GUARANTEE AGREEMENT
Between
Western Resources, Inc.
(as Guarantor)
and
__________________________
(as Trustee)
dated as of
___________________, 199
CROSS-REFERENCE TABLE 1
Section of Section of
Trust Indenture Act Guararantee
of 1939, as amended Agreement
310(a) ............................. 4.1(a)
310(b) ............................. 4.1(c), 2.8
310(c) ............................. Inapplicable
311(a) ............................. 2.2(b)
311(b) ............................. 2.2(b)
311(c) ............................. Inapplicable
312(a) ............................. 2.2(a)
312(b) ............................. 2.2(b)
313 ................................ 2.3
314(a) ............................. 2.4
314(b) ............................. Inapplicable
314(c) ............................. 2.5
314(d) ............................. Inapplicable
314(e) ............................. 1.1, 2.5, 3.2
314(f) ............................. 2.1, 3.2
315(a) ............................. 3.1(d)
315(b) ............................. 2.7
315(c) ............................. 3.1
315(d) ............................. 3.1(d)
316(a) ............................. 5.4(a), 2.6
316(b) ............................. 5.3
316(c) ............................. 2.2
317(a) ............................. Inapplicable
317(b) ............................. Inapplicable
318(a) ............................. 2.1(b)
318(b) ............................. 2.1
318(c) ............................. 2.1(a)
___________________
1 This Cross-Reference Table does not constitute part of this Guarantee
Agreement and shall not affect the interpretation of any of its terms
or provisions.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions .......................................... 2
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application ..................... 5
SECTION 2.2. Lists of Holders of Securities ....................... 5
SECTION 2.3. Reports by the Trustee ............................... 5
SECTION 2.4. Periodic Reports to Trustee .......................... 6
SECTION 2.5. Evidence of Compliance with Conditions
Precedent ...................................... 6
SECTION 2.6. Events of Default; Waiver ............................ 6
SECTION 2.7. Event of Default; Notice ............................. 6
SECTION 2.8. Conflicting Interests ................................ 7
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF TRUSTEE
SECTION 3.1. Powers and Duties of the Trustee ..................... 7
SECTION 3.2. Certain Rights of Trustee ............................ 9
ARTICLE 4
TRUSTEE
SECTION 4.1. Trustee; Eligibility ................................. 11
SECTION 4.2. Appointment, Removal and Resignation of
Trustee ........................................ 11
ARTICLE 5
GUARANTEE
SECTION 5.1. Guarantee ............................................ 12
SECTION 5.2. Waiver of Notice and Demand .......................... 12
-i-
Page
SECTION 5.3. Obligations Not Affected ............................. 13
SECTION 5.4. Rights of Holders .................................... 14
SECTION 5.5. Guarantee of Payment ................................. 14
SECTION 5.6. Subrogation .......................................... 14
SECTION 5.7. Independent Obligations .............................. 15
ARTICLE 6
SUBORDINATION
SECTION 6.1. Subordination ........................................ 15
SECTION 6.2. Pari Passu ........................................ 15
ARTICLE 7
TERMINATION
SECTION 7.1. Termination .......................................... 15
ARTICLE 8
MISCELLANEOUS
SECTION 8.1. Successors and Assigns ............................... 16
SECTION 8.2. Amendments ........................................... 16
SECTION 8.3. Notices .............................................. 16
SECTION 8.4. Benefit .............................................. 17
SECTION 8.5. Governing Law ........................................ 17
-ii-
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"),
dated as of ____________, 199 , is executed and delivered by
Western Resources, Inc., a Kansas corporation (the "Guaran-
tor"), and ___________________________, as trustee (the "Trus-
tee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of
Western Resources Capital [ ], a Delaware statutory business
trust (the "Issuer").
WHEREAS, pursuant to a Trust Agreement (the "Trust
Agreement"), dated as of _________________, 199 among the
Trustees of the Issuer named therein, Western Resources, Inc.,
as Depositor, and the Holders from time to time of ownership
interests in the Issuer, the Issuer is issuing as of the date
hereof $ aggregate liquidation amount of its ___%
Cumulative Quarterly Income Preferred Securities, Series [ ]
(the "Preferred Securities") representing ownership interests
in the Issuer and having the terms set forth in the Trust
Agreement.
WHEREAS, the Preferred Securities will be issued by
the Issuer and the proceeds thereof will be used, together with
the Common Securities of the Issuer, to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor and
deposit the same with the Issuer as trust assets; and
WHEREAS, as incentive for the Holders to purchase the
Preferred Securities the Guarantor desires to irrevocably and
unconditionally agree, to the extent set forth herein, to pay
to the Holders of the Preferred Securities the Guarantee Pay-
ments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the payment for
Preferred Securities by each Holder thereof, which payment the
Guarantor hereby agrees shall benefit the Guarantor, the Guar-
antor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time of the Preferred
Securities.
-2-
ARTICLE 1.
DEFINITIONS
SECTION 1.1. Definitions. As used in this Guaran-
tee Agreement, the terms set forth below shall, unless the con-
text otherwise requires, have the following meanings. Capital-
ized or otherwise defined terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the
Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such spec-
ified Person. For the purposes of this definition, "con-
trol" when used with respect to any specified Person means
the power to direct the management and policies of such
Person, directly or indirectly, whether through the owner-
ship of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Common Securities" means the securities representing
common ownership interests in the assets of the Issuer.
"Corporate Trust Office" means the principal office
of the Trustee in __________, at which at any particular
time its corporate trust business shall be and which at
the date of this Guarantee Agreement is _______________.
"Event of Default" means a default by the Guarantor
on any of its payment obligations under this Guarantee
Agreement.
"Guarantee Payments" shall mean the following pay-
ments or distributions, without duplication, with respect
to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accrued and
unpaid Distributions (as defined in the Trust Agreement)
that are required to be paid on such Preferred Securities,
but if and only to the extent that the Trustee of the
Issuer has available in the Payment Account funds suffi-
cient to make such payment, (ii) the redemption price,
including all accrued and unpaid Distributions to the date
of redemption (the "Redemption Price"), with respect to
the Preferred Securities called for redemption by the
Issuer, but if and only to the extent that the Trustee of
-3-
the Issuer has available in the Payment Account funds suf-
ficient to make such payment, and (iii) upon a voluntary
or involuntary dissolution, winding-up or termination of
the Issuer (other than in connection with a redemption of
all of the Preferred Securities), the lesser of (a) the
aggregate of the liquidation amount and all accrued and
unpaid Distributions on the Preferred Securities to the
date of payment, but if and only to the extent that the
Issuer has funds sufficient to make such payment, and (b)
the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the
books and records of the Issuer, of any Preferred Securi-
ties; provided, however, that in determining whether the
holders of the requisite percentage of Preferred Securi-
ties have given any request, notice, consent or waiver
hereunder. "Holder" shall not include the Guarantor or
any Affiliate of the Guarantor.
"Indenture" means the Indenture dated as of
______________, 199 , as supplemented by the ______ Sup-
plemental Indenture thereto dated as of __________, ____,
among the Guarantor (the "Debenture Issuer") and
____________________________, as trustee (the "Indenture
Trustee"), as the same may be supplemented or amended.
"Majority in Liquidation Amount of the Preferred
Securities" means a vote by Holder(s) of Preferred Securi-
ties, voting separately as a class, of at least a majority
in liquidation amount of all Preferred Securities.
"Officers' Certificate" means a certificate signed by
the Chairman, a Vice Chairman, the President, a Vice Pres-
ident or the Treasurer of the Guarantor and (ii) the Sec-
retary or an Assistant Secretary of the Guarantor, and
delivered to the Trustee; provided, however, that such
certificate may be signed by two of the officers or direc-
tors listed in clause (i) above in lieu of being signed by
one of such officers or directors listed in such clause
(i) and one of the officers listed in clause (ii) above.
Any Officers' Certificate delivered with respect to com-
pliance with a condition or covenant provided for in this
Guarantee Agreement shall include:
-4-
(a) a statement that each officer signing the
Officers' Certificate has read the covenant or condi-
tion and the definitions relating thereto;
(b) a brief statement of the nature and scope
of the examination or investigation undertaken by
each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made
such examination or investigation as, in such offic-
er's opinion, is necessary to enable such officer to
express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion
of each such officer, such condition or covenant has
been complied with.
"Person" means any individual, corporation, partner-
ship, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Responsible Officer" means, with respect to the
Trustee, any vice-president, any assistant vice-president,
the secretary, any assistant secretary, the treasurer, any
assistant treasurer, any trust officer or assistant trust
officer or any other officer of the Corporate Trust
Department of the Trustee customarily performing functions
similar to those performed by any of the above designated
officers and also means, with respect to a particular cor-
porate trust matter, any other officer to whom such matter
is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Senior Indebtedness" means Senior Indebtedness as
defined in the Indenture.
"Successor Trustee" means a successor Trustee pos-
sessing the qualifications to act as Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture Act
of 1939, as amended.
"Trustee" means ________________________ until a Suc-
cessor Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee Agree-
ment, and thereafter means each such Successor Trustee.
-5-
ARTICLE 2.
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the pro-
visions of the Trust Indenture Act that are required to be part
of this Guarantee Agreement and shall, to the extent appli-
cable, be governed by such provisions; and
(b) if and to the extent that any provision of this
Guarantee Agreement limits, qualifies or conflicts with the
duties imposed by Sections 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control.
SECTION 2.2. Lists of Holders of Securities.
(a) The Guarantor shall furnish or cause to be fur-
nished to the Trustee (a) semiannually, not later than February
15, and August 15 in each year, a list, in such form as the
Trustee may reasonably require, of the names and addresses of
the Holders of the Preferred Securities ("List of Holders") as
of a date not more than 15 days prior to the delivery thereof,
and (b) at such other times as the Trustee may request in writ-
ing, within 30 days after the receipt by the Guarantor of any
such request, a List of Holders as of a date not more than 15
days prior to the time such list is furnished; provided that,
the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from
the most recent List of Holders given to the Trustee by the
Guarantor. The Trustee may destroy any List of Holders previ-
ously given to it on receipt of a new List of Holders.
(b) The Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3. Reports by the Trustee. Within 60 days
after July 1 of each year, the Trustee shall provide to the
Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Trustee shall also comply with the require-
ments of Section 313(d) of the Trust Indenture Act.
-6-
SECTION 2.4. Periodic Reports to Trustee. The Guar-
antor shall provide to the Trustee, the Securities and Exchange
Commission and the Holders of the Preferred Securities such
documents, reports and information (if any) as may be required
by Section 314, as well as the compliance certificate required
by Section 314 of the Trust Indenture Act in the form, in the
manner and at the times required by such Section 314.
SECTION 2.5. Evidence of Compliance with Conditions
Precedent. The Guarantor shall provide to the Trustee such
evidence of compliance with any conditions precedent provided
for in this Guarantee Agreement that relate to any of the mat-
ters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6. Events of Default; Waiver. The Holders
of a Majority in Liquidation Amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its conse-
quences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any
right consequent thereon.
SECTION 2.7. Event of Default; Notice.
(a) The Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first
class postage prepaid, to the Holders of the Preferred Securi-
ties, notices of all Events of Default known to the Trustee,
unless such defaults have been cured before the giving of such
notice, provided that the Trustee shall be protected in with-
holding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith deter-
mines that the withholding of such notice is in the interests
of the Holders of the Preferred Securities.
(b) The Trustee shall not be deemed to have knowl-
edge of any Event of Default unless the Trustee shall have
received written notice, or a Responsible Officer charged with
the administration of the Trust Agreement shall have obtained
written notice, of such Event of Default.
-7-
SECTION 2.8. Conflicting Interests. The Trust
Agreement shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE 3.
POWERS, DUTIES AND RIGHTS OF TRUSTEE
SECTION 3.1. Powers and Duties of the Trustee.
(a) This Guarantee Agreement shall be held by the
Trustee for the benefit of the Holders of the Preferred Securi-
ties, and the Trustee shall not transfer this Guarantee Agree-
ment to any Person except a Holder of Preferred Securities
exercising his or her rights pursuant to Section 5.4 or to a
Successor Trustee on acceptance by such Successor Trustee of
its appointment to act as Successor Trustee. The right, title
and interest of the Trustee shall automatically vest in any
Successor Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such
Successor Trustee.
(b) If an Event of Default has occurred and is con-
tinuing, the Trustee shall enforce this Guarantee Agreement for
the benefit of the Holders of the Preferred Securities.
(c) The Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that
may have occurred, shall undertake to perform only such duties
as are specifically set forth in this Guarantee Agreement, and
no implied covenants shall be read into this Guarantee Agree-
ment against the Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section
2.6), the Trustee shall exercise such of the rights and powers
vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall
be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
-8-
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of
Default that may have occurred:
(A) the duties and obligations of the Trustee
shall be determined solely by the express provisions
of this Guarantee Agreement, and the Trustee shall
not be liable except for the performance of such
duties and obligations as are specifically set forth
in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming
to the requirements of this Guarantee Agreement; but
in the case of any such certificates or opinions that
by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether
or not they conform to the requirements of this Guar-
xxxxx Agreement;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of
the Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of a
Majority in Liquidation Amount of the Preferred Securities
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee
under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall
require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the per-
formance of any of its duties or in the exercise of any of
its rights or powers, if the Trustee shall have reasonable
grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms
of this Guarantee Agreement or adequate indemnity against
such risk or liability is not reasonably assured to it.
-9-
SECTION 3.2. Certain Rights of Trustee.
(a) Subject to the provisions of Section 3.1:
(i) the Trustee may rely and shall be fully pro-
tected in acting or refraining from acting upon any reso-
lution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Guarantor contem-
plated by this Guarantee Agreement shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever, in the administration of this Guaran-
tee Agreement, the Trustee shall deem it desirable that a
matter be proved or established before taking, suffering
or omitting any action hereunder, the Trustee (unless
other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part, request and rely
upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor;
(iv) the Trustee may consult with counsel of its
choice, and the written advice or opinion of such counsel
with respect to legal matters shall be full and complete
authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion; such coun-
sel may be counsel to the Guarantor or any of its Affili-
ates and may include any of its employees; the Trustee
shall have the right at any time to seek instructions con-
cerning the administration of this Guarantee Agreement
from any court of competent jurisdiction;
(v) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Guarantee Agreement at the request or direction of any
Holder, unless such Holder shall have provided to the
Trustee such adequate security and indemnity as would sat-
isfy a reasonable person in the position of the Trustee,
against the costs, expenses (including attorneys' fees and
expenses) and liabilities that might be incurred by the
Trustee in complying with such request or direction,
including such reasonable advances as may be requested by
-10-
the Trustee; provided that, nothing contained in this Sec-
tion 3.2(a)(v) shall be interpreted so as to relieve the
Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in
it by this Guarantee Agreement;
(vi) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any res-
olution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts
or matters as it may see fit;
(vii) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys, and the
Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed
with due care by it hereunder; and
(viii) whenever in the administration of this Guarantee
Agreement the Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right
or taking any other action hereunder, the Trustee (i) may
request instructions from the Holders of the Preferred
Securities, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions
are received, and (iii) shall be protected in acting in
accordance with such instructions.
(b) No provision of this Guarantee Agreement shall
be deemed to impose any duty or obligation on the Trustee to
perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in
which it shall be illegal, or in which the Trustee shall be
unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority
available to the Trustee shall be construed to be a duty.
(c) The Guarantor agrees to indemnify the Trustee
for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense, including taxes (other than taxes
based on the income of the Trustee) incurred without negligence
or bad faith on its part, arising out of or in connection with
the acceptance or administration of this Guaranty Agreement,
-11-
including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or per-
formance of any of its powers or duties hereunder. The Trust-
ee's right to indemnification hereunder shall survive the ter-
mination of this Guaranty Agreement.
ARTICLE 4.
TRUSTEE
SECTION 4.1. Trustee; Eligibility.
(a) There shall at all times be a Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the
Trust Indenture Act to act as such and has a combined cap-
ital and surplus of at least $50,000,000 and has its Cor-
porate Trust office in _______________. If such Person
publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or exam-
ining authority, then, for the purposes of this Section
4.1(a)(ii), the combined capital and surplus of such Per-
son shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so
published.
(b) If at any time the Trustee shall cease to be
eligible to so act under Section 4.1(a), the Trustee shall
immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Trustee has or shall acquire any "con-
flicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the
Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of
Trustee.
(a) Subject to Section 4.2(b), the Trustee may be
appointed or removed without cause at any time by the Guarantor
except following the occurrence and during the continuation of
an Event of Default.
-12-
(b) The Trustee shall not be removed until a Succes-
sor Trustee has been appointed and has accepted such appoint-
ment by written instrument executed by such Successor Trustee
and delivered to the Guarantor.
(c) The Trustee appointed to office shall hold
office until a Successor Trustee shall have been appointed or
until its removal or registration. The Trustee may resign from
office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Trustee and delivered to
the Guarantor, which resignation shall not take effect until a
Successor Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor
Trustee and delivered to the Guarantor and the resigning Trus-
tee.
(d) If no Successor Trustee shall have been
appointed and accepted appointment as provided in this Section
4.2 within 60 days after delivery to the Guarantor of an
instrument of resignation, the resigning Trustee may petition
any court of competent jurisdiction for appointment of a Suc-
cessor Trustee. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a Successor
Trustee.
ARTICLE 5.
GUARANTEE
SECTION 5.1. Guarantee. The Guarantor irrevocably
and unconditionally agrees to pay in full to the Holders the
Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any
defense, right of set-off or counterclaim which the Issuer may
have or assert, other than the defense of payment. The Guaran-
tor's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Guarantor to
the Holders or by causing the Issuer to pay such amounts to the
Holders.
SECTION 5.2. Waiver of Notice and Demand. The Guar-
antor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a
proceeding first against the Issuer or any other Person before
proceeding against the Guarantor, protest, notice of
-13-
nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3. Obligations Not Affected. The obliga-
tion of the Guarantor to make the Guarantee Payments under this
Guarantee Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer
of any express or implied agreement, covenant, term or
condition relating to the Preferred Securities to be per-
formed or observed by the Issuer;
(b) the extension of time for the payment by the
Issuer of all or any portion of the Distributions, Redemp-
tion Price, Liquidation Distribution or any other sums
payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obliga-
tion under, arising out of, or in connection with, the
Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the
extension of any interest payment period on the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of dili-
gence on the part of the Holders to enforce, assert or
exercise any right, privilege, power or remedy conferred
on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer grant-
ing indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, disso-
lution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reor-
ganization, arrangement, composition or readjustment of
the debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in,
the Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
-14-
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or
defense of a guarantor other than the defense of payment,
it being the intent of this Section 5.3 that the obliga-
tions of the Guarantor hereunder -- to the limited extent
set forth herein -- shall be absolute and unconditional
under any and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happen-
ing of any of the foregoing.
SECTION 5.4. Rights of Holders. The Guarantor
expressly acknowledges that: (i) this Guarantee Agreement will
be deposited with the Trustee to be held for the benefit of the
Holders of the Preferred Securities; (ii) the Trustee has the
right to enforce this Guarantee Agreement on behalf of the
Holders of the Preferred Securities; (iii) the Holders of a
Majority in Liquidation Amount of the Preferred Securities have
the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee in
respect of this Guarantee Agreement or exercising any trust or
power conferred upon the Trustee under this Guarantee Agree-
ment; and (iv) if the Trustee fails to enforce this Guarantee
Agreement as above provided, any Holder of the Preferred Secu-
rities may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement,
without first instituting a legal proceeding against the Issuer
or any other person or entity.
SECTION 5.5. Guarantee of Payment. This Guarantee
Agreement creates a guarantee of payment and not of collection.
This Guarantee Agreement will not be discharged except by pay-
ment of the Guarantee Payments in full (without duplication).
SECTION 5.6. Subrogation. The Guarantor shall be
subrogated to all (if any) rights of the Holders of Preferred
Securities against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement;
provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement,
in all cases as a result of payment under this Guarantee Agree-
ment, if, at the time of any such payment, any amounts of Guar-
xxxxx Payments are due and unpaid under this Guarantee Agree-
ment. If any amount shall be paid to the Guarantor in xxxxx-
tion of the preceding sentence, the Guarantor agrees to hold
-15-
such amount in trust for the Holders and to pay over such
amount to the Holders.
SECTION 5.7. Independent Obligations. The Guarantor
acknowledges that its obligations hereunder are independent of
the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal
and as debtor hereunder to make Guarantee Payments pursuant to
the terms of this Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through
(g), inclusive, of Section 5.3 hereof.
ARTICLE 6.
SUBORDINATION
SECTION 6.1. Subordination. This Guarantee Agree-
ment will constitute an unsecured obligation of the Guarantor
and will rank subordinate and junior in right of payment to all
Senior Indebtedness of the Guarantor. This Guarantee Agreement
will be pari passu with the Debentures.
SECTION 6.2. Pari Passu. This Guarantee Agreement
shall rank pari passu with any similar Guarantee Agreements
issued by the Guarantor on behalf of the Holders of Preferred
Securities issued by Western Resources Capital II or any other
issuer holding debentures issued under the Indenture, dated as
of , 199 .
ARTICLE 7.
TERMINATION
SECTION 7.1. Termination. This Guarantee Agreement
shall terminate and be of no further force and effect upon:
(i) full payment of the Redemption Price of all Preferred Secu-
rities, (ii) the distribution of Debentures to Holders of Pre-
ferred Securities in exchange for all of the Preferred Securi-
ties or (iii) upon full payment of the amounts payable in
accordance with the Trust Agreement upon liquidation of the
Issuer. Notwithstanding the foregoing, this Guarantee Agree-
ment will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder must restore payment
of any sums paid with respect to the Preferred Securities or
under this Guarantee Agreement.
-16-
ARTICLE 8.
MISCELLANEOUS
SECTION 8.1. Successors and Assigns. All guarantees
and agreements contained in this Guarantee Agreement shall bind
the successors, assigns, receivers, trustees and representa-
tives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding. Except
in connection with a consolidation, merger or sale involving
the Guarantor that is permitted under Article Eight of the
Indenture, the Guarantor shall not assign its obligations
hereunder.
SECTION 8.2. Amendments. Except with respect to any
changes which do not adversely affect the rights of Holders (in
which case no consent of Holders will be required), this Guar-
xxxxx Agreement may only be amended with the prior approval of
the Holders of not less than a Majority in liquidation amount
of all the outstanding Preferred Securities. The provisions of
Article Six of the Trust Agreement concerning meetings of Hold-
ers shall apply to the giving of such approval.
SECTION 8.3. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall
be in writing, duly signed by the party giving such notice, and
delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set
forth below or such other address as the Guarantor may
give notice of to the Holders of the Preferred Securities:
Western Resources, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Vice President, Finance;
(b) if given to the Issuer, in care of the Trustee,
at the Issuer's (and the Trustee's) address set forth
below or such other address as the Trustee on behalf of
the Issuer may give notice to the Holders of the Preferred
Securities:
-17-
Western Resources Capital [ ]
c/o Western Resources, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Vice President, Finance
with copy to:
[Trustee]___________________________
____________________________________
____________________________________
____________________________________
Facsimile No:
Attention: ________________________; and
(c) if given to any Holder of Preferred Securities,
at the address set forth on the books and records of the
Issuer.
All notices hereunder shall be deemed to have been
given when received in person, telecopied with receipt con-
firmed, or mailed by first class mail, postage prepaid except
that if a notice or other document is refused delivery or can-
not be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed
to have been delivered on the date of such refusal or inability
to deliver.
SECTION 8.4. Benefit. This Guarantee Agreement is
solely for the benefit of the Holders of the Preferred Securi-
ties and, subject to Section 3.1(a), is not separately trans-
ferable from the Preferred Securities.
SECTION 8.5. Governing Law. THIS GUARANTEE AGREE-
MENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together consti-
tute but one and the same instrument.
-18-
THIS GUARANTEE AGREEMENT is executed as of the day
and year first above written.
WESTERN RESOURCES, INC., as Guarantor
By:
Name:
Title:
_________________________, as Trustee
By:
Name:
Title:
