FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES ACT OF 1934
For Quarter Ended: December 31, 1997
Commission File Number: 2-95465-S
WESTAR FINANCIAL SERVICES INCORPORATED
successor to
REPUBLIC LEASING INCORPORATED
(Exact name of registrant as specified in its charter)
Washington 91-1715252
(State or other jurisdiction of (IRS Employer Identification Number)
Incorporation or organization)
The Republic Building; Olympia, WA 98501
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (360) 754-6227
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 and (2) has been subject to such
filing requirements for the past 90 days.
Yes: X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
Common Stock 1,889,300
Class Number of Shares Issued at January 31, 1998
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Westar Financial Services Incorporated and Subsidiaries
Consolidated Balance Sheet
as of December 31, 1997 and March 31, 1997
December 31 March 31
(Unaudited)
--------- --------
Cash $ 389,174 $ 191,380
Accounts receivable, net of allowance
for credit losses 177,963 333,497
Credit enhancement receivable, net of
allowance for credit losses 855,847 1,066,015
Net investment in direct finance leases, net of
allowance for credit losses 16,265,422 7,962,805
Deferred tax asset 2,965,629 2,263,075
Other assets 538,949 475,144
---------- ---------
$ 21,192,984 $12,291,916
========== ==========
Accounts payable $ 414,364 $ 560,356
Notes payable - bank 16,876,925 8,287,619
Notes payable - subordinated 2,253,424 1,027,048
Other liabilities 661,079 259,076
--------- ---------
20,205,792 10,134,099
---------- ----------
Redeemable preferred stock 4,148,000 4,248,000
--------- ---------
Common stock, no par value 3,090,795 2,874,795
Paid in capital - stock warrants 371,495
Accumulated deficit (6,623,098) (4,964,978)
---------- ---------
(3,160,808) (2,090,183)
---------- ---------
$ 21,192,984 $12,291,916
========== ==========
See accompanying notes to consolidated financial statements.
Westar Financial Services Incorporated and Subsidiaries
Consolidated Statement of Operations
For the three and nine months ended December 31, 1997 and 1996
(Unaudited)
Three Months Ended Nine Months Ended
1997 1996 1997 1996
Revenues:
Earned income-direct financing
leases $ 300,794 $ 124,929 $ 783,086 $ 386,547
Revenues from sales and
securitizations 163,812 9,001,087 458,014 19,500,750
Administrative fee income 20,493 109,793
Service fee income 27,528 15,570 75,821 19,570
Other income 5,074 12,859 15,013 87,208
---------- ---------- ---------- ---------
Total revenues 517,701 9,154,445 1,441,727 19,994,075
---------- ---------- ---------- ---------
Direct Costs:
Interest 378,021 124,426 898,522 399,301
Costs related to sales and
securitizations 175,119 9,540,245 446,282 20,734,795
Provision for credit losses 15,000 42,417 55,000 99,239
Other 24,335 15,743 93,677 34,485
---------- ---------- ---------- ---------
Total direct costs 592,475 9,722,831 1,493,481 21,267,820
---------- ---------- ---------- ---------
(74,774) (568,386) (51,754) (1,273,745)
General and
administrative expenses 581,479 507,010 1,643,092 1,518,710
---------- ---------- ---------- ---------
Operating loss before other expense
and income tax benefit (656,253) (1,075,396) (1,694,846) (2,792,455)
Non-cash interest expense 30,450 371,496
---------- ---------- ---------- ---------
Loss before income tax benefit (686,703) (1,075,396) (2,066,342) (2,792,455)
Income tax benefit 233,479 365,637 702,556 949,435
---------- ---------- ---------- ---------
Net Loss (453,224) (709,759) (1,363,786) (1,843,020)
Dividends on redeemable
preferred stock (97,864) (98,235) (294,334) (294,705)
---------- ---------- ---------- ---------
Net loss applicable to
common stock $(551,088) $(807,994)$(1,658,120)$(2,137,725)
========== ========== ========== ==========
Net loss per common share $(.31) $(.49) $(.93) $(1.38)
=== === === ====
Weighted average number
of shares 1,797,300 1,660,890 1,773,522 1,550,200
========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
Westar Financial Services Incorporated and Subsidiaries
Consolidated Statement of Cash Flows
For the nine months ended December 31, 1997 and 1996
(Unaudited)
1997 1996
---- ----
Net cash used in operating activities $ (1,224,726) $ (3,240,703)
---------- ----------
Cash flows from investing activities:
Recovery of equipment costs and residual
interests 1,434,376 20,338,556
Purchases of equipment for lease (9,783,121) (17,303,219)
Other 38,541 (34,808)
--------- ---------
Net cash provided by (used in)
investing activities (8,310,204) 3,000,529
--------- ---------
Cash flows from financing activities:
Redemption of redeemable preferred stock (100,000) (2,000)
Proceeds from issuance of common stock 216,000 2,044,600
Additions to notes payable to banks 10,863,558 15,750,971
Payments on notes payable to banks (2,274,252) (18,093,950)
Additions to notes payable - subordinated 1,768,738
Payments on notes payable - subordinated (542,362)
Increase in advances from affiliate 779,120
Dividends paid on preferred stock (198,958) (294,705)
--------- ---------
Net cash provided by financing activities 9,732,724 184,036
--------- ---------
Net increase in cash 197,794 (56,138)
Cash:
Beginning of period 191,380 190,841
--------- -------
End of period $ 389,174 $ 134,703
========= =======
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The Company's consolidated annual financial statements presented in the 1997
Annual Report on Form 10-K of the Company includes a summary of significant
accounting policies and should be read in conjunction with this Form 10-Q.
The consolidated financial statements include the accounts of Westar Auto
Holding Co., Inc. ("WestAH"), a 100%-owned subsidiary of the Company, Westar
Auto Finance L.L.C. ("WestAF"), a limited liability company owned 99% by the
Company and 1% by WestAH, and Westar Lease Origination Trust, a Massachusetts
business trust registered in the State of Washington beneficially owned by
WestAF. The statements for the three and nine months ended December 31, 1997
and 1996, are unaudited, condensed and do not contain all information required
by generally accepted accounting principles to be included in a full set of
annual financial statements. In the opinion of Management, all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the results of operations for such periods are included. All significant
inter-company balances and transactions have been eliminated. The results of
operations for the three and nine months ended December 31, 1997, are not
necessarily indicative of the results of operations for the entire year.
2. The Company paid cash for interest of $355,954 and $273,728 for the nine
months ended December 31, 1997 and 1996, respectively.
3. In April 1997, the Company entered into an agreement to borrow
$1,500,000 from a Preferred Shareholder/Director. The loan is to be repaid
no later than March 26, 1998 and bears interest at the rate of 6%. The
borrowings are subordinated to bank borrowings, guaranteed by one of the
Company's executive officers and are secured by certain Company assets. The
agreement grants the lender warrants exercisable for five years to purchase
3.75% of the Company's then outstanding common stock for $.01 a share. The
Company recorded a discount for the fair value of the warrants, which is the
difference between the fair value of the common stock and the exercise price.
This difference is amortized over the life of the note and charged to non-cash
interest expense.
4. During the nine months ended December 31, 1997, the Company issued 85,000
shares in various option transactions for $170,000 and 92,000 shares in warrant
transactions for $46,000.
5. Earnings per share are computed using the weighted-average number of common
shares outstanding for the three months and nine months ended December 31, 1997
and 1996, respectively. Net loss used in the computation of earnings per share
has been increased to include the redeemable preferred stock dividends. The
outstanding shares used in the earnings per share calculation have been
adjusted for the 2-for-1 stock split paid in June 1996. Earnings per share
does not include common stock warrants or common stock options as the effect
is anti-dilutive.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL POSITION
Nine months ended December 31, 1997 compared to nine months ended
December 31, 1996
- -----------------------------------------------------------------------------
Total revenues decreased by approximately $18,552,000, from $19,994,000 to
$1,442,000. The decrease is caused by a reduction in revenues from sales and
securitizations of $19,043,000 offset by an increase of earned income from
direct financing leases of $397,000 and an increase of other income of $94,000.
The decrease in revenues from sales and securitizations is due primarily to the
lack of Asset Backed Securitizations "ABS" compared to a year ago. The
Company is currently planning on securitization transactions occurring in
larger denominations compared to the prior year. The increase in direct
financing lease income is due to the increased volume of leases warehoused.
Other revenues increased primarily due to the increased revenues generated by
administrative and service fee income.
Direct costs decreased by $19,774,000, from $21,268,000 to $1,494,000. The
decrease was attributable to a decrease in costs related to sales and
securitizations of approximately $20,289,000 offset by an increase of direct
interest of approximately $499,000 and an increase in other expenses of
$16,000. The decrease in costs related to sales and securitizations is
explained in the preceding paragraph. Interest costs related to warehousing
leases prior to securitization increased due to the increased volume of leases
warehoused and in October of 1997 Bank One increased the borrowing base funding
percentage from 95% to 97%.
General and administrative expenses increased by approximately $124,000, from
$1,519,000 to $1,643,000. General and administrative costs increased due to
the following factors: interest expense increased by $101,000 due to
the issuance of the subordinated debt and increases in other operating lines
of credit; salaries and wages increased by $63,000 due to the hiring of a
vice-president of Risk Management and a Risk Manager; depreciation increased
by $46,000 due to the reclassification of sale/leaseback equipment. Other
operating costs, including consulting services, marketing incentives and travel
decreased during the nine months ended December 31, 1997.
The Company incurred a non-cash interest charge of $371,000 due to the
realization of a discount related to the issuance of subordinated debt with
warrants. The warrants are convertible into common stock at a discount from
market price of the common stock. The difference is recorded as non-cash
interest and is amortized over the term of the note and, when fully amortized,
will have no effect on stockholder's equity and operating income.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business requires substantial cash to implement its business
strategy, including cash to: (i) acquire vehicles, (ii) pay securitization
costs, including amounts required for credit enhancement (iii) satisfy working
capital requirements (iv) pay operating expenses, (v) satisfy debt service and
(vi) pay preferred stock dividends. Many of these cash requirements increase as
the Company's volume of leases increases. A substantial portion of the
Company's revenues in any period is represented by revenues from
securitizations of leases in such period, if any, but a portion of the cash
underlying such revenues is received over the life of the leases. The
Company expects to continue to operate with a negative cash flow as long as the
volume of leases continues to grow. The Company has historically funded
negative operating cash flows principally through borrowings from financial
institutions and sales of equity and debt securities.
The Company completed securitizations in both the second and third quarter
of fiscal year 1997 and has approximately $18.6 million of leases securitized
as of December 31, 1997. As the Company retains the servicing of leases
securitized, it receives servicing income from the securitized pools. The
Company is currently planning on securitization transactions occurring in
larger denominations.
The revolving credit facility provided by Bank One is the primary source of
cash to finance the acquisition of vehicle leases until they are securitized
through the facility made available by the Industrial Bank of Japan (IBJ).
During the third quarter of fiscal year ended 1997, Bank One increased
the revolving warehouse line of credit, subject to certain conditions, from
$12,000,000 to $25,000,000. After repayment of the related borrowings from Bank
One, the net proceeds from the IBJ securitizations provide a source of cash for
future acquisition of vehicle leases and general and administrative expenses.
The Company records a deferred tax asset related to its operating losses as it
believes that it has the ability to provide funding for the lease volumes
necessary to generate sufficient taxable income for realization of the deferred
tax asset.
During the nine months ended December 31, 1997, the Company issued 85,000
shares in various option transactions for $170,000 and 92,000 shares in warrant
transactions for $46,000.
In April 1997, the Company entered into an agreement to borrow $1,500,000 of
subordinated debt from a Preferred Shareholder/Director. The agreement grants
the lender warrants exercisable for five years to purchase 3.75% of the
Company's common stock for $.01 a share. The proceeds of the note were used
primarily to reduce notes payable - banks and notes payable - subordinated
debt.
It is the opinion of management that, as of December 31, 1997, the liquidity
sources discussed above are sufficient to meet the Company's immediate cash
flow needs for operations and for the acquisition of leases in the normal
course of business. It will be necessary, however, to obtain additional capital
through both private and public financing to provide for the Company's planned
growth over the next several years.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
During the nine months ended December 31, 1997, the Company issued 85,000
shares in various option transactions for $170,000 and 92,000 shares in warrant
transactions for $46,000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1997 Annual Meeting of Shareholder's was held on November 17,
1997 R.W. Christensen Jr. and David C. Soward were re-elected to the Board of
Directors for a three-year term. Directors, whose terms of office continued
subsequent to the meeting were Joel I. Davis, Charles S. Seel, Cathy L. Carlson
and Robert L. Lovely.
The number of votes cast for, against, withheld or abstained, as applicable,
for the Directors voted upon are summarized in the following table:
For Withhold
------------ ------------
R.W. Christensen Jr. 1,235,517 6,600
David C. Soward 1,235,287 6,830
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits
2. Plan of acquisition, reorganization, arrangement, liquidation
or succession
2.1 Plan and Agreement of Merger between Westar Financial
Services Incorporated and Republic Leasing Incorporated
incorporated by reference to the Exhibit to Form 10-K
dated June 11, 1996.
3. Articles of Incorporation and Bylaws
3.1 The Articles of Incorporation of Westar Financial
Services Incorporated filed on February 13, 1996
incorporated by reference to the Exhibit to Form 10-K
dated June 11, 1996.
3.2 The Bylaws of Westar Financial Services Incorporated
adopted on February 21, 1996 incorporated by reference to
the Exhibit to Form 10-K dated June 11, 1996.
4. Instruments defining the rights of security holders, including
indentures.
4.1 Designation of Rights and Preferences of Republic Leasing
Incorporated Series 1 Preferred Stock incorporated by
reference to the Exhibit to Form 10-K dated
June 11, 1996.
4.2 Designation of Rights and Preferences of Republic Leasing
Incorporated Series 2 Preferred Stock incorporated by
reference to the Exhibit to Form 10-K dated
June 11, 1996.
4.3 Designation of Rights and Preferences of Republic Leasing
Incorporated Series 3 Preferred Stock incorporated by
reference to the Exhibit to Form 10-K dated
June 11, 1996.
4.4 Designation of Rights and Preferences of Republic Leasing
Incorporated Series 4 Preferred Stock incorporated by
reference to the Exhibit to Form 10-K dated
June 11, 1996.
10. Material Contracts.
10.1 Republic Leasing Incorporated 1994 Stock Option Plan
incorporated by reference to the Exhibit to Form 10-K
dated June 11, 1996.
10.2 The Letter Agreement between Republic Leasing
Incorporated and The Industrial Bank of Japan, Limited
dated March 3, 1995 incorporated by reference to the
Exhibit to Form 10-K dated June 11, 1996.
10.3 Revolving Credit Agreement among Westar Auto Finance,
L.L.C. as Borrower, Republic Leasing Incorporated as
Guarantor and Bank One, Columbus, N.A., as Lender dated
July 12, 1995 incorporated by reference to the Exhibit
to Form 10-K dated June 11, 1996.
10.4 Amendment, dated February 15, 1996, to the Revolving
Credit Agreement with Bank One, Columbus, N.A., dated
July 12, 1995 incorporated by reference to the Exhibit
to Form 10-K dated June 11, 1996.
10.5 The Promissory Note between Westar Financial Services
Incorporated and Mud Bay Holdings Ltd., as a lender
dated January 15, 1997 incorporated by reference to the
Exhibit to Form 10-K dated September 9, 1997.
10.6 The Promissory Note between Westar Financial Services
Incorporated and & Capital Inc., as the lender dated
April 15, 1997 incorporated by reference to the Exhibit
to Form 10-Q dated September 22, 1997.
10.7 The Amended and Restated Revolving Credit Loan agreement
between Westar Financial Services Incorporated and Bank
One, as the lender dated July 22, 1997 incorporated by
reference to the Exhibit to form 10-Q dated November
14, 1997.
10.8 The Amended agreement between Westar Financial Services
Incorporated and & Capital, Partners, L.P., as the
lender dated October 20, 1997 incorporated by reference
to the Exhibit to form 10-Q dated November 14, 1997.
10.9 The Amended agreement between Westar Financial Services
Incorporated and & Capital, Partners, L.P., as the
lender dated February 9, 1998.
10.10 The Amended agreement between Westar Financial Services
Incorporated and Bank One as the lender dated
October 27, 1997.
27. Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the Regi-
strant has duly caused this Report to be signed on its behalf by the under-
signed, thereunto duly authorized.
WESTAR FINANCIAL SERVICES INCORPORATED
February 13, 1998 R. W. Christensen, Jr., President
(Date) (Signature)
February 13, 1998 T. M. Foley, Vice President, Finance
(Date) (Signature)
AGREEMENT
This Agreement is made as of February 9, 1998 between WESTAR FINANCIAL
SERVICES INCORPORATED , a Washington corporation (the "Company") and &
CAPITAL, INC. ("Lender").
Recitals
--------
A. The Company executed and delivered to Lender a promissory
note in the principal amount of $1,500,000 dated April 15, 1997
(the "Note").
B. The Note matured on July 31, 1997 and was extended.
C. To provide security for repayment of the Note, the Company
executed a Security Agreement dated April 15, 1997, granting to
Lender a security interest in certain assets of the Company (the
"Lender Security Agreement").
D. The Parties are entering into this Agreement to again extend
the maturity date for payment of the Note.
Agreement
---------
NOW, THEREFORE, the parties agree as follows:
1. Maturity Date. The maturity date of the Note is hereby extended to the
earlier of (i) March 26, 1998 or (ii) receipt by the Company of not less
than $5,000,000 in proceeds from one or more closings of its current offerings
of Units, consisting of senior subordinated notes and common stock or any
other similar financing or financings involving securities.
2. Subordination. The Bank One Security Interest shall be and remain at all
times a lien or charge on the Residual Interest, prior and superior to the
lien or charge of Lender under the Lender Security Agreement.
3. Acknowledgement of Subordination. Lender acknowledges that it hereby
intentionally waives, relinquishes and subordinates the priority and
superiority of the lien or charge of the Lender Security Agreement in favor of
the lien or charge of the Bank One Security Interest upon the Residual
Interest, and understands that in reliance upon and in consideration of this
waiver, relinquishment and subordination, specific loans and advances are
being and will be made and specific monetary and other obligations are being
and will be entered into by third parties which would not be made or entered
into but for such reliance upon this waiver, relinquishment and subordination.
Lender agrees to execute such further documents as either Bank One or the
Company may reasonablely request to reflect, implement or confirm such
subordination.
4. Entire Agreement. This Agreement contains the whole agreement between
the parties hereto with respect to its subject matter, and supersedes all
prior agreements whether written or oral.
5. Binding Effect. This Agreement shall enure to the benefit of and be
binding upon the legal representatives, heirs, successors and assigns of the
parties.
6. Continuing Effect. Except as specifically modified or amended hereby,
the Note and the Lender Security Agreement shall continue in full force and
effect in accordance with their terms.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
WESTAR FINANCIAL SERVICES
INCORPORATED
By:___________________________
R.W. Christensen, Jr., President
& CAPITAL, PARTNERS, L.P.
By:___________________________
David C. Soward, Managing General Partner
LOAN MODIFICATION AGREEMENT
-----------------------------
THIS LOAN MODIFICATION AGREEMENT (the "Agreement") is made and entered
into as of October 27, 1997 by and among WESTAR FINANCIAL SERVICES
INCORPORATED, a Washington corporation ("Westar"), ROBERT W. CHRISTENSEN, JR.
("Christensen") and BANK ONE, NA, a national banking association formerly
named Bank One, Columbus, NA (the "Lender").
RECITALS
----------
The following recitals are representations with respect to certain
factual matters that form the basis of this Agreement and are an integral part
of this Agreement.
A. The Lender loaned to Westar the sum of $750,000 (the "Loan") pursuant
to the terms and conditions of a certain Loan Agreement dated as of August 13,
1997 by and between Westar and the Lender (the "Loan Agreement");
B. To evidence the Loan, Westar executed a certain Promissory Note dated
August 13, 1997 (the "Note"), whereby Westar promised to pay the outstanding
principal balance of the Loan, together with interest as set forth in the
Note, on or before October 27, 1997;
C. To secure the Loan Agreement and the Note, the Lender and Westar
entered into a certain Security Agreement dated as of August 13, 1997 (the
"Security Agreement");
D. In consideration of the Lender making the Loan to Westar, Christensen
(the "Indemnitor") severally, agreed by a certain Validity Agreement dated as
of August 13, 1997 to indemnify the Lender as set forth therein (the "Validity
Agreement");
E. In further consideration of the Lender making the Loan to Westar,
the Lender and Westar entered into a certain Agreement with Respect to
Prevention and Resolution of Disputes dated as of August 13, 1997 (the
"Dispute Resolution Agreement");
F. Lender is still the holder and beneficiary of the Loan Agreement,
Note, Security Agreement, Validity Agreement, Dispute Resolution Agreement and
certain other agreements, documents and instruments related thereto
(collectively, the "Loan Documents"); and
G. Westar, the Lender and the Indemnitor desire to amend the Loan
Documents to extend the maturity date of the Note from October 27, 1997 to
March 15, 1998 and to change the interest rate thereunder from and after
October 31, 1997 to twenty percent (20%) per annum.
AGREEMENT
-----------
NOW, THEREFORE, in consideration of the agreement and undertakings of the
parties to amend the Loan Documents, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1. All terms and conditions of the Loan Documents shall remain in full
force and effect without change, except that, in order to reflect the
extension of the maturity date of the Note to March 15, 1998 and the increase
of the interest rate thereunder from and after October 31, 1997 to twenty
percent (20%) per annum, Section 1 of the Note is hereby deleted in its
entirety and replaced with the following:
1. Payments of Principal and Interest.
The total principal sum and interest hereunder shall be due
and payable and shall be paid by Westar to the Lender in one lump
sum payment on or before March 15, 1998.
The unpaid principal balance of this Note shall bear
interest as follows:
(a) from the date of the initial disbursement to and
including October 31, 1997, at a fluctuating rate per annum equal
to three percent (3.0%) above the LIBOR Rate (defined below);
and
(b) from and after November 1, 1997 to and including the
maturity date, at a rate of twenty percent (20%) per annum.
As used herein, "LIBOR Rate" shall mean the interest rate
at which deposits in immediately available funds in U.S. dollars
are offered by prime banks in the interbank market for a thirty (30)
day period as published in the Wall Street Journal. The initial
LIBOR Rate shall be the LIBOR Rate in effect as of the date of
disbursement of the loan proceeds by the Lender and thereafter
shall be the LIBOR Rate in effect as of the first Business Day of
each month (the "Interest Determination Date") and such LIBOR
Rate shall be effective until the next succeeding Interest
Determination Date. Any change in the LIBOR Rate shall be
effective immediately upon and after the related Interest
Determination Date
All interest payable in accordance with this Note shall be
calculated on the basis of a 360-day year for the actual number of
days principal is outstanding."
2. Westar covenants that it will (i) pay the balance of the principal,
together with the interest from the dates of disbursement thereof, as
specified in the Loan Documents, as amended hereby, and (ii) perform and
observe all covenants, agreements, stipulations and conditions on its part to
be performed under the Loan Documents.
3. Except as specifically modified herein, the Loan Documents shall
remain in full force and effect in all respects according to their original
terms, covenants and conditions as security for the unpaid balance of the
indebtedness and interest thereon evidenced by the Loan Agreement and the
Note, as if the unpaid balance of the principal, with the interest accrued
thereon, had originally been payable as provided for herein. Except as
specifically set forth herein, nothing in this Agreement shall affect or
impair any rights and powers which the Lender may have thereunder.
4. Each of the parties hereto consents to the provisions of this
Agreement and represents and warrants to the Lender that as of the date hereof
the Loan Documents to which such party remain in full force and effect and are
enforceable in accordance with their respective terms, as amended hereby.
5. This Agreement may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
6. This Agreement is binding upon, and shall inure to the benefit of,
the parties hereto and their respective successors and assigns; provided,
however, that Westar and the Indemnitors may not assign or transfer their
respective rights or duties under this Agreement or the Loan Documents without
the prior written consent of the Lender.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BANK ONE, NA WESTAR FINANCIAL SERVICES
INCORPORATED, a Washington
corporation
By:__________________________ By:___________________________
Robert N. Kent, Jr., Robert W. Christensen,
Vice President President
_____________________________
ROBERT W. CHRISTENSEN,
Individually
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<PERIOD-END> DEC-31-1997
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4,148,000
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