-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M3ZgT0mKVGmsCvovenMd+YE/CqOOb7DZsXcCMfge2IkPVwhQs1/4GnmMtnEqCLwg fFVE3YSwR5HqYb4FMbR5/Q== 0000032689-98-000012.txt : 19980513 0000032689-98-000012.hdr.sgml : 19980513 ACCESSION NUMBER: 0000032689-98-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMPIRE DISTRICT ELECTRIC CO CENTRAL INDEX KEY: 0000032689 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 440236370 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03368 FILM NUMBER: 98616123 BUSINESS ADDRESS: STREET 1: 602 JOPLIN ST CITY: JOPLIN STATE: MO ZIP: 64801 BUSINESS PHONE: 4176255100 MAIL ADDRESS: STREET 1: P.O. BOX 127 CITY: JOPLIN STATE: MO ZIP: 64802 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1998 or Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______________ to ____________. Commission file number: 1-3368 THE EMPIRE DISTRICT ELECTRIC COMPANY (Exact name of registrant as specified in its charter) Kansas 44-0236370 (State of Incorporation) (I.R.S. Employer Identification No.) 602 Joplin Street, Joplin, Missouri 64801 (Address of principal executive offices) (zip code) Registrant's telephone number: (417) 625-5100 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ___ Common stock outstanding as of April 30, 1998: 16,845,833 shares. THE EMPIRE DISTRICT ELECTRIC COMPANY INDEX Page Number Part I - Financial Information: Item 1. Financial Statements: a. Statement of Income 3 b. Balance Sheet 5 c. Statement of Cash Flows 6 d. Notes to Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II- Other Information: Item 1. Legal Proceedings - (none) Item 2. Changes in Securities - (none) Item 3. Defaults Upon Senior Securities - (none) Item 4. Submission of Matters to a Vote of Security Holders 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 PART I. FINANCIAL INFORMATION Item 1. Financial Statements STATEMENT OF INCOME (UNAUDITED)
Three Months Ended March 31, 1998 1997 Operating revenues: Electric $ 51,146,349 $ 47,056,481 Water 241,891 248,286 51,388,240 47,304,767 Operating revenue deductions: Operating expenses: Fuel 6,151,704 6,781,084 Purchased power 14,485,249 12,578,852 Other 7,398,425 7,910,516 Total operating expenses 28,035,378 27,270,452 Maintenance and repairs 4,078,515 3,032,191 Depreciation and amortization 6,167,602 5,556,021 Provision for income taxes 1,954,840 1,515,833 Other taxes 3,092,132 2,856,839 43,328,467 40,231,336 Operating income 8,059,773 7,073,431 Other income and deductions: Allowance for equity funds used during construction - - Interest income 25,267 23,816 Other - net (196,650) (121,464) (171,383) (97,648) Income before interest charges 7,888,390 6,975,783 Interest charges: First mortgage bonds 4,145,292 4,148,202 Commercial paper 396,916 121,900 Allowance for borrowed funds used during construction (73,205) (511,909) Other 78,889 92,774 4,547,892 3,850,967 Net income 3,340,498 3,124,816 Preferred stock dividend requirements 604,085 604,085 Net income applicable to common stock $ 2,736,413 $ 2,520,731 Weighted average number of common shares 16,794,641 16,457,197 outstanding Basic and diluted earnings per weighted average share of common stock $ 0.16 $ 0.15 Dividends per share of common stock $ 0.32 $ 0.32 See accompanying Notes to Financial Statements.
STATEMENT OF INCOME (UNAUDITED)
Twelve Months Ended March 31, 1998 1997 Operating revenues: Electric $ 218,396,467 $ 204,607,553 Water 997,850 1,041,109 219,394,317 205,648,662 Operating revenue deductions: Operating expenses: Fuel 35,481,195 31,715,702 Purchased power 49,039,282 48,869,956 Other 30,134,395 30,484,532 Total operating expenses 114,654,872 111,070,190 Maintenance and repairs 13,889,831 13,941,625 Depreciation and amortization 24,006,872 21,863,118 Provision for income taxes 13,439,007 11,320,223 Other taxes 11,455,023 11,112,308 177,445,605 169,307,464 Operating income 41,948,712 36,341,198 Other income and deductions: Allowance for equity funds used during construction 150,475 395,795 Interest income 132,136 155,335 Other - net (528,264) (350,793) (245,653) 200,337 Income before interest charges 41,703,059 36,541,535 Interest charges: First mortgage bonds 16,590,133 15,334,029 Commercial paper 1,418,270 620,279 Allowance for borrowed funds used during construction (636,761) (1,250,964) Other 322,756 310,836 17,694,398 15,014,180 Net income 24,008,661 21,527,355 Preferred stock dividend requirements 2,416,340 2,416,340 Net income applicable to common stock $ 21,592,321 $ 19,111,015 Weighted average number of common shares outstanding 16,682,474 16,318,551 Basic and diluted earnings per weighted average share of common stock $ 1.29 $ 1.17 Dividends per share of common stock $ 1.28 $ 1.28 See accompanying Notes to Financial Statements.
BALANCE SHEET
March 31, 1998 December 31, (Unaudited) 1997 ASSETS Utility plant, at original cost: Electric $ 802,059,326 $ 795,880,240 Water 5,951,782 5,824,165 Construction work in progress 11,062,210 8,114,680 819,073,318 809,819,085 Accumulated depreciation 269,511,906 262,834,707 549,561,412 546,984,378 Current assets: Cash and cash equivalents 3,059,641 2,545,282 Accounts receivable - trade, net 13,513,372 13,270,329 Accrued unbilled revenues 3,951,492 6,047,739 Accounts receivable - other 2,229,325 1,552,998 Fuel, materials and supplies 16,528,437 13,215,068 Prepaid expenses 731,271 1,001,468 40,013,538 37,632,884 Deferred charges: Regulatory assets 37,098,662 37,472,225 Unamortized debt issuance costs 3,305,629 3,374,780 Other 1,098,445 1,000,700 41,502,736 41,847,705 Total Assets $ 631,077,686 $ 26,464,967 CAPITALIZATION AND LIABILITIES: Common stock, $1 par value, 16,837,648 and 16,776,654 shares issued and outstanding, respectively $ 16,837,648 $ 16,776,654 Capital in excess of par value 152,124,964 150,784,239 Retained earnings (Note 2) 48,837,659 51,472,897 Total common stockholders' equity 217,800,271 219,033,790 Preferred stock 32,901,800 32,901,800 Long-term debt 196,388,507 196,384,541 447,090,578 448,320,131 Current liabilities: Accounts payable and accrued liabilities 14,571,954 14,862,581 Commercial paper 28,000,000 28,000,000 Customer deposits 3,228,188 3,140,621 Interest accrued 6,082,118 3,509,680 Taxes accrued, including income taxes 4,489,731 817,045 Current maturities of long-term debt 23,000,000 23,000,000 79,371,991 73,329,927 Noncurrent liabilities and deferred credits: Regulatory liability 17,249,191 17,540,757 Deferred income taxes 69,811,643 69,344,653 Unamortized investment tax credits 8,899,660 8,971,000 Postretirement benefits other than pensions4,416,934 4,463,488 Other 4,237,689 4,495,011 104,615,117 104,814,909 Total Capitalization and Liabilities $ 631,077,686 $ 626,464,967 See accompanying Notes to Financial Statements
STATEMENT OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, 1998 1997 Operating activities: Net income $ 3,340,498 $ 3,124,816 Adjustments to reconcile net income to cash flows: Depreciation and amortization 6,990,595 6,284,845 Pension income (285,000) (237,501) Deferred income taxes, net 202,608 209,945 Investment tax credit, net (71,340) (62,090) Allowance for equity funds used during construction - - Issuance of common stock for 401(k) plan 178,618 176,738 Other 54,247 35,826 Cash flows impacted by changes in: Accounts receivable and accrued unbilled revenues 1,176,876 3,790,070 Fuel, materials and supplies (3,313,369) 354,557 Prepaid expenses and deferred charges 115,116 (75,420) Accounts payable and accrued liabilities (290,627) (2,468,161) Customer deposits, interest and taxes accrued6,332,691 6,098,626 Other liabilities and other deferred credits (18,876) 436,741 Net cash provided by operating activities 14,412,037 17,668,992 Investing activities: Construction expenditures (9,145,043) (15,734,205) Allowance for equity funds used during construction - - Net cash used in investing activities (9,145,043) (15,734,205) Financing activities: Proceeds from issuance of common stock 1,223,101 1,327,233 Dividends (5,975,736) (5,867,544) Payment of debt issue costs (11,991) Net proceeds from short-term borrowings 3,500,000 Net cash used in financing activities (4,752,635) (1,052,302) Net increase (decrease) in cash and cash equivalents 514,359 882,485 Cash and cash equivalents at beginning of period 2,545,282 2,246,136 Cash and cash equivalents at end of period $ 3,059,641 $ 3,128,621 See accompanying Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Note 1 - Summary of Significant Accounting Policies The accompanying interim financial statements do not include all disclosures included in the annual financial statements and therefore should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997. The information furnished reflects all adjustments, consisting only of normal recurring adjustments, which are in the opinion of the Company necessary to present fairly the results for the interim periods presented. Note 2 - Retained Earnings
First Quarter 1998 Balance at January 1, 1998 51,472,897 Changes January 1 through March 31: Net Income 3,340,498 Quarterly cash dividends on common stock: - $0.32 per share (5,371,651) Quarterly cash dividends on preferred stock: 8-1/8% cumulative - $0.203125 per share (507,813) 5% cumulative - $0.125 per share (48,772) 4-3/4% cumulative - $0.11875 per share (47,500) Total changes January 1 through March 31 (2,635,238) Balance at March 31, 1998 $ 48,837,659
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS The following discussion analyzes significant changes in the results of operations for the three-month and twelve-month periods ended March 31, 1998, compared to the same periods ended March 31, 1997. Operating Revenues and Kilowatt-Hour Sales Of the Company's total electric operating revenues during the first quarter of 1998, approximately 45% were from residential customers, 28% from commercial customers, 17% from industrial customers, 5% from wholesale on-system customers and 3% from wholesale off-system transactions. The remainder of such revenues were derived from miscellaneous sources. The percentage changes from the prior year in kilowatt-hour ("Kwh") sales and revenue by major customer class were as follows:
Kwh Sales Revenue Twelve Twelve First Months First Months Quarter Ended Quarter Ended Residential 1.7% 1.3% 9.3% 6.2% Commercial 1.9 2.6 7.8 7.1 Industrial 1.5 1.5 10.3 6.9 Wholesale On-System 7.5 5.3 10.2 5.0 Total System 2.0 2.0 9.3 6.8
Residential and commercial Kwh sales and revenues were up during the first quarter of 1998 compared to the first quarter of 1997 despite mild temperatures during the first two months of 1998. Although heating degree days were virtually level with the same period last year, increases of 1.8% in the average number of residential customers served and 2.5% in the average number of commercial customers served compared to a year ago contributed to the increased Kwh sales and revenues. Revenues increased more than the corresponding increase in Kwh sales due to annual rate increases of $10,589,364 (6.43%) and $3,000,000 (1.7%) granted by the Missouri Public Service Commission effective July 28, 1997, and September 19, 1997, respectively. The combined increases granted in 1997 equaled $13,589,634 (8.25%). Industrial Kwh sales and revenues were also up during the first quarter of 1998 when compared to the same period last year due to continuing increases in business activity throughout the Company's service territory. Industrial revenues were also positively impacted by the 1997 Missouri rate increases. On-system wholesale Kwh sales and revenues were up during the first quarter of 1998 as well as for the twelve months ended March 31, 1998, due to continued economic growth in the communities served. Revenues for the first quarter of 1998 increased more than the corresponding Kwh sales while revenues for the twelve months ended March 31, 1998, increased less than the corresponding Kwh sales. These variations result from operation of the fuel adjustment clause applicable to these FERC regulated sales. For the twelve months ended March 31, 1998, Kwh sales to and revenue from the Company's on-system customers were up over the year earlier period. This increase reflected the warmer summer temperatures during the third quarter of 1997. Although these third quarter summer temperatures were cooler than normal, they were warmer than those experienced during the summer of 1996. Revenues for the twelve months ended March 31, 1998 also reflect nine months of the Missouri rate increases. The Company filed an application on February 19, 1998, to increase rates in Arkansas by $618,497 annually. An agreement has been reached to stipulate an increase of $358,849. The agreement is subject to the approval of the Arkansas Public Service Commission. A public hearing on this application has been set for June 1998. Any increase relating to this filing is not expected to have a material effect on operating results for 1998. Off-System Transactions In addition to sales to its own customers, the Company also sells power to other utilities as available and also provides transmission service through its system for transactions between other energy suppliers. During the first quarter of 1998, income from such off-system transactions exceeded related expenses by approximately $0.4 million, compared with approximately $0.5 million during the first quarter of 1997. For the twelve months ended March 31, 1998 and March 31, 1997, income from such off-system transactions exceeded related expenses by approximately $2.0 million annually. Operating Revenue Deductions During the first quarter of 1998, total operating expenses increased approximately $0.8 million (2.9%) compared with the same period last year. Purchased power costs were up approximately $1.9 million (15.2%) during the period, primarily due to increased purchases of replacement energy needed during an outage at the Asbury Plant initially caused by a generator winding problem in late January. The outage was extended to perform planned spring maintenance originally scheduled for the second quarter. The Asbury Plant returned to service in early March. Total fuel costs were down approximately $0.6 million (9.3%) during the first quarter of 1998, reflecting primarily a decrease of approximately 151 million Kwh (27.0%) in fuel-generated kilowatt-hours by the Company's plants due largely to the Asbury Plant outage. Other operating expenses decreased approximately $0.5 million (6.5%) during the period, due primarily to lower general and administrative costs. Maintenance and repair expense increased approximately $1.0 million (34.5%) during the quarter, primarily due to the increased expenses associated with the Asbury maintenance outage. Depreciation and amortization expenses increased approximately $0.6 million (11.0%) during the quarter due to increased levels of plant and equipment placed in service, primarily Unit No. 2 at the State Line Plant in June 1997. Total income taxes increased during the first quarter of 1998 due primarily to higher taxable income during the current period. Other taxes were up approximately $0.2 million (8.2%) during the quarter largely as a result of increased franchise taxes relating to higher revenues. During the twelve months ended March 31, 1998, total operating expenses were up approximately $3.6 million (3.3%) compared to the year ago period. Total purchased power costs were up approximately $0.2 million (0.4%), primarily due to increased purchases of replacement energy needed during the Asbury Plant outage. Total fuel costs were up approximately $3.8 million (11.9%) during the twelve month period due primarily to greater availability of the Company owned generating facilities. Unit No. 2 at the State Line Plant began commercial operation on June 18, 1997, and the Asbury Plant set a Company record by running continuously for 170 days during the second and third quarters of 1997. Other operating expenses decreased approximately $0.4 million (1.2%) during the twelve months ended March 31, 1998, compared to the same period last year due primarily to lower general and administrative costs. Maintenance and repair expenses during the twelve months ended March 31, 1998 were virtually level with these expenses for the prior period. Depreciation and amortization expense increased approximately $2.1 million (9.8%) due to increased levels of plant and equipment placed in service. Total provision for income taxes increased $2.1 million (18.7%) due to higher taxable income during the current period. Nonoperating Items Total allowance for funds used during construction decreased significantly during both current year periods as compared to the same periods last year, reflecting lower levels of construction work in progress, particularly due to the completion of Unit No. 2 at the Company's State Line Plant in June 1997. Although interest income decreased slightly during the twelve months ended March 31, 1998, it increased slightly during the first quarter of 1998, reflecting more cash available for investment particularly due to decreased levels of construction and higher revenues associated with the 1997 Missouri rate increase. Interest charges on first mortgage bonds were significantly higher during the current twelve-month period because of the issuance of $25.0 million of the Company's First Mortgage Bonds in December, 1996. Commercial paper interest increased during both periods due to increased usage of short-term debt to finance the Company's construction program. Earnings For the first quarter of 1998, earnings per share of common stock were $0.16 compared to $0.15 during the first quarter of 1997. Earnings per share were up primarily due to increased revenues resulting from the 1997 rate increases granted by the Missouri Public Service Commission. Earnings per common share for the twelve months ended March 31, 1998, were $1.29 compared to $1.17 for the twelve months ended a year earlier. Increased revenues resulted primarily from the warm summer temperatures in the third quarter of 1997 and the 1997 Missouri rate increases. LIQUIDITY AND CAPITAL RESOURCES The Company's construction-related expenditures totaled $9.1 million during the first quarter of 1998, compared to $15.7 million for the same period in 1997. Approximately $4.3 million during the first quarter of 1998 was related to additions to the Company's distribution system to meet projected increases in customer demand and approximately $0.7 million of the first quarter's construction expenditures was related to the Company's investment in fiber optics cable and equipment which the Company plans to utilize and to lease to other entities. The large decrease in construction expenditures for 1998 is mainly due to the completion of Unit No. 2 at the State Line Power Plant, which was placed in service June 18, 1997. During the first quarter of 1998, approximately 92% of construction expenditures and other funds requirements were satisfied internally from operations. The remainder was provided from the issuance of commercial paper, and from the sale of common stock through the Company's Dividend Reinvestment Plan and Employee Stock Purchase Plan. The Company's construction expenditures are expected to total approximately $35.6 million in 1998, including approximately $19.1 million for additions to the Company's distribution system to meet projected increases in customer demand. On April 28, 1998, the Company sold to the public in an underwritten offering $50 million aggregate principal amount of its First Mortgage Bonds, 6.50% Series due 2010. The net proceeds from this sale were added to the Company's general funds and were used to repay $23 million of the Company's First Mortgage Bonds, 5.70% Series due May 1, 1998 and to repay short-term indebtedness, including indebtedness incurred in connection with the Company's construction program. The Company currently estimates that internally generated funds will provide all of the funds required for the remainder of its 1998 construction expenditures. In the past, the Company has utilized short- term debt to finance any additional amounts needed for such construction and repaid such borrowings with the proceeds of sales of public offerings of long-term debt or equity securities, including the sale of the Company's common stock pursuant to its Dividend Reinvestment Plan and Employee Stock Purchase Plan and from internally-generated funds. The Company will continue to utilize short-term debt as needed to support normal operations or other temporary requirements. FORWARD LOOKING STATEMENTS Certain matters discussed in this quarterly report are "forward- looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements address future plans, objectives, expectations and events or conditions concerning various matters such as capital expenditures, earnings, rate and other regulatory matters, liquidity and capital resources, and accounting matters. Actual results in each case could differ materially from those currently anticipated in such statements, by reason of factors such as the cost and availability of company-owned generation, purchased power and fuel; electric utility restructuring, including ongoing state and federal activities; weather, business and economic conditions; legislation; regulation, including rate relief; competition; and other circumstances affecting anticipated rates, revenues and costs. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. (a) The annual meeting of Common Stockholders was held on April 23, 1998. (b) The following persons were re-elected Directors of the Company to serve until the 2001 Annual Meeting of Stockholders: V. E. Brill (12,083,593 votes for; 109,772 withheld authority). R. C. Hartley (12,074,444 votes for; 118,921 withheld authority). F. E. Jeffries (12,085,334 votes for; 108,031 withheld authority). The term of office as Director of the following other Directors continued after the meeting: M. F. Chubb, Jr., R. D. Hammons, J. R. Herschend, R. L. Lamb, R. E. Mayes, M. W. McKinney, and M. M. Posner. Item 5. Other Information. At March 31, 1998, the Company's ratio of earnings to fixed charges, and ratio of earnings to fixed charges and preferred stock dividend requirements, were 3.02x and 2.51x, respectively. See Exhibit (12) hereto. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. (4) Twenty-Ninth Supplemental Indenture dated as of April 1, 1998 to Indenture of Mortgage and Deed of Trust. (12) Computation of Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividend Requirements. (27) Financial Data Schedule for March 31, 1998 (b) In a current report dated April 23, 1998, the Company filed, under Item 5. "Other Events," a press release announcing the Company's earnings for the first quarter of 1998 and for the twelve month period ended March 31, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE EMPIRE DISTRICT ELECTRIC COMPANY Registrant By /s/ R. B. Fancher R. B. Fancher Vice President - Finance By /s/ G. A. Knapp G. A. Knapp Controller and Assistant Treasurer May 12, 1998 EX-12 2 EXHIBIT (12) COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS Twelve Months Ended March 31, 1998 Income before provision for income taxes and fixed charges (Note A) $ 55,741,399 Fixed charges: Interest on first mortgage bonds $ 15,701,389 Amortization of debt discount and expense less premium 888,744 Interest on short-term debt 1,419,770 Other interest 321,256 Rental expense representative of an interest factor (Note B) 156,662 Total fixed charges 18,487,821 Preferred stock dividend requirements: Preferred stock dividend requirements not deductible for tax purposes 2,338,304 Ratio of income before provision for incomes taxes to net income 1.552 Nondeductible dividend requirements 3,629,048 Deductible dividends 78,036 Total preferred stock dividend requirements 3,707,084 Total combined fixed charges and preferred stock dividend requirements $ 22,194,905 Ratio of earnings to fixed charges 3.02x Ratio of earnings to combined fixed charges and preferred stock dividend requirements 2.51x NOTE A: For the purpose of determining earnings in the calculation of the ratio, net income has been increased by the provision for income taxes, non-operating income taxes and by the sum of fixed charges as shown above. NOTE B: One-third of rental expense (which approximates the interest factor). EX-27 3
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AT MARCH 31, 1998 AND THE STATEMENT OF INCOME AND THE STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1998 MAR-31-1998 PER-BOOK 549,561,412 0 40,013,538 41,502,736 0 631,077,686 16,837,648 152,124,964 48,837,659 217,800,271 0 32,901,800 219,388,507 0 0 28,000,000 0 0 0 0 132,987,108 631,077,686 51,388,240 1,954,840 41,373,627 43,328,467 8,059,773 (171,383) 7,888,390 4,547,892 3,340,498 604,085 2,736,413 5,371,651 4,145,292 14,412,037 0.16 0.16
EX-4 4 (Conformed) THE EMPIRE DISTRICT ELECTRIC COMPANY TO HARRIS TRUST AND SAVINGS BANK AND STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A. Trustees ___________________ Twenty-Ninth Supplemental Indenture Dated as of April 1, 1998 ___________________ (Supplemental to Indenture dated as of September 1, 1944) ___________________ $50,000,000 First Mortgage Bonds, 6.50% Series due 2010 TABLE OF CONTENTS1 PAGE PARTIES 1 RECITALS 1 FORM OF BOND 2 FORM OF PRINCIPAL TRUSTEE'S CERTIFICATE OF AUTHENTICATION 5 GRANTING CLAUSES 5 SUBSTATIONS AND SWITCHING STATIONS 5 PRODUCTION PLANT 6 PROPERTY NOW OWNED OR HEREAFTER ACQUIRED 7 SUBJECT TO PERMITTED ENCUMBRANCES, LIENS ON AFTER-ACQUIRED PROPERTY AND CERTAIN VENDORS' LIENS 7 HABENDUM 8 GRANT IN TRUST 8 DEFEASANCE 8 GENERAL COVENANT 8 ARTICLE I CREATION AND DESCRIPTION OF FIRST MORTGAGE BONDS, 6.50% SERIES DUE 2010 SECTION 1. New Series of Bonds 8 Bonds to be dated as of authentication date 8 Record Date 8 Denominations 8 Registrable and interchangeable,tax or government charge 9 No service charge on exchange or transfer 9 Book-entry procedures 9 SECTION 2. Issue of Bonds of the New Series limited to $50,000,000. All or a portion of the Bonds of the New Series may be authenticated prior to recording of this Supplemental Indenture 10 ARTICLE II NO REDEMPTION OF BONDS OF THE NEW SERIES The Bonds of the New Series shall not be redeemable by the Company 10 ARTICLE III NO SINKING AND IMPROVEMENT FUND FOR BONDS OF THE NEW SERIES There shall be no Sinking and Improvement Fund for the Bonds of the New Series 10 ___________________ 1This Table of Contents is not a part of the annexed Supplemental Indenture as executed. PAGE ARTICLE IV DIVIDEND COVENANTS Covenants in Section 4.11 of the Original Indenture to continue in effect so long as any Bonds of the New Series are outstanding 11 ARTICLE V THE TRUSTEES The Trustees accept the trusts created by this Supplemental Indenture and agree to perform the same upon terms set forth in the Original Indenture as supplemented 11 ARTICLE VI MISCELLANEOUS PROVISIONS SECTION 1. Provision regarding legal holidays 11 SECTION 2. Original Indenture, as supplemented and amended, ratified and confirmed 11 SECTION 3. This Supplemental Indenture may be executed in counterparts 11 SECTION 4. Rights conferred only on holder of bonds, Company and Trustees 11 TESTIMONIUM 12 SIGNATURES AND SEALS 12 ACKNOWLEDGMENTS 15 TWENTY-NINTH SUPPLEMENTAL INDENTURE, dated as of April 1, 1998, between The Empire District Electric Company, a corporation organized and existing under the laws of the State of Kansas (hereinafter called the "Company"), party of the first part, and Harris Trust and Savings Bank, a corporation organized and existing under the laws of the State of Illinois and having its principal place of business at 111 West Monroe Street, in the City of Chicago, Illinois, and State Street Bank and Trust Company of Missouri, N.A., a national banking association organized under the laws of the United States of America, and having its principal corporate trust office located in St. Louis, MO (successor to Mercantile Bank of Western Missouri, Joplin, MO as set out in Resignation and Appointment Agreement dated July 28, 1997, recorded with the Recorder of Deeds in Carthage, MO and successor at Book 1558 Page 502-509.) (hereinafter sometimes called respectively the "Principal Trustee" and the "Missouri Trustee" and together the "Trustees" and each thereof a "Trustee"), as Trustees, parties of the second part. WHEREAS the Company has heretofore executed and delivered to the Trustees its Indenture of Mortgage and Deed of Trust, dated as of September 1, 1944 (hereinafter sometimes referred to as the "Original Indenture"), to secure an issue of First Mortgage Bonds of the Company, issuable in series, and created thereunder a series of bonds designated as First Mortgage Bonds, 3-1/2% Series due 1969, being the initial series of bonds issued under the Original Indenture; and WHEREAS the Company has heretofore executed and delivered to the Trustees twenty-eight Supplemental Indentures supplemental to the Original Indenture as follows: Title Dated First Supplemental Indenture as of June 1, 1946 Second Supplemental Indenture as of January 1, 1948 Third Supplemental Indenture as of December 1, 1950 Fourth Supplemental Indenture as of December 1, 1954 Fifth Supplemental Indenture as of June 1, 1957 Sixth Supplemental Indenture as of February 1, 1968 Seventh Supplemental Indenture as of April 1, 1969 Eighth Supplemental Indenture as of May 1, 1970 Ninth Supplemental Indenture as of July 1, 1976 Tenth Supplemental Indenture as of November 1, 1977 Eleventh Supplemental Indenture as of August 1, 1978 Twelfth Supplemental Indenture as of December 1, 1978 Thirteenth Supplemental Indenture as of November 1, 1979 Fourteenth Supplemental Indenture as of September 15, 1983 Fifteenth Supplemental Indenture as of October 1, 1988 Sixteenth Supplemental Indenture as of November 1, 1989 Seventeenth Supplemental Indenture as of December 1, 1990 Eighteenth Supplemental Indenture as of July 1, 1992 Nineteenth Supplemental Indenture as of May 1, 1993 Twentieth Supplemental Indenture as of June 1, 1993 Twenty-First Supplemental Indenture as of October 1, 1993 Twenty-Second Supplemental Indenture as of November 1, 1993 Twenty-Third Supplemental Indenture as of November 1, 1993 Twenty-Fourth Supplemental Indenture as of March 1, 1994 Twenty-Fifth Supplemental Indenture as of November 1, 1994 Twenty-Sixth Supplemental Indenture as of April 1, 1995 Twenty-Seventh Supplemental Indenture as of June 1, 1995 Twenty-Eighth Supplemental Indenture as of December 1, 1996 some for the purpose of creating an additional series of bonds and of conveying additional property of the Company, and some for the purpose of modifying or amending provisions of the Original Indenture (the Original Indenture, all said Supplemental Indentures and this Supplemental Indenture are herein collectively called the "Indenture"); and WHEREAS the Company has acquired certain additional property hereinafter described or mentioned and, in compliance with its covenants in the Original Indenture, desires, by this Twenty-Ninth Supplemental Indenture, to evidence the subjection of such additional property to the lien of the Indenture; and WHEREAS as provided by the Original Indenture, the Board of Directors of the Company, by resolution, has authorized a new series of bonds, to mature April 1, 2010, and to be designated as "First Mortgage Bonds, 6.50% Series due 2010," and has authorized provisions permitted by the Original Indenture in respect of the bonds of said series; and WHEREAS the Board of Directors of the Company has authorized the Company to enter into this Twenty-Ninth Supplemental Indenture (herein sometimes referred to as "this Twenty-Ninth Supplemental Indenture" or "this Supplemental Indenture") conveying to the Trustees and subjecting to the lien of the Indenture the property hereinafter described or mentioned, creating and designating the new series of bonds, and specifying the form and provisions of the bonds of said series provided or permitted by the Indenture; and WHEREAS the texts of the First Mortgage Bonds, 6.50% Series due 2010, and of the Principal Trustee's Certificate of Authentication to be endorsed thereon are to be substantially in the forms following, respectively: [FORM OF BOND] [FACE] THE EMPIRE DISTRICT ELECTRIC COMPANY FIRST MORTGAGE BOND 6.50% SERIES DUE 2010 DUE APRIL 1, 2010 No. $ THE EMPIRE DISTRICT ELECTRIC COMPANY, a corporation organized and existing under the laws of the State of Kansas (hereinafter sometimes called the "Company"), for value received, hereby promises to pay to or registered assigns, on April 1, 2010, Dollars ($ ) at its office or agency in the City of Chicago, Illinois, and to pay interest thereon at said office or agency at the rate per annum specified in the title hereof from April 28, 1998, or from the most recent interest payment date to which interest has been paid or duly provided for on the bonds of this series, semi-annually on April 1 and October 1 in each year, commencing on October 1, 1998, until the Company's obligation with respect to such principal sum shall be discharged. The principal of and the interest on this bond shall be payable in any coin or currency of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts. The interest so payable on any April 1 and October 1 will, subject to certain exceptions provided in the Twenty-Ninth Supplemental Indenture referred to on the reverse hereof, be paid to the person in whose name this bond is registered at the close of business on the March 15 or September 15 next preceding such April 1 or October 1. Notwithstanding anything in the Original Indenture or this Supplemental Indenture to the contrary, so long as the bonds of this series are in a book-entry only system, payment of principal of and interest on this bond will be in accordance with arrangements with The Depository Trust Company, a New York corporation ("DTC"). Reference is made to the further provisions of this bond set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This bond shall not be valid or become obligatory for any purpose until the certificate of authentication endorsed hereon shall have been signed by Harris Trust and Savings Bank, or its successor, as a Trustee under the Indenture referred to on the reverse hereof. IN WITNESS WHEREOF, THE EMPIRE DISTRICT ELECTRIC COMPANY has caused this bond to be signed in its name by its President or a Vice President, and its corporate seal to be imprinted hereon and attested by its Secretary or an Assistant Secretary. Dated: THE EMPIRE DISTRICT ELECTRIC COMPANY, By___________________________________ President. Attest: ___________________________________ Secretary. [FORM OF BOND] [REVERSE] This bond is one of an issue of bonds of the Company, known as its First Mortgage Bonds, issued and to be issued in one or more series under and equally and ratably secured (except as any sinking, amortization, improvement or other fund, established in accordance with the provisions of the indenture hereinafter mentioned may afford additional security for the bonds of any particular series) by a certain indenture of mortgage and deed of trust, dated as of September 1, 1944, made by the Company to Harris Trust and Savings Bank and State Street Bank and Trust Company of Missouri, N.A., as Trustees (hereinafter called the "Trustees"), and certain indentures supplemental thereto, including a Third Supplemental Indenture, a Sixth Supplemental Indenture, a Seventh Supplemental Indenture, an Eighth Supplemental Indenture, a Fourteenth Supplemental Indenture, a Twenty-Fourth Supplemental Indenture and a Twenty-Ninth Supplemental Indenture (dated respectively as of December 1, 1950, February 1, 1968, April 1, 1969, May 1, 1970, September 15, 1983, March 1, 1994 and April 1, 1998) made by the Company to the Trustees (said indenture of mortgage and deed of trust and all indentures supplemental thereto being hereinafter collectively called the "Indenture"), to which Indenture reference is hereby made for a description of the property mortgaged, the nature and extent of the security, the rights and limitations of rights of the Company, the Trustees, and the holders of said bonds, and the terms and conditions upon which said bonds are secured, to all of the provisions of which Indenture, including the provisions permitting the issuance of bonds of any series for property which, under the restrictions and limitations therein specified, may be subject to liens prior to the lien of the Indenture, the holder, by accepting this bond, assents. To the extent permitted by, and as provided in, the Indenture, the rights and obligations of the Company and of the holders of said bonds may be changed and modified, with the consent of the Company, by the holders of at least 60% in aggregate principal amount of the bonds then outstanding, such percentage being determined as provided in the Indenture, or in the event that one or more but less than all of the series of bonds then outstanding are affected by such change or modification, by the holders of 60% in aggregate principal amount of the outstanding bonds of such one or more series so affected. Without the consent of the holder hereof no change or modification of the rights and obligations of the Company and of the holders of the bonds shall be made which will extend the time of payment of the principal of or the interest on this bond or reduce the principal amount hereof or the rate of interest hereon or will otherwise modify the terms of payment of such principal or interest (other than changes in any sinking or other fund) or will permit the creation of any lien ranking prior to or on a parity with the lien of the Indenture on any of the mortgaged property, or will deprive any non-assenting bondholder of a lien upon the mortgaged property for the security of such bondholder's bonds, subject to certain exceptions, or will reduce the percentage of bonds required for the aforesaid action under the Indenture. This bond is one of a series of bonds designated as the First Mortgage Bonds, 6.50% Series due 2010, of the Company. The principal of this bond may be declared or may become due before the maturity hereof, on the conditions, in the manner and at the times set forth in the Indenture, upon the happening of a default as therein defined. This bond is transferable by the registered owner hereof in person or by his duly authorized attorney at the office or agency of the Company in the City of Chicago, Illinois, upon surrender and cancellation of this bond, and thereupon a new bond of this series, for a like principal amount, will be issued to the transferee in exchange therefor, as provided in the Indenture. If this bond is transferred or exchanged between a record date, as defined in the aforementioned Twenty-Ninth Supplemental Indenture, and the interest payment date in respect thereof, the new bond or bonds will bear interest from such interest payment date unless the interest payable on such date is not duly paid or provided for on such date. The Company and the Trustees and any paying agent may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment as herein provided and for all other purposes. This bond, alone or with other bonds of this series, may in like manner be exchanged at such office or agency for one or more new bonds of this series in authorized denominations, of the same aggregate principal amount, all as provided in the Indenture. Upon each such transfer or exchange the Company may require the payment of any stamp or other tax or governmental charge incident thereto. No recourse under or upon any covenant or obligation of the Indenture, or of any bonds thereby secured, or for any claim based thereon, or otherwise in any manner in respect thereof, shall be had against any incorporator, subscriber to the capital stock, stockholder, officer or director, as such, of the Company, whether former, present or future, either directly, or indirectly through the Company or the Trustees or either of them, by the enforcement of any subscription to capital stock, assessment or otherwise, or by any legal or equitable proceeding by virtue of any statute or otherwise (including, without limiting the generality of the foregoing, any proceeding to enforce any claimed liability of stockholders of the Company based upon any theory of disregarding the corporate entity of the Company or upon any theory that the Company was acting as the agent or instrumentality of the stockholders), any and all such liability of incorporators, stockholders, subscribers, officers and directors, as such, being released by the holder hereof, by the acceptance of this bond, and being likewise waived and released by the terms of the Indenture under which this bond is issued. Whenever the beneficial ownership of this bond is determined by a book-entry at a securities depository for the bonds, the foregoing requirements of holding, delivering or transferring this bond shall be modified to require the appropriate person or entity to meet the requirements of the securities depository as to registering or transferring the book-entry to produce the same effect. [FORM OF PRINCIPAL TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This bond is one of the bonds, of the series designated therein, described in the within-mentioned Indenture. HARRIS TRUST AND SAVINGS BANK, as Trustee, By_________________________________ Authorized Officer and WHEREAS the Company represents that all acts and things necessary have happened, been done, and been performed, to make the First Mortgage Bonds, 6.50% Series due 2010, when duly executed by the Company and authenticated by the Principal Trustee, and duly issued, the valid, binding and legal obligations of the Company, and to make the Original Indenture, the aforementioned twenty-eight Supplemental Indentures and this Supplemental Indenture valid and binding instruments for the security thereof, in accordance with their terms; NOW, THEREFORE, THIS TWENTY-NINTH SUPPLEMENTAL INDENTURE WITNESSETH: That The Empire District Electric Company, the Company herein named, in consideration of the premises and of One Dollar ($1.00) to it duly paid by the Trustees at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in order to secure the payment of the principal of and the interest on all bonds from time to time outstanding under the Indenture, according to the terms of said bonds and of the coupons attached thereto, has granted, bargained, sold, warranted, aliened, remised, released, conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed, and by these presents does grant, bargain, sell, warrant, alien, remise, release, convey, assign, transfer, mortgage, pledge, set over and confirm unto Harris Trust and Savings Bank and State Street Bank and Trust Company of Missouri, N.A., as Trustees, and their respective successor or successors in the trust, and its or their assigns forever, the following property, with the same force and effect and subject to the same reservations and exceptions, as though specifically described in the granting clauses of the Original Indenture, that is to say: SUBSTATIONS AND SWITCHING STATIONS 1. Land for Expansion of Boston East Substation #249: Land located in the County of Barton, State of Missouri: A TRACT OF LAND BEGINNING AT A POINT APPROXIMATELY 475 FEET (476.37 FEET-MEASURED), SOUTH (SOUTH 00? 14' WEST - MEASURED) OF THE NORTHWEST CORNER OF SECTION TWENTY-EIGHT (28), THENCE IN A SOUTHERLY DIRECTION (SOUTH 00? 14' WEST - MEASURED) A DISTANCE OF 200 FEET, THENCE IN AN EASTERLY DIRECTION (SOUTH 89? 46' EAST - MEASURED) A DISTANCE OF 200 FEET, THENCE IN A NORTHERLY DIRECTION (NORTH 00? 14' EAST - MEASURED) A DISTANCE OF 200 FEET, THENCE IN A WESTERLY DIRECTION (NORTH 89? 46' WEST - MEASURED) A DISTANCE OF 200 FEET TO THE POINT OF BEGINNING, BEING SITUATE IN SECTION TWENTY-EIGHT (28), TOWNSHIP THIRTY-ONE (31) NORTH, RANGE THIRTY (30) WEST, BARTON COUNTY, MISSOURI. 2. Land for New Noel Substation #444: Land located in the County of McDonald, State of Missouri: ALL OF LOTS 11 AND 12, HARMON-ST. CLAIR SUB-DIVSION IN SECTION 15, TOWNSHIP 21, RANGE 33, MCDONALD COUNTY, MISSOURI. 3. Land for New Willard Substation #445: Land located in the County of Greene, State of Missouri: COMMENCING AT AN EXISTING RAILROAD SPIKE, AT THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 14, TOWNSHIP 30 NORTH, RANGE 23 WEST. THENCE NORTH 00 DEGREES 29 MINUTES 13 SECONDS WEST, ALONG THE EAST LINE OF SAID SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER, A DISTANCE OF 30.00 FEET. THENCE SOUTH 89 DEGREES 36 MINUTES 41 SECONDS WEST, A DISTANCE OF 29.78 FEET TO THE WEST RIGHT-OF-WAY LINE OF MISSOURI STATE HIGHWAY "Z", TO A 5/8 INCH IRON PIN CAPPED L.S. 2153 FOR A POINT OF BEGINNING. THENCE CONTINUING SOUTH 89 DEGREES 36 MINUTES 41 SECONDS WEST, ALONG THE NORTH RIGHT-OF-WAY LINE OF FARM ROAD #68, A DISTANCE OF 208.71 FEET, TO A 5/8 INCH IRON PIN CAPPED L.S. 2153. THENCE NORTH 00 DEGREES 31 MINUTES 13 SECONDS WEST, A DISTANCE OF 208.71 FEET, TO A 5/8 INCH IRON PIN CAPPED L.S. 2153. THENCE NORTH 89 DEGREES 36 MINUTES 41 SECONDS EAST, A DISTANCE OF 208.71 FEET, TO A 5/8 INCH PIN CAPPED L.S. 2153 ON SAID WEST RIGHT-OF-WAY LINE OF MISSOURI STATE HIGHWAY "Z". THENCE SOUTH 00 DEGREES 31 MINUTES 13 SECONDS EAST, ALONG SAID WEST RIGHT-OF-WAY LINE OF MISSOURI STATE HIGHWAY "Z", A DISTANCE OF 208.71 FEET, TO THE POINT OF BEGINNING. ALL IN GREENE COUNTY, MISSOURI. CONTAINING 1.00 ACRES PLUS OR MINUS. PRODUCTION PLANT 4. Additional land for State Line plant: Land located in the County of Jasper, State of Missouri: BEGINNING AT THE NORTH QUARTER CORNER OF SECTION 14, TOWNSHIP 27 NORTH, RANGE 34 WEST, THENCE SOUTH 89?36' WEST 630 FEET, THENCE SOUTH 687.54 FEET TO THE CENTER OF THE FRISCO RAILROAD, THENCE SOUTHEASTERLY ALONG THE CENTER OF THE FRISCO RAILROAD TO THE CENTER LINE OF SECTION 14, THENCE NORTH 1230.56 FEET TO THE POINT OF BEGINNING, EXCEPT RAILROAD RIGHT-OF-WAY AND EXCEPT THE EAST 325 FEET OF THE NORTH 600 FEET AND EXCEPT BEGINNING 460 FEET WEST OF THE NORTH QUARTER CORNER OF SAID SECTION, THENCE WEST 170 FEET, THENCE SOUTH 235 FEET, THENCE NORTH 89?36' EAST 170 FEET, THENCE NORTH 235 FEET TO THE POINT OF BEGINNING, ALL IN JASPER COUNTY, MISSOURI, EXCEPT ANY PART TAKEN OR DEEDED FOR ROAD PURPOSES. 5. Additional land for State Line Plant: Land located in the County of Jasper, State of Missouri: BEGINNING AT A POINT 1962.11 FEET SOUTH OF THE NORTH QUARTER OF SECTION 14, TOWNSHIP 27 NORTH, RANGE 34 WEST, THENCE SOUTH 988.03 FEET, THENCE, SOUTH 89 DEGREES 16' WEST 1,901.33 FEET TO THE MISSOURI-KANSAS STATE LINE, THENCE NORTH 01 DEGREE 44' WEST (ALONG STATE LINE) 988.03 FEET, THENCE NORTH 89 DEGREES 16' EAST 1,936.69 FEET TO THE POINT OF BEGINNING, CONTAINING 43.082 ACRES, LESS RIGHT-OF-WAY ALONG THE STATE LINE: ALSO BEGINNING IN THE CENTER OF THE FRISCO RAILROAD 1,230.56 FEET SOUTH OF THE NORTH QUARTER OF SECTION 14, TOWNSHIP 27 NORTH, RANGE 34 WEST, THENCE SOUTH 731.55 FEET, THENCE SOUTH 89 DEGREES 16' WEST 1,936.69 FEET TO THE MISSOURI-KANSAS STATE LINE, THENCE NORTH 01 DEGREE 44' WEST 1,985.05 FEET TO THE NORTHWEST CORNER OF SECTION 14, THENCE SOUTH 89 DEGREES 48' EAST 382.22 FEET TO THE CENTER LINE OF THE FRISCO RAILROAD, THENCE SOUTHEASTERLY ALONG THE CENTER LINE OF RAILROAD TO THE POINT OF BEGINNING, CONTAINING 66.5 ACRES, LESS ROAD RIGHT-OF-WAY ALONG THE STATE LINE: EXCEPTING THEREFROM THE FOLLOWING DESCRIBED REAL ESTATE TO-WIT: BEGINNING AT A POINT 2,598.08 FEET SOUTH OF THE NORTHWEST CORNER OF SECTION 14, TOWNSHIP 27 NORTH, RANGE 34 WEST, THENCE EAST 464.65 FEET, THENCE SOUTH 01 DEGREE 00' EAST 375.0 FEET, THENCE WEST 464.65 FEET, THENCE NORTH 01 DEGREE 00' WEST 375.0 FEET TO THE PLACE OF BEGINNING, EXCEPT THAT PART TAKEN FOR ROAD RIGHT-OF-WAY. AND EXCEPTING ROAD RIGHT-OF-WAY AND FRISCO RAILROAD RIGHT-OF-WAY ON THE NORTHEAST. AND EXCEPT A TRACT OF LAND DESCRIBED AS COMMENCING AT AN IRON PIN SET AT THE NORTHWEST CORNER OF SECTION 14, TOWNSHIP 27 NORTH, RANGE 34 WEST, JASPER COUNTY, MISSOURI; THENCE SOUTH 01 DEGREE 56' 10" EAST 1,200.00 FEET ALONG THE WEST LINE OF SECTION 14 TO A SET 5/8 INCH IRON PIN, THENCE NORTH 89 DEGREES 13' 46" EAST 1,525.00 FEET TO A SET 5/8 INCH IRON PIN; THENCE NORTH 209.86 FEET TO THE SOUTH RIGHT-OF-WAY LINE OF THE BURLINGTON NORTHERN RAILROAD; THENCE SOUTH 52 DEGREES 56' 12" EAST 312.12 FEET ALONG SAID RIGHT-OF-WAY TO A SET 5/8 INCH IRON PIN; THENCE CONTINUING ALONG SAID RIGHT-OF-WAY 234.81 FEET ON A CURVE TO THE LEFT WITH A CENTER ANGLE OF 04 DEGREES 36' 56" A RADIUS OF 2,914.79 FEET ALONG CHORD DISTANCE 234.75 FEET ON A BEARING OF SOUTH 56 DEGREES 13' 54" EAST TO A 5/8 INCH IRON PIN SET ON THE NORTH/SOUTH HALF SECTION LINE; THENCE SOUTH 1,658.97 FEET ALONG SAID HALF SECTION LINE TO A FOUND 1/2 INCH IRON PIN; THENCE SOUTH 89 DEGREES 13' 46" WEST, 1,444.63 FEET TO A SET 5/8 INCH IRON PIN; THENCE NORTH 01 DEGREE 56' 10" WEST 375.80 FEET TO A SET 5/8 INCH IRON PIN; THENCE SOUTH 89 DEGREES 13' 46" WEST, 464.65 FEET TO A 5/8 INCH IRON PIN SET ON THE WEST LINE OF SECTION 14; THENCE NORTH 01 DEGREE 56' 10" WEST 1,398.08 FEET ALONG THE WEST LINE OF SECTION 14, TO THE POINT OF BEGINNING, EXCEPT ANY PART TAKEN OR DEEDED FOR ROAD PURPOSES. ALSO all other property, whether real, personal or mixed (except as in the Original Indenture expressly excepted) of every nature and kind and wheresoever situated now owned or hereafter acquired by the Company; TOGETHER with all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid mortgaged property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of s 8.01 of the Original Indenture) the tolls, rents, revenues, issues, earnings, income, products and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid mortgaged property, and every part and parcel thereof; SUBJECT, HOWEVER, to permitted encumbrances as defined in the Original Indenture and, as to any property hereafter acquired by the Company, to any lien thereon existing, and to any liens for unpaid portions of the purchase money placed thereon at the time of such acquisition, and also subject to the provisions of Article 12 of the Original Indenture. TO HAVE AND TO HOLD the same, unto the Trustees and their and each of their respective successors and assigns forever; IN TRUST, NEVERTHELESS, upon the terms and trusts set forth in the Indenture, so that the same shall be held specifically by the Trustees under and subject to the terms of the Indenture in the same manner and for the same trusts, uses and purposes as if said properties had been specifically contained and described in the Original Indenture; PROVIDED, HOWEVER, and these presents are upon the condition that, if the Company, its successors or assigns, shall pay or cause to be paid unto the holders of the bonds the principal and interest, and premium, if any, to become due in respect thereof at the times and in the manner stipulated therein and in the Indenture and shall keep, perform and observe all and singular the covenants and promises in said bonds and in the Indenture expressed to be kept, performed and observed by or on the part of the Company, then the Indenture and the estate and rights thereby granted shall cease, determine and be void, otherwise to be and remain in full force and effect. AND THE COMPANY, for itself and its successors, does hereby covenant and agree to and with the Trustees, for the benefit of those who shall hold the bonds and the coupons appertaining thereto, or any of them, issued or to be issued under the Indenture, as follows: ARTICLE I CREATION AND DESCRIPTION OF FIRST MORTGAGE BONDS, 6.50% SERIES DUE 2010 Section 1. A new series of bonds to be issued under and secured by the Indenture is hereby created, to be designated as First Mortgage Bonds, 6.50% Series due 2010 (hereinafter sometimes called the "Bonds of the New Series" or "Bonds"). The Bonds of the New Series shall be limited to an aggregate principal amount of Fifty Million Dollars ($50,000,000), excluding any Bonds of the New Series which may be authenticated in lieu of or in substitution or exchange for other Bonds of the New Series pursuant to the provisions of Article 2 or of s15.09 of the Original Indenture. Said Bonds and the certificate of authentication of the Principal Trustee to be endorsed upon the Bonds shall be substantially in the forms hereinbefore recited, respectively. Each Bond shall be dated as of the date of its authentication and all Bonds of the New Series shall mature April 1, 2010 and shall bear interest at the rate of 6.50% per annum, payable semi-annually on April 1 and October 1 in each year, commencing October 1, 1998, both principal and interest shall be payable at the office or agency of the Company in the City of Chicago, Illinois, and in any coin or currency of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts. The holder of any Bond on any record date (as hereinbelow defined) with respect to any interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such Bond upon any exchange or transfer thereof subsequent to the record date and prior to such interest payment date, except if and to the extent that the Company shall default in the payment of the interest due on such interest payment date, in which case such defaulted interest shall be paid to the person in whose name such Bond (or any Bond or Bonds issued upon transfer or exchange thereof) is registered on a date fixed by the Company, which shall be not more than 15 and not less than 10 days before the date of payment of such defaulted interest. The term "record date" as used in this Section with respect to any interest payment date shall mean the close of business on the March 15 or September 15, as the case may be, next preceding such interest payment date, whether or not such March 15 or September 15 shall be a legal holiday or a day on which banking institutions in the City of Chicago, Illinois are authorized by law to remain closed. Bonds of the New Series shall be registered Bonds in book-entry form or in definitive form without coupons in denominations of $1,000 and any integral multiple of $1,000 which may be executed by the Company and delivered to the Principal Trustee for authentication and delivery. The Bonds of the New Series shall be registrable and interchangeable at the office or agency of the Company in the City of Chicago, Illinois, in the manner and upon the terms set forth in s2.05 of the Original Indenture, upon payment of such an amount as shall be sufficient to reimburse the Company for, or to pay, any stamp or other tax or governmental charge incident thereto. Notwithstanding the provisions of s2.08 of the Original Indenture, no service or other charge will be made for any exchange or transfer of any Bond of the New Series. If the Bonds of the New Series are to be issued in book-entry form only, notwithstanding any provision of the Indenture to the contrary, unless the Company shall otherwise direct (which direction shall promptly be given at the written request of The Depository Trust Company ("DTC")), all Bonds of the New Series shall be registered in the name of Cede & Co., as nominee of DTC, as registered owner of the Bonds of the New Series, and held in the custody of DTC. Unless otherwise requested by DTC, a single certificate will be issued and delivered to DTC. Beneficial owners of Bonds of the New Series will not receive physical delivery of Bond certificates except as hereinafter provided. For so long as DTC shall continue to serve as securities depository for the Bonds of the New Series as provided herein, all transfers of beneficial ownership interests will be made by book-entry only, and no investor or other party purchasing, selling or otherwise transferring beneficial ownership of Bonds of the New Series is to receive, hold or deliver any Bond certificate. With respect to Bonds of the New Series registered in the name of Cede & Co., as nominee of DTC, the Trustees and the Company shall have no responsibility or obligation to the securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC participants ("DTC Participants") or to any person on whose behalf a DTC Participant holds an interest in the Bonds of the New Series. Without limiting the immediately preceding sentence, the Trustees and the Company shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds of the New Series, (ii) the delivery to any DTC Participant or any other person, other than the registered owner of the Bonds of the New Series, of any notice with respect to the Bonds of the New Series, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than the registered owner of the Bonds of the New Series, of any amount with respect to principal of or premium, if any, or interest on the Bonds of the New Series. If the Bonds of the New Series are to be issued in book-entry form only, replacement Bonds may be issued directly to beneficial owners of Bonds of the New Series other than DTC, or its nominee, but only in the event that (i) DTC determines not to continue to act as securities depository for the Bonds of the New Series (which determination shall become effective by the giving of reasonable notice to the Company or the Principal Trustee); or (ii) the Company has advised DTC of its determination (which determination is conclusive as to DTC and beneficial owners of the Bonds of the New Series) to terminate the services of DTC as securities depository for the Bonds of the New Series; or (iii) the Company has determined (which determination is conclusive as to DTC and the beneficial owners of the Bonds of the New Series) that the interests of the beneficial owners of the Bonds of the New Series might be adversely affected if such book-entry only system of transfer is continued. Upon occurrence of the event set forth in (i) above, the Company shall use its best efforts to attempt to locate another qualified securities depository. If the Company fails to locate another qualified securities depository to replace DTC, the Company shall direct the Principal Trustee to cause to be authenticated and delivered replacement Bonds of the New Series, in certificated form, to the beneficial owners of the Bonds of the New Series. In the event that the Company makes the determination described in (ii) or (iii) above (provided that the Company undertakes no obligation to make any investigation to determine the occurrence of any events that would permit the Company to make any such determination), and has made provisions to notify the beneficial owners of Bonds of the New Series of such determination by mailing an appropriate notice to DTC, the Company shall cause to be issued replacement Bonds of the New Series in certificated form to beneficial owners of the Bonds of the New Series as shown on the records of DTC provided to the Trustee and the Company. Whenever, during the term of the Bonds of the New Series, the beneficial ownership thereof is determined by a book-entry at DTC, the requirements in the Original Indenture or this Supplemental Indenture relating to holding, delivering or transferring Bonds or selection of Bonds to be redeemed shall be deemed modified to require the appropriate person or entity to meet the requirements of DTC as to registering or transferring the book-entry to produce the same effect. If the Bonds of the New Series are to be issued in book-entry form only, notwithstanding any provision of the Original Indenture or this Supplemental Indenture to the contrary, all Bonds of the New Series issued hereunder, if DTC so requires, shall bear a legend substantially to the following effect: Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. If the Bonds of the New Series are to be issued in book-entry form only, the Company and the Principal Trustee shall enter into a letter of representations with DTC to implement the book-entry only system of Bond registration described above. If at any time DTC ceases to hold the Bonds of the New Series, all references herein to DTC shall be of no further force or effect. Section 2. The Bonds of the New Series described in Section 1 of this Article, in the aggregate principal amount of Fifty Million Dollars ($50,000,000), shall be executed by the Company and delivered to the Principal Trustee and, upon compliance with all the provisions and requirements of the Original Indenture in respect thereof, all or any portion of the Bonds of the New Series may, from time to time, be authenticated by the Principal Trustee and delivered (without awaiting the filing or recording of this Supplemental Indenture) in accordance with the written order or orders of the Company. ARTICLE II No Redemption of Bonds of the New Series The Bonds of the New Series shall not be redeemable by the Company. ARTICLE III No Sinking and Improvement Funds for Bonds of the New Series There shall be no Sinking and Improvement Fund for the Bonds of the New Series. ARTICLE IV Dividend Covenants The Company hereby covenants that, so long as any of the Bonds of the New Series shall remain outstanding, the covenants and agreements of the Company set forth in Section 4.11 of the Original Indenture as heretofore supplemented shall be and remain in full force and effect and be duly observed and complied with by the Company, notwithstanding that no First Mortgage Bonds, 3-1/2 % Series due 1969, remain outstanding. ARTICLE V The Trustees The Trustees accept the trusts created by this Supplemental Indenture upon the terms and conditions hereof and agree to perform such trusts upon the terms and conditions set forth in the Original Indenture as heretofore supplemented and in this Supplemental Indenture set forth. In general, each and every term and condition contained in Article 13 of the Original Indenture shall apply to this Supplemental Indenture with the same force and effect as if the same were herein set forth in full, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Supplemental Indenture. ARTICLE VI Miscellaneous Provisions Section 1. If the date for making any payment of principal or interest or premium or the last date for performance of any act or the exercising of any right, as provided in this Supplemental Indenture, shall be a legal holiday or a day on which banking institutions in the City of Chicago, Illinois, are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are authorized by law to remain closed, with the same force and effect as if done on the nominal date provided in this Supplemental Indenture, and no interest shall accrue for the period after such nominal date. Section 2. The Original Indenture as heretofore and hereby supplemented and amended is in all respects ratified and confirmed; and the Original Indenture, this Supplemental Indenture and all other indentures supplemental to the Original Indenture shall be read, taken and construed as one and the same instrument. Neither the execution of this Supplemental Indenture nor anything herein contained shall be construed to impair the lien of the Original Indenture as heretofore supplemented on any of the property subject thereto, and such lien shall remain in full force and effect as security for all bonds now outstanding or hereafter issued under the Indenture. All terms defined in Article 1 of the Original Indenture, as heretofore supplemented, for all purposes of this Supplemental Indenture, shall have the meanings therein specified, unless the context otherwise requires. Section 3. This Supplemental Indenture may be simultaneously executed in any number of counterparts, and all said counterparts executed and delivered, each as an original, shall constitute but one and the same instrument. Section 4. Nothing in this Supplemental Indenture contained, shall, or shall be construed to, confer upon any person other than a holder of bonds issued under the Indenture, the Company and the Trustees any right or interest to avail himself of any benefit under any provision of the Indenture, as heretofore supplemented and amended, or of this Supplemental Indenture. IN WITNESS WHEREOF, The Empire District Electric Company, party of the first part, has caused its corporate name to be hereunto affixed and this instrument to be signed by its President or a Vice President, and its corporate seal to be hereunto affixed and attested by its Secretary or an Assistant Secretary for and in its behalf; and Harris Trust and Savings Bank and State Street Bank and Trust Company of Missouri, N.A., parties of the second part, have each caused its corporate name to be hereunto affixed, and this instrument to be signed by its President or a Vice President and its corporate seal to be hereunto affixed and attested by its Secretary or an Assistant Secretary for and in its behalf, all as of the day and year first above written. THE EMPIRE DISTRICT ELECTRIC COMPANY, By /s/ R.B. Fancher Name: R.B. Fancher Title: Vice President-Finance [Corporate Seal] Attest: /s/ J.S. Watson Name: J.S. Watson Title: Secretary-Treasurer Signed, sealed and delivered by THE EMPIRE DISTRICT ELECTRIC COMPANY in the presence of: /s/ D.W. Gibson Name: D.W. Gibson /s/ G.A. Knapp Name: G.A. Knapp HARRIS TRUST AND SAVINGS BANK, as Trustee, By /s/ F.A. Pierson Name: F.A. Pierson Title: Vice President [Corporate Seal] Attest: /s/ J. Bartolini Name: J. Bartolini Title: Assistant Secretary Signed, sealed and delivered by HARRIS TRUST AND SAVINGS BANK in the presence of: /s/ Daryl L. Pomykala Name: Daryl L. Pomykala /s/ R. Johnson Name: R. Johnson STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A., as Trustee, By /s/ R. Clasquin Name: R. Clasquin Title: Assistant Vice President [Corporate Seal] Attest: /s/ Daniel G. Dwyer Name: Daniel G. Dwyer Title: Assistant Vice President Signed, sealed and delivered by STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A. in the presence of: /s/ Lisa M. Yuen Name: /s/ Karie A. Puleo Name: State of Missouri ) ) SS.: County of Jasper ) Be It Remembered, and I do hereby certify, that on this 23rd day of April, 1998, before me, a Notary Public in and for the County and State aforesaid, personally appeared R.B. Fancher, the Vice President-Finance of The Empire District Electric Company, a Kansas corporation, and J.S. Watson, the Secretary-Treasurer of said corporation, who are both to me personally known, and both personally known to me to be such officers and to be the identical persons whose names are subscribed to the foregoing instrument as such Vice President-Finance and Secretary-Treasurer, respectively, and as the persons who subscribed the name and affixed the seal of said The Empire District Electric Company, one of the makers thereof, to the foregoing instrument as its Vice President-Finance and Secretary-Treasurer, and they each acknowledged to me that they, being thereunto duly authorized, executed the same for the uses, purposes and consideration therein set forth and expressed, and in the capacities therein stated, as their free and voluntary act and deed, and as the free and voluntary act and deed of said corporation. And the said R.B. Fancher and J.S. Watson, being each duly sworn by me, severally deposed and said: that they reside in the City of Joplin, Missouri and Neosho, Missouri, respectively; that they were at that time Vice President-Finance and Secretary-Treasurer, of said corporation; that they knew the corporate seal of said corporation, and that the seal affixed to said instrument was such corporate seal, and was thereto affixed by said Secretary-Treasurer, and the said instrument was signed by said Vice President- Finance, in pursuance of the power and authority granted them by the By-Laws of said corporation, and by authority of the Board of Directors thereof. In Testimony Whereof, I have hereunto set my hand and affixed my official and notarial seal at my office in said County and State the day and year last above written. My commission expires February 19, 2002. [Notary Seal] /s/ Michelle L. Blackford Michelle L. Blackford Notary Public State of Illinois ) ) SS.: County of Cook ) Be It Remembered, and I do hereby certify, that on the 23rd day of April, 1998, before me, a Notary Public in and for the County and State aforesaid, personally appeared F.A. Pierson, Vice President of Harris Trust and Savings Bank, an Illinois corporation, and J. Bartolini, Assistant Secretary of said corporation, who are both to me personally known, and both personally known to me to be such officers and to be the identical persons whose names are subscribed to the foregoing instrument as such Vice President and Assistant Secretary, respectively, and as the persons who subscribed the name and affixed the seal of said Harris Trust and Savings Bank, one of the makers thereof, to the foregoing instrument as its Vice President and Assistant Secretary, and they each acknowledged to me that they, being thereunto duly authorized, executed the same for the uses, purposes and consideration therein set forth and expressed, and in the capacities therein stated, as their free and voluntary act and deed, and as the free and voluntary act and deed of said corporation. And the said F.A. Pierson and J. Bartolini, being each duly sworn by me, severally deposed and said: that they reside in Chicago, Illinois, that they were at that time respectively Vice President and Assistant Secretary, of said corporation; that they knew the corporate seal of said corporation, and that the seal affixed to said instrument was such corporate seal, and was thereto affixed by said Assistant Secretary, and the said instrument was signed by said Vice President, in pursuance of the power and authority granted them by the By-Laws of said corporation, and by authority of the Board of Directors thereof. In Testimony Whereof, I have hereunto set my hand and affixed my official and notarial seal at my office in said County and State the day and year last above written. My commission expires November 7, 2001. [Notary Seal] /s/ Kimberley Lange Kimberley Lange Notary Public State of Missouri ) ) SS.: County of St. Louis ) Be It Remembered, and I do hereby certify, that on this 23rd day of April 1998, before me, a Notary Public in and for the County and State aforesaid, personally appeared R. Clasquin, Assistant Vice President of State Street Bank and Trust Company of Missouri, N.A.,, a bank organized under the laws of the State of Missouri, and Daniel G. Dwyer, Assistant Vice President of said corporation, who are both to me personally known, and both personally known to me to be such officers and to be the identical persons whose names are subscribed to the foregoing instrument as such Assistant Vice Presidents and as the persons who subscribed the name and affixed the seal of said State Street Bank and Trust Company of Missouri, N.A., one of the makers thereof, to the foregoing instrument as its Assistant Vice Presidents, and they each acknowledged to me that they, being thereunto duly authorized, executed the same for the uses, purposes and consideration therein set forth and expressed, and in the capacities therein stated, as their free and voluntary act and deed, and as the free and voluntary act and deed of said corporation. And the said R. Clasquin and Daniel G. Dwyer, being each duly sworn by me, severally deposed and said: that they reside in the City of Highland, Illinois and St. Louis, Missouri, respectively, that they were at the time Assistant Vice Presidents of said corporation; that they knew the corporate seal of said corporation, and that the seal affixed to said instrument was such corporate seal, and was thereto affixed by said Assistant Vice President, and the said instrument was signed by said Assistant Vice President, in pursuance of the power and authority granted them by the By-Laws of said corporation, and by authority of the Board of Directors thereof. In Testimony Whereof, I have hereunto set my hand and affixed my official and notarial seal at my office in said County and State the day and year last above written. My commission expires . [Notary Seal] /s/ S.L. Battas Notary Public -----END PRIVACY-ENHANCED MESSAGE-----