As filed with the Securities and Exchange Commission on March 31, 2003
REGISTRATION NO. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MDU RESOURCES GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 41-0423660
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
SCHUCHART BUILDING
918 EAST DIVIDE AVENUE, P.O. BOX 5650
BISMARCK, NORTH DAKOTA 58506-5650
(701) 222-7900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
____________________________
MARTIN A. WHITE WARREN L. ROBINSON THOMAS J. IGOE, JR., ESQ.
Chairman of the Board, President and Chief Executive Vice President, Treasurer and Thelen Reid & Priest LLP
Executive Officer Chief Financial Officer 875 Third Avenue
MDU Resources Group, Inc. MDU Resources Group, Inc. New York, New York 10022
Schuchart Building Schuchart Building (212) 603-2000
918 East Divide Avenue, P.O. Box 5650 918 East Divide Avenue, P.O. Box 5650
Bismarck, North Dakota 58506-5650 Bismarck, North Dakota 58506-5650
(701) 222-7900 (701) 222-7900
(NAMES, ADDRESSES AND TELEPHONE NUMBERS OF AGENTS FOR SERVICE)
____________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to time
after the effective date of this Registration Statement, as determined by market
conditions and other factors.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| _____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| _____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
=============================================================================================================
Proposed maximum aggregate Amount of
Title of each class of securities to be registered offering price (1)(2) registration fee (3)(4)
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Debt securities.....................................
Common stock, one dollar ($1.00) par value..........
Preference share purchase rights....................
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Total $500,000,000 $40,381
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(1) Includes an indeterminate number or amount of Debt Securities, shares
of common stock and preference share purchase rights as may from time to time be
issued at indeterminate prices provided that in no event will the aggregate
initial price of all Debt Securities, common stock and preference share purchase
rights sold under this registration statement exceed $500,000,000.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Since no separate consideration is paid for the preference share
purchase rights, the registration fee for these securities is included in the
fee for the common stock. The value attributable to the preference share
purchase rights, if any, is reflected in the market price for the common stock.
(4) Prior to the filing of this registration statement, 32,180 shares of
the registrant's common stock remained registered and unsold under Registration
Statement No. 333-101268 filed with the SEC on November 18, 2002. The
registration fee of $69.00 associated with the unsold securities has been offset
from the registration fee of $40,450 associated with the securities to be
registered, and such unsold securities are hereby deemed deregistered.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
PROSPECTUS
SUBJECT TO COMPLETION, DATED MARCH 31, 2003
$500,000,000
MDU RESOURCES GROUP, INC.
DEBT SECURITIES
COMMON STOCK
AND
PREFERENCE SHARE PURCHASE RIGHTS
We may offer from time to time up to an aggregate of $500,000,000 of our
securities. We will provide the specific terms of our securities, including
their offering prices, in supplements to this prospectus. The supplements may
also add, update or change information contained in this prospectus. The names
of any underwriters or agents will also be stated in an accompanying prospectus
supplement. You should read this prospectus and any supplements carefully before
you invest.
Our common stock is listed on the New York Stock Exchange and the Pacific
Exchange under the symbol "MDU." Any common stock sold in this offering will be
listed on the New York Stock Exchange and the Pacific Exchange.
See "Risk Factors" beginning on page 3 to read about certain factors you
should consider before investing in the securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Our principal executive offices are located at MDU Resources Group, Inc.,
Schuchart Building, 918 East Divide Avenue, P.O. Box 5650, Bismarck, North
Dakota 58506-5650, and our telephone number is (701) 222-7900.
We may offer our securities directly or through agents, underwriters or
dealers. If an agent or any underwriter is involved in the sale of any of our
securities covered by this prospectus, the names of those agents or
underwriters, any applicable discounts, commissions or allowances and a
description of any indemnification arrangements will be contained in a
prospectus supplement. The "Plan of Distribution" section on page 34 of this
prospectus provides more information on this topic.
The date of this Prospectus is ________ ___, 2003.
--------------------------------------------------------------------------------
The information in this prospectus is not complete and may be changed. MDU
Resources may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
TABLE OF CONTENTS
Page
----
RISK FACTORS...................................................................3
FORWARD-LOOKING STATEMENTS.....................................................5
WHERE YOU CAN FIND MORE INFORMATION ABOUT US...................................6
MDU RESOURCES GROUP, INC.......................................................7
RATIO OF EARNINGS TO FIXED CHARGES.............................................8
USE OF PROCEEDS................................................................8
DESCRIPTION OF THE DEBT SECURITIES.............................................8
DESCRIPTION OF THE FIRST MORTGAGE BONDS.......................................25
DESCRIPTION OF THE COMMON STOCK...............................................28
DESCRIPTION OF THE PREFERENCE SHARE PURCHASE RIGHTS...........................31
PLAN OF DISTRIBUTION..........................................................34
EXPERTS.......................................................................35
LEGAL OPINIONS................................................................35
2
RISK FACTORS
In considering whether to purchase any of the securities being offered, you
should carefully consider all the information we have included or incorporated
by reference in this prospectus. In particular, you should carefully consider
the risk factors described below, as well as the factors listed in
"Forward-Looking Statements."
THE RECENT EVENTS LEADING TO THE CURRENT ADVERSE ECONOMIC ENVIRONMENT MAY
HAVE A GENERAL NEGATIVE IMPACT ON OUR FUTURE REVENUES.
In response to the occurrence of several recent events, including the
September 11, 2001, terrorist attack on the United States, the ongoing war
against terrorism by the United States and the bankruptcy of several large
energy and telecommunications companies, the financial markets have been
disrupted. An adverse economy could negatively affect the level of governmental
expenditures on public projects and the timing of these projects which, in turn,
would negatively affect the demand for our products and services.
Innovatum, Inc., our indirect wholly owned subsidiary, that specializes in
cable and pipeline magnetization and locating, is subject to the economic
conditions within the telecommunications and energy industries. Innovatum could
face a future goodwill impairment if there is a continued downturn in these
sectors. At December 31, 2002, the goodwill amount at Innovatum was
approximately $8.3 million. The determination of whether an impairment will
occur is dependent on a number of factors, including the level of spending in
the telecommunications and energy industries, the rapid changes in technology,
competitors and potential new customers.
OUR NATURAL GAS AND OIL PRODUCTION BUSINESS IS DEPENDENT ON FACTORS
INCLUDING COMMODITY PRICES WHICH CANNOT BE PREDICTED OR CONTROLLED.
These factors include: price fluctuations in natural gas and crude oil
prices; availability of economic supplies of natural gas; drilling successes in
natural gas and oil operations; the ability to contract for or to secure
necessary drilling rig contracts and to retain employees to drill for and
develop reserves; the ability to acquire natural gas and oil properties; and
other risks incidental to the operations of natural gas and oil wells.
OUR OPERATIONS ARE WEATHER SENSITIVE.
Our results of operations can be affected by changes in the weather.
Weather conditions directly influence the demand for electricity and natural
gas, affect the price of energy commodities and affect the ability to perform
services at the utility services and construction materials and mining
businesses. We cannot predict future weather conditions and as a result, adverse
weather conditions could negatively affect our operations and financial
conditions.
WE ARE SUBJECT TO EXTENSIVE ENVIRONMENTAL LAWS AND REGULATIONS THAT MAY
INCREASE OUR COSTS OF OPERATIONS, IMPACT OR LIMIT OUR BUSINESS PLANS, OR EXPOSE
US TO ENVIRONMENTAL LIABILITIES.
We are subject to extensive environmental laws and regulations affecting
many aspects of our present and future operations including air quality, water
quality, waste management and other environmental considerations. These laws and
regulations can result in increased capital, operating, and other costs, as a
result of compliance, remediation, containment and monitoring obligations,
particularly with regard to laws relating to power plant emissions and coalbed
natural gas development. These laws and regulations generally require us to
obtain and comply with a wide variety of environmental licenses, permits,
inspections and other approvals. Both public officials and private individuals
may seek to enforce applicable environmental laws and regulations. We cannot
predict the outcome (financial or operational) of any related litigation that
may arise.
There are no assurances that existing environmental regulations will not be
revised or that new regulations seeking to protect the environment will not be
adopted or become applicable to us. Revised or additional regulations which
result in increased compliance costs or additional operating restrictions,
particularly if those costs are not fully recoverable from customers, could have
a material affect on our results of operations.
3
Fidelity Exploration & Production Company, our indirect wholly owned
subsidiary, has been named as a defendant in several lawsuits filed in
connection with its coalbed natural gas development in the Powder River Basin in
Montana and Wyoming. Fidelity believes the ultimate outcome of these actions
would not have a material effect on its existing coalbed natural gas operations.
However, if the plaintiffs are successful, which Fidelity does not currently
anticipate, the ultimate outcome of the actions could have a material effect on
Fidelity's future development of its coalbed natural gas properties.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATIONS THAT MAY HAVE A NEGATIVE
IMPACT ON OUR BUSINESS AND OUR RESULTS OF OPERATIONS.
We are subject to regulation by federal, state and local regulatory
agencies with respect to, among other things, allowed rates of return,
financings, industry rate structures, and recovery of purchased power and
purchased gas costs. These governmental regulations significantly influence our
operating environment and may affect our ability to recover costs from our
customers. We are required to have numerous permits, approvals and certificates
from the agencies that regulate our business. We believe the necessary permits,
approvals and certificates have been obtained for existing operations and that
our business is conducted in accordance with applicable laws; however, we are
unable to predict the impact on operating results from the future regulatory
activities of any of these agencies.
Changes in regulations or the imposition of additional regulations could
have an adverse impact on our results of operations.
WE ARE DEPENDENT ON OUR ABILITY TO SUCCESSFULLY ACCESS CAPITAL MARKETS.
INABILITY TO ACCESS CAPITAL MAY LIMIT OUR ABILITY TO EXECUTE BUSINESS PLANS,
PURSUE IMPROVEMENTS OR MAKE ACQUISITIONS THAT WE MAY OTHERWISE RELY ON FOR
FUTURE GROWTH.
We rely on access to both short-term borrowings, including the issuance of
commercial paper, and long-term capital markets as a significant source of
liquidity for capital requirements not satisfied by the cash flow from
operations. If we are not able to access capital at competitive rates, the
ability to implement our business plans may be adversely affected. Market
disruptions or a downgrade of our credit ratings may increase the cost of
borrowing or adversely affect our ability to access one or more financial
markets. Such disruptions could include:
o A severe economic downturn
o The bankruptcy of unrelated companies in the same line of business
o Capital market conditions generally
o Commodity prices
o Terrorist attacks
o Global events
THERE ARE RISKS INVOLVED WITH THE GROWTH STRATEGIES OF OUR INDEPENDENT
POWER PRODUCTION BUSINESS.
The operation of power generation facilities involves many risks, including
start up risks, breakdown or failure of equipment, competition, inability to
obtain required governmental permits and approvals and inability to negotiate
acceptable acquisition, construction, fuel supply or other material agreements,
as well as the risk of performance below expected levels of output or
efficiency.
Our plans to construct a 113-megawatt coal-fired electric generation
station in Montana are pending. We purchased plant equipment and obtained all
permits necessary to begin construction. NorthWestern Energy terminated the
power purchase agreement for the energy from this plant in July 2002; however,
we are pursuing other markets for the energy and we are studying our options
regarding this project. We have suspended construction activities except for
those items of a critical nature. At December 31, 2002, our investment in this
project was approximately $23.1 million. If it is not economically feasible for
us to construct and operate this facility or if alternate markets cannot be
identified, an asset impairment may occur.
4
THE VALUE OF OUR INVESTMENT IN FOREIGN OPERATIONS MAY DIMINISH DUE TO
POLITICAL, REGULATORY AND ECONOMIC CONDITIONS AND CHANGES IN CURRENCY RATES IN
COUNTRIES WHERE WE DO BUSINESS.
We are subject to political, regulatory and economic conditions and changes
in currency rates in foreign countries where we do business. Significant changes
in the political, regulatory or economic environment in these countries could
negatively affect the value of our investments located in these countries. Also,
since we are unable to predict the fluctuations in the foreign currency exchange
rates, these fluctuations may have an adverse impact on our results of
operations.
Our 49 percent equity method investment in a 200-megawatt natural gas-fired
electric generation project in Brazil includes a power purchase agreement that
contains an embedded derivative. This embedded derivative derives its value from
an annual adjustment factor that largely indexes the contract capacity payments
to the U.S. dollar. In addition, from time to time, other derivative instruments
may be utilized. The valuation of these financial instruments, including the
embedded derivative, can involve judgments, uncertainties and the use of
estimates. As a result, changes in the underlying assumptions could affect the
reported fair value of these instruments. These instruments could recognize
financial losses as a result of volatility in the underlying fair values, or if
a counterparty fails to perform.
COMPETITION IS INCREASING IN ALL OF OUR BUSINESSES.
All of our business segments are subject to increased competition. The
independent power industry includes numerous strong and capable competitors,
many of which have extensive experience in the operation, acquisition and
development of power generation facilities. Utility services competition is
based primarily on price and reputation for quality, safety and reliability. The
construction materials products are marketed under highly competitive conditions
and are subject to such competitive forces as price, service, delivery time and
proximity to the customer. The electric utility and natural gas industries are
also experiencing increased competitive pressures as a result of consumer
demands, technological advances, deregulation, greater availability of natural
gas-fired generation and other factors. Pipeline and energy services competes
with several pipelines for access to natural gas supplies and gathering,
transportation and storage business and the natural gas and oil production
business is subject to competition in the acquisition and development of natural
gas and oil properties.
FORWARD-LOOKING STATEMENTS
We are including the risk factors described above and these cautionary
statements in this prospectus to make applicable and to take advantage of the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995
for any forward-looking statements made by us, or on our behalf. Forward-looking
statements include statements concerning plans, objectives, goals, strategies,
future events or performance, and underlying assumptions (many of which are
based, in turn, upon further assumptions) and other statements which are other
than statements of historical facts. From time to time, we may publish or
otherwise make available forward-looking statements of this nature. All these
subsequent forward-looking statements, whether written or oral and whether made
by us or on our behalf, are also expressly qualified by the risk factors above
and these cautionary statements.
Forward-looking statements involve risks and uncertainties, which could
cause actual results or outcomes to differ materially from those expressed. Our
expectations, beliefs and projections are expressed in good faith and are
believed by us to have a reasonable basis, including without limitation
management's examination of historical operating trends, data contained in our
records and other data available from third parties, but there can be no
assurance that our expectations, beliefs or projections will be achieved or
accomplished.
Any forward-looking statement contained in this document or any document
incorporated by reference into this document speaks only as of the date on which
the statement is made, and we undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances that
occur after the date on which the statement is made or to reflect the occurrence
of unanticipated events. New factors emerge from time to time, and it is not
possible for management to predict all of the factors, nor can it assess the
effect of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statement.
5
Following are some specific factors that should be considered in addition
to the risk factors described above for a better understanding of our financial
condition. These factors, the risk factors described above and the other matters
discussed in the prospectus are important factors that could cause our actual
results or outcomes to differ materially from those discussed in the
forward-looking statements included elsewhere in this prospectus.
o Acquisition and disposal of assets or facilities
o Changes in operation and construction of plant facilities
o Changes in present or prospective generation
o Changes in anticipated tourism levels
o The availability of economic expansion or development opportunities
o Population growth rates and demographic patterns
o Market demand for energy from plants or facilities
o Changes in tax rates or policies
o Unanticipated project delays or changes in project costs
o Unanticipated changes in operating expenses or capital expenditures
o Labor negotiations or disputes
o Inflation rates
o Inability of various counterparties to meet their contractual obligations
o Changes in accounting principles and/or the application of such principles
to us
o Changes in technology and legal proceedings
o The ability to effectively integrate the operations of acquired companies
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and other reports and other information with the
Securities and Exchange Commission. You can read and copy any information filed
by us with the Securities and Exchange Commission at the Securities and Exchange
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. You can obtain additional information about the Public Reference Room by
calling the Securities and Exchange Commission at 1-800-SEC-0330.
In addition, the Securities and Exchange Commission maintains an Internet
site (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the Securities and Exchange Commission, including MDU Resources.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information that we file with the Securities and Exchange
Commission which means that we may disclose important information to you by
referring you to those documents in this prospectus. The information
incorporated by reference is an important part of this prospectus. We are
incorporating by reference the documents listed below and any future filings we
make with the Securities and Exchange Commission under Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until we terminate this
offering. Any of those future filings will update, supersede and replace the
information contained in any documents incorporated by reference in this
prospectus at the time of the future filings.
1. MDU Resources' Annual Report on Form 10-K for the year ended December
31, 2002 (including portions of the Annual Report to Stockholders);
2. MDU Resources' Current Report on Form 8-K, filed January 29, 2003;
3. MDU Resources' Current Report on Form 8-K, filed March 13, 2003;
4. MDU Resources' Registration Statement on Form 8-A, filed September 21,
1994, Amendment No. 1 thereto, filed March 23, 2000 and Amendment No.
2 thereto, filed March 10, 2003.
6
5. MDU Resources' Registration Statement on Form 8-A filed November 12,
1998, and Amendment No. 1 thereto, filed March 23, 2000; and
6. Proxy Statement for an annual meeting of stockholders to be held on
April 22, 2003.
You may request a copy of these documents, at no cost to you, by writing or
calling Office of the Treasurer, MDU Resources Group, Inc., Schuchart Building,
918 East Divide Avenue, P.O. Box 5650, Bismarck, North Dakota 58506-5650,
telephone (701) 222-7900.
You should rely only on the information contained in, or incorporated by
reference in, this prospectus and the prospectus supplement. We have not, and
any underwriters, agents or dealers have not, authorized anyone else to provide
you with different information. We are not, and any underwriters, agents or
dealers are not, making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information contained in
this prospectus and the prospectus supplement is accurate as of any date other
than the date on the front of the prospectus supplement or that the information
incorporated by reference in this prospectus is accurate as of any date other
than the date on the front of those documents.
Our consolidated financial statements for the year ended December 31, 2001,
incorporated into this document by reference were audited by Arthur Andersen
LLP. After reasonable efforts, we have not been able to obtain Arthur Andersen
LLP's consent to the incorporation by reference of its audit report dated
January 23, 2002 into the registration statement of which this prospectus is a
part. Rule 437a under the Securities Act of 1933 permits us to file the
registration statement and this prospectus without Arthur Andersen LLP's written
consent, but as a result of the lack of Arthur Andersen LLP's consent, you will
not be able to sue Arthur Andersen LLP pursuant to Section 11(a)(4) of the
Securities Act of 1933 and your right of recovery under that section may be
limited.
Upon the recommendations of the audit committee, our Board of Directors, in
February 2002, approved the dismissal of Arthur Andersen LLP as our independent
public accountants following the 2001 audit and, in March 2002, approved the
selection of Deloitte & Touche LLP as independent public accountants for the
2002 fiscal year.
MDU RESOURCES GROUP, INC.
We are a diversified natural resource company which was incorporated under
the laws of the state of Delaware in 1924. Our principal executive offices are
at the Schuchart Building, 918 East Divide Avenue, P.O. Box 5650, Bismarck,
North Dakota 58506-5650, telephone (701) 222-7900.
Montana-Dakota Utilities Co., one of our public utility divisions, through
the electric and natural gas distribution segments, generates, transmits and
distributes electricity and distributes natural gas in the states of North
Dakota, South Dakota, Montana and Wyoming. Great Plains Natural Gas Co., another
one of our public utility divisions, distributes natural gas in southeastern
North Dakota and western Minnesota. These operations also supply related
value-added products and services in the northern Great Plains.
Through our wholly owned subsidiary, Centennial Energy Holdings, Inc., we
own WBI Holdings, Inc., Knife River Corporation, Utility Services, Inc.,
Centennial Energy Resources LLC and Centennial Holdings Capital LLC.
WBI Holdings is comprised of the pipeline and energy services and the
natural gas and oil production segments. The pipeline and energy
services segment provides natural gas transportation, underground
storage and gathering services through regulated and nonregulated
pipeline systems primarily in the Rocky Mountain and northern Great
Plains regions of the United States. The pipeline and energy services
segment also provides energy-related management services, including
cable and pipeline magnetization and locating. The natural gas and oil
production segment is engaged in natural gas and oil acquisition,
exploration and production activities primarily in the Rocky Mountain
region of the United States and in the Gulf of Mexico.
7
Knife River mines aggregates and markets crushed stone, sand, gravel and
related construction materials, including ready-mixed concrete, cement,
asphalt and other value-added products, as well as performing integrated
construction services, in the north central and western United States,
including Alaska and Hawaii.
Utility Services is a diversified infrastructure company specializing in
electric, gas and telecommunication utility construction, as well as
industrial and commercial electrical, exterior lighting and traffic
signalization throughout most of the United States. Utility Services
also provides related specialty equipment manufacturing, sales and
rental services.
Centennial Resources owns electric generating facilities in the United
States. Electric capacity and energy produced at these facilities is
sold under long-term contracts to nonaffiliated entities. Centennial
Resources also invests in potential new growth and synergistic
opportunities that are not directly being pursued by the other business
units. These activities are reflected in the independent power
production segment.
Centennial Capital insures and reinsures various types of risks as a
captive insurer for certain of our subsidiaries. The function of the
captive is to fund the deductible layers of the insured companies'
general liability and automobile liability coverages. Centennial Capital
also owns some real and personal property and contract rights. These
activities are reflected in the independent power production segment.
Through our wholly owned subsidiary, Centennial Energy Resources
International Inc, we have an investment in an electric generating facility in
Brazil. Electric capacity and energy produced at this facility is sold under a
long-term contract to a nonaffiliated entity. Centennial International invests
in projects outside the United States which are consistent with our philosophy,
growth strategy and areas of expertise. These activities are reflected in the
independent power production segment.
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows our ratio of earnings to fixed charges for the
periods indicated:
Fiscal Years Ended December 31,
----------------------------------------------------------------------
2002 2001 2000 1999 1998
4.9 5.4 4.2 4.5 2.5
USE OF PROCEEDS
Except as may otherwise be set forth in the prospectus supplement, the net
proceeds from the sale of the securities may be used for the refunding of
outstanding debt obligations, for corporate development purposes (including the
potential acquisition of businesses and/or business assets), and for other
general business purposes.
DESCRIPTION OF THE DEBT SECURITIES
The following description sets forth the general terms and provisions of
the Debt Securities that we may offer by this prospectus. We will describe the
particular terms of the Debt Securities, and provisions that vary from those
described below, in one or more prospectus supplements.
We may issue the Debt Securities from time to time in the future, in one or
more series, under an indenture as it may be supplemented from time to time
(Indenture) between us and The Bank of New York, as trustee, or the Indenture
Trustee. A form of the Indenture is filed as an exhibit to the registration
statement relating to the Debt Securities.
8
The Indenture and its associated documents contain the full legal text of
the matters described in this section. Because this section is a summary, it
does not describe every aspect of the Debt Securities or the Indenture. This
summary is subject to and qualified in its entirety by reference to all the
provisions of the Indenture, including definitions of some of the terms used in
the Indenture. We also include references in parentheses to some of the sections
of the Indenture. Whenever we refer to particular sections or defined terms of
the Indenture in this prospectus or in a prospectus supplement, these sections
or defined terms are incorporated by reference into this document or in the
prospectus supplement. This summary also is subject to and qualified by
reference to the description of the particular terms of each series of Debt
Securities described in the applicable prospectus supplement or supplements. The
Indenture has been qualified under the Trust Indenture Act, and you should also
refer to the Trust Indenture Act for provisions that apply to the Debt
Securities.
There is no requirement under the Indenture that future issuances of debt
securities be issued exclusively under the Indenture, and we will be free to
employ other indentures or agreements containing provisions different from those
included in the Indenture or applicable to one or more issues of debt
securities, in connection with future issues of the other debt securities.
GENERAL
The Indenture permits us to issue an unlimited amount of Debt Securities
from time to time. All Debt Securities of any one series need not be issued at
the same time, and a series may be reopened for issuances of additional Debt
Securities of that series. This means that we may from time to time, without the
consent of the existing holders of the Debt Securities of any series, create and
issue additional Debt Securities of a series having the same terms and
conditions as the previously-issued Debt Securities of that series in all
respects, except for issue date, issue price and, if applicable, the initial
interest payment on those additional Debt Securities. Additional Debt Securities
issued in this manner will be consolidated with, and will form a single series
with, the previously-issued Debt Securities of that series. For more
information, see the discussion below under "Issuance of Additional Debt
Securities."
Until the Release Date (described below), the Debt Securities will be
issued on the basis of, and primarily secured by, (a) the lien of one or more
series of First Mortgage Bonds issued by us under the Mortgage (as these terms
are defined below under DESCRIPTION OF THE FIRST MORTGAGE BONDS) and any other
Class A Bonds issued by us and delivered by us to the Indenture Trustee and (b)
the lien of the Indenture on our Electric and Gas Utility Property (as defined
below under "Lien of the Indenture"). On the Release Date, the Debt Securities
will cease to be secured and will become our unsecured general obligations,
ranking on a parity with our other senior unsecured indebtedness. For more
information, see the discussions below under "Security," "Issuance of Additional
Debt Securities" and "Discharge of Lien; Release Date").
A prospectus supplement and an officer's certificate relating to any series
of Debt Securities being offered will include specific terms relating to that
offering. These terms will include some or all of the following terms that apply
to that series:
o the title of the Debt Securities;
o any limit upon the total principal amount of the Debt Securities;
o the dates, or the method to determine these dates, on which the principal
of the Debt Securities will be payable and how it will be paid;
o the interest rate or rates which the Debt Securities will bear, or how the
rate or rates will be determined, the interest payment dates for the Debt
Securities and the regular record dates for interest payments;
o any right to delay the interest payments for the Debt Securities;
o the percentage, if less than 100%, of the principal amount of the Debt
Securities that will be payable if the maturity of the Debt Securities is
accelerated;
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o any date or dates on which the Debt Securities may be redeemed at our
option and any restrictions on those redemptions;
o any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem the Debt Securities;
o any additions to the events of default under the Indenture or additions to
our covenants under the Indenture for the benefit of the holders of Debt
Securities;
o if the Debt Securities will be issued in denominations other than multiples
of $1,000;
o if payments on the Debt Securities may be made in a currency or currencies
other than United States dollars; and, if so, the means through which the
equivalent principal amount of any payment in United States dollars is to
be determined for any purpose;
o any rights or duties of another entity to assume our obligations with
respect to the Debt Securities;
o any collateral, security, assurance or guarantee for the Debt Securities;
and
o any other terms of the Debt Securities not inconsistent with the terms of
the Indenture.
(Indenture, Section 301.)
We may sell Debt Securities at a discount below their principal amount.
United States federal income tax considerations applicable to Debt Securities
sold at an original issue discount may be described in the prospectus
supplement. In addition, important United States federal income tax or other tax
considerations applicable to any Debt Securities denominated or payable in a
currency or currency unit other than United States dollars may be described in
the prospectus supplement.
Except as may otherwise be described in the applicable prospectus
supplement, the covenants contained in the Indenture will not afford holders of
Debt Securities protection in the event of a highly-leveraged transaction
involving us.
REDEMPTION
We will set forth any terms for the redemption of Debt Securities of any
series in the applicable prospectus supplement. Unless we indicate differently
in a prospectus supplement, and except with respect to Debt Securities
redeemable at the option of the holder of those Debt Securities, Debt Securities
will be redeemable upon notice to holders by mail at least 30 days prior to the
redemption date. (Indenture, Section 504.) If less than all of the Debt
Securities of any series or any tranche thereof are to be redeemed, the
Indenture Trustee will select the Debt Securities to be redeemed. In the absence
of any provision for selection, the Indenture Trustee will choose a method of
random selection as it deems fair and appropriate. (Indenture, Section 503.)
Debt securities will cease to bear interest on the redemption date. We will
pay the redemption price and any accrued interest to the redemption date upon
surrender of any Debt Security for redemption. (Indenture, Section 505.) If only
part of a Debt Security is redeemed, the Indenture Trustee will deliver to the
holder of the Debt Security a new Debt Security of the same series for the
remaining portion without charge. (Indenture, Section 506.)
We may make any redemption at our option conditional upon the receipt by
the paying agent, on or prior to the date fixed for redemption, of money
sufficient to pay the redemption price. If the paying agent has not received the
money by the date fixed for redemption, we will not be required to redeem the
Debt Securities. (Indenture, Section 504.)
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PAYMENT AND PAYING AGENTS
Except as may be provided in the applicable prospectus supplement,
interest, if any, on each Debt Security payable on any interest payment date
will be paid to the person in whose name that Debt Security is registered at the
close of business on the regular record date for that interest payment date.
However, interest payable at maturity will be paid to the person to whom the
principal is paid. If there has been a default in the payment of interest on any
Debt Security, the defaulted interest may be paid to the holder of that Debt
Security as of the close of business on a date between 10 and 15 days before the
date proposed by us for payment of the defaulted interest or in any other manner
permitted by any securities exchange on which that Debt Security may be listed,
if the Indenture Trustee finds it workable. (Indenture, Section 307.)
Unless otherwise specified in the applicable prospectus supplement,
principal, premium, if any, and interest on the Debt Securities at maturity will
be payable upon presentation of the Debt Securities at the corporate trust
office of The Bank of New York, in the city of New York, as our paying agent.
However, we may choose to make payment of interest by check mailed to the
address of the persons entitled to payment. We may change the place of payment
on the Debt Securities, appoint one or more additional paying agents (including
MDU) and remove any paying agent, all at our discretion. (Indenture, Section
702.)
REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable prospectus supplement, the
transfer of Debt Securities may be registered, and Debt Securities may be
exchanged for other Debt Securities of the same series or tranche, of authorized
denominations and with the same terms and principal amount, at the offices of
the Indenture Trustee in New York, New York. (Indenture, Section 305.) We may
designate one or more additional places, or change the place or places
previously designated, for registration of transfer and exchange of the Debt
Securities. (Indenture, Section 702.) Unless otherwise specified in the
applicable prospectus supplement, no service charge will be made for any
registration of transfer or exchange of the Debt Securities. However, we may
require payment to cover any tax or other governmental charge that may be
imposed in connection with a registration of transfer or exchange. We will not
be required to execute or to provide for the registration, transfer or exchange
of any Debt Security
o during the 15 days before an interest payment date;
o during the 15 days before giving any notice of redemption; or
o selected for redemption except the unredeemed portion of any Debt Security
being redeemed in part.
(Indenture, Section 305.)
SECURITY
Except as described below under this heading and under "Issuance of
Additional Debt Securities," and subject to the exceptions discussed under
"Discharge of Lien; Release Date," all Debt Securities will be secured, equally
and ratably, by:
(1) the first lien of an equal principal amount of First Mortgage Bonds
delivered by us to the Indenture Trustee, and other Class A Bonds as
described below; as discussed under DESCRIPTION OF THE FIRST MORTGAGE
BONDS - "Security and Priority," the Mortgage constitutes a first
mortgage lien on the Mortgaged Property; and
(2) the lien of the Indenture, which is junior to the lien of the
Mortgage, upon our Electric and Gas Utility Property (as defined below
under Lien of the Indenture). If we acquire any property that is
subject to a Class A Mortgage (as described below), the lien of the
Indenture would be junior to the lien of that Class A Mortgage with
respect to any of our Electric and Gas Utility Property subject to the
lien of that Class A Mortgage.
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See "Discharge of Lien; Release Date" for a discussion of provisions of the
Indenture pursuant to which, subject to the satisfaction of the specified
conditions, the lien of the Indenture would be discharged and the Debt
Securities would become our unsecured obligations.
CLASS A BONDS
As discussed below under "Consolidation, Merger and Conveyance of Assets,"
we will be permitted to merge or consolidate with another company upon meeting
specified requirements. Following a merger or consolidation of another company
into us, we could deliver to the Indenture Trustee first mortgage bonds issued
under an existing mortgage on the properties of the other company as the basis
for the issuance of additional Debt Securities. In this event, the Debt
Securities would be secured, additionally, by the first lien of the first
mortgage bonds and by the lien of the Indenture on the mortgaged property
acquired from the other company, which would be junior to the lien of the
existing mortgage. The Mortgage and all the other mortgages are collectively
referred to in this document as the "Class A Mortgages," and all first mortgage
bonds issued under the Class A Mortgages are collectively referred to in this
document as the "Class A Bonds." (Indenture, Section 1706.)
Class A Bonds, including First Mortgage Bonds, that are the basis for the
authentication and delivery of Debt Securities (a) will be delivered to, and
registered in the name of, the Indenture Trustee or its nominee and will be
owned and held by the Indenture Trustee, subject to the provisions of the
Indenture, for the benefit of the holders of all Debt Securities outstanding
from time to time; (b) will mature or be subject to mandatory redemption on the
same dates, and in the same principal amounts, as the Debt Securities; and
(c)(i) may, but need not, bear interest and (ii) may, but need not, contain
provisions for their redemption at our option, any redemption to be made at a
redemption price or prices not less than the principal amount of the Class A
Bonds. (Indenture, Sections 1602 and 1701). To the extent that Class A Bonds do
not bear interest, holders of Debt Securities will not have the benefit of the
lien of a Class A Mortgage in respect of an amount equal to accrued interest, if
any, on the Debt Securities; however, the holders will nevertheless have the
benefit of the lien of the Indenture in respect of the amount of accrued
interest.
Any payment by us of principal of or premium or interest on the Class A
Bonds delivered to and held by the Indenture Trustee will be applied by the
Indenture Trustee to the payment of any principal, premium or interest, as the
case may be, in respect of the Debt Securities which is then due. Our obligation
under the Indenture to make payment in respect of the Debt Securities will be
deemed satisfied and discharged to the extent of the payment. If, at the time of
any payment of principal of Class A Bonds, there is no principal then due in
respect of the Debt Securities, the proceeds of the payment will constitute
"Funded Cash" and will be held by the Indenture Trustee as part of the
collateral for the Debt Securities, to be withdrawn, used or applied as provided
in the Indenture. If, at the time of any payment of premium or interest on Class
A Bonds, there is no premium or interest then due on the Debt Securities, the
payment will be remitted to us at our request; except that, if any event of
default under the Indenture, as described below, has occurred and is continuing,
the payment will be held as part of the collateral for the Debt Securities until
the event of default under the Indenture has been cured or waived. (Indenture,
Section 1702). See "Withdrawal of Cash" below.
Any payment by us on Debt Securities authenticated and delivered on the
basis of the delivery to the Indenture Trustee of Class A Bonds (other than by
application of the proceeds of a payment in respect of the Class A Bonds) will,
to that extent, be deemed to satisfy and discharge our obligations, if any, to
make a corresponding payment, in respect of the Class A Bonds which is then due.
(Indenture, Section 1702).
The Indenture Trustee may not sell, assign or otherwise transfer any Class
A Bonds except to a successor trustee under the Indenture. (Indenture, Section
1704.) At the time any Debt Securities that have been authenticated and
delivered upon the basis of Class A Bonds cease to be outstanding (other than as
a result of the application of the proceeds of the payment or redemption of the
Class A Bonds), the Indenture Trustee will surrender to us, or upon our order,
an equal principal amount of the Class A Bonds. (Indenture, Section 1703.)
When the aggregate principal amount of all Class A Bonds outstanding under
all Class A Mortgages, other than those held by the Indenture Trustee, does not
exceed the greater of 5% of the net book value of our Electric and Gas Utility
Property (as described below) or 5% of our Capitalization (as described below),
then, at our request and subject to satisfaction of specified conditions, the
Class A Bonds held by the Indenture Trustee will be deemed satisfied and
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discharged, the Indenture Trustee will surrender the Class A Bonds for
cancellation, and the Debt Securities will become our senior unsecured debt,
subject to Permitted Secured Debt and the exceptions described below.
(Indenture, Section 1811.) See "Discharge of Lien; Release Date" below.
At the date of this prospectus, the only Class A Mortgage is the Mortgage,
and the only Class A Bonds issuable at this time are First Mortgage Bonds
issuable under the Mortgage. When all of the outstanding First Mortgage Bonds
which are not held by the Indenture Trustee do not exceed the greater of 5% of
the net book value of our Electric and Gas Utility Property or 5% of our
Capitalization, and assuming no other Class A Mortgage exists at the time, the
Indenture may become unsecured.
"Capitalization " means the total of all the following items appearing on,
or included in, our unconsolidated balance sheet; (i) liabilities for
indebtedness maturing more than 12 months from the date of determination, and
(ii) common stock, common stock expense, accumulated other comprehensive income
or loss, preferred stock, preference stock, premium on common stock and retained
earnings (however the foregoing may be designated), less, to the extent not
otherwise deducted, the cost of shares of our capital stock held in our
treasury, if any. Capitalization is determined in accordance with generally
accepted accounting principles and practices applicable to the type of business
in which we are engaged, and may be determined as of the date not more than 60
days prior to the happening of the event for which the determination is being
made.
LIEN OF THE INDENTURE
The Indenture creates a lien on substantially all of our fixed electricity
generation, transmission and distribution, and natural gas distribution,
properties owned by us immediately prior to July 1, 2000, together with
improvements, extensions and additions to, and renewals, replacements and
substitutions of or for, any part or parts of these properties, other than
Excepted Property (as defined below). At the date of this prospectus, these
properties are located in the states of North Dakota, South Dakota, Montana and
Wyoming. These properties, regardless of whether the Release Date has occurred,
are sometimes referred to as our "Electric and Gas Utility Property." At the
date of this prospectus, substantially all of this property is included within
the category of property, plant and equipment on our balance sheet, this
property had a net book value as of December 31, 2002 of approximately $369.1
million, and this property, while subject to the lien of the Indenture, is also
subject to the prior lien of the Mortgage. For so long as the Release Date has
not occurred, the Debt Securities will have the benefit of the first mortgage
lien of the Mortgage on the Mortgaged Property to the extent of the aggregate
principal amount of First Mortgage Bonds held by the Indenture Trustee, and also
the benefit of the lien of any additional Class A Mortgage on any property
subject to that Class A Mortgage to the extent of the aggregate principal amount
of Class A Bonds, issued under that Class A Mortgage, held by the Indenture
Trustee.
PERMITTED LIENS
The lien of the Indenture is subject to Permitted Liens described in the
Indenture. These Permitted Liens include liens existing at the execution date of
the Indenture such as the lien of the Mortgage, liens on property at the time we
acquire the property such as the lien of any other Class A Mortgage, tax liens
and other governmental charges which are not delinquent or which are being
contested in good faith, mechanics', construction and materialmen's liens,
specified judgment liens, easements, reservations and rights of others
(including governmental entities) in, and defects of title in, our property,
specified leases and leasehold interests, liens to secure public obligations,
rights of others to take minerals, timber, electric energy or capacity, gas,
water, steam or other products produced by us or by others on our property,
rights and interests of Persons other than us arising out of agreements relating
to the common ownership or joint use of property, and liens on the interests of
those Persons in the property, liens which have been bonded or for which other
security arrangements have been made, liens created in connection with the
issuance of tax-exempt bonds, purchase money liens and liens related to the
construction or acquisition of property, or the development or expansion of
property, liens which secure specified Debt Securities equally and ratably with
other obligations, and additional liens on any of our property (other than
Excepted Property, as described below) to secure debt for borrowed money in an
aggregate principal amount not exceeding the greater of 10% of our Net Tangible
Assets (as described below) or 10% of our Capitalization. (Indenture, Granting
Clauses and Sections 101 and 707.)
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The Indenture provides that the Indenture Trustee will have a lien, prior
to the lien on behalf of the holders of Debt Securities, upon the collateral for
the Debt Securities for the payment of its reasonable compensation and expenses
and for indemnity against specified liabilities. (Indenture, Section 1007.) This
lien would be a Permitted Lien under the Indenture.
EXCEPTED PROPERTY
The lien of the Indenture does not cover, among other things, the following
types of property:
o all properties acquired by us on or after July 1, 2000, including the
properties acquired in the merger with Great Plains Energy Corp. and Great
Plains Natural Gas Co. (which include all our gas distribution properties
located in the state of Minnesota and certain gas distribution properties
located in the southeastern part of North Dakota), but excluding
improvements, extensions and additions to, and renewals, replacements and
substitutions of or for, any part or parts of the fixed electricity
generation, transmission and distribution, and natural gas distribution,
properties owned by us immediately prior to July 1, 2000 unless otherwise
excepted from the lien of the Indenture;
o all property of subsidiaries, including Centennial Energy Holdings, Inc.,
WBI Holdings, Inc., Knife River Corporation, Utility Services, Inc.,
Centennial Energy Resources LLC, Centennial Holdings Capital LLC,
Centennial Energy Resources International Inc, Fidelity Exploration &
Production Company and any other subsidiaries;
o all cash and securities (including the capital stock of the subsidiaries
mentioned in the preceding bullet and any other subsidiaries) not paid,
deposited or held under the Indenture, and all policies of insurance on the
lives of our officers;
o all contracts, leases and other agreements of all kinds, contract rights,
bills, notes and other instruments, accounts receivable, transition
property, claims, demands and judgments;
o all governmental and other licenses, permits, franchises, consents and
allowances; intellectual property rights and other general intangibles;
o all vehicles, movable equipment, aircraft and vessels;
o all merchandise and appliances acquired for the purpose of resale in the
ordinary course and conduct of our business, and all materials and supplies
held for consumption in operation or held in advance of use thereof for
fixed capital purposes;
o all electric energy, gas, steam and other materials and products generated,
manufactured, produced or purchased by us for sale, distribution or use in
the ordinary course and conduct of our business;
o all property which is the subject of a lease agreement designating us as
lessee, and all our right, title and interest in and to the property and
in, to and under the lease agreement, whether or not the lease agreement is
intended as security;
o all property which prior to the execution date of the Indenture has been
released from the lien of the Mortgage;
o all property which subsequent to the execution date of the Indenture has
been released from the lien of the Indenture; and
o any and all property not acquired or constructed by us for use in our
electricity generation, transmission and distribution, and natural gas
distribution business.
We sometimes refer to property of ours not covered by the lien of the Indenture
as "Excepted Property." (Indenture, Granting Clauses.)
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We may enter into supplemental indentures with the Indenture Trustee,
without the consent of the holders, in order to subject additional property
(including property that would otherwise be excepted from the lien) to the lien
of the Indenture. (Indenture, Section 1301.) This property would then constitute
Property Additions and part of the collateral for the Debt Securities, and would
be available as a basis for the issuance of Debt Securities. See "Issuance of
Additional Debt Securities."
The Indenture provides that after-acquired properties (other than Excepted
Property) that are improvements, extensions or additions to, or renewals,
replacements or substitutions of or for, any part or parts of our Electric and
Gas Utility Property will be subject to the lien of the Indenture. (Indenture,
Second Granting Clause.) We may also elect to subject additional property to the
lien of the Indenture by amending the Indenture.
See "Discharge of Lien; Release Date" for a discussion of provisions of the
Indenture pursuant to which, subject to the satisfaction of specified
conditions, all the collateral for the Debt Securities would be released from
the lien of the Indenture, the Class A Bonds held by the Indenture Trustee would
be surrendered for cancellation, and Debt Securities would become our unsecured
obligations.
ISSUANCE OF ADDITIONAL DEBT SECURITIES
Subject to the issuance restrictions described below, the maximum principal
amount of Debt Securities that may be authenticated and delivered under the
Indenture is unlimited. (Indenture, Section 301.) Prior to the Release Date,
Debt Securities of any series may be issued from time to time on the basis of,
and in an aggregate principal amount not exceeding:
o the aggregate principal amount of Class A Bonds delivered to the Indenture
Trustee;
o 70% of the Cost or Fair Value to us (whichever is less) of Property
Additions (as described below) which do not constitute Funded Property
(generally, Property Additions which have been made the basis of the
authentication and delivery of Debt Securities, the release of collateral
for the Debt Securities or the withdrawal of cash, which have been
substituted for retired Funded Property or which have been used for other
specified purposes) after specified deductions and additions, primarily
including adjustments to offset property retirements;
o the aggregate principal amount of retired Debt Securities, but if Class A
Bonds had been made the basis for the authentication and delivery of the
retired Debt Securities, only after the discharge of the related Class A
Mortgage; or
o an amount of cash deposited with the Indenture Trustee.
(Indenture, Sections 1602 through 1605.)
Property Additions generally include any property that is owned by us and
is subject to the lien of the Indenture. (Indenture, Section 103.)
We expect that, until the Release Date, we will issue Debt Securities
primarily on the basis of First Mortgage Bonds. However, we have the right to
issue additional Debt Securities on the basis of Property Additions, retired
Debt Securities and cash deposits, and Class A Bonds not issued under the
Mortgage.
RELEASE OF PROPERTY
Unless an event of default under the Indenture has occurred and is
continuing, we may obtain the release from the lien of the Indenture of any
collateral for the Debt Securities, except for cash held by the Indenture
Trustee, upon delivery to the Indenture Trustee of an amount in cash equal to
the amount, if any, by which the Cost of the property to be released (or, if
less, the Fair Value to us of the property at the time it became Funded
Property) exceeds the aggregate of:
o an amount equal to the aggregate principal amount of obligations secured by
Purchase Money Liens upon the property to be released and delivered to the
Indenture Trustee;
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o an amount equal to the Cost or Fair Value to us (whichever is less) of
certified Property Additions not constituting Funded Property after
specified deductions and additions, primarily including adjustments to
offset property retirements (except that these adjustments need not be made
if the Property Additions were acquired or made within the 90-day period
preceding the release);
o the aggregate principal amount of Debt Securities that we would be entitled
to issue on the basis of retired Debt Securities (with the entitlement
being waived by operation of the release);
o any amount of cash and/or an amount equal to the aggregate principal amount
of obligations secured by Purchase Money Liens upon the property released
delivered to the trustee or other holder of a lien prior to the lien of the
Indenture, subject to specified limitations described below;
o the aggregate principal amount of Debt Securities delivered to the
Indenture Trustee (with the Debt Securities to be canceled by the Indenture
Trustee); and
o any taxes and expenses incidental to any sale, exchange, dedication or other
disposition of the property to be released.
(Indenture, Section 1803.)
Property that is not Funded Property may generally be released from the
lien of the Indenture without depositing any cash or property with the Indenture
Trustee as long as (a) the aggregate amount of Cost or Fair Value to us
(whichever is less) of all Property Additions which do not constitute Funded
Property (excluding the property to be released) after some deductions and
additions, primarily including adjustments to offset property retirements, is
not less than zero or (b) the Cost or Fair Value (whichever is less) of property
to be released does not exceed the aggregate amount of the Cost or Fair Value to
us (whichever is less) of Property Additions acquired or made within the 90-day
period preceding the release. (Indenture, Section 1804.)
The Indenture provides simplified procedures for the release of property
which has been released from the lien of a Class A Mortgage, minor properties
and property taken by eminent domain, and provides for dispositions of certain
obsolete property and grants or surrender of certain rights without any release
or consent by the Indenture Trustee. (Indenture Sections 1802, 1805, 1807 and
1808.)
If we retain any interest in any property released from the lien of the
Indenture, the Indenture will not become a lien on the property or the interest
in the property or any improvements, extensions or additions to, or any
renewals, replacements or substitutions of or for, any part or parts of the
property. (Indenture, Section 1810.)
WITHDRAWAL OF CASH
Unless an event of default under the Indenture has occurred and is
continuing, and subject to specified limitations, cash held by the Indenture
Trustee may, generally, (1) be withdrawn by us (a) to the extent of the Cost or
Fair Value to us (whichever is less) of Property Additions not constituting
Funded Property, after specified deductions and additions, primarily including
adjustments to offset retirements (except that these adjustments need not be
made if the Property Additions were acquired or made within the 90-day period
preceding the withdrawal) or (b) in an amount equal to the aggregate principal
amount of Debt Securities that we would be entitled to issue on the basis of
retired Debt Securities (with the entitlement to the issuance being waived by
operation of the withdrawal) or (c) in an amount equal to the aggregate
principal amount of any outstanding Debt Securities delivered to the Indenture
Trustee, or (2) upon our request, be applied to (a) the purchase of Debt
Securities or (b) the payment (or provision for payment) at stated maturity of
any Debt Securities or the redemption (or provision for payment) of any Debt
Securities which are redeemable (Indenture, Section 1806); except that cash
deposited with the Indenture Trustee as the basis for the authentication and
delivery of Debt Securities, as well as cash representing a payment of principal
of Class A Bonds, may, in addition, be withdrawn in an amount equal to the
aggregate principal amount of Class A Bonds delivered to the Indenture Trustee.
(Indenture, Sections 1605 and 1702.)
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DISCHARGE OF LIEN; RELEASE DATE
At any time when the aggregate principal amount of all Class A Bonds
outstanding under all Class A Mortgages, other than those held by the Indenture
Trustee, does not exceed the greater of 5% of the net book value of our Electric
and Gas Utility Property or 5% of our Capitalization, the Indenture may be
amended and supplemented, without the consent of the holders of Debt Securities
or any other Debt Securities, to eliminate all terms and conditions relating to
collateral for the Debt Securities, with the result that our obligations under
the Indenture and the Debt Securities would be entirely unsecured. We refer to
the date on which the elimination of collateral occurs as the "Release Date."
The occurrence of the Release Date is subject to our delivery of the
following documents to the Indenture Trustee:
o a company order requesting execution and delivery by the Indenture Trustee
of a supplemental indenture and other instruments necessary to discharge,
cancel, terminate or satisfy the lien of the Indenture;
o an officer's certificate stating that
(1) to the knowledge of the officer, no event of default under the
Indenture has occurred and is continuing; and
(2) the aggregate principal amount of all Class A Bonds outstanding
under all Class A Mortgages, other than those held by the
Indenture Trustee, does not exceed the greater of 5% of the net
book value of our Electric and Gas Utility Property or 5% of our
Capitalization; and
o an opinion of counsel to the effect that none of our Electric and Gas Utility
Property, other than Excepted Property, is subject to any lien other than the
lien of the Indenture and Permitted Liens.
Upon the execution and delivery of the amendment of the Indenture as
contemplated above, the lien of the Indenture will be deemed to have been
satisfied and discharged and the Indenture Trustee will release the collateral
for the Debt Securities from the lien of the Indenture and surrender all Class A
Bonds held by the Indenture Trustee under the Indenture to the respective Class
A Trustee for cancellation. (Indenture, Section 1811.)
As of December 31, 2002, we had $35 million aggregate principal amount
outstanding of a series of First Mortgage Bonds that is not redeemable prior to
maturity and matures on April 1, 2012. Unless we purchase or defease some of
this series of First Mortgage Bonds or increase the net book value of our
Electric and Gas Utility Property or our Capitalization to at least $700
million, a Release Date is unlikely to occur prior to April 1, 2012.
LIMITATION ON SECURED DEBT
So long as any of the Debt Securities remain outstanding, we will not issue
any Secured Debt other than Permitted Secured Debt (in each case as defined
below) without the consent of the holders of a majority in principal amount of
the outstanding Debt Securities of all series with respect to which this
covenant is made, considered as one class; provided, however, that this covenant
will not prohibit the creation or existence of any Secured Debt if either:
o we make effective provision whereby all Debt Securities then outstanding
will be secured equally and ratably with the Secured Debt; or
o we deliver to the Indenture Trustee bonds, notes or other evidences of
indebtedness secured by the lien which secures the Secured Debt in an
aggregate principal amount equal to the aggregate principal amount of the
Debt Securities then outstanding and meeting other requirements set forth
in the Indenture.
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"Secured Debt" means Debt created, issued, incurred or assumed by us which
is secured by a lien upon any of our property (other than Excepted Property).
For purposes of this covenant, any Capitalized Lease Liabilities will be deemed
to be Debt secured by a lien on our property.
"Debt" means:
o our indebtedness for borrowed money evidenced by a bond, debenture, note or
other written instrument or agreement by which we are obligated to repay
the borrowed money;
o any guaranty by us of any indebtedness of another person; and
o any Capitalized Lease Liabilities.
"Debt" does not include, among other things:
o indebtedness under any installment sale or conditional sale agreement or
any other agreement relating to indebtedness for the deferred purchase
price of property or services;
o any trade obligations (including any obligations under power or other
commodity purchase agreements and any associated hedges or derivatives) or
other obligations in the ordinary course of business;
o obligations under any lease agreement that are not Capitalized Lease
Liabilities; or
o any liens securing indebtedness, neither assumed nor guaranteed by us nor
on which we customarily pay interest, existing upon real estate or rights
in or relating to real estate acquired by us for substation, transmission
line, transportation line, distribution line or right of way purposes.
"Permitted Secured Debt" means, as of any particular time:
o Class A Bonds and Debt Securities issued prior to the Release Date;
o Secured Debt which matures less than one year from the date of the issuance
or incurrence and is not extendible at the option of the issuer; and any
refundings, refinancings and/or replacements of any the Secured Debt by or
with Secured Debt that matures less than one year from the date of the
refunding, refinancing and/or replacement and is not extendible at the
option of the issuer;
o Secured Debt secured by Purchase Money Liens or any other liens existing or
placed upon property at the time of, or within one hundred eighty (180)
days after, the acquisition thereof by us, and any refundings, refinancings
and/or replacements of any the Secured Debt; provided, however, that no
Purchase Money Lien or other Lien of this type will extend to or cover any
of our property other than (1) the property so acquired and improvements,
extensions and additions to the property and renewals, replacements and
substitutions of or for the property or any part or parts of the property
and (2) with respect to Purchase Money Liens, other property subsequently
acquired by us;
o Secured Debt relating to governmental obligations the interest on which is
not included in gross income for purposes of federal income taxation
pursuant to Section 103 of the Internal Revenue Code of 1986, as amended
(or any successor provision of law), for the purpose of financing or
refinancing, in whole or in part, costs of acquisition or construction of
property to be used by us, to the extent that the lien which secures the
Secured Debt is required either by applicable law or by the issuer of the
governmental obligations or is otherwise necessary in order to establish or
maintain the exclusion from gross income; and any refundings, refinancings
and/or replacements of any Secured Debt by or with similar Secured Debt;
o Secured Debt (i) which is related to the construction or acquisition of
property not previously owned by us or (ii) which is related to the
financing of a project involving the development or expansion of our
property and (iii) in either case, the obligee in respect of which has no
recourse to us or any of our property other than the property constructed
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or acquired with the proceeds of the transaction or the project financed
with the proceeds of the transaction (or the proceeds of the property or
the project); and any refundings, refinancings and/or replacements of any
Secured Debt by or with Secured Debt described in clause (iii) above; and
o in addition to the Permitted Secured Debt described above, Secured Debt not
otherwise so permitted in an aggregate principal amount not exceeding the
greater of 10% of our Net Tangible Assets or 10% of our Capitalization.
"Net Tangible Assets" means the amount shown as total assets on our
unconsolidated balance sheet, less (i) intangible assets including, but without
limitation, such items as goodwill, trademarks, trade names, patents,
unamortized debt discount and expense and other regulatory assets carried as
assets on our unconsolidated balance sheet and (ii) appropriate adjustments, if
any, on account of minority interests. Net Tangible Assets will be determined in
accordance with generally accepted accounting principles and practices
applicable to the type of business in which we are engaged.
"Capitalized Lease Liabilities" means the amount, if any, shown as
liabilities on our unconsolidated balance sheet for capitalized leases of
electric transmission and distribution property not owned by us, which amount
will be determined in accordance with generally accepted accounting principles
and practices applicable to the type of business in which we are engaged.
(Indenture, Section 707.)
DEFEASANCE
We will be discharged from our obligations on the Debt Securities of a
particular series if we irrevocably deposit with the Indenture Trustee or any
paying agent, other than us, sufficient cash or government securities to pay the
principal, interest, any premium and any other sums when due on the stated
maturity date or a redemption date of that series of Debt Securities.
(Indenture, Section 801.)
CONSOLIDATION, MERGER AND CONVEYANCE OF ASSETS
Under the terms of the Indenture, we may not consolidate with or merge into
any other entity or convey, transfer or lease as or substantially as an entirety
to any entity our Electric and Gas Utility Property, unless:
o the surviving or successor entity, or an entity which acquires by
conveyance or transfer or which leases our Electric and Gas Utility
Property as, or substantially as, an entirety, is organized and validly
existing under the laws of any domestic jurisdiction and it expressly
assumes our obligations on all Debt Securities then outstanding under the
Indenture and if the consolidation, merger, conveyance, sale or other
transfer occurs prior to the Release Date, confirms the lien of the
Indenture on the collateral for the Debt Securities;
o in the case of a lease, the lease is made expressly subject to termination
by us or by the Indenture Trustee and by the purchaser of the property so
leased at any sale thereof at any time during the continuance of an event
of default under the Indenture;
o we shall have delivered to the Indenture Trustee an officer's certificate
and an opinion of counsel as provided in the Indenture; and
o immediately after giving effect to the transaction, no event of default
under the Indenture, or event which, after notice or lapse of time or both,
would become an event of default under the Indenture, shall have occurred
and be continuing.
(Indenture, Section 1201.) In the case of the conveyance or other transfer of
the Electric and Gas Utility Property as or substantially as an entirety to any
other person, upon the satisfaction of all the conditions described above, we
would be released and discharged from all our obligations under the Indenture
and on the Debt Securities then outstanding unless we elect to waive release and
discharge. (Indenture, Section 1204.)
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The Indenture does not prevent or restrict:
o any conveyance or other transfer, or lease, of any part of our Electric and
Gas Utility Property that does not constitute the entirety, or
substantially the entirety, of our Electric and Gas Utility Property; or
(Indenture, Section 1205.)
o any conveyance, transfer or lease of any of our properties where we retain
Electric and Gas Utility Property with a fair value in excess of 143% of
the aggregate principal amount of all outstanding Debt Securities, and any
other outstanding debt securities that rank equally with, or senior to, the
Debt Securities with respect to the Electric and Gas Utility Property,
other than any Class A Bonds held by the Indenture Trustee. This fair value
will be determined within 90 days of the conveyance, transfer or lease by
an independent expert that we select and that is approved by the Indenture
Trustee. (Indenture, Section 1206.)
The terms of the Indenture do not restrict us in a merger in which we are the
surviving entity. (Indenture, Section 1205.)
EVENTS OF DEFAULT
"Event of default," when used in the Indenture with respect to Debt
Securities, means any of the following:
o failure to pay interest on any Debt Security for 30 days after it is due;
o failure to pay the principal of or any premium on any Debt Security when
due;
o failure to perform any other covenant in the Indenture that continues for
90 days after we receive written notice from the Indenture Trustee, or we
and the Indenture Trustee receive a written notice from the holders of at
least 33% in aggregate principal amount of the outstanding Debt Securities;
o events of bankruptcy, insolvency or our reorganization as specified in the
Indenture;
o as long as the Indenture Trustee holds any outstanding Class A Bonds which
were delivered as the basis for the authentication and delivery of
outstanding Debt Securities, the occurrence of a matured event of default
under the related Class A Mortgage (other than a matured event of default
which (i) is not a failure to make payments on Class A Bonds and is not of
similar kind or character to the event of default relating to events of
bankruptcy, insolvency or reorganization, referred to above, and (ii) has
not resulted in the acceleration of the outstanding Class A Bonds under the
Class A Mortgage); provided, however, that the waiver or cure of the event
of default under a Class A Mortgage will constitute a waiver and cure of
the corresponding event of default under the Indenture, and the rescission
and annulment of the consequences thereof will constitute a rescission and
annulment of the corresponding consequences under the Indenture; or
o any other event of default included in any supplemental indenture or
officer's certificate for that series of Debt Securities.
(Indenture, Sections 901 and 1301.)
REMEDIES
If an event of default under the Indenture occurs and is continuing, then
the Indenture Trustee or the holders of at least 33% in aggregate principal
amount of the outstanding Debt Securities may declare the principal amount of
all of the Debt Securities to be due and payable immediately.
At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the
Indenture Trustee, the event of default under the Indenture giving rise to the
declaration of acceleration will be considered cured, and the declaration and
its consequences will be considered rescinded and annulled, if:
20
o we have paid or deposited with the Indenture Trustee a sum sufficient to pay:
(1) all overdue interest on all outstanding Debt Securities;
(2) the principal of and premium, if any, on the outstanding Debt
Securities that have become due otherwise than by the declaration
of acceleration and overdue interest thereon;
(3) interest on overdue interest to the extent lawful; and
(4) all amounts due to the Indenture Trustee under the Indenture; and
o any other event of default under the Indenture with respect to the Debt
Securities of that series has been cured or waived as provided in the
Indenture.
(Indenture, Section 902.)
There is no automatic acceleration, even in the event of our bankruptcy,
insolvency or reorganization.
Subject to the Indenture, under specified circumstances and to the extent
permitted by law, if an event of default under the Indenture occurs and is
continuing prior to the Release Date, the Indenture Trustee has the power to
appoint a receiver of the collateral for the Debt Securities, and is entitled to
all other remedies available to mortgagees and secured parties under the Uniform
Commercial Code or any other applicable law. (Indenture, Section 917.)
Upon the occurrence and continuance of an event of default under the
Indenture after the Release Date, the remedies of the Indenture Trustee and the
holders under the Indenture would be limited to the rights of unsecured
creditors.
In addition to every other right and remedy provided in the Indenture, the
Indenture Trustee may exercise any right or remedy available to the Indenture
Trustee in its capacity as owner and holder of Class A Bonds which arises as a
result of a default or matured event of default under any Class A Mortgage,
whether or not an event of default under the Indenture has occurred and is
continuing. (Indenture, Section 916.)
Other than its duties in case of an event of default under the Indenture,
the Indenture Trustee is not obligated to exercise any of its rights or powers
under the Indenture at the request, order or direction of any of the holders,
unless the holders offer the Indenture Trustee a reasonable indemnity.
(Indenture, Section 1003.) If they provide this reasonable indemnity, the
holders of a majority in principal amount of the outstanding Debt Securities
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or exercising any
power conferred upon the Indenture Trustee. The Indenture Trustee is not
obligated to comply with directions that conflict with law or other provisions
of the Indenture. (Indenture, Section 912.)
No holder of Debt Securities will have any right to institute any
proceeding under the Indenture, or any remedy under the Indenture, unless:
o the holder has previously given to the Indenture Trustee written notice of
a continuing event of default under the Indenture;
o the holders of a majority in aggregate principal amount of the outstanding
Debt Securities of all series have made a written request to the Indenture
Trustee, and have offered reasonable indemnity to the Indenture Trustee to
institute proceedings; and
o the Indenture Trustee has failed to institute any proceeding for 60 days
after notice and has not received during that period any direction from the
holders of a majority in aggregate principal amount of the outstanding Debt
Securities, inconsistent with the written request of holders referred to
above.
(Indenture, Section 907.) However, these limitations do not apply to a suit
by a holder of an Debt Security for payment of the principal, premium, if any,
or interest on the Debt Security on or after the applicable due date.
(Indenture, Section 908.)
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We will provide to the Indenture Trustee an annual statement by an
appropriate officer as to our compliance with all conditions and covenants under
the Indenture. (Indenture, Section 705.)
MODIFICATION AND WAIVER
Without the consent of any holder of Debt Securities, we and the Indenture
Trustee may enter into one or more supplemental indentures for any of the
following purposes:
o to evidence the assumption by any permitted successor of our covenants in
the Indenture and in the Debt Securities;
o to permit an entity acquiring a substantial portion of our Electric and Gas
Utility Property to assume a pro rata share of the outstanding Debt
Securities based upon the net book value of the Electric and Gas Utility
Property acquired by that entity and to release us and our properties from
any obligations or liens under the Indenture with respect to those assumed
Debt Securities, provided that the assumed Debt Securities will be secured
by a lien on the acquired Electric and Gas Utility Property to
substantially the same extent and upon substantially the same terms as
provided in the Indenture except for the substitution of the acquiring
entity for us;
o to add one or more covenants or other provisions for the benefit of the
holders of all or any series or tranche of Debt Securities, or to surrender
any right or power conferred upon us;
o to add additional events of default under the Indenture for all or any
series of Debt Securities;
o to change or eliminate or add any provision to the Indenture; provided,
however, if the change will adversely affect the interests of the holders
of Debt Securities of any series in any material respect, the change,
elimination or addition will become effective only:
(1) when the consent of the holders of Debt Securities of such series
has been obtained in accordance with the Indenture; or
(2) when no Debt Securities of the affected series remain outstanding
under the Indenture;
o to provide additional security for any Debt Securities;
o to establish the form or terms of Debt Securities of any other series as
permitted by the Indenture;
o to provide for the authentication and delivery of bearer securities with or
without coupons;
o to evidence and provide for the acceptance of appointment by a separate or
successor Trustee or co-trustee;
o to provide for the procedures required for use of a noncertificated system
of registration for the Debt Securities of all or any series;
o to change any place where principal, premium, if any, and interest shall be
payable, Debt Securities may be surrendered for registration of transfer or
exchange and notices to us may be served;
o to amend and restate the Indenture as originally executed and as amended
from time to time, with additions, deletions and other changes that do not
adversely affect the interests of the holders of Debt Securities of any
series in any material respect;
o to cure any ambiguity or inconsistency; or
o after the Release Date, to amend the Indenture to eliminate any provisions
related to the lien of the Indenture, collateral for the Debt Securities
and Class A Bonds which are no longer applicable.
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(Indenture, Section 1301.)
The holders of at least a majority in aggregate principal amount of the
Debt Securities of all series then outstanding may waive compliance by us with
some restrictive provisions of the Indenture. (Indenture, Section 706.) The
holders of not less than a majority in principal amount of the outstanding Debt
Securities may waive any past default under the Indenture, except a default in
the payment of principal, premium, if any, or interest and certain covenants and
provisions of the Indenture that cannot be modified or be amended without the
consent of the holder of each outstanding Debt Security of any series affected.
(Indenture, Section 913.)
The consent of the holders of a majority in aggregate principal amount of
the Debt Securities of all series then outstanding, considered as one class, is
required for all other modifications to the Indenture. However, if less than all
of the series of Debt Securities outstanding are directly affected by a proposed
supplemental indenture, then the consent only of the holders of a majority in
aggregate principal amount of the outstanding Debt Securities of all series that
are directly affected, considered as one class, will be required. No amendment
or modification may without the consent of all the holders of the Debt
Securities of all series then outstanding:
o change the stated maturity of the principal of, or any installment of
principal of or interest on, any Debt Security, or reduce the principal
amount of any Debt Security or its rate of interest or change the method of
calculating that interest rate or reduce any premium payable upon
redemption, or change the currency in which payments are made, or impair
the right to institute suit for the enforcement of any payment on or after
the stated maturity of any Debt Security;
o create any lien ranking prior to the lien of the Indenture with respect to
more than 10% of the collateral for the Debt Securities or, except as
provided in the Indenture in connection with releases, the withdrawal of
cash held by the Indenture Trustee and the Release Date, terminate the lien
of the Indenture on more than 10% of the collateral for the Debt Securities
or deprive any holder of the benefits of the security of the lien of the
Indenture;
o reduce the percentage in principal amount of the outstanding Debt
Securities of any series the consent of the holders of which is required
for any supplemental indenture or any waiver of compliance with a provision
of the Indenture or any default thereunder and its consequences, or reduce
the requirements for quorum or voting; or
o modify some of the provisions of the Indenture relating to supplemental
indentures, waivers of some covenants and waivers of past defaults with
respect to the Debt Securities of any series.
A supplemental indenture that changes the Indenture solely for the benefit
of one or more particular series of Debt Securities, or modifies the rights of
the holders of Debt Securities of one or more series, will not affect the rights
under the Indenture of the holders of the Debt Securities of any other series.
(Indenture, Section 1302.)
The Indenture provides that Debt Securities owned by us or anyone else
required to make payment on the Debt Securities shall be disregarded and
considered not to be outstanding in determining whether the required holders
have given a request or consent. (Indenture, Section 101.)
We may fix in advance a record date to determine the required number of
holders entitled to give any request, demand, authorization, direction, notice,
consent, waiver or similar act of the holders, but we have no obligation to do
so. If we fix a record date, that request, demand, authorization, direction,
notice, consent, waiver or other act of the holders may be given before or after
that record date, but only the holders of record at the close of business on
that record date will be considered holders for the purposes of determining
whether holders of the required percentage of the outstanding Debt Securities
have authorized or agreed or consented to the request, demand, authorization,
direction, notice, consent, waiver or other act of the holders. For that
purpose, the outstanding Debt Securities will be computed as of the record date.
Any request, demand, authorization, direction, notice, consent, election,
waiver or other act of a holder of any Debt Security will bind every future
holder of that Debt Security and the holder of every Debt Security issued upon
the registration of transfer of or in exchange for that Debt Security. A
transferee will also be bound by acts of the Indenture Trustee or us in reliance
thereon, whether or not notation of that action is made upon the Debt Security.
(Indenture, Section 106.)
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VOTING OF CLASS A BONDS
The Indenture provides that the Indenture Trustee will, as holder of Class
A Bonds delivered as the basis for the issuance of Debt Securities, attend
meetings of bondholders under the related Class A Mortgage, or deliver its proxy
in connection with those meetings, that relate to matters with respect to which
it, as a holder, is entitled to vote or consent. The Indenture provides that, so
long as no event of default under the Indenture has occurred and is continuing,
the Indenture Trustee will, as holder of the Class A Bonds, vote or consent
(without any consent or other action by the holders of the Debt Securities,
except as described in the proviso of paragraph (7) below) in favor of any
amendments or modifications to the Class A Mortgage of substantially the same
tenor and effect as follows:
(1) to modify any Class A Mortgage to allow us to issue Class A Bonds up
to 70% of the lower of (a) the fair value to us of the property
subject to the lien of that Class A Mortgage as of a valuation date
specified by us and (b) the cost of that property as of the valuation
date;
(2) to make certain technical amendments to the Mortgage;
(3) to delete the net earnings test for the issuance of Class A Bonds and
all references to it in any Class A Mortgage;
(4) to amend any Class A Mortgage so we may pay dividends and
distributions to our common stockholders and repurchase our common
stock so long as our shareholders' equity is positive;
(5) to amend any Class A Mortgage to permit an entity acquiring a
substantial portion of the property subject to the lien of that Class
A Mortgage to assume a pro rata share of the outstanding Class A Bonds
issued under that Class A Mortgage based upon the net book value of
that property acquired by that entity and to release us and our
properties from any obligations or liens under that Class A Mortgage
with respect to those assumed Class A Bonds, provided that the assumed
Class A Bonds will be secured by a first lien on that acquired
property to substantially the same extent and upon substantially the
same terms as provided in that Class A Mortgage except for the
substitution of the acquiring entity for us;
(6) to conform any provision of a Class A Mortgage in all material
respects to the correlative provision of the Indenture, to add to a
Class A Mortgage any provision not otherwise contained therein which
conforms in all material respects to a provision contained in the
Indenture, to delete from a Class A Mortgage any provision to which
the Indenture contains no correlative provision and any combination of
the foregoing; and/or
(7) with respect to any amendments or modifications to any Class A
Mortgage other than those amendments or modifications referred to in
clauses (1) through (6) above, vote all the Class A Bonds delivered
under the Class A Mortgage, or consent with respect thereto,
proportionately with the vote or consent of holders of all other Class
A Bonds outstanding under the Class A Mortgage the holders of which
are eligible to vote or consent, as evidenced by a certificate
delivered by the trustee under the Class A Mortgage; provided,
however, that the Indenture Trustee will not vote in favor of, or
consent to, any amendment or modification of a Class A Mortgage which,
if it were an amendment or modification of the Indenture, would
require the consent of holders of Debt Securities as described under
"Modification and Waiver," without the prior consent of holders of
Debt Securities which would be required for an amendment or
modification of the Indenture. (Indenture, Section 1705.)
As described more fully in DESCRIPTION OF THE FIRST MORTGAGE BONDS -
"Modification" below, we may make amendments to, or eliminate some of the
covenants in, the Mortgage with the consent of the holders of 60% of the
outstanding First Mortgage Bonds issued under the Mortgage. A holder of Debt
Securities would no longer benefit from the covenants contained in the Mortgage
should the Indenture Trustee vote these First Mortgage Bonds to amend or
eliminate the covenants as described above.
24
RESIGNATION OF A TRUSTEE
The Indenture Trustee may resign at any time by giving written notice to us
or may be removed at any time by an act of the holders of a majority in
principal amount of all series of Debt Securities then outstanding delivered to
the Indenture Trustee and us. No resignation or removal of the Indenture Trustee
and no appointment of a successor trustee will be effective until the acceptance
of appointment by a successor trustee. So long as no event of default or event
which, after notice or lapse of time, or both, would become an event of default
has occurred and is continuing and except with respect to a trustee appointed by
act of the holders, if we have delivered to the Indenture Trustee a resolution
of our Board of Directors appointing a successor trustee and the successor has
accepted the appointment in accordance with the terms of the Indenture, the
Indenture Trustee will be deemed to have resigned and the successor will be
deemed to have been appointed as trustee in accordance with the Indenture.
(Indenture, Section 1010.)
NOTICES
Notices to holders of Debt Securities will be given by mail to the
addresses of the holders as they may appear in the security register for Debt
Securities. (Indenture, Section 108.)
TITLE
We, the Indenture Trustee, and any of our or the Indenture Trustee's
agents, may treat the person in whose name Debt Securities are registered as the
absolute owner thereof, whether or not the Debt Securities may be overdue, for
the purpose of making payments and for all other purposes irrespective of notice
to the contrary. (Indenture, Section 308.)
GOVERNING LAW
The Indenture is, and the Debt Securities will be, governed by, and
construed in accordance with, the laws of the state of New York except where
otherwise required by law. (Indenture, Section 114.)
INFORMATION ABOUT THE INDENTURE TRUSTEE
The Indenture Trustee will be The Bank of New York. In addition to acting
as Indenture Trustee, The Bank of New York also acts as the Mortgage Trustee.
The Bank of New York also acts, and may act, as trustee under various other of
our and our affiliates' indentures, trusts and guarantees. We and our affiliates
maintain deposit accounts and credit and liquidity facilities and conduct other
banking transactions with the trustee and its affiliates in the ordinary course
of our respective businesses.
DESCRIPTION OF THE FIRST MORTGAGE BONDS
As discussed above under DESCRIPTION OF THE DEBT SECURITIES - "Security"
and "Discharge of Lien; Release Date," the Debt Securities will be issued on the
basis of, and primarily secured by, one or more series of first mortgage bonds
issued by us under the Indenture of Mortgage, dated as of May 1, 1939, made by
and between MDU (formerly Montana-Dakota Utilities Co.) and The New York Trust
Company (The Bank of New York, as successor Corporate Trustee (the "Mortgage
Trustee")) and all indentures supplemental thereto (including the (Forty-Fifth)
Supplemental Indenture, dated as of April 21, 1992, which contains, in Part II
thereof, a Restatement of Indenture) (collectively, the "Mortgage") and
delivered by us to the Indenture Trustee. In this prospectus we refer to all
first mortgage bonds issued or to be issued under the Mortgage, including the
first mortgage bonds to be delivered to the Indenture Trustee, as, collectively,
the "First Mortgage Bonds."
We will issue First Mortgage Bonds in an aggregate principal amount equal
to the aggregate principal amount of the Debt Securities, in one or more series,
under the Mortgage, in fully registered form. First Mortgage Bonds are, or will
be, secured by a first mortgage lien on the Mortgaged Property as described
below under "Security and Priority." All First Mortgage Bonds are equally
secured and rank equally with respect to each other.
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The Mortgage is filed as an exhibit to the registration statement. The
Mortgage and its associated documents contain the full legal text of the matters
described in this section. Because this section is a summary, it does not
describe every aspect of the First Mortgage Bonds or the Mortgage. This summary
is subject to and qualified in its entirety by reference to all the provisions
of the Mortgage, including definitions of terms used in the Mortgage, which may
be used in this document without definition. We also include references in
parentheses to sections of the Mortgage. Whenever we refer to particular
sections or defined terms of the Mortgage in this prospectus or in a prospectus
supplement, the references are to the Restatement of Indenture described above,
and all amendments or modifications to the Restatement of Indenture, if any; and
the sections or defined terms are incorporated by reference into this document
or in the prospectus supplement. This summary also is subject to and qualified
by reference to the description of the particular terms of the First Mortgage
Bonds described in the applicable prospectus supplement or supplements. The
Mortgage has been qualified under the Trust Indenture Act, and you should refer
to the Trust Indenture Act for provisions that apply to the First Mortgage
Bonds.
SECURITY AND PRIORITY
In the opinion of our General Counsel, the First Mortgage Bonds now or
hereafter issued will be secured, together with all other First Mortgage Bonds,
by a valid and direct first mortgage lien on substantially all of the fixed
properties owned and all franchises held by us immediately prior to July 1,
2000, together with improvements, extensions and additions to, and renewals,
replacements and substitutions of or for, any part or parts of these properties,
other than property excepted or released from the Mortgage (as described below),
subject to the lien of taxes for the current year and the lien of taxes and
assessments not yet delinquent and to specified exceptions and reservations
which do not, in the opinion of counsel, materially affect our title to or right
to use the properties. This property, other than property excepted and released
from the Mortgage, is sometimes referred to as the "Mortgaged Property." There
are excepted from Mortgaged Property all properties acquired by us on or after
July 1, 2000, including the properties acquired in the merger with Great Plains
Energy Corp. and Great Plains Natural Gas Co. (which include all properties of
the Company located in the state of Minnesota and all gas distribution
properties located in the southeastern part of North Dakota), but excluding
improvements, extensions and additions to, and renewals, replacements and
substitutions of or for, any part or parts of the Mortgaged Property owned by us
immediately prior to July 1, 2000 unless otherwise excepted from the lien of the
Mortgage. There are also excepted from Mortgaged Property all cash, receivables
and securities (including the capital stock of Centennial Energy Holdings, Inc.,
WBI Holdings, Inc., Knife River Corporation, Utility Services, Inc., Centennial
Energy Resources LLC, Centennial Holdings Capital LLC, Centennial Energy
Resources International Inc, Fidelity Exploration & Production Company and any
other subsidiaries); some contracts; merchandise, appliances, materials or
supplies; electric energy, gas, steam and other products; and automobiles,
tractors, ships, railroad cars and aircraft and various other transportation
equipment. The property of subsidiaries, including Centennial Energy Holdings,
Inc., WBI Holdings, Inc., Knife River Corporation, Utility Services, Inc.,
Centennial Energy Resources LLC, Centennial Holdings Capital LLC, Centennial
Energy Resources International Inc, Fidelity Exploration & Production Company
and any other subsidiaries), is not subject to the lien of the Mortgage. We have
released and transferred certain properties from the lien of the Mortgage since
July 1, 2000, and may release additional property subject to the lien of the
Mortgage against various credits, including:
o cash deposited with the Mortgage Trustee,
o the principal amount of bonds or other obligations deposited with the
Mortgage Trustee secured by a purchase money mortgage on the property
released up to 70% of the fair value to us of that property, or
o the fair value in cash of bonds or other obligations of municipal
corporations or other governmental subdivisions possessing taxing
power.
We may withdraw cash held by the Mortgage Trustee against various credits,
including
o the principal amount of refundable bonds not previously used under the
Mortgage,
o 70% of the net bondable value of property additions, or
26
o the lesser of cost or fair value to us of property which is already
subject to the lien of the Mortgage, but which has not yet been used
as a credit under any provisions of the Mortgage.
Property not used as the basis for the issuance of First Mortgage Bonds or
otherwise as a credit under the Mortgage may in effect be released without
substitution of equivalent property.
The Mortgage provides that after-acquired properties (other than the
excepted property and released property described above) that are improvements,
extensions or additions to, or renewals, replacements or substitutions of or
for, any part or parts of the Mortgaged Property will be subject to the lien of
the Mortgage. (Mortgage, Forty-Ninth Supplemental Indenture.) We also may elect
to subject additional property to the lien of the Mortgage by amending the
Mortgage.
ISSUANCE OF ADDITIONAL FIRST MORTGAGE BONDS
We may issue additional First Mortgage Bonds ranking equally with
outstanding First Mortgage Bonds in a principal amount equal to:
(1) 70% of the net bondable value of property additions we acquire;
(2) the amount of cash deposited with the Mortgage Trustee; and
(3) the amount of refundable First Mortgage Bonds surrendered to the
Mortgage Trustee.
(Mortgage, Sections 3.04 through 3.06.)
The First Mortgage Bonds will be issued against property additions,
refunded First Mortgage Bonds and/or the deposit of cash. On December 31, 2002,
we had approximately $164 million of available Property Additions and $163
million of refunded First Mortgage Bonds. See the discussion above under
"Security and Priority."
With some exceptions in the case of (3) above, additional First Mortgage
Bonds may be issued only if our net earnings available for interest after
depletion, as defined in the Mortgage, for any twelve consecutive calendar
months within the fifteen calendar months immediately preceding the month in
which the application for the additional First Mortgage Bonds is made, are in
the aggregate equal to at least two times the amount of the annual stated
interest charges on all First Mortgage Bonds thereafter to be outstanding, and
on all permitted equal or prior lien debt, if any. (Mortgage, Sections 1.01 and
3.03.) For the twelve months ended December 31, 2002, our net earnings available
for interest after depletion were $75 million or 7.7 times the annual stated
interest charges on all First Mortgage Bonds and permitted equal or prior lien
debt outstanding on that date, which would have permitted us to issue
approximately $327 million of additional First Mortgage Bonds.
Property available for use as property additions includes property useful
in the energy business in any form (other than gas but including gas
distribution property) and water and steam heat property. The property may be
located anywhere in the United States of America or its coastal waters and may
also include space satellites (including solar power satellites), space stations
and other analogous facilities. (Mortgage, Section 1.01.)
DIVIDEND RESTRICTIONS
So long as any of the First Mortgage Bonds are outstanding, we may declare
and pay dividends in cash or property on our common stock only out of Surplus,
as defined in the Mortgage, or out of net profits for the fiscal year or the
preceding fiscal year. However, we may not pay dividends out of net profits if
the Capital of the Company, as defined in the Mortgage, has been diminished to a
specified extent. (Mortgage, Section 2.01).
MAINTENANCE AND DEPRECIATION PROVISIONS
We are required to make expenditures necessary to maintain the mortgaged
property in good repair, except that we may abandon any property, and to make
provisions for depreciation and for depletion of depletable fixed assets in
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accordance with good accounting practices and in accordance with any applicable
rules of any regulatory authority having jurisdiction. (Mortgage, Section 6.06.)
MODIFICATION
Modifications of the terms of the Mortgage may be made with our consent by
an affirmative vote of at least 60% in principal amount of outstanding First
Mortgage Bonds and of at least 60% in principal amount of outstanding First
Mortgage Bonds of any series especially affected by the modification; but no
modification may be made which will affect the terms of payment of the principal
at maturity of, or interest on, any First Mortgage Bond. (Mortgage, Article XV.)
VOTING OF FIRST MORTGAGE BONDS HELD BY THE INDENTURE TRUSTEE
The Indenture Trustee will, as holder of the First Mortgage Bonds, attend
meetings of bondholders under the Mortgage, or deliver its proxy in connection
with those meetings, as to matters with respect to which it is entitled to vote
or consent. See DESCRIPTION OF THE DEBT SECURITIES - "Voting of Class A Bonds."
DEFAULTS AND NOTICE OF DEFAULTS
"Events of default" include the failure to pay principal, failure for 30
days to pay interest or to make any required deposit in any fund for the
purchase or redemption of First Mortgage Bonds (including any sinking fund or
improvement and sinking fund), failure for 90 days after written notice to
perform any other covenant, and various events in bankruptcy or insolvency.
(Mortgage, Article IX.)
The Trustees under the Mortgage are required to give notice to Bondholders
of any continuing event of default known to them, but other than for a default
in the payment of principal or interest or a sinking fund installment, the
Trustees may withhold notice if the responsible officers of the Corporate
Trustee in good faith determine that the withholding is in the interests of the
Bondholders. (Mortgage, Section 13.03.)
SATISFACTION AND DISCHARGE
Once we make due provision for the payment of all of the First Mortgage
Bonds and paying all other sums due under the Mortgage, the Mortgage will cease
to be of further effect and may be discharged. (Mortgage, Article XVI.)
ANNUAL REPORT TO THE MORTGAGE TRUSTEE
We must give the Mortgage Trustee an annual statement as to whether or not
we have fulfilled our obligations under the Mortgage throughout the preceding
calendar year.
DESCRIPTION OF THE COMMON STOCK
COMMON STOCK - GENERAL
The following is a description of our common stock. This description is not
complete, and we qualify it by referring to our restated certificate of
incorporation, amended bylaws and Mortgage, all of which we incorporate into
this document by reference, and the laws of the state of Delaware. We also refer
you to the rights agreement, dated as of November 12, 1998, between us and
Norwest Bank Minnesota, NA (now, Wells Fargo Bank Minnesota, N.A.), as rights
agent, that we incorporate into this document by reference.
Our restated certificate of incorporation authorizes us to issue
252,000,000 shares of stock, divided into four classes:
o 500,000 shares of preferred stock, $100 par value;
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o 1,000,000 shares of preferred stock A, without par value;
o 500,000 shares of preference stock, without par value; and
o 250,000,000 shares of common stock, $1.00 par value.
DIVIDEND RIGHTS
Under our restated certificate of incorporation, we may declare and pay
dividends on our common stock, out of surplus or net profits, only if we have
paid or provided for full cumulative dividends on all outstanding shares of
preferred and preference stock. As of March 31, 2003, we had no preference stock
outstanding.
In addition to these provisions, our first mortgage bond indenture includes
a covenant generally to the effect that we may declare and pay dividends in cash
or property on our common stock only either (1) out of "surplus" or (2) in case
there is no "surplus," out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year. For purposes of this
test, "surplus" means the excess of our net assets over our "capital"; and
"capital" means that part of the consideration received by us for any of our
shares of common stock which has been determined to be "capital."
VOTING RIGHTS
Our common stock has one vote per share. The holders of our common stock
are entitled to vote on all matters to be voted on by stockholders. The holders
of our common stock do not have cumulative voting rights.
The holders of our preferred stock, preferred stock A and preference stock
do not have the right to vote, except as our board of directors establishes or
as provided in our restated certificate of incorporation or bylaws or as
determined by state law.
Our restated certificate of incorporation gives the holders of our
preferred stock, preferred stock A or the preference stock the right to vote if
dividends are unpaid, in whole or in part, on their shares for one year. The
holders have one vote per share until we pay the dividend arrearage, declare
dividends for the current dividend period and set aside the funds to pay the
current dividends. In addition, the holders of some series of our preferred
stock and preferred stock A, and/or the holders of our preference stock, must
approve amendments to the restated certificate of incorporation in some
instances.
LIQUIDATION RIGHTS
If we were to liquidate, the holders of the preferred stock, preferred
stock A and the preference stock have the right to receive specified amounts, as
set forth in our restated certificate of incorporation, before we can make any
payments to the holders of our common stock. After the preferred and preference
stock payments are made, the holders of our common stock are entitled to share
in all of our remaining assets available for distribution to stockholders.
OTHER RIGHTS
Our common stock is not liable to further calls or assessment. The holders
of our common stock have no preemptive rights. Our common stock cannot be
redeemed, and it does not have any conversion rights or sinking fund provisions.
EFFECTS ON OUR COMMON STOCK IF WE ISSUE PREFERRED OR PREFERENCE STOCK
Our board of directors has the authority, without further action by the
stockholders, to issue up to 500,000 shares of preferred stock, 1,000,000 shares
of preferred stock A and 500,000 shares of preference stock, each in one or more
series. Our board of directors has the authority to determine the terms of each
series of any preferred or preference stock, within the limits of the restated
certificate of incorporation and the laws of the state of Delaware. These terms
29
include the number of shares in a series, dividend rights, liquidation
preferences, terms of redemption, conversion rights and voting rights.
If we issue any preferred or preference stock, we may negatively affect the
holders of our common stock. These possible negative effects include diluting
the voting power of shares of our common stock and affecting the market price of
our common stock. In addition, the ability of our board of directors to issue
preferred or preference stock may delay or prevent a change in control of MDU
Resources.
As of December 31, 2002, we had 163,000 shares of preferred stock
outstanding, and we have reserved 125,000 shares of Series B preference stock
for issuance in connection with our rights plan.
PROVISIONS OF OUR RESTATED CERTIFICATE OF INCORPORATION AND OUR BYLAWS THAT
COULD DELAY OR PREVENT A CHANGE IN CONTROL
Our restated certificate of incorporation and bylaws contain provisions
which will make it difficult to obtain control of MDU Resources if our board of
directors does not approve the transaction. The provisions include the
following:
PROVISIONS RELATING TO OUR BOARD OF DIRECTORS
CLASSIFIED BOARD
We have divided the members of our board of directors into three classes as
nearly equal in number as may be. Directors in each class are elected for a
three-year term.
This classification of our board of directors may prevent stockholders from
changing the membership of the entire board of directors in a relatively short
period of time. At least two annual meetings, instead of one, generally will be
required to change the majority of directors. The classified board provisions
could have the effect of prolonging the time required for a stockholder with
significant voting power to gain majority representation on our board of
directors. Where majority or supermajority board of directors approval is
necessary for a transaction, like in the case of an interested stockholder
business combination, the inability immediately to gain majority representation
on the board of directors could discourage takeovers and tender offers.
NUMBER OF DIRECTORS, VACANCIES, REMOVAL OF DIRECTORS
Our restated certificate of incorporation provides that our board of
directors will have at least six and at most 15 directors. Two-thirds of the
continuing directors decide the exact number of directors at a given time. Our
board fills any new directorships it creates and any vacancies.
Our directors may be removed only for cause and then only by a majority of
the shares entitled to vote.
MEETINGS OF STOCKHOLDERS
NO CUMULATIVE VOTING
Our restated certificate of incorporation does not provide for cumulative
voting.
ADVANCE NOTICE PROVISIONS
Our bylaws require that for a stockholder to nominate a director or bring
other business before an annual meeting, the stockholder must give notice not
less than 120 days prior to the date corresponding to the date on which we first
mailed our proxy materials for the prior year's annual meeting.
Our restated certificate of incorporation prevents stockholders from
calling a special meeting. In addition, our restated certificate of
incorporation provides that stockholder action may be taken only at a
stockholders' meeting.
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AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
Our restated certificate of incorporation requires the affirmative vote of
80% of the common stock entitled to vote in order to amend some of its
provisions, including provisions relating to the board of directors, unless
two-thirds of the continuing directors approve the amendment.
PROVISIONS RELATING TO THE AUTHORIZATION OF BUSINESS COMBINATIONS
Our restated certificate of incorporation requires the affirmative vote of
80% of the common stock entitled to vote for directors in order to authorize
certain types of business combinations. Any business combination must also meet
specified fair price and procedural requirements. However, if two-thirds of our
continuing directors approve the business combination, then the vote of 80% of
the common stock and the fair price provisions will not be required.
There is also a provision permitting our board of directors to consider
specified factors in determining whether or not to approve some types of
business combinations as specified in our restated certificate of incorporation.
PROVISIONS OF DELAWARE LAW THAT COULD DELAY OR PREVENT A CHANGE IN CONTROL
We are subject to the provisions of Section 203 of the General Corporation
Law of Delaware. With some exceptions, this law prohibits us from engaging in
some types of business combinations with a person who owns 15% or more of our
outstanding voting stock for a three-year period after that person acquires the
stock. This prohibition does not apply if our board of directors approved of the
business combination or the acquisition of our stock before the person acquired
15% of the stock. A business combination includes mergers, consolidations, stock
sales, asset sales and other transactions resulting in a financial benefit to
the interested stockholder.
TRANSFER AGENT; REGISTRAR
The transfer agent and registrar for our common stock is Wells Fargo Bank
Minnesota, N.A., Saint Paul, Minnesota.
DESCRIPTION OF THE PREFERENCE SHARE PURCHASE RIGHTS
GENERAL
On November 12, 1998, the board of directors declared a dividend of one
preference share purchase right for each outstanding share of common stock, par
value $1.00 per share. The dividend was paid on December 1, 1998 to the
stockholders of record on that date.
Our board of directors has adopted a rights agreement to protect our
stockholders from coercive or otherwise unfair takeover tactics. In general
terms, it works by imposing a significant penalty upon any person or group which
acquires 15% or more of our outstanding common stock without the approval of the
board of directors. The rights agreement should not interfere with any merger or
other business combination approved by our board of directors.
For those interested in the specific terms of the rights agreement between
us and Wells Fargo Bank Minnesota, N.A., as the rights agent, dated as of
November 12, 1998, we are providing the following summary description. Please
note, however, that this description is only a summary, and is not complete, and
should be read together with the entire rights agreement, a copy of which is
available from us free of charge.
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THE RIGHTS
Our board of directors authorized the issuance of a preference share
purchase right with respect to each issued and outstanding share of our common
stock on December 1, 1998. The preference share purchase rights will initially
trade with, and will be inseparable from, the common stock. The preference share
purchase rights are evidenced only by certificates that represent shares of
common stock. New preference share purchase rights will accompany any new shares
of common stock that we issue after December 1, 1998 until the distribution date
described below.
EXERCISE PRICE
Each preference share purchase right will allow its holder to purchase from
us one one-thousandth of a share of Series B preference stock for $125, once the
preference share purchase rights become exercisable. This portion of a share of
Series B preference stock will give the stockholder approximately the same
dividend and liquidation rights as would one share of common stock. Prior to
exercise, the preference share purchase right does not give its holder any
dividend, voting, or liquidation rights.
EXERCISABILITY
The preference share purchase rights will not be exercisable until:
o 10 days after the public announcement that a person or group has become an
"acquiring person" by obtaining beneficial ownership of 15% or more of MDU
Resources' outstanding common stock, or, if earlier,
o 10 business days (or a later date determined by our board of directors
before any person or group becomes an acquiring person) after a person or
group begins a tender or exchange offer which, if consummated, would result
in that person or group becoming an acquiring person.
We refer to the date when the preference share purchase rights become
exercisable as the "distribution date." Until that date, the common stock
certificates will also evidence the preference share purchase rights, and any
transfer of shares of common stock will constitute a transfer of preference
share purchase rights. After that date, the preference share purchase rights
will separate from the common stock and be evidenced by book-entry credits or by
preference share purchase rights certificates that we would mail to all eligible
holders of common stock. Any preference share purchase rights held by an
acquiring person are void and may not be exercised.
Our board of directors may reduce the threshold at which a person or group
becomes an acquiring person from 15% to not less than 10% of the outstanding
common stock.
CONSEQUENCES OF A PERSON OR GROUP BECOMING AN ACQUIRING PERSON
Flip In. If a person or group becomes an acquiring person, all holders of
preference share purchase rights except the acquiring person may, for $125,
purchase shares of our common stock with a market value of $250, based on the
market price of the common stock prior to the acquisition.
Flip Over. If we are later acquired in a merger or similar transaction
after the "preference share purchase rights distribution date," all holders of
preference share purchase rights except the acquiring person may, for $125,
purchase shares of the acquiring corporation with a market value of $250, based
on the market price of the acquiring corporation's stock prior to the merger.
PREFERENCE SHARE PROVISIONS
Each one one-thousandth of a share of Series B preference stock, if issued:
o will not be redeemable.
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o will entitle holders to quarterly dividend payments of $.001 per share, or
an amount equal to the dividend paid on one share of common stock,
whichever is greater.
o will entitle holders upon liquidation either to receive $1.00 per share or
an amount equal to the payment made on one share of common stock, whichever
is greater.
o will have no voting power, except as otherwise provided by Delaware law or
our restated certificate of incorporation.
o will entitle holders to a per share payment equal to the payment made on
one share of common stock, if shares of our common stock are exchanged via
merger, consolidation, or a similar transaction.
The value of one one-thousandth interest in a share of Series B preference stock
should approximate the value of one share of common stock.
EXPIRATION
The preference share purchase rights will expire on December 31, 2008.
REDEMPTION
Our board of directors may redeem the preference share purchase rights for
$.01 per preference share purchase right at any time before any person or group
becomes an acquiring person. If the board of directors redeems any preference
share purchase rights, it must redeem all of the preference share purchase
rights. Once the preference share purchase rights are redeemed, the only right
of the holders of preference share purchase rights will be to receive the
redemption price of $.01 per preference share purchase right. The redemption
price will be adjusted if we have a stock split of, or stock dividends on, our
common stock.
EXCHANGE
After a person or group becomes an acquiring person, but before an
acquiring person owns 50% or more of our outstanding common stock, our board of
directors may extinguish the preference share purchase rights by exchanging one
share of common stock or an equivalent security for each preference share
purchase right, other than preference share purchase rights held by the
acquiring person.
ANTI-DILUTION PROVISIONS
Our board of directors may adjust the purchase price of a share of Series B
preference stock, the number of shares of Series B preference stock issuable and
the number of outstanding preference share purchase rights to prevent dilution
that may occur from a stock dividend, a stock split, a reclassification of the
Series B preference stock or common stock. No adjustments to the exercise price
of less than 1% will be made.
AMENDMENTS
The terms of the rights agreement may be amended by our board of directors
without the consent of the holders of the preference share purchase rights.
However, our board may not amend the rights agreement to lower the threshold at
which a person or group becomes an acquiring person to below 10% of our
outstanding common stock. In addition, our board may not cause a person or group
to become an acquiring person by lowering this threshold below the percentage
interest that the person or group already owns. After a person or group becomes
an acquiring person, the board may not amend the agreement in a way that
adversely affects holders of the preference share purchase rights.
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PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus in one or more of the
following ways from time to time: (i) to underwriters for resale to the public
or to institutional investors; (ii) directly to institutional investors; or
(iii) through agents to the public or to institutional investors. The prospectus
supplement with respect to the securities being sold will set forth the terms of
the offering of those securities, including the name or names of any
underwriters or agents, the purchase price of the securities and the net
proceeds to us from the sale, any underwriting discounts or agency fees and
other items constituting underwriters' or agents' compensation, any initial
public offering price, and any discounts or concessions allowed or reallowed or
paid to dealers.
If underwriters participate in the sale, the securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale.
If the securities are sold by agents, commissions payable by us to those
agents will be set forth in a related prospectus supplement. Unless otherwise
indicated in a prospectus supplement, any agent will be acting on a reasonable
efforts basis for the period of its appointment.
Unless otherwise set forth in the prospectus supplement, the obligations of
the underwriters to purchase the securities will be subject to conditions
precedent and the underwriters will be obligated to purchase all the securities
being offered if any are purchased.
We may make sales of our common stock to or through one or more
underwriters or agents in at-the-market offerings, we will do so pursuant to the
terms of a distribution agreement between us and the underwriters or agents. If
we engage in at-the-market sales pursuant to a distribution agreement, we will
issue and sell shares of our common stock to or through one or more underwriters
or agents, which may act on an agency basis or on a principal basis. During the
term of any such distribution agreement, we may sell shares on a daily basis in
exchange transactions or otherwise as we agree with the underwriters or agent.
The distribution agreement may provide that any shares of our common stock sold
will be sold at prices related to the then prevailing market prices for our
securities. Therefore, exact figures regarding net proceeds to us or commissions
to be paid are impossible to determine and will be described in a prospectus
supplement. Pursuant to the terms of the distribution agreement, we also may
agree to sell, and the relevant underwriters or dealers may agree to solicit
offers to purchase, blocks of our common stock. The terms of each such
distribution agreement will be set forth in more detail in a prospectus
supplement to this prospectus. To the extent that any named underwriter or agent
acts as principal pursuant to the terms of a distribution agreement, or if we
offer to sell shares of our common stock through another broker-dealer acting as
underwriter, then such named underwriter may engage in certain transactions that
stabilize, maintain or otherwise affect the price of our common stock. We will
describe any such activities in the prospectus supplement relating to the
transaction. To the extent that any named broker dealer or agent acts as agent
on a best efforts basis pursuant to the terms of a distribution agreement, such
broker dealer or agent will not engage in any such stabilization transactions.
Underwriters and agents may be entitled under agreements entered into with
us to indemnification against securities civil liabilities, including
liabilities under the Securities Act of 1933. Underwriters and agents may engage
in transactions with, or perform services for, us in the ordinary course of
business.
Each series of securities offered by this prospectus will be a new issue
and, except for the common stock, which is listed on the New York Stock Exchange
and the Pacific Exchange, will have no established trading market. We may elect
to list any series of new securities on an exchange, or in the case of the
common stock, on any additional exchange, but unless otherwise indicated in the
prospectus supplement, we have no obligation to cause any securities to be so
listed. Any underwriters that purchase securities for public offering and sale
may make a market in the securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. We
make no assurance as to the liquidity of, or the trading markets for, any
securities.
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EXPERTS
The consolidated financial statements and consolidated financial statement
schedule incorporated by reference from our Annual Report on Form 10-K for the
year ended December 31, 2002, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports which are incorporated herein
by reference (which express an unqualified opinion and include an explanatory
paragraph relating to the application of certain procedures relating to certain
other disclosures and reclassifications of financial statement amounts related
to the 2001 and 2000 consolidated financial statements that were audited by
other auditors for which Deloitte & Touche LLP has expressed no opinion or other
form of assurance other than with respect to such disclosures and
reclassifications), and have been so incorporated in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.
Our consolidated financial statements and schedule as of December 31, 2001
for the years ended December 31, 2001 and 2000 incorporated in this prospectus
by reference from our Annual Report on Form 10-K for the year ended December 31,
2002 were audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto (which expresses an unqualified
opinion and includes an explanatory paragraph relating to the adoption of a new
accounting principle), and have been so incorporated in reliance upon the report
and upon the authority of that firm as experts in accounting and auditing in
giving the report. On February 14, 2002, we dismissed Arthur Andersen LLP as our
independent public accounting firm, and on March 25, 2002, we hired Deloitte &
Touche LLP as our independent auditors for the 2002 fiscal year. Since that
time, Arthur Andersen LLP was convicted on federal charges of obstruction of
justice, and in August 2002, Arthur Andersen LLP ceased performing auditing
services worldwide. These events may materially and adversely affect the ability
of Arthur Andersen LLP to satisfy all of their existing and future obligations,
including claims under the federal securities laws. Accordingly, purchasers of
our securities may be limited in their ability to recover damages from Arthur
Andersen LLP for any claims that may arise out of Arthur Andersen LLP's audit of
our financial statements. In addition, we were not able to obtain the consent of
Arthur Andersen LLP as required by Section 7 of the Securities Act to the
incorporation by reference of their report on the audited financial statements
into the registration statement. As a result of Arthur Andersen LLP not having
provided a consent, the ability of purchasers of our securities to assert claims
and seek remedies against Arthur Andersen LLP may be limited with respect to
their report, particularly those remedies arising under Section 11 of the
Securities Act.
LEGAL OPINIONS
The validity of the securities has been passed upon for us by Lester H.
Loble, II, Esq., our General Counsel, and also by Thelen Reid & Priest LLP, 875
Third Avenue, New York, New York 10022.
________________________
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO SELL ONLY THE SECURITIES OFFERED HEREBY, BUT ONLY UNDER
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.
35
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Securities and Exchange Commission Registration Fee.... $ 40,381
Listing Fees........................................... $ 23,000
Printing and Engraving Expenses........................ $ 30,000
Transfer Agent Fees.................................... $ 0
Legal Fees and Expenses................................ $150,000
Accountants' Fees and Expenses......................... $ 50,000
Miscellaneous.......................................... $ 6,619
Total $300,000
__________
* All amounts other than the Securities and Exchange Commission registration
fee are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Bylaws include the following provision:
7.07 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE.
(a) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which such person reasonably believed to be in or not opposed to the
best interest of the Corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was
a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit if such person acted in
good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Corporation and except that
no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable
to the Corporation, unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought, shall
determine upon application that, despite the adjudication of liability
but in view of all circumstances of the case, such person is fairly
II-1
and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director, officer, employee or
agent of a corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in
subsections (a) and (b), or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in
connection therewith.
(d) Any indemnification under subsections (a) and (b) of this Section
(unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that
indemnification of the present or former director, officer, employee
or agent is proper in the circumstances because such person has met
the applicable standard of conduct as set forth in subsections (a) and
(b) of this Section. Such determination shall be made (1) by a
majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such
directors, even though less than a quorum, or (3) if there are no such
directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (4) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by a present or former
officer or director in defending any civil, criminal, administrative
or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the
Corporation as authorized in this Section. Once the Corporation has
received the undertaking, the Corporation shall pay the officer or
director within 30 days of receipt by the Corporation of a written
application from the officer or director for the expenses incurred by
that officer or director. In the event the Corporation fails to pay
within the 30-day period, the applicant shall have the right to sue
for recovery of the expenses contained in the written application and,
in addition, shall recover all attorneys' fees and expenses incurred
in the action to enforce the application and the rights granted in
this Section 7.07. Expenses (including attorneys' fees) incurred by
other employees and agents shall be paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this Section shall not
be deemed exclusive of any other rights to which those seeking
indemnity or advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as
to action in another capacity while holding such office.
(g) The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any
liability asserted against such person and incurred by such person in
any such capacity, or arising out of such person's status as such,
whether or not the Corporation would have the power to indemnify such
person against such liability under the provisions of this Section.
(h) For the purposes of this Section, references to "the Corporation"
include all constituent corporations absorbed in a consolidation or
merger, as well as the resulting or surviving corporation, so that any
person who is or was a director, officer, employee or agent of such a
constituent corporation or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of
this Section with respect to the resulting or surviving corporation as
such person would if such person had served the resulting or surviving
corporation in the same capacity.
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(i) For purposes of this Section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with
respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner
such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of
the Corporation" as referred to in this Section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 145 of the General Corporation Law of the state of Delaware
provides for indemnification of our directors and officers in a variety of
circumstances, which may include liabilities under the Securities Act of 1933.
We maintain liability insurance protecting us, as well as our directors and
officers, against liability by reason of their being or having been our
directors or officers.
ITEM 16. EXHIBITS.
Exhibit
No. Description
------- -----------
*1 Form of Underwriting Agreement (Forms of any underwriting
agreements with respect to any securities offered under the
prospectus contained in this registration statement will be
filed as exhibits to a report on Form 8-K, as contemplated
by Item 601(b)(1) of Regulation S-K under the Securities
Act).
*3(a) Restated Certificate of Incorporation of MDU Resources, as
amended to date (filed as Exhibit 3(a) to Form 10-Q for the
quarter ended June 30, 2002, in File No. 1-3480).
*3(b) Bylaws of MDU Resources, as amended to date (filed as
Exhibit 3.3 to Amendment No. 2 to Form 8-A, filed on March
10, 2003).
*3(c) Certificate of Designations of Series B Preference Stock
of MDU Resources, as amended (filed as Exhibit 3(a) to Form
10-Q for the quarter ended September 30, 2002, in File
No. 1-3480)
*4(a) Indenture of Mortgage, dated as of May 1, 1939, as restated
in the Forty-Fifth Supplemental Indenture, dated as of April
21, 1992, and the Forty-Sixth through Forty-Ninth
Supplements thereto between MDU Resources and The New York
Trust Company (The Bank of New York, successor Co-Trustee)
and A.C. Downing (Douglas J. MacInnes, successor Co-Trustee)
(filed as Exhibit 4(a) in Registration No. 33-66682, and as
Exhibits 4(e), 4(f) and 4(g) in Registration No. 33-53896
and Exhibit 4(c)(i) in Registration No. 333-49472).
4(b) Form of Supplemental Indenture to Mortgage relating to MDU
Resources First Mortgage Bonds.
*4(c) Rights Agreement, dated as of November 12, 1998, between MDU
Resources and Norwest Bank Minnesota, N.A. (now, Wells Fargo
Bank Minnesota, N.A.), Rights Agent, (filed as Exhibit 4.1
to Form 8-A on November 12, 1998, in File No. 1-3480).
4(d) Form of Indenture.
II-3
4(e) Form of Officer's Certificate establishing some of the terms
of the Debt Securities.
5(a) Opinion of Lester H. Loble, II, Esq., General Counsel to MDU
Resources.
5(b) Opinion of Thelen Reid & Priest LLP, counsel to MDU
Resources.
*12 Computation of Ratio of Earnings to Fixed Charges and
Combined Fixed Charges and Preferred Stock Dividends (filed
as Exhibit 12 to Form 10-K for the fiscal year ended
December 31, 2002, in File No. 1-3480).
23(a) The consents of Lester H. Loble, II, Esq. and Thelen Reid &
Priest LLP are contained in their opinions filed as Exhibit
5(a) and Exhibit 5(b), respectively, to this Registration
Statement.
23(b) The consent of Deloitte & Touche LLP.
23(c) Notice regarding consent of Arthur Andersen LLP.
24 Power of Attorney is contained on the first of two signature
pages of this Registration Statement.
25 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The Bank of New York.
______________
* Incorporated into this document by reference as indicated.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the SEC pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
II-4
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the SEC by the
registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's Annual
Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new
registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 15 above, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of
1933, and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bismarck, State of North Dakota on the 31st day of
March, 2003.
MDU RESOURCES GROUP, INC.
By: /s/ Martin A. White
----------------------------------
Martin A. White
Chairman of the Board, President
and Chief Executive Officer
POWER OF ATTORNEY
Each director and/or officer of the registrant whose signature appears
below hereby appoints the Agents for Service named in this registration
statement, and each of them severally, as his/her attorney-in-fact to sign in
his/her name and behalf, in any and all capacities stated below, and to file
with the Securities and Exchange Commission, any and all amendments, including
post-effective amendments, to this registration statement, and the registrant
hereby also appoints each such Agent for Service as its attorney-in-fact with
like authority to sign and file any such amendment in its name and behalf.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Martin A. White Chief Executive Officer and March 31, 2003
------------------------------------ Director
Martin A. White
(Chairman of the Board, President
and Chief Executive Officer)
/s/ Warren L. Robinson Chief Financial Officer March 31, 2003
------------------------------------
Warren L. Robinson
(Executive Vice President, Treasurer
and Chief Financial Officer)
/s/ Vernon A. Raile Chief Accounting Officer March 31, 2003
------------------------------------
Vernon A. Raile
(Senior Vice President, Controller
and Chief Accounting Officer)
/s/ Harry J. Pearce Lead Director March 31, 2003
------------------------------------
Harry J. Pearce
Signature Title Date
--------- ----- ----
Director
------------------------------------
Bruce R. Albertson
/s/ Thomas Everist Director March 31, 2003
------------------------------------
Thomas Everist
/s/ Dennis W. Johnson Director March 31, 2003
------------------------------------
Dennis W. Johnson
/s/ Robert L. Nance Director March 31, 2003
------------------------------------
Robert L. Nance
/s/ John L. Olson Director March 31, 2003
------------------------------------
John L. Olson
/s/ Homer A. Scott, Jr. Director March 31, 2003
------------------------------------
Homer A. Scott, Jr.
/s/ Joseph T. Simmons Director March 31, 2003
------------------------------------
Joseph T. Simmons
/s/ Sister Thomas Welder Director March 31, 2003
------------------------------------
Sister Thomas Welder
EXHIBIT INDEX
Item No.
4(b) Form of Supplemental Indenture to Mortgage relating to MDU Resources
First Mortgage Bonds.
4(d) Form of Indenture.
4(e) Form of Officer's Certificate establishing some of the terms of the
Debt Securities.
5(a) Opinion of Lester H. Loble, II, Esq., General Counsel to MDU
Resources.
5(b) Opinion of Thelen Reid & Priest LLP, counsel to MDU Resources.
23(a) The consents of Lester H. Loble, II, Esq. and Thelen Reid & Priest
LLP are contained in their opinions filed as Exhibit 5(a) and Exhibit
5(b), respectively, to this Registration Statement.
23(b) The consent of Deloitte & Touche LLP.
23(c) Notice regarding consent of Arthur Andersen LLP.
24 Power of Attorney is contained on the first of two signature pages of
this Registration Statement.
25 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York.