as the service provided is
deemed adequate. Under the South Dakota Public Utilities Act, effective
July 1, 1976, the Company is not required to obtain or renew municipal
franchises to provide electric service within its assigned service
territory.
The Company has nonexclusive municipal franchises to provide gas
service in the Nebraska and South Dakota communities in which it provides
such service. The maximum term permitted under Nebraska law for such
franchises is 25 years while the maximum term permitted under South Dakota
law is 20 years. The Company's policy is to seek renewal of a franchise in
the last year of its term. The Company has never been denied the renewal
of any of these franchises and does not anticipate that any future renewals
would be withheld.
Unlike the Company's electric and natural gas businesses, propane
distribution rates and service areas are unregulated. In an unregulated
business such as propane, the Company is competing against a number of
other distributors. There are, however, certain inherent barriers for
customers to overcome in switching from one propane delivery service
provider to another. The Company believes that its ownership of propane
storage tanks installed at customers' premises, together with safety
regulations which prohibit other propane distributors from filling the
propane tanks and cylinders at the customers' premises, promotes long-
standing relationships which are typical in the retail propane industry.
The cost and inconvenience of switching tanks tend to minimize the
switching by customers among suppliers on the basis of minimal price
variations. Conversely, it also makes it more difficult for the Company to
acquire new customers, other than through acquisitions, in areas where
there are existing relationships between potential customers and other
distributors.
Weather patterns have a material impact on the Company's operating
performance for all three segments of its energy business. This impact is
particularly relevant for natural gas and propane. Because natural gas and
propane are heavily used for residential and commercial heating, the demand
for these products depends upon weather patterns throughout the Company's
service area. With a larger proportion of its operations related to
seasonal natural gas and propane sales in the future, the distribution of
the Company's quarterly operating performance will be different than in
historical periods. A significantly greater portion of the Company's
future operating income is expected to be recognized in the first and
fourth quarters related to higher revenues from the heating season.
Operating income for the second and third quarters is expected to be
significantly less than historical periods.
ELECTRIC BUSINESS
ELECTRIC SALES. On a consolidated basis, 37% of the Company's 1995
operating revenues were from the sale of electric energy. All of the
Company's electric revenues are derived from customers in South Dakota.
The Company has relatively few large customers in its service
territory. By customer category, 35% of 1995 total electric sales was from
residential sales, 53% was from commercial and industrial sales, 1% was
from street lighting and sales to public authorities, and 11% was from
sales for resale.
Sales for resale primarily include power pool sales to other
utilities. Power pool sales fluctuate from year to year depending on a
number of factors including the Company's availability of excess short-term
generation and the ability to sell the excess power to other utilities in
the power pool. The Company also sells power and energy at wholesale to
certain municipalities for resale and to various governmental agencies. In
1995, these sales accounted for less than 1% of total electric sales.
CAPABILITY AND DEMAND. The Company shares in the ownership of the Big
Stone Generating Plant (Big Stone), located near Big Stone City in
northeastern South Dakota. In North Dakota, the Company maintains
transmission facilities to interconnect with electric transmission lines of
other utilities and shares in the ownership of the Coyote I Electric
Generating Plant (Coyote), located near Beulah, North Dakota. In Iowa, the
Company shares in the ownership of Neal Electric Generating Unit #4 (Neal),
located near Sioux City, Iowa.
At December 31, 1995, the aggregate net summer peaking capacity of all
Company-owned electric generating units was 308,912 kw, consisting of
105,043 kw from Big Stone (the Company's 23.4% share), 42,700 kw from
Coyote (the Company's 10.0% share), 54,169 kw from Neal (the Company's 8.7%
share), and 107,000 kw from internal combustion turbine units and small
diesel units, used primarily for peaking purposes. In addition to those
plant facilities, the Company entered into an agreement in 1995 to purchase
up to 17,250 kw of firm capacity from Basin Electric Cooperative to assist
in meeting peak capacity demands. The Company has also contracted with
Nebraska Public Power District to purchase various amounts of firm capacity
to further assist in supplying peak energy demands.
The Company is a summer peaking utility. The 1995 peak demand of
272,722 occurred on August 8, 1995. Total system capability at the time of
peak was 326,162 kw. The reserve margin for 1995 was 20%. The minimum
reserve margin requirement as determined by the members of the Mid-
Continent Area Power Pool (MAPP), of which the Company is a member, is 15%.
MAPP is an area power pool arrangement consisting of utilities and
power suppliers having transmission interconnections located in a 9-state
area in the North Central region of the United States and in two Canadian
provinces. The objective of MAPP is to accomplish coordination of planning
and operation of generation and interconnecting transmission facilities to
provide reliable and economical electric service to members' customers,
consistent with reasonable utilization of natural resources and protection
of the environment. While benefiting from the advantages of the planning,
coordination, and operations of MAPP, each member has the right and
obligation to own or otherwise provide the facilities to meet its own
requirements. The terms and conditions of the MAPP agreement and
transactions between MAPP members are subject to the jurisdiction of the
Federal Energy Regulatory Commission (FERC). The MAPP agreement was
accepted for filing by the FERC effective 1972. The Company also has
interconnections with the transmission facilities of Otter Tail Power
Company, Montana-Dakota Utilities Co., Northern States Power Company, and
Western Area Power Administration; and has emergency interconnections with
transmission facilities of East River Electric Cooperative, Inc. and West
Central Electric Cooperative. These interconnections and pooling
arrangements enable the Company to arrange purchases or sales of
substantial quantities of electric power and energy with other pool members
and to participate in the benefits of pool arrangements.
The Company has finalized an integrated resource plan to identify how
it will meet the energy needs of its customers. The plan includes
estimates of customer usage and programs to provide for economic, reliable,
and timely supplies of energy. The plan does not anticipate the need for
additional baseload generating capacity for at least the next ten years.
FUEL SUPPLY. Lignite and sub-bituminous coal were utilized by the
Company as fuel for virtually all of the electric energy generated during
1995. North Dakota lignite is the primary fuel at Coyote. The Company
burned North Dakota lignite coal at Big Stone for the majority of 1995.
For the remainder of 1995, however, Big Stone was switched over to Montana
sub-bituminous coal as a result of a new supply contract executed late in
1994. During 1995, the average heating value of lignite burned was 6,165
BTU per pound at Big Stone and 6,974 BTU per pound at Coyote. The sulfur
content of this lignite is typically between 0.8% and 1.2%. The Montana
sub-bituminous coal burned at Big Stone contained an average heating value
of 8,825 BTU per pound and a sulfur content between 0.55% and 0.75%. Neal
burned Wyoming sub-bituminous coal which had an average heating value of
8,491 BTU per pound during 1995. Typically, the sulfur content of this
coal is between 0.30% and 0.40%.
The Company's fuel costs have remained relatively stable. The average
cost by type of fuel burned is shown below for the periods indicated:
Cost Per Million BTU % of 1995
Year Ended December 31 Megawatt
---------------------- Hours
Fuel Type 1993 1994 1995 Generated
----- ----- ---- ---------
Lignite - Big Stone $1.12 $1.10 $1.09 33%
Sub-bituminous-Big Stone - - 1.00 12%
Lignite - Coyote** .84 .86 .83 25%
Sub-bituminous-Neal .76 .74 .76 29%
Natural Gas 2.37 2.21 1.80 *
Oil 3.90 3.90 3.96 *
*Combined for approximately one percent.
**Includes pollution control reagent.
During 1995, the average delivered cost per ton of lignite was $13.54
to Big Stone and $10.91 to Coyote. The average cost per ton of sub-
bituminous coal received at Big Stone for the partial year 1995 was $18.01.
The average cost for coal delivered to Neal was $12.49 per ton for 1995.
Such amounts include severance taxes imposed by the states of North Dakota
and Montana and a production tax imposed by the state of Wyoming. While
the effect on the Company's fuel costs of future changes in severance or
production taxes cannot be predicted, any changes in the Company's fuel
costs may be passed on to its customers through the operation of the fuel
adjustment clause. This feature of the Company's electric rates is more
fully discussed in the section entitled "Regulation".
The continued delivery of lignite and sub-bituminous coal to the three
large steam generating units in which the Company is part owner is
reasonably assured by contracts covering various periods of the operating
lives of these units. Following bid evaluations of coal supplies for Big
Stone, a contract for Montana sub-bituminous coal was executed late in 1994
for the period of mid-1995 through 1999. Further evaluations will be
conducted during the contract term to select a coal supply for periods
beyond 1999. The contract for delivery of lignite to Coyote, which expires
in 2016, provides for an adequate fuel supply for the estimated economic
life of that plant. Neal receives Wyoming sub-bituminous coal under a long-
term contract which expires in 1998. In the near future, the Company,
along with the other owners of Neal, will begin to study options for the
supply of coal for periods beyond the expiration date.
Following test burns in 1990 and 1991, the owners of the Big Stone
Plant received approval from the South Dakota Department of Environment and
Natural Resources to burn tire derived fuel (TDF) and refuse derived fuel
(RDF). The quantity of TDF and RDF that was burned in 1995 and that is
expected to be burned in 1996 is insignificant when compared to total coal
consumption at the plant.
The fossil fuel supplies for Big Stone and Neal are delivered via unit
trains belonging to the respective plants' owners and locomotives of the
Burlington Northern Railroad and the Union Pacific Railroad, respectively.
The lignite supply for Coyote is delivered via conveyor at this "mine-
mouth" plant. In early 1996, the Company and its partners at Big Stone
executed a fifteen year operating lease agreement for unit train cars.
This agreement will be effective late in 1996. The current unit train cars
will ultimately be sold to another third party independent of the leasing
transaction.
While the Company has no firm contract for diesel fuel for its other
electric generating plants, it has been able to purchase its diesel fuel
requirements in recent years from local suppliers and currently has in
storage an amount adequate to satisfy its normal requirements for such
fuel.
Additional information relating to jointly owned plants is
incorporated by reference to Note 7 of the "Notes to Consolidated
Statements" on page 15 of the financial section of the Company's 1995
Annual Report to Stockholders filed as an Exhibit hereto.
NATURAL GAS BUSINESS
NATURAL GAS SALES AND DEMAND. On a consolidated basis, 31% of the
Company's 1995 operating revenues were from the sale of natural gas energy.
During 1995, the Company derived 54% of its natural gas revenues from South
Dakota and 46% from Nebraska. The Company's peak daily sendout was 108,700
MMBTU.
CAPABILITY AND SUPPLY. The Company owns and operates natural gas
distribution systems serving 37,330 customers in eastern South Dakota. In
1995, the Company executed a service agreement with Cibola Energy Services
Corporation (Cibola) whereby Cibola coordinates supply and transportation
services. The agreement with Cibola to provide capacity supplemented with
peak shaving capacity allows the Company to meet its peak day system needs.
This agreement provides for firm deliverable pipeline capacity of
approximately 49,300 MMBTU per day in South Dakota.
In Nebraska, the Company owns and operates natural gas distribution
systems serving 39,134 retail customers in the village of Alda and the
cities of Grand Island, Kearney, and North Platte, Nebraska. The Company
purchases all of its natural gas for these systems through KN Gas
Marketing, Inc. (KN) under a service agreement entered in 1995 whereby KN
coordinates supply and transportation services. This agreement provides
for firm deliverable pipeline capacity of approximately 58,000 MMBTU per
day in Nebraska.
In 1992, FERC issued Order 636. Order 636 requires, among other
provisions, that all companies with natural gas pipelines separate natural
gas supply or production services from transportation service and storage
businesses. This allows gas distribution companies, such as the Company,
and individual customers to purchase gas directly from producers, third
parties, and various gas marketing entities and transport it through the
suppliers' pipelines. The Company has operated under the restructured
environment during the past three years.
To supplement firm gas supplies, the Company's service agreements with
Cibola and KN also provide for underground natural gas storage services to
meet the heating season and peak day requirements of its gas customers. In
addition, the Company also owns and operates six propane-air plants with a
total rated capacity of 18,000 MMBTU per day, or approximately 17% of
1995's peak day requirements. The propane-air plants provide an economic
alternative to pipeline transportation charges to meet the peaks caused by
customer demand on extremely cold days.
A few of the Company's industrial customers purchase their natural gas
requirements directly from gas marketing firms for transportation and
delivery through the Company's distribution system. The transportation
rates have been designed to make the Company economically indifferent as to
whether the Company sells and transports gas or only transports gas.
PROPANE BUSINESS
Effective August 15, 1995, the Company acquired Synergy Group, Inc.
(Synergy), a retail propane distributor with operations in the eastern and
south-central regions of the United States. Synergy was acquired through a
subsidiary (SYN Inc.) formed for this purpose. Late in 1995, two smaller
propane companies were acquired: Western Gas on November 20 and Myers
Propane Gas Company on December 7. Propane complements the Company's
electric and natural gas distribution businesses and adds geographical
diversity to its operations.
The acquisition of the propane properties was made in association with
Empire Gas Corporation (Empire Gas), a large propane distribution company
headquartered in Lebanon, Missouri, which has a management team experienced
in the retail propane distribution business. With Northwestern, Empire Gas
provides joint oversight and management of the properties acquired. Empire
Gas provides administrative and operating management services to all
propane properties including accounting, human resources, marketing,
management information systems, and propane supply and transportation
functions. In accordance with the Company's plans upon the acquisition of
Synergy, substantial changes were made in the management and operation of
the acquired business in order to achieve improvement in the results of
operations. Among the cost efficiency measures put into place to reduce
Synergy's operating, selling, and administrative expenses were the
elimination of employee positions, and corporate overhead and field
location operating expenses. The Synergy headquarters office operations in
Farmingdale, New York were closed in late November with corporate functions
consolidated with the Empire Gas corporate offices. Another significant
expense reduction was the elimination of compensation and lease expenses
previously paid to Synergy stockholders.
As compensation for the management services, the Company pays Empire
Gas a fixed fee and a management fee. The fixed fee is intended to cover
Empire Gas' operating overhead in performing the management services and
initially is $3,250,000 per annum, subject to adjustment annually based
upon increases in the Consumer Price Index. The management fee will be at
the rate of $500,000 per annum plus 10% of the amount by which the earnings
before interest, taxes, depreciation and amortization of SYN Inc. and its
subsidiaries, on a consolidated basis, exceed certain threshold amounts.
Additional information regarding the acquisitions is incorporated by
reference to Note 2 of the "Notes to Consolidated Statements" on page 13 of
the financial section of the Company's 1995 Annual Report to Stockholders,
filed as an Exhibit hereto.
SALES. On a consolidated basis, 19% of the Company's 1995 operating
revenues were from the sale of propane. Operating revenues recorded of
$38.9 million on sales of 37.9 million gallons reflect a partial year of
operations.
Similar to its electric and natural gas businesses, no single customer
accounts for a significant portion of the Company's propane sales. By
customer category, propane sales were 55% residential, 28% commercial and
industrial, 4% motor fuel, 14% agriculture related and 6% other.
Agricultural uses of propane include tobacco curing, crop drying, and
poultry breeding. Other customers include industrial customers who use
propane to fire furnaces, as a cutting gas, and in other process
applications. Other industrial customers include large scale heating
accounts, local gas utility customers who maintain a standby propane
capability for use during peak demand periods, and customers who use
propane as a feedstock in manufacturing processes.
SUPPLY AND DISTRIBUTION. In accordance with the management agreement
executed with Empire Gas, Empire Gas is responsible for securing propane
supply. During the partial year 1995, Empire Gas purchased propane from
various suppliers, including major domestic oil companies and independent
producers of gas liquid and oil and made occasional spot market
transactions. Approximately 73% of the propane purchases were on a
contractual basis under one-year agreements subject to annual renewal. The
two largest suppliers provided approximately 30% of the total volumes
purchased under contract. The percentage of contract purchases may vary
from year to year depending on a number of factors. Supply contracts
generally provide for pricing in accordance with posted prices at the time
of delivery or contract prices established at major storage points, and
some contracts include a pricing formula that typically is based on such
market prices. Empire Gas has established relationships with a number of
suppliers over the past few years and believes it will have ample sources
of supply under comparable terms to draw upon to meet the necessary propane
requirements if it were to discontinue purchasing propane from its two
largest suppliers. Empire Gas has not experienced a shortage that has
prevented it from satisfying its own customers' needs and does not foresee
any significant shortage in the supply of propane that would cause a
disruption in meeting the needs of the Company's customers as well.
The Company owns a fleet of 40 over-the-road tractors and 50 transport
trailers to transport propane from refineries, natural gas processing
plants or pipeline terminals to the Company's bulk storage plants. A
certain number of these tractors and trailers have been leased to an
unaffiliated third party who under separate agreement provides transport
services back to the Company. The Company also uses common carriers and
railroad tank cars for these purposes. The Company believes that the
combination of operating its own transport trucks and having access to such
equipment through the transportation agreement enhances the reliability and
dependability of propane supply deliveries at the Company's bulk storage
plants. The transportation of propane requires specialized equipment. The
trucks and railroad cars utilized for this purpose carry specialized steel
tanks that maintain the propane in a liquefied state.
Propane delivery to customers is made by means of 370 bulk delivery
tank trucks owned by the Company. Propane is stored by the customers on
their premises in stationary steel tanks generally ranging in capacity from
25 to 1,000 gallons, with large users having tanks with a capacity of
30,000 gallons. A majority of the propane storage tanks used by the
Company's residential and commercial customers are owned by the Company.
In addition, a certain number of Company owned tanks are provided to
customers under a leasing agreement.
COMPETITION
Although the Company's electric service territory is assigned
according to the South Dakota Public Utilities Act, and the Company has the
right to provide electric service to present and future electric customers
in its assigned service area for so long as the service provided is deemed
adequate, the energy industry in general has become increasingly
competitive. Electric service also competes with other forms of energy and
the degree of competition may vary from time to time depending on relative
costs and supplies of other forms of energy.
The National Energy Policy Act of 1992 (Energy Act) was designed to
promote energy efficiency and increased competition in the electric
wholesale markets. The Energy Act also allows the FERC to order wholesale
wheeling by public utilities to provide utility and nonutility generators
access to public utility transmission facilities. The provision allows the
FERC to set prices for wheeling, which will allow utilities to recover
certain costs from the companies receiving the services, rather than the
utilities' retail customers. Many states are currently considering retail
wheeling, which aims to provide all customers with the right to choose
their electricity supplier. No regulatory proposals with respect to retail
wheeling have yet been formally introduced in South Dakota.
Federal Energy Regulatory Commission Order 636 requires, among other
provisions, that all companies with natural gas pipelines separate natural
gas supply or production services from transportation service and storage
businesses. This allows gas distribution companies, such as the Company,
and individual customers to purchase gas directly from producers, third
parties, and various gas marketing entities and transport it through the
suppliers' pipelines. While Order 636 had positive aspects by providing
for more diversified supply and storage options, it also required the
Company to assume responsibility for the procurement, transportation, and
storage of natural gas. The alternatives now available under Order 636
create additional pressure on all distribution companies to keep gas supply
and transportation pricing competitive, particularly for large customers.
Unlike the Company's electric and natural gas businesses, propane
distribution rates and service areas are unregulated. The propane retail
distribution industry is comprised of two categories of participants:
large multi-state marketers, including the Company, and local independent
distributors. Most of the Company's retail service centers compete with
multiple marketers or distributors of propane. The Company competes with
these marketers and distributors primarily on the basis of service and
price, emphasizing reliability of service and responsiveness to its
customers. Within its propane customer service area, the Company also
competes with suppliers of other energy sources, including suppliers of
electricity for sales to residential and commercial customers. The Company
believes a moderate level of growth can be achieved by the conversion of
homes to propane that currently use electricity or fuel oil products.
Propane currently enjoys, and historically has enjoyed, a competitive
advantage over electricity because of the higher cost of electricity. Fuel
oil does not present a significant competitive threat in the Company's
primary service areas due to the following factors: (i) propane is a
residue-free, cleaner energy source, (ii) environmental concerns make fuel
oil relatively unattractive, and (iii) fuel oil appliances are not as
efficient as propane appliances. The Company competes with these same
alternative forms of energy in its own regulated service areas. However,
the distinction is that in many parts of its service territory, the Company
provides both electricity and natural gas. Natural gas has traditionally
been at a lower cost than propane on an equivalent unit of energy basis.
REGULATION
The Company is a "public utility" within the meaning of the Federal
Power Act and the South Dakota Public Utilities Act and, as such, is
subject to the jurisdiction of, and regulation by, FERC with respect to
issuance of securities, the PUC with respect to electric service
territories, and both FERC and the PUC with respect to rates, service,
accounting records, and in other respects. The State of Nebraska has no
centralized regulatory agency which has jurisdiction over the Company's
operations in that state; however, the Company's natural gas rates are
subject to regulation by the municipalities in which it operates.
Under the South Dakota Public Utilities Act, effective July 1, 1976, a
requested rate increase may be implemented by the Company 30 days after the
date of its filing unless its effectiveness is suspended by the PUC and, in
such event, can be implemented subject to refund with interest six months
after the date of filing, unless sooner authorized by the PUC. The
Company's electric rate schedules provide that it may pass along to all
classes of customers qualified increases or decreases in the cost of fuel
used in its generating stations and in the cost of fuel included in
purchased power. A purchased gas adjustment provision in its gas rate
schedules permits the Company to pass along to gas customers increases or
decreases in the cost of purchased gas.
The Company filed no electric rate cases in South Dakota during the
three years ended December 31, 1995. During 1995, the Company realized the
full year's effect of a natural gas increase implemented in South Dakota on
November 15, 1994. The increase will produce additional annual natural gas
revenues of $2.1 million, assuming normal weather, representing an overall
increase of 6.2%. Effective April 1, 1995, the Company implemented
increased rates related to its Nebraska natural gas service area as a
result of a negotiated settlement with representatives of the four
communities in which the Company operates. These new rates will generate
additional annual revenues of $2.3 million, based on normal weather, or an
overall increase of 8.3%.
ENVIRONMENTAL MATTERS
The Company is subject to regulation with regard to air and water
quality, solid waste disposal, and other environmental considerations by
Federal, state, and local governmental authorities. The application of
governmental requirements to protect the environment involves or may
involve review, certification, issuance of permits, or similar action by
government agencies or authorities, including the United States
Environmental Protection Agency (EPA), the South Dakota Department of
Environment and Natural Resources (DENR), the North Dakota State Department
of Health, and the Iowa Department of Environmental Quality, as well as
compliance with decisions of the courts.
CLEAN AIR ACT. The Clean Air Act Amendments of 1990 (the Clean Air
Act) which stipulate limitations on sulfur dioxide and nitrogen oxide
emissions from certain coal-fired power plants will require the purchase of
additional emission allowances or a reduction in sulfur dioxide emissions
beginning in the year 2000 from Big Stone. The Company believes Big Stone
can most economically meet the sulfur dioxide emission requirements of the
Clean Air Act by changing its fuel source from North Dakota lignite to low-
sulfur western sub-bituminous coal available in the region as evidenced by
the switch made to Montana sub-bituminous coal in August 1995. The
Company's other baseload plants, Coyote and Neal, are expected to comply
with the sulfur dioxide emission limitations through the use of existing
flue gas scrubbing and low sulfur coal without the need for additional
emission allowances.
With regard to the Clean Air Act's nitrogen oxide emission
requirements, the Neal wall-fired boiler is expected to meet the emission
limitations for such boilers. The Clean Air Act does not yet specify
nitrogen oxide limitations for boilers with cyclone burners such as those
used at Big Stone and Coyote because practical low-nitrogen oxide cyclone
burner technology does not exist. It requires the EPA to establish
nitrogen oxide emission limitations before 1997 for cyclone boilers
including taking into account that the cost to accomplish such limits be
comparable to retrofitting low-nitrogen oxide burner technology to other
types of boilers. In addition, it also requires future studies to
determine what controls, if any, should be imposed on coal-fired boilers to
control emissions of certain air toxics other than sulfur and nitrogen
oxides. Because of the uncertain nature of cyclone boiler nitrogen oxide
and air toxic emission limits, the Company cannot now determine the
additional costs, if any, it may incur due to these provisions of the Clean
Air Act.
PCBs. The Company has met or exceeded the removal and disposal
requirements of equipment containing polychlorinated biphenyls (PCBs) as
required by state and Federal regulations. The Company will use some PCB-
contaminated equipment for its remaining useful life, and dispose of the
equipment according to pertinent regulations that govern that use and
disposal of this equipment. PCB-contaminated oil is burned for energy
recovery at a permitted facility.
STORAGE TANKS. The South Dakota DENR and the EPA adopted regulations
imposing requirements upon the owners and operators of above ground and
underground storage tanks. The Company's fuel oil storage facilities at
its generating plants in South Dakota are affected by the above ground tank
regulations, and the Company has instituted procedures for compliance.
SITE REMEDIATION. The Company conducted an investigation of a
manufactured gas plant site and took remedial action during 1995 by
removing the residue contained in the soil through a thermal desorption
process. Adjustments of the Company's natural gas rates to reflect the
costs associated with the remediation were approved through the regulatory
process. The Company is pursuing recovery from insurance carriers. Any
recovery in excess of costs incurred will be returned to customers.
OTHER. In addition to the Clean Air Act, the Company is also subject
to other environmental regulations. The Company believes that it is in
compliance with all presently applicable environmental protection
requirements and regulations. However, the Company is unable to forecast
the effect which future environmental regulations may ultimately have upon
the cost of its utility related facilities and operations. No
administrative or judicial proceedings involving the Company are now
pending or known by the Company to be contemplated under presently
effective environmental protection requirements.
SITING. The states of South Dakota, North Dakota, and Iowa have
enacted laws with respect to the siting of large electric generating plants
and transmission lines. The South Dakota PUC, the North Dakota Public
Service Commission, and the Iowa Utilities Board have been granted
authority in their respective states to issue site permits for nonexempt
facilities.
PROPANE TRANSPORTATION AND SAFETY MATTERS. The Company's propane
operations are subject to various Federal, state, and local laws governing
the transportation, storage and distribution of propane, occupational
health and safety, and other matters. All states in which the Company
operates have adopted fire safety codes that regulate the storage and
distribution of propane. In some states, these laws are administered by
state agencies, and in others they are administered on a municipal level.
Certain municipalities prohibit the underground installation of propane
furnaces and appliances, and certain states are considering the adoption of
similar regulations.
The Company currently meets and exceeds Federal regulations requiring
that all persons employed in the handling of propane gas be trained in
proper handling and operating procedures. All employees have participated,
or will participate within 90 days of their employment date, in hazardous
materials training. The Company has established ongoing training programs
in all phases of product knowledge and safety including participation in
the National Propane Gas Association's (NPGA) Certified Employee Training
Program.
CAPITAL SPENDING AND FINANCING
The Company's primary ongoing capital requirements include the funding
of its energy business construction and expansion programs, the funding of
debt and preferred stock retirements and sinking fund requirements, and the
funding of its corporate development and investment activities.
The emphasis of the Company's construction activities is to undertake
those projects that most efficiently serve the expanding needs of its
customer base, enhance energy delivery capabilities, expand its current
customer base, and provide for the reliability of energy supply. Capital
expenditure plans are subject to continual review and may be revised as a
result of changing economic conditions, variations in sales, environmental
requirements, investment opportunities, and other ongoing considerations.
Expenditures for construction activities for 1995, 1994, and 1993 were
$29.6 million, $22.7 million, and $20.0 million. Construction expenditures
during the last three years included expenditures related to an operations
center expected to provide cost savings and operating efficiencies through
consolidation of activities, the installation of an additional 43 mw of
internal peaking capacity, and the expansion of the Company's natural gas
system into additional communities in eastern South Dakota. In addition,
1995 included $4.7 million of capital expenditures related to propane.
Construction expenditures for 1996, excluding propane, are estimated to be
$16.0 million. The majority of the projected expenditures will be spent on
enhancements of the electric and gas distribution systems. Estimated
electric and natural gas related construction expenditures for the years
1996 through 2000 are expected to be $70.4 million. Nonregulated capital
expenditures for 1996 are estimated to be $6.5 million. Estimated
nonregulated capital expenditures for the years 1996 through 2000 are
expected to be $20.5 million.
Capital requirements for the mandatory retirement of long-term debt
and mandatory preferred stock sinking fund redemption totaled $600,000,
$600,000 and $180,000 for the years ended 1995, 1994, and 1993,
respectively. It is expected that such mandatory retirements will be
$580,000 in 1996, $570,000 in 1997, $20.6 million in 1998, $12.8 million in
1999, and $5.0 million in 2000.
The Company anticipates that future capital requirements will be met
by both internally generated cash flows and available external financing.
During 1995, the Company made debt and preferred stock investments in
SYN Inc., the entity created to acquire Synergy. Such investments were
funded primarily by financings undertaken during the third quarter of 1995
that were comprised of $60 million of 7.10% series general mortgage bonds
maturing in 2005, 1.3 million shares of preferred securities of subsidiary
trust ($32.5 million) and 1.2 million shares of common stock ($31.35
million). In December, the Company issued 42,890 shares of common stock
($1.15 million)and 11,500 shares of redeemable cumulative preferred stock
($1.15 million) related to the acquisition of Myers Propane Gas Company.
The Company plans to continue to evaluate and pursue opportunities to
enhance shareholder return through nonregulated business investments.
Nonregulated projects are expected to be financed from the existing
investment portfolio and from other available financing options.
Information relating to capital resources and liquidity is
incorporated by reference to "Management's Discussion and Analysis" on
pages 1 - 5 of the financial section of the Company's 1995 Annual Report to
Stockholders, filed as an Exhibit hereto.
NONREGULATED OPERATIONS
GRANT, INC. Grant, Inc., which holds title to property not used in
the Company's utility business, was incorporated in South Dakota in 1972.
NORTHWESTERN GROWTH CORPORATION (NGC). NGC was incorporated under the
laws of South Dakota in 1994 to pursue and manage nonutility investments
and development activities. NGC owns majority common stock control of SYN
Inc., the entity created to acquire Synergy and Western Gas. Other NGC
assets include a portfolio of marketable securities and the investments of
two subsidiaries: Northwestern Networks, Inc., which holds a common stock
investment in LodgeNet Entertainment Corporation, a provider of television
entertainment and information systems to hotels and motels, and
Northwestern Systems, Inc., which owns 100% of the common stock of Lucht
Inc., a firm that develops, manufactures, and markets multi-image
photographic printers and other related equipment. Although the primary
focus of NGC's investment program will be to continue to seek growth
opportunities in the energy, energy equipment, and energy services
industries, NGC will also continue to pursue opportunities in existing and
emerging growth entities in non-energy industries that meet return and
capital gain requirements.
MYERS PROPANE GAS COMPANY (MYERS). Myers was incorporated in Delaware
in 1995. Myers was created to hold the 100% common stock ownership of
Myers Propane Gas Company following the acquisition in late 1995. The
Company owns majority common stock control of Myers.
Additional information relating to nonregulated business is
incorporated by reference to "Management's Discussion and Analysis" on
pages 1 - 5 of the financial section of the Company's 1995 Annual Report to
Stockholders, filed as an Exhibit hereto.
EMPLOYEES
At December 31, 1995, the Company had 441 utility employees. A three-
year collective bargaining agreement which expires June 30, 1998, covers
239 operating and clerical employees. The Company has never experienced a
work stoppage or strike and considers its relationship with its employees
to be very good.
At December 31, 1995, the Company had 858 employees involved in its
propane operations. None of these employees are represented by unions.
The Company has not experienced any work stoppage or other significant
labor problems and believes it has a good relationship with its employees.
EXECUTIVE OFFICERS OF THE REGISTRANT
R. A. Wilkens, Chairman of the Board, age 67
Chairman of the Board of Directors since February 1994. Formerly
Chief Executive Officer from 1990-1994; President from 1980-1994.
M. D. Lewis, President and Chief Executive Officer, age 48
President and Chief Executive Officer since February 1994; formerly
Executive Vice President from May 1993, to February 1994; Executive
Vice President-Corporate Services 1992-1993; Vice President-Corporate
Services 1987-1992; Assistant Corporate Secretary 1982-1993. Mr.
Lewis also serves as Chairman and Chief Executive Officer of
Northwestern Growth Corporation since September 1994.
R. R. Hylland, Executive Vice President - Strategic Development, age 35
Executive Vice President - Strategic Development since November 1995;
formerly Vice President-Strategic Development from August 1995 to
November 1995; Vice President Corporate Development from 1993-1995;
Vice President-Finance from 1991-1995; Treasurer from 1990-1994; Mr.
Hylland also serves as President and Chief Operating Officer of
Northwestern Growth Corporation since September 1994.
W. D. Craig, Vice President, age 59 - Retired
Retired as Vice President effective July 1, 1995; Vice President since
November 1994; formerly Vice President-Gas Operations September 1988-
November 1994.
A. D. Dietrich, Vice President - Corporate Services and Corporate
Secretary, age 45
Vice President-Corporate Services since November 1994; Corporate
Secretary since October 1989; formerly Vice President-Legal May 1990-
November 1994.
A. R. Donnell, Vice President - Energy Operations, age 52
Vice President-Energy Operations since November 1994; formerly Vice
President-Electric Operations July 1987-November 1994.
T. A. Gulbranson, Vice President - Energy Services, age 48
Vice President - Energy Services since January 1996; formerly Vice
President November 1994-January 1996; Vice President-Corporate
Services May 1993-November 1994; Vice President-Community Development
1988-1993.
R. F. Leyendecker, Vice President - Market Development, age 50
Vice President-Market Development since January 1996; formerly Vice
President-Energy Services November 1994-January 1996; Vice President-
Rates & Regulation 1987-November 1994.
W. K. Lotsberg, Vice President - Public Affairs, age 53
Vice President-Public Affairs since May 1994; formerly Vice President-
Consumer Affairs March 1989-May 1994.
D. K. Newell, Vice President - Finance, age 39
Vice President - Finance since July 1995. Joined the Company in July
1995. Formerly CFO, Vice President - Finance and Treasurer with Energy
Fuels Corporation. Mr. Newell also serves as Executive Vice President
of Northwestern Growth Corporation since July 1995.
D. C. Oberlander, Assistant Vice President, age 50
Assistant Vice President since May 1994; formerly Controller April
1991-May 1994; Assistant Controller December 1990-April 1991; Manager-
Information Systems 1979-1990.
R. A. Thaden, Treasurer, age 44
Treasurer since November 1994; formerly Manager-Corporate Accounting
1987-November 1994. Ms. Thaden also serves as Vice President and
Treasurer of Northwestern Growth Corporation since September 1995.
All of the executive officers of the registrant serve at the
discretion of the Board and are elected annually by the Board of Directors
following the Annual Meeting of Stockholders. No family relationships
exist between any officers of the Company.
ITEM 2. PROPERTIES
ELECTRIC PROPERTY
The Company's electric properties consist of an interconnected and
integrated system. The Company, Otter Tail Power Company (Otter Tail), and
Montana-Dakota Utilities Co. (MDU) jointly own Big Stone, a 455,783
kilowatt (kw) nameplate capacity coal-fueled electric generating plant and
related transmission facilities. Big Stone is operated by Otter Tail for
the benefit of the owners. The Company owns 23.4% of the Big Stone Plant.
The Company is one of four power suppliers which jointly own Coyote, a
455,782 kw nameplate capacity lignite-fueled electric generating plant and
related transmission facilities located near Beulah, North Dakota. The
Company has a 10% interest in Coyote, which is operated by MDU for the
benefit of the owners.
The Company is one of 14 power suppliers which jointly own Neal, a
639,999 kw nameplate capacity coal-fueled electric generating plant and
related transmission facilities located near Sioux City, Iowa. MidAmerican
Energy Company is principal owner of Neal and is the operator of the unit.
The Company has an 8.7% interest in Neal.
The Company has an undivided interest in these jointly owned
facilities and is responsible for its proportionate share of the capital
and operating costs while being entitled to its proportionate share of the
power generated. Each participant finances its own investment. The
Company's interest in each plant is reflected in the Consolidated Balance
Sheet on a pro rata basis, and its share of operating expenses is reflected
in the Consolidated Statement of Income and Retained Earnings.
In addition to its interest in Big Stone, Coyote and Neal, the Company
owns and operates 19 fuel oil and gas-fired units for peaking and reserve
capacity.
As of December 31, 1995, the aggregate nameplate capacity of all
Company-owned electric generating units was 327,419 kw, with an aggregate
net summer peaking capacity of 308,912 kw and a net winter peaking capacity
of 328,137 kw. In addition to owned capacity, the Company entered into two
contractual agreements to purchase firm capacity to assist in meeting peak
energy needs. The Company's maximum peak hourly demand of 272,722 kw
occurred on August 8, 1995, exceeding the previous peak of 251,493 kw set
on July 17, 1991.
The Company's interconnected transmission system consists of 321.8
miles operating at 115 kilovolts (kv) and 897.6 miles operating at 69 kv
and 34.5 kv. The Company also owns three segments of transmission line,
which are not tied to its internal system, in connection with its joint
ownership in the three large steam generating plants. These lines consist
of 18.2 miles of 230 kv line from Big Stone, 25.4 miles of 345 kv line from
Neal, and 23.1 miles of 345 kv line from Coyote. In addition to these
lines, the Company owns 1,732.3 miles of distribution lines serving
customers in more than 100 communities and adjacent rural areas. The
Company owns 38 transmission substations with a total rated capacity of
1,111,417 kilovolt amperes (kva), two mobile substations with a total rated
capacity of 5,500 kva and 78 distribution substations with a total rated
capacity of 350,949 kva.
GAS PROPERTY
On December 31, 1995, the Company owned 1,017 miles of distribution
mains and appurtenant facilities in South Dakota. The Company also owns
propane-air facilities in Aberdeen, Brookings, Huron, and Mitchell, South
Dakota, having a total rated capacity of 15,280 MMBTU per day, which are
operated for standby and peak shaving purposes only.
On December 31, 1995, the Company owned 659 miles of distribution
mains and appurtenant facilities in Nebraska. The Company also owns
propane-air facilities at Kearney and North Platte, Nebraska, having a
total rated capacity of 9,380 MMBTU per day, which are operated for standby
and peak shaving purposes only.
PROPANE PROPERTY
The Company, in combination with Empire Gas, operates 125 service
centers consisting of appliance showrooms, bulk storage plants, warehousing
space, maintenance facilities, garages, and storage depots of large propane
tanks with associated distribution equipment. These service center
facilities are located in 17 states comprised of Texas, New Mexico,
Oklahoma, Mississippi, Tennessee, Arkansas, Missouri, Vermont, New
Hampshire, New York, Maryland, New Jersey, Virginia, North Carolina, South
Carolina, Ohio, and Florida.
CHARACTER OF OWNERSHIP
All mortgage bonds issued under the Company's General Mortgage
Indenture and Deed of Trust dated as of August 1, 1993 (the "Indenture")
are secured by a first mortgage lien on the Company's properties used in
the generation, production, transmission or distribution of electric energy
or the distribution of natural gas in any form and for any purpose, with
certain exceptions expressly provided in the Indenture. The principal
offices and properties of the Company are held in fee and are free from
other encumbrances, subject to minor exceptions, none of which is of such a
nature as substantially to impair the usefulness to the Company of such
properties. In general, the electric lines and natural gas lines and mains
are located on land not owned in fee, but are covered by necessary consents
of various governmental authorities or by appropriate rights obtained from
owners of private property. These consents and rights are deemed adequate
for the purposes for which they are being used.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various pending proceedings and suits, but
in the judgment of management after consultation with counsel for the
Company, the nature of such proceedings and suits, and the amounts involved
do not depart from the routine litigation and proceedings incident to the
kind of business conducted by the Company.
ITEM 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS
No issues were submitted to a vote of security holders during the last
quarter of the period covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The information required by this Item 5 is incorporated by reference
to page 24 of the Company's 1995 Annual Report to Stockholders, filed as an
Exhibit hereto.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item 6 is incorporated by reference
to "Financial Statistics" on page 20 of the financial section of the
Company's 1995 Annual Report to Stockholders, filed as an Exhibit hereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The information required by this Item 7 is incorporated by reference
to "Management's Discussion and Analysis" on pages 1 - 5 of the financial
section of the Company's 1995 Annual Report to Stockholders, filed as an
Exhibit hereto.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 is incorporated by reference
to the Company's financial statements and related footnotes on pages 12 -
17, of the financial section of the Company's 1995 Annual Report to
Stockholders, filed as an Exhibit hereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in accountants or disagreements on
accounting principles or practices or financial statement disclosures.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT
(a) IDENTIFICATION OF DIRECTORS
The information regarding directors required by this Item 10 and
paragraphs (a) and (e) of Item 401 of Regulation S-K is incorporated by
reference to the information under "Election of Directors" in the Company's
definitive Proxy Statement dated March 15, 1996, and filed with the
Commission pursuant to Regulation 14A under the Securities Exchange Act of
1934 within 120 days after the close of the Company's fiscal year ended
December 31, 1995.
The information relating to the Company's executive officers is set
forth in Part I of this Annual Report on Form 10-K.
Reports to the Securities and Exchange Commission
The information required by Item 405 of Regulation S-K is incorporated
by reference to the information under "Reports to the Securities and
Exchange Commission" in the Company's definitive Proxy Statement dated
March 15, 1996 and filed with the Commission pursuant to Regulation 14A
under the Securities Exchange Act of 1934 within 120 days after the close
of the Company's fiscal year ended December 31, 1995.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is incorporated by reference
to the information under "Compensation of Directors and Executive Officers"
in the Company's definitive Proxy Statement dated March 15, 1996, and filed
with the Commission pursuant to Regulation 14A under the Securities
Exchange Act of 1934 within 120 days after the close of the Company's
fiscal year ended December 31, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 12 is incorporated by reference
to the information under "Securities Ownership by Directors and Officers"
in the Company's definitive Proxy Statement dated March 15, 1996, and filed
with the Commission pursuant to Regulation 14A under the Securities
Exchange Act of 1934 within 120 days after the close of the Company's
fiscal year ended December 31, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
The Company has no relationships or transactions covered by this item.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT
1. Financial Statements
The following items are included in this annual report by reference to
the registrant's Annual Report to Stockholders for the year ended December
31, 1995:
Page in financial
section of Annual
Report to Stockholders
FINANCIAL STATEMENTS:
Report of Independent Public Accountants 7
Consolidated Statement of Operations and
Retained Earnings for the Three Years
Ended December 31, 1995 8
Consolidated Statement of Cash Flows for the
Three Years Ended December 31, 1995 9
Consolidated Balance Sheets,
December 31, 1995 and 1994 10
Consolidated Statement of Capitalization,
December 31, 1995 and 1994 11
Notes to Consolidated Financial Statements 12-17
Quarterly Unaudited Financial Data for the
Two Years Ended December 31, 1995 17
2. Financial Statement Schedules
The following supplemental financial data included herein should be
read in conjunction with the financial statements referenced above:
Page in
Form 10-K
----------
Report of Independent Public Accountants 24
Schedule II - Valuation and Qualifying Accounts 25
Schedules other than those listed above are omitted because of the
absence of the conditions under which they are required or because the
information required is included in the financial statements or the notes
thereto.
3. Exhibits
The exhibits listed on the Exhibit Index beginning on page 26 of this
Annual Report on Form 10-K are filed herewith or are incorporated herein by
reference to other filings.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter ended
December 31, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
NORTHWESTERN PUBLIC SERVICE COMPANY (Registrant)
/s/ M. D. Lewis
M. D. Lewis, Director and President and Chief Executive Officer
March 29th, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ R. A. Wilkens
- -------------------------------
R. A. Wilkens, Chairman of the Board of Directors
/s/ M. D. Lewis
- -------------------------------
M. D. Lewis, Director and President and Chief Executive Officer
/s/ R. R. Hylland
- -------------------------------
R. R. Hylland, Director and Executive Vice President-Strategic Development
(Principal Financial Officer)
/s/ Rogene A. Thaden
- -------------------------------
Rogene A. Thaden, Treasurer (Principal Accounting Officer)
/s/ Jerry W. Johnson
- -------------------------------
Jerry W. Johnson, Director
/s/ Aelred J. Kurtenbach
- -------------------------------
Aelred J. Kurtenbach, Director
/s/ Herman Lerdal
- -------------------------------
Herman Lerdal, Director
/s/ Larry F. Ness
- -------------------------------
Larry F. Ness, Director
/s/ Raymond M. Schutz
- -------------------------------
Raymond M. Schutz, Director
/s/ Bruce I. Smith
- -------------------------------
Bruce I. Smith, Director
/s/ W. W. Wood
- -------------------------------
W. W. Wood, Director
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Northwestern Public Service Company:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Northwestern Public
Service Company's annual report to shareholders incorporated by reference
in this Form 10-K, and have issued our report thereon dated February 2,
1996. Our audit was made for the purpose of forming an opinion on those
financial statements taken as a whole. The schedule listed in the table of
contents of financial statements is the responsibility of the Company's
management and is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be
set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
February 2, 1996
<PAGE>
<TABLE>
NORTHWESTERN PUBLIC SERVICE COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
- ---------------------------- ----------- --------------------- --------- -----------
Additions
Balance ---------------------
Beginning Charged to Charged Balance
of Period Costs and to Other Deductions End
Description <F1> Expenses Expenses <F1> of Period
- ---------------------------- --------- ---------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1995
- ------------------------------------
RESERVES DEDUCTED
FROM APPLICABLE ASSETS:
Uncollectible accounts $ 5,907,675 $ 827,909 $ - $ (310,681) $ 6,424,903
=========== ========= ======== ========= ===========
OTHER DEFERRED CREDITS:
Reserve for decommissioning costs $ 7,278,173 $ 510,309 $ - $ - $ 7,788,482
=========== ========= ======== ========= ===========
FOR THE YEAR ENDED DECEMBER 31, 1994
- ------------------------------------
RESERVES DEDUCTED
FROM APPLICABLE ASSETS:
Uncollectible accounts $ 400,000 $ 129,039 $ - $ (129,039) $ 400,000
=========== ========= ======== ========= ===========
OTHER DEFERRED CREDITS:
Reserve for decommissioning costs $ 6,769,631 $ 508,542 $ - $ - $ 7,278,173
=========== ========= ======== ========= ===========
FOR THE YEAR ENDED DECEMBER 31, 1993
- ------------------------------------
RESERVES DEDUCTED
FROM APPLICABLE ASSETS:
Uncollectible accounts $ 300,000 $ 249,455 $ - $ (149,455) $ 400,000
=========== ========= ======== ========= ===========
OTHER DEFERRED CREDITS:
Reserve for decommissioning costs $ 6,264,998 $ 504,633 $ - $ - $ 6,769,631
=========== ========= ======== ========= ===========
<FN>
<F1> The beginning balance for 1995 was restated to reflect the propane acquisitions that occurred
during the year.
<F2> All deductions from reserves were for purposes for which such reserves were created.
</TABLE>
<PAGE>
EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K
FOR YEAR ENDED DECEMBER 31, 1995
(3) ARTICLES OF INCORPORATION AND BY-LAWS
3(a)(1)
Registrant's Restated Certificate of Incorporation, dated February 7, 1990,
is incorporated by reference to Exhibit 3(a)(1) to Form 10-K for the year
ended December 31, 1989, Commission File No. 0-692.
3(a)(2)
Certificate of Retirement of Preferred Stocks, dated January 13, 1992, is
incorporated by reference to Exhibit 3(a)(2) to Form 10-K for the year
ended December 31, 1991, Commission File No. 0-692.
3(b)
Registrant's By-Laws, as amended, dated November, 1995 are incorporated by
reference to Exhibit 3(ii) of Form 10-Q for the quarter ended September 30,
1995, Commission File No. 0-692.
(4) INDENTURES AND POLLUTION CONTROL FACILITY OBLIGATIONS
4(a)(1)
General Mortgage Indenture and Deed of Trust, dated as of August 1, 1993,
from the Company to The Chase Manhattan Bank (National Association), as
Trustee, is incorporated by reference to Exhibit 4(a) of Form 8-K, dated
August 16, 1993, Commission File No. 0-692.
4(a)(2)
Supplemental Indenture, dated August 15, 1993, from the Company to The
Chase Manhattan Bank (National Association), as Trustee, is incorporated by
reference to Exhibit 4(b) of Form 8-K, dated August 16, 1993, Commission
File No. 0-692.
4(a)(3)
Letter Agreement, dated July 28, 1995, from the Company to The Chase
Manhattan Bank (National Association), as Trustee, the Travelers Insurance
Company, and Metropolitan Life Insurance Company pursuant to which each
party agreed to amend the 1940 Mortgage Indenture and allow bonds issued
under the 1940 Indenture be exchanged for comparable bonds under the 1993
General Mortgage Indenture and Deed of Trust.
4(a)(4)
Supplemental Indenture, dated August 1, 1995, from the Company to The Chase
Manhattan Bank (National Association), as Trustee, is incorporated by
reference to Exhibit 4(b) of Form 8-K, dated August 30, 1995, Commission
File No. 0-692.
4(a)(5)
Supplemental Indenture, dated September 1, 1995, from the Company to The
Chase Manhattan Bank (National Association), as Trustee, concerning the New
Mortgage Bonds, 6.99% Series due 2002.
4(a)(6)
Supplemental Indenture, dated September 1, 1995, from the Company to The
Chase Manhattan Bank (National Association), as Trustee, concerning the New
Mortgage Bonds, 8.824% Series due 1998.
4(a)(7)
Supplemental Indenture, dated September 1, 1995, from the Company to The
Chase Manhattan Bank (National Association), as Trustee, concerning the New
Mortgage Bonds, 8.90% Series due 1999.
4(b)(1)
Preferred Securities Guarantee Agreement, dated August 3, 1995, between the
Company and Wilmington Trust Company is incorporated by reference to
Exhibit 1(d) of Form 8-K, dated August 30, 1995, Commission File No. 0-692.
4(b)(2)
Declaration of Trust of NWPS Capital Financing I is incorporated by
reference to Exhibit 4(d) of Form 8-K, dated August 30, 1995, Commission
File No. 0-692.
4(b)(3)
Amended and Restated Declaration of Trust of NWPS Capital Financing I is
incorporated by reference to Exhibit 4(e) of Form 8-K, dated August 30,
1995, Commission File No. 0-692.
4(b)(4)
Subordinated Debt Securities Indenture, dated August 1, 1995, between the
Company and The Chase Manhattan Bank (National Association), as Trustee, is
incorporated by reference to Exhibit 4(f) of Form 8-K, dated August 30,
1995, Commission File No. 0-692.
4(b)(5)
First Supplemental Indenture, dated August 1, 1995, to the Subordinated
Debt Securities Indenture is incorporated by reference to Exhibit 4(g) of
Form 8-K, dated August 30, 1995, Commission File No. 0-692.
4(c)(1)
Copy of Sale Agreement between Company and Mercer County, North Dakota,
dated June 1, 1993, related to issuance of Pollution Control Refunding
Revenue Bonds (Northwestern Public Service Company Project) Series 1993, is
incorporated by reference to Exhibit 4(b)(1) of Registrant's report on Form
10-Q for the quarter ending June 30, 1993, Commission File No. 0-692.
4(c)(2)
Copy of Loan Agreement between Company and Grant County, South Dakota,
dated June 1, 1993, related to issuance of Pollution Control Refunding
Revenue Bonds (Northwestern Public Service Company Project) Series 1993A,
is incorporated by reference to Exhibit 4(b)(2) of Registrant's report on
Form 10-Q for the quarter ending June 30, 1993, Commission File No. 0-692.
4(c)(3)
Copy of Loan Agreement between Company and Grant County, South Dakota,
dated June 1, 1993, related to issuance of Pollution Control Refunding
Revenue Bonds (Northwestern Public Service Company Project) Series 1993B,
is incorporated by reference to Exhibit 4(b)(3) of Registrant's report on
Form 10-Q for the quarter ending June 30, 1993, Commission File No. 0-692.
4(c)(4)
Copy of Loan Agreement between Company and City of Salix, Iowa, dated June
1, 1993, related to issuance of Pollution Control Refunding Revenue Bonds
(Northwestern Public Service Company Project) Series 1993, is incorporated
by reference to Exhibit 4(b)(4) of Registrant's report on Form 10-Q for the
quarter ending June 30, 1993, Commission File No. 0-692.
(10) MATERIAL CONTRACTS
10(a)(1)
Supplemental Income Security (Retirement) Plan for Directors, Officers and
Managers, as amended July 1, 1986, is incorporated by reference to Exhibit
10(g)(1) to Form 10-K for the year ended December 31, 1988, Commission File
No. 0-692.
10(a)(2)
Deferred Compensation Plan for Non-employee Directors adopted November 6,
1985, is incorporated by reference to Exhibit 10(g)(2) to Form 10-K for the
year ended December 31, 1988, Commission File No. 0-692.
10(a)(3)
Pension Equalization Plan, dated August 5, 1987, is incorporated by
reference to Exhibit 10(g)(4) to Form 10-K for the year ended December 31,
1988, Commission File No. 0-692.
10(a)(4)
Director Retirement Plan, dated November 4, 1987, as amended May 3, 1995.
10(a)(5)
Long-term Incentive Compensation Plan (Phantom Stock Unit Plan) for
Directors and Officers, dated February 1, 1989, as amended May 3, 1995.
10(a)(6)
Form of Severance Agreement for Officers, dated November 1, 1995.
10(a)(7)
Annual Performance Incentive Plan (NorthSTAR Plan) for all eligible
employees, dated May 3, 1995.
(13) REPORT FURNISHED TO SECURITY HOLDERS
13(a)
Annual Report for fiscal year ended December 31, 1995, furnished to
stockholders of record on March 4, 1996 (exhibit filed herewith).
(21) SUBSIDIARIES OF REGISTRANT
State of Jurisdiction
Name of Incorporation
- ------------------------------------- ---------------------
Northwestern Public Service Company Delaware
Grant, Inc. South Dakota
Myers Propane Gas Company (1) Delaware
Northwestern Growth Corporation South Dakota
Northwestern Networks, Inc. South Dakota
Northwestern Systems, Inc. South Dakota
Lucht Inc. Delaware
SYN Inc. (2) Delaware
Synergy Group Incorporated (3) Delaware
Western Gas North Carolina
(1) Northwestern Public Service Company owns 51% of the common stock
of Myers Propane Gas Company.
(2) Northwestern Growth Corporation owns 52.5% of the common stock of
SYN Inc.
(3) Synergy Group Incorporated has 54 wholly-owned subsidiaries operating
in the United States, the majority of which are in the propane
distribution business.
Exhibit 4(a)(3)
NORTHWESTERN PUBLIC SERVICE COMPANY
33 Third Street S.E.
Huron, South Dakota 57350-1318
July 28, 1995
The Travelers Insurance Company
The Phoenix Insurance Company
The Travelers Indemnity Company
205 Columbus Boulevard
Hartford, CT 06183
Metropolitan Life Insurance Company
One Lincoln Centre, Suite 800
Oakbrook, IL 60181
The Chase Manhattan Bank (National
Association)
4 Chase MetroTech Center
3rd Floor
Brooklyn, NY 11245
Re: Northwestern Public Service Company - Consent to Amendment to
1940
Indenture and Agreement to Exchange Bonds
Ladies and Gentlemen:
We refer to:
(i) the Indenture dated August 1, 1940 (as the same has been amended
from time to time, the "1940 Indenture") by and between Northwestern Public
Service Company (the "Company") and The Chase Manhattan Bank (National
Association), successor to The Chase National Bank of the City of New York
(the "1940 Trustee"), and C. J. Heinzelmann, successor to Carl E. Buckley
(the 1940 Trustee and said C. J. Heinzelmann being hereinafter called the
"1940 Trustees");
(ii) the Supplemental Indenture dated November 1, 1989 by and between
the Company and the 1940 Trustees, pursuant to which the Company issued
$7,500,000 of its First Mortgage Bonds, 8.90% Series due 1999 (the "8.90%
Bonds") to Metropolitan Life Insurance Company ("Metropolitan Life");
(iii) the Supplemental Indenture dated July 15, 1991 by and
between the Company and the 1940 Trustees, pursuant to which the Company
issued $15,000,000 of its First Mortgage Bonds, 8.824% Series due 1998 (the
"8.824% Bonds"), $11,000,000 of which were issued to The Travelers
Insurance Company ("Travelers") and the remaining $4,000,000 of which were
issued to The Phoenix Insurance Company ("Phoenix");
(iv) the Supplemental Indenture dated September 1, 1992 by and between
the Company and the 1940 Trustees, pursuant to which the Company issued
$25,000,000 of its First Mortgage Bonds, 6.99% Series due 2002 (the "6.99%
Bonds"), $22,000,000 of which were issued to Travelers and the remaining
$3,000,000 of which were issued to The Travelers Indemnity Company
("Indemnity"); and
(v) the Supplemental Indenture dated August 15, 1993 by and between
the Company and the 1940 Trustees, pursuant to which the Company issued
$55,000,000 of its First Mortgage Bonds, 7% Series due 2023 (the "7%
Bonds") to The Chase Manhattan Bank (National Association), as Trustee (the
"1993 Trustee") under the General Mortgage Indenture and Deed of Trust
dated as of August 1, 1993 (the "1993 Indenture") by and between the
Company and the 1993 Trustee.
Unless otherwise defined herein, the terms defined in the 1940
Indenture shall be used herein as therein defined.
As of the date of this letter, the only Bonds outstanding under the
1940 Indenture are the 8.90% Bonds, the 8.824% Bonds, the 6.99% Bonds and
the 7% Bonds, and the only holders of the Bonds are Metropolitan Life,
Travelers, Phoenix, Indemnity and the 1993 Trustee (collectively, the
"Bondholders").
The Company has advised the Bondholders that it desires to enter into
a Supplemental Indenture with the 1940 Trustees pursuant to which the
Company would issue up to $75,000,000 of Bonds (the "New 1940 Bonds") to
the 1993 Trustee to be used as "Pledged Bonds" under the 1993 Indenture for
purposes of issuing to the public a like amount of bonds ("New Mortgage
Bonds") under the 1993 Indenture (the "Public Offering"). At present, the
Company is not able to issue the full amount of New 1940 Bonds under the
1940 Indenture, because of (a) the limitation in Section 3 of Article II of
the 1940 Indenture that it may issue Bonds pursuant to such Section only to
the extent in principal amount of sixty percent (60%) of all "net
expenditures" (as defined in such Section), and (b) the prohibition in
Section 3 of Article II of the 1940 Indenture on using as the basis for the
issuance of Bonds any expenditures for property which has previously been
used by the Company to satisfy its maintenance and renewal fund obligations
under Article VII of the 1940 Indenture.
The undersigned Bondholders have agreed (a) to consent to the
amendment of Section 3 of Article II to the 1940 Indenture (i) to increase
the percentage stated therein from sixty percent (60%) to seventy-five
percent (75%), and (ii) to eliminate the restriction regarding the use of
expenditures for property that has been used to satisfy the Company's
obligations under Article VII of the 1940 Indenture, pursuant to a
Supplemental Indenture to the 1940 Indenture in substantially the form of
Exhibit A attached hereto, and (b) in the case of Metropolitan Life,
Travelers, Phoenix and Indemnity (collectively, the "Exchanging
Bondholders"), to exchange the Bonds held by each of them for bonds of like
tenor to be issued pursuant to a Supplemental Indenture to the 1993
Indenture in substantially the form of Exhibit B-1, Exhibit B-2 or Exhibit
B-3 (as applicable), in each case so long as the Company agrees to the
conditions and other provisions set forth herein.
1. Accordingly, the Company and the undersigned Bondholders
(including the 1993 Trustee) hereby agree as follows:
(a) The actions set forth in clause (b) of this Paragraph 1
shall be effective as if the same had taken place at a meeting of
Bondholders pursuant to Article XVIII (Meetings of Bondholders) of the
1940 Indenture (which provision was added to the 1940 Indenture by the
Supplemental Indenture dated October 1, 1946), and the undersigned
Bondholders hereby waive any and all notice of a meeting of the
Bondholders provided for in said Article XVIII; and
(b) The undersigned Bondholders hereby consent to the execution
by the Company and the 1940 Trustees of the Supplemental Indenture to
the 1940 Indenture in substantially the form of Exhibit A attached
hereto, and the recording and filing thereof in the various
jurisdictions in which the 1940 Indenture is recorded or filed.
2. The Company and the Exchanging Bondholders hereby agree as
follows:
(a) On a date not later than the last to occur of September 1,
1995 or the date of the Public Offering, the Company will issue:
(i) to Metropolitan Life, and Metropolitan Life will
accept, one or more bonds in the aggregate principal amount of
$7,500,000 in exchange for all of the issued and outstanding
8.90% Bonds, which bonds shall bear interest at a rate of 8.90%
per annum, shall mature on November 1, 1999, and shall be issued
pursuant to a Supplemental Indenture to the 1993 Indenture in
substantially the form of Exhibit B-1 attached hereto (as the
same may be modified by mutual agreement of the Company and
Metropolitan Life) and afforded the benefits set forth therein;
(ii) to Travelers, and Travelers will accept, one or
more bonds in the aggregate principal amount of $11,000,000 in
exchange for a like amount of 8.824% Bonds held by it, and to
Phoenix, and Phoenix will accept, one or more bonds in the
aggregate principal amount of $4,000,000 in exchange for a like
amount of 8.824% Bonds held by it, in each case which bonds shall
bear interest at a rate of 8.824% per annum, shall mature on July
15, 1998, and shall be issued pursuant to a Supplemental
Indenture to the 1993 Indenture in substantially the form of
Exhibit B-2 attached hereto (as the same may be modified by
mutual agreement of the Company, Travelers and Phoenix) and
afforded the benefits set forth therein; and
(iii) to Travelers, and Travelers will accept, one
or more bonds in the aggregate principal amount of $22,000,000 in
exchange for a like amount of 6.99% Bonds held by it, and to
Indemnity, and Indemnity will accept, one or more bonds in the
aggregate principal amount of $3,000,000 in exchange for a like
amount of 6.99% Bonds held by it, in each case which bonds shall
bear interest at a rate of 6.99% per annum, shall mature on
September 1, 2002, and shall be issued pursuant to a Supplemental
Indenture to the 1993 Indenture in substantially the form of
Exhibit B-3 attached hereto (as the same may be modified by
mutual agreement of the Company, Travelers and Indemnity) and
afforded the benefits set forth therein.
The bonds to be issued under the 1993 Indenture and the Supplemental
Indentures thereto pursuant to this clause (a) are referred to herein
as the "Exchanged Bonds."
(b) At the time of the issue of the Exchanged Bonds pursuant to
clause (a) of this Paragraph 2, each of the Exchanging Bondholders
will surrender their respective Bonds in exchange for the Exchanged
Bonds (which shall be stated to accrue interest from the date of the
last interest payment date of the Bonds to be exchanged for the
Exchanged Bonds), subject to satisfaction of the following conditions:
(i) Each Exchanging Bondholder shall have received an
opinion of counsel from Schiff Hardin & Waite in substantially
the form (mutatis mutandis) of the opinion delivered pursuant to
Paragraph 9(b) (or in the case of the Exchanged Bonds issued in
exchange for the 8.90% Bonds, Paragraph 10(b)) of the Bond
Purchase Agreements pursuant to which the Bonds were issued to
such Exchanging Bondholder;
(ii) Each Exchanging Bondholder shall have received an
opinion of counsel from local counsel in the States of South
Dakota and Nebraska in substantially the form (mutatis mutandis)
of the opinions delivered pursuant to Paragraph 9(c) (or in the
case of the Exchanged Bonds issued in exchange for the 8.90%
Bonds, Paragraph 10(c)) of the Bond Purchase Agreements pursuant
to which the Bonds were issued to such Exchanging Bondholder;
(iii) Each Exchanging Bondholder shall have
received an officer's certificate in substantially the form
(mutatis mutandis) of the officer's certificate delivered
pursuant to Paragraph 9(d) (or in the case of the Exchanged Bonds
issued in exchange for the 8.90% Bonds, Paragraph 10(d)) of the
Bond Purchase Agreements pursuant to which the Bonds were issued
to such Exchanging Bondholder, which officer's certificate shall
also include a representation by the Company to the effect that
the issuance of the Exchanged Bonds and the compliance by the
Company with the provisions thereof will not involve any
prohibited transaction within the meaning of ERISA or Section
4975 of the Internal Revenue Code;
(iv) Each Exchanging Bondholder shall be satisfied with
the proceedings taken on or before the date of the exchange in
connection with the transactions contemplated by this Paragraph
2, and with the form and substance of all instruments applicable
to the issuance of the Exchanged Bonds;
(v) The exchange shall, on the date of the exchange,
be permitted by the laws and regulations of all jurisdictions to
which each Exchanging Bondholder is then subject, and each
Exchanging Bondholder shall have received such factual
certificates, signed by officers of the Company, or such other
evidence as it may request to establish compliance with this
condition; and
(vi) The obligation of each Exchanging Bondholder to
surrender its respective Bonds is subject to the surrender by
each of the other Exchanging Bondholders of their Bonds.
(c) Concurrently with the issuance of the Exchanged Bonds in
accordance with clause (a) of this Paragraph 2 and the surrender of
the Bonds in accordance with clause (b) of this Paragraph 2, the
Company will deliver to the 1993 Trustee the "Company Order" and the
other documents and instruments referred to in Section 7.07 of the
1993 Indenture for purposes of causing the 1993 Trustee to surrender
for cancellation to the 1940 Trustees all of the Pledged Bonds
(including the 7% Bonds and the New 1940 Bonds) then held by the 1993
Trustee.
(d) Promptly following the surrender by the 1993 Trustee of the
Pledged Bonds in accordance with clause (c) of this Paragraph 2, the
Company will deliver (i) to the 1940 Trustees the request of the
Company and the other documents and instruments referred to in Article
XII of the 1940 Indenture for purposes of causing the 1940 Trustees to
cancel and discharge the lien of the 1940 Indenture as provided for in
said Article XII, and (ii) to the Exchanging Bondholders a certificate
to the effect that the 1940 Mortgage has been cancelled and
discharged, together with an opinion of counsel from Schiff Hardin &
Waite to the same effect.
3. As further consideration for the agreement of the Exchanging
Bondholders to the consent to the amendment to the 1940 Indenture, the
exchange of the Bonds for the Exchanged Bonds and the other matters
provided for herein, the Company agrees that each Exchanging Bondholder (or
its respective successors or assigns), with respect to the Exchanged Bonds
then held by it, shall have the following rights, in addition to the rights
provided for in the 1993 Indenture and the Supplemental Indentures pursuant
to which the Exchanged Bonds were issued:
(a) If, at any time subsequent to the earlier of (i) the date
which is 120 days following the issuance of New Mortgage Bonds
pursuant to the S-3 Registration Statement filed by the Company on
June 21, 1995, as the same may be amended or supplemented, or (ii)
January 1, 1996, an Exchanging Bondholder gives written notice to the
Company (specifying that it is being given pursuant to this clause
(a)) requesting the Company to file a registration statement to
register under the 1933 Act all (but not less than all) of a series of
Exchanged Bonds owned by the requesting person (provided, however,
that (1) in the event that such request is made with respect to the
Exchanged Bonds to be issued in exchange for the 8.824% Bonds, such
request shall be submitted by both Travelers and Phoenix, and (2) in
the event that such request is made with respect to the Exchanged
Bonds to be issued in exchange for the 6.99% Bonds, such request shall
be submitted by both Travelers and Indemnity), then the Company shall
promptly notify each of the other Exchanging Bondholders of such
request. Within 15 days after receipt by any such other Exchanging
Bondholder of notice of such request, it may notify the Company that
it too requests that all (but not less than all) of a series of
Exchanged Bonds owned by such Exchanging Bondholder be included in
such registration (all of the Exchanging Bondholders who at that point
have requested the Company to include their Exchanged Bonds in the
registration being hereinafter referred to as the "Selling
Bondholders"); provided, however, that the failure by an Exchanging
Bondholder to make such a request shall not preclude such Exchanging
Bondholder from subsequently exercising its rights under this
Paragraph 3. The Company shall then use its best efforts to cause to
be registered under the 1933 Act all Exchanged Bonds that the Selling
Bondholders have so requested to be registered. Notwithstanding the
foregoing, the Company shall not be obligated to effect a registration
pursuant to this clause (a) during the period starting with the date
45 days prior to the Company's estimated date of filing of, a
registration statement pertaining to an underwritten public offering
of New Mortgage Bonds for the account of the Company, provided that
the Company is actively employing in good faith all reasonable efforts
to cause such registration statement to become effective and that the
Company's estimate of the date of filing such registration statement
is made in good faith. The Company shall be obligated to effect one
registration pursuant to this clause (a) for each series of Exchanged
Bonds. At any time prior to the effectiveness of the registration
statement, any request for registration under this clause (a) may be
withdrawn by a Selling Bondholder, whereupon, if such withdrawal
affects all of the Exchanged Bonds that were to be the subject of the
registration statement, the Company shall either not file or withdraw
the filing of the registration statement, as applicable, and such
withdrawal of the request for registration will not be deemed to have
been the exercise of the registration right granted in this clause
(a).
(b) Whenever under clause (a) of this Paragraph 3 the Company is
to use its best efforts to effect the registration of any Exchanged
Bonds, that shall require the Company to do the following:
(i) As expeditiously as reasonably possible (and in
any event within 30 days following the delivery to the Company of
the request by the first Selling Bondholder pursuant to clause
(a) of this Paragraph 3), prepare and file with the Securities
and Exchange Commission ("SEC," which term includes any successor
agency) a registration statement with respect to such Exchanged
Bonds, and use its best efforts to cause such registration
statement to become and remain effective under the 1933 Act,
except that the Company shall in no event be obligated to cause
any such registration to remain effective for more than nine
months.
(ii) As expeditiously as reasonably possible, prepare
and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with
the provisions of the 1933 Act with respect to the disposition of
all securities covered by such registration statement.
(iii) As expeditiously as reasonably possible,
furnish to each Selling Bondholder such numbers of the copies of
the prospectus used in connection with such registration
statement (including all preliminary prospectuses and the final
prospectus), and all amendments and supplements thereto, and such
other documents as they may reasonably request in order to
facilitate the distribution of the Exchanged Bonds owned by such
Selling Bondholder.
(iv) As expeditiously as reasonably possible, make a
commercially reasonable effort to register and qualify the
securities covered by such registration statement under such
securities or Blue Sky laws of such jurisdictions as shall be
reasonably appropriate or requested by each Selling Bondholder or
by the underwriter (if any) for the distribution of the
securities covered by the registration statement, except that the
Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general
consent to service of process in any such jurisdiction, and
except that (anything in this letter to the contrary
notwithstanding with respect to the bearing of expenses) if any
jurisdiction in which the Exchanged Bonds shall be qualified
shall require that expenses incurred in connection with the
registration or qualification of the Exchanged Bonds in that
jurisdiction be borne by those selling the Exchanged Bonds, then
such expenses shall be payable by the Selling Bondholders pro
rata in accordance with the principal amount of the Exchanged
Bonds being registered, to the extent required by such
jurisdiction.
(v) Advise each Selling Bondholder promptly after the
Company shall receive notice or obtain knowledge thereof of (1)
the issuance of any stop order by the SEC suspending the
effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose, (2) any similar
action by any regulatory agency of competent jurisdiction under
the securities or Blue Sky laws of any jurisdiction, and in any
such case promptly make a commercially reasonable effort to
prevent the issuance of any stop order or the taking of any such
similar action or to obtain its withdrawal if such stop order
shall be issued or any such similar action shall be taken, and
(3) the happening of any event as a result of which the
prospectus included in such registration statement contains an
untrue statement of material fact or omits to state any fact
necessary to make the statements therein not misleading.
(vi) Furnish to each Selling Bondholder copies of all
documents proposed to be filed with respect to any amendment or
supplement to such registration statement or prospectus at a
reasonable time prior to such filing, and not file any such
amendment or supplement to which the Selling Bondholders of a
majority of the Exchanged Bonds covered by such registration
statement shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects
with the requirements of the 1933 Act or the rules and
regulations thereunder, unless in the opinion of counsel for the
Company the filing of such amendment or supplement is reasonably
necessary to protect the Company from any liabilities under any
applicable federal or state law and such filing will not violate
applicable law.
(vii) Furnish on the effective date of the
registration statement and, if such registration includes an
underwritten public offering, at the closing provided for in the
underwriting agreement: (1) an opinion, dated each such date, of
the counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the
Selling Bondholders participating in such registration, stating
that such registration statement has become effective under the
1933 Act and that (A) to the best of such counsel's knowledge, no
stop order suspending the effectiveness thereof has been issued
and no proceedings for that purpose have been instituted or are
pending or contemplated under the 1933 Act, (B) the registration
statement, related prospectus and each amendment or supplement
thereto comply as to form in all material respects with the
requirements of the 1933 Act and the applicable rules and
regulations of the SEC thereunder (except that such counsel need
express no opinion as to financial statements and financial data
contained therein), (C) such counsel have no reason to believe
that the registration statement, the prospectus or any amendment
or supplement thereto contains any untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light
of circumstances under which they were made, not misleading
(except that such counsel need express no belief as to the
financial statements and financial data contained therein, nor as
to any of the information provided by the Selling Bondholders
pursuant to clause (c) of this Paragraph 3), (D) the description
in the registration statement or prospectus or any amendment or
supplement thereto of all legal and governmental proceedings and
all contracts and other legal documents or instruments filed as
exhibits to the registration statement are accurate and fairly
present the information required to be shown, and (2) a letter
dated each such date, from the independent certified public
accountants of the Company, addressed to the underwriters, if
any, and to the Selling Bondholders participating in such
registration, covering such matters as such underwriters and such
Selling Bondholders may reasonably request, in which letter such
accountants shall state (without limiting the generality of the
foregoing) that they are independent certified public accountants
within the meaning of the 1933 Act and that in the opinion of
such accountants the financial statements and other financial
data of the Company included in the registration statement or the
prospectus or any amendment or supplement thereto comply in all
material respects with the applicable accounting requirements of
the 1933 Act and applicable rules and regulations thereunder.
(viii) Enter into such customary agreements and take
all such other actions as the Selling Bondholders that are
holders of a majority of the Exchanged Bonds covered by such
registration statement or the managing underwriters for such
registration, if any, may reasonably request in order to
facilitate the distribution of such Exchanged Bonds (including,
without limitation, to cause such Exchanged Bonds to be listed on
such securities exchange on which similar securities issued by
the Company are then listed, to cause such Exchanged Bonds to be
eligible for quotation and transaction reporting through an
automated inter-dealer quotation system operated by a national
securities association, and to provide a transfer agent and
registrar).
(ix) Make available for inspection by, and cause the
Company's officers, directors, employees and independent
accountants to supply to, any Selling Bondholder, any underwriter
participating in the distribution pursuant to such registration
statement, and any attorney, accountant or other agent for any
thereof, all financial and other records of the Company and all
information reasonable requested in connection with such
registration statement.
(x) Enter into an indemnity agreement pursuant to
which the Company agrees (to the extent permitted by law) to
indemnify and hold harmless each Selling Bondholder, each of its
directors, officers, employees and agents, each underwriter (if
any), each other person who participates in the offering of such
Exchanged Bonds, and each other person, if any, who controls
(within the meaning of the 1933 Act) such Selling Bondholder,
underwriter or participating person, against any losses, claims,
damages or liabilities, joint or several, to which such Selling
Bondholder, director, officer, employee, agent, underwriter,
participating person or controlling person may become subject
under the 1933 Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (A) any alleged
untrue statement of any material fact contained, on the effective
date thereof, in any registration statement under which such
Exchanged Bonds were registered under the 1933 Act, any
preliminary prospectus or final prospectus contained therein, or
any summary prospectus issued in connection with any Exchanged
Bonds being registered, or any amendment or supplement thereto,
or (B) any alleged omission to state in any such document a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse such
Selling Bondholders, director, officer, employee, agent,
underwriter, participating person or controlling person for any
legal or other expenses reasonably incurred by such Selling
Bondholder, director, officer, employee, agent, underwriter,
participating person or controlling person in connection with
investigating or defending any such loss, damage, liability or
action; provided, however, that the Company shall not be liable
to such Selling Bondholder, director, officer, employee, agent,
underwriter, participating person or controlling person in any
such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any alleged untrue
statement or alleged omission made in such registration
statement, preliminary prospectus, final prospectus, summary
prospectus or amendment or supplement thereto in reliance upon
and in conformity with written information furnished to the
Company by such Selling Bondholder, specifically for use therein.
Such indemnity agreement shall contain customary provisions with
respect to the procedure to be followed in connection with the
assertion of any right to indemnification, as well as customary
provisions with respect to just and equitable contribution in the
event where any such indemnity is unavailable.
(c) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Paragraph 3 that each
Selling Bondholder shall furnish to the Company such information
regarding such Selling Bondholder, the Exchanged Bonds held by such
Selling Bondholder, and the intended method of disposition of such
Exchanged Bonds (which may, but need not, involve an underwritten
transaction) as the Company shall reasonably request and as shall be
required in connection with the action to be taken by the Company.
(d) All expenses incurred in connection with a registration
pursuant to clause (a) of this Paragraph 3 (excluding underwriters'
discounts and commissions (if any), fees of any counsel which the
Selling Bondholder may separately engage and expenses expressly
required by clause (b)(iv) of this Paragraph 3 to be paid by the
Selling Bondholders), including without limitation all registration
and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company, internal expenses of the
Company (including, without limitation, salaries of officers and
employees) and listing fees shall be borne by the Company.
(e) In the event that, for any reason other than the failure by
a Selling Bondholder to comply with the provisions of this Paragraph
3, the registration statement provided for in clause (a) of this
Paragraph 3 is not declared effective by the SEC within 90 days
following the filing thereof pursuant to clause (b)(i) of this
Paragraph 3, the Company shall be obligated to pay to each Selling
Bondholder a fee equal to fifteen basis points (.15%) per annum
(calculated on the basis of a 360-day year) of the principal amount of
the Exchanged Bonds owned by such Selling Bondholder that are subject
to such registration statement for the period beginning on the 90th
day following the filing of such registration statement and ending on
the earlier of (i) the date that such registration statement is
declared effective by the SEC, or (ii) the date on which the Exchanged
Bonds with respect to which the fee applies are paid in full by the
Company. The fee provided for under this clause (e) shall be payable
semi-annually in arrears on the date on which interest on the
Exchanged Bonds is due and payable and on the last day of the period
referred to in the preceding sentence.
(f) For purposes of this Paragraph 3: (i) the term "1933 Act"
means the Securities Act of 1933, as amended; and (ii) the terms
"register," "registered" and "registration" refer to a registration
effected by filing a registration statement in compliance with the
1933 Act (a "registration statement") and such registration statement
becoming effective under the 1933 Act.
In order to induce the Bondholders to execute and deliver this letter,
the Company represents and warrants to the Bondholders that:
(a) This letter is the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its
terms, except as may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors rights in general and by
general principles of equity;
(b) No "default" or "event of default" (as such terms are
defined in the 1940 Indenture) or "Event of Default" (as such term is
defined in the 1993 Indenture) exists, in each case both before and
after giving effect to the consents and other matters contemplated
hereby; and
(c) Upon the discharge of the lien of the 1940 Indenture in
accordance with clause (d) of Paragraph 2, the lien of the 1993
Indenture on the property formerly subject to the lien of the 1940
Indenture, to the extent the same is part of the "Mortgaged Property"
under the 1993 Indenture, will be subject to no lien prior to the lien
of the 1993 Indenture except "Permitted Liens" under the 1993
Indenture and liens of the character permitted to exist or to be
created under Section 6.06 of the 1993 Indenture.
Nothing contained in this letter shall affect in any manner the
Company's obligations under the Bond Purchase Agreements pursuant to which
the 8.90% Bonds, the 8.824% Bonds or the 6.99% Bonds, respectively, were
issued, except to the extent that any such obligations relate to the "New
Bonds" or the "Indenture" (as such terms are defined in such Bond Purchase
Agreements), in which case such obligations shall relate to the applicable
series of Exchanged Bonds and the 1993 Indenture (mutatis mutandis),
respectively, and such Bond Purchase Agreements shall otherwise remain in
full force and effect.
This letter shall be construed and enforced as an agreement in
accordance with, and the rights of the parties shall be governed by, the
law of the State of New York (without giving effect to principles of
conflicts of law).
This letter may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed
to be an original and all of which taken together shall constitute but one
and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same
to the Company, whereupon this letter shall become a binding agreement
among you and the Company.
Very truly yours,
NORTHWESTERN PUBLIC SERVICE COMPANY
By:
Title:
The foregoing letter is
hereby accepted as of the
date first above written.
METROPOLITAN LIFE INSURANCE COMPANY
By:
Title:
THE TRAVELERS INSURANCE COMPANY
By:
Title:
THE PHOENIX INSURANCE COMPANY
By:
Title:
THE TRAVELERS INDEMNITY COMPANY
By:
Title:
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
in its capacity as Trustee under the 1993 Indenture
By:
Title:
EXHIBIT A
TO CONSENT
Supplemental Indenture, dated the _____ day of July, nineteen hundred
and ninety-five (1995), made by and between Northwestern Public Service
Company, a corporation organized and existing under the laws of the State
of Delaware (hereinafter called the "Company"), party of the first part,
and The Chase Manhattan Bank (National Association), a national banking
association organized and existing under the laws of the United States of
America and having its principal office or place of business in the Borough
of Manhattan, The City of New York, State of New York, successor to The
Chase National Bank of the City of New York (hereinafter called the
"Trustee"), and C. J. Heinzelmann, of Nassau County, New York, successor to
Carl E. Buckley (the Trustee and said C. J. Heinzelmann being hereinafter
called the "Trustees," which term where the context requires may also
designate their respective predecessors in trust, the post office address
of the Trustees being Corporate Trust Administration Division, 4 Chase
MetroTech Center - 3rd Floor, Brooklyn, New York 11245), as Trustees under
the Indenture dated August 1, 1940, hereinafter mentioned, parties of the
second part.
Whereas the Company has heretofore executed and delivered its
Indenture (hereinafter referred to as the "Original Indenture"), dated
August 1, 1940, to the Trustees for the security of the bonds of the
Company issued and to be issued thereunder; and
Whereas the Company, from time to time, has heretofore duly made and
delivered to the Trustees certain indentures supplemental to the Original
Indenture, including supplemental indentures dated January 15, 1941, August
18, 1945, September 23, 1946, October 1, 1946, July 24, 1947, June 1, 1948,
September 1, 1948, June 1, 1949, August 16, 1950, March 1, 1952, May 1,
1953, February 1, 1955, August 27, 1955, October 1, 1956, July 1, 1957,
August 1, 1959, July 1, 1961, July 1, 1966, September 1, 1970, August 1,
1972, July 1, 1973, November 14, 1974, May 1, 1975, June 1, 1977, July 1,
1978, December 1, 1978, May 6, 1987, November 1, 1989, July 15, 1991,
November 15, 1991, September 1, 1992 and August 15, 1993 (the Original
Indenture as supplemented and amended by the aforementioned supplemental
indentures and by this Supplemental Indenture being hereinafter referred to
as the "Indenture"); and
Whereas pursuant to the terms and provisions of the Original Indenture
and a Supplemental Indenture dated November 1, 1989, the Company created a
new series of bonds, to be issued under the Original Indenture, and to be
known as First Mortgage Bonds, 8.90% Series due 1999, of which Bonds of the
8.90% Series there are issued and outstanding, as of the date of this
Supplemental Indenture, $7,500,000 principal amount; and
Whereas pursuant to the terms and provisions of the Original Indenture
and a Supplemental Indenture dated July 15, 1991, the Company created a new
series of bonds, to be issued under the Original Indenture, and to be known
as First Mortgage Bonds, 8.824% Series due 1998, of which Bonds of the
8.824% Series there are issued and outstanding, as of the date of this
Supplemental Indenture, $15,000,000 principal amount; and
Whereas pursuant to the terms and provisions of the Original Indenture
and a Supplemental Indenture dated September 1, 1992, the Company created a
new series of Bonds, to be issued under the Original Indenture, and to be
known as First Mortgage Bonds, 6.99% Series due 2002, of which Bonds of the
6.99% Series there are issued and outstanding, as of the date of this
Supplemental Indenture, $25,000,000 principal amount; and
Whereas pursuant to the terms and provisions of the Original Indenture
and a Supplemental Indenture dated August 15, 1993, the Company created a
new series of Bonds, to be issued under the Original Indenture, and to be
known as First Mortgage Bonds, 7% Series due 2023, of which Bonds of the 7%
Series there are issued and outstanding, as of the date of this
Supplemental Indenture, $55,000,000 principal amount; and
Whereas the Company desires to modify the Indenture in certain
respects; and
Whereas the holders of all of the Bonds issued and outstanding under
the Original Indenture as of the date hereof (being the Bonds of the 8.90%
Series, the Bonds of the 8.824% Series, the Bonds of the 6.99% Series and
the Bonds of the 7% Series) have consented to the modifications reflected
herein, and to the execution by the Company and the Trustees of this
Supplemental Indenture; and
Whereas the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Original
Indenture, and pursuant to appropriate resolutions of its Board of
Directors, has duly resolved and determined to make, execute and deliver to
the Trustees a Supplemental Indenture in the form hereof for the purposes
herein provided; and
Whereas all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been
done, performed and fulfilled and the execution and delivery hereof have
been in all respects duly authorized;
Now, Therefore, This Indenture Witnesseth:
That Northwestern Public Service Company, in consideration of the
premises and of One Dollar to it duly paid by the Trustees at or before the
ensealing and delivery of these presents, the receipt whereof is hereby
acknowledged, hereby covenants and agrees to and with the Trustees and
their successors in the trust under the Indenture, for the benefit of those
who shall hold the bonds and coupons, or any of them, to be issued
thereunder as hereinafter amended, as follows:
Article I
Amendment of Original Indenture
Section 1. Section 3 of Article II of the Indenture (referred to on
pages 17-26 of the Supplemental Indenture dated October 1, 1946) is hereby
amended by deleting the figure "sixty per centum (60%)" and inserting in
lieu thereof the figure "seventy-five per centum (75%)" in both places
where it appears.
Section 2. Section 3 of Article II of the Indenture (referred to on
pages 17-26 of the Supplemental Indenture dated October 1, 1946) is hereby
amended further amended by:
(a) Deleting the phrase "or which shall have been certified or
used to comply with any requirement of Article VII of this Indenture"
in the first paragraph thereof;
(b) Deleting the phrase "the greater of (a) the aggregate amount
of such gross expenditures, if any, certified to the Trustee for or
during such period pursuant to the provisions of Section 1 of Article
VII hereof as expended for the purposes stated in sub-paragraph (b) of
said Section or (b)" in the first paragraph of the definition of "net
expenditures" contained therein;
(c) Deleting the phrase "(1) were certified to the Trustee
pursuant to the provisions of Section 1 of Article VII hereof as
expended by the Company for the purpose stated in sub-paragraph (c) of
Section 1 of Article VII hereof, (2) were paid to the Trustee to
comply with the requirements of Section 1 of Article VII hereof, and
(3)" in the first paragraph of the definition of "net expenditures"
contained therein;
(d) Deleting the phrase "or the certification of net
expenditures to the Trustee under the provisions of Section 2 of
Article VII of this Indenture" in the second paragraph of the
definition of "net expenditures" contained therein;
(e) Deleting clauses (3), (4)(b) and (4)(c) of sub-paragraph (b)
thereof (referred to on page 24 of the Supplemental Indenture dated
October 1, 1946); and
(f) Deleting the phrase "or has been certified or used to comply
with any requirement of Article VII of this Indenture" in
sub-paragraph (b) thereof (referred to on page 25 of the Supplemental
Indenture dated October 1, 1946).
Article II
The Trustees
The Trustees hereby accept the trusts hereby declared and provided and
agree to perform the same upon the terms and conditions in the Original
Indenture set forth and upon the following terms and conditions:
The Trustees shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Supplemental Indenture or
the due execution hereof by the Company or for or in respect of the
recitals contained herein, all of which recitals are made by the Company
solely. In general each and every term and condition contained in Article
XV of the Original Indenture, as amended by Section 15 of Article IV of the
Supplemental Indenture dated October 1, 1946, shall apply to this
Supplemental Indenture with the same force and effect as if the same were
herein set forth in full, with such omissions, variations and modifications
thereof as may be appropriate to make the same conform to this Supplemental
Indenture.
In Witness Whereof, said Northwestern Public Service Company has
caused this instrument to be executed in its corporate name by its
President or one of its Vice Presidents, and its corporate seal to be
hereunto affixed and to be attested by its Corporate Secretary or an
Assistant Secretary, and said The Chase Manhattan Bank (National
Association), to evidence its acceptance of the trust hereby created, has
caused this instrument to be executed in its corporate name by its
President or one of its Second Vice Presidents and its corporate seal to be
hereunto affixed and to be attested by one of its Assistant Secretaries,
and said C.J. Heinzelmann, to evidence his acceptance of the trust hereby
created, has signed this instrument, in several counterparts, all as of the
day and year first above written.
NORTHWESTERN PUBLIC SERVICE
By
(Title)
ATTEST:
By
(Title)
Executed by Northwestern
Public Service Company
in the presence of:
Witnesses
(BANK SEAL) THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION)
By
(Title)
ATTEST:
By
Assistant Secretary
Executed by the Chase
Manahttan Bank (National
Association) in the presence of:
Witnesses
By
C. J. Heinzelmann
Executed by C. J.
Heinzelmann in
the presence of:
Witnesses
State Of South Dakota )
) SS
County Of Beadle )
On this _____th day of July, in the year 1995, before me, ___________,
a Notary Public in and for said County and State, personally appeared
__________ and __________, known to me to be the _______________ and the
_______________, respectively, of Northwestern Public Service Company, a
Delaware corporation, and one of the corporations that is described in and
that executed the within instrument, and to be officers of said corporation
authorized to execute said instrument on its behalf, and acknowledged to me
that said corporation executed the same, and further acknowledged to me
that they had executed said instrument as such officers and on behalf of
said corporation, thereunto duly authorized.
In Witness Whereof, I have hereunto set my hand and affixed my seal of
office this _____th day of July, 1995.
(Notarial Seal)
Notary Public
[Name]
Notary Public,
Beadle County, S.D.
My Commission
expires __________, _____
State Of South Dakota )
) SS
County Of Beadle )
On this _____th day of July, in the year 1995, before me, ___________,
a Notary Public in and for said County and State, personally appeared
__________ and __________, known to me to be the _______________ and the
_______________, respectively, of the within named Northwestern Public
Service Company, a Delaware corporation, and to be the same persons whose
names are signed to the foregoing instrument as such _______________ and
such _______________, respectively, of said corporation, and acknowledged
said instrument to be the voluntary act and deed of said corporation, and
further acknowledged that they had signed, sealed and delivered said
instrument as their voluntary act and deed as the _______________ and the
_______________, respectively, of said corporation and that the seal of
said corporation affixed to said instrument is the common seal of said
corporation.
In Witness Whereof, I have hereunto set my hand and affixed my seal of
office this _____th day of July, 1995.
(Notarial Seal)
Notary Public
[Name]
Notary Public,
Beadle County, S.D.
My Commission
expires __________, ____
State Of New York )
) SS
County Of Kings )
On this _____th day of July, in the year 1995, before me, __________,
a Notary Public in and for said County and State, personally appeared
__________ and __________ to me personally known and known to me to be a
_______________ and an Assistant Secretary, respectively, of THE CHASE
MANHATTAN BANK (National Association), a national banking association
organized and existing under the laws of the United States of America and
one of the corporations described in and which executed the foregoing
instrument, who, being by me severally duly sworn, each for himself did
depose, and say and acknowledge that he, said __________, resides at
_________________, and is a _______________ of said Bank and that she, said
__________, resides at _______________, and is an Assistant Secretary of
said Bank; that they respectively know the seal of said Bank and that the
seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said Bank, and that they,
respectively, signed their names thereto by like order; and that said
instrument is the voluntary act and deed of said Bank, by it voluntarily
executed.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal this _____th day of July, 1995.
(Notarial Seal)
Notary Public
Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires __________, ____
State Of New York )
) SS
County Of New York )
On this _____th day of July, in the year 1995, before me, __________,
a Notary Public in and for said County and State, personally appeared C. J.
HEINZELMANN, to me personally known and known by me to be the person
described in and who executed the foregoing instrument, who, being by me
duly sworn, did depose, say and acknowledge that he resides at 15 Boylston
Street, Garden City, New York, and that said instrument is his voluntary
act and deed, by him voluntarily executed.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal this _____th day of July, 1995.
(Notarial Seal)
Notary Public
Notary Public, State of New York
No. __________
Qualified in New York County
Commission expires __________, _____
ACKNOWLEDGMENT
The undersigned acknowledges the delivery to it and the receipt by it
of a full, true and complete copy of the foregoing Supplemental Indenture
dated July, 1995.
Northwestern Public Service Company
[Title]
(Corporate Seal)
By
[Title]
EXHIBIT B-1
TO CONSENT
Supplemental Indenture, dated as of __________, 1995 (the
"Supplemental Indenture"), made by and between Northwestern Public Service
Company, a corporation organized and existing under the laws of the State
of Delaware (the "Company"), the post office address of which is 33 Third
Street, S.E., Huron, South Dakota 57350, and The Chase Manhattan Bank
(National Association), a national banking association organized and
existing under the laws of the United States of America (the "Trustee"), as
Trustee under the General Mortgage Indenture and Deed of Trust dated as of
August 1, 1993, hereinafter mentioned, the post office address of which is
4 Chase MetroTech Center, 3rd Floor, Brooklyn, New York 11245;
Whereas, the Company has heretofore executed and delivered its General
Mortgage Indenture and Deed of Trust dated as of August 1, 1993 (the
"Original Indenture"), to the Trustee, for the security of the Bonds of the
Company issued and to be issued thereunder (the "Bonds"); and
Whereas, the Company has heretofore executed and delivered to the
Trustee a certain indenture supplemental to the Original Indenture dated
August 15, 1993 (the Original Indenture, as supplemented and amended by the
aforementioned supplemental indenture and by this Supplemental Indenture
being hereinafter referred to as the "Indenture"); and
Whereas, the Company desires to create a new series of Bonds to be
issued under the Indenture, to be known as New Mortgage Bonds, 8.90% Series
due 1999 (the "New Mortgage Bonds of the 8.90% Series"), which New Mortgage
Bonds of the 8.90% Series are to be issued in exchange for certain other
bonds of the Company of like tenor and amount that were issued pursuant to
a supplemental indenture to the Company's Indenture dated August 1, 1940;
and
Whereas, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Indenture,
and pursuant to appropriate resolutions of the Board of Directors, has duly
resolved and determined to make, execute and deliver to the Trustee a
Supplemental Indenture in the form hereof for the purposes herein provided;
and
Whereas, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been
done, performed and fulfilled and the execution and delivery hereof have
been in all respects duly authorized;
Now, Therefore, This Indenture Witnesseth:
That Northwestern Public Service Company, in consideration of the
exchange referred to above and ownership from time to time of the Bonds and
the service by the Trustee, and its successors, under the Indenture and of
One Dollar to it duly paid by the Trustee at or before the ensealing and
delivery of these presents, the receipt whereof is hereby acknowledged,
hereby covenants and agrees to and with the Trustee and its successors in
the trust under the Indenture, for the benefit of those who shall hold the
Bonds as follows:
Article I
Description Of Bonds Of The 8.90% Series Due 1999
Section 1. The Company hereby creates a new series of Bonds to be
known as "New Mortgage Bonds, 8.90% Series due 1999." The New Mortgage
Bonds of the 8.90% Series shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be subject to,
all of the terms, conditions and covenants of the Indenture, as
supplemented and modified.
The commencement of the first interest period for the New Mortgage
Bonds of the 8.90% Series shall be May 1, 1995. The New Mortgage Bonds of
the 8.90% Series shall mature November 1, 1999, and shall bear interest at
the rate of 8.90% per annum, payable semi-annually on the first day of May
and the first day of November in each year; provided, however, that if the
Company shall default in the payment of principal of, premium, if any, or
interest on, any New Mortgage Bond of the 8.90% Series when the same shall
have become due and such default shall continue for more than five days,
then the Company covenants and agrees that it will pay to the holder
thereof, to the extent permitted by applicable law, interest on the
outstanding principal amount of such New Bond at the rate of 9.90% per
annum commencing on the due date of such payment and continuing until such
overdue amount is paid. The person in whose name any of the New Mortgage
Bonds of the 8.90% Series are registered at the close of business on any
record date (as hereinafter defined) with respect to any interest payment
date shall be entitled to receive the interest payable on such interest
payment date notwithstanding the cancellation of such New Mortgage Bonds of
the 8.90% Series upon any transfer or exchange subsequent to the record
date and prior to such interest payment date; provided, however, that if
and to the extent the Company shall default in the payment of the interest
due on such interest payment date, such defaulted interest shall be paid as
provided in Section 3.07(b) of the Indenture.
The term "record date" as used in this Section with respect to any
interest payment date shall mean April 15 or October 15, as the case may
be, next preceding the semi-annual interest payment date, or, if such April
15 or October 15 shall be a legal holiday or a day on which banking
institutions in the Borough of Manhattan, The City of New York, State of
New York, are authorized by law to close, then the next preceding day which
shall not be a legal holiday or a day on which such institutions are so
authorized to close.
Section 2. The New Mortgage Bonds of the 8.90% Series shall be issued
only as registered Bonds without coupons of the denomination of $1,000, or
any integral multiple of $1,000, appropriately numbered. The New Mortgage
Bonds of the 8.90% Series may be exchanged, upon surrender thereof, at the
agency of the Company in the Borough of Manhattan, The City of New York,
State of New York, for one or more new New Mortgage Bonds of the 8.90%
Series of other authorized denominations, for the same aggregate principal
amount, subject to the terms and conditions set forth in the Indenture.
New Mortgage Bonds of the 8.90% Series may be exchanged or transferred
without expense to the registered owner thereof except that any taxes or
other governmental charges required to be paid with respect to such
transfer or exchange shall be paid by the registered owner requesting such
transfer or exchange as a condition precedent to the exercise of such
privilege.
Section 3. The New Mortgage Bonds of the 8.90% Series and the
Trustee's Certificate of Authentication shall be substantially in the
following forms respectively:
[Form Of Bond Of The 8.90% Series Due 1999]
Northwestern Public Service Company
(Incorporated under the laws of the State of South Dakota)
New Mortgage Bond, 8.90% Series Due 1999
No. R- $______________
Northwestern Public Service Company, a corporation organized and
existing under the laws of the State of Delaware (the "Company", which term
shall include any successor corporation as defined in the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________ or registered assigns, the sum of __________ dollars on the
first day of November, 1999, in any coin or currency of the United States
of America which at the time of payment is legal tender for public and
private debts, and to pay interest thereon in like coin or currency from
May 1, 1995, payable semi-annually, on the first days of May and November
in each year, at the rate of 8.90% per annum, until the Company's
obligation with respect to the payment of such principal shall be
discharged as provided in the Indenture hereinafter mentioned; provided,
however, that if the Company shall default in the payment of principal of,
premium, if any, or interest on, this Bond when the same shall have become
due and such default shall continue for more than five days, then the
Company covenants and agrees that it will pay to the holder hereof, to the
extent permitted by applicable law, interest on the outstanding principal
amount of this Bond at the rate of 9.90% per annum commencing on the due
date of such payment and continuing until such overdue amount is paid. The
interest so payable on any May 1 or November 1 will, subject to certain
exceptions provided in the Supplemental Indenture dated as of __________,
1995, be paid to the person in whose name this Bond is registered at the
close of business on the immediately preceding April 15 or October 15, as
the case may be. Both principal of, and interest on, this Bond are payable
at the agency of the Company in the Borough of Manhattan, The City of New
York, State of New York.
This Bond shall not be entitled to any benefit under the Indenture or
any indenture supplemental thereto, or become valid or obligatory for any
purpose, until the form of certificate endorsed hereon shall have been
signed by or on behalf of The Chase Manhattan Bank (National Association),
the Trustee under the Indenture, or a successor trustee thereto under the
Indenture, or by an authenticating agent duly appointed by the Trustee in
accordance with the terms of the Indenture.
The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
In Witness Whereof, Northwestern Public Service Company has caused
this New Mortgage Bond to be signed (manually or by facsimile signature) in
its name by an Authorized Executive Officer, as defined in the Indenture,
and its corporate seal (or a facsimile thereof) to be hereto affixed and
attested (manually or by facsimile signature) by an Authorized Executive
Officer, as defined in the Indenture.
Dated: Northwestern Public Service Company
By
Authorized Executive Officer
ATTEST:
Authorized Executive Officer
[Form of Trustee's Certificate]
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture and Supplemental Indenture dated as of
_________, 1995.
The Chase Manhattan Bank (National
Association), as Trustee
By
Authorized Officer
[FORM OF REVERSE OF BOND]
This New Mortgage Bond of the 8.90% Series is one of a duly authorized
issue of Bonds of the Company (the "Bonds"), of the series hereinafter
specified, all issued and to be issued under and equally secured by a
General Mortgage Indenture and Deed of Trust (the "Indenture"), dated as of
August 1, 1993, executed by the Company to The Chase Manhattan Bank
(National Association) (the "Trustee"), as Trustee, to which Indenture and
all indentures supplemental thereto reference is hereby made for a
description to the properties mortgaged and pledged, the nature and extent
of the security, the rights of registered owners of the Bonds and of the
Trustee in respect thereof, and the terms and conditions upon which the
Bonds are, and are to be, secured. The Bonds may be issued in series, for
various principal sums, may mature at different times, may bear interest at
different rates and may otherwise vary as provided in the Indenture. This
New Mortgage Bond of the 8.90% Series is one of a series designated as the
"New Mortgage Bonds, 8.90% Series Due 1999" (the "New Mortgage Bonds of the
8.90% Series") of the Company issued under and secured by the Indenture and
described in the supplemental indenture dated as of __________, 1995 (the
"Supplemental Indenture dated as of __________, 1995"), between the Company
and the Trustee, supplemental to the Indenture.
New Mortgage Bonds of the 8.90% Series, of which this is one, are
subject to redemption as follows:
At the option of the Company and upon the notice and in the
manner and with the effect provided in the Indenture, any or all
of the New Mortgage Bonds of the 8.90% Series may be redeemed by
the Company at any time and from time to time prior to maturity,
upon payment of the Yield Maintenance Price (as defined in
Section 1 of Article III of the Supplemental Indenture dated as
of __________, 1995) for each of the New Mortgage Bonds of the
8.90% Series to be redeemed, together in each case with principal
and accrued interest to the redemption date.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereof, and of the rights and obligations of the Company and
of the holders of the Bonds may be made with the consent of the Company by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds entitled to vote then outstanding, at a meeting of the
holders of the Bonds called and held as provided in the Indenture, and by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds of any series or any tranche or tranches of any series
entitled to vote then outstanding and affected by such modification or
alteration, in case one or more but less than all of the series of Bonds or
of any tranche or tranches of any series of Bonds then outstanding under
the Indenture are so affected; provided, however, that no such modification
or alteration shall be made which will affect the terms of payment of the
principal of, or interest or premium, if any, on this Bond.
In case an Event of Default, as defined in the Indenture, shall occur,
the principal of all the New Mortgage Bonds of the 8.90% Series at any such
time outstanding under the Indenture may be declared or may become due and
payable, upon the conditions and in the manner and with the effect provided
in the Indenture. The Indenture provides that such declaration may be
rescinded under certain circumstances.
Article II
Issue Of New Mortgage Bonds Of The 8.90% Series
Section 1. The Company hereby exercises the right to obtain the
authentication of $7,500,000 principal amount of Bonds pursuant to the
terms of Section 4.03 of the Indenture. All such Bonds shall be New
Mortgage Bonds of the 8.90% Series.
Section 2. Such New Mortgage Bonds of the 8.90% Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.
Article III
Redemption
Section 1. The New Mortgage Bonds of the 8.90% Series shall, upon the
notice and in the manner and with the effect provided in Article Five of
the Original Indenture, as amended by Section 2 of this Article III, be
redeemable at any time and from time to time prior to maturity, at the
option of the Company, as a whole, upon payment of the Yield Maintenance
Price (as hereinafter defined) for each of the New Mortgage Bonds of the
8.90% Series to be redeemed, together with accrued interest to the
redemption date; provided however, the Company shall not redeem any New
Mortgage Bonds of the 8.90% Series in a principal amount less than $100,000
or a multiple thereof.
If the notice of redemption shall have been given by the Company as
provided in the Indenture, the Computing Holder shall deliver written
notice to the Company on the fifth business day prior to such redemption
date, of the amount of the Yield Maintenance Price for the principal amount
of the New Mortgage Bonds of the 8.90% Series held by such Computing Holder
so to be redeemed, which notice shall set forth in reasonable detail the
computation thereof. The Yield Maintenance Price set forth in such notice
shall be binding on the Company absent manifest error.
The Company shall deliver to each holder of the New Mortgage Bonds of
the 8.90% Series to be redeemed on or before such redemption date a
certificate signed by a principal financial officer of the Company setting
forth the Yield Maintenance Price of the principal amount of the New
Mortgage Bonds of the 8.90% Series held by such holder so to be redeemed,
and setting forth in reasonable detail the calculation thereof accompanied
by a copy of the written notice given by the Computing Holder which sets
forth the computation of the Yield Maintenance Price of the New Mortgage
Bonds of the 8.90% Series held by the Computing Holder. The Company
covenants and agrees that it will on such redemption date redeem the New
Mortgage Bonds of the 8.90% Series held by each holder so to be redeemed by
payment to such holder the Yield Maintenance Price therefor, together with
interest accrued thereon to the date fixed for redemption.
As used in this Section 1:
"Computing Holder" shall mean the holder who holds bonds of the New
Mortgage Bonds of the 8.90% Series with an aggregate principal amount
outstanding higher than that of New Mortgage Bonds of the 8.90% Series held
by any other holder, or in the event two or more holders hold an equal
amount which constitutes the highest principal amount of the New Mortgage
Bonds of the 8.90% Series, any holder designated by the other holders. For
purposes of determining the Computing Holder, the New Mortgage Bonds of the
8.90% Series then held by Metropolitan Life Insurance Company and its
subsidiaries shall be aggregated.
"Weighted Average Life to Final Maturity" of any of the New Mortgage
Bonds of the 8.90% Series to be redeemed, shall mean the number of years
(rounded to the nearest one-twelfth of a year) which will elapse between
the scheduled date of redemption thereof and the scheduled date of maturity
of the New Mortgage Bonds of the 8.90% Series.
"Yield Maintenance Price" shall mean the higher of (1) the entire
unpaid principal amount of the New Mortgage Bonds of the 8.90% Series to be
redeemed and (2) the sum of the respective Payment Values of each
prospective interest payment and the principal payment as maturity in
respect of the principal amount of the New Mortgage Bonds of the 8.90%
Series to be redeemed (the amount of each such payment being herein
referred to as a "Payment"). The Payment Value of each Payment shall be
determined by discounting such Payment at the Reinvestment Rate, for the
period from the scheduled date on which such Payment is due to be made to
the applicable date of redemption. The Reinvestment Rate is the yield
which shall be imputed from the yields of those actively traded "On The
Run" United States Treasury securities having maturities as close as
practicable to the Weighted Average Life to Final Maturity of the New
Mortgage Bonds of the 8.90% Series to be redeemed. The yields of such
United States Treasury securities shall be determined as of 10 A.M. Eastern
Time on the date on which the Yield Maintenance Price is determined.
Section 2. Notice of redemption of any New Mortgage Bonds of the
8.90% Series shall be given as provided in Section 5.04 of the Original
Indenture. If given by mail, the mailing of such notice shall be a
condition precedent to redemption, provided that any notice which is mailed
in the manner provided in Section 5.04 of the Original Indenture shall be
conclusively presumed to have been duly given whether or not the holders
receive such notice, and failure to give such notice by mall, or any defect
in such notice, to the holder of any such bond designated for redemption
shall not affect the validity of the redemption of any other such bond.
Except for the changes in the giving of notice of redemption as provided in
this Section, the procedures for redemption of the New Mortgage Bonds of
the 8.90% Series shall be as provided in Article Five of the Original
Indenture.
Section 3. The Company, with the approval of the Trustee, may enter
into a written agreement with the holder of any New Mortgage Bonds of the
8.90% Series providing that payment of such bonds called for redemption in
part only be made directly by mail, wire transfer or in any other manner to
the holder thereof without presentation or surrender thereof if there shall
be delivered to the Trustee an agreement (which may be a composite with
other such agreements) between the Company and such holder (or other person
acting as agent for such holder or for whom such holder is a nominee) that
payment shall be so made, and that in the event the holder thereof shall
sell or transfer any such bonds (a) it will, prior to the delivery of such
bonds, either (i) surrender such bonds to the Trustee to make a proper
notation of the amount of principal paid thereon or (ii) surrender such
bonds to the Trustee against receipt of one or more New Mortgage Bonds of
the 8.90% Series in an aggregate principal amount equal to the unpaid
principal portion of the bonds so surrendered, and (b) it will promptly
notify the Company of the name and address of the transferee of any New
Mortgage Bonds of the 8.90% Series so transferred. The Trustee shall not
be liable or responsible to any such holder or transferee or to the Company
or to any other person for any act or omission to act on the part of the
Company or any such holder in connection with any such agreement. The
Company will indemnify and save the Trustee harmless against any liability
resulting from any such act or omission and against any liability resulting
from any action taken by the Trustee in accordance with the provisions of
any such agreement.
Article IV
The Trustee
The Trustee hereby accepts the trusts hereby declared provided, and
agrees to perform the same upon the terms and conditions in the Indenture
set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of
this Supplemental Indenture or the due execution hereof by the
Company or for or in respect of the recitals contained herein,
all of which recitals are made by the Company solely. In
general, each and every term and condition contained in Article
Eleven of the Indenture shall apply to this Supplemental
Indenture with the same force and effect as if the same were
herein set forth in full, with such omissions, variations and
modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.
Article VI
Miscellaneous Provisions
This Supplemental Indenture may be simultaneously executed in any
number of counterparts, each of which when so executed shall be deemed to
be an original; but such counterparts shall together constitute but one and
the same instrument.
In Witness Whereof, said Northwestern Public Service Company has
caused this Indenture to be executed on its behalf by an Authorized
Executive Officer as defined in the Indenture, and its corporate seal to be
hereto affixed and said seal and this Indenture to be attested by an
Authorized Executive Officer as defined in the Indenture; and The Chase
Manhattan Bank (National Association), in evidence of its acceptance of the
trust hereby created, has caused this Indenture to be executed on its
behalf by its President or one of its Vice Presidents and its corporate
seal to be hereto affixed and said seal and this Indenture to be attested
by its Secretary or one of its Assistant Secretaries; all as of the _____
day of __________, 1995.
Northwestern Public Service Company
By
Vice President
(CORPORATE SEAL)
ATTEST:
[Assistant] Secretary
The Chase Manhattan Bank (National
Association)
By
Vice President
(CORPORATE SEAL)
ATTEST:
Assistant Secretary
State Of South Dakota )
) SS
County Of Beadle )
Be it Remembered, that on this _____th day of __________, 1995, before
me, ___________, a Notary Public within and for the County and State
aforesaid, personally came _________, Vice President, and __________,
[Assistant] Corporate Secretary of Northwestern Public Service Company, a
Delaware corporation, who are personally known to me to be such officers,
and who are personally known to me to be the same persons who executed as
such officers the within instrument of writing, and such persons duly
acknowledged that they signed, sealed and delivered the said instrument as
their free and voluntary act as such Vice President and [Assistant]
Corporate Secretary, respectively, and as the free and voluntary act of
Northwestern Public Service Company for the uses and purposes therein set
forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Notary Public
[Name]
Notary Public,
Beadle County, S.D.
My Commission
expires __________, _____
State Of New York )
) SS
County Of Kings )
Be it Remembered, that on this _____th day of __________, 1995, before
me, ___________, a Notary Public within and for the County and State
aforesaid, personally came _________, Vice President, and __________,
Assistant Secretary of The Chase Manhattan Bank (National Association), a
national banking association, who are personally known to me to be such
officers, and who are personally known to me to be the same persons who
executed as such officers the within instrument of writing, and such
persons duly acknowledged that they signed, sealed and delivered the said
instrument as their free and voluntary act as such Vice President and
Assistant Secretary, respectively, and as the free and voluntary act of The
Chase Manhattan Bank (National Association) for the uses and purposes
therein set forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Notary Public
Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires __________, ____
EXHIBIT B-2
TO CONSENT
Supplemental Indenture, dated as of __________, 1995 (the
"Supplemental Indenture"), made by and between Northwestern Public Service
Company, a corporation organized and existing under the laws of the State
of Delaware (the "Company"), the post office address of which is 33 Third
Street, S.E., Huron, South Dakota 57350, and The Chase Manhattan Bank
(National Association), a national banking association organized and
existing under the laws of the United States of America (the "Trustee"), as
Trustee under the General Mortgage Indenture and Deed of Trust dated as of
August 1, 1993, hereinafter mentioned, the post office address of which is
4 Chase MetroTech Center, 3rd Floor, Brooklyn, New York 11245;
Whereas, the Company has heretofore executed and delivered its General
Mortgage Indenture and Deed of Trust dated as of August 1, 1993 (the
"Original Indenture"), to the Trustee, for the security of the Bonds of the
Company issued and to be issued thereunder (the "Bonds"); and
Whereas, the Company has heretofore executed and delivered to the
Trustee a certain indenture supplemental to the Original Indenture dated
August 15, 1993 (the Original Indenture, as supplemented and amended by the
aforementioned supplemental indenture and by this Supplemental Indenture
being hereinafter referred to as the "Indenture"); and
Whereas, the Company desires to create a new series of Bonds to be
issued under the Indenture, to be known as New Mortgage Bonds, 8.824%
Series due 1998 (the "New Mortgage Bonds of the 8.824% Series"), which New
Mortgage Bonds of the 8.824% Series are to be issued in exchange for
certain other bonds of the Company of like tenor and amount that were
issued pursuant to a supplemental indenture to the Company's Indenture
dated August 1, 1940; and
Whereas, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Indenture,
and pursuant to appropriate resolutions of the Board of Directors, has duly
resolved and determined to make, execute and deliver to the Trustee a
Supplemental Indenture in the form hereof for the purposes herein provided;
and
Whereas, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been
done, performed and fulfilled and the execution and delivery hereof have
been in all respects duly authorized;
Now, Therefore, This Indenture Witnesseth:
That Northwestern Public Service Company, in consideration of the
exchange referred to above and ownership from time to time of the Bonds and
the service by the Trustee, and its successors, under the Indenture and of
One Dollar to it duly paid by the Trustee at or before the ensealing and
delivery of these presents, the receipt whereof is hereby acknowledged,
hereby covenants and agrees to and with the Trustee and its successors in
the trust under the Indenture, for the benefit of those who shall hold the
Bonds as follows:
Article I
Description Of Bonds Of The 8.824% Series Due 1998
Section 1. The Company hereby creates a new series of Bonds to be
known as "New Mortgage Bonds, 8.824% Series due 1998." The New Mortgage
Bonds of the 8.824% Series shall be executed, authenticated and delivered
in accordance with the provisions of, and shall in all respects be subject
to, all of the terms, conditions and covenants of the Indenture, as
supplemented and modified.
The commencement of the first interest period for the New Mortgage
Bonds of the 8.824% Series shall be July 15, 1995. The New Mortgage Bonds
of the 8.824% Series shall mature July 15, 1998, and shall bear interest at
the rate of 8.824% per annum, payable semi-annually on the fifteenth day of
January and the fifteenth day of July in each year. The person in whose
name any of the New Mortgage Bonds of the 8.824% Series are registered at
the close of business on any record date (as hereinafter defined) with
respect to any interest payment date shall be entitled to receive the
interest payable on such interest payment date notwithstanding the
cancellation of such New Mortgage Bonds of the 8.824% Series upon any
transfer or exchange subsequent to the record date and prior to such
interest payment date; provided, however, that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, such defaulted interest shall be paid as provided in Section
3.07(b) of the Indenture.
The term "record date" as used in this Section with respect to any
interest payment date shall mean January 1 or July 1, as the case may be,
next preceding the semi-annual interest payment date, or, if such January 1
or July 1 shall be a legal holiday or a day on which banking institutions
in the Borough of Manhattan, The City of New York, State of New York, are
authorized by law to close, then the next preceding day which shall not be
a legal holiday or a day on which such institutions are so authorized to
close.
Section 2. The New Mortgage Bonds of the 8.824% Series shall be
issued only as registered Bonds without coupons of the denomination of
$1,000, or any integral multiple of $1,000, appropriately numbered. The
New Mortgage Bonds of the 8.824% Series may be exchanged, upon surrender
thereof, at the agency of the Company in the Borough of Manhattan, The City
of New York, State of New York, for one or more new New Mortgage Bonds of
the 8.824% Series of other authorized denominations, for the same aggregate
principal amount, subject to the terms and conditions set forth in the
Indenture.
New Mortgage Bonds of the 8.824% Series may be exchanged or
transferred without expense to the registered owner thereof except that any
taxes or other governmental charges required to be paid with respect to
such transfer or exchange shall be paid by the registered owner requesting
such transfer or exchange as a condition precedent to the exercise of such
privilege.
Section 3. The New Mortgage Bonds of the 8.824% Series and the
Trustee's Certificate of Authentication shall be substantially in the
following forms respectively:
[Form Of Bond Of The 8.824% Series Due 1998]
Northwestern Public Service Company
(Incorporated under the laws of the State of South Dakota)
New Mortgage Bond, 8.824% Series Due 1998
No. R- $______________
Northwestern Public Service Company, a corporation organized and
existing under the laws of the State of Delaware (the "Company", which term
shall include any successor corporation as defined in the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________ or registered assigns, the sum of __________ dollars on the
fifteenth day of July, 1998, in any coin or currency of the United States
of America which at the time of payment is legal tender for public and
private debts, and to pay interest thereon in like coin or currency from
July 15, 1995, payable semi-annually, on the fifteenth days of January and
July in each year, at the rate of 8.824% per annum, until the Company's
obligation with respect to the payment of such principal shall be
discharged as provided in the Indenture hereinafter mentioned. The
interest so payable on any January 15 or July 15 will, subject to certain
exceptions provided in the Supplemental Indenture dated as of __________,
1995, be paid to the person in whose name this Bond is registered at the
close of business on the immediately preceding January 1 or July 1, as the
case may be. Both principal of, and interest on, this Bond are payable at
the agency of the Company in the Borough of Manhattan, The City of New
York, State of New York.
This Bond shall not be entitled to any benefit under the Indenture or
any indenture supplemental thereto, or become valid or obligatory for any
purpose, until the form of certificate endorsed hereon shall have been
signed by or on behalf of The Chase Manhattan Bank (National Association),
the Trustee under the Indenture, or a successor trustee thereto under the
Indenture, or by an authenticating agent duly appointed by the Trustee in
accordance with the terms of the Indenture.
The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
In Witness Whereof, Northwestern Public Service Company has caused
this New Mortgage Bond to be signed (manually or by facsimile signature) in
its name by an Authorized Executive Officer, as defined in the Indenture,
and its corporate seal (or a facsimile thereof) to be hereto affixed and
attested (manually or by facsimile signature) by an Authorized Executive
Officer, as defined in the Indenture.
Dated: Northwestern Public Service Company
By
Authorized Executive Officer
ATTEST:
Authorized Executive Officer
[Form of Trustee's Certificate]
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture and Supplemental Indenture dated as of
_________, 1995.
The Chase Manhattan Bank (National
Association), as Trustee
By
Authorized Officer
[FORM OF REVERSE OF BOND]
This New Mortgage Bond of the 8.824% Series is one of a duly
authorized issue of Bonds of the Company (the "Bonds"), of the series
hereinafter specified, all issued and to be issued under and equally
secured by a General Mortgage Indenture and Deed of Trust (the
"Indenture"), dated as of August 1, 1993, executed by the Company to The
Chase Manhattan Bank (National Association) (the "Trustee"), as Trustee, to
which Indenture and all indentures supplemental thereto reference is hereby
made for a description to the properties mortgaged and pledged, the nature
and extent of the security, the rights of registered owners of the Bonds
and of the Trustee in respect thereof, and the terms and conditions upon
which the Bonds are, and are to be, secured. The Bonds may be issued in
series, for various principal sums, may mature at different times, may bear
interest at different rates and may otherwise vary as provided in the
Indenture. This New Mortgage Bond of the 8.824% Series is one of a series
designated as the "New Mortgage Bonds, 8.824% Series Due 1998" (the "New
Mortgage Bonds of the 8.824% Series") of the Company issued under and
secured by the Indenture and described in the supplemental indenture dated
as of __________, 1995 (the "Supplemental Indenture dated as of __________,
1995"), between the Company and the Trustee, supplemental to the Indenture.
New Mortgage Bonds of the 8.824% Series, of which this is one, are
subject to redemption at the option of the Company and upon the notice and
in the manner and with the effect provided in the Indenture, all, but not
less than all, of the New Mortgage Bonds of the 8.824% Series may be
redeemed by the Company at any time, on or after July 15, 1996 and prior to
maturity, upon payment of the following percentages of the principal
amounts thereof:
If redeemed during the twelve month period beginning the fifteenth day
of July of the year:
1996 ---------- 101.471%
1997 ---------- 100.000%
together with accrued interest to the redemption date.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereof, and of the rights and obligations of the Company and
of the holders of the Bonds may be made with the consent of the Company by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds entitled to vote then outstanding, at a meeting of the
holders of the Bonds called and held as provided in the Indenture, and by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds of any series or any tranche or tranches of any series
entitled to vote then outstanding and affected by such modification or
alteration, in case one or more but less than all of the series of Bonds or
of any tranche or tranches of any series of Bonds then outstanding under
the Indenture are so affected; provided, however, that no such modification
or alteration shall be made which will affect the terms of payment of the
principal of, or interest or premium, if any, on this Bond.
In case an Event of Default, as defined in the Indenture, shall occur,
the principal of all the New Mortgage Bonds of the 8.824% Series at any
such time outstanding under the Indenture may be declared or may become due
and payable, upon the conditions and in the manner and with the effect
provided in the Indenture. The Indenture provides that such declaration
may be rescinded under certain circumstances.
Article II
Issue Of New Mortgage Bonds Of The 8.824% Series
Section 1. The Company hereby exercises the right to obtain the
authentication of $15,000,000 principal amount of Bonds pursuant to the
terms of Section 4.03 of the Indenture. All such Bonds shall be New
Mortgage Bonds of the 8.824% Series.
Section 2. Such New Mortgage Bonds of the 8.824% Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.
Article III
Redemption
Section 1. The New Mortgage Bonds of the 8.824% Series shall, upon
the notice and in the manner and with the effect provided in Article Five
of the Original Indenture, as amended by Section 2 of this Article III, be
redeemable at any time, on or after July 15, 1996 and prior to maturity, at
the option of the Company, as a whole, upon payment of the following
percentages of the principal amounts thereof:
If redeemed during the twelve month period beginning the fifteenth day
of July of the year:
1996 ---------- 101.471%
1997 ---------- 100.000%
together with accrued interest to the redemption date.
Section 2. Notice of redemption of any New Mortgage Bonds of the
8.824% Series shall be given as provided in Section 5.04 of the Original
Indenture. If given by mail, the mailing of such notice shall be a
condition precedent to redemption, provided that any notice which is mailed
in the manner provided in Section 5.04 of the Original Indenture shall be
conclusively presumed to have been duly given whether or not the holders
receive such notice, and failure to give such notice by mall, or any defect
in such notice, to the holder of any such bond designated for redemption
shall not affect the validity of the redemption of any other such bond.
Except for the changes in the giving of notice of redemption as provided in
this Section, the procedures for redemption of the New Mortgage Bonds of
the 8.824% Series shall be as provided in Article Five of the Original
Indenture.
Section 3. The Company, with the approval of the Trustee, may enter
into a written agreement with the holder of any New Mortgage Bonds of the
8.824% Series providing that payment of such bonds called for redemption in
part only be made directly by mail, wire transfer or in any other manner to
the holder thereof without presentation or surrender thereof if there shall
be delivered to the Trustee an agreement (which may be a composite with
other such agreements) between the Company and such holder (or other person
acting as agent for such holder or for whom such holder is a nominee) that
payment shall be so made, and that in the event the holder thereof shall
sell or transfer any such bonds (a) it will, prior to the delivery of such
bonds, either (i) surrender such bonds to the Trustee to make a proper
notation of the amount of principal paid thereon or (ii) surrender such
bonds to the Trustee against receipt of one or more New Mortgage Bonds of
the 8.824% Series in an aggregate principal amount equal to the unpaid
principal portion of the bonds so surrendered, and (b) it will promptly
notify the Company of the name and address of the transferee of any New
Mortgage Bonds of the 8.824% Series so transferred. The Trustee shall not
be liable or responsible to any such holder or transferee or to the Company
or to any other person for any act or omission to act on the part of the
Company or any such holder in connection with any such agreement. The
Company will indemnify and save the Trustee harmless against any liability
resulting from any such act or omission and against any liability resulting
from any action taken by the Trustee in accordance with the provisions of
any such agreement.
Article IV
The Trustee
The Trustee hereby accepts the trusts hereby declared provided, and
agrees to perform the same upon the terms and conditions in the Indenture
set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of
this Supplemental Indenture or the due execution hereof by the
Company or for or in respect of the recitals contained herein,
all of which recitals are made by the Company solely. In
general, each and every term and condition contained in Article
Eleven of the Indenture shall apply to this Supplemental
Indenture with the same force and effect as if the same were
herein set forth in full, with such omissions, variations and
modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.
Article V
Miscellaneous Provisions
This Supplemental Indenture may be simultaneously executed in any
number of counterparts, each of which when so executed shall be deemed to
be an original; but such counterparts shall together constitute but one and
the same instrument.
In Witness Whereof, said Northwestern Public Service Company has
caused this Indenture to be executed on its behalf by an Authorized
Executive Officer as defined in the Indenture, and its corporate seal to be
hereto affixed and said seal and this Indenture to be attested by an
Authorized Executive Officer as defined in the Indenture; and The Chase
Manhattan Bank (National Association), in evidence of its acceptance of the
trust hereby created, has caused this Indenture to be executed on its
behalf by its President or one of its Vice Presidents and its corporate
seal to be hereto affixed and said seal and this Indenture to be attested
by its Secretary or one of its Assistant Secretaries; all as of the _____
day of __________, 1995.
Northwestern Public Service Company
By
Vice President
(CORPORATE SEAL)
ATTEST:
[Assistant] Secretary
The Chase Manhattan Bank (National Association)
By
Vice President
(CORPORATE SEAL)
ATTEST:
Assistant Secretary
State Of South Dakota )
) SS
County Of Beadle )
Be it Remembered, that on this _____th day of __________, 1995, before
me, ___________, a Notary Public within and for the County and State
aforesaid, personally came _________, Vice President, and __________,
[Assistant] Corporate Secretary of Northwestern Public Service Company, a
Delaware corporation, who are personally known to me to be such officers,
and who are personally known to me to be the same persons who executed as
such officers the within instrument of writing, and such persons duly
acknowledged that they signed, sealed and delivered the said instrument as
their free and voluntary act as such Vice President and [Assistant]
Corporate Secretary, respectively, and as the free and voluntary act of
Northwestern Public Service Company for the uses and purposes therein set
forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Notary Public
[Name]
Notary Public,
Beadle County, S.D.
My Commission
expires __________, _____
State Of New York )
) SS
County Of Kings )
Be it Remembered, that on this _____th day of __________, 1995, before
me, ___________, a Notary Public within and for the County and State
aforesaid, personally came _________, Vice President, and __________,
Assistant Secretary of The Chase Manhattan Bank (National Association), a
national banking association, who are personally known to me to be such
officers, and who are personally known to me to be the same persons who
executed as such officers the within instrument of writing, and such
persons duly acknowledged that they signed, sealed and delivered the said
instrument as their free and voluntary act as such Vice President and
Assistant Secretary, respectively, and as the free and voluntary act of The
Chase Manhattan Bank (National Association) for the uses and purposes
therein set forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Notary Public
Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires __________, ____
EXHIBIT B-3
TO CONSENT
Supplemental Indenture, dated as of __________, 1995 (the
"Supplemental Indenture"), made by and between Northwestern Public Service
Company, a corporation organized and existing under the laws of the State
of Delaware (the "Company"), the post office address of which is 33 Third
Street, S.E., Huron, South Dakota 57350, and The Chase Manhattan Bank
(National Association), a national banking association organized and
existing under the laws of the United States of America (the "Trustee"), as
Trustee under the General Mortgage Indenture and Deed of Trust dated as of
August 1, 1993, hereinafter mentioned, the post office address of which is
4 Chase MetroTech Center, 3rd Floor, Brooklyn, New York 11245;
Whereas, the Company has heretofore executed and delivered its General
Mortgage Indenture and Deed of Trust dated as of August 1, 1993 (the
"Original Indenture"), to the Trustee, for the security of the Bonds of the
Company issued and to be issued thereunder (the "Bonds"); and
Whereas, the Company has heretofore executed and delivered to the
Trustee a certain indenture supplemental to the Original Indenture dated
August 15, 1993 (the Original Indenture, as supplemented and amended by the
aforementioned supplemental indenture and by this Supplemental Indenture
being hereinafter referred to as the "Indenture"); and
Whereas, the Company desires to create a new series of Bonds to be
issued under the Indenture, to be known as New Mortgage Bonds, 6.99% Series
due 2002 (the "New Mortgage Bonds of the 6.99% Series"), which New Mortgage
Bonds of the 6.99% Series are to be issued in exchange for certain other
bonds of the Company of like tenor and amount that were issued pursuant to
a supplemental indenture to the Company's Indenture dated August 1, 1940;
and
Whereas, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Indenture,
and pursuant to appropriate resolutions of the Board of Directors, has duly
resolved and determined to make, execute and deliver to the Trustee a
Supplemental Indenture in the form hereof for the purposes herein provided;
and
Whereas, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been
done, performed and fulfilled and the execution and delivery hereof have
been in all respects duly authorized;
Now, Therefore, This Indenture Witnesseth:
That Northwestern Public Service Company, in consideration of the
exchange referred to above and ownership from time to time of the Bonds and
the service by the Trustee, and its successors, under the Indenture and of
One Dollar to it duly paid by the Trustee at or before the ensealing and
delivery of these presents, the receipt whereof is hereby acknowledged,
hereby covenants and agrees to and with the Trustee and its successors in
the trust under the Indenture, for the benefit of those who shall hold the
Bonds as follows:
Article I
Description Of Bonds Of The 6.99% Series Due 2002
Section 1. The Company hereby creates a new series of Bonds to be
known as "New Mortgage Bonds, 6.99% Series due 2002." The New Mortgage
Bonds of the 6.99% Series shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be subject to,
all of the terms, conditions and covenants of the Indenture, as
supplemented and modified.
The commencement of the first interest period for the New Mortgage
Bonds of the 6.99% Series shall be [March 1] [September 1], 1995. The New
Mortgage Bonds of the 6.99% Series shall mature September 1, 2002, and
shall bear interest at the rate of 6.99% per annum, payable semi-annually
on the first day of March and the first day of September in each year. The
person in whose name any of the New Mortgage Bonds of the 6.99% Series are
registered at the close of business on any record date (as hereinafter
defined) with respect to any interest payment date shall be entitled to
receive the interest payable on such interest payment date notwithstanding
the cancellation of such New Mortgage Bonds of the 6.99% Series upon any
transfer or exchange subsequent to the record date and prior to such
interest payment date; provided, however, that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, such defaulted interest shall be paid as provided in Section
3.07(b) of the Indenture.
The term "record date" as used in this Section with respect to any
interest payment date shall mean February 15 or August 15, as the case may
be, next preceding the semi-annual interest payment date, or, if such
February 15 or August 15 shall be a legal holiday or a day on which banking
institutions in the Borough of Manhattan, The City of New York, State of
New York, are authorized by law to close, then the next preceding day which
shall not be a legal holiday or a day on which such institutions are so
authorized to close.
Section 2. The New Mortgage Bonds of the 6.99% Series shall be issued
only as registered Bonds without coupons of the denomination of $1,000, or
any integral multiple of $1,000, appropriately numbered. The New Mortgage
Bonds of the 6.99% Series may be exchanged, upon surrender thereof, at the
agency of the Company in the Borough of Manhattan, The City of New York,
State of New York, for one or more new New Mortgage Bonds of the 6.99%
Series of other authorized denominations, for the same aggregate principal
amount, subject to the terms and conditions set forth in the Indenture.
New Mortgage Bonds of the 6.99% Series may be exchanged or transferred
without expense to the registered owner thereof except that any taxes or
other governmental charges required to be paid with respect to such
transfer or exchange shall be paid by the registered owner requesting such
transfer or exchange as a condition precedent to the exercise of such
privilege.
Section 3. The New Mortgage Bonds of the 6.99% Series and the
Trustee's Certificate of Authentication shall be substantially in the
following forms respectively:
[Form Of Bond Of The 6.99% Series Due 2002]
Northwestern Public Service Company
(Incorporated under the laws of the State of South Dakota)
New Mortgage Bond, 6.99% Series Due 2002
No. R- $______________
Northwestern Public Service Company, a corporation organized and
existing under the laws of the State of Delaware (the "Company", which term
shall include any successor corporation as defined in the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________ or registered assigns, the sum of __________ dollars on the
first day of September, 2002, in any coin or currency of the United States
of America which at the time of payment is legal tender for public and
private debts, and to pay interest thereon in like coin or currency from
[March 1] [September 1], 1995, payable semi-annually, on the first days of
March and September in each year, at the rate of 6.99% per annum, until the
Company's obligation with respect to the payment of such principal shall be
discharged as provided in the Indenture hereinafter mentioned. The
interest so payable on any March 1 or September 1 will, subject to certain
exceptions provided in the Supplemental Indenture dated as of __________,
1995, be paid to the person in whose name this Bond is registered at the
close of business on the immediately preceding February 15 or August 15, as
the case may be. Both principal of, and interest on, this Bond are payable
at the agency of the Company in the Borough of Manhattan, The City of New
York, State of New York.
This Bond shall not be entitled to any benefit under the Indenture or
any indenture supplemental thereto, or become valid or obligatory for any
purpose, until the form of certificate endorsed hereon shall have been
signed by or on behalf of The Chase Manhattan Bank (National Association),
the Trustee under the Indenture, or a successor trustee thereto under the
Indenture, or by an authenticating agent duly appointed by the Trustee in
accordance with the terms of the Indenture.
The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
In Witness Whereof, Northwestern Public Service Company has caused
this New Mortgage Bond to be signed (manually or by facsimile signature) in
its name by an Authorized Executive Officer, as defined in the Indenture,
and its corporate seal (or a facsimile thereof) to be hereto affixed and
attested (manually or by facsimile signature) by an Authorized Executive
Officer, as defined in the Indenture.
Dated: Northwestern Public Service Company
By
Authorized Executive Officer
ATTEST:
Authorized Executive Officer
[Form of Trustee's Certificate]
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture and Supplemental Indenture dated as of
_________, 1995.
The Chase Manhattan Bank (National
Association), as Trustee
By
Authorized Officer
[FORM OF REVERSE OF BOND]
This New Mortgage Bond of the 6.99% Series is one of a duly authorized
issue of Bonds of the Company (the "Bonds"), of the series hereinafter
specified, all issued and to be issued under and equally secured by a
General Mortgage Indenture and Deed of Trust (the "Indenture"), dated as of
August 1, 1993, executed by the Company to The Chase Manhattan Bank
(National Association) (the "Trustee"), as Trustee, to which Indenture and
all indentures supplemental thereto reference is hereby made for a
description to the properties mortgaged and pledged, the nature and extent
of the security, the rights of registered owners of the Bonds and of the
Trustee in respect thereof, and the terms and conditions upon which the
Bonds are, and are to be, secured. The Bonds may be issued in series, for
various principal sums, may mature at different times, may bear interest at
different rates and may otherwise vary as provided in the Indenture. This
New Mortgage Bond of the 6.99% Series is one of a series designated as the
"New Mortgage Bonds, 6.99% Series Due 2002" (the "New Mortgage Bonds of the
6.99% Series") of the Company issued under and secured by the Indenture and
described in the supplemental indenture dated as of __________, 1995 (the
"Supplemental Indenture dated as of __________, 1995"), between the Company
and the Trustee, supplemental to the Indenture.
New Mortgage Bonds of the 6.99% Series, of which this is one, are
subject to redemption as follows:
(I) At the option of the Company and upon the notice and in the
manner and with the effect provided in the Indenture, all, but not less
than all, of the New Mortgage Bonds of the 6.99% Series may be redeemed by
the Company at any time, on or after September 1, 1997 and prior to
maturity, upon payment of the Make-Whole Amount (as defined in Section 1 of
Article III of the Supplemental Indenture dated as of __________, 1995) for
each of the New Mortgage Bonds of the 6.99% Series to be redeemed, together
in each case with principal and accrued interest to the redemption date.
(II) New Mortgage Bonds of the 6.99% Series shall be redeemed by the
Company in the amounts required by the Supplemental Indenture dated as of
__________, 1995 on September 1 of each year, commencing in 1998, through
the operation of the sinking fund for such bonds, upon payment of the
principal amount thereof together with accrued interest to the redemption
date.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereof, and of the rights and obligations of the Company and
of the holders of the Bonds may be made with the consent of the Company by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds entitled to vote then outstanding, at a meeting of the
holders of the Bonds called and held as provided in the Indenture, and by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds of any series or any tranche or tranches of any series
entitled to vote then outstanding and affected by such modification or
alteration, in case one or more but less than all of the series of Bonds or
of any tranche or tranches of any series of Bonds then outstanding under
the Indenture are so affected; provided, however, that no such modification
or alteration shall be made which will affect the terms of payment of the
principal of, or interest or premium, if any, on this Bond.
In case an Event of Default, as defined in the Indenture, shall occur,
the principal of all the New Mortgage Bonds of the 6.99% Series at any such
time outstanding under the Indenture may be declared or may become due and
payable, upon the conditions and in the manner and with the effect provided
in the Indenture. The Indenture provides that such declaration may be
rescinded under certain circumstances.
Article II
Issue Of New Mortgage Bonds Of The 6.99% Series
Section 1. The Company hereby exercises the right to obtain the
authentication of $25,000,000 principal amount of Bonds pursuant to the
terms of Section 4.03 of the Indenture. All such Bonds shall be New
Mortgage Bonds of the 6.99% Series.
Section 2. Such New Mortgage Bonds of the 6.99% Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.
Article III
Redemption
Section 1. The New Mortgage Bonds of the 6.99% Series shall, upon the
notice and in the manner and with the effect provided in Article Five of
the Original Indenture, as amended by Section 3 of this Article III, be
redeemable (otherwise than out of moneys specified in Section 2 of this
Article III), at any time, on or after September 1, 1997 and prior to
maturity, at the option of the Company, as a whole, upon payment of the
principal amount of each of the New Mortgage Bonds of the 6.99% Series to
be redeemed, and accrued interest thereon to the redemption date, together
with the applicable Make-Whole Amount (as hereinafter defined).
On or before the redemption date specified in the notice of redemption
given by the Company as provided in the Indenture, the Company shall
deliver to each holder of the New Mortgage Bonds of the 6.99% Series to be
redeemed, a certificate signed by a principal financial officer of the
Company setting forth the Make-Whole Amount (determined in good faith by
the Company as of the date five business days prior to the date of such
redemption), if any, applicable to the New Mortgage Bonds of the 6.99%
Series held by such holder so to be redeemed. In the event the Company
shall incorrectly compute the Make-Whole Amount payable in connection with
any New Mortgage Bond of the 6.99% Series, the holder of such Bond shall
not be bound by such incorrect computation, but shall instead be entitled
to receive an amount equal to the correct Make-Whole Amount, if any,
computed in compliance with the terms hereof.
As used in this Section 1:
"Make-Whole Amount" shall mean the excess, if any, of (i) the
aggregate present value as of the date of such redemption of each dollar of
principal being prepaid and the amount of interest (exclusive of interest
accrued to the date of redemption) that would have been payable in respect
of such dollar if such redemption had not been made, determined by
discounting such amounts at the Reinvestment Rate from the respective dates
on which they would have been payable, over (ii) 100% of the principal
amount of the outstanding New Mortgage Bonds of the 6.99% Series being
redeemed. If the Reinvestment Rate is equal to or higher than 6.99%, the
Make-Whole Amount shall be zero. For purposes of any determination of the
Make-Whole Amount:
"Reinvestment Rate" shall mean the arithmetic mean of the yields
under the respective headings "This Week" and "Last Week" published in
the Statistical Release under the caption "Treasury Constant
Maturities" for the maturity (rounded to the nearest month)
corresponding to the Weighted Average Life to Maturity of the
principal amount of the New Mortgage Bonds of the 6.99% Series being
redeemed. If no maturity exactly corresponds to such Weighted Average
Life to Maturity, yields for the two published maturities most closely
corresponding to such Weighted Average Life to Maturity shall be
calculated pursuant to the immediately preceding sentence and the
Reinvestment Rate shall be interpolated or extrapolated from such
yields on a straightline basis, rounding in each of such relevant
periods to the nearest month. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior
to the date of determination of the Make-Whole Amount shall be used.
"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve System
and which establishes yields on actively traded U.S. Government
Securities adjusted to constant maturities or, if such statistical
release is not published at the time of any determination hereunder,
then such other reasonably comparable index which shall be
designated by the holders of 66-2/3% in aggregate principal amount of
the outstanding New Mortgage Bonds of the 6.99% Series.
"Weighted Average Life to Maturity" of any of the New Mortgage
Bonds of the 6.99% Series to be redeemed shall mean the number of
years (rounded to the nearest one-twelfth of a year) obtained by
dividing the then Remaining Dollar-Years of the New Mortgage Bonds of
the 6.99% Series by the then outstanding principal amount of such
Bonds. For the purposes of this definition, "Remaining Dollar-Years"
means the sum of the amounts obtained by multiplying the amount of
each then remaining sinking fund or other required repayment,
including repayment at final maturity, by the number of years
(calculated to the nearest one-twelfth of a year) which will elapse
between the time of such determination and the date of such repayment.
Section 2. Upon the notice and in the manner and with the effect
provided in Article Five of the Original Indenture, as amended by Section 3
of this Article III, any of the New Mortgage Bonds of the 6.99% Series
shall be redeemable on the first day of September in each year, commencing
in 1998, by operation of the sinking fund provided for by Section 1 of
Article IV hereof, upon payment of the principal amount thereof together
with accrued interest to the redemption date.
Section 3. Whenever the Company shall propose to redeem less than all
of the outstanding New Mortgage Bonds of the 6.99% Series on any redemption
date, the Trustee, instead of selecting by lot, shall select the serial
numbers of the New Mortgage Bonds of the 6.99% Series to be redeemed (in
whole or in part) by prorating, as nearly as may be, the aggregate
principal amount of the New Mortgage Bonds of the 6.99% Series to be
redeemed among the registered owners of the New Mortgage Bonds of the 6.99%
Series according to the principal amount thereof registered in their
respective names. In any such proration, the Trustee shall make such
adjustments, reallocations and eliminations as it shall deem proper to the
end that the principal amount of the New Mortgage Bonds of the 6.99% Series
so prorated to any registered owner of the New Mortgage Bonds of the 6.99%
Series shall be $1,000 or a multiple thereof, by increasing or decreasing
or eliminating the amount which would be allocable to any such registered
owner on the basis of exact proportion by an amount not exceeding $1,000.
The Trustee in its discretion may determine the particular New Mortgage
Bonds of the 6.99% Series (if there are more than one) registered in the
name of any registered owner which are to be redeemed, in whole or in part.
In any determination by proration pursuant to this Section, New Mortgage
Bonds of the 6.99% Series held by the Company shall not be considered
outstanding and shall be excluded in making the determination of the New
Mortgage Bonds of the 6.99% Series to be redeemed.
Notice of redemption of any New Mortgage Bonds of the 6.99% Series
shall be given as provided in Section 5.04 of the Original Indenture,
except that, in the case of redemption by operation of the sinking fund for
such bonds, the notice shall state that the redemption is for the account
of the sinking fund. If given by mail, the mailing of such notice shall be
a condition precedent to redemption, provided that any notice which is
mailed in the manner provided in Section 5.04 of the Original Indenture
shall be conclusively presumed to have been duly given whether or not the
holders receive such notice, and failure to give such notice by mall, or
any defect in such notice, to the holder of any such bond designated for
redemption in whole or in part shall not affect the validity of the
redemption of any other such bond.
Except for the determination of the serial numbers of the New Mortgage
Bonds of the 6.99% Series to be redeemed (in whole or in part) by proration
as provided in this Section when less than all of the New Mortgage Bonds of
the 6.99% Series are to be redeemed on any redemption date and except for
the changes in the giving of notice of redemption as provided in this
Section, the procedures for redemption of the New Mortgage Bonds of the
6.99% Series shall be as provided in Article Five of the Original
Indenture.
Section 4. The Company, with the approval of the Trustee, may enter
into a written agreement with the holder of any New Mortgage Bonds of the
6.99% Series providing that payment of such bonds called for redemption in
part only be made directly by mail, wire transfer or in any other manner to
the holder thereof without presentation or surrender thereof if there shall
be delivered to the Trustee an agreement (which may be a composite with
other such agreements) between the Company and such holder (or other person
acting as agent for such holder or for whom such holder is a nominee) that
payment shall be so made, and that in the event the holder thereof shall
sell or transfer any such bonds (a) it will, prior to the delivery of such
bonds, either (i) surrender such bonds to the Trustee to make a proper
notation of the amount of principal paid thereon or (ii) surrender such
bonds to the Trustee against receipt of one or more New Mortgage Bonds of
the 6.99% Series in an aggregate principal amount equal to the unpaid
principal portion of the bonds so surrendered, and (b) it will promptly
notify the Company of the name and address of the transferee of any New
Mortgage Bonds of the 6.99% Series so transferred. The Trustee shall not
be liable or responsible to any such holder or transferee or to the Company
or to any other person for any act or omission to act on the part of the
Company or any such holder in connection with any such agreement. The
Company will indemnify and save the Trustee harmless against any liability
resulting from any such act or omission and against any liability resulting
from any action taken by the Trustee in accordance with the provisions of
any such agreement.
Article IV
Additional Covenants
The Company covenants and agrees, subject to the terms and of this
Section, that it will pay to the Trustee on or before the last day of
August, 1998 and on or before the last day of August in each calendar year
thereafter so long as any New Mortgage Bonds of the 6.99% Series shall be
outstanding (each such last day of August being referred to herein as a
"sinking fund payment date") as and for a cash sinking fund for the
retirement of New Mortgage Bonds of the 6.99% Series, a sum in cash
sufficient to redeem on the first day of September next following such
sinking fund payment date, at the redemption price for the redemption of
New Mortgage Bonds of the 6.99% Series by operation of the sinking fund, a
principal amount of bonds of said series at least equal to twenty per
centum of the greatest principal amount of bonds of said series outstanding
at any time (determined as in this Section provided) between September 1,
1992, and the end of the calendar year immediately preceding such sinking
fund payment date. Cash paid to the Trustee by the Company pursuant to
this Section shall be applied by the Trustee to the redemption on the next
following the first day of September of the specified principal amount of
New Mortgage Bonds of the 6.99% Series in accordance with provisions of
this Section; and the Company shall carry out the procedures required of it
for such redemption.
On or before the first day of July in each year beginning with the
calendar year 1998, so long as any New Mortgage Bonds of the 6.99% Series
shall be outstanding, the Company shall deliver to the Trustee a
certificate, signed in the name of the Company by its President or one of
its Vice Presidents and by its Treasurer or an Assistant Treasurer,
containing the statements required by Section 1.05 of the Original
Indenture, and showing the greatest principal amount of New Mortgage Bonds
of the 6.99% Series outstanding at any time between September 1, 1992 and
the end of the preceding calendar year, determined in accordance with the
provisions of this Section, which certificate shall include, or be
accompanied by, the notice from the Company to the Trustee pursuant to
Section 5.04 of the Original Indenture, as amended by Section 3 of Article
III hereof, specifying the principal amount of the New Mortgage Bonds of
the 6.99% Series to be redeemed on the first day of September next
following by operation of the sinking fund provided for by this Section.
In determining under the provisions of this Section the principal
amount of New Mortgage Bonds of the 6.99% Series outstanding under the
Indenture, there shall be excluded the principal amount of any bonds of
said series authenticated under the Indenture which are owned by the
Company.
Any and all New Mortgage Bonds of the 6.99% Series received by the
Trustee pursuant to any provision of this Section shall thereupon be
canceled and destroyed by the Trustee.
If the first day of September in the calendar year 1998, or in any
calendar year thereafter so long as any New Mortgage Bonds of the 6.99%
Series shall be outstanding, is a legal holiday or day on which banking
institutions which act as paying agents hereunder are authorized by law to
close, then payment of the redemption price (including interest payable
upon redemption) for purposes of redemption of New Mortgage Bonds of the
6.99% Series by operation of the sinking fund provided for by this Section
may be made on the next succeeding day which is not a legal holiday or a
day on which such banking institutions are authorized by law to close with
the same force and effect as if made on the nominal redemption date, and no
interest shall accrue for the period after the nominal redemption date.
Article V
The Trustee
The Trustee hereby accepts the trusts hereby declared provided, and
agrees to perform the same upon the terms and conditions in the Indenture
set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of
this Supplemental Indenture or the due execution hereof by the
Company or for or in respect of the recitals contained herein,
all of which recitals are made by the Company solely. In
general, each and every term and condition contained in Article
Eleven of the Indenture shall apply to this Supplemental
Indenture with the same force and effect as if the same were
herein set forth in full, with such omissions, variations and
modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.
Article VI
Miscellaneous Provisions
This Supplemental Indenture may be simultaneously executed in any
number of counterparts, each of which when so executed shall be deemed to
be an original; but such counterparts shall together constitute but one and
the same instrument.
In Witness Whereof, said Northwestern Public Service Company has
caused this Indenture to be executed on its behalf by an Authorized
Executive Officer as defined in the Indenture, and its corporate seal to be
hereto affixed and said seal and this Indenture to be attested by an
Authorized Executive Officer as defined in the Indenture; and The Chase
Manhattan Bank (National Association), in evidence of its acceptance of the
trust hereby created, has caused this Indenture to be executed on its
behalf by its President or one of its Vice Presidents and its corporate
seal to be hereto affixed and said seal and this Indenture to be attested
by its Secretary or one of its Assistant Secretaries; all as of the _____
day of __________, 1995.
Northwestern Public Service Company
By
Vice President
(CORPORATE SEAL)
ATTEST:
[Assistant] Secretary
The Chase Manhattan Bank (National
Association)
By
Vice President
(CORPORATE SEAL)
ATTEST:
Assistant Secretary
State Of South Dakota )
) SS
County Of Beadle )
Be it Remembered, that on this _____th day of __________, 1995, before
me, ___________, a Notary Public within and for the County and State
aforesaid, personally came _________, Vice President, and __________,
[Assistant] Corporate Secretary of Northwestern Public Service Company, a
Delaware corporation, who are personally known to me to be such officers,
and who are personally known to me to be the same persons who executed as
such officers the within instrument of writing, and such persons duly
acknowledged that they signed, sealed and delivered the said instrument as
their free and voluntary act as such Vice President and [Assistant]
Corporate Secretary, respectively, and as the free and voluntary act of
Northwestern Public Service Company for the uses and purposes therein set
forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Notary Public
[Name]
Notary Public,
Beadle County, S.D.
My Commission
expires __________, _____
State Of New York )
) SS
County Of Kings )
Be it Remembered, that on this _____th day of __________, 1995, before
me, ___________, a Notary Public within and for the County and State
aforesaid, personally came _________, Vice President, and __________,
Assistant Secretary of The Chase Manhattan Bank (National Association), a
national banking association, who are personally known to me to be such
officers, and who are personally known to me to be the same persons who
executed as such officers the within instrument of writing, and such
persons duly acknowledged that they signed, sealed and delivered the said
instrument as their free and voluntary act as such Vice President and
Assistant Secretary, respectively, and as the free and voluntary act of The
Chase Manhattan Bank (National Association) for the uses and purposes
therein set forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Notary Public
Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires __________, ____
Exhibit 4(a)(5)
Supplemental Indenture, dated as of September 1, 1995 (the
"Supplemental Indenture"), made by and between Northwestern Public Service
Company, a corporation organized and existing under the laws of the State
of Delaware (the "Company"), the post office address of which is 33 Third
Street, S.E., Huron, South Dakota 57350, and The Chase Manhattan Bank
(National Association), a national banking association organized and
existing under the laws of the United States of America (the "Trustee"), as
Trustee under the General Mortgage Indenture and Deed of Trust dated as of
August 1, 1993, hereinafter mentioned, the post office address of which is
4 Chase MetroTech Center, 3rd Floor, Brooklyn, New York 11245;
Whereas, the Company has heretofore executed and delivered its General
Mortgage Indenture and Deed of Trust dated as of August 1, 1993 (the
"Original Indenture"), to the Trustee, for the security of the Bonds of the
Company issued and to be issued thereunder (the "Bonds"); and
Whereas, the Company has heretofore executed and delivered to the
Trustee certain indentures supplemental to the Original Indenture dated as
of August 15, 1993 and as of August 1, 1995 and, contemporaneously
herewith, the Company has executed and delivered to the Trustee two certain
indentures dated as of September 1, 1995 relating to New Mortgage Bonds of
the 8.90% Series and New Mortgage Bonds of the 8.824% Series, respectively
(the Original Indenture, as supplemented and amended by the aforementioned
supplemental indentures and by this Supplemental Indenture being
hereinafter referred to as the "Indenture"); and
Whereas, the Company desires to create a new series of Bonds to be
issued under the Indenture, to be known as New Mortgage Bonds, 6.99% Series
due 2002 (the "New Mortgage Bonds of the 6.99% Series"), which New Mortgage
Bonds of the 6.99% Series are to be issued in exchange for certain other
bonds of the Company of like tenor and amount that were issued pursuant to
a supplemental indenture to the Company's Indenture dated August 1, 1940;
and
Whereas, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Indenture,
and pursuant to appropriate resolutions of the Board of Directors, has duly
resolved and determined to make, execute and deliver to the Trustee a
Supplemental Indenture in the form hereof for the purposes herein provided;
and
Whereas, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been
done, performed and fulfilled and the execution and delivery hereof have
been in all respects duly authorized;
Now, Therefore, This Indenture Witnesseth:
That Northwestern Public Service Company, in consideration of the
exchange referred to above and ownership from time to time of the Bonds and
the service by the Trustee, and its successors, under the Indenture and of
One Dollar to it duly paid by the Trustee at or before the ensealing and
delivery of these presents, the receipt whereof is hereby acknowledged,
hereby covenants and agrees to and with the Trustee and its successors in
the trust under the Indenture, for the benefit of those who shall hold the
Bonds as follows:
Article I
Description Of Bonds Of The 6.99% Series Due 2002
Section 1. The Company hereby creates a new series of Bonds to be
known as "New Mortgage Bonds, 6.99% Series due 2002." The New Mortgage
Bonds of the 6.99% Series shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be subject to,
all of the terms, conditions and covenants of the Indenture, as
supplemented and modified.
The commencement of the first interest period for the New Mortgage
Bonds of the 6.99% Series shall be September 1, 1995. The New Mortgage
Bonds of the 6.99% Series shall mature September 1, 2002, and shall bear
interest at the rate of 6.99% per annum, payable semi-annually on the first
day of March and the first day of September in each year. The person in
whose name any of the New Mortgage Bonds of the 6.99% Series are registered
at the close of business on any record date (as hereinafter defined) with
respect to any interest payment date shall be entitled to receive the
interest payable on such interest payment date notwithstanding the
cancellation of such New Mortgage Bonds of the 6.99% Series upon any
transfer or exchange subsequent to the record date and prior to such
interest payment date; provided, however, that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, such defaulted interest shall be paid as provided in Section
3.07(b) of the Indenture.
The term "record date" as used in this Section with respect to any
interest payment date shall mean February 15 or August 15, as the case may
be, next preceding the semi-annual interest payment date, or, if such
February 15 or August 15 shall be a legal holiday or a day on which banking
institutions in the Borough of Manhattan, The City of New York, State of
New York, are authorized by law to close, then the next preceding day which
shall not be a legal holiday or a day on which such institutions are so
authorized to close.
Section 2. The New Mortgage Bonds of the 6.99% Series shall be issued
only as registered Bonds without coupons of the denomination of $1,000, or
any integral multiple of $1,000, appropriately numbered. The New Mortgage
Bonds of the 6.99% Series may be exchanged, upon surrender thereof, at the
agency of the Company in the Borough of Manhattan, The City of New York,
State of New York, for one or more new New Mortgage Bonds of the 6.99%
Series of other authorized denominations, for the same aggregate principal
amount, subject to the terms and conditions set forth in the Indenture.
New Mortgage Bonds of the 6.99% Series may be exchanged or transferred
without expense to the registered owner thereof except that any taxes or
other governmental charges required to be paid with respect to such
transfer or exchange shall be paid by the registered owner requesting such
transfer or exchange as a condition precedent to the exercise of such
privilege.
Section 3. The New Mortgage Bonds of the 6.99% Series and the
Trustee's Certificate of Authentication shall be substantially in the
following forms respectively:
[Form Of Bond Of The 6.99% Series Due 2002]
Northwestern Public Service Company
(Incorporated under the laws of the State of South Dakota)
New Mortgage Bond, 6.99% Series Due 2002
No. R- $______________
Northwestern Public Service Company, a corporation organized and
existing under the laws of the State of Delaware (the "Company", which term
shall include any successor corporation as defined in the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________ or registered assigns, the sum of __________ dollars on the
first day of September, 2002, in any coin or currency of the United States
of America which at the time of payment is legal tender for public and
private debts, and to pay interest thereon in like coin or currency from
September 1, 1995, payable semi-annually, on the first days of March and
September in each year, at the rate of 6.99% per annum, until the Company's
obligation with respect to the payment of such principal shall be
discharged as provided in the Indenture hereinafter mentioned. The
interest so payable on any March 1 or September 1 will, subject to certain
exceptions provided in the Supplemental Indenture dated as of September 1,
1995, be paid to the person in whose name this Bond is registered at the
close of business on the immediately preceding February 15 or August 15, as
the case may be. Both principal of, and interest on, this Bond are payable
at the agency of the Company in the Borough of Manhattan, The City of New
York, State of New York.
This Bond shall not be entitled to any benefit under the Indenture or
any indenture supplemental thereto, or become valid or obligatory for any
purpose, until the form of certificate endorsed hereon shall have been
signed by or on behalf of The Chase Manhattan Bank (National Association),
the Trustee under the Indenture, or a successor trustee thereto under the
Indenture, or by an authenticating agent duly appointed by the Trustee in
accordance with the terms of the Indenture.
The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
In Witness Whereof, Northwestern Public Service Company has caused
this New Mortgage Bond to be signed (manually or by facsimile signature) in
its name by an Authorized Executive Officer, as defined in the Indenture,
and its corporate seal (or a facsimile thereof) to be hereto affixed and
attested (manually or by facsimile signature) by an Authorized Executive
Officer, as defined in the Indenture.
Dated: Northwestern Public Service Company
By
Authorized Executive Officer
ATTEST:
Authorized Executive Officer
[Form of Trustee's Certificate]
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture and Supplemental Indenture dated as of
September 1, 1995.
The Chase Manhattan
Bank (National Association), as Trustee
By
Authorized Officer
[FORM OF REVERSE OF BOND]
This New Mortgage Bond of the 6.99% Series is one of a duly authorized
issue of Bonds of the Company (the "Bonds"), of the series hereinafter
specified, all issued and to be issued under and equally secured by a
General Mortgage Indenture and Deed of Trust (the "Indenture"), dated as of
August 1, 1993, executed by the Company to The Chase Manhattan Bank
(National Association) (the "Trustee"), as Trustee, to which Indenture and
all indentures supplemental thereto reference is hereby made for a
description to the properties mortgaged and pledged, the nature and extent
of the security, the rights of registered owners of the Bonds and of the
Trustee in respect thereof, and the terms and conditions upon which the
Bonds are, and are to be, secured. The Bonds may be issued in series, for
various principal sums, may mature at different times, may bear interest at
different rates and may otherwise vary as provided in the Indenture. This
New Mortgage Bond of the 6.99% Series is one of a series designated as the
"New Mortgage Bonds, 6.99% Series Due 2002" (the "New Mortgage Bonds of the
6.99% Series") of the Company issued under and secured by the Indenture and
described in the supplemental indenture dated as of September 1, 1995 (the
"Supplemental Indenture dated as of September 1, 1995"), between the
Company and the Trustee, supplemental to the Indenture.
New Mortgage Bonds of the 6.99% Series, of which this is one, are
subject to redemption as follows:
(I) At the option of the Company and upon the notice and in the
manner and with the effect provided in the Indenture, all, but not less
than all, of the New Mortgage Bonds of the 6.99% Series may be redeemed by
the Company at any time, on or after September 1, 1997 and prior to
maturity, upon payment of the Make-Whole Amount (as defined in Section 1 of
Article III of the Supplemental Indenture dated as of September 1, 1995)
for each of the New Mortgage Bonds of the 6.99% Series to be redeemed,
together in each case with principal and accrued interest to the redemption
date.
(II) New Mortgage Bonds of the 6.99% Series shall be redeemed by the
Company in the amounts required by the Supplemental Indenture dated as of
September 1, 1995 on September 1 of each year, commencing in 1998, through
the operation of the sinking fund for such bonds, upon payment of the
principal amount thereof together with accrued interest to the redemption
date.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereof, and of the rights and obligations of the Company and
of the holders of the Bonds may be made with the consent of the Company by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds entitled to vote then outstanding, at a meeting of the
holders of the Bonds called and held as provided in the Indenture, and by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds of any series or any tranche or tranches of any series
entitled to vote then outstanding and affected by such modification or
alteration, in case one or more but less than all of the series of Bonds or
of any tranche or tranches of any series of Bonds then outstanding under
the Indenture are so affected; provided, however, that no such modification
or alteration shall be made which will affect the terms of payment of the
principal of, or interest or premium, if any, on this Bond.
In case an Event of Default, as defined in the Indenture, shall occur,
the principal of all the New Mortgage Bonds of the 6.99% Series at any such
time outstanding under the Indenture may be declared or may become due and
payable, upon the conditions and in the manner and with the effect provided
in the Indenture. The Indenture provides that such declaration may be
rescinded under certain circumstances.
Article II
Issue Of New Mortgage Bonds Of The 6.99% Series
Section 1. The Company hereby exercises the right to obtain the
authentication of $25,000,000 principal amount of Bonds pursuant to the
terms of Section 4.03 of the Indenture. All such Bonds shall be New
Mortgage Bonds of the 6.99% Series.
Section 2. Such New Mortgage Bonds of the 6.99% Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.
Article III
Redemption
Section 1. The New Mortgage Bonds of the 6.99% Series shall, upon the
notice and in the manner and with the effect provided in Article Five of
the Original Indenture, as amended by Section 3 of this Article III, be
redeemable (otherwise than out of moneys specified in Section 2 of this
Article III), at any time, on or after September 1, 1997 and prior to
maturity, at the option of the Company, as a whole, upon payment of the
principal amount of each of the New Mortgage Bonds of the 6.99% Series to
be redeemed, and accrued interest thereon to the redemption date, together
with the applicable Make-Whole Amount (as hereinafter defined).
On or before the redemption date specified in the notice of redemption
given by the Company as provided in the Indenture, the Company shall
deliver to each holder of the New Mortgage Bonds of the 6.99% Series to be
redeemed, a certificate signed by a principal financial officer of the
Company setting forth the Make-Whole Amount (determined in good faith by
the Company as of the date five business days prior to the date of such
redemption), if any, applicable to the New Mortgage Bonds of the 6.99%
Series held by such holder so to be redeemed. In the event the Company
shall incorrectly compute the Make-Whole Amount payable in connection with
any New Mortgage Bond of the 6.99% Series, the holder of such Bond shall
not be bound by such incorrect computation, but shall instead be entitled
to receive an amount equal to the correct Make-Whole Amount, if any,
computed in compliance with the terms hereof.
As used in this Section 1:
"Make-Whole Amount" shall mean the excess, if any, of (i) the
aggregate present value as of the date of such redemption of each dollar of
principal being prepaid and the amount of interest (exclusive of interest
accrued to the date of redemption) that would have been payable in respect
of such dollar if such redemption had not been made, determined by
discounting such amounts at the Reinvestment Rate from the respective dates
on which they would have been payable, over (ii) 100% of the principal
amount of the outstanding New Mortgage Bonds of the 6.99% Series being
redeemed. If the Reinvestment Rate is equal to or higher than 6.99%, the
Make-Whole Amount shall be zero. For purposes of any determination of the
Make-Whole Amount:
"Reinvestment Rate" shall mean the arithmetic mean of the yields
under the respective headings "This Week" and "Last Week" published in
the Statistical Release under the caption "Treasury Constant
Maturities" for the maturity (rounded to the nearest month)
corresponding to the Weighted Average Life to Maturity of the
principal amount of the New Mortgage Bonds of the 6.99% Series being
redeemed. If no maturity exactly corresponds to such Weighted Average
Life to Maturity, yields for the two published maturities most closely
corresponding to such Weighted Average Life to Maturity shall be
calculated pursuant to the immediately preceding sentence and the
Reinvestment Rate shall be interpolated or extrapolated from such
yields on a straightline basis, rounding in each of such relevant
periods to the nearest month. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior
to the date of determination of the Make-Whole Amount shall be used.
"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve System
and which establishes yields on actively traded U.S. Government
Securities adjusted to constant maturities or, if such statistical
release is not published at the time of any determination hereunder,
then such other reasonably comparable index which shall be
designated by the holders of 66-2/3% in aggregate principal amount of
the outstanding New Mortgage Bonds of the 6.99% Series.
"Weighted Average Life to Maturity" of any of the New Mortgage
Bonds of the 6.99% Series to be redeemed shall mean the number of
years (rounded to the nearest one-twelfth of a year) obtained by
dividing the then Remaining Dollar-Years of the New Mortgage Bonds of
the 6.99% Series by the then outstanding principal amount of such
Bonds. For the purposes of this definition, "Remaining Dollar-Years"
means the sum of the amounts obtained by multiplying the amount of
each then remaining sinking fund or other required repayment,
including repayment at final maturity, by the number of years
(calculated to the nearest one-twelfth of a year) which will elapse
between the time of such determination and the date of such repayment.
Section 2. Upon the notice and in the manner and with the effect
provided in Article Five of the Original Indenture, as amended by Section 3
of this Article III, any of the New Mortgage Bonds of the 6.99% Series
shall be redeemable on the first day of September in each year, commencing
in 1998, by operation of the sinking fund provided for by Section 1 of
Article IV hereof, upon payment of the principal amount thereof together
with accrued interest to the redemption date.
Section 3. Whenever the Company shall propose to redeem less than all
of the outstanding New Mortgage Bonds of the 6.99% Series on any redemption
date, the Trustee, instead of selecting by lot, shall select the serial
numbers of the New Mortgage Bonds of the 6.99% Series to be redeemed (in
whole or in part) by prorating, as nearly as may be, the aggregate
principal amount of the New Mortgage Bonds of the 6.99% Series to be
redeemed among the registered owners of the New Mortgage Bonds of the 6.99%
Series according to the principal amount thereof registered in their
respective names. In any such proration, the Trustee shall make such
adjustments, reallocations and eliminations as it shall deem proper to the
end that the principal amount of the New Mortgage Bonds of the 6.99% Series
so prorated to any registered owner of the New Mortgage Bonds of the 6.99%
Series shall be $1,000 or a multiple thereof, by increasing or decreasing
or eliminating the amount which would be allocable to any such registered
owner on the basis of exact proportion by an amount not exceeding $1,000.
The Trustee in its discretion may determine the particular New Mortgage
Bonds of the 6.99% Series (if there are more than one) registered in the
name of any registered owner which are to be redeemed, in whole or in part.
In any determination by proration pursuant to this Section, New Mortgage
Bonds of the 6.99% Series held by the Company shall not be considered
outstanding and shall be excluded in making the determination of the New
Mortgage Bonds of the 6.99% Series to be redeemed.
Notice of redemption of any New Mortgage Bonds of the 6.99% Series
shall be given as provided in Section 5.04 of the Original Indenture,
except that, in the case of redemption by operation of the sinking fund for
such bonds, the notice shall state that the redemption is for the account
of the sinking fund. If given by mail, the mailing of such notice shall be
a condition precedent to redemption, provided that any notice which is
mailed in the manner provided in Section 5.04 of the Original Indenture
shall be conclusively presumed to have been duly given whether or not the
holders receive such notice, and failure to give such notice by mall, or
any defect in such notice, to the holder of any such bond designated for
redemption in whole or in part shall not affect the validity of the
redemption of any other such bond.
Except for the determination of the serial numbers of the New Mortgage
Bonds of the 6.99% Series to be redeemed (in whole or in part) by proration
as provided in this Section when less than all of the New Mortgage Bonds of
the 6.99% Series are to be redeemed on any redemption date and except for
the changes in the giving of notice of redemption as provided in this
Section, the procedures for redemption of the New Mortgage Bonds of the
6.99% Series shall be as provided in Article Five of the Original
Indenture.
Section 4. The Company, with the approval of the Trustee, may enter
into a written agreement with the holder of any New Mortgage Bonds of the
6.99% Series providing that payment of such bonds called for redemption in
part only be made directly by mail, wire transfer or in any other manner to
the holder thereof without presentation or surrender thereof if there shall
be delivered to the Trustee an agreement (which may be a composite with
other such agreements) between the Company and such holder (or other person
acting as agent for such holder or for whom such holder is a nominee) that
payment shall be so made, and that in the event the holder thereof shall
sell or transfer any such bonds (a) it will, prior to the delivery of such
bonds, either (i) surrender such bonds to the Trustee to make a proper
notation of the amount of principal paid thereon or (ii) surrender such
bonds to the Trustee against receipt of one or more New Mortgage Bonds of
the 6.99% Series in an aggregate principal amount equal to the unpaid
principal portion of the bonds so surrendered, and (b) it will promptly
notify the Company of the name and address of the transferee of any New
Mortgage Bonds of the 6.99% Series so transferred. The Trustee shall not
be liable or responsible to any such holder or transferee or to the Company
or to any other person for any act or omission to act on the part of the
Company or any such holder in connection with any such agreement. The
Company will indemnify and save the Trustee harmless against any liability
resulting from any such act or omission and against any liability resulting
from any action taken by the Trustee in accordance with the provisions of
any such agreement.
Article IV
Additional Covenants
The Company covenants and agrees, subject to the terms and of this
Section, that it will pay to the Trustee on or before the last day of
August, 1998 and on or before the last day of August in each calendar year
thereafter so long as any New Mortgage Bonds of the 6.99% Series shall be
outstanding (each such last day of August being referred to herein as a
"sinking fund payment date") as and for a cash sinking fund for the
retirement of New Mortgage Bonds of the 6.99% Series, a sum in cash
sufficient to redeem on the first day of September next following such
sinking fund payment date, at the redemption price for the redemption of
New Mortgage Bonds of the 6.99% Series by operation of the sinking fund, a
principal amount of bonds of said series at least equal to twenty per
centum of the greatest principal amount of bonds of said series outstanding
at any time (determined as in this Section provided) between September 1,
1992, and the end of the calendar year immediately preceding such sinking
fund payment date. Cash paid to the Trustee by the Company pursuant to
this Section shall be applied by the Trustee to the redemption on the next
following the first day of September of the specified principal amount of
New Mortgage Bonds of the 6.99% Series in accordance with provisions of
this Section; and the Company shall carry out the procedures required of it
for such redemption.
On or before the first day of July in each year beginning with the
calendar year 1998, so long as any New Mortgage Bonds of the 6.99% Series
shall be outstanding, the Company shall deliver to the Trustee a
certificate, signed in the name of the Company by its President or one of
its Vice Presidents and by its Treasurer or an Assistant Treasurer,
containing the statements required by Section 1.05 of the Original
Indenture, and showing the greatest principal amount of New Mortgage Bonds
of the 6.99% Series outstanding at any time between September 1, 1992 and
the end of the preceding calendar year, determined in accordance with the
provisions of this Section, which certificate shall include, or be
accompanied by, the notice from the Company to the Trustee pursuant to
Section 5.04 of the Original Indenture, as amended by Section 3 of Article
III hereof, specifying the principal amount of the New Mortgage Bonds of
the 6.99% Series to be redeemed on the first day of September next
following by operation of the sinking fund provided for by this Section.
In determining under the provisions of this Section the principal
amount of New Mortgage Bonds of the 6.99% Series outstanding under the
Indenture, there shall be excluded the principal amount of any bonds of
said series authenticated under the Indenture which are owned by the
Company.
Any and all New Mortgage Bonds of the 6.99% Series received by the
Trustee pursuant to any provision of this Section shall thereupon be
canceled and destroyed by the Trustee.
If the first day of September in the calendar year 1998, or in any
calendar year thereafter so long as any New Mortgage Bonds of the 6.99%
Series shall be outstanding, is a legal holiday or day on which banking
institutions which act as paying agents hereunder are authorized by law to
close, then payment of the redemption price (including interest payable
upon redemption) for purposes of redemption of New Mortgage Bonds of the
6.99% Series by operation of the sinking fund provided for by this Section
may be made on the next succeeding day which is not a legal holiday or a
day on which such banking institutions are authorized by law to close with
the same force and effect as if made on the nominal redemption date, and no
interest shall accrue for the period after the nominal redemption date.
Article V
The Trustee
The Trustee hereby accepts the trusts hereby declared provided, and
agrees to perform the same upon the terms and conditions in the Indenture
set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of
this Supplemental Indenture or the due execution hereof by the
Company or for or in respect of the recitals contained herein,
all of which recitals are made by the Company solely. In
general, each and every term and condition contained in Article
Eleven of the Indenture shall apply to this Supplemental
Indenture with the same force and effect as if the same were
herein set forth in full, with such omissions, variations and
modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.
Article VI
Miscellaneous Provisions
This Supplemental Indenture may be simultaneously executed in any
number of counterparts, each of which when so executed shall be deemed to
be an original; but such counterparts shall together constitute but one and
the same instrument.
In Witness Whereof, said Northwestern Public Service Company has
caused this Indenture to be executed on its behalf by an Authorized
Executive Officer as defined in the Indenture, and its corporate seal to be
hereto affixed and said seal and this Indenture to be attested by an
Authorized Executive Officer as defined in the Indenture; and The Chase
Manhattan Bank (National Association), in evidence of its acceptance of the
trust hereby created, has caused this Indenture to be executed on its
behalf by its President or one of its Vice Presidents and its corporate
seal to be hereto affixed and said seal and this Indenture to be attested
by its Secretary or one of its Assistant Secretaries; all as of the 1st day
of September, 1995.
Northwestern Public Service Company
By
Vice President
(CORPORATE SEAL)
ATTEST:
Corporate Secretary
The Chase Manhattan
Bank (National Association)
By
Vice President
(CORPORATE SEAL)
ATTEST:
Assistant Secretary
State Of South Dakota )
) SS
County Of Beadle )
Be it Remembered, that on this _____ day of August, 1995, before me,
Susan M. Anderson, a Notary Public within and for the County and State
aforesaid, personally came D. K. Newell, Vice President - Finance, and Alan
D. Dietrich, Corporate Secretary of Northwestern Public Service Company, a
Delaware corporation, who are personally known to me to be such officers,
and who are personally known to me to be the same persons who executed as
such officers the within instrument of writing, and such persons duly
acknowledged that they signed, sealed and delivered the said instrument as
their free and voluntary act as such Vice President - Finance and Corporate
Secretary, respectively, and as the free and voluntary act of Northwestern
Public Service Company for the uses and purposes therein set forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Susan M. Anderson
Notary Public, Beadle County, S.D.
My Commission expires June 8, 2000
State Of New York )
) SS
County Of Kings )
Be it Remembered, that on this _____ day of August, 1995, before me,
_______________, a Notary Public within and for the County and State
aforesaid, personally came _________________, Vice President, and
_________________, Assistant Secretary of The Chase Manhattan Bank
(National Association), a national banking association, who are personally
known to me to be such officers, and who are personally known to me to be
the same persons who executed as such officers the within instrument of
writing, and such persons duly acknowledged that they signed, sealed and
delivered the said instrument as their free and voluntary act as such Vice
President and Assistant Secretary, respectively, and as the free and
voluntary act of The Chase Manhattan Bank (National Association) for the
uses and purposes therein set forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires ________, ____
Exhibit 4(a)(6)
Supplemental Indenture, dated as of September 1, 1995 (the
"Supplemental Indenture"), made by and between Northwestern Public Service
Company, a corporation organized and existing under the laws of the State
of Delaware (the "Company"), the post office address of which is 33 Third
Street, S.E., Huron, South Dakota 57350, and The Chase Manhattan Bank
(National Association), a national banking association organized and
existing under the laws of the United States of America (the "Trustee"), as
Trustee under the General Mortgage Indenture and Deed of Trust dated as of
August 1, 1993, hereinafter mentioned, the post office address of which is
4 Chase MetroTech Center, 3rd Floor, Brooklyn, New York 11245;
Whereas, the Company has heretofore executed and delivered its General
Mortgage Indenture and Deed of Trust dated as of August 1, 1993 (the
"Original Indenture"), to the Trustee, for the security of the Bonds of the
Company issued and to be issued thereunder (the "Bonds"); and
Whereas, the Company has heretofore executed and delivered to the
Trustee certain indentures supplemental to the Original Indenture dated as
of August 15, 1993 and as of August 1, 1995 and, contemporaneously
herewith, the Company has executed and delivered to the Trustee two certain
indentures dated as of September 1, 1995 relating to New Mortgage Bonds of
the 8.90% Series and New Mortgage Bonds of the 6.99% Series, respectively
(the Original Indenture, as supplemented and amended by the aforementioned
supplemental indentures and by this Supplemental Indenture being
hereinafter referred to as the "Indenture"); and
Whereas, the Company desires to create a new series of Bonds to be
issued under the Indenture, to be known as New Mortgage Bonds, 8.824%
Series due 1998 (the "New Mortgage Bonds of the 8.824% Series"), which New
Mortgage Bonds of the 8.824% Series are to be issued in exchange for
certain other bonds of the Company of like tenor and amount that were
issued pursuant to a supplemental indenture to the Company's Indenture
dated August 1, 1940; and
Whereas, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Indenture,
and pursuant to appropriate resolutions of the Board of Directors, has duly
resolved and determined to make, execute and deliver to the Trustee a
Supplemental Indenture in the form hereof for the purposes herein provided;
and
Whereas, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been
done, performed and fulfilled and the execution and delivery hereof have
been in all respects duly authorized;
Now, Therefore, This Indenture Witnesseth:
That Northwestern Public Service Company, in consideration of the
exchange referred to above and ownership from time to time of the Bonds and
the service by the Trustee, and its successors, under the Indenture and of
One Dollar to it duly paid by the Trustee at or before the ensealing and
delivery of these presents, the receipt whereof is hereby acknowledged,
hereby covenants and agrees to and with the Trustee and its successors in
the trust under the Indenture, for the benefit of those who shall hold the
Bonds as follows:
Article I
Description Of Bonds Of The 8.824% Series Due 1998
Section 1. The Company hereby creates a new series of Bonds to be
known as "New Mortgage Bonds, 8.824% Series due 1998." The New Mortgage
Bonds of the 8.824% Series shall be executed, authenticated and delivered
in accordance with the provisions of, and shall in all respects be subject
to, all of the terms, conditions and covenants of the Indenture, as
supplemented and modified.
The commencement of the first interest period for the New Mortgage
Bonds of the 8.824% Series shall be July 15, 1995. The New Mortgage Bonds
of the 8.824% Series shall mature July 15, 1998, and shall bear interest at
the rate of 8.824% per annum, payable semi-annually on the fifteenth day of
January and the fifteenth day of July in each year. The person in whose
name any of the New Mortgage Bonds of the 8.824% Series are registered at
the close of business on any record date (as hereinafter defined) with
respect to any interest payment date shall be entitled to receive the
interest payable on such interest payment date notwithstanding the
cancellation of such New Mortgage Bonds of the 8.824% Series upon any
transfer or exchange subsequent to the record date and prior to such
interest payment date; provided, however, that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, such defaulted interest shall be paid as provided in Section
3.07(b) of the Indenture.
The term "record date" as used in this Section with respect to any
interest payment date shall mean January 1 or July 1, as the case may be,
next preceding the semi-annual interest payment date, or, if such January 1
or July 1 shall be a legal holiday or a day on which banking institutions
in the Borough of Manhattan, The City of New York, State of New York, are
authorized by law to close, then the next preceding day which shall not be
a legal holiday or a day on which such institutions are so authorized to
close.
Section 2. The New Mortgage Bonds of the 8.824% Series shall be
issued only as registered Bonds without coupons of the denomination of
$1,000, or any integral multiple of $1,000, appropriately numbered. The
New Mortgage Bonds of the 8.824% Series may be exchanged, upon surrender
thereof, at the agency of the Company in the Borough of Manhattan, The City
of New York, State of New York, for one or more new New Mortgage Bonds of
the 8.824% Series of other authorized denominations, for the same aggregate
principal amount, subject to the terms and conditions set forth in the
Indenture.
New Mortgage Bonds of the 8.824% Series may be exchanged or
transferred without expense to the registered owner thereof except that any
taxes or other governmental charges required to be paid with respect to
such transfer or exchange shall be paid by the registered owner requesting
such transfer or exchange as a condition precedent to the exercise of such
privilege.
Section 3. The New Mortgage Bonds of the 8.824% Series and the
Trustee's Certificate of Authentication shall be substantially in the
following forms respectively:
[Form Of Bond Of The 8.824% Series Due 1998]
Northwestern Public Service Company
(Incorporated under the laws of the State of South Dakota)
New Mortgage Bond, 8.824% Series Due 1998
No. R- $______________
Northwestern Public Service Company, a corporation organized and
existing under the laws of the State of Delaware (the "Company", which term
shall include any successor corporation as defined in the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________ or registered assigns, the sum of __________ dollars on the
fifteenth day of July, 1998, in any coin or currency of the United States
of America which at the time of payment is legal tender for public and
private debts, and to pay interest thereon in like coin or currency from
July 15, 1995, payable semi-annually, on the fifteenth days of January and
July in each year, at the rate of 8.824% per annum, until the Company's
obligation with respect to the payment of such principal shall be
discharged as provided in the Indenture hereinafter mentioned. The
interest so payable on any January 15 or July 15 will, subject to certain
exceptions provided in the Supplemental Indenture dated as of September 1,
1995, be paid to the person in whose name this Bond is registered at the
close of business on the immediately preceding January 1 or July 1, as the
case may be. Both principal of, and interest on, this Bond are payable at
the agency of the Company in the Borough of Manhattan, The City of New
York, State of New York.
This Bond shall not be entitled to any benefit under the Indenture or
any indenture supplemental thereto, or become valid or obligatory for any
purpose, until the form of certificate endorsed hereon shall have been
signed by or on behalf of The Chase Manhattan Bank (National Association),
the Trustee under the Indenture, or a successor trustee thereto under the
Indenture, or by an authenticating agent duly appointed by the Trustee in
accordance with the terms of the Indenture.
The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
In Witness Whereof, Northwestern Public Service Company has caused
this New Mortgage Bond to be signed (manually or by facsimile signature) in
its name by an Authorized Executive Officer, as defined in the Indenture,
and its corporate seal (or a facsimile thereof) to be hereto affixed and
attested (manually or by facsimile signature) by an Authorized Executive
Officer, as defined in the Indenture.
Dated: Northwestern Public Service Company
By
Authorized Executive Officer
ATTEST:
Authorized Executive Officer
[Form of Trustee's Certificate]
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture and Supplemental Indenture dated as of
September 1, 1995.
The Chase Manhattan
Bank (National Association), as Trustee
By
Authorized Officer
[FORM OF REVERSE OF BOND]
This New Mortgage Bond of the 8.824% Series is one of a duly
authorized issue of Bonds of the Company (the "Bonds"), of the series
hereinafter specified, all issued and to be issued under and equally
secured by a General Mortgage Indenture and Deed of Trust (the
"Indenture"), dated as of August 1, 1993, executed by the Company to The
Chase Manhattan Bank (National Association) (the "Trustee"), as Trustee, to
which Indenture and all indentures supplemental thereto reference is hereby
made for a description to the properties mortgaged and pledged, the nature
and extent of the security, the rights of registered owners of the Bonds
and of the Trustee in respect thereof, and the terms and conditions upon
which the Bonds are, and are to be, secured. The Bonds may be issued in
series, for various principal sums, may mature at different times, may bear
interest at different rates and may otherwise vary as provided in the
Indenture. This New Mortgage Bond of the 8.824% Series is one of a series
designated as the "New Mortgage Bonds, 8.824% Series Due 1998" (the "New
Mortgage Bonds of the 8.824% Series") of the Company issued under and
secured by the Indenture and described in the supplemental indenture dated
as of September 1, 1995 (the "Supplemental Indenture dated as of September
1, 1995"), between the Company and the Trustee, supplemental to the
Indenture.
New Mortgage Bonds of the 8.824% Series, of which this is one, are
subject to redemption at the option of the Company and upon the notice and
in the manner and with the effect provided in the Indenture, all, but not
less than all, of the New Mortgage Bonds of the 8.824% Series may be
redeemed by the Company at any time, on or after July 15, 1996 and prior to
maturity, upon payment of the following percentages of the principal
amounts thereof:
If redeemed during the twelve month period beginning the fifteenth day
of July of the year:
1996 ---------- 101.471%
1997 ---------- 100.000%
together with accrued interest to the redemption date.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereof, and of the rights and obligations of the Company and
of the holders of the Bonds may be made with the consent of the Company by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds entitled to vote then outstanding, at a meeting of the
holders of the Bonds called and held as provided in the Indenture, and by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds of any series or any tranche or tranches of any series
entitled to vote then outstanding and affected by such modification or
alteration, in case one or more but less than all of the series of Bonds or
of any tranche or tranches of any series of Bonds then outstanding under
the Indenture are so affected; provided, however, that no such modification
or alteration shall be made which will affect the terms of payment of the
principal of, or interest or premium, if any, on this Bond.
In case an Event of Default, as defined in the Indenture, shall occur,
the principal of all the New Mortgage Bonds of the 8.824% Series at any
such time outstanding under the Indenture may be declared or may become due
and payable, upon the conditions and in the manner and with the effect
provided in the Indenture. The Indenture provides that such declaration
may be rescinded under certain circumstances.
Article II
Issue Of New Mortgage Bonds Of The 8.824% Series
Section 1. The Company hereby exercises the right to obtain the
authentication of $15,000,000 principal amount of Bonds pursuant to the
terms of Section 4.03 of the Indenture. All such Bonds shall be New
Mortgage Bonds of the 8.824% Series.
Section 2. Such New Mortgage Bonds of the 8.824% Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.
Article III
Redemption
Section 1. The New Mortgage Bonds of the 8.824% Series shall, upon
the notice and in the manner and with the effect provided in Article Five
of the Original Indenture, as amended by Section 2 of this Article III, be
redeemable at any time, on or after July 15, 1996 and prior to maturity, at
the option of the Company, as a whole, upon payment of the following
percentages of the principal amounts thereof:
If redeemed during the twelve month period beginning the fifteenth day
of July of the year:
1996 ---------- 101.471%
1997 ---------- 100.000%
together with accrued interest to the redemption date.
Section 2. Notice of redemption of any New Mortgage Bonds of the
8.824% Series shall be given as provided in Section 5.04 of the Original
Indenture. If given by mail, the mailing of such notice shall be a
condition precedent to redemption, provided that any notice which is mailed
in the manner provided in Section 5.04 of the Original Indenture shall be
conclusively presumed to have been duly given whether or not the holders
receive such notice, and failure to give such notice by mall, or any defect
in such notice, to the holder of any such bond designated for redemption
shall not affect the validity of the redemption of any other such bond.
Except for the changes in the giving of notice of redemption as provided in
this Section, the procedures for redemption of the New Mortgage Bonds of
the 8.824% Series shall be as provided in Article Five of the Original
Indenture.
Section 3. The Company, with the approval of the Trustee, may enter
into a written agreement with the holder of any New Mortgage Bonds of the
8.824% Series providing that payment of such bonds called for redemption in
part only be made directly by mail, wire transfer or in any other manner to
the holder thereof without presentation or surrender thereof if there shall
be delivered to the Trustee an agreement (which may be a composite with
other such agreements) between the Company and such holder (or other person
acting as agent for such holder or for whom such holder is a nominee) that
payment shall be so made, and that in the event the holder thereof shall
sell or transfer any such bonds (a) it will, prior to the delivery of such
bonds, either (i) surrender such bonds to the Trustee to make a proper
notation of the amount of principal paid thereon or (ii) surrender such
bonds to the Trustee against receipt of one or more New Mortgage Bonds of
the 8.824% Series in an aggregate principal amount equal to the unpaid
principal portion of the bonds so surrendered, and (b) it will promptly
notify the Company of the name and address of the transferee of any New
Mortgage Bonds of the 8.824% Series so transferred. The Trustee shall not
be liable or responsible to any such holder or transferee or to the Company
or to any other person for any act or omission to act on the part of the
Company or any such holder in connection with any such agreement. The
Company will indemnify and save the Trustee harmless against any liability
resulting from any such act or omission and against any liability resulting
from any action taken by the Trustee in accordance with the provisions of
any such agreement.
Article IV
The Trustee
The Trustee hereby accepts the trusts hereby declared provided, and
agrees to perform the same upon the terms and conditions in the Indenture
set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of
this Supplemental Indenture or the due execution hereof by the
Company or for or in respect of the recitals contained herein,
all of which recitals are made by the Company solely. In
general, each and every term and condition contained in Article
Eleven of the Indenture shall apply to this Supplemental
Indenture with the same force and effect as if the same were
herein set forth in full, with such omissions, variations and
modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.
Article V
Miscellaneous Provisions
This Supplemental Indenture may be simultaneously executed in any
number of counterparts, each of which when so executed shall be deemed to
be an original; but such counterparts shall together constitute but one and
the same instrument.
In Witness Whereof, said Northwestern Public Service Company has
caused this Indenture to be executed on its behalf by an Authorized
Executive Officer as defined in the Indenture, and its corporate seal to be
hereto affixed and said seal and this Indenture to be attested by an
Authorized Executive Officer as defined in the Indenture; and The Chase
Manhattan Bank (National Association), in evidence of its acceptance of the
trust hereby created, has caused this Indenture to be executed on its
behalf by its President or one of its Vice Presidents and its corporate
seal to be hereto affixed and said seal and this Indenture to be attested
by its Secretary or one of its Assistant Secretaries; all as of the 1st day
of September, 1995.
Northwestern Public Service Company
By
Vice President
(CORPORATE SEAL)
ATTEST:
Corporate Secretary
The Chase Manhattan
Bank (National Association)
By
Vice President
(CORPORATE SEAL)
ATTEST:
Assistant Secretary
State Of South Dakota )
) SS
County Of Beadle )
Be it Remembered, that on this 1st day of September, 1995, before me,
Susan M. Anderson, a Notary Public within and for the County and State
aforesaid, personally came D. K. Newell, Vice President - Finance, and Alan
D. Dietrich, Corporate Secretary of Northwestern Public Service Company, a
Delaware corporation, who are personally known to me to be such officers,
and who are personally known to me to be the same persons who executed as
such officers the within instrument of writing, and such persons duly
acknowledged that they signed, sealed and delivered the said instrument as
their free and voluntary act as such Vice President - Finance and Corporate
Secretary, respectively, and as the free and voluntary act of Northwestern
Public Service Company for the uses and purposes therein set forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Susan M. Anderson
Notary Public, Beadle County, S.D.
My Commission expires June 8, 2000
State Of New York )
) SS
County Of Kings )
Be it Remembered, that on this _____ day of August, 1995, before me,
_______________, a Notary Public within and for the County and State
aforesaid, personally came _________________, Vice President, and
_________________, Assistant Secretary of The Chase Manhattan Bank
(National Association), a national banking association, who are personally
known to me to be such officers, and who are personally known to me to be
the same persons who executed as such officers the within instrument of
writing, and such persons duly acknowledged that they signed, sealed and
delivered the said instrument as their free and voluntary act as such Vice
President and Assistant Secretary, respectively, and as the free and
voluntary act of The Chase Manhattan Bank (National Association) for the
uses and purposes therein set forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires ________, ____
Exhibit 4(a)(7)
Supplemental Indenture, dated as of September 1, 1995 (the
"Supplemental Indenture"), made by and between Northwestern Public Service
Company, a corporation organized and existing under the laws of the State
of Delaware (the "Company"), the post office address of which is 33 Third
Street, S.E., Huron, South Dakota 57350, and The Chase Manhattan Bank
(National Association), a national banking association organized and
existing under the laws of the United States of America (the "Trustee"), as
Trustee under the General Mortgage Indenture and Deed of Trust dated as of
August 1, 1993, hereinafter mentioned, the post office address of which is
4 Chase MetroTech Center, 3rd Floor, Brooklyn, New York 11245;
Whereas, the Company has heretofore executed and delivered its General
Mortgage Indenture and Deed of Trust dated as of August 1, 1993 (the
"Original Indenture"), to the Trustee, for the security of the Bonds of the
Company issued and to be issued thereunder (the "Bonds"); and
Whereas, the Company has heretofore executed and delivered to the
Trustee certain indentures supplemental to the Original Indenture dated as
of August 15, 1993 and as of August 1, 1995 and, contemporaneously
herewith, the Company has executed and delivered to the Trustee two certain
indentures dated as of September 1, 1995 relating to New Mortgage Bonds of
the 8.824% Series and New Mortgage Bonds of the 6.99% Series, respectively
(the Original Indenture, as supplemented and amended by the aforementioned
supplemental indentures and by this Supplemental Indenture being
hereinafter referred to as the "Indenture"); and
Whereas, the Company desires to create a new series of Bonds to be
issued under the Indenture, to be known as New Mortgage Bonds, 8.90% Series
due 1999 (the "New Mortgage Bonds of the 8.90% Series"), which New Mortgage
Bonds of the 8.90% Series are to be issued in exchange for certain other
bonds of the Company of like tenor and amount that were issued pursuant to
a supplemental indenture to the Company's Indenture dated August 1, 1940;
and
Whereas, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Indenture,
and pursuant to appropriate resolutions of the Board of Directors, has duly
resolved and determined to make, execute and deliver to the Trustee a
Supplemental Indenture in the form hereof for the purposes herein provided;
and
Whereas, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been
done, performed and fulfilled and the execution and delivery hereof have
been in all respects duly authorized;
Now, Therefore, This Indenture Witnesseth:
That Northwestern Public Service Company, in consideration of the
exchange referred to above and ownership from time to time of the Bonds and
the service by the Trustee, and its successors, under the Indenture and of
One Dollar to it duly paid by the Trustee at or before the ensealing and
delivery of these presents, the receipt whereof is hereby acknowledged,
hereby covenants and agrees to and with the Trustee and its successors in
the trust under the Indenture, for the benefit of those who shall hold the
Bonds as follows:
Article I
Description Of Bonds Of The 8.90% Series Due 1999
Section 1. The Company hereby creates a new series of Bonds to be
known as "New Mortgage Bonds, 8.90% Series due 1999." The New Mortgage
Bonds of the 8.90% Series shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be subject to,
all of the terms, conditions and covenants of the Indenture, as
supplemented and modified.
The commencement of the first interest period for the New Mortgage
Bonds of the 8.90% Series shall be May 1, 1995. The New Mortgage Bonds of
the 8.90% Series shall mature November 1, 1999, and shall bear interest at
the rate of 8.90% per annum, payable semi-annually on the first day of May
and the first day of November in each year; provided, however, that if the
Company shall default in the payment of principal of, premium, if any, or
interest on, any New Mortgage Bond of the 8.90% Series when the same shall
have become due and such default shall continue for more than five days,
then the Company covenants and agrees that it will pay to the holder
thereof, to the extent permitted by applicable law, interest on the
outstanding principal amount of such New Bond at the rate of 9.90% per
annum commencing on the due date of such payment and continuing until such
overdue amount is paid. The person in whose name any of the New Mortgage
Bonds of the 8.90% Series are registered at the close of business on any
record date (as hereinafter defined) with respect to any interest payment
date shall be entitled to receive the interest payable on such interest
payment date notwithstanding the cancellation of such New Mortgage Bonds of
the 8.90% Series upon any transfer or exchange subsequent to the record
date and prior to such interest payment date; provided, however, that if
and to the extent the Company shall default in the payment of the interest
due on such interest payment date, such defaulted interest shall be paid as
provided in Section 3.07(b) of the Indenture.
The term "record date" as used in this Section with respect to any
interest payment date shall mean April 15 or October 15, as the case may
be, next preceding the semi-annual interest payment date, or, if such April
15 or October 15 shall be a legal holiday or a day on which banking
institutions in the Borough of Manhattan, The City of New York, State of
New York, are authorized by law to close, then the next preceding day which
shall not be a legal holiday or a day on which such institutions are so
authorized to close.
Section 2. The New Mortgage Bonds of the 8.90% Series shall be issued
only as registered Bonds without coupons of the denomination of $1,000, or
any integral multiple of $1,000, appropriately numbered. The New Mortgage
Bonds of the 8.90% Series may be exchanged, upon surrender thereof, at the
agency of the Company in the Borough of Manhattan, The City of New York,
State of New York, for one or more new New Mortgage Bonds of the 8.90%
Series of other authorized denominations, for the same aggregate principal
amount, subject to the terms and conditions set forth in the Indenture.
New Mortgage Bonds of the 8.90% Series may be exchanged or transferred
without expense to the registered owner thereof except that any taxes or
other governmental charges required to be paid with respect to such
transfer or exchange shall be paid by the registered owner requesting such
transfer or exchange as a condition precedent to the exercise of such
privilege.
Section 3. The New Mortgage Bonds of the 8.90% Series and the
Trustee's Certificate of Authentication shall be substantially in the
following forms respectively:
[Form Of Bond Of The 8.90% Series Due 1999]
Northwestern Public Service Company
(Incorporated under the laws of the State of South Dakota)
New Mortgage Bond, 8.90% Series Due 1999
No. R- $______________
Northwestern Public Service Company, a corporation organized and
existing under the laws of the State of Delaware (the "Company", which term
shall include any successor corporation as defined in the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________ or registered assigns, the sum of __________ dollars on the
first day of November, 1999, in any coin or currency of the United States
of America which at the time of payment is legal tender for public and
private debts, and to pay interest thereon in like coin or currency from
May 1, 1995, payable semi-annually, on the first days of May and November
in each year, at the rate of 8.90% per annum, until the Company's
obligation with respect to the payment of such principal shall be
discharged as provided in the Indenture hereinafter mentioned; provided,
however, that if the Company shall default in the payment of principal of,
premium, if any, or interest on, this Bond when the same shall have become
due and such default shall continue for more than five days, then the
Company covenants and agrees that it will pay to the holder hereof, to the
extent permitted by applicable law, interest on the outstanding principal
amount of this Bond at the rate of 9.90% per annum commencing on the due
date of such payment and continuing until such overdue amount is paid. The
interest so payable on any May 1 or November 1 will, subject to certain
exceptions provided in the Supplemental Indenture dated as of September 1,
1995, be paid to the person in whose name this Bond is registered at the
close of business on the immediately preceding April 15 or October 15, as
the case may be. Both principal of, and interest on, this Bond are payable
at the agency of the Company in the Borough of Manhattan, The City of New
York, State of New York.
This Bond shall not be entitled to any benefit under the Indenture or
any indenture supplemental thereto, or become valid or obligatory for any
purpose, until the form of certificate endorsed hereon shall have been
signed by or on behalf of The Chase Manhattan Bank (National Association),
the Trustee under the Indenture, or a successor trustee thereto under the
Indenture, or by an authenticating agent duly appointed by the Trustee in
accordance with the terms of the Indenture.
The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
In Witness Whereof, Northwestern Public Service Company has caused
this New Mortgage Bond to be signed (manually or by facsimile signature) in
its name by an Authorized Executive Officer, as defined in the Indenture,
and its corporate seal (or a facsimile thereof) to be hereto affixed and
attested (manually or by facsimile signature) by an Authorized Executive
Officer, as defined in the Indenture.
Dated: Northwestern Public Service Company
By
Authorized Executive Officer
ATTEST:
Authorized Executive Officer
[Form of Trustee's Certificate]
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture and Supplemental Indenture dated as of
September 1, 1995.
The Chase Manhattan
Bank (National Association), as Trustee
By
Authorized Officer
[FORM OF REVERSE OF BOND]
This New Mortgage Bond of the 8.90% Series is one of a duly authorized
issue of Bonds of the Company (the "Bonds"), of the series hereinafter
specified, all issued and to be issued under and equally secured by a
General Mortgage Indenture and Deed of Trust (the "Indenture"), dated as of
August 1, 1993, executed by the Company to The Chase Manhattan Bank
(National Association) (the "Trustee"), as Trustee, to which Indenture and
all indentures supplemental thereto reference is hereby made for a
description to the properties mortgaged and pledged, the nature and extent
of the security, the rights of registered owners of the Bonds and of the
Trustee in respect thereof, and the terms and conditions upon which the
Bonds are, and are to be, secured. The Bonds may be issued in series, for
various principal sums, may mature at different times, may bear interest at
different rates and may otherwise vary as provided in the Indenture. This
New Mortgage Bond of the 8.90% Series is one of a series designated as the
"New Mortgage Bonds, 8.90% Series Due 1999" (the "New Mortgage Bonds of the
8.90% Series") of the Company issued under and secured by the Indenture and
described in the supplemental indenture dated as of September 1, 1995 (the
"Supplemental Indenture dated as of September 1, 1995"), between the
Company and the Trustee, supplemental to the Indenture.
New Mortgage Bonds of the 8.90% Series, of which this is one, are
subject to redemption as follows:
At the option of the Company and upon the notice and in the
manner and with the effect provided in the Indenture, any or all
of the New Mortgage Bonds of the 8.90% Series may be redeemed by
the Company at any time and from time to time prior to maturity,
upon payment of the Yield Maintenance Price (as defined in
Section 1 of Article III of the Supplemental Indenture dated as
of September 1, 1995) for each of the New Mortgage Bonds of the
8.90% Series to be redeemed, together in each case with principal
and accrued interest to the redemption date.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereof, and of the rights and obligations of the Company and
of the holders of the Bonds may be made with the consent of the Company by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds entitled to vote then outstanding, at a meeting of the
holders of the Bonds called and held as provided in the Indenture, and by
an affirmative vote of the holders of a majority in aggregate principal
amount of the Bonds of any series or any tranche or tranches of any series
entitled to vote then outstanding and affected by such modification or
alteration, in case one or more but less than all of the series of Bonds or
of any tranche or tranches of any series of Bonds then outstanding under
the Indenture are so affected; provided, however, that no such modification
or alteration shall be made which will affect the terms of payment of the
principal of, or interest or premium, if any, on this Bond.
In case an Event of Default, as defined in the Indenture, shall occur,
the principal of all the New Mortgage Bonds of the 8.90% Series at any such
time outstanding under the Indenture may be declared or may become due and
payable, upon the conditions and in the manner and with the effect provided
in the Indenture. The Indenture provides that such declaration may be
rescinded under certain circumstances.
Article II
Issue Of New Mortgage Bonds Of The 8.90% Series
Section 1. The Company hereby exercises the right to obtain the
authentication of $7,500,000 principal amount of Bonds pursuant to the
terms of Section 4.03 of the Indenture. All such Bonds shall be New
Mortgage Bonds of the 8.90% Series.
Section 2. Such New Mortgage Bonds of the 8.90% Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.
Article III
Redemption
Section 1. The New Mortgage Bonds of the 8.90% Series shall, upon the
notice and in the manner and with the effect provided in Article Five of
the Original Indenture, as amended by Section 2 of this Article III, be
redeemable at any time and from time to time prior to maturity, at the
option of the Company, as a whole, upon payment of the Yield Maintenance
Price (as hereinafter defined) for each of the New Mortgage Bonds of the
8.90% Series to be redeemed, together with accrued interest to the
redemption date; provided however, the Company shall not redeem any New
Mortgage Bonds of the 8.90% Series in a principal amount less than $100,000
or a multiple thereof.
If the notice of redemption shall have been given by the Company as
provided in the Indenture, the Computing Holder shall deliver written
notice to the Company on the fifth business day prior to such redemption
date, of the amount of the Yield Maintenance Price for the principal amount
of the New Mortgage Bonds of the 8.90% Series held by such Computing Holder
so to be redeemed, which notice shall set forth in reasonable detail the
computation thereof. The Yield Maintenance Price set forth in such notice
shall be binding on the Company absent manifest error.
The Company shall deliver to each holder of the New Mortgage Bonds of
the 8.90% Series to be redeemed on or before such redemption date a
certificate signed by a principal financial officer of the Company setting
forth the Yield Maintenance Price of the principal amount of the New
Mortgage Bonds of the 8.90% Series held by such holder so to be redeemed,
and setting forth in reasonable detail the calculation thereof accompanied
by a copy of the written notice given by the Computing Holder which sets
forth the computation of the Yield Maintenance Price of the New Mortgage
Bonds of the 8.90% Series held by the Computing Holder. The Company
covenants and agrees that it will on such redemption date redeem the New
Mortgage Bonds of the 8.90% Series held by each holder so to be redeemed by
payment to such holder the Yield Maintenance Price therefor, together with
interest accrued thereon to the date fixed for redemption.
As used in this Section 1:
"Computing Holder" shall mean the holder who holds bonds of the New
Mortgage Bonds of the 8.90% Series with an aggregate principal amount
outstanding higher than that of New Mortgage Bonds of the 8.90% Series held
by any other holder, or in the event two or more holders hold an equal
amount which constitutes the highest principal amount of the New Mortgage
Bonds of the 8.90% Series, any holder designated by the other holders. For
purposes of determining the Computing Holder, the New Mortgage Bonds of the
8.90% Series then held by Metropolitan Life Insurance Company and its
subsidiaries shall be aggregated.
"Weighted Average Life to Final Maturity" of any of the New Mortgage
Bonds of the 8.90% Series to be redeemed, shall mean the number of years
(rounded to the nearest one-twelfth of a year) which will elapse between
the scheduled date of redemption thereof and the scheduled date of maturity
of the New Mortgage Bonds of the 8.90% Series.
"Yield Maintenance Price" shall mean the higher of (1) the entire
unpaid principal amount of the New Mortgage Bonds of the 8.90% Series to be
redeemed and (2) the sum of the respective Payment Values of each
prospective interest payment and the principal payment as maturity in
respect of the principal amount of the New Mortgage Bonds of the 8.90%
Series to be redeemed (the amount of each such payment being herein
referred to as a "Payment"). The Payment Value of each Payment shall be
determined by discounting such Payment at the Reinvestment Rate, for the
period from the scheduled date on which such Payment is due to be made to
the applicable date of redemption. The Reinvestment Rate is the yield
which shall be imputed from the yields of those actively traded "On The
Run" United States Treasury securities having maturities as close as
practicable to the Weighted Average Life to Final Maturity of the New
Mortgage Bonds of the 8.90% Series to be redeemed. The yields of such
United States Treasury securities shall be determined as of 10 A.M. Eastern
Time on the date on which the Yield Maintenance Price is determined.
Section 2. Notice of redemption of any New Mortgage Bonds of the
8.90% Series shall be given as provided in Section 5.04 of the Original
Indenture. If given by mail, the mailing of such notice shall be a
condition precedent to redemption, provided that any notice which is mailed
in the manner provided in Section 5.04 of the Original Indenture shall be
conclusively presumed to have been duly given whether or not the holders
receive such notice, and failure to give such notice by mall, or any defect
in such notice, to the holder of any such bond designated for redemption
shall not affect the validity of the redemption of any other such bond.
Except for the changes in the giving of notice of redemption as provided in
this Section, the procedures for redemption of the New Mortgage Bonds of
the 8.90% Series shall be as provided in Article Five of the Original
Indenture.
Section 3. The Company, with the approval of the Trustee, may enter
into a written agreement with the holder of any New Mortgage Bonds of the
8.90% Series providing that payment of such bonds called for redemption in
part only be made directly by mail, wire transfer or in any other manner to
the holder thereof without presentation or surrender thereof if there shall
be delivered to the Trustee an agreement (which may be a composite with
other such agreements) between the Company and such holder (or other person
acting as agent for such holder or for whom such holder is a nominee) that
payment shall be so made, and that in the event the holder thereof shall
sell or transfer any such bonds (a) it will, prior to the delivery of such
bonds, either (i) surrender such bonds to the Trustee to make a proper
notation of the amount of principal paid thereon or (ii) surrender such
bonds to the Trustee against receipt of one or more New Mortgage Bonds of
the 8.90% Series in an aggregate principal amount equal to the unpaid
principal portion of the bonds so surrendered, and (b) it will promptly
notify the Company of the name and address of the transferee of any New
Mortgage Bonds of the 8.90% Series so transferred. The Trustee shall not
be liable or responsible to any such holder or transferee or to the Company
or to any other person for any act or omission to act on the part of the
Company or any such holder in connection with any such agreement. The
Company will indemnify and save the Trustee harmless against any liability
resulting from any such act or omission and against any liability resulting
from any action taken by the Trustee in accordance with the provisions of
any such agreement.
Article IV
The Trustee
The Trustee hereby accepts the trusts hereby declared provided, and
agrees to perform the same upon the terms and conditions in the Indenture
set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of
this Supplemental Indenture or the due execution hereof by the
Company or for or in respect of the recitals contained herein,
all of which recitals are made by the Company solely. In
general, each and every term and condition contained in Article
Eleven of the Indenture shall apply to this Supplemental
Indenture with the same force and effect as if the same were
herein set forth in full, with such omissions, variations and
modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.
Article VI
Miscellaneous Provisions
This Supplemental Indenture may be simultaneously executed in any
number of counterparts, each of which when so executed shall be deemed to
be an original; but such counterparts shall together constitute but one and
the same instrument.
In Witness Whereof, said Northwestern Public Service Company has
caused this Indenture to be executed on its behalf by an Authorized
Executive Officer as defined in the Indenture, and its corporate seal to be
hereto affixed and said seal and this Indenture to be attested by an
Authorized Executive Officer as defined in the Indenture; and The Chase
Manhattan Bank (National Association), in evidence of its acceptance of the
trust hereby created, has caused this Indenture to be executed on its
behalf by its President or one of its Vice Presidents and its corporate
seal to be hereto affixed and said seal and this Indenture to be attested
by its Secretary or one of its Assistant Secretaries; all as of the 1st day
of September, 1995.
Northwestern Public Service Company
By
Vice President
(CORPORATE SEAL)
ATTEST:
Corporate Secretary
The Chase Manhattan
Bank (National Association)
By
Vice President
(CORPORATE SEAL)
ATTEST:
Assistant Secretary
State Of South Dakota )
) SS
County Of Beadle )
Be it Remembered, that on this 5th day of September, 1995, before me,
Susan M. Anderson, a Notary Public within and for the County and State
aforesaid, personally came D. K. Newell, Vice President - Finance, and Alan
D. Dietrich, Corporate Secretary of Northwestern Public Service Company, a
Delaware corporation, who are personally known to me to be such officers,
and who are personally known to me to be the same persons who executed as
such officers the within instrument of writing, and such persons duly
acknowledged that they signed, sealed and delivered the said instrument as
their free and voluntary act as such Vice President - Finance and Corporate
Secretary, respectively, and as the free and voluntary act of Northwestern
Public Service Company for the uses and purposes therein set forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Susan M. Anderson
Notary Public, Beadle County, S.D.
My Commission expires June 8, 2000
State Of New York )
) SS
County Of Kings )
Be it Remembered, that on this _____ day of August, 1995, before me,
_______________, a Notary Public within and for the County and State
aforesaid, personally came _________________, Vice President, and
_________________, Assistant Secretary of The Chase Manhattan Bank
(National Association), a national banking association, who are personally
known to me to be such officers, and who are personally known to me to be
the same persons who executed as such officers the within instrument of
writing, and such persons duly acknowledged that they signed, sealed and
delivered the said instrument as their free and voluntary act as such Vice
President and Assistant Secretary, respectively, and as the free and
voluntary act of The Chase Manhattan Bank (National Association) for the
uses and purposes therein set forth.
In Witness Whereof, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
(Notarial Seal)
Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires ________, ____
Exhibit 10(a)(4)
NORTHWESTERN PUBLIC SERVICE COMPANY
DIRECTORS' RETIREMENT PLAN
WHEREAS, Northwestern Public Service Company (the "Company") desires
to recognize the service of certain persons who have acted as outside
Directors of the Company and to provide for the security of such Directors
after their service with the Company ends; and
WHEREAS, the Board of Directors of Northwestern Public Service Company
did on November 4, 1987, adopt the Directors' Retirement Plan (the "Plan");
and
WHEREAS, on February 1, 1989, the Board of Directors adopted Amendment
No. 1, which amended the benefit reduction provisions of the Plan,
effective May 3, 1989; and
WHEREAS, on August 7, 1991, the Board of Directors adopted Amendment
No. 2, which amended and clarified the method of payment of benefits under
the Plan;
WHEREAS, on February 2, 1994, the Board of Directors adopted Amendment
No. 3, which amended the retirement benefit provisions, effective May 1,
1994.
WHEREAS, on May 3, 1995, the Board of Directors adopted Amendment No.
4, which amended the normal retirement benefit provisions, effective May 1,
1995.
NOW THEREFORE, the Northwestern Public Service Company Directors'
Retirement Plan provides as follows:
ARTICLE I
DEFINITIONS
The following words and phrases as used herein shall have the meanings
indicated below, unless a different meaning is required by the context:
1.01 "Board" means the Board of Directors of the Company as
constituted from time to time.
1.02 "Committee" means the Northwestern Public Service Company Board
of Directors' Nominating and Compensation Committee.
1.03 "Company" means Northwestern Public Service Company.
1.04 "Director" means a duly elected and qualified member of the
Board who either:
(a) on his Termination Date has never been an employee of the
Company; or
(b) has been an employee of the Company, but on his Termination
Date is not an employee of the Company and has then
completed ten Years of Service as a member of the Board
after the date of his termination of employment with the
Company.
1.05 "Effective Date" means January 1, 1988.
1.06 "Participant" means an individual who serves actively as a
Director at any time on or after the Effective Date and who has completed
at least five Years of Service as a Director on or prior to his Termination
Date.
1.07 "Plan" means the Northwestern Public Service Company Directors'
Retirement Plan.
1.08 "Plan Year" means the calendar year.
1.09 "Retirement Benefit" means the series of monthly payments made
to a Participant in accordance with the provisions of Section 2.01 or 2.02.
1.10 "Termination Date" means the date on which a Participant ceases
to be a Director, and a successor has been elected and qualifies.
1.11 "Years of Service" means the number of Plan Years (computed to
the nearest one-twelfth) during which a person has been a Director,
including Plan Years before the Effective Date. For purposes of making the
foregoing computation, a Director's Years of Service need not be
consecutive and all periods of service as a Director shall be aggregated.
1.12 "Quarter" means the three-month period May-July, August-October,
November-January, or February-April.
ARTICLE II
RETIREMENT BENEFITS
2.01 Normal Retirement Benefit. The amount of the annual Normal
Retirement Benefit payable to a Participant shall be an annual fee,
calculated as of the time Termination Date occurs according to the schedule
in Exhibit I to this Plan.
2.02 Early Retirement Benefit. A Participant whose Termination Date
occurs before the date he attains the age of seventy years shall be
entitled to receive an annual Early Retirement Benefit from the Company,
reduced as provided in the next sentence. The amount of the annual Early
Retirement Benefit payable to a Participant hereunder shall be equal to the
annual Normal Retirement Benefit that would have been payable under Section
2.01, reduced by five percent for each year, or part thereof, up to a
maximum of twenty-five percent by which the Participant's age at his
Termination Date is less than sixty-five years.
2.03 Time and Method of Payment. A Retirement Benefit payable to a
Participant pursuant to Section 2.01 or 2.02 shall be payable in monthly
installments commencing the first month of the quarter immediately
following the later to occur of his Termination Date and the date he
attains the age of sixty-five years and ending the month in which the
Participant has received benefits under the Plan for the same number of
months as he served as a Director. Should a Participant die before such
benefits have been fully paid, a surviving spouse of such Participant shall
receive the remaining benefits under the Plan until the earlier to occur of
the death of such surviving spouse or the termination of benefits according
to the prior sentence. In no event is any Retirement Benefit payable to or
with respect to a Participant prior to the later to occur of his
Termination Date and the date he attains the age of sixty-five years. A
Retirement Benefit is payable only in the form of an annuity as described
in this Section and may not be paid in any optional form.
2.04 Facility of Payment. Whenever, in the Committee's opinion, a
Participant is under a legal disability or is incapacitated in any way so
as to be unable to manage his financial affairs, the Committee may make
payments of his Retirement Benefit to the Participant or to his legal
representative or to a relative or friend of the Participant for his
benefit, or the Committee may apply the same for the benefit of the
Participant in such manner as the Committee considers advisable. Any
payment of a Benefit or installment thereof in accordance with the
provisions of this Section shall be a complete discharge of any liability
for the making of such payment under the provisions of the Plan.
ARTICLE III
ADMINISTRATION
3.01 Company's Obligation. The Company's obligation hereunder at any
time is to pay Retirement Benefits under the Plan as they become due to
Participants in accordance with the terms of the Plan. The Company need
not segregate any of its assets or otherwise fund in advance for
obligations likely to be incurred hereunder. Retirement Benefits specified
under the Plan shall be payable from the general assets of the Company at
the time they are due.
3.02 Committee. (a) The Plan shall be administered by the
Committee, which shall have such duties and powers as may be necessary to
discharge its duties under the Plan, including but not limited to the
following:
(i) To construe and interpret the Plan, to decide all questions
of eligibility, and to determine the amount, manner, and
time of payment of any Retirement Benefits hereunder.
(ii) To appoint or employ individuals to assist in the
administration of the Plan and any other agents deemed
advisable, including legal counsel.
(iii) To prescribe procedures to be followed by Participants
for filing applications for Retirement Benefits.
(iv) To receive from the Company and from Participants such
information as shall be necessary for the proper
administration of the Plan.
(b) The Committee shall have no power to add to, subtract from, or
modify any of the terms of the Plan, or to change or add to any Retirement
Benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility for a Retirement Benefit under the Plan.
3.03 Expenses. Reasonable expenses of the Committee incurred in the
administration of the Plan shall be reimbursed by the Company. The members
of the Committee shall receive no compensation for their services in
connection with the administration of the Plan.
3.04 Committee Member as Participant. A member of the Committee may
also be a Participant, but may not make any discretionary decision or take
any action affecting his own interest as a Participant under the Plan
unless that decision or action is upon a matter that affects all other
Participants similarly situated and confers no special right, benefit, or
privilege not simultaneously conferred upon all other such Participants.
3.05 Indemnification of Committee Members. The members of the
Committee shall be indemnified by the Company against any and all
liabilities arising by reason of any act or failure to act in good faith in
connection with the Plan, including expenses reasonably incurred in the
defense of any claim relating thereto.
ARTICLE IV
AMENDMENT AND TERMINATION
4.01 Amendment and Voluntary Termination. The Company reserves the
right at any time and from time to time to modify or amend in whole or in
part any or all of the provisions of the Plan, or to terminate the Plan.
Except as provided below, no such modification, amendment, or termination,
however, shall have the effect of reducing the amount of the Retirement
Benefit that a Participant has received prior to, is receiving on, or would
become entitled to (except for adjustments to such amounts following the
date a Participant terminates his service as a Director as provided in
Section 2.01) if his Termination Date occurred on, the effective date of
such modification, amendment, or termination. For any Participant who was
serving on the Board of Directors at the time of the adoption of Amendment
No. 3, when benefits become payable under Section 2.03 the Participant
shall elect, upon retirement, to receive the lifetime benefit payable under
the Plan prior to the adoption of such Amendment or the limited term and
surviving spouse survivorship benefit payable under the Amendment.
4.02 Corporate Successors. The Plan shall not be terminated by a
transfer or sale of assets of the Company or by the merger or consolidation
of the Company into or with any other corporation or other entity.
ARTICLE V
MISCELLANEOUS
5.01 No Guarantee. Nothing contained in this Plan shall be construed
as a contract of employment between the Company and any Director or as a
right of any Director to be continued in such capacity by the Company or as
a guarantee by the Company that any Director shall be continued in such
capacity.
5.02 Interest Nontransferable. Benefits payable under the Plan shall
not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution, or levy of
any kind, either voluntary or involuntary, including any such liability
that is for alimony or other payments for the support of a spouse or former
spouse, or for any other relative of the person entitled to such benefits
hereunder, prior to actual receipt by such person. Any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, or
otherwise dispose of any right to benefits payable hereunder shall be void.
5.03 Exclusions and Separability. Each provision hereof shall be
independent of each other provision hereof, and, if any provision of this
Plan proves to be, or is held by any court, or tribunal, board, or
authority of competent jurisdiction to be void or invalid with respect to a
Participant, such provision shall be disregarded and shall be deemed to be
null and void and not part of this Plan with respect to such Participant.
The invalidation of any such provision, however, shall not otherwise impair
or affect the Plan or any of the other provisions or terms hereof.
5.04 Unclaimed Funds. Each Participant shall keep the Committee
informed of his current address. Neither the Company nor the Committee
shall be obligated to search for the whereabouts of any person. If the
location of a Participant is not made known to the Committee within three
years after the date on which the first payment of the Participant's
Retirement Benefit is to be made, the Participant will be deemed to have
died at the end of the three-year period and the Retirement Benefit will be
forfeited. Notwithstanding the foregoing, if the Participant subsequently
makes a claim for any Retirement Benefit that has been forfeited under this
Section, such Retirement Benefit shall be reinstated, without interest.
5.05 Federal Tax Status. The Plan is not intended to be qualified or
tax exempt under Section 401 or Section 501(a), respectively, of the
Internal Revenue Code of 1986.
5.06 Governing Law. The provisions of the Plan shall be construed,
administered, and governed under the laws of South Dakota.
5.07 Successors. Subject to Article IV, the Plan shall be binding
upon and inure to the benefit of any successors of the Company.
5.08 Gender and Number. Except when otherwise required by the
context, any masculine terminology in this document shall include the
feminine and any singular terminology shall include the plural.
5.09 Headings. The headings in this Plan are inserted for
convenience of reference only and are not to be considered in construction
of the provisions hereof.
IN WITNESS WHEREOF, the Company has executed this revised Directors'
Retirement Plan as of the 3rd day of May, 1995.
NORTHWESTERN PUBLIC SERVICE COMPANY
By_____________________________________
M. D. Lewis
President & CEO
By_____________________________________
Raymond M. Schutz, Chairman
Nominating and Compensation Committee
EXHIBIT I
NORMAL RETIREMENT BENEFIT (ANNUAL)
Termination Date Benefit
May 1, 1995 - April 30, 1996 $11,600
May 1, 1996 - April 30, 1997 $12,000
May 1, 1997 - April 30, 1998 $12,400
May 1, 1998 - April 30, 1999 $12,800
May 1, 1999 - April 30, 2000 $13,200
Exhibit 10(a)(5)
NORTHWESTERN PUBLIC SERVICE COMPANY
PHANTOM STOCK UNIT PLAN
1. Objectives
The objective of the Northwestern Public Service Company Phantom Stock
Unit Plan (the "Plan") is to assist officers and directors ("Eligible
Individuals") in building financial security through capital accumulation
by providing them with deferred remuneration based upon the award of
Phantom Stock Units, the value of which is related to the value of the
common stock ("Common Stock") of Northwestern Public Service Company
("Company"). The Plan is also intended to: (1) create incentives to
participating Eligible Individuals related to the long-term performance of
the Common Stock, (2) encourage continued employment with, or service on
the Board of Directors ("Board") of, the Company, and (3) promote awareness
of the performance of the Common Stock.
2. Administration
The Plan shall be administered by the Company. Subject to the
provisions of the Plan, the Board shall have exclusive power to select the
Eligible Individuals to be granted Phantom Stock Units, to determine the
number of Phantom Stock Units to be granted as described in Section 3, to
determine the time or times when Phantom Stock Units will be granted and to
determine such terms and conditions, in addition to the terms and
conditions set forth in the Plan, that shall apply to the grant of Phantom
Stock Units. The authority granted to the Board by the preceding sentence
will be exercised based upon annual recommendations received from the
Nominating and Compensation Committee ("Committee") of the Board. In
determining the number of Phantom Stock Units to be granted to an Eligible
Individual, the Board shall consider an Eligible Individual's position and
responsibilities, the nature and value to the Company of an Eligible
Individual's services, an Eligible Individual's present and potential
contribution to the Company's success, and the Company's financial
performance. Determinations by the Board shall be made by majority vote
and shall be final and binding on all parties with respect to all matters
relating to the Plan.
The Committee shall have authority to interpret the Plan, to adopt and
revise rules and regulations relating to the Plan, and to make any other
determinations which it believes necessary or advisable for the
administration of the Plan.
3. Grants
Eligible Individuals to whom Phantom Stock Units are granted shall
hereafter be referred to as "Participants." Phantom Stock Units shall be
granted at the meeting of the Board in May, 1989, and at the May meeting
each year thereafter, to and including May, 1999, to Participants who are
Executive Officers of the Company in such amounts as the Board shall
determine based on the recommendations of the Committee. The Committee
shall recommend awards, in amounts based upon the criteria set forth in
paragraph 2 above, up to a maximum of 35% of base salary for the Chairman
of the Board and the President and Chief Executive Officer and up to a
maximum of 15% of base salary for the other Executive Officer Participants.
The award shall be made in Phantom Stock units at the closing price of the
Company's Common Stock on the date of the award. Annual awards of 200
units shall be made to each of the Director Participants who are not
Executive Officers of the Company.
4. Phantom Stock Units and Dividend Equivalents
(a) Phantom Stock Units granted to a Participant shall be credited to
a Phantom Stock Unit Account ("Account") established and maintained for
such Participant on the books of the Company. The Account of a
Participant, which shall be the record of Phantom Stock Units granted to
him under the Plan, and dividend equivalents related thereto, is solely for
accounting purposes and shall not require a segregation of any Company
assets. Each grant of Phantom Stock Units under the Plan to a Participant
shall be communicated by the Board in writing to the Participant within
thirty (30) days after the date of grant.
(b) Additional credits will be made to each Participant's Account in
amounts equal to the dividends the Participant would have received from
time to time had he been the owner on the record dates with respect thereto
of the number of shares of Common Stock equal to the number of Phantom
Stock Units in his Account on such dates. Such dividend credit amounts
shall be converted to Phantom Stock Units at the closing price of the
Common Stock on the New York Stock Exchange on the date that dividends are
paid.
5. Vesting
(a) A Participant shall have a nonforfeitable right to the Phantom
Stock Units granted in a given year and dividend equivalents thereon on May
1st of the year five years following the date that such Phantom Stock Units
were granted (the "Fifth Anniversary Date").
(b) A Participant shall have a nonforfeitable right to one hundred
percent (100%) of the Phantom Stock Units and other amounts credited to his
Account upon the Participant's termination of employment with the Company
due to death, permanent disability or retirement on or after the age of
sixty-five (65) years or such earlier date as the Board, in its discretion,
shall designate. The Participant or his Beneficiary may choose vesting
under paragraph 5(a) or the full vesting under the preceding sentence.
(c) For purposes of this Section 5 a Participant will be considered
to terminate employment by reason of "permanent disability" if, in the
determination of the Board, he is subject to a physical or mental condition
which is expected to render the Participant unable to perform his usual
duties or any comparable duties for the Company.
6. Payment for Phantom Stock Units
(a) Upon a Fifth Anniversary Date the Participant shall be entitled
to receive from the Company an amount equal to the sum of (1) the total
value (as determined by the Board pursuant to Section 7) of the Phantom
Stock Units credited to his Account that vest on such Date and (2) related
reinvested dividend equivalents credited to his Account pursuant to Section
4 as of such Date. Upon the date the Participant vests in 100% of the
Phantom Stock Units and related amounts credited to his Account pursuant to
paragraph 5(b) (the "Automatic Vesting Date"), the Participant shall be
entitled to receive from the Company an amount equal to the sum of (1) the
total value (as determined by the Board pursuant to Section 7) of the
Phantom Stock Units credited to the Participant's Account as of the
Automatic Vesting Date, and (2) the value of dividend equivalents thereon
credited to his Account pursuant to Section 4, as of the Automatic Vesting
Date.
(b) Payment to a Participant of any amount set forth in paragraph
6(a) shall be made in cash in a lump sum within thirty (30) days after the
applicable Fifth Anniversary Date and, unless otherwise elected by the
Participant or his Beneficiary, after the Automatic Vesting Date.
(c) Notwithstanding any other provision of the Plan, all Phantom
Stock Units and other amounts credited to the Account of a Participant, and
all right to any payment hereunder to the Participant, will be forfeited,
and the Company will have no further obligation hereunder to such
Participant, if any of the following circumstances occur:
(i) The Participant at any time is discharged from employment
with the Company for cause ("Cause"). "Cause" shall mean (A) a
Participant's conviction of any criminal violation involving dishonesty,
fraud, or breach of trust, or (B) a Participant's willful engagement in any
misconduct in the performance of his duty that materially injures the
Company, or (C) failure to adequately perform his duties; or
(ii) The Participant at any time prior to the Fifth Anniversary
Date or the Automatic Vesting Date voluntarily terminates employment with
the Company.
The Board shall have sole discretion with respect to the application
of the provisions of this paragraph (c) and such exercise of discretion
shall be conclusive and binding upon the Participant, and all other
persons.
(d) Notwithstanding any other provision of the Plan, one-half of the
payment under paragraph 6(a) for Participants who are active Executive
Officers of the Company will be used to purchase Common Stock of the
Company. Those Participants may elect to make such purchase in a lump sum
at the time of award payout each year, through payroll deduction during the
year, or a combination thereof.
7. Valuation of Phantom Stock Units
For all purposes of the Plan other than for the purposes of paragraph
4(b), the value of a Phantom Stock Unit upon a Fifth Anniversary Date or
the Automatic Vesting Date for purposes of Section 6 will be an amount
equal to the average of the closing prices of the Common Stock on the
Composite Tape of the New York Stock Exchange for the ten (10) consecutive
trading days immediately preceding such Date; or
8. Changes in Capital and Corporate Structure
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of an issuance of additional shares,
recapitalization, reclassification, reorganization, stock split, reverse
stock split, combination of shares, stock dividend or similar transaction,
the Board shall proportionately adjust, in an equitable manner, the number
of Phantom Stock Units held by Participants under the Plan. The foregoing
adjustment shall be made in a manner that will cause the relationship
between the aggregate appreciation in outstanding Common Stock and earnings
per share of the Company and the increase in value of each Phantom Stock
Unit granted hereunder to remain unchanged as a result of the applicable
transaction.
9. Non-Transferability
Phantom Stock Units granted under the Plan, and other amounts credited
to a Participant's Account, and any rights and privileges pertaining
thereto, may not be transferred, assigned, pledged or hypothecated in any
manner, by operation of law or otherwise, other than by will or by the laws
of descent and distribution, and shall not be subject to execution,
attachment or similar process.
10. Death of a Participant
In the event of a Participant's death, payment of any amount due under
the Plan shall be made to the Participant's designated Beneficiary. In the
event the Participant has not designated a Beneficiary, or if no designated
Beneficiary is living at the date of death of the Participant, payment of
any amount due under the Plan shall be paid as promptly as practicable to
the duly appointed and qualified executor or administrator of the
Participant's estate. "Beneficiary" shall mean the individual,
corporation, partnership, association, trust or unincorporated organization
designated by a Participant in writing filed with the Company as the
recipient of any payment to be made to a Participant hereunder in the event
of the Participant's death prior to payment. Such designation may be
changed by a Participant at any time by writing filed with the Company
without the consent of or notice to any Beneficiary previously designated.
11. Withholding
The Company shall have the right to deduct from all amounts paid
pursuant to the Plan any taxes required by law to be withheld with respect
to such amounts.
12. Voting and Dividend Rights
Except as provided in Sections 4, 6, and 8, no Participant shall be
entitled to any voting rights or to receive any dividends or other
distributions with respect to the Common Stock of the Company as a result
of his participation in the Plan.
13. Miscellaneous Provisions
(a) No Participant or other person shall have any claim or right to
be granted an award under the Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any Participant any right to be
retained in the employ of the Company or to continue to serve as a member
of the Board.
(b) The Plan shall at all times be entirely unfunded and no
provisions shall at any time be made with respect to segregating assets of
the Company for payment of any benefits hereunder. No Participant or other
person shall have any interest in any particular assets of the Company by
reason of the right to receive a benefit under the Plan and any such
Participant or other person shall have only the rights of a general
unsecured creditor of the Company with respect to any rights under the
Plan.
(c) Except when otherwise required by the context, any masculine
terminology in this document shall include the feminine, and any singular
terminology shall include the plural.
(d) This Plan shall be governed by the laws of the State of South
Dakota.
14. Effectiveness and Term of Plan
The effective date of the Plan shall be May 3, 1989, and the Plan
shall terminate with awards made in May, 1999. No Phantom Stock Units
shall be granted pursuant to the Plan after the date of termination of the
Plan, although after such date payments shall be made with respect to
Phantom Stock Units granted prior to the date of termination.
IN WITNESS WHEREOF, the Company has executed this Plan as of the 3rd
day of May, 1995.
NORTHWESTERN PUBLIC SERVICE COMPANY
By______________________________________
M. D. Lewis
President & CEO
By______________________________________
Raymond M. Schutz, Chairman
Nominating and Compensation Committee
Exhibit 10(a)(6)
AGREEMENT
BETWEEN
NORTHWESTERN PUBLIC SERVICE COMPANY
AND
______________________________
November 1, 1995
TABLE OF CONTENTS
Page
1. Defined Terms 1
2. Term of Agreement 2
3 Company's Covenants Summarized 2
4. The Executive's Covenants 3
5. Compensation Other Than Severance Payments 3
6. Severance Payments 4
7. Termination Procedures and Compensation During Dispute 12
8. No Mitigation 14
9. Successors; Binding Agreement 15
10. Notices 16
11. Miscellaneous 16
12. Validity 17
13. Counterparts 17
14. Settlement of Disputes; Arbitration 17
15. Definitions 18
AGREEMENT
THIS AGREEMENT dated November 1, 1995, is made by and between
Northwestern Public Service Company, a Delaware Corporation (the
"Company"), and ______________________________ (the "Executive").
WHEREAS the Company considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel; and WHEREAS the Board of Directors of the Company (the
"Board") recognizes that, as is the case with many publicly-held companies,
the possibility of a Change in Control or a Major Transaction (as defined
in the last Section hereof) exists and that such possibility, and the
uncertainty and questions which it may raise among management, may result
in the departure or distraction of management personnel to the detriment of
the Company and its shareholders; and
WHEREAS the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the management of the Company, including the Executive, to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control or a
Major Transaction;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definition of capitalized terms used in this
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1997; provided,
however, that commencing on January 1, 1996 and each January 1 thereafter,
the term of this Agreement shall automatically be extended for one
additional year unless, not later than September 30 of the preceding year,
the Company or the Executive shall have given notice not to extend this
Agreement or a Change in Control or a Major Transaction shall have occurred
prior to such January 1; provided, however, if a Change in Control or a
Major Transaction shall have occurred during the term of this Agreement,
this Agreement shall continue in effect for a period of thirty-six (36)
months beyond the month in which such Change in Control or Major
Transaction occurred.
3. Company's Covenants Summarized. In order to induce the Executive
to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees,
under the conditions described herein, to pay the Executive the "Severance
Payments" described in Section 6.1 hereof and the other payments and
benefits described herein in the event the Executive's employment with the
Company is terminated following a Change in Control or a Major Transaction
and during the term of this Agreement. No amount or benefit shall be
payable under this Agreement unless there shall have been (or, under the
terms hereof, there shall be deemed to have been) a termination of the
Executive's employment with the Company following a Change in Control or a
Major Transaction. This Agreement shall not be construed as creating an
express or implied contract of employment and, except as otherwise agreed
in writing between the Executive and the Company, the Executive shall not
have any right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that, subject to
the terms and conditions of this Agreement, in the event of a Potential
Change in Control or a Potential Major Transaction during the term of this
Agreement, the Executive will remain in the employ of the Company until the
earliest of (i) a date which is twelve (12) months from the date of such
Potential Change of Control or Potential Major Transaction, (ii) the date
of a Change in Control or a Major Transaction, (iii) the date of
termination by the Executive of the Executive's employment for Good Reason
(determined by treating the Potential Change in Control or Potential Major
Transaction as a Change in Control or a Major Transaction, as applicable,
in applying the definition of Good Reason), by reason of death or
Disability or Retirement, or (iv) the termination by the Company of the
Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control or a Major Transaction and during
the term of this Agreement, during any period that the Executive fails to
perform the Executive's full-time duties with the Company as a result of
incapacity due to physical or mental illness, the Company shall provide the
Executive with disability benefits equivalent to those under the Company's
disability insurance plan (without regard to any amendment to such plan
made subsequent to the Change in Control or Major Transaction which
amendment adversely affects the Executive's rights thereunder) until the
Executive's employment is terminated by the Employer for Disability.
5.2 If the Executive's employment shall be terminated for any reason
following a Change in Control or a Major Transaction and during the term of
this Agreement, the Company shall pay the Executive's full salary to the
Executive through the Date of Termination at the rate in effect at the time
the Notice of Termination is given, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of any compensation or benefit plan, program or arrangement
maintained by the Company during such period; except to the extent that the
Executive is receiving payments with respect to such period, or a portion
thereof, in accordance with Section 5.1.
5.3 If the Executive's employment shall be terminated for any reason
following a Change in Control or a Major Transaction and during the term of
this Agreement, the Company shall pay to the Executive the normal post-
termination compensation and benefits due the Executive as such payments
become due. Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the Company's applicable
retirement, insurance and other compensation or benefit plans, programs
and arrangements.
6. Severance Payments.
6.1 Subject to Section 6.2(b) hereof, the Company shall pay the
Executive the payments described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment following a
Change in Control or a Major Transaction and during the term of this
Agreement, in addition to the payments and benefits described in Section 5
hereof, unless such termination is (i) by the Company for Cause, (ii) by
reason of death, Disability or Retirement, or (iii) by the Executive
without Good Reason. The Executive's employment shall be deemed to have
been terminated following a Change in Control or a Major Transaction by
the Employer without cause or by the Executive with Good Reason if the
Executive's employment is terminated prior to a Change in Control or a
Major Transaction without Cause at the direction of a Person who has
entered into an agreement with the Company the consummation of which would
constitute a Change in Control or a Major Transaction, or if the Executive
terminates his employment with Good Reason prior to a Change in Control or
a Major Transaction (determined by treating a Potential Change in Control
or Potential Major Transaction as a Change in Control or a Major
Transaction, as applicable, in applying the definition of Good Reason) if
the circumstance or event which constitutes Good Reason occurs at the
direction of such Person.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall pay
to the Executive a lump sum severance payment, in cash, equal to three
times the sum of (i) the higher of the Executive's annual base salary
in effect as of the Date of Termination or in effect immediately prior
to the Change in Control or Major Transaction, and (ii) the higher of
the average amount paid to the Executive pursuant to the Company's
annual bonus plan with respect to the three years preceding the year
in which the Date of Termination occurs or the average amount so paid
with respect to the three years preceding the year in which the Change
in Control or Major Transaction occurs.
(B) In addition to the retirement benefits to which the
Executive is entitled under each Pension Plan or any successor plan
thereto, the Company shall pay the Executive a lump sum amount, in
cash, equal to the excess of (x) the actuarial equivalent of the
retirement pension (taking into account any early retirement subsidies
associated therewith and determined as a straight life annuity
commencing at Normal Retirement Age or any earlier date, but in no
event earlier than the third anniversary of the Date of Termination,
whichever annuity the actuarial equivalent of which is greatest) which
the Executive would have accrued under the terms of each such Pension
Plan (without regard to any amendment to such Pension Plan made
subsequent to a Change in Control or a Major Transaction, which
amendment adversely affects in any manner the computation of
retirement benefits thereunder), determined as if the Executive were
fully vested thereunder and had accumulated (after the Date of
Termination) thirty-six (36) additional months of service credit
thereunder and had been credited under each such Pension Plan during
such period with compensation at the higher of (a) Executive's
compensation (as defined in such Pension Plan) during the twelve (12)
months immediately preceding the Date of Termination or (b)
Executive's compensation (as defined in such Pension Plan) during the
twelve (12) months immediately preceding the Change in Control or
Major Transaction, over (y) the actuarial equivalent of the retirement
pension (taking into account any early retirement subsidies associated
therewith and determined as a straight life annuity commencing at
Normal Retirement Age or any earlier date, but in no event earlier
than the Date of Termination, whichever annuity the actuarial
equivalent is greatest) which the Executive had accrued pursuant to
the provisions of each such Pension Plan as of the Date of
Termination. For purposes of this Section 6.1(B), "actuarial
equivalent" shall be determined using the same methods and assumptions
utilized under each of the Pension Plans, as applicable, immediately
prior to the Date of Termination (without regard to any amendment of
such methods and assumptions made subsequent to a Change in Control or
a Major Transaction, which amendment results in a lower payment under
this Section 6.1(B)). To the extent additional actuarial assumptions
are required for the purpose of calculating benefits under this
Section 6.1(B), such assumptions shall be as set forth in Schedule I
hereto.
(C) If the Executive would have become entitled to benefits
under the Company's post-retirement health care or life insurance
plans had his employment terminated at any time during the period of
thirty-six (36) months after the Date of Termination, the Company
shall pay such benefits to the Executive commencing on the later of
(a) the date that such coverage would have first become available and
(b) the date the benefits described in (D) below terminate.
(D) For the thirty-six (36) month period immediately following
the Date of Termination, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control or a Major Transaction which reduction constitutes Good
Reason). Benefits otherwise receivable by the Executive pursuant to
this Section 6.1(D) shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during the thirty-six (36) month period following the Executive's
termination of employment (and any such benefits actually received by
the Executive shall be reported to the Company by the Executive). If
the benefits provided to the Executive under this Section 6.1(D) shall
result in a decrease, pursuant to Section 6.2(b), in the Severance
Payments and these Section 6.1(D) benefits are thereafter reduced
pursuant to the immediately preceding sentence because of the receipt
of comparable benefits, the Company shall, at the time of such
reduction, pay to the Executive the lesser of (a) the amount of the
decrease made in the Severance Payments pursuant to Section 6.2(b), or
(b) the maximum amount which can be paid to the Executive without
being, or causing any other payment to be, nondeductible by reason of
section 28OG of the Code.
6.2 (a) In the event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or any
Person affiliated with the Company or such Person) (all such payments and
benefits, including the Severance Payments, being hereinafter called "Total
Payments") will be subject (in whole or part) to the Excise Tax, then,
subject to the provisions of subsection (b) of this Section 6.2, the
Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Total Payments and any federal, state
and local income tax and Excise Tax upon the payment provided for by this
Section 6.2, shall be equal to the Total Payments. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence on the Date
of Termination, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.
(b) In the event that, after giving effect to any redeterminations
described in subsection (d) below, a reduction in the Severance Payments,
to the largest amount that would result in no portion of the Total Payments
being subject to the Excise Tax (after taking into account any reduction in
the Total Payments provided by reason of section 28OG of the Code in such
other plan, arrangement or agreement), would produce a net amount (after
deduction of the net amount of federal, state and local income tax on such
reduced Total Payments) that would be greater than the net amount of
unreduced Total Payments (after deduction of the net amount of federal,
state and local income tax and the amount of Excise Tax to which the
Executive would be subject in respect of such Total Payments), then
subsection (a) of this Section 6.2 shall not apply and the Severance
Payments shall be so reduced.
(c) For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i)
all of the Total Payments shall be treated as "parachute payments" within
the meaning of section 28OG(b)(2) of the Code, unless in the opinion of tax
counsel selected by the Company's independent auditors and reasonably
acceptable to the Executive ("Tax Counsel"), such other payments or
benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 28OG(b)(4)(A) of the Code, (ii) all
"excess parachute payments" within the meaning of section 28OG(b)(1) of the
Code shall be treated as subject to the Excise Tax, unless in the opinion
of Tax Counsel such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered, within
the meaning of section 28OG(b)(4)(B) of the Code, in excess of the Base
Amount allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax, and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections
28OG(d)(3) and (4) of the Code. Prior to the payment date set forth in
Section 6.3 hereof, the Company shall provide the Executive with its
calculation of the amounts referred to in this Section 6.2(b) and such
supporting .materials as are reasonably necessary for the Executive to
evaluate the Company's calculations. If the Executive disputes the
Company's calculations (in whole or in part), the reasonable opinion of Tax
Counsel with respect to the matter in dispute shall prevail.
(d) In the event that (i) the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder at the time of
termination of the Executive's employment and (ii) after giving effect to
such redetermination, the Severance Payments are not reduced pursuant to
Section 6.2(b) hereof, the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally determined,
the portion of the Gross-Up Payment attributable to such reduction (plus
that portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the Gross-Up Payment being
repaid by the Executive to the extent that such repayment results in a
reduction in the Excise Tax and/or a federal, state or local income tax
deduction) plus interest on the amount of such repayment at the rate
provided in section 1274(b)(2)(B) of the Code. In the event that (x) the
Excise Tax is determined to exceed the amount taken into account hereunder
at the time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be determined
at the time of the Gross-Up Payment) and (y) after giving effect to such
redetermination, the Severance Payments are not reduced pursuant to Section
6.2(b) hereof, the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable
by the Executive with respect to such excess) at the time that the amount
of such excess is finally determined.
6.3 The payments provided for in Section 6.1 (other than Section
6.1(C) and Section 6.1(D)) and Section 6.2 hereof shall be made not later
than the fifth day following the Date of Termination, provided, however,
that if the amounts of such payments, and the limitation on such payments
set forth in Section 6.2(b) hereof, cannot be finally determined on or
before such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Executive, of the minimum
amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth (30th)
day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of
the Code).
6.4 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any
termination of his employment hereunder or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code to any payment or benefit
provided hereunder. Such payments shall be made within five (5) business
days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in -Control or a Major
Transaction and during the term of this Agreement, any purported
termination of the Executive's employment (other than by reason of death)
shall be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with Section 10 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in
Control or a Major Transaction and during the term of this Agreement, shall
mean (i) if the Executive's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and (ii) if the Executive's
employment is terminated for any other reason, the date specified in the
Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 7.3), the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be
the date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court
of competent jurisdiction (which is not appealable or with respect to which
the time for appeal therefrom has expired and no appeal has been
perfected); provided further that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination occurs
following a Change in Control or a Major Transaction and during the term of
this Agreement, and such termination is disputed in accordance with Section
7.3 hereof, the Company shall pay the Executive the full compensation in
effect when the notice giving rise to the dispute was given (including, but
not limited to, salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment with the Company terminates during the term of this Agreement,
the Executive is not required to seek other employment or to attempt in any
way to reduce any amounts payable to the Executive by the Company pursuant
to this Agreement. Further, the amount of any payment or benefit provided
for in this Agreement (other than in Section 6.1(D) hereof) shall not be
reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against
any amount claimed to be owed by the Executive to the Company, or
otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon any successor
to the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as
the Executive would be entitled to hereunder if the Executive were to
terminate the Executive's employment for Good Reason after a Change in
Control or a Major Transaction, except that, for purposes of implementing
the foregoing, the date on which any such succession becomes effective
shall be deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive shall die while any amount would still be payable to the
Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon actual receipt:
To The Company:
Northwestern Public Service Company
33 Third Street SE
P. O. Box 1318
Huron, South Dakota 57350-1318
Attention: General Counsel
To the Executive:
_________________________________
_________________________________
_________________________________
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with,
any condition .or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This Agreement
supersedes any other agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of South Dakota. All references to sections
of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal,
state or local law and any additional withholding to which the Executive
has agreed. The obligations of the Company and the Executive under
Sections 6 and 7 shall survive the expiration of the term of this
Agreement.
12. Validity. The invalidity or unenforceability or any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of
a claim for benefits under this Agreement shall be delivered to the
Executive in writing and shall set forth the specific reasons for the
denial and the specific provisions of this Agreement relied upon. The Board
shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to
the Board a decision of the Board within sixty (60) days after notification
by the Board that the Executive's claim has been denied. Any further
dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in the State of South Dakota,
in accordance with the rules of the American Arbitration Association then
in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that the Executive shall be
entitled to seek specific performance of the Executive's right to be paid
until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
(A) "Base Amount" shall have the meaning defined in section
28OG(b)(3) of the Code.
(B) "Beneficial Owner" shall have the meaning defined in Rule
13d-3 under the Exchange Act.
(C) "Board" shall mean the Board of Directors of the Company.
(D) "Cause" for termination by the Employer of the Executive's
employment, after any Change in Control or Major Transaction, shall
mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination for Good Reason by the
Executive pursuant to Section 7.1) after a written demand for
substantial performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the
Executive's duties, or( ii) the willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's part shall
be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the
Company.
(E) A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall
have been satisfied:
(I) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates)
representing 20% or more of the combined voting power of the
Company's then outstanding securities; or
(II) during any period of not more than two consecutive
years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
whose original assumption of office is in connection with an
actual or threatened election of directors, as such terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act)
whose election by the Board or nomination for election by the
Company's shareholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved or
recommended, cease for any reason to constitute a majority
thereof.
(F) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(G) "Company" shall mean Northwestern Public Service Company
and any successor to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise
(except in determining, under Section 15(E) or 15(0) hereof, whether
or not any Change in Control or Major Transaction has occurred in
connection with such succession).
(H) "Date of Termination" shall have the meaning stated in
Section 7.2 hereof.
(I) "Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6)
consecutive months, the Company shall have given the Executive a
Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(J) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(K) "Excise Tax" shall mean any excise tax imposed under section
4999 of the Code.
(L) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(M) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the
Executive's express written consent) of any one of the following acts
by the Company, or failures by the Company, to act, unless, in the
case of any act or failure to act described in paragraph (V), (VI) or
(VII) below, such act or failure to act is corrected prior to the Date
of Termination specified in the Notice of Termination given in respect
thereof:
(I) the assignment to the Executive of duties substantially
inconsistent with the Executive's status as an executive
officer of the Company;
(II) a reduction in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(III) requiring the Executive to be based at a location
more than 100 miles from Huron, South Dakota, except for required
travel on the Company's business to an extent substantially
consistent with the Executive's present business travel
obligations;
(IV) the failure by the Company, to pay to the Executive
any portion of the Executive's compensation within seven (7) days
of the date such compensation is due;
(V) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately
prior to the Change in Control or the Major Transaction which is
material to the Executive's total compensation, including but not
limited to the Supplemental Income Security Plan, the Phantom
Stock Unit Plan and the Family Protector Plan, or any substitute
plans adopted prior to the Change in Control or Major
Transaction, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to continue
the Executive's participation therein (or in such substitute or
alternative plan) on a basis not substantially less favorable,
both in terms of the amount of benefits provided and the level of
the Executive's participation relative to other participants, as
existed at the time of the Change in Control or Major
Transaction;
(VI) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medical, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
or the Major Transaction, the taking of any action by the company
which would directly or indirectly materially reduce any of
such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control or Major Transaction, or the failure by the Company to
provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of service
with the Company in accordance with the Company's normal vacation
policy in effect at the time of the Change in Control or Major
Transaction; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; for
purposes of this Agreement, no such purported termination shall
be effective.
The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment
shall not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder.
(N) A "Gross-up Payment" shall have the meaning given in Section
6.02 hereof.
(0) A "Major Transaction" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall
have been satisfied:
(I) the shareholders of the Company approve a merger or
consolidation of the Company with any corporation or business
trust, other than (i) a merger or consolidation which would
result in the individuals who prior to such merger or
consolidation constitute the Board constituting at least two-
thirds (2/3) of the board of directors of the Company or the
surviving or succeeding entity immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person acquires more than 20% of the
combined voting power of the Company's then outstanding
securities; or
(II) the shareholders of the Company approve a plan of
complete liquidation of the Company; or
(III) the shareholders of the Company approve an agreement
for the sale or disposition by the Company of all or
substantially all the Company's assets, other than a sale or
disposition which would result in the individuals who prior to
such sale or disposition constitute the Board constituting at
least two-thirds (2/3) of the board of directors of the Person
purchasing such assets immediately after such sale or
disposition.
(P) "Normal Retirement Age" shall mean the earliest age at which
the Executive may commence Retirement and become entitled to an
unreduced pension under the IRS qualified Pension Plan.
(Q) "Notice of Termination" shall have the meaning stated in
Section 7.1 hereof.
(R) "Pension Plan" shall mean the Company's IRS Qualified Plan
and any successor thereto and any other agreement entered into between
the Executive and the Company which is designed to provide the
Executive with supplemental retirement benefits.
(S) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof; however, a Person shall not include (i) the Company, (ii) a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of
shares of the Company.
(T) "Potential Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(II) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(III) any Person who is or becomes the Beneficial owner,
directly or indirectly, of securities of the Company representing
10%. or more of the combined voting power of the Company's then
outstanding securities, increases such Person's beneficial
ownership of such securities by 5% or more over the percentage so
owned by such Person on the date hereof unless such Person has
reported or is required to report such ownership (but less than
25%) on Schedule 13G under the Exchange Act (or any comparable or
successor report) or on Schedule 13D under the Exchange Act (or
any comparable or successor report) which Schedule 13D does not
state any intention to or reserve the right to control or
influence the management or policies of the Company or engage in
any of the actions specified in Item 4 of such Schedule (other
than the disposition of the common shares) and, within 10
business days of being requested by the Company to advise it
regarding the same, certifies to the Company that such Person
acquired such securities of the Company in excess of 14.9%
inadvertently and who, together with its affiliates, thereafter
does not acquire additional securities while the Beneficial Owner
of 15% or more of the securities then outstanding; provided,
however, that if the Person requested to so certify fails to do
so within 10 business days, then such occurrence shall become a
Potential Change in Control immediately after such 10 business
day period; or
(IV) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
(U) "Potential Major Transaction" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Major Transaction;
(II) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Major Transaction; or
(III) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Major Transaction has
occurred.
(V) "Retirement" shall be deemed the reason for the termination
by the Company or the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's written
mandatory retirement policy, if any, as in effect immediately prior to
the Change in Control or Major Transaction, or in accordance with any
retirement arrangement established with the Executive's written
consent with respect to the Executive.
(W) "Severance Payments" shall mean those payments described in
Section 6.1 hereof.
(X) "Total Payments" shall mean those payments described in
Section 6.2 hereof.
NORTHWESTERN PUBLIC SERVICE COMPANY
By______________________________________
M. D. Lewis
President & CEO
________________________________________
Executive
Exhibit 10(a)(7)
NORTHWESTERN PUBLIC SERVICE COMPANY
NorthSTAR PLAN
I. Objective
The Northwestern Public Service Company NorthSTAR Plan ("Plan") is
established to accomplish the following objectives: (1) to motivate and
reward outstanding performance by Northwestern Public Service Company (the
"Company") and its employees by providing additional compensation to
eligible employees who influence the profitability of the Company; (2) to
compare the Company's performance with a group of regional utilities; (3)
to compare the Company's performance to established annual objectives; (4)
to compare individual performance to established annual objectives; (5) to
focus on stockholder and ratepayer interests and (6) to support long-term
objectives by achieving short-term goals.
II. Administration
The Plan shall be administered by the Company. The Compensation
Committee ("Committee") of the Company's Board of Directors ("Board"),
shall have responsibility and authority with respect to the Plan, including
the following: (1) approving performance measures, the measurement scale
used, and the comparison utilities selected; (2) reviewing eligibility for
Plan participation; (3) approving the size of the performance fund
("Performance Fund") and individual levels of award opportunities; and (4)
reviewing and approving awards for all Executive Officers.
III. Eligibility for Participation
Employees eligible to participate in the Plan are those full-time
employees who have completed one year of service with the Company. To be
eligible for an award, an employee must be employed with the Company on
December 31st of the year for which the award is based, except as hereafter
provided in Subsection (b).
All Participants will be eligible to participate in the Plan for that
calendar year unless any of the following circumstances occur:
(a) The Participant at any time is discharged from employment with
the Company for cause ("Cause"). "Cause" shall mean (i) a Participant's
conviction of any criminal violation involving dishonesty, fraud, or breach
of trust, or (ii) a Participant's willful engagement in any misconduct in
the performance of his duty that materially injures the Company, or (iii)
failure to adequately perform his duties; or
(b) The Participant's employment with the Company has terminated for
any reason other than death, permanent disability, or retirement on or
after the age of sixty-five (65) years or such earlier date as the Board,
in its discretion, shall designate. For the purposes of this Section, a
Participant will be considered to terminate employment by reason of
"permanent disability" if, in the determination of the Board, he is subject
to a physical or mental condition which is expected to render the
Participant unable to perform his usual duties or any comparable duties for
the Company.
In the event that an eligible Participant is not employed for an
entire plan year, or for the first year of eligibility, his award shall be
pro-rated to reflect the proportionate part of the plan year during which
he was actually employed or eligible.
IV. Determination of Performance Award Amounts
(a) A Performance Award ("Award") shall be awarded under the Plan to
each Participant, within the Range of Award Opportunities set forth on
Exhibit I attached hereto, based on performance for the applicable calendar
year which shall be determined by reference to the measures of performance
for that year and weighting as set forth on Exhibit II attached hereto and
detailed as follows:
(i) Company Performance vs. Peer Utilities (50% weight)
The Company will compare itself against peer utilities set
forth on Exhibit II for (1) Change in Average Rates, defined as
total retail revenues, divided by retail sales in kilowatt-hours,
for electric operations, and total revenue from ultimate
customers, divided by volume of gas sold to ultimate customers,
for gas operations, and for (2) Change in Operating Expenses,
defined as total operating expenses per unit of energy furnished
to customers. The results of both electric and gas computations,
in relation to a peer group, will be weighted in proportion to
the Company's operating income from each source.
The Company will rank itself percentile-wise against the
peer utilities in terms of each of the above two measures. The
average percentile ranking will determine the overall degree of
achievement of peer-based goals and the degree to which this
portion of the annual incentive is earned. If the average
percentile ranking is fifty percent (50%), the target award level
will be earned on the peer-based measures. If the Company ranks
first among peers in terms of both measures (100th percentile),
then the maximum award will be earned. If the average percentile
ranking is twenty-five percent (25%), then the threshold award
level will be earned with respect to the peer-based portion of
the annual incentive. A ranking below the twenty-fifth
percentile will eliminate this portion of the bonus.
(ii) Company Performance vs. Annual Objective (25% Weight)
Under this objective, Earnings Per Share, will be the
primary earnings per share of the Company as it appears in the
approved budget for the Company.
Company management will develop a schedule for translating
results of the objective into threshold, target and maximum
achievement levels. This schedule must be approved by the
Compensation Committee.
(iii) Performance vs. Individual Objectives (25% Weight)
Each year, Participants will establish three or four major
individual and department goals for review and approval by their
supervisor and by the Chief Executive Officer. At the end of
each year, Participants will provide to their supervisor and to
the Chief Executive Officer an explanation regarding the degree
to which each goal has been achieved. The supervisor and the
Chief Executive Officer will review the Participant's
explanations and will then determine the achievement level for
each Participant.
(b) At the end of each calendar year, percentages will be computed
and totaled for each Participant for each of the Measures of Performance in
Exhibit II. Each Participant will receive an Award for the applicable
calendar year equal to a percentage of his base salary as shown on Exhibit
I. Threshold is defined as a composite twenty-five percentage level,
Target as a composite fifty percentage level, and Maximum as a composite
one hundred percentage level.
The total amount of all awards made to Participants shall not exceed
seven percent (7%) of the Company's net after tax income for that year.
(c) All Executive Officer Awards shall be reviewed, and must be
approved, by the Compensation Committee. All Awards for other Company
employees shall be reviewed, and must be approved, by the Chief Executive
Officer of the Company.
(d) Annual base salary adjustments, as appropriate, will continue to
be made by the Company to individual employees predicated on merit,
performance, cost-of-living and such other factors as the Company normally
has considered without regard to Awards awarded under the Plan.
(e) Awards shall be paid to each Participant in a single sum as
promptly as practicable after approved.
V. Participant's Death
(a) In the event of the death of the Participant, any unpaid Award
held for the Participant shall be paid as promptly as practicable in a
single sum to the Participant's designated Beneficiary.
(b) In the event the Participant has not designated a Beneficiary, or
if no designated Beneficiary is living at the date of death of the
Participant, the unpaid Award shall be paid as promptly as practicable in a
single sum to the duly appointed executor or administrator of the
Participant's estate.
(c) For purposes of this Section, "Beneficiary" shall mean any
individual, corporation, partnership, association, trust or unincorporated
organization designated by a Participant in writing filed with the Company
as the recipient of the Participant's Award in the event of the
Participant's death prior to its payment. Such designation may be changed
by the Participant at any time in writing filed with the Company without
the consent of or notice to any Beneficiary previously designated.
VI. Continuity of the Plan
Although it is the present intention of the Company to continue the
Plan in effect for an indefinite period of time, the Board reserves the
right to terminate the Plan in its entirety as of the end of any calendar
year or other fiscal year of the Company or to modify the Plan as it exists
from time to time, provided that no such action shall adversely affect any
Awards previously awarded under the Plan.
VII. Miscellaneous Provisions
(a) No Award payable under the Plan shall be subject in any manner to
transfer, assignment, pledge, or hypothecation in any manner by operation
of law or otherwise, other than by will or by the laws of descent and
distribution nor be subject to execution, attachment or similar process.
(b) Neither the Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employ
of the Company.
(c) The Plan shall at all times be entirely unfunded and no provision
shall at any time be made with respect to segregating assets of the Company
for payment of any Awards hereunder. No Participant or any other person
shall have any interest in any particular assets of the Company by reason
of the right to receive an Award under the Plan and any such Participant or
any other person shall have only the rights of a general unsecured creditor
of the Company with respect to any rights under the Plan.
(d) Except when otherwise required by the context, any masculine
terminology in this document shall include the feminine, and any singular
terminology shall include the plural.
(e) This Plan shall be governed by the laws of the State of South
Dakota.
IN WITNESS WHEREOF, the Company has executed this revised Annual
Performance Incentive Plan as of the 3rd day of May, 1995.
NORTHWESTERN PUBLIC SERVICE COMPANY
By______________________________________
M. D. Lewis
President & CEO
By______________________________________
Raymond M. Schutz, Chairman
Nominating and Compensation Committee
EXHIBIT I
May 3, 1995
Range of Award Opportunities
(% of Base Salary)
Position Threshold Target Maximum
Group I:
President & CEO 20% 25% 30%
Group II:
Senior Executive Officers* 15% 20% 25%
Group III:
Other Executive Officers 10% 15% 20%
Group IV:
Manager Level Employees 5% 10% 15%
Group V:
Salaried-Non Manager 2.5% 5% 7.5%
Group VI:
Hourly 2% 4% 6%
* Vice President - Energy Services, Vice President - Energy Operations,
Vice President - Corporate Services, and Vice President - Finance and
Corporate Development
EXHIBIT II
May 3, 1995
MEASURES OF PERFORMANCE
Performance will be measured in the following three ways for purposes of
determining awards under the Plan, with weightings placed on each as
indicated.
1. Company performance vs. peer utilities* (50% weight)
2. Company performance vs. annual objectives (25% weight)
3. Individual performance vs. objectives (25% weight)
* Peer Utility Companies
Black Hills Corporation
IES Industries, Inc.
Interstate Power Company
Madison Gas & Electric Company
MDU Resources Group, Inc.
Midwest Resources
Minnesota Power
Otter Tail Power Company
St. Joseph Light & Power Company
Southern Indiana Gas & Electric Company
Management's Discussion and Analysis
Northwestern Public Service is an energy distribution company with core
operations engaged in the electric, natural gas, and propane businesses.
The Company generates and distributes electric energy to 55,000 customers
in eastern South Dakota. It also purchases and distributes natural gas to
76,000 customers in eastern South Dakota and four communities in Nebraska.
In August 1995, the Company acquired Synergy Group, Inc., a retail propane
distributor in the eastern and south-central regions of the United States.
Late in 1995, two smaller propane companies were acquired: Myers Propane
Gas Company and Western Gas. Propane complements the Company's electric and
natural gas distribution businesses and adds geographical diversity to its
operations with more than 180,000 customers and operations in 17 states.
Unlike the Company's electric and natural gas businesses, propane
distribution rates and service areas are unregulated.
Weather
Weather patterns have a material impact on the Company's operating
performance. Because natural gas and propane are heavily used for
residential and commercial heating, the demand for these products depends
upon weather patterns throughout the Company's service area. With a larger
proportion of its operations related to seasonal natural gas and propane
sales in 1996, the distribution of the Company's quarterly operating
performance will be different than in historical periods. A significantly
greater portion of the Company's future operating income is expected to be
recognized in the first and fourth quarters related to higher revenues from
the heating season. Operating income for the second and third quarters is
expected to be less than historical periods.
Earnings Growth
Earnings for 1995 were $18.0 million or $2.21 per share, compared to $15.3
million or $2.00 per share for 1994. The 10.5% earnings per share increase
in 1995 was primarily due to an increase in retail electric sales, modest
gas rate relief, and increased contributions from nonregulated operations,
principally propane. The Company issued 1.2 million additional shares of
common stock in 1995 related to the propane acquisitions. Earnings per
share for 1995 reflect 6% more average shares outstanding.
Earnings in 1994 were $2.00 compared to $1.96 in 1993. The increase was
primarily due to greater electric retail sales and increased contributions
from nonregulated businesses.
Dividend Enhancement
In November 1994, the Company's Board of Directors elected to increase
dividends four cents a share to $1.70. Subsequently, in November 1995, the
Board approved an increase in annual dividends per share from $1.70 to
$1.76. The Company's Certificate of Incorporation provides for the payment
of dividends on Common Stock out of retained earnings provided common
equity remains at least 25% of capitalization after payment of dividends.
The Company's financial strength, the success of its growth strategies, and
competitive changes in the industry will be factors to be considered when
evaluating future dividend payments.
Business Segment Summary
Increase Increase
Year Ended December 31 1995 1994 (Decrease) 1993 (Decrease)
------- ------- ------------ ------ ------------
REVENUES
Electric $74,857 $73,077 $ 1,780 2.4% $70,105 $2,972 4.2%
Gas 64,483 62,141 2,342 3.8% 65,018 (2,877) (4.4%)
Propane 38,883 - 38,883 - - - -
Manufacturing 26,747 22,047 4,700 21.3% 18,134 3,913 21.6%
OPERATING INCOME
Electric $26,003 $25,662$ 341 1.3% $21,752 $3,910 18.0%
Gas 3,862 2,540 1,322 52.0% 3,903 (1,363)(34.9%)
Propane 5,604 - 5,604 - - - -
Manufacturing 2,628 2,334 294 12.6% 1,618 716 44.3%
OPERATING DATA
Electric sales-
retail (mwh) 1,071 1,019 52 5.1% 964 55 5.7%
Gas throughput
(000 mmbtu) 15,204 14,750 454 3.1% 14,811 (61) (0.4%)
Propane sales
(000 gallons) 37,805 - 37,805 - - - -
- --------------------
Result of Operations
- --------------------
Electric
(graph of information in following table)
Electric Retail Sales
(000'S)
-----------------------
1991 936,368
1992 894,077
1993 964,477
1994 1,018,509
1995 1,071,328
(end of graph)
Increases in electric revenues reflect the effects of a warmer summer. The
Company set a new record for peak electric demand during the summer of 1995
exceeding the previous peak record set in 1991 by 8%. Retail electric kwh
sales increased by 5.1% in 1995, and residential customers' average annual
kwh use increased 5.2% from 8,859 kwh in 1994 to 9,316 kwh in 1995. Fuel-
related costs were comparable in 1995 with the increase in electric
revenue. Customers began to realize benefits from a new lower-cost sub-
bituminous coal contract for the Company's jointly owned Big Stone Plant
which became effective in August 1995. Combined with plant efficiency
improvements, the annual fuel cost savings are expected to be in excess of
$2.2 million. These savings are passed back to customers through the
operation of the fuel adjustment clause.
The increase in electric operating income reflects the higher retail sales,
offset by slightly higher operating expenses. Other operating expenses
increased primarily due to growth-related costs in expanded energy services
and marketing functions. The operating expense increase also includes the
initiation of incentive compensation programs for all employees which links
pay to performance. Maintenance expense declined slightly while
depreciation and property taxes reflect the increase in depreciable plant.
1994 vs. 1993. In 1994, revenue increases were related to a 5.7% increase
in retail kwh sales over 1993. The increase in electric operating income
was related to increased sales and lower operating costs. Maintenance
decreased due primarily to lower electric transmission and distribution
expenditures. Depreciation increases were attributed to an increase in
construction activity.
Natural Gas
(graph of information in following table)
Gas Throughput
000mmbtu
---------------------
1991 13,236
1992 12,340
1993 14,811
1994 14,750
1995 15,204
(end of graph)
One of the predominant factors affecting the Company's gas operations is
weather patterns during the winter heating season. Because natural gas is
heavily used for residential and commercial heating, the demand for this
product depends upon weather conditions. In 1995, the increase in natural
gas revenues over 1994 reflects the effects of rate increases, growth in
the number of customers and slightly cooler weather. Gas revenues include
a 6.2% overall rate increase in South Dakota implemented on November 15,
1994, and an 8.3% overall increase in Nebraska effective April 1, 1995.
Customers increased 2% over 1994.
The increase in gas operating income reflects a 3.1% increase in
throughput, effects of rate increases, offset by slightly higher operating
expenses. As discussed above, the increase in other operating expenses was
primarily due to growth-related costs in the expanded energy services and
marketing functions and incentive compensation programs. Maintenance
expense declined slightly while depreciation and property taxes reflect the
increase in depreciable plant.
1994 vs. 1993. Warmer weather patterns during the heating season resulted
in a 4.4% decrease in gas revenues offset slightly by a rate increase
implemented in South Dakota late in 1994. The decrease in operating income
was related to higher gas production and distribution expenses.
Depreciation increases were attributed to an increase in construction
activity.
Propane
(graph of information in following table)
Revenue Growth (000's)
Electric Natural Gas Manufacturing Propane
-------- ----------- ------------- -------
1991 67,958 54,942 - -
1992 65,628 52,216 1,353 -
1993 70,105 65,018 18,134 -
1994 73,077 62,141 22,047 -
1995 74,858 64,483 26,747 38,883
(end of graph)
Propane revenues include Synergy Group, Inc. acquired August 15, 1995,
Myers Propane Gas Company acquired on December 7, 1995, and Western Gas
acquired November 20, 1995. Since August, weather throughout the Company's
propane service area was 3% cooler than normal and 19% cooler than the same
period in 1994. Because of the heavy use of propane for heating, propane
sales are extremely weather sensitive. Synergy was acquired in the summer
which traditionally is a net loss period in the industry; the majority of
propane revenues occur in the first and fourth quarters when propane is
heavily sold for residential and commercial heating.
Operating revenue from propane sales was $38.9 million on sales of 37.8
million gallons. Propane revenues and earnings are consolidated with
Northwestern's utility and other diversified businesses.
The acquisition of the propane properties was made in association with
Empire Gas Corporation, a large propane distribution company headquartered
in Lebanon, Missouri, which has a management team experienced in the retail
propane distribution business. With Northwestern, Empire Gas provides
joint oversight and management of the properties acquired. Empire Gas
provides administrative and operating management services to all propane
properties including accounting, human resources, marketing, management
information systems, and propane supply and transportation functions. In
accordance with the Company's plans upon the acquisition of Synergy,
substantial changes were made in the management and operation of the
acquired business in order to achieve improvement in the results of
operations. Among the cost efficiency measures put into place to reduce
Synergy's operating, selling, and administrative expenses were the
elimination of employee positions, and corporate overhead and field
location operating expenses. The Synergy headquarters office operations in
Farmingdale, New York were closed in late November with corporate functions
consolidated with the Empire Gas corporate offices. Another significant
expense reduction was the elimination of compensation and lease expenses
previously paid to Synergy stockholders.
Manufacturing
Manufacturing revenues and operating income are related to the Company's
ownership interest in Lucht Inc., a company that manufactures photographic
processing and imaging equipment used by high-volume photo processing
laboratories. Operating income in 1995 increased by 12.6% over 1994
primarily due to acquisitions and an increase in sales of existing product
lines. Operating income in 1994 increased by 44.3% over 1993 when the
Company acquired the remaining 40% ownership interest not included in the
original acquisition.
Other Income Statement Items
Other income increased in 1995 over 1994 primarily due to greater
investment income related to the gain recognized from the sale of common
shares held by one of the Company's subsidiaries. The increase in interest
expense is primarily related to the issuance of $60 million general
mortgage bonds issued in August 1995 as a part of the Synergy acquisition
financing. Income taxes increased as the result of higher taxable income.
The increase in preferred dividends and the addition of minority interest
on preferred securities is related to the issuance of preferred securities
to finance the propane transactions.
- -------------------------------
Liquidity and Capital Resources
- -------------------------------
During 1995, cash flow from operations, net of dividends paid, together
with proceeds from external financing activities provided the funds for
construction expenditures, acquisitions, and other requirements.
Operating Activities
(graph of information in following table)
Cash Flows From
Operating Activities
------------------------
1991 24,874,754
1992 23,056,432
1993 24,262,799
1994 26,268,921
1995 35,366,960
(end of graph)
Cash flow from operating activities in 1995 increased 35% from 1994
primarily due to growth in the Company's earnings and propane acquisitions.
Liquidity is also increased through the availability of substantial cash
and investment balances. Cash equivalents and marketable securities
totaled $44.7 million, $39.2 million, and $39.1 million at December 31,
1995, 1994, and 1993.
Investment Activities - Financing Activities
The Company's principal investments and capital requirements in 1995 were
related to the acquisition of propane properties. During the third quarter
of 1995, the Company issued $60 million of 7.10% series general mortgage
bonds, maturing in 2005, 1.3 million shares of preferred securities of
subsidiary trust and 1.2 million shares of common stock.
The proceeds were used primarily for the acquisition of Synergy. In
December, the Company issued 42,890 shares of common stock and 11,500
shares of redeemable cumulative preferred stock related to the acquisition
of Myers Propane.
In August 1995, the holders of all series of the Company's First Mortgage
Bonds under the 1940 Mortgage Indenture (the 8.824% series due 1998, the
8.90% series due 1999, and the 6.99% series due 2002) agreed to exchange
those bonds for equivalent bonds under the 1993 General Mortgage Indenture.
The provisions of that indenture result in an increase in the amount of
bonds that can be issued on the basis of bonded property and increased
financing flexibility.
The Company will continue to review the economics of retiring or refunding
long-term debt and preferred stock to minimize long-term financing costs.
The Company's financial coverages are at levels in excess of those required
for the issuance of debt and preferred stock.
Working capital and other financial resources are also provided by unused
lines of credit, which are generally used to support commercial paper
borrowings, a primary source of short-term financing. At December 31,
1995, unused short-term lines of credit totaled $24 million. In addition,
the Company's nonregulated businesses maintain credit agreements with
various banks for revolving and term loans.
The consolidated capital structure at December 31, 1995 was 53% debt,
1% preferred stock, 8% preferred securities of subsidiary trust, and 38%
common equity as compared to 52% debt, 1% preferred stock, and 47% common
equity at year-end 1994. The Company's capital structure at December 31,
1995 includes the consolidation of $29 million of non-recourse debt of its
subsidiaries.
- --------------------
Capital Requirements
- --------------------
The Company's primary capital requirements include the funding of its
energy business construction and expansion programs, the funding of debt
and preferred stock retirements and sinking fund requirements, and the
funding of its corporate development and investment activities.
The emphasis of the Company's construction activities is to undertake those
projects that most efficiently serve the expanding needs of its customer
base, enhance energy delivery and reliability capabilities through system
replacement, expand its current customer base, and provide for the
reliability of energy supply. Capital expenditure plans are subject to
continual review and may be revised as a result of changing economic
conditions, variations in sales, environmental requirements, investment
opportunities, and other ongoing considerations.
Expenditures for construction activities for 1995, 1994, and 1993 were
$29.6 million, $22.7 million, and $20.0 million. Construction expenditures
during the last three years included expenditures related to an operations
center expected to provide cost savings and operating efficiencies through
consolidation of activities, the installation of an additional 43 mw of
internal peaking capacity, and the expansion of the Company's natural gas
system into additional communities in eastern South Dakota. In addition,
1995 included $4.7 million of capital expenditures related to propane.
Construction expenditures for 1996, excluding propane, are estimated to be
$16.0 million. The majority of the projected expenditures will be spent on
enhancements of the electric and gas distribution systems. Estimated
electric and natural gas related construction expenditures for the years
1996 through 2000 are expected to be $70.4 million. Nonregulated capital
expenditures for 1996 are estimated to be $6.5 million. Estimated
nonregulated capital expenditures for the years 1996 through 2000 are
expected to be $20.5 million.
Capital requirements for the mandatory retirement of long-term debt and
mandatory preferred stock sinking fund redemption totaled $600,000,
$600,000, and $180,000, for the years ended 1995, 1994, and 1993,
respectively. It is expected that such mandatory retirements will be
$580,000 in 1996, $570,000 in 1997, $20.6 million in 1998, $12.8 million in
1999, and $5.0 million in 2000.
The Company anticipates that future capital requirements will be met by
both internally generated cash flows and available external financing.
- -----------------------------
Competition and Business Risk
- -----------------------------
The electric and natural gas utility businesses continue to undergo
numerous transformations and the Company is operating in a rapidly
developing competitive marketplace. The passage of the National Energy
Policy Act of 1992 has accelerated competition in the electric business by
promoting competition in the industry at the wholesale level. Competition
in the Company's gas business was accelerated with the passage of the
Federal Energy Regulatory Commission's (FERC) Order 636 which resulted in
an unbundling of gas supply and services to customers, or separately-
priced, sale and transportation services.
The changes in the electric business are expected to be similar to those
experienced in the natural gas business over the last few years. The FERC,
which regulates interstate and wholesale electric transactions, has opened
up transmission grids and mandated that utilities must allow others equal
access to utility transmission systems. Various state regulatory bodies
are also supporting initiatives to redefine the electric energy market and
are experimenting with retail wheeling which gives some retail customers
the ability to choose their supplier of electricity. Traditionally,
utilities have been vertically integrated, providing bundled energy
services to customers. The potential for continued unbundling of energy
services exists, allowing customers to buy their own electricity and
natural gas on the open market and having it delivered by the local
utility.
The growing pace of competition in the energy industry has been a primary
focus of management over the last few years. The Company's future financial
performance will be dependent on the effective execution of operating
strategies to address a more competitive and changing energy marketplace.
Business strategies focus on enhancing the Company's competitive position,
on expanding energy sales and markets with new products and services for
customers, and increasing shareholder value. The Company has realigned all
areas of the business to support energy services and marketing functions.
A new marketing plan, an expanded line of energy products and services,
additional staff and new technologies are part of the Company's strategy
for providing responsive and superior customer service.
To strengthen the Company's competitive position, new technology was added
that enables employees to better serve customers, costs are being reduced
by centralizing activities to improve efficiency and customer
responsiveness, and business processes are being reengineered to apply best-
practices methodology. Long-term supply contracts have been renegotiated
to lower customers' energy costs and new alliances help reduce expenses and
add innovative work approaches.
Energy distribution growth will be increasingly important to the Company in
the future. In addition to maintaining a strong competitive position in
electric, natural gas, and propane distribution businesses, the Company
intends to seek new investments and acquisitions that have long-term
growth potential. While such investments and acquisitions can involve
increased risk in comparison to the Company's energy distribution
businesses, they offer the potential for enhanced investment returns.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: The statements included in this Annual Report to Shareholders which
are not historical facts and which are forward looking statements involve
risks and uncertainties detailed in the Company's Securities and Exchange
Commission filings.
Report of Management
The management of Northwestern Public Service Company is responsible for
the integrity and objectivity of the financial information contained in
this annual report. The consolidated financial statements, which
necessarily include some amounts which are based on informed judgments and
estimates of management, have been prepared in conformity with generally
accepted accounting principles.
In meeting this responsibility, management maintains a system of internal
accounting controls which is designed to provide reasonable assurance that
the assets of the Company are safeguarded and that transactions are
executed in accordance with management's authorization and are recorded
properly for the preparation of financial statements. This system is
supported by written policies, selection and training of qualified
personnel, an appropriate segregation of responsibilities within the
organization, and a program of internal auditing.
The Board of Directors, through its Audit Committee which is comprised
entirely of outside directors, oversees management's responsibilities for
financial reporting. The Audit committee meets regularly with management,
the internal auditors, and the independent public accountants to make
inquiries as to the manner in which each is performing its
responsibilities. The independent public accountants and the internal audit
staff have unrestricted access to the Audit committee, without management's
presence, to discuss auditing, internal accounting control, and financial
reporting matters.
Arthur Andersen LLP, an independent public accounting firm, has been
engaged annually to perform an audit of the Company's financial statements.
Their audit is conducted in accordance with generally accepted auditing
standards and includes examining, on a test basis, supporting evidence,
assessing the Company's accounting principles and significant estimates
made by management, and evaluating the overall financial statement
presentation to the extent necessary to allow them to report on the
fairness, in all material respects, of the operating results and financial
condition of the Company.
Merle D. Lewis
President and Chief Executive Officer
Richard R. Hylland
Executive Vice President-Strategic Development
Report of Independent Public Accountants
To the Stockholders and Board of Directors of Northwestern Public Service
Company:
We have audited the accompanying consolidated balance sheets and statement
of capitalization of NORTHWESTERN PUBLIC SERVICE COMPANY (a Delaware
corporation) AND SUBSIDIARIES as of December 31, 1995 and 1994, and the
related consolidated statements of operations and retained earnings, and
cash flows for each of the three years in the period ended December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Northwestern Public
Service Company and Subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
Minneapolis, Minnesota
February 2, 1996
<PAGE>
CONSOLIDATED STATEMENT OF CAPITALIZATION
December 31
1995 1994
----------------- -----------------
Common Stock Equity:
Common stock, $3.50 par value,
20,000,000 shares authorized;
8,920,122 and 7,677,232 shares
outstanding, respectively $ 31,220,427 $ 26,870,312
Additional paid-in capital 56,594,914 29,922,847
Retained earnings 59,159,042 55,373,112
Unrealized gain on investments, net 5,703,808 2,538,669
----------------- -----------------
152,678,191 38% 114,704,940 47%
----------------- -----------------
Cumulative Preferred Stock:
$100 par value, 300,000 shares
authorized; 37,600 shares outstanding:
Nonredeemable - 4 1/2% Series 2,600,000 2,600,000
Redeemable -
5 1/4% Series 10,000 40,000
6 1/2% Series 1,150,000 -
Preferred Stock of Subsidiary:
No par value, 2,500 shares outstanding:
Redeemable - 2,500,000 -
----------------- -----------------
6,260,000 1% 2,640,000 1%
----------------- -----------------
Company obligated mandatorily redeemable
security of trust holding solely parent debentures:
8 1/8% Series due 2023 32,500,000 8% -
Long-Term Debt:
Series Due
- ---------------------------------
General mortgage bonds-
8.824% 1998 15,000,000 15,000,000
8.9% 1999 7,500,000 7,500,000
6.99% 2002 25,000,000 25,000,000
7.10% 2005 60,000,000 -
7% 2023 55,000,000 55,000,000
Pollution control obligations-
5.85%, Mercer Co., ND 2023 7,550,000 7,550,000
5.90%, Salix, IA 2023 4,000,000 4,000,000
5.90%, Grant Co., SD 2023 9,800,000 9,800,000
----------------- -----------------
183,850,000 46% 123,850,000 51%
Nonrecourse debt of subsidiaries 29,560,224 7% 3,772,500 1%
Less-Due within one year (570,000) - (570,000) -
----------------- -----------------
212,840,224 53% 127,052,500 52%
----------------- -----------------
Total Capitalization $ 404,278,415 100% $ 244,397,440 100%
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended December 31
1995 1994 1993
------------- ------------
Operating Activities:
Net income $ 19,305,569 $ 15,440,208 $ 15,191,073
Items not affecting cash:
Depreciation and amortization 14,633,154 12,438,501 11,805,763
Deferred income taxes 2,540,385 1,509,619 (1,398,578)
Investment tax credit (563,311) (564,801) (566,498)
Changes in current assets and
liabilities net of
effects from acquisitions:
Trade accounts receivable (3,897,932) (1,057,563) (2,145,693)
Inventories (327,160) (1,447,191) (111,703)
Other current assets (2,641,018) (259,826) (1,056,726)
Accounts payable (1,718,666) 2,699,294 (1,565,245)
Accrued taxes 937,553 (1,487,575) 2,393,850
Accrued interest 1,741,160 (30,991) 193,772
Other current liabilities 3,328,632 421,690 898,638
Other, net 2,028,594 (1,392,444) 624,146
------------- ------------ ------------
Cash flows from operating
activities 35,366,960 26,268,921 24,262,799
------------- ------------ ------------
Investment Activities:
Property additions (29,636,745) (22,680,856) (19,974,072)
Purchase of noncurrent
investments, net (5,669,229) (1,386,178) (6,923,488)
Purchase of net assets, net
of cash acquired (109,528,168) - (2,850,000)
Purchase of working capital, net (10,607,114) - -
Acquisition related costs (5,405,328) - -
------------- ------------ ------------
Cash flows for investment
activities (160,846,584) (24,067,034) (29,747,560)
------------- ------------ ------------
Financing Activities:
Dividends on common and
preferred stock (14,463,389) (12,940,868) (12,635,351)
Minority interest on preferred
securities of subsidiary trust (1,056,250) - -
Issuance of long-term and
nonrecourse subsidiary debt 86,599,820 1,100,000 76,453,842
Repayment of long-term debt (3,156,699) (677,500) (58,900,200)
Issuance of preferred securities
of subsidiary trust 31,213,261 - -
Issuance of preferred stock 3,650,000 - -
Retirement of preferred stock (30,000) (30,000) (30,000)
Issuance of common stock 31,022,182 - -
Commercial paper borrowings
(repayments) (6,300,000) 9,800,000 -
------------- ------------ ------------
Cash flows from (for)
financing activities 127,478,925 (2,748,368) 4,888,291
------------- ------------ ------------
Increase (Decrease) in Cash and
Cash Equivalents 1,999,301 (546,481) (596,470)
Cash and Cash Equivalents,
beginning of year 2,552,612 3,099,093 3,695,563
------------- ------------ ------------
Cash and Cash equivalents,
end of year $ 4,551,913 $ 2,552,612 $ 3,099,093
============= ============ ============
Supplemental Cash Flow Information:
Cash paid during the year for:
Income taxes $ 5,972,200 $ 7,382,119 $ 6,338,293
Interest 8,381,217 8,887,901 8,771,595
Noncash transactions during the year for:
Assumption of debt as part of
acquisition $ 2,344,603 $ - $ -
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
Years Ended December 31
1995 1994 1993
------------- ------------- -------------
Operating Revenues:
Electric $ 74,857,501 $ 73,077,431 $ 70,104,822
Gas 64,482,943 62,141,382 65,017,964
Propane 38,883,031 - -
Manufacturing 26,746,847 22,047,241 18,134,456
------------- ------------- -------------
204,970,322 157,266,054 153,257,242
------------- ------------- -------------
Operating Expenses:
Fuel and purchased power 14,304,791 14,552,637 13,961,306
Purchased gas sold 46,430,023 46,351,422 48,153,861
Other operating expenses 23,428,509 21,728,387 23,285,277
Propane costs 31,716,415 - -
Manufacturing costs 23,735,000 19,385,349 16,269,766
Maintenance 6,019,601 6,169,895 6,368,346
Depreciation and amortization 14,633,154 12,438,501 11,805,763
Property and other taxes 6,605,660 6,103,903 6,139,613
------------- ------------- -------------
166,873,153 126,730,094 125,983,932
------------- ------------- -------------
Operating Income:
Electric 26,003,006 25,661,632 21,752,231
Gas 3,861,608 2,540,091 3,903,313
Propane 5,604,307 - -
Manufacturing 2,628,248 2,334,237 1,617,766
------------- ------------- -------------
38,097,169 30,535,960 27,273,310
Investment Income and Other 3,029,376 2,443,420 4,430,466
Interest Expense, net (11,694,483) (9,669,829) (8,944,584)
------------- ------------- -------------
Income Before Income Taxes 29,432,062 23,309,551 22,759,192
Income Taxes (10,126,493) (7,869,343) (7,568,119)
------------- ------------- -------------
Net Income 19,305,569 15,440,208 15,191,073
Minority Interest on Preferred
Securities of Subsidiary Trust (1,056,250) - -
Dividends on Cumulative Preferred
Stock (258,939) (119,888) (121,463)
------------- ------------- -------------
Earnings on Common Stock 17,990,380 15,320,320 15,069,610
Retained Earnings, beginning of year 55,373,112 52,873,772 50,318,050
Dividends on Common Stock (14,204,450) (12,820,980) (12,513,888)
------------- ------------- -------------
Retained Earnings, end of year $ 59,159,042 $ 55,373,112 $ 52,873,772
============= ============= =============
Average Shares Outstanding 8,130,581 7,677,232 7,677,232
Earnings Per Average Common Share $ 2.21 $ 2.00 $ 1.96
============= ============= =============
Dividends Declared Per Average
Common Share $ 1.746 $ 1.670 $ 1.630
============= ============= =============
See Notes to Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
December 31
1995 1994
--------------- ----------------
ASSETS
Property:
Electric $ 336,961,117 $ 321,153,724
Gas 73,546,150 67,213,487
Propane 74,815,533 -
Manufacturing 2,048,725 1,558,484
--------------- ----------------
487,371,525 389,925,695
Less-Accumulated depreciation (150,469,310) (139,381,075)
--------------- ----------------
336,902,215 250,544,620
Current Assets:
Cash and cash equivalents 4,551,913 2,552,612
Trade accounts receivable, net 28,190,389 12,255,483
Receivables related to acquisition 23,357,538 -
Inventories
Coal and fuel oil 3,600,474 4,886,572
Materials and supplies 4,097,484 4,686,771
Manufacturing 5,660,357 5,064,859
Propane 8,287,443 -
Deferred gas costs 2,925,865 3,029,688
Other 9,948,238 3,694,912
--------------- ----------------
90,619,701 36,170,897
--------------- ----------------
Other Assets:
Investments 51,907,141 46,237,912
Deferred charges and other 30,240,083 22,881,641
Goodwill and other intangibles, net 49,052,343 3,230,570
--------------- ----------------
131,199,567 72,350,123
--------------- ----------------
$ 558,721,483 $ 359,065,640
=============== ================
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity $ 152,678,191 $ 114,704,940
Nonredeemable cumulative preferred stock 2,600,000 2,600,000
Redeemable cumulative preferred stock 3,660,000 40,000
Company obligated mandatorily redeemable
security of trust holding solely
parent debentures 32,500,000 -
Long-term debt 212,840,224 127,052,500
--------------- ----------------
404,278,415 244,397,440
--------------- ----------------
Commitments and Contingencies
(Notes 7, 8, 9)
Current Liabilities:
Commercial Paper 3,500,000 9,800,000
Long-term debt due within one year 570,000 570,000
Accounts payable 15,564,985 13,139,557
Accrued taxes 7,689,592 6,740,035
Accrued interest 4,738,243 2,915,084
Accrued Liabilities related to acquisition 12,750,424 -
Other 13,947,990 6,039,430
--------------- ----------------
58,761,234 39,204,106
--------------- ----------------
Deferred Credits:
Accumulated deferred income taxes 43,666,229 37,328,539
Unamortized investment tax credits 10,021,519 10,584,830
Other 41,994,086 27,550,725
--------------- ----------------
95,681,834 75,464,094
--------------- ----------------
$ 558,721,483 $ 359,065,640
See Notes to Consolidated Financial =============== ================
Statements
<PAGE>
Notes to Consolidated Financial Statement
- ---------------------------
1. Significant Accounting
Policies -
- ---------------------------
Nature of Operations:
Northwestern Public Service Company is an investor-owned combination
electric and natural gas utility with nonregulated propane and
manufacturing operations. The Company is engaged in the production,
purchase, transmission, distribution and sale of electricity and the
delivery of natural gas. The Company serves 55,310 electric customers in
eastern South Dakota and 76,464 natural gas customers in eastern South
Dakota and central Nebraska. To provide baseload electric power, the
Company jointly owns three coal-fired generating plants with other
utilities. The Company has various long-term supply agreements with its
natural gas suppliers for the purchase of natural gas in the normal course
of its gas operations. Through the acquisitions of Synergy Group, Inc.,
Western Gas, and Myers Propane Gas Company, the Company provides propane
delivery service to 184,500 customers located principally in the eastern
and south-central regions of the United States. The Company's
manufacturing operations are comprised of Lucht Inc., a wholly owned
subsidiary that develops, manufactures, and markets multi-image
photographic printers and other related equipment.
Basis of Consolidation:
The accompanying consolidated financial statements include the accounts of
Northwestern Public Service Company and all wholly and majority owned
subsidiaries. All significant intercompany balances and transactions have
been eliminated from the consolidated financial statements. The Company's
regulated businesses are subject to various state and federal agency
regulation. The accounting policies followed by these businesses are
generally subject to the Uniform System of Accounts of the Federal Energy
Regulatory Commission (FERC) which differ in some respects from those used
by nonregulated businesses. Manufacturing revenues and costs reflect the
operations of Lucht Inc. Propane revenues and costs reflect the operations
of Synergy Group, Inc. which was acquired effective August 15, 1995,
Western Gas, which was acquired effective November 20, 1995, and Myers
Propane Gas Company, which was acquired effective December 7, 1995.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Revenue Recognition and Gas Costs:
Electric and natural gas revenues are based on billings rendered to
customers rather than on meters read or energy delivered. Customers are
billed monthly on a cycle basis. Revenues from sales of propane are
recognized principally as fuel products are shipped or delivered to
customers. Manufacturing revenue is recognized as equipment is shipped or
delivered to customers.
The commodity cost portion of natural gas purchased from wholesale
suppliers but not yet billed to customers is charged to deferred gas costs.
This account is subsequently credited in future periods as customers are
billed for natural gas used in prior periods. This method has the
approximate effect of matching costs with revenues in any financial
reporting period. The demand cost portion of natural gas costs, which is
comprised of numerous components, is expensed as incurred.
The Company has various long-term gas supply agreements with its natural
gas suppliers for the purchase of natural gas in the normal course of its
gas operations. An agreement with Cibola Energy Services Corporation
provides supply, storage and transportation services of natural gas in
South Dakota, while an agreement with KN Gas Marketing, Inc. provides
similar services in Nebraska.
Allowance for Funds Used During Construction:
The allowance for funds used during construction includes the costs of
equity and borrowed funds used to finance construction which are
capitalized in accordance with rules prescribed by the FERC. In 1995,
1994, and 1993, allowance for equity funds was $134,000, $17,000, and
$32,000. Allowance for borrowed funds for 1995, 1994, and 1993 was
$362,000, $39,000, and $50,000.
Cash Equivalents:
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.
Depreciation and Maintenance:
Depreciation is computed using the straight-line method based on the
estimated useful lives of the various classes of property. Depreciation
provisions, as a percentage of the average balance of depreciable property,
were 3.61% in 1995, 3.39% in 1994, and 3.37% in 1993. The percentage for
1995 includes a propane-related depreciation provision and depreciable
property whose estimated useful lives range from 5 to 33 years.
Depreciation rates include a provision for the Company's share of the
estimated costs to decommission three coal-fired generating plants at the
end of the useful life of each plant. The annual provision for such costs
is included in depreciation expense, while the accumulated provisions are
included in other deferred credits.
The costs of maintenance, repairs, and replacements of minor property items
are charged to maintenance expense accounts. Costs of renewals and
betterments of electric and natural gas property units are charged to
property accounts. The costs of units of electric and natural gas property
removed from service, net of removal costs and salvage, are charged to
accumulated depreciation. No profit or loss is recognized in connection
with ordinary retirements of depreciable electric and natural gas property.
Goodwill and Other Intangibles:
The excess of the cost of businesses acquired over the fair market value of
all tangible and intangible assets acquired, net of liabilities assumed has
been recorded as goodwill which is being amortized on a straight-line basis
over 40 years. Other intangibles, consisting principally of costs of
covenants not to compete, are being amortized over the estimated periods
benefited which do not exceed 10 years. Goodwill and other intangibles are
reflected net of accumulated amortization recorded at December 31, 1995 and
1994, of $1,188,000 and $567,000, respectively.
It is the Company's policy to review goodwill and other intangible assets
for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable.
If such review indicates that the carrying amount is not recoverable, it is
the Company's policy to reduce the carrying amount of these assets to fair
value.
Investments and Fair Value of Financial Instruments:
The Company's investments consist primarily of corporate preferred and
common stocks. In addition, the Company has investments in privately held
entities and ventures, safe harbor leases, and various money market and tax
exempt investment programs. These investments are accounted for in
accordance with Statement of Financial Accounting Standards No. 115 (SFAS
115), "Accounting for Certain Investments in Debt and Equity Securities".
SFAS 115 requires that certain investments in debt and equity securities be
reported at fair value.
The Company's securities are classified under the provisions of SFAS 115.
As of December 31, 1995, the fair value, cost, and the gross unrealized
gain of the Company's preferred stock investments, classified as available
for sale, were $37,746,000, $37,592,000, and $154,000, respectively. The
fair value, cost, and the gross unrealized gains on the Company's
marketable equity securities, classified as available for sale, were
$9,892,000, $1,271,000, and $8,621,000, respectively. As of December 31,
1994, the fair value, cost, and the gross unrealized holding loss of the
Company's preferred stock, classified as available for sale, were
$31,742,000, $34,948,000, and $3,206,000, respectively. The fair value,
cost, and the gross unrealized gains on the Company's marketable
securities, classified as available for sale, were $8,480,000, $1,368,000,
and $7,112,000, respectively. The unrealized gain, net of tax, at December
31, 1995 and 1994 was $5,704,000 and $2,539,000, respectively. Held to
maturity securities are reported at cost, which approximated fair value and
at December 31, 1995 and 1994 was $4,269,000 and $6,016,000, respectively.
The Company uses the specific identification method for determining the
cost basis of its investments in available for sale securities. Gross
proceeds and realized gains and losses on sales of its available for sale
securities were not material in 1995 and 1994.
Based on current market rates for debt of similar credit quality and
remaining maturities or quoted market prices for certain issues, the face
value of the Company's long-term debt approximates its market value.
Income Taxes:
Deferred income taxes relate primarily to the difference between book and
tax methods of depreciating property, taxable income derived from safe
harbor leases, the difference in the recognition of revenues for book and
tax purposes, and natural gas costs which are deferred for book purposes
but expensed currently for tax purposes.
For book purposes, investment tax credits were deferred and are being
amortized as a reduction of income tax expense over the useful lives of the
property which generated the credits.
Statement of Financial Accounting Standards No. 121:
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of", which
establishes new accounting standards for the impairment of long-lived
assets. The statement is effective for fiscal years beginning after
December 15, 1995. While the Company has not performed a detailed analysis
of the impact of the statement, management does not expect that the
adoption, which will occur in 1996, will have a material effect on
financial position or results of operations.
Statement of Financial Accounting Standards No. 123:
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation", was issued in October 1995 and effective for fiscal
years beginning after December 15, 1995. This statement will have no impact
on the Company's results of operations or financial position.
Reclassifications:
Certain 1994 and 1993 amounts have been reclassified to conform to the 1995
presentation. Such reclassifications had no impact on net income and common
stock equity as previously reported.
- ---------------------------
2. Business Acquisitions -
- ---------------------------
On August 15, 1995, the Company completed its acquisition of Synergy Group
Incorporated (Synergy), a retail distributor of propane. Synergy maintained
152 retail branches serving approximately 200,000 customers in 23 states,
primarily in suburban and rural areas of the eastern and south-central
regions of the United States. In conjunction with the acquisition, the
Company sold certain retail property outlets to an unrelated third party.
The transaction represented an initial cash investment by the Company of
approximately $137.5 million, but after the sale of certain retail property
outlets, the total net cash acquisition investment by the Company was
$104.9 million. The Company made debt and preferred stock investments in
SYN Inc., the entity created to acquire Synergy, and Northwestern Growth
Corporation, one of the Company's wholly owned subsidiaries, owns control
of SYN Inc. common stock. The acquisition was accounted for under the
purchase method of accounting. The total net purchase price was comprised
of consideration paid of $104.9 million cash, certain securities issued,
certain liabilities assumed including long-term debt of $2.3 million, and
transaction related costs of $5.4 million. The cost in excess of the fair
value of the net tangible and intangible assets acquired of $50.6 million
has been classified as goodwill and is being amortized on a straight-line
method over 40 years. The allocation of the purchase price to the acquired
assets and liabilities of Synergy was based on preliminary estimated fair
value of the related assets and liabilities and is subject to adjustment as
further information becomes available. The Company has asserted claims
under the acquisition agreement for post-closing adjustments to reduce the
total consideration paid for the acquisition of Synergy. If these claims
are successful, an adjustment in the consideration paid for the acquisition
could result.
The Company's investments in SYN Inc. were funded primarily by financings
undertaken in 1995. During the third quarter of 1995, the Company issued
$60 million of 7.10% general mortgage bonds due August 1, 2005, 1.3 million
shares of
8 1/8% preferred securities of subsidiary trust, and 1.2 million shares of
common stock.
Effective November 20, 1995, SYN Inc. acquired control of Western Gas
(Western) for $2 million plus the value of certain current assets. Western
is a retail distributor of propane serving approximately 3,500 customers in
and around Edenton, North Carolina. The purchase price was comprised of
cash and a certain amount of seller financing. Effective December 7, 1995,
the Company acquired majority control of Myers Propane Gas Company (Myers)
through the issuance of 42,890 shares of common stock and 11,500 shares of
6 1/2% redeemable cumulative preferred stock. Myers is a retail distributor
of propane serving approximately 4,500 customers in and around Sandusky,
Ohio. The total purchase price of $4.8 million was comprised of the
securities issued by the Company and a certain amount of seller financing.
The acquisitions were accounted for under the purchase method of
accounting.The cost in excess of fair value of the net assets acquired of
$1.9 million has been classified as goodwill and is being amortized on a
straight-line method over 40 years.
The acquisitions of Synergy, Western, and Myers were made in association
with Empire Gas Corporation (Empire Gas), a large propane distribution
company headquartered in Lebanon, Missouri, which has a management team
experienced in the retail propane distribution business. Empire Gas has a
30% common stock ownership interest in SYN Inc. (after debt and preferred
stock obligations to the Company) and a management agreement between SYN
Inc. and Empire Gas has been executed whereby Empire Gas performs the
planning and management of the assets and business operations.
Had the acquisition of Synergy occurred on January 1, 1994 (the effect of
the Myers and Western acquisitions are immaterial), combined unaudited pro
forma results for the years ended December 31, 1995 and 1994 as prescribed
under Accounting Principles Board Opinion No. 16 (APB 16), "Business
Combinations", would have been: Revenues $262,239,000 and $256,645,000, net
income $19,993,000 and $9,674,000 and earnings per share $2.25 and $1.09.
The pro forma disclosures required under APB 16 are not indicative of past
or future operating results. Since the acquisition, the Company has
implemented significant cost reduction measures principally related to
elimination of certain employee positions, corporate administrative
expenses and other specifically identified operating expenses that have not
been reflected in the pro forma information under the provisions of APB 16.
- ---------------------------
3. Short-Term Borrowings -
- ---------------------------
The Company may issue short-term debt in the form of bank loans and
commercial paper as interim financing for general corporate purposes. The
bank loans may be obtained under short-term lines of credit which totaled
$24 million at December 31, 1995. The Company pays an annual fee
equivalent to 1/4% of the unused lines. There were no borrowings
outstanding at December 31, 1995 and 1994. At December 31, 1995, the
Company had outstanding $3.5 million of commercial paper.
- --------------------
4. Long-Term Debt -
- --------------------
Substantially all of the Company's utility plant is subject to the lien of
the indentures securing its general mortgage bonds and pollution control
obligations. General mortgage bonds of the Company may be issued in
amounts limited by property, earnings, and other provisions of the mortgage
indenture.
Lucht Inc. has a credit agreement with a bank whereby it may borrow up to
$8 million in revolving and term loans. A balance of $4,802,500 was
outstanding under the revolving and term loan as of December 31, 1995 at a
weighted average interest rate of 8.5%. Borrowings under the agreement are
collateralized by all receivables, inventories, property, and other assets
of Lucht, and are nonrecourse to the Company.
SYN Inc. has a credit agreement with a bank whereby it may borrow up to $25
million in revolving loans. A balance of $21,342,320 was outstanding under
the facility as of December 31, 1995, at a variable interest rate tied to a
certain Eurodollar index plus 2%. Borrowings under the agreement are
collateralized by SYN Inc. receivables and inventories and are nonrecourse
to the Company. The term of the facility ends December 31, 1997.
The balance of nonrecourse debt to subsidiaries is comprised of the
remaining debt assumed from the Synergy acquisition of $615,404 and
securities issued of $2 million as part of the Myers acquisition. In
addition, there was $800,000 of other subsidiary debt outstanding.
Annual scheduled retirements of the Company's long-term bond debt during
the next five years are $20,000,000 in 1998, $12,500,000 in 1999, and
$5,000,000 in 2000. Scheduled retirements of the Lucht long-term debt are
$570,000 in 1996, $570,000 in 1997, $570,000 in 1998, and $292,500 in 1999.
- -------------------------------
5. Capital Stock Transactions
and Retained Earnings
Availability -
- -------------------------------
As part of financing the Synergy acquisition, the Company issued 1.2
million shares of common stock and 1.3 million shares of 8 1/8% preferred
securities of subsidiary trust. In financing the Myers acquisition, the
Company issued 42,890 shares of common stock and 11,500 shares of
redeemable cumulative preferred stock. Preferred stock transactions for
the three years ended December 31, 1995, have also included redemptions to
satisfy mandatory sinking fund requirements.
With the release of the 1940 Mortgage Indenture in 1995, the only
restriction on the Company's ability to pay dividends on common stock is
limited by the Company's Restated Certificate of Incorporation whereby no
dividend declared shall cause common stock equity to be less than 25% of
total capitalization.
Under its credit agreement, SYN Inc. is limited in the payment of dividends
and interest related to the preferred stock and debt investments held by
the Company. Such payments may be made to the Company provided they do not
render SYN Inc. in default, as defined, of the credit agreement executed
with the bank and are subordinate to any indebtedness outstanding under the
credit agreement.
The following table summarizes the capital stock transactions that occurred
during the year (in thousands):
Paid-in
Preferred Common Capital
----------- -------- --------
Balance, 12/31/94 $2,640 $26,870 $29,923
Private placement* 1,150 150 1,000
Public offering* - 4,200 25,672
Mandatory sinking
fund redemption (30) - -
Subsidiary issuance 2,500 - -
----------- -------- --------
Balance, 12/31/95 $6,260 $31,220 $56,595
----------- -------- --------
*See Footnote 2.
- ------------------
6. Income Taxes -
- ------------------
Income tax expense is comprised of the following (in thousands):
1995 1994 1993
------- ------ ------
Federal income -
Current tax expense $ 7,849 $6,522 $9,038
Deferred tax (benefit)
expense 2,540 1,509 (1,399)
Investment tax credit (563) (565) (566)
State income 300 403 495
------- ------ ------
$10,126 $7,869 $7,568
------- ------ ------
The following table reconciles the Company's effective income tax rate to
the federal statutory rate:
1995 1994 1993
------- ------ ------
Federal statutory rate 35% 35% 35%
Amortization of
investment tax credit (2) (2) (2)
Dividends received
deduction (5) (3) (2)
Other, net 6 4 2
------- ------ ------
34% 34% 33%
------- ------ ------
The components of the net deferred federal income tax liability recognized
in the Company's Consolidated Balance Sheet are related to the following
temporary differences at December 31 (in thousands):
1995 1994
--------- ----------
Excess tax depreciation $(26,252) $(24,592)
Safe harbor leases (7,060) (8,233)
Property basis and
life differences (7,526) (7,526)
Asset sales (4,366) (4,766)
Regulatory asset (4,052) (4,052)
Regulatory liability 4,189 4,189
Unbilled revenue 3,857 3,882
Unamortized investment
tax credit 3,491 3,491
Unrealized gain
on investments (3,071) (1,367)
Other, net (2,876) 1,645
--------- ----------
$(43,666) $(37,329)
--------- ----------
- --------------------------
7. Jointly Owned Plants -
- --------------------------
The Company has an ownership interest in three major electric generating
plants, all of which are operated by other utility companies. The Company
has an undivided interest in these facilities and is responsible for its
proportionate share of the capital and operating costs while being entitled
to its proportionate share of the power generated. The Company's interest
in each plant is reflected in the
Consolidated Balance Sheet on a pro rata basis, and its share of operating
expenses is reflected in the Consolidated Statement of Income and Retained
Earnings. The participants each finance their own investment.
The Company has long-term coal contracts for delivery of lignite coal to
Coyote I and sub-bituminous coal to Neal #4. The lignite coal contract for
Big Stone expired in mid-1995, and the plant owners have negotiated and
secured a contract for Montana sub-bituminous coal for the period of mid-
1995 through 1999. The new sub-bituminous coal contract for Big Stone
requires minimum annual purchases of 1.2 million tons. The lignite contract
for Coyote I is a total requirements contract with a minimum obligation of
30,000 tons per week except during scheduled or forced outages. Neal #4
has a contract for delivery of sub-bituminous coal with an annual minimum
purchase requirement of 1.8 million tons. Information relating to the
Company's ownership interest in these facilities at December 31, 1995, is
as follows (dollars in thousands):
Big Stone Neal #4 Coyote I
---------- -------- ---------
Utility plant in service $47,150 $35,011 $45,502
Accumulated
depreciation $26,076 $15,945 $17,968
Construction work
in progress $1,583 $272 $232
Total plant capacity - mw 449 624 427
Company's share 23.4% 8.7% 10.0%
In-service date 1975 1979 1981
Coal contract
expiration date 1999 1998 2016
- ------------------------
8. Employee Retirement
Benefits -
- ------------------------
The Company maintains a noncontributory defined benefit pension plan
covering substantially all employees. The benefits to which an employee is
entitled under the plan are derived using a formula based on the number of
years of service and compensation levels as defined. The Company
determines the annual funding for its plan using the frozen initial
liability cost method. The Company's annual contribution is funded in
accordance with the requirements of ERISA. Assets of the plan consist
primarily of debt and equity securities.
The components of net periodic pension cost for the years ended
December 31, 1995, 1994, and 1993 were as follows (in thousands):
1995 1994 1993
--------- --------- ---------
Service cost $ 755 $ 948 $ 985
Interest cost on projected
benefit obligation 3,144 3,176 3,048
Actual return
on assets (10,082) 586 (2,970)
Net amortization
and deferral 6,475 (4,391) (886)
--------- --------- ---------
Net periodic
pension cost $ 292 $ 319 $ 177
--------- --------- ---------
The following table reflects the funded status of the Company's pension
plan as of December 31, 1995, 1994, and 1993 (in thousands):
1995 1994 1993
--------- --------- ---------
Actuarial present value of
Accumulated benefit obligation
Vested $ 39,946 $ 34,436 $ 34,052
Nonvested 1,417 1,197 1,528
--------- --------- ---------
41,363 35,633 35,580
--------- --------- ---------
Provision for future
pay increases 5,488 3,993 5,515
--------- --------- ---------
Projected benefit
obligation 46,851 39,626 41,095
Plan assets at
fair value 52,762 44,501 46,912
--------- --------- ---------
Projected benefit oblication
less than plan assets (5,911) (4,875) (5,817)
Unrecognized
transition obligation (1,547) (1,702) (1,856)
Unrecognized net gain 5,381 5,365 6,941
--------- --------- ---------
Prepaid pension cost $ (2,077) $ (1,212) $ ( 732)
--------- --------- ---------
The assumptions used in calculating the projected benefit obligation for
1995, 1994, and 1993 were as follows:
1995 1994 1993
--------- --------- ---------
Discount rate 7 3/4% 8 1/2% 8%
Expected rate of return
on assets 8 1/2% 8 1/2% 8 1/2%
Long-term rate of increase
in compensation levels 3% 4% 5%
The Company provides an employee savings plan which permits all employees
to defer receipt of compensation as provided in Section 401(k) of the
Internal Revenue Code. Under the plan, any employee may elect to direct up
to twelve percent of their gross compensation be contributed to the plan.
The Company contributes 50 cents for every one dollar contributed by the
employee, up to a maximum Company contribution of three percent of the
employee's gross compensation. Costs incurred under the plan were
$479,000, $468,000, and $442,000 in 1995, 1994, and 1993.The Company also
provides an Employee Stock Ownership Plan (ESOP) for full-time employees.
The ESOP is funded primarily with federal income tax savings which arise
from tax laws applicable to such employee benefit plans. Certain Company
contributions and shares of stock acquired by the ESOP are allocated to
participants' accounts in proportion to the compensation of employees
during the particular year for which allocation is made. Costs incurred
under the plan were $810,000, $705,000, and $757,000 in 1995, 1994, and
1993.
The Company also has various supplemental retirement plans for outside
directors and selected management employees. The plans are nonqualified
defined benefit plans that provide for certain amounts of salary
continuation in the event of death before or after retirement, or certain
supplemental retirement benefits in lieu of any death benefits. In
addition, the Company provides life insurance benefits to beneficiaries of
all eligible employees who represent a reasonable insurable risk. To
minimize the overall cost of plans providing life insurance benefits, the
Company has obtained life insurance coverage that is sufficient to fund
benefit obligations. Costs incurred under the plans were $648,000,
$552,000, and $544,000 in 1995, 1994, and 1993, respectively.
SYN Inc. provides an employee savings plan which permits all employees to
defer receipt of compensation as provided in Section 401(k) of the Internal
Revenue Code. Under the plan, any employee may elect to direct up to
fifteen percent of their gross compensation be contributed to the plan.
SYN Inc. contributes 25 cents for every one dollar contributed by the
employee, up to a maximum SYN Inc. contribution of four percent of the
employee's gross compensation. Costs incurred under the plan for the
partial year 1995 were $31,000.
- ---------------------------
9. Environmental Matters -
- ---------------------------
The Company is subject to environmental regulations from numerous entities.
The Clean Air Act Amendments of 1990 (the Act) stipulate limitations on
sulfur dioxide and nitrogen oxide emissions from coal-fired power plants.
The Company believes it can economically meet such sulfur dioxide emission
requirements at its generating plants by the required compliance dates and
that it is in compliance with all presently applicable environmental
protection requirements and regulations. The Company is also subject to
other environmental regulations including matters related to former
manufactured gas plant sites. During 1995, the Company remediated a site
located at Huron, South Dakota through thermal desorption of residues in
the soil. Adjustments of the Company's natural gas rates to reflect the
costs associated with the remediation were approved through the regulatory
process. The Company is pursuing recovery from insurance carriers. No
administrative or judicial proceedings involving the Company are now
pending or known by the Company to be contemplated under present
environmental protection requirements.
- --------------------------------
10. Cumulative Preferred Stock
and Preference Stock -
- --------------------------------
The Company's cumulative preferred stock, 5 1/4% Series, is subject to
mandatory redemption at par through an annual sinking fund requirement
through 1996. The provisions of the 6 1/2% Series stock contain a 5 year
put option exercisable by the holders of the securities and a 10 year
redemption option exercisable by the Company. In any event, redemption
will occur at par value. The preferred stock of subsidiary is redeemable
beginning July 1, 1999 at a redemption price of $1,075.00 per share. The
cumulative preferred stock, 4 1/2% Series, may be redeemed in whole or in
part at the option of the Board of Directors at any time upon at least 30
days notice at $110.00 per share, plus accrued dividends.
In the event of involuntary dissolution, all Company preferred stock
outstanding would have a preferential interest of $100 per share, plus
accumulated dividends, before any distribution to common stockholders.
The Company is also authorized to issue a maximum of 200,000 shares of
preference stock at a par value of $50 per share. No preference shares
have ever been issued.
- ---------------------------
11. Segments of Business -
- ---------------------------
The four primary segments of the Company's business are its electric,
natural gas, propane, and manufacturing operations. The following table
summarizes certain information specifically identifiable with each segment
as of or for the years ended December 31 (in thousands):
1995 1994 1993
---------- --------- ---------
Depreciation and
Amortization:
Electric $ 10,503 $ 10,115 $ 9,841
Gas 2,185 1,996 1,718
Propane 1,562 - -
Manufacturing 383 328 247
---------- --------- ---------
$ 14,633 $ 12,439 $ 11,806
---------- --------- ---------
Capital
Expenditures:
Electric $ 17,868 $ 16,023 $ 11,225
Gas 6,521 6,425 8,483
Propane 4,726 - -
Manufacturing 522 233 266
--------- --------- ---------
$ 29,637 $ 22,681 $ 19,974
--------- --------- ---------
Assets:
Identifiable -
Electric $218,006 $210,872 $206,962
Gas 59,384 52,008 45,296
Propane 173,665 - -
Manufacturing 16,409 13,843 11,352
Corporate assets 91,257 82,343 79,964
--------- --------- ---------
$558,721 $359,066 $343,574
--------- --------- ---------
Identifiable assets include all assets that are used directly in each
business segment. Corporate assets consist of assets not directly
assignable to a business segment, i.e., cash, investments, certain accounts
receivable, prepayments, and other miscellaneous current and deferred
assets.
- ------------------------------
12. Quarterly Financial Data
(unaudited) -
- ------------------------------
First Second Third Fourth
(thousands except per share amounts)
1995:
Operating revenues $50,754 $40,107 $45,548 $68,561
Operating income 12,929 6,679 6,908 11,581
Net income 7,103 3,049 3,140 6,014
Average shares 7,677 7,677 8,277 8,889
Earnings per average
common share $ .92 $ .39 $ .32 $ .59
-------------------------------------
1994:
Operating revenues $55,464 $33,757 $30,195 $37,850
Operating income 14,163 4,783 3,793 7,797
Net income 8,017 2,244 1,330 3,849
Average shares 7,677 7,677 7,677 7,677
Earnings per average
common share $ 1.04 $ .29 $ .17 $ .50
-------------------------------------
The 1995 quarterly earnings per average common share do not total to 1995
annual earnings per average common share due to the effect of common stock
issuances during the year.
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 336,902,215
<OTHER-PROPERTY-AND-INVEST> 51,907,141
<TOTAL-CURRENT-ASSETS> 90,619,701
<TOTAL-DEFERRED-CHARGES> 79,292,426
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 558,721,483
<COMMON> 31,220,427
<CAPITAL-SURPLUS-PAID-IN> 56,594,914
<RETAINED-EARNINGS> 64,862,850
<TOTAL-COMMON-STOCKHOLDERS-EQ> 152,678,191
0
6,260,000
<LONG-TERM-DEBT-NET> 212,840,224
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 3,500,000
<LONG-TERM-DEBT-CURRENT-PORT> 570,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 182,873,068
<TOT-CAPITALIZATION-AND-LIAB> 558,721,483
<GROSS-OPERATING-REVENUE> 204,970,322
<INCOME-TAX-EXPENSE> 10,126,493
<OTHER-OPERATING-EXPENSES> 166,873,153
<TOTAL-OPERATING-EXPENSES> 176,999,646
<OPERATING-INCOME-LOSS> 27,970,676
<OTHER-INCOME-NET> 3,029,376
<INCOME-BEFORE-INTEREST-EXPEN> 31,000,052
<TOTAL-INTEREST-EXPENSE> 11,694,483
<NET-INCOME> 19,305,569
1,315,189
<EARNINGS-AVAILABLE-FOR-COMM> 17,990,380
<COMMON-STOCK-DIVIDENDS> 14,204,450
<TOTAL-INTEREST-ON-BONDS> 10,536,642
<CASH-FLOW-OPERATIONS> 35,366,960
<EPS-PRIMARY> 2.21
<EPS-DILUTED> 0
</TABLE>
