0000912057-01-534993.txt : 20011018 0000912057-01-534993.hdr.sgml : 20011018 ACCESSION NUMBER: 0000912057-01-534993 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 20011010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PSI ENERGY INC CENTRAL INDEX KEY: 0000081020 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 350594457 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-71316 FILM NUMBER: 1756057 BUSINESS ADDRESS: STREET 1: 1000 EAST MAIN STREET STREET 2: PO BOX 960 CITY: PLAINFIELD STATE: IN ZIP: 46168 BUSINESS PHONE: 3178399611 MAIL ADDRESS: STREET 1: 1000 EAST MAIN STREET STREET 2: 139 E FOURTH ST, PO BOX 960 CITY: PLAINFIELD STATE: IN ZIP: 46168 FORMER COMPANY: FORMER CONFORMED NAME: PUBLIC SERVICE CO OF INDIANA INC DATE OF NAME CHANGE: 19900509 S-4 1 a2054103zs-4.txt S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 10, 2001 REGISTRATION NO. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ PSI ENERGY, INC. (Exact name of registrant as specified in its charter) INDIANA 4931 35-0594457 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of Classification Code Number) Identification No.) incorporation or organization)
1000 EAST MAIN STREET PLAINFIELD, INDIANA 46168 (513) 421-9500 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) BRADLEY C. ARNETT, ESQ. SENIOR COUNSEL PSI ENERGY, INC. 221 EAST FOURTH STREET SUITE 2500 P.O. BOX 960 CINCINNATI, OH 45201-0960 (513) 421-9500 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------ COPIES TO: TIMOTHY E. HOBERG, ESQ. TAFT, STETTINIUS & HOLLISTER LLP 1800 FIRSTAR TOWER CINCINNATI, OHIO 45202-3957 (513) 381-2838 ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement. ------------------------ If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / ------------------------ CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM TITLE OF EACH CLASS AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE AMOUNT OF OF SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE(1) OFFERING PRICE(1) REGISTRATION FEE(2) First Mortgage Bonds Series EEE, 6.65%, due June 15, 2006...................... $325,000,000 100% $325,000,000 $81,250
(1) Estimated solely for the purpose of calculating the amount of the registration fee. (2) Calculated pursuant to Rule 457. -------------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PROSPECTUS OCTOBER , 2001 PSI ENERGY, INC. OFFER TO EXCHANGE FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED FOR ALL OUTSTANDING FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 ------------------ THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER , 2001, UNLESS EXTENDED. ------------------------ Terms of the Exchange Offer: - We will exchange all outstanding bonds that are validly tendered and not withdrawn prior to the expiration of the Exchange Offer. - You may withdraw tenders of outstanding bonds at any time prior to the expiration of the Exchange Offer. - The exchange of bonds will not be a taxable exchange for United States federal income tax purposes. - We will not receive any proceeds from the Exchange Offer. - The terms of the bonds to be issued are substantially identical to the outstanding bonds, except for certain transfer restrictions, registration rights and related additional interest provisions applicable to the outstanding bonds. ------------------------ THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. TABLE OF CONTENTS Where You Can Find More Information......................... 2 Incorporation of Certain Documents by Reference............. 2 Summary..................................................... 3 The Company............................................... 3 The Exchange Offer........................................ 4 Consequences of Exchanging Bonds Pursuant to the Exchange Offer................................................... 5 The New Bonds............................................. 6 Selected Income Information............................... 8 Capitalization............................................ 9 Ratio of Earnings to Fixed Charges........................ 9 Use of Proceeds............................................. 10 Description of New Bonds.................................... 11 The Exchange Offer.......................................... 19 United States Federal Income Tax Consequences............... 26 Plan of Distribution........................................ 26 Legal Matters............................................... 26 Independent Public Accountants.............................. 26
WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any document that we file at the Public Reference Room of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. You may also read our filings on Internet at the Commission's web site at http://www.sec.gov. This prospectus constitutes part of a registration statement on Form S-4 filed with the SEC under the Securities Act of 1933 (the "Securities Act"). It omits some of the information contained in the registration statement, and reference is made to the registration statement for further information on PSI Energy, Inc. and the New Bonds being offered. Any statement contained in this prospectus concerning the provisions of any document filed as an exhibit to the registration statement or otherwise filed with the Commission is not necessarily complete, and in each instance reference is made to the copy of the document filed. INCORPORATION OF DOCUMENTS BY REFERENCE Our Annual Report on Form 10-K for the year ended December 31, 2000 and our Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2001, filed under the Securities and Exchange Act of 1934 (the "Exchange Act") are incorporated into this prospectus by reference. We also incorporate by reference any filings made with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and before the termination of this Exchange Offer. You may request a copy of these filings at no cost, by writing or telephoning the office of Lisa D. Gamblin, Vice President and Treasurer, PSI Energy, Inc., 139 East Fourth Street, Cincinnati, Ohio 45202, telephone number (513) 287-4329. 2 SUMMARY THIS SUMMARY MAY NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION. UNLESS THE CONTEXT INDICATES OTHERWISE, THE WORDS "PSI," "THE COMPANY," "WE," "OUR," "OURS" AND "US" REFER TO PSI ENERGY, INC. AND ITS SUBSIDIARIES AND JOINT VENTURES, INCLUDING UNCONSOLIDATED ENTITIES. THE COMPANY We are an electric public utility company incorporated in Indiana. We are primarily engaged in the production, transmission, distribution, and sale of electric energy in north central, central and southern Indiana. The area we serve has an estimated population of 2.2 million people located in 69 of the state's 92 counties, and includes the cities of Bloomington, Columbus, Kokomo, Lafayette, New Albany and Terre Haute. Our fully regulated generation portfolio of approximately 6,000 megawatts currently serves a customer base of over 700,000. We currently have over 1,900 employees. We are a wholly-owned subsidiary of Cinergy Corp., a registered holding company under the Public Utility Holding Company Act of 1935. Our principal operating utility affiliates are The Cincinnati Gas & Electric Company and The Union Light, Heat and Power Company. Cincinnati Gas & Electric, an Ohio corporation, is a combination electric and gas public utility company that provides service principally in the southwestern portion of Ohio. Union Light is a Kentucky corporation that provides electric and gas service in northern Kentucky. Our principal executive offices are located at 1000 East Main Street, Plainfield, Indiana 46168; our telephone number is (513) 287-1099. 3 THE EXCHANGE OFFER Securities Offered We are offering up to $325,000,000 aggregate principal amount of First Mortgage Bonds Series EEE, 6.65%, due June 15, 2006, which have been registered under the Securities Act ("New Bonds"). The Exchange Offer We are offering to issue the New Bonds in exchange for a like principal amount of outstanding First Mortgage Bonds Series EEE, 6.65%, due June 15, 2006, issued by PSI on June 22, 2001 ("Old Bonds"). We are offering to issue the New Bonds to satisfy our obligations in a registration rights agreement entered into when the Old Bonds were sold in transactions exempt from registration under the Securities Act. For procedures for tendering, see "The Exchange Offer." Tenders, Expiration Date, Withdrawal The Exchange Offer will expire at 5:00 p.m. New York City time on November , 2001, unless it is extended. If you decide to exchange your Old Bonds for New Bonds, you must acknowledge that you are not engaging in, and do not intend to engage in, a distribution of the New Bonds. If you decide to tender your Old Bonds under the Exchange Offer, you may withdraw them at any time before November , 2001. If we decide for any reason not to accept any Old Bonds for exchange, your Old Bonds will be returned to you without expense promptly after the Exchange Offer expires. Federal Income Tax Consequences Your exchange of Old Bonds for New Bonds in the Exchange Offer will not result in any income, gain or loss to you for Federal income tax purposes. See "United States Federal Income Tax Considerations." Use of Proceeds We will not receive any proceeds from the issuance of the New Bonds under the Exchange Offer. Exchange Agent LaSalle Bank National Association is the exchange agent for the Exchange Offer.
4 CONSEQUENCES OF EXCHANGING BONDS PURSUANT TO THE EXCHANGE OFFER Based on interpretations contained in no-action letters issued from the Commission's staff to third parties, we believe that New Bonds issued in exchange for Old Bonds under the Exchange Offer may be offered for resale, resold or otherwise transferred by you without registering the New Bonds under the Securities Act or delivering a prospectus: - so long as you are not one of our "affiliates," as defined in Rule 405 of the Securities Act; - so long as you acquire the New Bonds in the ordinary course of your business; and - unless you are a broker-dealer, so long as you do not have any arrangement with any person to participate in the distribution of the New Bonds. Unless you are a broker-dealer, you must acknowledge that: - you are not engaged in, and do not intend to engage in, a distribution of the New Bonds; and - you have no arrangement or understanding to participate in a distribution of the New Bonds. If you are an affiliate of PSI, or you are engaged in, intend to engage in or have any arrangement or understanding with respect to, the distribution of New Bonds acquired in the Exchange Offer, you should not rely on our interpretations of the position of the Commission's staff and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. If you are a broker-dealer and receive New Bonds for your own account in the Exchange Offer: - you must acknowledge that you will deliver a prospectus in connection with any resale of those New Bonds; and - you may use this prospectus, as it may be amended or supplemented from time to time, in connection with the resale of New Bonds received in exchange for Old Bonds acquired by you as a result of market-making or other trading activities. For a period of 90 days after the expiration of the Exchange Offer, we will make this prospectus available to any broker-dealer for use in connection with any such resale. You may offer or sell the New Bonds in certain jurisdictions only if they have been registered or qualified for sale there, or an exemption from registration or qualification is available and is complied with. Subject to the limitations specified in the registration rights agreement, we will register or qualify the New Bonds for offer or sale under the securities laws of any jurisdictions upon your reasonable written request. Unless you request that the sale of the New Bonds be registered or qualified in a jurisdiction, we currently do not intend to register or qualify the sale of the New Bonds in any jurisdiction. If you do not comply with the requirement described in this paragraph, you could incur liability under the Securities Act, and we will not indemnify you in those circumstances. 5 THE NEW BONDS The terms of the New Bonds and the Old Bonds are identical in all material respects, except that the New Bonds have been registered under the Securities Act and some transfer restrictions, registration rights and related additional interest provisions applicable to the Old Bonds do not apply to the New Bonds. Issuer............................... PSI Energy, Inc. New Bonds offered.................... $325,000,000 aggregate principal amount of First Mortgage Bonds Series EEE, 6.65%, due June 15, 2006. Maturity............................. June 15, 2006. Interest payment dates............... June 15 and December 15, beginning December 15, 2001. Ranking.............................. The New Bonds will be secured senior obligations and rank equally with our secured senior indebtedness. As of June 30, 2001, we had outstanding $1,520.7 million of indebtedness, of which $822.5 million was secured senior indebtedness, including the Old Bonds. Ratings.............................. The New Bonds will be rated the same as the Old Bonds, A- by Standard & Poor's Ratings Group, A3 by Moody's Investor Service, Inc. and A- by Fitch IBCA, Inc. Security ratings are not recommendations to buy, sell or hold the New Bonds. Ratings are subject to revision or withdrawal at any time by the rating agencies. Optional redemption.................. We may redeem some or all of the New Bonds at any time at a redemption price equal to the sum of - the principal amount of the New Bonds being redeemed plus accrued and unpaid interest, and - the excess, if any, of (1) the sum of the present value of the principal amount of the New Bonds to be redeemed, together with the remaining scheduled payments of interest on the New Bonds (not including any portion of such payments of interest accrued as of the redemption date), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the treasury rate plus 25 basis points over (2) 100% of the principal amount of the New Bonds to be redeemed. Certain rights to require repurchase of New Bonds by PSI.................. If an unaffiliated third party acquires us or our parent company, Cinergy Corp., and both Moody's and S&P lower their credit rating on the New Bonds to less than Investment Grade within 30 calendar days of the event, then each holder of New Bonds will have the right, at the holder's option, to require us to repurchase all or any part of the holder's New Bonds. We will purchase the New Bonds at a price equal to 100% of the principal amount of the New Bonds, plus accrued and unpaid interest, to the repurchase date.
6 Interest rate adjustment............. The interest rate payable on the New Bonds will be subject to adjustment from time to time if either Moody's or S&P reduces the rating ascribed to our senior secured debt below Baa3 or BBB-, respectively. Use of proceeds...................... We will not receive any proceeds from the issuance of the New Bonds. Form and denomination................ The New Bonds will be issued in denominations of $1,000 and integral multiples of $1,000.
7 SELECTED INCOME INFORMATION The following table gives selected financial information for PSI. This information is derived from our historical results. See "Where You Can Find More Information." All amounts are in thousands.
SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ------------------------------------ JUNE 30, 2001 2000 1999(1) 1998(2) -------------- ---------- ---------- ---------- Operating Revenues.......................... $2,099,937 $2,684,197 $2,135,706 $2,403,038 Depreciation and Amortization............... 73,995 142,584 136,402 130,604 Operating Income............................ 151,288 297,472 272,024 161,244 Interest.................................... 38,537 78,250 86,265 89,359 Income Taxes................................ 42,662 88,547 69,215 23,147 Net Income.................................. 75,649 135,398 117,199 52,038 Preferred Dividend Requirement.............. 1,293 3,738 4,601 5,659 Net Income Applicable to Common Stock....... 74,356 131,660 112,598 46,379
------------------------ Notes: (1) In the third quarter of 1999, we experienced extreme weather conditions which resulted in a reduction in net income of $41 million, after tax. (2) In 1998, we incurred charges against income relating to: - a one-time charge of $80 million (before taxes) reflecting the implementation of a 1989 settlement of a dispute with the Wabash Valley Power Association, Inc. that resulted from the cancellation of the Marble Hill nuclear power station in 1984; and - the recording of $62 million (before taxes) of unrealized losses related to energy marketing and trading operations. 8 CAPITALIZATION
OUTSTANDING OUTSTANDING JUNE 30, 2001 DECEMBER 31, 2000 ---------------------------- ---------------------------- % OF % OF AMOUNT CAPITALIZATION AMOUNT CAPITALIZATION ----------- -------------- ----------- -------------- (THOUSANDS) (THOUSANDS) Total Debt................................ $1,520,698 54.9% $1,445,865 55.2% Cumulative Preferred Stock Not Subject to Mandatory Redemption.................... 42,347 1.5 42,348 1.6 Common Stock Equity....................... 1,207,923 43.6 1,133,695 43.2 ---------- ----- ---------- ----- Total Capitalization.................. $2,770,968 100.0% $2,621,908 100.0% ========== ===== ========== =====
RATIO OF EARNINGS TO FIXED CHARGES Listed below is the ratio of earnings to fixed charges for the six months ended June 30, 2001 and each year of the five year period ended December 31, 2000.
SIX MONTHS YEAR ENDED DECEMBER 31, ENDED ---------------------------------------------------------------- JUNE 30, 2001 2000 1999 1998 1997 1996 -------------- -------- -------- -------- -------- -------- 3.66 3.58 2.99 1.78 3.31 3.35
For the purpose of computing the ratio of earnings to fixed charges, earnings consist of pretax income from continuing operations plus fixed charges. Fixed charges consist of: - interest expense; - amortized premiums, discounts and capitalized expenses related to indebtedness; and - an estimate of the interest within rental expense. 9 USE OF PROCEEDS We will not receive any cash proceeds from the issuance of the New Bonds offered by this prospectus. New Bonds will be exchanged for Old Bonds as described in this prospectus on our receipt of Old Bonds in like principal amount. The Old Bonds surrendered in exchange for the New Bonds will be retired and cancelled. Accordingly, the issuance of the New Bonds will not result in any change in our indebtedness. The net proceeds to us from the sale of the Old Bonds was approximately $322 million (after discounts and commissions and other expenses of the offering). We used these net proceeds to repay a portion of our outstanding short-term indebtedness. 10 DESCRIPTION OF NEW BONDS GENERAL The Old Bonds were, and the New Bonds will be, issued under a First Mortgage Indenture dated as of September 1, 1939, between the Company and LaSalle Bank National Association, as Trustee, as amended and as supplemented by a Fifty-Third Supplemental Indenture dated June 15, 2001. The following summary does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the First Mortgage Indenture and the specific terms of the New Bonds. Whenever particular provisions or defined terms in those documents are referred to in this description, those provisions or terms are incorporated by reference from the applicable document. The terms of the New Bonds are identical in all material respects to the terms of the Old Bonds, except for the removal of the transfer restrictions and the registration rights and related additional interest provisions applicable to the Old Bonds because they were not registered under the Securities Act. The New Bonds will rank equally, except as to any sinking fund or similar fund provided for in any outstanding series of First Mortgage Bonds, with all First Mortgage Bonds now or hereafter issued and outstanding under the First Mortgage Indenture. The New Bonds, together with all other outstanding First Mortgage Bonds of PSI, will be secured by a mortgage on substantially all of the Company's properties. We will issue New Bonds in an aggregate principal amount of up to $325,000,000. Just as the Old Bonds were, the New Bonds will be a series of First Mortgage Bonds designated Series EEE and will mature on June 15, 2006. The New Bonds will be issued only in fully registered form in denominations of $1,000 and integral multiples of $1,000. INTEREST We will pay interest on the New Bonds initially at a rate of 6.65%, subject to increase as discussed below. Payments will occur on June 15 and December 15 of each year beginning December 15, 2001. Interest will accrue from June 22, 2001. The amount of interest payable for any period will be computed based on a 360-day year of twelve 30-day months. Interest will be paid to holders of record on the business day immediately preceding the interest payment date. If any interest payment date is not a business day, then interest payable on that date will be paid on the next business day. No additional interest or other payment will be paid due to the delay. INTEREST RATE ADJUSTMENT The interest rate payable on the New Bonds will be subject to adjustment from time to time if either Moody's or S&P reduces the rating ascribed to our senior secured debt below Investment Grade, which is Baa3 in the case of Moody's and BBB- in the case of S&P. In this event, the interest rate payable on the New Bonds will be increased by .25% for such a reduction by either Moody's or S&P, with a maximum increase of .50% if both rating agencies reduce their ratings below Investment Grade. If Moody's or S&P subsequently increases the rating ascribed to our senior secured debt above Ba1 in the case of Moody's or above BB+ in the case of S&P, then the interest rate payable on the New Bonds will be decreased by .25% for such an upgrade by either Moody's or S&P, as the case may be, with a maximum decrease of .50% if both rating agencies upgrade their ratings to Investment Grade, but in no event will the interest rate be reduced to below the initial interest rate. Any such interest rate increase or decrease will take effect from the interest payment date following the related rating downgrade or upgrade, as the case may be. There is no limit to the number of times the interest rate payable on the New Bonds can be adjusted. However, the interest rate payable on the New Bonds will not exceed the initial interest rate of 6.65%, plus a maximum adjustment of .50% for rating agency downgrades. 11 CERTAIN RIGHTS TO REQUIRE REPURCHASE OF NEW BONDS BY PSI If an unaffiliated third party acquires us or our parent company, Cinergy Corp. (an "Acquisition Event"), and both Moody's and S&P lower their credit rating on the New Bonds to less than Investment Grade within 30 calendar days of the Acquisition Event, then each holder of New Bonds will have the right, at the holder's option, to require us to repurchase all or any part of the holder's New Bonds. We will purchase the New Bonds on the Repurchase Date at a price equal to 100% of the principal amount of the New Bonds, plus accrued and unpaid interest, to the Repurchase Date. We are obligated to give notice to the Trustee and holders of the New Bonds within 30 calendar days after the New Bonds become subject to repurchase. The date on which we give notice to the Trustee is called the "Notice Date." To require us to repurchase the New Bonds, a holder must, on or before the close of business on the 20th business day prior to the Repurchase Date, notify the Trustee of the holder's exercise of this option and complete and submit appropriate documentation. We may hold, re-market or retire the New Bonds that we purchase from the holders. The "Repurchase Date" means the 45th calendar day after the Notice Date. A "business day" is any day other than a Saturday or Sunday or a day that banking institutions in the City of New York or the City of Chicago are authorized or obligated to close. As of the date of this prospectus, our current senior secured long-term debt (which includes the New Bonds) rating by Moody's is A3 and by S&P is A-. However, on December 12, 2000, S&P placed us, Cinergy Corp. and all of our affiliates on CreditWatch with negative implications. On January 22, 2001, Moody's assigned negative outlooks to our debt and preferred stock securities and those of Cinergy Corp. and all of our affiliates. Our failure to repurchase the New Bonds on the Repurchase Date will be an event of default under the First Mortgage Indenture upon 60 days following notice to us from the Trustee of our failure to perform or observe our covenant to repurchase the New Bonds. OPTIONAL REDEMPTION BY PSI Subject to the terms of the First Mortgage Indenture, we will have the right to redeem the New Bonds, in whole or from time to time in part, until maturity (such redemption, a "Make-Whole Redemption," and the date thereof, the "Redemption Date"), upon not less than 30 nor more than 60 days notice to the holders, at a redemption price equal to the sum of (i) the principal amount of the Bonds being redeemed plus accrued and unpaid interest thereon to the Redemption Date, and (ii) the Make-Whole Amount (as defined below), if any, with respect to the New Bonds being redeemed. "Make-Whole Amount" means the excess, if any, of (i) the sum, as determined by a Quotation Agent, of the present value of the principal amount of the New Bonds to be redeemed, together with scheduled payments of interest thereon from the Redemption Date to June 15, 2006 (not including any portion of such payments of interest accrued as of the Redemption Date), in each case discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate over (ii) 100% of the principal amount of the New Bonds to be redeemed. "Adjusted Treasury Rate" means the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for the Redemption Date, calculated on the third business day preceding the Redemption Date, plus in each case .25% (25 basis points). "Comparable Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term from the Redemption Date to the stated maturity of the New Bonds that would be utilized, at the time of selection and in accordance with 12 customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the New Bonds. "Quotation Agent" means the Reference Treasury Dealer selected by the Trustee after consultation with the Company. "Reference Treasury Dealer" means a primary U.S. Government securities dealer. "Comparable Treasury Price" means (1) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding the Redemption Date, as set forth in the daily statistical release designated "H.15" (or any successor release) published by the Board of Governors of the Federal Reserve System or (2) if that release (or any successor release) is not published or does not contain those prices on that business day, (A) the average of the Reference Treasury Dealer Quotations for the Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three Reference Treasury Dealer Quotations, the average of those Quotations. "Reference Treasury Dealer Quotations" means the average, as determined by the Trustee (after consultation with the Company), of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding the Redemption Date. Notice of any redemption will be mailed by us at least 30 days but not more than 60 days before any Redemption Date to each holder of New Bonds to be redeemed. If less than all the New Bonds are to be redeemed at our option, the Trustee will select, in such manner as it deems fair and appropriate, the New Bonds to be redeemed. Unless we default in payment of the Redemption Price, on and after any Redemption Date, interest will cease to accrue on the New Bonds or portions thereof called for redemption. NO OPTIONAL REDEMPTION BY HOLDERS The New Bonds will not be redeemable at the option of any holder prior to maturity. As set forth under "Certain Rights to Require Repurchase of New Bonds by PSI," any holder will have the right, under certain circumstances, to require us to repurchase all or any part of the holder's New Bonds. SINKING FUND The New Bonds are not entitled to the benefits of a sinking fund. MAINTENANCE AND RENEWAL The New Bonds are not entitled to the benefits of a Maintenance and Renewal Fund. However, with respect to all series of bonds issued prior to Series BBB, the following provisions of the First Mortgage Indenture will apply: During each calendar year, so long as any bonds are outstanding thereunder, we must expend sums equal to the greater of (a) 15% of our gross operating revenues (which, as defined in the First Mortgage Indenture, excludes revenues received after January 1, 1976 which are attributable to increases in the unit cost of fuel over the average unit cost of fuel used in 1975) for such calendar year or (b) 2.25% of our depreciable property on January 1 of such year for (i) the maintenance and repair of the mortgaged properties, (ii) the construction or acquisition of bondable property, or (iii) the retirement of bonds issued under the First Mortgage Indenture. We must deposit annually with the First Mortgage Trustee cash to the extent that such aggregate amount is not so expended, less any credits for excess expenditures for such purposes in prior years. Any cash so deposited may be withdrawn by us or applied by the First Mortgage Trustee as provided in the First Mortgage Indenture (including the redemption at the optional redemption price of bonds which are then redeemable at our 13 option). Excess expenditures may be used to comply with the requirements of any subsequent year or years, and gross expenditures (as defined and limited in the First Mortgage Indenture) for bondable property may be certified to comply with the provisions of clause (ii) above. Expenditures so used, and bonds retired through expenditures so used, cannot be used for other purposes under the First Mortgage Indenture; and expenditures used or bonds retired for other purposes under the First Mortgage Indenture cannot be used for the purpose of complying with said maintenance and renewal provisions. The First Mortgage Indenture does not require that any notice be given to bondholders in connection with these maintenance and renewal requirements, unless and until an event of default under the First Mortgage Indenture occurs by reason of our failure to meet the requirements. The maintenance and renewal provisions of the First Mortgage Indenture do not require the retirement annually of any specific amount of outstanding first mortgage bonds. We will maintain the mortgaged properties in good repair and working order. SECURITY The New Bonds will rank PARI PASSU, except as to any sinking fund, Maintenance and Renewal Fund or similar fund provided for in any outstanding series of bonds, with all bonds now or subsequently issued and outstanding under the First Mortgage Indenture. The First Mortgage Indenture constitutes a first mortgage lien, subject only to permitted liens (as defined in the First Mortgage Indenture), on all or substantially all of our permanent fixed properties. ISSUE OF ADDITIONAL FIRST MORTGAGE BONDS Additional new series of bonds, without limitation as to aggregate principal amount, may be issued under, and in accordance with the terms of, the First Mortgage Indenture from time to time on any one or more of the following bases: 1. For or on account of the "retirement" of an equal principal amount of bonds of any one or more other series previously authenticated under the First Mortgage Indenture; but we have covenanted that, so long as any bonds issued under the First Mortgage Indenture remain outstanding, bonds issued for or on account of such "retirement" will be issued only in respect of bonds issued after August 31, 1945. 2. In principal amount not greater than 60% of "net expenditures" made by the Company after September 26, 1945 for the construction or acquisition of "bondable property" (which includes construction work in progress to the extent actually construed or erected) which has become subject to the lien of the First Mortgage Indenture and is not subject to any lien or mortgage equal or prior in lien or mortgage securing obligations for the payment or redemption of which the necessary funds shall have been deposited irrevocably in trust with instructions to apply such funds to the payment or redemption of such obligations. 3. To an aggregate principal amount of bonds equal to the amount of cash deposited with the First Mortgage Trustee under the First Mortgage Indenture, which "deposited cash" may be applied to the redemption or purchase of bonds of any series issued under the First Mortgage Indenture or may be withdrawn by us to an amount equal to the principal amounts of any bonds which could be authenticated for the purposes and under the conditions stated in 1 and 2 above. No additional bonds may be authenticated for or on account of "net expenditures" for "bondable property" or for "deposited cash," and no additional bonds bearing a higher rate of interest than the bonds for or on account of the "retirement" of which they are issued may be authenticated more than five years prior to the stated maturity of the bonds for or on account of the "retirement" of which they are issued, unless "net earnings" requirements (i.e., net earnings for the twelve months ended prior to such issuance must be two times the interest on all bonds outstanding after giving effect to such issuance) are satisfied. For purposes of the First Mortgage Indenture, the "net earnings" of PSI for any period means an amount, computed in accordance with accepted principles of accounting, determined 14 by deducting from the total gross earnings and income for PSI derived from all sources for such period all operating expenses of PSI for such period, the remainder being adjusted, if necessary, so that no more than ten per centum (10%) thereof consists of the aggregate of (a) net non-operating income, (b) net operating revenues derived from the operation by PSI of any properties other than electric, gas or water properties, and (c) net earnings from any properties not owned by PSI. The Supplemental Indenture relating to the New Bonds provides that, at any time when no First Mortgage Bonds of any series prior to Series BBB are outstanding, the 60% "bonding ratio" referred to in subsection 2 of the first paragraph above will increase to 66 2/3%. ACQUISITION OF PROPERTY SUBJECT TO PRIOR LIEN The First Mortgage Indenture provides that after having acquired properties, other than the properties acquired on April 9, 1941 from Dresser Power Corporation, of a value in the aggregate of $500,000, without regard to the limitations referred to in this paragraph, we will not, so long as any bonds are outstanding under the First Mortgage Indenture, acquire any properties which at the time of the acquisition are subject to a lien or liens equal or prior to the lien of the First Mortgage (other than "permitted liens") if at the date of acquisition the principal amount of outstanding obligations secured by such liens exceeds 60% of the "value" of "bondable property" so acquired, or if the "net earnings" of such property for twelve consecutive months ending within 90 days next preceding the date of acquisition has been less than two times the interest charges for one year on all outstanding obligations secured by such lien at the time of acquisition, except obligations for the payment or redemption of which the necessary funds have been deposited irrevocably in trust with instructions to apply such funds to the payment or redemption of such obligations. The First Mortgage Indenture further provides that upon the acquisition of any property subject to a lien or liens equal or prior to the lien of the First Mortgage, we will cause all such mortgages then existing on such property to be closed and, after such acquisition, will permit no additional indebtedness to be secured by those mortgages. The Supplemental Indenture relating to the New Bonds provides that, at any time when no First Mortgage Bonds of any series prior to Series BBB are outstanding, the 60% figure in principal amount of outstanding obligations secured referred to in the previous paragraph above will increase to 66 2/3%. MODIFICATION OF FIRST MORTGAGE INDENTURE In general, modifications or alterations of the First Mortgage Indenture, and of the rights or obligations of PSI and of the bondholders, as well as waivers of compliance with the First Mortgage Indenture, may with the approval of our Board of Directors be made at bondholders' meetings with the affirmative vote of 75% of the bonds entitled to vote at the meeting with respect to matters involved; PROVIDED, HOWEVER, that no modifications or alterations may be made which will permit (1) the extension of the time or times of payment of the principal of, or the interest or the premium (if any) on, any bond, or the reduction in the principal amount thereof or in the rate of interest or the amount of any premium thereon, or any other modification in terms of payment of such principal, interest or premium, which terms shall always be unconditional, or (2) the creation of any lien ranking prior to or on a parity with the lien of the First Mortgage with respect to any of the mortgaged properties, or (3) the depriving of any bondholder of a lien upon the mortgaged properties, or (4) the reduction of the percentage of bonds required for the taking of action with respect to any such modification or alteration. The Supplemental Indenture relating to the New Bonds provides that, at any time when no First Mortgage Bonds of any series prior to Series BBB are outstanding, the 75% vote requirement referred to in the previous paragraph will decrease to 66 2/3%. DIVIDEND RESTRICTIONS The First Mortgage Indenture provides that, so long as any bonds are outstanding under the First Mortgage Indenture, PSI may not declare or pay any dividends or make any distributions on shares of 15 any class of its capital stock (other than on preferred stock or dividends payable in shares of its Common Stock or dividends which are applied to the purchase of shares of its Common Stock by the shareholder receiving such dividends) or purchase, retire or otherwise acquire for a consideration any shares of its Common Stock, except out of our earned surplus or net profits determined in accordance with generally accepted principles of accounting and lawfully available for that purpose. For the purpose of this covenant only, in computing the amount of such earned surplus or net profits, there shall have been, subsequent to September 1, 1939, and up to the date as of which the computation is made, charged to operating expenses for maintenance or as a reserve for depreciation or retirements, the aggregate amounts required to be expended or deposited with the First Mortgage Trustee under the provisions described under the caption "Maintenance and Renewal" for such period. The First Mortgage Indenture does not require that any notice be given to bondholders in connection with the foregoing restrictions on dividends, unless and until an event of default under the First Mortgage Indenture occurs by reason of the company's violation of that dividend restriction. CONCERNING THE FIRST MORTGAGE TRUSTEE The First Mortgage Indenture provides that the holders of a majority in principal amount of the outstanding bonds have the right to require the First Mortgage Trustee to take action on behalf of the bondholders, but under certain circumstances the First Mortgage Trustee may decline to follow such directions or to exercise certain of its powers. Prior to taking such action, the First Mortgage Trustee is entitled to indemnity satisfactory to it against costs, expenses and liabilities that may be incurred in the course of such action. Such right to indemnification does not impair the absolute right of any bondholder to enforce payment of the principal of and interest on his bonds when due. Certain affiliates of the First Mortgage Trustee provide various financial services for us and our affiliates in the normal course of business. DEFAULTS, NOTICES AND CERTIFICATES The First Mortgage Indenture provides generally that failure for 30 days to pay interest on any bond, failure to pay the principal of any bond, whether at maturity or upon redemption or declaration, failure to pay principal or interest on any prior lien obligations, failure for 60 days after notice to perform or observe other covenants of the First Mortgage Indenture, default under any mortgage or other instrument securing any prior lien obligations and the occurrence of insolvency, bankruptcy or similar proceedings constitute events of default. The First Mortgage Trustee is required to give notice to the bondholders of the occurrence of any event which constitutes, or which, with the giving of notice or the lapse of time or both, would constitute, an event of default, except that the First Mortgage Trustee may withhold such notice if the First Mortgage Trustee determines that to do so is in the interests of the bondholders unless such event relates to the payment of principal of or interest on or any sinking fund obligation for the benefit of any of the bonds. Upon the occurrence of an event of default, the First Mortgage Trustee may, and upon written request of the holders of a majority in principal amount of all bonds then outstanding under the First Mortgage Indenture due and payable, must enforce the lien of the First Mortgage by foreclosure or exercise such other remedies as are provided in the First Mortgage Indenture. Compliance with certain provisions of the First Mortgage Indenture is required to be evidenced by various written statements or certificates filed with the First Mortgage Trustee, and various certificates and other papers are required to be filed with the First Mortgage Trustee annually and upon the happening of various events. However, no periodic evidence is required to be furnished as to the absence of events of default or compliance with the terms of the First Mortgage Indenture. BOOK ENTRY; DELIVERY AND FORM The New Bonds will be issued in fully registered form, without coupons. Except as described below, the New Bonds will be deposited with, or on behalf of, the Depository Trust Company, New 16 York, New York ("DTC"), and registered in the name of DTC's nominee, in the form of a global bond (the "Global New Bond"). We expect that pursuant to procedures established by DTC: - upon deposit of the Global New Bond, DTC or its custodian will credit on its internal system interests in the Global New Bond to the accounts of persons who have accounts with DTC ("Participants"); and - ownership of interests in the Global New Bond will be shown on, and the transfer of those interests will be effected only through, records maintained by DTC or its nominee (with respect to interests of Participants) and the records of Participants (with respect to interests of persons other than Participants). Ownership of beneficial interests in the Global New Bond will be limited to Participants or persons who hold interests through Participants. So long as DTC or its nominee is the registered owner of the New Bonds, DTC or the nominee will be considered the sole owner of the New Bonds represented by the Global New Bond for all purposes under the First Mortgage Indenture. No beneficial owner of an interest in the Global New Bond will be able to transfer that interest except in accordance with DTC's procedures, in addition to those provided for under the First Mortgage Indenture with respect to the New Bonds. Payments of the principal of and interest on the Global New Bond will be made to DTC or its nominee, as the case may be, as the registered owner thereof. None of PSI, the Trustee or any paying agent under the First Mortgage Indenture will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global New Bond or for maintaining, supervising or reviewing any records relating to those beneficial ownership interests. We expect that DTC or its nominee, upon receipt of any payment of the principal of or interest on the Global New Bond, will credit Participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global New Bond as shown on the records of DTC or its nominee. We also expect that payments by Participants to owners of beneficial interests in the Global New Bond held through such Participants will be governed by standing instructions and customary practice as is now the case with securities held in nominee accounts. These payments will be the responsibility of the Participants. Transfers between Participants in DTC will be effected in accordance with DTC's rules and will be settled in immediately available funds. If a holder requires physical delivery of a certificated New Bond for any reason, including to sell New Bonds to persons in states which require physical delivery of the New Bonds or to pledge such securities, the holder must transfer its interest in the Global New Bond in accordance with the normal procedures of DTC and with the procedures set forth in the First Mortgage Indenture. DTC has advised us that: - it will take any action permitted to be taken by a holder of New Bonds (including the presentation of New Bonds for exchange as described below) only at the direction of one or more Participants to whose account at DTC interests in the Global New Bond are credited and only in respect of that portion of the aggregate principal amount of New Bonds as to which the Participant or Participants has or have given direction. However, if there is an Event of Default under the First Mortgage Indenture, DTC will exchange the Global New Bonds for certificated New Bonds, which it will distribute to its Participants; - it is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act; and 17 - it was created to hold securities for its Participants and facilitate the clearance and settlement of securities transactions between Participants through electronic book-entry changes in accounts of its Participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interest in the Global New Bond among Participants, it is under no obligation to perform those procedures, and the procedures may be discontinued at any time. Neither PSI nor the Trustee will have any responsibility for the performance by DTC or its Participants or Indirect Participants of their respective obligations under the rules and procedures governing their operations. EXCHANGE OF INTERESTS IN GLOBAL NEW BOND FOR CERTIFICATED NEW BONDS The entire Global New Bond may be exchanged for definitive New Bonds in registered, certificated form ("Certificated New Bonds") if: - DTC: - notifies us that it is unwilling or unable to continue as depositary for the Global New Bond and we fail to appoint a successor depositary within 90 days, or - has ceased to be a clearing agency registered under the Exchange Act; - we notify the Trustee in writing that we elect to cause the issuance of Certificated New Bonds; or - there shall have occurred and be continuing a Default or an Event of Default with respect to the New Bonds. Beneficial interests in the Global New Bond may be exchanged for Certificated New Bonds only upon at least 20 days' prior written notice given to the Trustee by or on behalf of DTC in accordance with customary DTC procedures. Certificated New Bonds delivered in exchange for any beneficial interest in the Global New Bond will be registered in the names, and issued in any approved denominations, requested by DTC on behalf of its Direct or Indirect Participants. Neither PSI nor the Trustee will be liable for any delay by the holder of the Global New Bond or DTC in identifying the beneficial owners of New Bonds, and PSI and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the holder of the Global New Bond or DTC for all purposes. TITLE PSI, the Trustee, and any agent of PSI or the Trustee may treat the person in whose name a New Bond is registered as the absolute owner of the New Bond (whether or not that New Bond may be overdue) for the purpose of making payment and for all other purposes. 18 THE EXCHANGE OFFER Pursuant to a Registration Rights Agreement among PSI and the initial purchasers of the Old Bonds (the "Registration Rights Agreement"), we agreed to use our reasonable best efforts to register the New Bonds with the Commission and to offer the holders of Old Bonds the opportunity to exchange their Old Bonds for New Bonds. This prospectus is a part of the registration statement filed for that purpose (the "Exchange Offer Registration Statement"). The Registration Rights Agreement also provides that if any holders of Old Bonds, other than affiliates of ours and certain other holders, who participate in the Exchange Offer cannot receive New Bonds that may be sold without restriction under federal and state securities laws, we will file a registration statement covering resale of those Old Bonds (a "Shelf Registration Statement") and will use our reasonable best efforts to cause the Shelf Registration Statement to become effective and to keep it effective for two years from June 22, 2001, the date on which we delivered the Old Bonds to the initial purchasers (the "Closing Date"). If either: - we have not exchanged New Bonds for all Old Bonds validly tendered in accordance with the terms of the Exchange Offer on or prior to 35 days after the date on which the Exchange Offer Registration Statement was declared effective, or - if applicable, the Shelf Registration Statement has been declared effective but ceases to be effective at any time prior to two years from the Closing Date, the Registration Rights Agreement provides that additional interest ("Additional Interest") will accrue on the Old Bonds at a rate of .25% per annum, beginning immediately following the relevant event. Additional Interest on the Old Bonds will cease to accrue: - upon the exchange of New Bonds for all Old Bonds tendered, or - upon the effectiveness of the Shelf Registration Statement which had ceased to remain effective prior to two years from the Closing Date, or - upon the termination of transfer restrictions on the Old Bonds in accordance with Rule 144(k) under the Securities Act. Any Additional Interest will be payable in cash, on the same original payment dates of the Old Bonds. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Old Bonds, multiplied by a fraction, the numerator of which is the number of days the Additional Interest rate was applicable during the period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360. Old Bonds not tendered in the Exchange Offer will bear interest at the same rates as in effect at the time of issuance of the Old Bonds. TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD BONDS Upon the terms and subject to the conditions set forth in this prospectus and in the accompanying letter of transmittal (the "Letter of Transmittal"), we will: - accept for exchange Old Bonds which are properly tendered on or prior to the Expiration Date and not withdrawn as permitted below, and - keep the Exchange Offer open for not less than 30 days after the date notice of the Exchange Offer is mailed to the holders of the Old Bonds. 19 The "Expiration Date" will be 5:00 p.m., New York City time, on November , 2001, unless we extend the period of time for which the Exchange Offer is open, in which case the "Expiration Date" will be the latest time and date to which the Exchange Offer is extended. As of the date of this prospectus, $325,000,000 in aggregate principal amount of the Old Bonds were outstanding. The Exchange Offer is not conditioned upon any minimum principal amount of Old Bonds being tendered. This prospectus, together with the Letter of Transmittal, is first being sent on or about the date set forth on the cover page to all holders of Old Bonds at the addresses set forth in the security register for the Old Bonds. We expressly reserve the right: - at any time or from time to time, to extend the period of time during which the Exchange Offer is open, and thereby delay acceptance of any Old Bonds, and - to amend or terminate the Exchange Offer, and not to accept for exchange any Old Bonds not previously accepted, upon the occurrence of any of the conditions of the Exchange Offer specified below under "Certain Conditions to the Exchange Offer." We will give oral or written notice of any extension, amendment, non-acceptance or termination to holders of Old Bonds as promptly as practicable. In the case of any extension, notice will be given by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Subject to applicable law, we shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. Holders of Old Bonds do not have appraisal or dissenters' rights in connection with the Exchange Offer. Old Bonds which (1) are not tendered for exchange or (2) are tendered but not accepted in connection with the Exchange Offer and are not entitled to be included in a Shelf Registration Statement will remain outstanding and be entitled to the benefits of the First Mortgage Indenture, but will not be entitled to any further registration rights under the Registration Rights Agreement. PROCEDURES FOR TENDERING OLD BONDS The tender to us of Old Bonds by a holder as set forth below and our acceptance of those Old Bonds will constitute a binding agreement between the tendering holder and us upon the terms and subject to the conditions set forth in this prospectus and in the accompanying Letter of Transmittal. Except as set forth below, a holder who wishes to tender Old Bonds for exchange pursuant to the Exchange Offer must: - transmit a properly-completed and duly-executed Letter of Transmittal, including all other documents required by the Letter of Transmittal, to LaSalle Bank National Association at the address given below under the heading "Exchange Agent," or - if Old Bonds are tendered in accordance with the book-entry procedures described below, transmit an Agent's Message to the Exchange Agent at the address given below under the heading "Exchange Agent." In addition: - the Exchange Agent must receive, on or before the Expiration Date, either (1) certificates for the Old Bonds, or (2) a timely confirmation of book-entry transfer of the Old Bonds into the Exchange Agent's account at DTC, along with the Letter of Transmittal or an Agent's Message, or - the holder must comply with the guaranteed delivery procedures described below. 20 The term "Agent's Message" means a message, transmitted to DTC and received by the Exchange Agent and forming a part of a book-entry transfer, that states that DTC has received an express acknowledgment that the tendering holder agrees to be bound by the Letter of Transmittal and that we may enforce the Letter of Transmittal against this holder. THE METHOD OF DELIVERY OF OLD BONDS, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD BONDS SHOULD BE SENT TO PSI. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the Old Bonds surrendered for exchange are tendered: - by a registered holder of the Old Bonds who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the Letter of Transmittal, or - for the account of an Eligible Institution (as defined below). If the signature on a Letter of Transmittal or a notice of withdrawal is required to be guaranteed, the guarantee must be by a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States which participates in the Medallion Signature Guarantee Program (each an "Eligible Institution"). If Old Bonds are registered in the name of a person other than the person signing the Letter of Transmittal, the Old Bonds surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by us in our sole discretion, duly executed by the registered holder with the signature guaranteed by an Eligible Institution. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of Old Bonds tendered for exchange will be determined by PSI in its sole discretion and will be final and binding. We reserve the absolute right: - to reject any and all tenders of any Old Bonds not properly tendered or to not accept any Old Bonds if acceptance might, in our judgment or the judgment of our counsel, be unlawful, and - to waive any defects or irregularities or conditions of the Exchange Offer as to any particular Old Bonds either before or after the Expiration Date (including the right to waive the ineligibility of any holder who seeks to tender Old Bonds in the Exchange Offer). Unless waived, any defects or irregularities in connection with the tender of Old Bonds for exchange must be cured within such reasonable period of time as we determine. Neither PSI, the Exchange Agent nor any other person will be under any duty to give notification of any defect or irregularity with respect to any tender of Old Bonds for exchange, nor will any of them incur any liability for failure to give such notification. If the Letter of Transmittal is signed by a person or persons other than the registered holder or holders of the Old Bonds, those Old Bonds must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders that appear on the Old Bonds. If the Letter of Transmittal or any Old Bonds or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers or corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing and, unless waived by PSI, submit proper evidence satisfactory to PSI of their authority to so act. 21 By executing, or otherwise becoming bound by a Letter of Transmittal, each holder of the Old Bonds (other than certain specified holders) will represent that: - it is not our affiliate, - any New Bonds to be received by it are being acquired in the ordinary course of business, and - it has no arrangement with any person to participate in the distribution (within the meaning of the Securities Act) of the New Bonds. If the tendering holder is a broker-dealer that will receive New Bonds for its own account in exchange for Old Bonds that were acquired as a result of market-making activities or other trading activities, it will be required to acknowledge that it will deliver a prospectus in connection with any resale of those New Bonds. See "--Resale of the New Bonds." ACCEPTANCE OF OLD BONDS FOR EXCHANGE; DELIVERY OF NEW BONDS Upon satisfaction or waiver of all of the conditions to the Exchange Offer, promptly after the Expiration Date we will accept all Old Bonds properly tendered and will issue the New Bonds. See "Certain Conditions to the Exchange Offer" below. For purposes of the Exchange Offer, we will be deemed to have accepted properly tendered Old Bonds for exchange if and when we have given oral or written notice thereof to the Exchange Agent. In all cases, issuance of New Bonds for Old Bonds that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of certificates for the Old Bonds or a timely Book-Entry Confirmation of the Old Bonds into the Exchange Agent's account at DTC pursuant to the book-entry transfer procedures described below, a properly completed and duly executed Letter of Transmittal and all other required documents. If any tendered Old Bonds are not accepted for any reason set forth in the terms and conditions of the Exchange Offer or if certificates representing Old Bonds are submitted for a greater principal amount than the holder desires to exchange, the unaccepted or non-exchanged Old Bonds will be returned without expense to the tendering holder (or, in the case of Old Bonds tendered by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry transfer procedures described below, will be credited to an account maintained with DTC) as promptly as practicable after the expiration or termination of the Exchange Offer. BOOK-ENTRY TRANSFER The Exchange Agent will make a request to establish an account with respect to the Old Bonds at DTC for purposes of the Exchange Offer promptly after the date of this prospectus. Any financial institution that is a Participant in DTC's systems may execute the exchange and make book-entry delivery of Old Bonds by causing DTC to transfer those Old Bonds into the Exchange Agent's account in accordance with DTC's Automated Tender Offer Program ("ATOP") procedures for transfer. DTC Participants that are accepting the exchange should transmit their acceptance to DTC, which will edit and verify the acceptance and execute a book-entry delivery to the Exchange Agent's account at DTC. DTC will then send an Agent's Message to the Exchange Agent for its acceptance. Delivery of the Agent's Message by DTC will satisfy the terms of the exchange as to the execution and delivery of a Letter of Transmittal by the Participant identified in the Agent's Message. DTC Participants also may accept the exchange by submitting a notice of guaranteed delivery through ATOP. The exchange for the Old Bonds so tendered will only be made after timely confirmation of such book-entry transfer of Old Bonds into the Exchange Agent's account, and timely receipt by the Exchange Agent of the Agent's Message and any other documents required by the Letter of Transmittal. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. 22 GUARANTEED DELIVERY PROCEDURES If a holder of the Old Bonds desires to tender those Old Bonds and the Old Bonds are not immediately available, or time will not permit the holder's Old Bonds or other required documents to reach the Exchange Agent before the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if: - the tender is made through an Eligible Institution; - prior to the Expiration Date, the Exchange Agent receives from the Eligible Institution a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form provided by us (by telegram, telex, facsimile transmission, mail or hand delivery), setting forth the name and address of the holder of Old Bonds and the amount of Old Bonds tendered, stating that the tender is being made thereby and guaranteeing that within five New York Stock Exchange ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates of all physically tendered Old Bonds, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent; and - the certificates for all physically tendered Old Bonds, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within five NYSE trading days after the date of execution of the Notice of Guaranteed Delivery. WITHDRAWAL RIGHTS Tenders of Old Bonds may be withdrawn at any time prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent at one of the addresses set forth below under "Exchange Agent." Any notice of withdrawal must specify: - the name of the person having tendered the Old Bonds to be withdrawn, - the Old Bonds to be withdrawn (including the principal amount of such Old Bonds), and - (where certificates for Old Bonds have been transmitted) the name in which the Old Bonds are registered, if different from that of the withdrawing holder. If certificates for Old Bonds have been delivered or otherwise identified to the Exchange Agent, then the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless the holder is an Eligible Institution. If Old Bonds have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Old Bonds and otherwise comply with DTC's procedures. All questions as to the validity, form and eligibility (including time of receipt) of a notice of withdrawal will be determined by us, and our determination will be final and binding on all parties. Any Old Bonds that are withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Old Bonds which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder without cost to the holder (or, in the case of Old Bonds tendered by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry transfer procedures described above, the Old Bonds will be credited to an account maintained with DTC for the Old Bonds) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Old Bonds may be re-entered by following one 23 of the procedures described under "Procedures for Tendering Old Bonds" above at any time on or prior to the Expiration Date. CERTAIN CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provisions of the Exchange Offer, we are not required to accept for exchange, or to issue New Bonds in exchange for, any Old Bonds and may terminate or amend the Exchange Offer, if at any time before acceptance of those Old Bonds for exchange or the exchange of the New Bonds for Old Bonds, the acceptance or issuance would violate applicable law or any interpretation of the Commission's staff. The condition in the paragraph immediately above is for our sole benefit and may be asserted by us regardless of the circumstances giving rise to such condition. Our failure at any time to exercise this right is not to be deemed a waiver of the right, which is an ongoing right that may be asserted at any time and from time to time. In addition, we will not accept for exchange any Old Bonds tendered, and no New Bonds will be issued in exchange for Old Bonds, if at the time a stop order is threatened or in effect with respect to either the Registration Statement of which this prospectus is a part or the qualification of the First Mortgage Indenture under the Trust Indenture Act. EXCHANGE AGENT LaSalle Bank National Association has been appointed as the Exchange Agent for the Exchange Offer. All executed Letters of Transmittal should be directed to the Exchange Agent at one of the addresses described below. Questions and requests for assistance, requests for additional copies of this prospectus or of the Letter of Transmittal and requests for notices of guaranteed delivery should be directed to the Exchange Agent, addressed as follows: DELIVER TO: LaSalle Bank National Association, Exchange Agent BY MAIL OR BY HAND: LaSalle Bank National Association 135 South LaSalle Street Suite 1960 Chicago, Illinois 60603 Attention: Corporate Trust Administration BY FACSIMILE: (312) 904-2236 CONFIRM BY TELEPHONE: (312) 904-5619 Delivery to an address other than as described above or transmission of instructions via facsimile other than as described above does not constitute a valid delivery. FEES AND EXPENSES The principal solicitation is being made by mail; however, additional solicitation may be made by telegraph, telephone or in person by our officers, regular employees and affiliates. We will not pay any additional compensation to officers and employees who engage in soliciting tenders or make any payment to brokers, dealers or others soliciting acceptances of the Exchange Offer. However, we will 24 pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses relating to those services. The cash expenses of making the Exchange Offer will be paid by us and are estimated to be $75,000. TRANSFER TAXES Holders who tender their Old Bonds for exchange will not be obligated to pay any transfer taxes in connection therewith, except that holders who instruct us to register New Bonds in the name of, or request that Old Bonds not tendered or not accepted in the Exchange Offer to be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer tax thereon. RESALE OF THE NEW BONDS Under existing interpretations of the Commission's staff contained in several no-action letters to third parties, the New Bonds will be freely transferable after the Exchange Offer without further registration under the Securities Act. However, any purchaser of Old Bonds who is an "affiliate" of PSI or who intends to participate in the Exchange Offer for the purpose of distributing the New Bonds: - will not be able to rely on these interpretations by the Commission's staff, and - must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of those New Bonds unless the sale or transfer is made under an exemption from those requirements. By executing, or otherwise becoming bound by, the Letter of Transmittal, each holder of Old Bonds (other than certain specified holders) will represent that: - it is not our "affiliate"; - any New Bonds to be received by it are being acquired in the ordinary course of its business; and - it has no arrangement with any person to participate in the distribution (within the meaning of the Securities Act) of the New Bonds. In addition, in connection with any resales of New Bonds, any participating broker-dealer who acquired bonds for its own account as a result of market-making or other trading activities must deliver a prospectus meeting the requirements of the Securities Act. The Commission has taken the position that participating broker-dealers may fulfill their prospectus delivery requirements with respect to the New Bonds (other than a resale of an unsold allotment from the original sale of the Old Bonds) with this prospectus. Under the Registration Rights Agreement, we are required to allow participating broker-dealers and other persons, if any, subject to similar prospectus delivery requirements to use this prospectus as it may be amended or supplemented from time to time, in connection with the resale of such New Bonds. 25 UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The exchange of Old Bonds for New Bonds pursuant to the Exchange Offer will not result in any United States federal income tax consequences to holders. When a holder of the Old Bonds exchanges an Old Bond for a New Bond pursuant to the Exchange Offer, that holder will have the same adjusted basis and holding period in the New Bond as in the Old Bond immediately before the exchange. PLAN OF DISTRIBUTION Each participating broker-dealer pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of New Bonds. This prospectus, as it may be amended or supplemented from time to time, may be used by a participating broker-dealer in connection with resales of New Bonds received in exchange for Old Bonds where the Old Bonds were acquired as a result of market-making activities or other trading activities. We have agreed that we will make this prospectus, as amended or supplemented, available to any participating broker-dealer for use in connection with any such resale and participating broker-dealers will be authorized to deliver this prospectus for a period not exceeding 90 days after the Expiration Date. We will not receive any proceeds from any sales of the New Bonds by participating broker-dealers. New Bonds received by participating broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time, in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Bonds or a combination of those methods of resale, at market prices prevailing at the time of resale, at prices related to the prevailing market prices or at negotiated prices. Any resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any participating broker-dealer that resells the New Bonds that were received by it for its own account pursuant to the Exchange Offer. Any broker or dealer that participates in a distribution of New Bonds may be deemed to be an "underwriter" within the meaning of the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a participating broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. We will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any participating broker-dealer that requests those documents in the Letter of Transmittal. See "The Exchange Offer." LEGAL MATTERS The validity of the bonds in respect of which this prospectus is being delivered will be passed on for PSI by Taft, Stettinius & Hollister LLP, Cincinnati, Ohio. INDEPENDENT PUBLIC ACCOUNTANTS PSI's financial statements and schedules incorporated by reference in this prospectus, to the extent and for the periods indicated in their report, have been audited by Arthur Andersen LLP, independent public accountants, and are incorporated by reference in reliance upon the authority of such firm as experts in accounting and auditing in giving said report. 26 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- $325,000,000 PSI ENERGY, INC. FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 --------------------- PROSPECTUS --------------------- OCTOBER , 2001 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Indiana Business Corporation Law and the Amended Articles of Consolidation of PSI provide for indemnification of PSI's directors and officers under a variety of circumstances provided that each of the following conditions is satisfied: (a) the individual's conduct was in good faith; and (b) the individual reasonably believed: (1) in case of conduct in the individual's official capacity with the corporation, that the individual's conduct was in its best interests; and (2) in all other cases, that the individual's conduct was at least not opposed to its best interests; and (c) in case of any criminal proceeding, the individual either: (1) had reasonable cause to believe the individual's conduct was lawful; or (2) had no reasonable cause to believe the individual's conduct was unlawful. If each of the above conditions is satisfied, the indemnification may include liabilities under the Securities Act. In addition, PSI has purchased insurance permitted by the laws of Indiana on behalf of directors and officers which may cover liabilities under the securities laws, except those arising under Section 16(b) of the Exchange Act or involving fraud, criminal fines or penalties or deliberate dishonesty with respect to a material matter which is the subject of litigation. Insofar as indemnification for liabilities arising under the Securities Act is permitted to directors, officers or persons controlling PSI, pursuant to the terms of PSI's Amended Articles of Consolidation, by-laws and insurance policies, PSI has been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits.
EXHIBIT NO. DOCUMENT ----------- -------- 1.1 Registration Rights Agreement, dated as of June 22, 2001, among PSI Energy, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, ABN AMRO Rothschild LLC, and J.P. Morgan Securities Inc., as the initial purchasers. *3.1 Amended Articles of Consolidation, as amended to April 20, 1995 (Exhibit to PSI's Form June 30, 1995 10-Q). *3.2 Amendment to Article D of the Amended Articles of Consolidation, effective July 10, 1997 (Exhibit to PSI's 1997 Form 10-K). *3.3 By-laws, as amended to December 17, 1996 (Exhibit to PSI's March 31, 1997 Form 10-Q). *4.1 Original Indenture (First Mortgage Bonds) dated September 1, 1939, between PSI and LaSalle Bank National Association, as Trustee (formerly named LaSalle National Bank and Successor Trustee to The First National Bank of Chicago) (Exhibit to File No. 70-258). *4.2 Tenth Supplemental Indenture between PSI and LaSalle Bank National Association dated July 1, 1952 (Exhibit to File No. 2-9687).
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EXHIBIT NO. DOCUMENT ----------- -------- *4.3 Twenty-third Supplemental Indenture between PSI and LaSalle Bank National Association dated January 1, 1977 (Exhibit to File No. 2-57828). *4.4 Twenty-fifth Supplemental Indenture between PSI and LaSalle Bank National Association dated September 1, 1978 (Exhibit to File No. 2-62543). *4.5 Twenty-sixth Supplemental Indenture between PSI and LaSalle Bank National Association dated September 1, 1978 (Exhibit to File No. 2-62543). *4.6 Thirtieth Supplemental Indenture between PSI and LaSalle Bank National Association dated August 1, 1980 (Exhibit to File No. 2-68562). *4.7 Thirty-fifth Supplemental Indenture between PSI and LaSalle Bank National Association dated March 30, 1984 (Exhibit to PSI's 1984 Form 10-K). *4.8 Forty-sixth Supplemental Indenture between PSI and LaSalle Bank National Association dated June 1, 1990 (Exhibit to PSI's 1991 Form 10-K). *4.9 Forty-seventh Supplemental Indenture between PSI and LaSalle Bank National Association dated July 15, 1991 (Exhibit to PSI's 1991 Form 10-K). *4.10 Forty-eighth Supplemental Indenture between PSI and LaSalle Bank National Association dated July 15, 1992 (Exhibit to PSI's 1992 Form 10-K). *4.11 Fiftieth Supplemental Indenture between PSI and LaSalle Bank National Association dated February 15, 1993 (Exhibit to PSI's 1992 Form 10-K). *4.12 Fifty-first Supplemental Indenture between PSI and LaSalle Bank National Association dated February 1, 1994 (Exhibit to PSI's 1993 Form 10-K). *4.13 Fifty-second Supplemental Indenture between PSI and LaSalle Bank National Association, as Trustee, dated April 30, 1999 (Exhibit to PSI's March 31, 1999 Form 10-Q). *4.14 Fifty-third Supplemental Indenture between PSI and LaSalle Bank National Association dated June 15, 2001 (Exhibit to PSI's June 30, 2001 Form 10-Q). 5.1 Opinion of Taft, Stettinius & Hollister LLP with respect to the New Bonds. 12.1 Computation of Ratio of Earnings to Fixed Charges. *21.1 Subsidiaries of PSI (Exhibit to PSI's 2000 Form 10-K). 23.1 Consent of Taft, Stettinius & Hollister LLP (contained in their opinion filed as Exhibit 5.1). 23.2 Consent of Arthur Andersen LLP. 24.1 Powers of Attorney. 24.2 Certified copy of a resolution of PSI's Board of Directors. 25.1 Statement of Eligibility of LaSalle Bank National Association on Form T-1. 99.1 Form of Letter of Transmittal. 99.2 Form of Notice of Guaranteed Delivery. 99.3 Form of Letter to Clients. 99.4 Form of Letter to Nominees
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EXHIBIT NO. DOCUMENT ----------- -------- 99.5 Form of Instructions to Registered Holder and/or Book-Entry Transfer Participant from Owner.
------------------------ * Incorporated by reference as indicated. ITEM 22. UNDERTAKINGS (a) The Registrant undertakes: (1) To file during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment to the registration statement) which, individually or in the aggregate, represent a fundamental change in the information contained in the registration statement; and (iii) to include any material information on the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment is deemed to be a new registration statement relating to the securities offered under such registration statement, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering of such securities. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the above provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) The Registrant undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (d) The Registrant undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved in that transaction, that was not the subject of and included in the registration statement when it became effective. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in Cincinnati, Ohio on the 9th day of October, 2001. PSI ENERGY INC. By: *James E. Rogers ----------------------------------------- James E. Rogers, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT ON FORM S-4 HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- (i) Principal executive officer: *James E. Rogers Chairman of the Board and ------------------------------------------- Chief Executive Officer October 9, 2001 James E. Rogers (ii) Principal financial officer: /s/ R. FOSTER DUNCAN Executive Vice President ------------------------------------------- and Chief Financial October 9, 2001 R. Foster Duncan Officer (iii) Principal accounting officer: /s/ BERNARD F. ROBERTS Vice President and ------------------------------------------- Comptroller October 9, 2001 Bernard F. Roberts (iv) Directors: *James K. Baker Director October 9, 2001 *Michael G. Browning Director October 9, 2001 *John A. Hillenbrand II Director October 9, 2001 *James E. Rogers Director October 9, 2001
*By: /s/ JEROME A. VENNEMANN -------------------------------------- Jerome A. Vennemann, Attorney-in-fact
II-4 EX-1.1 3 a2054103zex-1_1.txt REG RIGHTS AGREE EXHIBIT 1.1 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of June 22, 2001 (this "AGREEMENT"), among PSI ENERGY, INC., an Indiana corporation (the "COMPANY") and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, ABN AMRO ROTHSCHILD LLC, AND J.P. MORGAN SECURITIES INC. as the initial purchasers (the "INITIAL PURCHASERS") of the First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006 of the Company. This Agreement is made pursuant to the Purchase Agreement, dated as of June 15, 2001, among the Company and the Initial Purchasers (the "Purchase Agreement"). In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company has agreed to provide the registration rights provided for in the Agreement to the Initial Purchasers and their respective direct and indirect transferees. The execution of the Agreement is a condition to the closing of the transactions contemplated by the Purchase Agreement. 1. CERTAIN DEFINITIONS. For purposes of this Registration Rights Agreement, the following terms shall have the following respective meanings: (a) "ADDITIONAL INTEREST" has the meaning assigned thereto in Section 2(c). (b) "AFFILIATE" has the meaning given thereto in Rule 405. (c) "CLOSING DATE" means the date on which the Bonds are initially issued. (d) "COMMISSION" means the Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose. (e) "BONDS" means the First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006, to be issued under the Indenture and sold by the Company to the Initial Purchasers, and First Mortgage Bonds (other than Exchange Bonds) issued in exchange therefor or in lieu thereof pursuant to the Indenture. (f) "EFFECTIVENESS PERIOD" means the period commencing with the date hereof and ending on the date that all Bonds have ceased to be Registrable Bonds. (g) "EFFECTIVE TIME," in the case of (i) an Exchange Offer, means the time and date as of which the Commission declares the Exchange Offer Registration Statement effective or as of which the Exchange Offer Registration Statement otherwise becomes effective and (ii) a "SHELF REGISTRATION" means the time and date as of which the Commission declares the Shelf Registration Statement effective or as of which the Shelf Registration Statement otherwise becomes effective. (h) "EXCHANGE ACT" means the Securities Exchange Act of 1934 and the rules and regulations promulgated by the SEC thereunder, all as the same shall be amended from time to time. (i) "EXCHANGE BONDS" has the meaning assigned thereto in Section 2(a). (j) "EXCHANGE OFFER" has the meaning assigned thereto in Section 2(a). (k) "EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning assigned thereto in Section 2(a). (l) "HOLDER" means each Initial Purchaser for so long as it owns any Registrable Bonds, and such of its respective successors and assigns who acquire Registrable Bonds, directly or indirectly, from such person or from any successor or assign of such person, in each case for so long as such person owns any Registrable Bonds. (m) "INDENTURE" means the Company's Indenture of Mortgage and Deed of Trust dated September 1, 1939, under which LaSalle National Bank is the successor trustee, as amended or supplemented by fifty-two supplemental First Mortgage Indentures thereto and as to be further amended and supplemented by a Fifty-Third Supplemental Indenture, as the same shall be amended from time to time. (n) "INITIAL PURCHASERS" mean Merrill Lynch, Pierce, Fenner & Smith Incorporated, ABN AMRO Rothschild LLC, and J.P. Morgan Securities Inc. (o) "PERSON" means a corporation, association, partnership, limited liability company, business, individual, or any other entity or organization, including any government or political subdivision thereof or governmental agency. 2 (p) "PARTICIPATING BROKER-DEALER" has the meaning assigned thereto in Section 6(a). (q) "PURCHASE AGREEMENT" means the Purchase Agreement dated as of June 15, 2001 among the Company and the Initial Purchasers. (r) "REGISTRABLE BONDS" means the Bonds; PROVIDED, HOWEVER, that the Bonds shall cease to be Registrable Bonds when (i) the Bonds have been exchanged for Exchange Bonds in an Exchange Offer as contemplated in Section 2(a); (ii) in the circumstances contemplated by Section 2(b), a registration statement registering the Bonds under the Securities Act has been declared or becomes effective and the Bonds have been sold or otherwise transferred by the holder thereof pursuant to such effective registration statement; (iii) the Bonds are sold pursuant to Rule 144 under circumstances in which any legend borne by the Bonds relating to restrictions on transferability thereof, under the Securities Act or otherwise, is removed or the Bonds are eligible to be sold pursuant to paragraph (k) of Rule 144; or (iv) the Bonds shall cease to be outstanding. (s) "REGISTRATION DEFAULT" has the meaning assigned thereto in Section 2(c). (t) "REGISTRATION EXPENSES" has the meaning assigned thereto in Section 4. (u) "REGISTRATION STATEMENT" has the meaning assigned thereto in Section 2(b). (v) "RESALE PERIOD" means the period beginning on the date the Shelf Registration Statement becomes effective and ending on the earlier of (i) the Shelf Registration Statement ceasing to be effective or (ii) the second anniversary of the Closing Date. (w) "RESTRICTED HOLDER" means (i) a holder that is an Affiliate of the Company, (ii) a holder who acquires Exchange Bonds outside the ordinary course of such holder's business, (iii) a holder who has arrangements or understandings with any person to participate in the Exchange Offer for the purpose of distributing Exchange Bonds, or (iv) a broker-dealer who receives Bonds for its own account but did not acquire the Bonds as a result of market-making activities or other trading activities. (x) "RULE 144," "RULE 405" and "RULE 415" means, in each case, such rule promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. 3 (y) "SECURITIES ACT" means the Securities Act of 1933 and the rules and regulations promulgated by the SEC thereunder, all as the same shall be amended from time to time. (z) "SHELF REGISTRATION STATEMENT" has the meaning assigned thereto in Section 2(b). (aa) "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, or any successor thereto, and the rules, regulations and forms promulgated thereunder, all as the same shall be amended from time to time. Unless the context otherwise requires, any reference herein to a "Section" or "clause" refers to a Section or clause, as the case may be, of this Agreement, and the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision. Unless the context otherwise requires, any reference to a statute, rule or regulation refers to the same (including any successor statute, rule or regulation thereto) as it may be amended from time to time. 2. REGISTRATION UNDER THE SECURITIES ACT. (a) Except as set forth in Section 2(b), the Company agrees to use its reasonable best efforts to file under the Securities Act a registration statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to an offer to exchange (the "EXCHANGE OFFER") any and all of the Bonds for a like aggregate amount of Bonds issued by the Company, which have the same terms as the Bonds (and are entitled to the benefits of a trust indenture which has been qualified under the Trust Indenture Act), except that they have been registered pursuant to an effective registration statement under the Securities Act, do not contain restrictions on transfers and do not contain provisions for the additional interest contemplated in Section 2(c) below (such new Bonds hereinafter called "EXCHANGE BONDS"). The Company agrees to use its reasonable best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act within 180 days after the Closing Date. The Company agrees to use its reasonable best efforts to register the Exchange Offer under the Securities Act on the appropriate form and to comply with all applicable requirements of the Securities Act, the Exchange Act and other applicable laws in connection with the Exchange Offer. The Company further agrees to use its reasonable best efforts to commence and complete the Exchange Offer promptly after the Exchange Offer Registration Statement has become effective for all Bonds that have been properly tendered and not withdrawn on or prior to the expiration of the Exchange Offer. The Exchange Offer will be deemed completed only (i) if the Exchange Bonds received by holders (other than Restricted Holders) in the Exchange Offer for Bonds are, upon receipt, transferable by each such holder without restriction 4 imposed thereon by the Securities Act or the Exchange Act and without material restrictions imposed thereon by the blue sky or securities laws of a substantial majority of the States of the United States of America and (ii) upon the Company having exchanged, pursuant to the Exchange Offer, Exchange Bonds for all Bonds that have been properly tendered and not withdrawn before the expiration of the Exchange Offer, which shall be on a date that is at least 30 days following the commencement of the Exchange Offer. (b) If (i) because of any change in law or in applicable interpretations by the staff of the Commission, the Company is not permitted to effect the Exchange Offer or (ii) in the case of any holder, other than a Restricted Holder, that participates in the Exchange Offer, such holder does not receive Exchange Bonds on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such holder as an Affiliate of the Company), then in addition to or in lieu of conducting the Exchange Offer contemplated by Section 2(a), the Company shall file under the Securities Act as promptly as practicable a "shelf" registration statement providing for the registration of, and the sale on a continuous or delayed basis by the holders of, all of the then Registrable Bonds, pursuant to Rule 415 or any similar rule that may be adopted by the Commission (the "SHELF REGISTRATION STATEMENT" and, together with the Exchange Offer Registration Statement, a "REGISTRATION STATEMENT"). The Company agrees to use its reasonable best efforts to cause the Shelf Registration Statement to become or be declared effective and to keep such Shelf Registration Statement continuously effective for a period ending on the earlier of (i) the second anniversary of the Closing Date or (ii) such time as there are no longer any Registrable Bonds outstanding. The Company further agrees to supplement or make amendments to the Shelf Registration Statement, as and when required by the rules, regulations or instructions applicable to the registration form used for such Shelf Registration Statement or by the Securities Act or rules and regulations thereunder for shelf registrations, and the Company agrees to furnish to the holders of the Registrable Bonds copies of any such supplement or amendment promptly following its filing with the Commission. (c) If any of the following events (any such event a "REGISTRATION DEFAULT") shall occur, then, as liquidated damages, additional interest (the "ADDITIONAL INTEREST") shall become payable in respect of the Bonds as follows: (i) if the Exchange Offer Registration Statement or a Shelf Registration Statement is not filed with the Commission within 120 days following the Closing Date, then commencing on the 121st day after the Closing Date, Additional Interest shall accrue on the principal amount of the Bonds at a rate of 0.25% per annum; or 5 (ii) if neither the Exchange Offer Registration Statement nor a Shelf Registration Statement is declared effective by the Commission on or prior to the 180th day following the Closing Date, then commencing on the 181st day after the Closing Date, Additional Interest shall accrue on the principal amount of the Bonds at a rate of 0.25% per annum; or (iii) if either (A) the Company has not exchanged Exchange Bonds for all Bonds validly tendered and not withdrawn, in accordance with the terms of the Exchange Offer, on or prior to 35 days after the date on which the Exchange Offer Registration Statement was declared effective, or (B) if applicable, the Shelf Registration Statement has been declared effective but such Shelf Registration Statement ceases to be effective at any time prior to two years from the Closing Date, then commencing on (x) the 36th day after such effective date, in the case of (A) above, or (y) the day such Shelf Registration Statement ceases to be effective, in the case of (B) above, Additional Interest shall accrue on the principal amount of Bonds at a rate of 0.25% per annum. PROVIDED, HOWEVER, that the Additional Interest rate on the Bonds, shall not exceed in the aggregate 0.25% per annum; AND PROVIDED FURTHER, that (1) upon the filing of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (i) above), (2) upon the effectiveness of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (ii) above), (3) upon the exchange of Exchange Bonds for all Bonds validly tendered and not withdrawn (in the case of clause (iii) (A) above), or upon the effectiveness of the Shelf Registration Statement which had ceased to remain effective (in the case of clause (iii) (B) above), or (4) upon the termination of transfer restrictions on the Bonds as a result of the application of Rule 144(k), Additional Interest on the Bonds as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue. (d) Any reference herein to a registration statement shall be deemed to include any document incorporated therein by reference as of the applicable Effective Time and any reference herein to any post effective amendment to a registration statement shall be deemed to include any document incorporated therein by reference as of a time after such Effective Time. (e) Notwithstanding any other provision of this Agreement, no holder of Registrable Bonds who does not comply with the provisions of Section 3(d), if applicable, shall be entitled to receive Additional Interest unless and until such holder complies with the provisions of such section, if applicable. 6 3. REGISTRATION PROCEDURES. The following provisions shall apply to registration statements filed pursuant to Section 2: (a) At or before the Effective Time of the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, the Company shall qualify the Indenture under the Trust Indenture Act. (b) In connection with the Company's obligations with respect to the Shelf Registration Statement, if applicable, the Company shall, as soon as reasonably practicable (or as otherwise specified herein): (i) prepare and file with the Commission a registration statement with respect to the Shelf Registration Statement on any form which may be utilized by the Company and which shall permit the disposition of the Registrable Bonds in accordance with the intended method or methods thereof, as specified in writing by the holders of the then Registrable Bonds, and use its reasonable best efforts to cause such registration statement to become effective as soon as practicable thereafter; (ii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such registration statement for the period specified in Section 2(b) and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such registration statement, and furnish to the holders of the then Registrable Bonds copies of any such supplement or amendment simultaneously with its being filed with the Commission; (iii) comply, as to all matters within the Company's control, with the provisions of the Securities Act with respect to the disposition of all of the Registrable Bonds covered by such registration statement in accordance with the intended methods of disposition by the holders thereof provided for in such registration statement; (iv) provide to any of (A) the holders of the Registrable Bonds to be included in such registration statement, (B) the underwriters (which term, for purposes of this Agreement, shall include a person deemed to be an underwriter within the meaning of Section 2(11) of the Securities Act), if any, thereof, (C) the sales or placement agent, if any, therefor, (D) counsel for such underwriters or agent and (E) counsel for the holders of 7 such Registrable Bonds who so request of the Company in writing the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the Commission and each amendment or supplement thereto; (v) for a reasonable period prior to the filing of such registration statement, and throughout the Resale Period, make available at reasonable times at the Company's principal place of business or such other reasonable place for inspection by the persons referred to in (D) and (E) of Section 3(b)(iv), who shall certify to the Company that they represent persons who have a current intention to sell their Registrable Bonds pursuant to the Shelf Registration Statement, such financial and other information and books and records of the Company, and cause the officers, employees, counsel and independent certified public accountants of the Company to respond to such inquiries, as shall be reasonably necessary, in the judgment of the representatives referred to above, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; PROVIDED, HOWEVER, that each representative and party represented shall be required to maintain in confidence and not to disclose to any other person any information or records reasonably designated by the Company in writing as being confidential, until such time as (A) such information becomes a matter of public record (whether by virtue of its inclusion in such registration statement or otherwise), or (B) such person shall be required so to disclose such information pursuant to a subpoena or order of any court or other governmental agency or body having jurisdiction over the matter (subject to the requirements of such order, and only after such person shall have given the Company prompt prior written notice of such requirement and the opportunity to contest the same or seek an appropriate protective order), or (C) such information is required to be set forth in such registration statement or the prospectus included therein or in an amendment to such registration statement or an amendment or supplement to such prospectus in order that such registration statement, prospectus, amendment or supplement, as the case may be, does not contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made; (vi) promptly notify the selling holders of Registrable Bonds, the sales or placement agent, if any, therefor and the managing underwriter or underwriters, if any, thereof named in the Shelf Registration Statement or a supplement thereto, and confirm such notice in writing, (A) when such registration statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such registration statement or any post-effective 8 amendment, when the same has become effective, (B) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or the initiation or written threat of any proceedings for that purpose, (C) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Bonds for sale in any jurisdiction or the initiation or written threat of any proceeding for such purpose, or (D) at any time when a prospectus is required to be delivered under the Securities Act, if such registration statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act; (vii) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement or any post-effective amendment thereto at the earliest practicable date; (viii) if requested by any managing underwriter or underwriters, any placement or sales agent or any holder of Registrable Bonds, promptly incorporate in a prospectus supplement or post-effective amendment such information as is required by the applicable rules and regulations of the Commission relating to the terms of the sale of such Registrable Bonds, including information with respect to the principal amount of Registrable Bonds being sold by such holder or agent or to any underwriters, the name and description of such holder, agent or underwriter, the offering price of such Registrable Bonds and any discount, commission or other compensation payable in respect thereof, the purchase price being paid therefor by such underwriters and any other terms of the offering of the Registrable Bonds to be sold by such holder or agent or to such underwriters; and make all required filings of such prospectus supplement or post-effective amendment promptly after notification of the matters to be incorporated in such prospectus supplement or post-effective amendment; (ix) furnish to each holder of Registrable Bonds, each placement or sales agent, if any, therefor, each underwriter, if any, thereof and the respective counsel referred to in Section 3(b)(iv) a conformed copy of such registration statement, each amendment or supplement thereto (in each case including all exhibits thereto) and such number of copies of such registration statement (excluding exhibits thereto) and of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), as they may reasonably request; and the Company hereby consents to the use of such 9 prospectus (including any such preliminary or summary prospectus) and any amendment or supplement thereto by each such holder and by any such agent and underwriter, in each case in the form most recently provided to such person by the Company in connection with the offering and sale of the Registrable Bonds covered by the prospectus (including any such preliminary or summary prospectus) or any supplement or amendment thereto; and (x) use its reasonable best efforts to (A) register or qualify the Registrable Bonds to be included in such registration statement under such securities laws or blue sky laws of such United States jurisdictions as any holder of such Registrable Bonds and each placement or sales agent, if any, therefor and underwriter, if any, thereof shall reasonably request, and (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions during the period the Shelf Registration Statement is required to remain effective under Section 2(b); PROVIDED, HOWEVER, that the Company shall not be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(b)(x), (2) consent to general service of process in any such jurisdiction or (3) make any changes to its Amended Articles of Consolidation or by-laws or any agreement between it and its stockholders. In case any of the foregoing obligations is dependent upon information provided or to be provided by a party other than the Company, such obligation shall be subject to the provision of such information by such party; provided that the Company shall use its reasonable best efforts to obtain the necessary information from any party responsible for providing such information. (c) In the event that the Company would be required, pursuant to Section 3(b)(vi)(D), to notify the selling holders of Registrable Bonds, the placement or sales agent, if any, therefor or the managing underwriters, if any, thereof named in the Shelf Registration Statement or a supplement thereto of the existence of the circumstances described therein, the Company shall promptly prepare and furnish to each such holder, to each placement or sales agent, if any, and to each such underwriter, if any, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of Registrable Bonds, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act. Each holder of Registrable Bonds agrees that upon receipt of any notice from the Company, pursuant to Section 3(b)(vi)(D), such holder shall forthwith discontinue (and cause any placement or sales agent or underwriters acting on their behalf to 10 discontinue) the disposition of Registrable Bonds pursuant to the registration statement applicable to such Registrable Bonds until such holder (i) shall have received copies of such amended or supplemented prospectus and, if so directed by the Company, such holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such holder's possession of the prospectus covering such Registrable Bonds at the time of receipt of such notice or (ii) shall have received notice from the Company that the disposition of Registrable Bonds pursuant to the Shelf Registration Statement may continue. (d) The Company may require each holder of Registrable Bonds as to which any registration pursuant to Section 2(b) is being effected to furnish to the Company such information regarding such holder and such holder's intended method of distribution of such Registrable Bonds as the Company may from time to time reasonably request in writing, but only to the extent that such information is required in order to comply with the Securities Act. Each such holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such holder to the Company or of the occurrence of any event in either case as a result of which any prospectus relating to such registration contains or would contain an untrue statement of a material fact regarding such holder or such holder's intended method of disposition of such Registrable Bonds or omits to state any material fact regarding such holder or such holder's intended method of disposition of such Registrable Bonds required to be stated therein or necessary to make the statements therein not misleading, and promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to such holder or the disposition of such Registrable Bonds, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (e) Until the expiration of two years after the Closing Date, the Company will not, and will not permit any of its "Affiliates" to resell any of the Bonds that have been reacquired by any of them except pursuant to an effective registration statement under the Securities Act. (f) In connection with the Company's obligations with respect to the registration of Exchange Bonds as contemplated by Section 2(a), if applicable, the Company shall, as soon as reasonably practicable (or as otherwise specified): (i) prepare and file with the Commission such amendments and supplements to the Exchange Offer Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness thereof for the periods and purposes contemplated in Section 11 2(a) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of the Exchange Offer Registration Statement, and promptly provide each broker-dealer holding Exchange Bonds with such number of copies of the prospectus included therein (as then amended or supplemented), in conformity in all material respects with the requirements of the Securities Act and the Trust Indenture Act, as such broker-dealer reasonably may request for use in connection with resales of Exchange Bonds; (ii) promptly notify each broker-dealer that has requested or received copies of the prospectus included in the Exchange Offer Registration Statement, and confirm such advice in writing, (A) when any prospectus amendment or supplement or post effective amendment to the Exchange Offer Registration Statement has been filed, and, with respect to any post-effective amendment to the Exchange Offer Registration Statement, when the same has become effective, (B) of the issuance by the Commission of any stop order suspending the effectiveness of the Exchange Offer Registration Statement or the initiation or threatening of any proceedings for that purpose, (C) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Exchange Bonds for sale in any United States jurisdiction or the initiation or threatening in writing of any proceeding for such purpose, or (D) at any time when a prospectus is required to be delivered under the Securities Act, if the Exchange Offer Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act; (iii) in the event that the Company would be required, pursuant to Section 3(f)(ii)(D), to notify any broker-dealers holding Exchange Bonds, promptly prepare and furnish to each such holder a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of such Exchange Bonds, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act or notify such broker-dealers that the offer and sale of Exchange Bonds pursuant to the Exchange Offer Registration Statement may continue; (iv) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the Exchange Offer Registration Statement or any post-effective amendment thereto at the earliest practicable date; 12 (v) use its reasonable best efforts to register or qualify the Exchange Bonds under the securities laws or blue sky laws of such jurisdictions as are contemplated by Section 2(a) no later than the commencement of the Exchange Offer, PROVIDED, HOWEVER, that the Company shall not be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(f)(v), (2) consent to general service of process in any such jurisdiction or (3) make any changes to its Amended Articles of Consolidation or by-laws or any agreement between it and its stockholders; and (vi) make generally available to its security holders as soon as practicable but no later than eighteen months after the effective date of such registration statement, an earning statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Company, Rule 158 thereunder). In case any of the foregoing obligations is dependent upon information provided or to be provided by a party other than the Company, such obligation shall be subject to the provision of such information by such party; provided that the Company shall use its reasonable best efforts to obtain the necessary information from any party responsible for providing such information. 4. REGISTRATION EXPENSES. The Company agrees to bear and to pay or cause to be paid promptly upon request being made therefor all expenses incident to the Company's performance of or compliance with this Agreement, including (a) all Commission and any NASD registration and filing fees and expenses, (b) all fees and expenses in connection with the qualification of the Bonds or Exchange Bonds for offering and sale under the State securities and blue sky laws referred to in Section 3(b)(x) and Section 3(f)(v) hereof, including reasonable fees and disbursements of one counsel for the placement or sales agent or underwriters, if any, in connection with such qualifications, (c) all expenses relating to the preparation, printing, distribution and reproduction of each registration statement required to be filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the certificates representing the Bonds and all other documents relating hereto, (d) fees and expenses of the Trustee under the Indenture, and of any escrow agent or custodian, (e) internal expenses (including all salaries and expenses of the Company's officers and employees performing legal or accounting duties), (f) fees, disbursements and expenses of counsel and independent certified public accountants of the Company (including the expenses of any opinions or "cold comfort" letters required by or incident to such performance and compliance) and (g) reasonable fees, disbursements and expenses of one counsel for the holders of Registrable Bonds retained in connection with a Shelf 13 Registration Statement, as selected by the holders of at least a majority in aggregate principal amount of the Registrable Bonds being registered and approved by the Company, and fees, expenses and disbursements of any other persons, including special experts, retained by the Company in connection with such registration (collectively, the "REGISTRATION EXPENSES"). To the extent that any Registration Expenses are incurred, assumed or paid by any holder of Registrable Bonds or any placement or sales agent therefor or underwriter thereof, the Company shall reimburse such person for the full amount of the Registration Expenses so incurred, assumed or paid promptly after receipt of a documented request therefor. Notwithstanding the foregoing, the holders of the Registrable Bonds being registered shall pay all agency fees and commissions and underwriting discounts and commissions attributable to the sale of such Registrable Bonds and the fees and disbursements of any counsel or other advisors or experts retained by such holders (severally or jointly), other than the counsel and experts specifically referred to above. 5. REPRESENTATIONS AND WARRANTIES The Company represents and warrants to, and agrees with, the Initial Purchasers and each of the holders from time to time of Registrable Bonds that: (a) Each registration statement covering Registrable Bonds and each prospectus (including any preliminary or summary prospectus) contained therein or furnished pursuant to Section 3(c) or Section 3(f) hereof and any further amendments or supplements to any such registration statement or prospectus, when it becomes effective or is filed with the Commission, as the case may be, and, in the case of an underwritten offering of Registrable Bonds, at the time of the closing under the underwriting agreement relating thereto, will conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made; and at all times subsequent to the Effective Time when a prospectus would be required to be delivered under the Securities Act, other than from such time as a notice has been given to holders of Registrable Bonds pursuant to Section 3(b)(vi)(D) or Section 3(f)(ii)(D) hereof until such time as the Company furnishes an amended or supplemented prospectus pursuant to Section 3(c) or Section 3(f)(iii) hereof or such time as the Company provides notice that offers and sales pursuant to the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, may continue, each such registration statement, and each prospectus (including any summary prospectus) contained therein or furnished pursuant to Section 3(b) or Section 3(f) hereof, as then amended or supplemented, will conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act; PROVIDED, HOWEVER, that this representation and warranty shall not apply to any statements or 14 omissions made in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of a holder of Registrable Bonds expressly for use therein. (b) Any documents incorporated by reference in any prospectus referred to in Section 5(a) hereof, when they become or became effective or are or were filed with the Commission, as the case may be, will conform or conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and none of such documents will contain or contained an untrue statement of a material fact or will omit or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, PROVIDED, HOWEVER, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by a holder of Registrable Bonds expressly for use therein. (c) The compliance by the Company with all of the provisions of this Agreement and the consummation of the transactions herein contemplated will not contravene any provision of applicable law or the Amended Articles of Consolidation or by-laws of the Company or, except to the extent that any such contravention would not have a material adverse effect on the Company and its subsidiaries, taken as a whole, any indenture or instrument relating to indebtedness for money borrowed or any agreement to which the Company is a party or any order, rule, regulation or decree of any court or governmental agency or authority located in the United States having jurisdiction over the Company or any property of the Company; and, to the best knowledge of the Company, no consent, authorization or order of, or filing or registration with, any court or governmental agency or authority is required for the consummation by the Company of the transactions contemplated by this Agreement, except the Order (as defined in the Purchase Agreement), the registration under the Securities Act contemplated hereby, qualification of the Indenture under the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under State securities or blue sky laws. (d) This Agreement has been duly authorized, executed and delivered by the Company. 15 6. INDEMNIFICATION (a) The Company will indemnify and hold harmless each Holder of the Registrable Bonds included in a Registration Statement, and each person who is named in such Registration Statement or a supplement thereto as a placement or sales agent or as an underwriter (each a "PARTICIPATING BROKER-DEALER") in any offering or sale of such Registrable Bonds and each person who controls any such person (each Holder, any Participating Broker-Dealer and such controlling persons are referred to collectively as the "INDEMNIFIED PARTIES") from and against any losses, claims, damages or liabilities, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Registrable Bonds) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration Statement, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof, PROVIDED, HOWEVER, that (i) the Company shall not be liable in any such case to the extent that such loss, claim, damage, liability or action arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration Statement in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Indemnified Party or any Affiliate thereof specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Registrable Bonds concerned (or any Affiliate of such Holder or Participating Broker-Dealer), to the extent that a prospectus relating to such Registrable Bonds was required to be delivered by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Participating Broker-Dealer or any Affiliate thereof results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Registrable Bonds to such person, a copy of the final prospectus if the 16 Company had previously furnished copies thereof to such Holder or Participating Broker-Dealer; PROVIDED FURTHER, HOWEVER, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party. (b) Each Holder of the Registrable Bonds and Participating Broker-Dealer, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration Statement, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or alleged omission was made in reliance upon and in conformity with written information pertaining to such Holder or Participating Broker-Dealer, as the case may be, and furnished to the Company by or on behalf of such Holder or Participating Broker-Dealer, as the case may be, specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder or Participating Broker-Dealer, as the case may be, may otherwise have to the Company or any of its controlling persons. (c) Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with 17 counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party (which consent shall not be unreasonably withheld), be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 6 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, and does not include a statement as to or an admission of fault, culpability or failure to act by or on behalf of any indemnified party. (d) If the indemnification provided for in this Section 6 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the exchange of the Registrable Bonds, pursuant to the transactions contemplated by the applicable Registration Statement or prospectus, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder, Participating Broker-Dealer, or other indemnified party, as the case may be, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 6(d), the Holders of the Registrable Bonds shall not be required to contribute any 18 amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Registrable Bonds pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company. (e) The agreements contained in this Section 6 shall survive the sale of the Registrable Bonds pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. 7. RULE 144. The Company covenants to the holders of Registrable Bonds that the Company shall use its reasonable best efforts to timely file the reports required to be filed by it under the Exchange Act or the Securities Act, all to the extent required from time to time to enable such holder to sell Registrable Bonds without registration under the Securities Act within the limitations of the exemption provided by Rule 144. Upon the request of any holder of Registrable Bonds in connection with that holder's sale pursuant to Rule 144, the Company shall deliver to such holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities under any section of the Exchange Act. 8. MISCELLANEOUS. (a) NO INCONSISTENT AGREEMENTS. The Company represents, warrants, covenants and agrees that it has not granted, and shall not grant, registration rights with respect to Registrable Bonds which would be inconsistent with the terms contained in this Agreement. (b) NOTICES. All notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, if delivered personally or by courier, or three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested) as follows: If to the Company, to it at 1000 East 19 Main Street, Plainfield, Indiana 46168, Attn: Treasurer; if to an Initial Purchaser, to it at the address for the Initial Purchasers set forth in the Purchase Agreement; and if to a holder, to the address of such holder set forth in the security register or other records of the Company or to such other address as the Company or any such holder may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. (c) PARTIES IN INTEREST. All the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective successors and assigns of the parties hereto. In the event that any transferee of any holder of Registrable Bonds shall acquire Registrable Bonds, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any further writing or action of any kind, be deemed a party hereto for all purposes and such Registrable Bonds shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Bonds such transferee shall be entitled to receive the benefits of, and be conclusively deemed to have agreed to be bound by and to perform, all of the applicable terms and provisions of this Agreement. (d) SURVIVAL. The respective indemnities, agreements, representations, warranties and each other provision set forth in this Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any holder of Registrable Bonds, any director, officer or partner of such holder, any agent or underwriter or any director, officer or partner thereof, or any controlling person of any of the foregoing, and shall survive delivery of and payment for the Registrable Bonds pursuant to the Purchase Agreement and the transfer and registration of Registrable Bonds by such holder and the consummation of an Exchange Offer. (e) LAW GOVERNING. THIS REGISTRATION RIGHTS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. (f) HEADINGS. The descriptive headings of the several Sections and paragraphs of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. 20 (g) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other writings referred to herein (including the Indenture) or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by the Company and the holders of at least a majority in aggregate principal amount of the Registrable Bonds at the time outstanding. Each holder of any Registrable Bonds at the time or thereafter outstanding shall be bound by any amendment or waiver effected pursuant to this Section 8(g), whether or not any notice, writing or marking indicating such amendment or waiver appears on such Registrable Bonds or is delivered to such holder. (h) INSPECTION. For so long as this Agreement shall be in effect, this Agreement and a complete list of the names and addresses of all the holders of Registrable Bonds shall be made available for inspection and copying on any business day by any holder of Registrable Bonds for proper purposes only (which shall include any purpose related to the rights of the holders of Registrable Bonds under the Bonds, the Indenture and this Agreement) at the offices of the Company at the address thereof set forth in Section 8(b) above, or at the office of the Trustee under the Indenture. (i) COUNTERPARTS. This Agreement may be executed by the parties in counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. (j) REMEDIES. In the event of a breach by the Company of its obligations under this Agreement, each Holder of Registrable Bonds, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement; PROVIDED that the sole damages payable for a violation of the terms of this Agreement for which liquidated damages are expressly provided pursuant to Section 2(c) hereof shall be such liquidated damages. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. 21 (k) SUCCESSORS AND ASSIGNS. Any person who purchases any Registrable Bonds from an Initial Purchaser shall be deemed, for purposes of this Agreement, to be an assignee of such Initial Purchaser. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties and shall inure to the benefit of and be binding upon each Holder of any Registrable Bonds. (l) SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such which may be hereafter declared invalid, illegal, void or unenforceable. (m) ATTORNEYS' FEES. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party, as determined by the court, shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. (n) FURTHER ASSURANCES. Each of the parties hereto shall use all reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things reasonably necessary, proper or advisable under applicable law, and execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and the other documents contemplated hereby and consummate and make effective the transactions contemplated hereby. (o) TERMINATION. This Agreement and the obligations of the parties hereunder shall terminate upon the end of the Effectiveness Period, except for any liabilities or obligations under Sections 4 or 5 hereof and the obligations to make payments of and provide for liquidated damages under Section 2(c) hereof to the extent such damages accrue prior to the end of the Effectiveness Period, each of which shall remain in effect in accordance with their terms. 22 Agreed to and accepted as of the date referred to above. PSI ENERGY, INC. By: /s/ LISA GAMBLIN ----------------------------------- Name: Lisa Gamblin Title: Treasurer MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED ABN AMRO ROTHSCHILD LLC J.P. MORGAN SECURITIES INC. By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ BRANT MELESKI ----------------------------------- Name: Brant Meleski Title: Vice President 23 EX-5.1 4 a2054103zex-5_1.txt (800) 688 - 1933 EXHIBIT 5.1 [LETTERHEAD OF TAFT, STETTINIUS & HOLLISTER LLP] October 9, 2001 PSI Energy, Inc. 1000 East Main Street Plainfield, Indiana 46168 Dear Sir or Madam: In connection with the registration under the Securities Act of 1933 (the "Act") of $325 million principal amount of First Mortgage Bonds Series EEE, 6.65%, due June 15, 2006 (the "New Bonds") of PSI Energy, Inc., an Indiana corporation (the "Company"), to be issued in exchange for the Company's outstanding First Mortgage Bonds Series EEE, 6.65%, due June 15, 2006 (the "Old Bonds") pursuant to (i) the Indenture dated September 1, 1939 as amended through the Fifty-third Supplemental Indenture dated June 15, 2001 (the "Indenture") between the Company and LaSalle Bank National Association, as trustee (the "Trustee"), and (ii) the Registration Rights Agreement dated as of June 22, 2001 (the "Registration Rights Agreement") by and among the Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated, ABN AMRO Rothschild LLC, and J.P. Morgan Securities, Inc., we, as your counsel, have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, we advise you that, in our opinion, the New Bonds have been duly authorized by the Company; and when the Securities and Exchange Commission declares the Company's Registration Statement on Form S-4 effective and the New Bonds have been duly executed, authenticated, issued and delivered in exchange for the Old Bonds in accordance with the terms of the Registration Rights Agreement and the Indenture, the New Bonds will be legally issued, fully paid and nonassessable and the binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. The foregoing opinion is limited to the federal laws of the United States of America, and the Indiana General Corporation Law, and we are expressing no opinion as to the effect of the laws of any other jurisdiction. In connection with the foregoing, we have assumed that at the time of the issuance and delivery of the New Bonds there will not have occurred any change in law affecting the validity, legally binding character or enforceability of the New Bonds and that the issuance and delivery of the New Bonds, all of the terms of the New Bonds and the performance by the Company of its obligations thereunder will comply with applicable law and with each requirement or restriction imposed by any court or governmental body having jurisdiction over the Company and will not result in a default under or a breach of any agreement or instrument then binding upon the Company. In rendering the foregoing opinion, we have relied as to certain matters on information obtained from public officials, officers of the Company and other sources believed by us to be responsible, and we have assumed (i) that the Indenture has been duly authorized, executed and delivered by the Trustee, (ii) that the New Bonds will conform to the form thereof set forth in the Indenture, (iii) that the Trustee's certificates of authentication of the New Bonds will be manually signed by one of the Trustee's authorized officers and (iv) that the signatures on all documents examined by us are genuine, assumptions which we have not independently verified. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading "Legal Matters" in the Prospectus. In giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ TAFT, STETTINIUS & HOLLISTER LLP EX-12 5 a2054103zex-12.txt COMPUTATION OF RATIO OF EARNINGS EXHIBIT 12 PSI ENERGY INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
6 MONTHS 12 MONTHS ENDED DECEMBER 31 ENDED JUNE 30 ------------------------------------------------------------------------ 2001 2000 1999 1998 1997 1996 ---- ---- ---- ---- ---- ---- (THOUSANDS, EXCEPT RATIOS) Earnings Available Net Income $ 75,649 $135,398 $117,199 $ 52,038 $132,205 $125,678 Plus: Income Taxes 42,662 88,547 69,215 23,147 77,380 77,191 Interest on Long-Term Debt 33,008 72,999 77,090 80,259 71,638 67,001 Other Interest 8,695 8,463 11,425 11,060 13,584 14,511 Interest Component of Rents (a) 2,698 5,396 5,394 5,351 5,390 4,921 -------- -------- -------- -------- -------- -------- Total Available $162,712 $310,803 $280,323 $171,855 $300,197 $289,302 ======== ======== ======== ======== ======== ======== Fixed Charges Interest Charges $ 41,703 $ 81,462 $ 88,515 $ 91,319 $ 85,222 $ 81,512 Interest Component of Rents (a) 2,698 5,396 5,394 5,351 5,390 4,921 -------- -------- -------- -------- -------- -------- Total Fixed Charges $ 44,401 $ 86,858 $ 93,909 $ 96,670 $ 90,612 $ 86,433 ======== ======== ======== ======== ======== ======== Ratio of Earnings to Fixed Charges 3.66 3.58 2.99 1.78 3.31 3.35 ======== ======== ======== ======== ======== ========
--------------------- (a) Estimated interest component of rentals (1/3 of rentals was used where no readily defined interest element could be determined. EX-23.2 6 a2054103zex-23_2.txt CONSENT ARTHUR ANDERSEN CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our report, on PSI Energy, Inc.'s consolidated financial statements, dated January 23, 2001, included in PSI Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2000, and to all references to our Firm included in this Registration Statement. ARTHUR ANDERSEN LLP Cincinnati, Ohio October 5, 2001 EX-24.1 7 a2054103zex-24_1.txt POWER OF ATTORNEY EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL BY THESE PRESENTS, that the undersigned director of PSI Energy, Inc. (the "Corporation") hereby constitutes and appoints James E. Rogers, R. Foster Duncan, Lisa D. Gamblin, Wendy L. Aumiller, Jerome A. Vennemann and Julia S. Janson, and each of them, with full power to act without the other, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign one or more Registration Statements of the Corporation on such appropriate form(s), including any and all amendments and supplements thereto (the "Registration Statements"), as may be required to fulfill the Corporation's obligations under that certain Registration Rights Agreement relating to the $325,000,000 aggregate principal amount of the Corporation's First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006, and to file such Registration Statements, with all exhibits and schedules thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned director has caused this Power of Attorney to be executed as of this 16th day of July, 2001. /s/ JAMES K. BAKER ------------------------ James K. Baker POWER OF ATTORNEY KNOW ALL BY THESE PRESENTS, that the undersigned director of PSI Energy, Inc. (the "Corporation") hereby constitutes and appoints James E. Rogers, R. Foster Duncan, Lisa D. Gamblin, Wendy L. Aumiller, Jerome A. Vennemann and Julia S. Janson, and each of them, with full power to act without the other, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign one or more Registration Statements of the Corporation on such appropriate form(s), including any and all amendments and supplements thereto (the "Registration Statements"), as may be required to fulfill the Corporation's obligations under that certain Registration Rights Agreement relating to the $325,000,000 aggregate principal amount of the Corporation's First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006, and to file such Registration Statements, with all exhibits and schedules thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned director has caused this Power of Attorney to be executed as of this 19TH day of July, 2001. /s/ MICHAEL G. BROWNING ---------------------------- Michael G. Browning POWER OF ATTORNEY KNOW ALL BY THESE PRESENTS, that the undersigned director of PSI Energy, Inc. (the "Corporation") hereby constitutes and appoints James E. Rogers, R. Foster Duncan, Lisa D. Gamblin, Wendy L. Aumiller, Jerome A. Vennemann and Julia S. Janson, and each of them, with full power to act without the other, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign one or more Registration Statements of the Corporation on such appropriate form(s), including any and all amendments and supplements thereto (the "Registration Statements"), as may be required to fulfill the Corporation's obligations under that certain Registration Rights Agreement relating to the $325,000,000 aggregate principal amount of the Corporation's First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006, and to file such Registration Statements, with all exhibits and schedules thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned director has caused this Power of Attorney to be executed as of this 19TH day of July, 2001. /s/ JOHN A. HILLENBRAND II -------------------------- John A. Hillenbrand II POWER OF ATTORNEY KNOW ALL BY THESE PRESENTS, that the undersigned director of PSI Energy, Inc. (the "Corporation") hereby constitutes and appoints James E. Rogers, R. Foster Duncan, Lisa D. Gamblin, Wendy L. Aumiller, Jerome A. Vennemann and Julia S. Janson, and each of them, with full power to act without the other, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign one or more Registration Statements of the Corporation on such appropriate form(s), including any and all amendments and supplements thereto (the "Registration Statements"), as may be required to fulfill the Corporation's obligations under that certain Registration Rights Agreement relating to the $325,000,000 aggregate principal amount of the Corporation's First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006, and to file such Registration Statements, with all exhibits and schedules thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned director has caused this Power of Attorney to be executed as of this 19th day of July, 2001. /s/ JAMES E. ROGERS ---------------------- James E. Rogers EX-24.2 8 a2054103zex-24_2.txt CERTIFICATE OF ASSIST SECRETARY EXHIBIT 24.2 CERTIFICATE OF ASSISTANT SECRETARY I, JEROME A. VENNEMANN, an Assistant Secretary of PSI Energy, Inc., an Indiana corporation, DO HEREBY CERTIFY that the following is a true and correct copy of a resolution duly adopted by the Executive Committee of the Board of Directors of said corporation effective June 15, 2001, and that such resolution has not been amended and is in full force and effect on the date hereof: RESOLVED FURTHER That each officer and director of the Corporation who may be required to sign and execute each Registration Statement covering such securities or amendments and supplements thereto or documents in connection therewith (whether for or on behalf of the Corporation, or as an officer of the Corporation, or otherwise) is hereby authorized to execute a power of attorney appointing Lisa D. Gamblin, Vice President and Treasurer, Wendy L. Aumiller, Assistant Treasurer, Julia S. Janson, Secretary, and Jerome A. Vennemann, Vice President, General Counsel and Assistant Secretary, and each of them, severally, his or her true and lawful attorney or attorneys to sign in his or her name, place and stead in any such capacity such Registration Statements and any and all amendments thereto, including amendments or supplements to the prospectus contained in such Registration Statement or amendments thereto and the addition or amendment of exhibits and other documents in connection therewith, and to file the same with the Commission, each of such attorneys to have power to act with or without the other, and to have full power and authority to do and perform, in the name and on behalf of each of such officers and directors who shall have executed such a power of attorney, every act whatsoever which such attorneys, or either of them, may deem necessary or advisable to be done in connection therewith as fully and to all intents and purposes as such officers or directors might or could do in person. IN WITNESS WHEREOF, I have hereunto subscribed my name this 9th day of October, 2001. /s/ JEROME A. VENNEMANN --------------------------- Jerome A. Vennemann Assistant Secretary EX-25.1 9 a2054103zex-25_1.txt FORM T-1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ----------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) LASALLE BANK NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) 36-0884183 (I.R.S. Employer Identification No.) 135 South LaSalle Street, Chicago, Illinois 60603 (Address of principal executive offices) (Zip Code) ----------------------- Willie J. Miller, Jr. Group Senior Vice President Chief Legal Officer and Secretary Telephone: (312) 904-2018 135 South LaSalle Street, Suite 925 Chicago, Illinois 60603 (Name, address and telephone number of agent for service) ----------------------- PSI Energy, Inc. (Exact name of obligor as specified in its charter) Indiana 35-0594457 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1000 East Main Street Plainfield, Indiana 46168 (Address of principal executive offices) (Zip Code) ----------------------- First Mortgage Bonds Series EEE, 6.65%, due June 15, 2006 (Title of the indenture securities) ITEM 1. GENERAL INFORMATION* Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. 1. Comptroller of the Currency, Washington D.C. 2. Federal Deposit Insurance Corporation, Washington, D.C. 3. The Board of Governors of the Federal Reserve Systems, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each such affiliation. Not Applicable *Pursuant to General Instruction B, the trustee has responded only to items 1, 2 and 16 of this form since to the best knowledge of the trustee the obligor is not in default under any indenture under which the trustee is a trustee. ITEM 16. LIST OF EXHIBITS. List below all exhibits filed as part of this statement of eligibility and qualification. 1. A copy of the Articles of Association of LaSalle Bank National Association now in effect. (incorporated herein by reference to Exhibit 1 filed with Form T-1 filed with the Current Report on Form 8-K, dated June 29, 2000, in File No. 333-61691). 2. A copy of the certificate of authority to commence business (incorporated herein by reference to Exhibit 2 filed with Form T-1 filed with the Current Report on Form 8-K, dated June 29, 2000, in File No. 333-61691). 3. A copy of the authorization to exercise corporate trust powers (incorporated herein by reference to Exhibit 3 filed with Form T-1 filed with the Current Report on Form 8-K, dated June 29, 2000, in File No. 333-61691). 4. A copy of the existing By-Laws of LaSalle Bank National Association (incorporated herein by reference to Exhibit 4 filed with Form T-1 filed with the Current Report on Form 8-K, dated June 29, 2000, in File No. 333-61691). 5. Not applicable. 6. The consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939 (incorporated herein by reference to Exhibit 6 filed with Form T-1 filed with the Current Report on Form 8-K, dated June 29, 2000, in File No. 333-61691). 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, LaSalle Bank National Association, a corporation organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago, State of Illinois, on the 4th day of October, 2001. LASALLE BANK NATIONAL ASSOCIATION By: /s/ John W. Porter ------------------------- John W. Porter Vice President LaSalle Bank N.A. Call Date: 3/31/2001 ST-BK: 17-1520 FFIEC 031 135 South LaSalle Street Page RC-1 Chicago, IL 60603 Vendor ID: D CERT: 15407 11
Transit Number: 71000505 CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30 , 2001 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. SCHEDULE RC - BALANCE SHEET
Dollar Amounts in Thousands ---------------------------------------------------------------------------------------------------------------------------- ASSETS 1. Cash and balances due from depository RCFD institutions (from Schedule RC-A): ---- a. Noninterest-bearing balances and currency and coin (1) 0081 1,201,388 1.a b. Interest-bearing balances (2) 0071 128,725 1.b 2. Securities: a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 614,376 2.a b. Available-for-sale securities (from Schedule RC-B, column D) 1773 14,978,795 2.b 3. Federal funds sold and securities purchased under agreements to resell 1350 507,375 3. 4. Loans and lease financing receivables: a. Loans and leases held for sale 5369 323,201 4.a b. Loans and leases, net of unearned income (from Schedule RC-C) 2122 31,044,135 4.b c. LESS: Allowance for loan and lease losses 3128 438,702 4.c d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 30,605,433 4.d 5. Trading assets (from Schedule RC-D) 3545 479,858 5. 6. Premises and fixed assets (including capitalized leases) 2145 269,487 6. 7. Other real estate owned (from Schedule RC-M) 2150 9,857 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 0 8. 9. Customers' liability to this bank on acceptances outstanding 2155 10,596 9. 10. Intangible assets (from Schedule RC-M) a. Goodwill 3163 189,279 10.a b. Other Intangible assets 0426 365,182 10.b 11. Other assets (from Schedule RC-F) 2160 2,162,574 11. 12. Total assets (sum of items 1 through 11) 2170 51,846,126 12. 51,846,126
------------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. LaSalle Bank N.A. Call Date: 3/31/2001 ST-BK: 17-1520 FFIEC 031 135 South LaSalle Street Page RC-1 Chicago, IL 60603 Vendor ID: D CERT: 15407 12
Transit Number: 71000505 SCHEDULE RC - CONTINUED
Dollar Amounts in Thousands ------------------------------------------------------------------------------------------------------------------------- LIABILITIES 13. Deposits: RCON a. In domestic offices (sum of totals of ---- columns A and C from Schedule RC-E, part I) 2200 25,008,544 13.a RCON ---- (1) Noninterest-bearing (1) 6631 3,631,884 13.a.1 (2) Interest-bearing 6636 21,376,660 13.a.2 25,008,544 RCFN b. In foreign offices, Edge and Agreement ---- subsidiaries, and IBFs (from Schedule RC-E, part II) 2200 4,456,041 13.b RCFN ---- (1) Noninterest-bearing 6631 0 13.b.1 (2) Interest-bearing 6636 4,456,041 13.b.2 RCFD 14. Federal funds purchased and securities ---- sold under agreements to repurchase 2800 5,137,352 14. 15. (from Schedule RC-D) 3548 216,762 15 16. Other borrowed money (includes mortgage indebtedness and obligations under 3190 11,266,057 16 capitalized leases): From schedule RC-M 17. Not applicable. 18. Bank's liability on acceptances executed and outstanding 2920 10,596 18. 19. Subordinated notes and debentures (2) 3200 861,000 19. 20. Other liabilities (from Schedule RC-G) 2930 1,353,493 20. 21. Total liabilities (sum of items 13 through 20) 2948 48,309,845 21. 48,309,845 22. Minority Interest in consolidated subsidiaries 3000 0 22. EQUITY CAPITAL RCFD ---- 23. Perpetual preferred stock and related surplus 3838 135,410 23. 24. Common stock 3230 41,234 24. 25. Surplus (exclude all surplus related to preferred stock) 3839 1,903,169 25. 26. a.Retained Earnings 3632 1,454,514 26.a b. Accumulated Other Comprehensive income.(3) B530 1,954 26.b 27. Other Equity capital components (4) 3284 0 27. 28. Total equity capital (sum of items 23 through 27) 3210 3,536,281 28. 3,536,281 29. Total liabilities, minority interest, and equity capital (sum of items 21, 22, and 28) 3300 51,846,126 29.
MEMORANDUM TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION. 1. Indicate in the box at the right the number of the statement below that best describes RCFD Number the most comprehensive level of auditing work performed for the bank by independent ---- ------ external auditors as of any date during 1999 6724 N/A M.1 1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank conducted in with generally accepted auditing standards by a certified accordance with generally accepted auditing standards by a certified accounting firm. public accounting firm which submits a report on the bank (may be required by state chartering 2 = Independent audit of the bank's parent holding company authority) conducted in accordance with generally accepted auditing 5 = Directors' examination of the bank performed by standards by a certified public accounting firm which other external auditors (may be required by submits a report on the consolidated holding company (but state chartering authority) not on the bank separately) 6 = Review of the bank's financial statements by 3 = Attestation on bank managements assertion on the effectiveness external auditors of the banks internal control over financial reporting by a 7 = Compilation of the bank's financial statements certified public accounting firm with generally accepted by external auditors auditing standards by a certified public accounting firm 8 = Other audit procedures (excluding tax preparation work) 9 = No external audit work
------------------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus. (3) Includes net unrealized holding gains(losses) on available for sale securities, accumulated net gains (losses) on cash flow hedges, cumulative foreign currency translation adjustments, and minimum pension liability adjustments. (4) Includes treasury stock and unearned Employee Stock Ownership plan shares. EX-99.1 10 a2054103zex-99_1.txt LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL OFFER TO EXCHANGE FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 (REGISTERED UNDER THE SECURITIES ACT OF 1933) FOR ALL OUTSTANDING FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 OF PSI ENERGY, INC. PURSUANT TO THE PROSPECTUS DATED OCTOBER , 2001 -------------------------------------------------------------------------------- THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER , 2001, UNLESS THE OFFER IS EXTENDED. -------------------------------------------------------------------------------- THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: LASALLE BANK NATIONAL ASSOCIATION BY REGISTERED OR CERTIFIED MAIL: BY OVERNIGHT DELIVERY OR HAND: LaSalle Bank National Association LaSalle Bank National Association 135 South LaSalle Street 135 South LaSalle Street Suite 1960 Suite 1960 Chicago, Illinois 60603 Chicago, Illinois 60603 Attn: Corporate Trust Administration Attn: Corporate Trust Administration TO CONFIRM BY TELEPHONE FACSIMILE TRANSMISSIONS: OR FOR INFORMATION: (312) 904-2236 (312) 904-5619
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus (as defined below). This Letter of Transmittal is to be completed by holders of Old Bonds (as defined below) if Old Bonds are to be forwarded herewith. If tenders of Old Bonds are to be made by book-entry transfer to an account maintained by LaSalle Bank National Association (the "Exchange Agent") at The Depository Trust Company ("DTC") pursuant to the procedures set forth in "The Exchange Offer--Book-Entry Transfer" in the Prospectus and in accordance with the Automated Tender Offer Program ("ATOP") established by DTC, a tendering holder will become bound by the terms and conditions hereof in accordance with the procedures established under ATOP. DTC Participants that are accepting the exchange should transmit their acceptance to DTC, which will edit and verify the acceptance and execute a book-entry delivery to the Exchange Agent's account at DTC. DTC will then send an Agent's Message to the Exchange Agent for its acceptance. Delivery of the Agent's Message by DTC will satisfy the terms of the exchange as to the execution and delivery of a Letter of Transmittal by the Participant identified in the Agent's Message. DTC Participants may also accept the exchange by submitting a notice of guaranteed delivery through ATOP. Holders of Old Bonds whose certificates (the "Certificates") for such Old Bonds are not immediately available or who cannot deliver their Certificates and all other required documents to the Exchange Agent on or prior to the Expiration Date (as defined in the Prospectus) or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Old Bonds according to the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures" in the Prospectus. SEE INSTRUCTION 1. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY ALL TENDERING HOLDERS COMPLETE THIS BOX:
----------------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF OLD BONDS TENDERED ----------------------------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) OLD BONDS TENDERED (PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY) ----------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT CERTIFICATE PRINCIPAL AMOUNT OF OLD BONDS TENDERED NUMBER(S)* OF OLD BONDS* (IF LESS THAN ALL)** --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- TOTAL AMOUNT TENDERED ----------------------------------------------------------------------------------------------------------------------------- * Need not be completed by book-entry holders. ** Old Bonds may be tendered in whole or in part in denominations of $1,000 and integral multiples thereof. All Old Bonds held shall be deemed tendered unless a lesser number is specified in this column. (BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY) / / CHECK HERE IF TENDERED OLD BONDS ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution DTC Account Number Transaction Code Number / / CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED OLD BONDS ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name of Registered Holder(s) Window Ticket Number (if any) Date of Execution of Notice of Guaranteed Delivery Name of Institution which Guaranteed If Guaranteed Delivery is to be made By Book-Entry Transfer: Name of Tendering Institution DTC Account Number Transaction Code Number / / CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD BONDS ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE. / / CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD BONDS FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: Address: -----------------------------------------------------------------------------------------------------------------------------
2 Ladies and Gentlemen: The undersigned hereby tenders to PSI Energy, Inc., an Indiana corporation (the "Company"), the above described aggregate principal amount of the Company's First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006 (the "Old Bonds") in exchange for a like aggregate principal amount of the Company's First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006 (the "New Bonds"), upon the terms and subject to the conditions set forth in the Prospectus dated October , 2001 (as the same may be amended or supplemented from time to time, the "Prospectus"), receipt of which is acknowledged, and in this Letter of Transmittal (which, together with the Prospectus, constitute the "Exchange Offer"). The Exchange Offer has been registered under the Securities Act of 1933 (the "Securities Act"). Subject to and effective upon the acceptance for exchange of all or any portion of the Old Bonds tendered herewith in accordance with the terms and conditions of the Exchange Offer (including, if the Exchange Offer is extended or amended, the terms and conditions of any such extension or amendment), the undersigned hereby sells, assigns and transfers to or upon the order of the Company all right, title and interest in and to such Old Bonds as are being tendered herewith. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its agent and attorney-in-fact (with full knowledge that the Exchange Agent is also acting as agent of the Company in connection with the Exchange Offer) with respect to the tendered Old Bonds, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), subject only to the right of withdrawal described in the Prospectus, to (i) deliver Certificates for Old Bonds to the Company together with all accompanying evidences of transfer and authenticity to, or upon the order of, the Company, upon receipt by the Exchange Agent, as the undersigned's agent, of the New Bonds to be issued in exchange for such Old Bonds, (ii) present Certificates for such Old Bonds for transfer, and to transfer the Old Bonds on the books of the Company, and (iii) receive for the account of the Company all benefits and otherwise exercise all rights of beneficial ownership of such Old Bonds, all in accordance with the terms and conditions of the Exchange Offer. THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD BONDS TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OLD BONDS TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE OLD BONDS TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER. The name(s) and address(es) of the registered holder(s) of the Old Bonds tendered hereby should be printed above, if they are not already set forth above, as they appear on the Certificates representing such Old Bonds. The Certificate number(s) and the Old Bonds that the undersigned wishes to tender should be indicated in the appropriate boxes above. If any tendered Old Bonds are not exchanged pursuant to the Exchange Offer for any reason, or if Certificates are submitted for more Old Bonds than are tendered or accepted for exchange, Certificates for such unaccepted or nonexchanged Old Bonds will be returned (or, in the case of Old Bonds tendered by book-entry transfer, such Old Bonds will be credited to an account maintained at DTC), without expense to the tendering holder, promptly following the expiration or termination of the Exchange Offer. The undersigned understands that tenders of Old Bonds pursuant to any one of the procedures described in "The Exchange Offer--Procedures for Tendering Old Bonds" in the Prospectus and in the instructions hereto will, upon the Company's acceptance for exchange of such tendered Old Bonds, constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. In all cases in which a Participant elects to accept the Exchange Offer by transmitting an express acknowledgment in accordance with the established ATOP procedures, such Participant shall be bound by all of the terms and conditions of this Letter of Transmittal. The undersigned recognizes that, under certain circumstances set forth in the Prospectus, the Company may not be required to accept for exchange any of the Old Bonds tendered hereby. 3 Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, the undersigned hereby directs that the New Bonds be issued in the name(s) of the undersigned or, in the case of a book-entry transfer of Old Bonds, that such New Bonds be credited to the account indicated above maintained at DTC. If applicable, substitute Certificates representing Old Bonds not exchanged or not accepted for exchange will be issued to the undersigned or, in the case of a book-entry transfer of Old Bonds, will be credited to the account indicated above maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery Instructions," please deliver New Bonds to the undersigned at the address shown below the undersigned's signature. BY TENDERING OLD BONDS AND EXECUTING, OR OTHERWISE BECOMING BOUND BY, THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN "AFFILIATE" OF THE COMPANY, (II) ANY NEW BONDS TO BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS AND (III) THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH NEW BONDS. BY TENDERING OLD BONDS PURSUANT TO THE EXCHANGE OFFER AND EXECUTING, OR OTHERWISE BECOMING BOUND BY, THIS LETTER OF TRANSMITTAL, A HOLDER OF OLD BONDS WHICH IS A BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES, THAT (A) SUCH OLD BONDS HELD BY THE BROKER-DEALER ARE HELD ONLY AS A NOMINEE, OR (B) SUCH OLD BONDS WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER THE PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH NEW BONDS (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT). THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER (AS DEFINED BELOW) IN CONNECTION WITH RESALES OF NEW BONDS RECEIVED IN EXCHANGE FOR OLD BONDS, WHERE SUCH OLD BONDS WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 90 DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION UNDER CERTAIN LIMITED CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH NEW BONDS HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER. IN THAT REGARD, EACH BROKER DEALER WHO ACQUIRED OLD BONDS FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER- DEALER"), BY TENDERING SUCH OLD BONDS AND EXECUTING, OR OTHERWISE BECOMING BOUND BY, THIS LETTER OF TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE OF NEW BONDS PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF THE NEW BONDS MAY BE RESUMED, AS THE CASE MAY BE. IF THE COMPANY GIVES SUCH NOTICE TO SUSPEND THE SALE OF THE NEW BONDS, IT SHALL EXTEND THE 90-DAY PERIOD REFERRED TO ABOVE DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE PROSPECTUS IN CONNECTION WITH THE RESALE OF NEW BONDS BY THE NUMBER OF DAYS DURING THE PERIOD FROM AND INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING THE DATE WHEN PARTICIPATING BROKER-DEALERS SHALL HAVE RECEIVED COPIES OF THE 4 SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES OF THE NEW BONDS OR TO AND INCLUDING THE DATE ON WHICH THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF NEW BONDS MAY BE RESUMED, AS THE CASE MAY BE. All authority herein conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, legal representatives, successors and assigns of the undersigned. This tender may only be withdrawn as provided in the Prospectus and, otherwise, is irrevocable. 5 -------------------------------------------------------------------------------- HOLDER(S) SIGN HERE (SEE INSTRUCTIONS 2, 5 AND 6) (NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2) Must be signed by registered holder(s) exactly as name(s) appear(s) on Certificate(s) for the Old Bonds hereby tendered or on a security position listing, or by any person(s) authorized to become the registered holder(s) by endorsements and documents transmitted herewith. If signature is by an attorney-in-fact, executor, administrator, trustee, guardian, officer of a corporation or another acting in a fiduciary or representative capacity, please set forth the signer's full title. See Instruction 5. ---------------------------------------------------------------------------- (SIGNATURE(S) OF HOLDER(S)) Date ----------------------------------------------------------------------------, 2001 Name(s) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (PLEASE PRINT) Capacity: ---------------------------------------------------------------------------- (INCLUDE FULL TITLE) Address ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number -------------------------------------------------------------------- Tax Identification or Social Security Number(s) ---------------------------------------------------------- GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 2 AND 5) Authorized Signature -------------------------------------------------------------------------------- Name ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (PLEASE PRINT) Date ----------------------------------------------------------------------------, 2001 Capacity or Title ---------------------------------------------------------------------------- Name of Firm ---------------------------------------------------------------------------- Address ---------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number -------------------------------------------------------------------- ---------------------------------------------------------------------------- 6 ---------------------------------------------------- SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 1, 5 AND 6) To be completed ONLY if the New Bonds are to be issued in the name of someone other than the registered holder of the Old Bonds whose name(s) appear(s) above. Issue New Bonds to: Name ----------------------------------------- (PLEASE PRINT) ------------------------------------------------------------ ADDRESS ---------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------ (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER) ------------------------------------------------------------ ------------------------------------------------------------ SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5 AND 6) To be completed ONLY if New Bonds are to be sent to someone other than the registered holder of the Old Bonds whose name(s) appear(s) above, or to such registered holder(s) at an address other than that shown above. Mail New Bonds To: Name ----------------------------------------- (PLEASE PRINT) ------------------------------------------------------------ ADDRESS ---------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------ (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER) ------------------------------------------------------------ 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to be completed if Certificates are to be forwarded herewith. If tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in "The Exchange Offer--Book-Entry Transfer" in the Prospectus and in accordance with ATOP established by DTC, a tendering holder will become bound by the terms and conditions hereof in accordance with the procedures established under ATOP. Certificates, or timely confirmation of a book-entry transfer of Old Bonds into the Exchange Agent's account at DTC, as well as this Letter of Transmittal (or facsimile thereof), if required, properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at one of its addresses set forth herein on or prior to the Expiration Date. Old Bonds may be tendered in whole or in part in the principal amount of $1,000 and integral multiples of $1,000. Holders who wish to tender their Old Bonds and (i) whose Old Bonds are not immediately available or (ii) who cannot deliver their Old Bonds, this Letter of Transmittal and all other required documents to the Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete the procedures for delivery by book-entry transfer on a timely basis, may tender their Old Bonds by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures" in the Prospectus. Pursuant to such procedures: (i) such tender must be made by or through an Eligible Institution (as defined below); (ii) this Letter of Transmittal (or facsimile thereof), properly completed and duly executed, and a Notice of Guaranteed Delivery, substantially in the form made available by the Company, must be received by the Exchange Agent on or prior to the Expiration Date; and (iii) the Certificates (or a book-entry confirmation (as defined in the Prospectus)) representing all tendered Old Bonds, in proper form for transfer, together with this Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent within five New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, telex, facsimile or mail to the Exchange Agent, and must include a guarantee by an Eligible Institution in the form set forth in such Notice. For Old Bonds to be properly tendered pursuant to the guaranteed delivery procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration Date. As used herein and in the Prospectus, "Eligible Institution" means a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD BONDS AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY BY BOOK-ENTRY TRANSFER AND ANY ACCEPTANCE OR AGENT'S MESSAGE DELIVERED THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE HOLDER, AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD BONDS SHOULD BE SENT TO THE COMPANY. The Company will not accept any alternative, conditional or contingent tenders. Each tendering holder, by execution of a Letter of Transmittal (or facsimile thereof), or any Agent's Message in lieu thereof, waives any right to receive any notice of the acceptance of such tender. 2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of Transmittal is required if: (i) this Letter of Transmittal is signed by the registered holder (which term, for purposes of this document, shall include any participant in DTC whose name appears on a security position listing as the owner of Old Bonds) of the Old Bonds tendered herewith, unless such holder has completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" above, or (ii) such Old Bonds are tendered for the account of a firm that is an Eligible Institution. In all other cases, an Eligible Institution must guarantee the signature(s) on this Letter of Transmittal. See Instruction 5. 3. INADEQUATE SPACE. If the space provided in the box captioned "Description of Old Bonds" is inadequate, the Certificate number(s) and/or the principal amount of Old Bonds and any other required information should be listed on a separate signed schedule which is attached to this Letter of Transmittal. 8 4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Bonds will be accepted only in the principal amount of $1,000 and integral multiples thereof. If less than all the Old Bonds evidenced by any Certificate submitted are to be tendered, fill in the principal amount of Old Bonds which are to be tendered in the box entitled "Principal Amount of Old Notes Tendered (if less than all)." In such case, new Certificate(s) for the remainder of the Old Bonds that were evidenced by your old Certificate(s) will only be sent to the holder of the Old Bond, promptly after the Expiration Date. All Old Bonds represented by Certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. Except as otherwise provided herein, tenders of Old Bonds may be withdrawn at any time on or prior to the Expiration Date. In order for a withdrawal to be effective on or prior to that time, a written notice of withdrawal must be timely received by the Exchange Agent at one of its addresses set forth above or in the Prospectus on or prior to the Expiration Date. Any such notice of withdrawal must specify the name of the person who tendered the Old Bonds to be withdrawn, identify the Old Bonds to be withdrawn (including the principal amount of such Old Bonds) and (where Certificates for Old Bonds have been transmitted) specify the name in which such Old Bonds are registered, if different from that of the withdrawing holder. If Certificates for the Old Bonds have been delivered or otherwise identified to the Exchange Agent, then prior to the release of such Certificates, the withdrawing holder must submit the serial numbers of the particular certificates for the Old Bonds to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution, unless such holder is an Eligible Institution. If Old Bonds have been tendered pursuant to the procedures for book-entry transfer set forth in the Prospectus under "The Exchange Offer--Book-Entry Transfer," any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of Old Bonds and otherwise comply with the procedures of such facility. Old Bonds properly withdrawn will not be deemed validly tendered for purposes of the Exchange Offer, but may be retendered at any time on or prior to the Expiration Date by following one of the procedures described in the Prospectus under "The Exchange Offer--Procedures for Tendering Old Bonds." All questions as to the validity, form and eligibility (including time of receipt) of any withdrawal notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Old Bonds which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Old Bonds tendered by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry procedures described in the Prospectus under "The Exchange Offer--Book-Entry Transfer," will be credited to an account maintained with DTC for the Old Bonds) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. 5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Old Bonds tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Certificate(s) without alteration, enlargement or any change whatsoever. If this Letter of Transmittal is signed by a participant in a book-entry transfer facility, the signature must correspond with the name as it appears on the security position listing as the owner of the Old Bonds. If any of the Old Bonds tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Old Bonds are registered in different names on several Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or facsimiles thereof) as there are different registrations of Certificates. If this Letter of Transmittal or any Certificates or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by the Company, proper evidence satisfactory to the Company of such persons' authority to so act must be submitted. When this Letter of Transmittal is signed by the registered holder(s) of the Old Bonds listed and transmitted hereby, no endorsement(s) of Certificate(s) or written instrument or instruments of transfer or exchange are required unless New Bonds are to be issued in the name of a person other than the registered holder(s). Signature(s) on such Certificate(s) or written instrument or instruments of transfer or exchange must be guaranteed by an Eligible Institution. 9 If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Old Bonds listed, the Certificates must be endorsed or accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by the Company in its sole discretion and executed by the registered holder(s), in either case signed exactly as the name or names of the registered holder(s) appear(s) on the Certificates. Signatures on such Certificates or written instrument or instruments of transfer or exchange must be guaranteed by an Eligible Institution. 6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Bonds are to be issued in the name of a person other than the signer of this Letter of Transmittal, or if New Bonds are to be sent to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Certificates for Old Bonds not exchanged will be returned by mail or, if tendered by book-entry transfer, by crediting the account indicated above maintained at DTC. See Instruction 4. 7. IRREGULARITIES. The Company will determine, in its sole discretion, all questions as to the form, validity, eligibility (including time of receipt) and acceptance for exchange of any tender of Old Bonds, which determination shall be final and binding. The Company reserves the absolute right to reject any and all tenders of any particular Old Bonds not properly tendered or to not accept any particular Old Bonds if that acceptance might, in the judgment of the Company or its counsel, be unlawful. The Company also reserves the absolute right, in its sole discretion, to waive any defects or irregularities or conditions of the Exchange Offer as to any particular Old Bonds either before or after the Expiration Date (including the right to waive the ineligibility of any holder who seeks to tender Old Bonds in the Exchange Offer). The interpretation of the terms and conditions of the Exchange Offer as to any particular Old Bonds either before or after the Expiration Date (including this Letter of Transmittal) by the Company shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with the tender of Old Bonds for exchange must be cured within such reasonable period of time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Old Bonds for exchange, nor shall any of them incur any liability for failure to give such notification. 8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Exchange Agent at its address and telephone number set forth on the front of this Letter of Transmittal. Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained from the Exchange Agent or from your broker, dealer, commercial bank, trust company or other nominee. 9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s) representing Old Bonds have been lost, destroyed or stolen, the holder should promptly notify the Exchange Agent. The holder will then be instructed as to the steps that must be taken in order to replace the Certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen Certificate(s) have been followed. 10. SECURITY TRANSFER TAXES. Holders who tender their Old Bonds for exchange will not be obligated to pay any transfer taxes in connection therewith, except that holders who instruct the Company to register New Bonds in the name of or request that Old Bonds not tendered or not accepted in the Exchange Offer to be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer tax thereon. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF), OR AN AGENT'S MESSAGE IN LIEU THEREOF, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. 10 EX-99.2 11 a2054103zex-99_2.txt NOTICE OF GUARANTEED DELIVERY NOTICE OF GUARANTEED DELIVERY OFFER TO EXCHANGE FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 (REGISTERED UNDER THE SECURITIES ACT OF 1933) FOR ALL OUTSTANDING FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 OF PSI ENERGY, INC. This Notice of Guaranteed Delivery or one substantially equivalent hereto must be used to accept the Exchange Offer (as defined below) if (i) certificates for the Company's (as defined below) First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006 (the "Old Bonds") are not immediately available, (ii) Old Bonds, the Letter of Transmittal and any other documents required by the Letter of Transmittal cannot be delivered to LaSalle Bank National Association (the "Exchange Agent") on or prior to the Expiration Date (as defined in the Prospectus referred to below) or (iii) the procedures for book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile transmission, overnight courier, telex, telegram or mail to the Exchange Agent. See "The Exchange Offer--Guaranteed Delivery Procedures" in the Prospectus dated October , 2001 (which, together with the related Letter of Transmittal, constitutes the "Exchange Offer") of PSI Energy, Inc., an Indiana corporation (the "Company"). THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: LASALLE BANK NATIONAL ASSOCIATION BY HAND OR OVERNIGHT DELIVERY: LaSalle Bank National Association 135 South LaSalle Street Suite 1960 Chicago, Illinois 60603 Attention: Corporate Trust Administration FACSIMILE TRANSMISSIONS: (ELIGIBLE INSTITUTIONS ONLY) (312) 904-2236 TO CONFIRM BY TELEPHONE OR FOR INFORMATION CALL: (312) 904-5619 BY REGISTERED OR CERTIFIED MAIL: LaSalle Bank National Association 135 South LaSalle Street Suite 1960 Chicago, Illinois 60603 Attention: Corporate Trust Department DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED ON THE LETTER OF TRANSMITTAL. 2 THE FOLLOWING GUARANTEE MUST BE COMPLETED GUARANTEE OF DELIVERY (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States, hereby guarantees to deliver to the Exchange Agent, at one of its addresses set forth above, either the certificates for all physically tendered Old Bonds, in proper form for transfer, or confirmation of the book-entry transfer of such Old Bonds to the Exchange Agent's account at The Depository Trust Company ("DTC"), pursuant to the procedures for book-entry transfer set forth in the Prospectus, in either case together with one or more properly completed and duly executed Letter(s) of Transmittal (or facsimile thereof) and any other documents required by such Letter of Transmittal, within five New York Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery. The undersigned acknowledges that it must deliver the Letter(s) of Transmittal and the Old Bonds tendered hereby to the Exchange Agent within the time period set forth above and that failure to do so could result in a financial loss to the undersigned.
Name of Firm: (Authorized Signature) Address: Title: Name: (Zip Code) (Please type or print) Area Code and Telephone Number: Date:
NOTE: DO NOT SEND OLD BONDS WITH THIS NOTICE OF GUARANTEED DELIVERY. ACTUAL SURRENDER OF OLD BONDS MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND FULLY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS. 3 EX-99.3 12 a2054103zex-99_3.txt CLIENT LETTER OFFER TO EXCHANGE FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 (REGISTERED UNDER THE SECURITIES ACT OF 1933) FOR ANY AND ALL OUTSTANDING FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 OF PSI ENERGY, INC. To Our Clients: We are enclosing herewith - a Prospectus, dated September , 2001, of PSI Energy, Inc., an Indiana corporation (the "Company"), and a related Letter of Transmittal (which together constitute the "Exchange Offer") relating to the offer by the Company to exchange its First Mortgage Bonds Series EEE, 6.65%, Due June 15, 2006 (the "New Bonds"), pursuant to an offering registered under the Securities Act of 1933 (the "Securities Act"), for a like principal amount of its issued and outstanding First Mortgage Bonds Series EEE, 6.65%, Due June 15, 2006 (the "Old Bonds") upon the terms and subject to the conditions set forth in the Exchange Offer, and - an Instruction to Registered Holder and/or Book-Entry Transfer Facility Participant from Owner ("Instruction"). PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER , 2001, UNLESS EXTENDED. The Exchange Offer is not conditioned upon any minimum number of Old Bonds being tendered. We are the holder of record and/or participant in the book-entry transfer facility of Old Bonds held by us for your account. A tender of such Old Bonds can be made only by us as the record holder and/or participant in the book-entry transfer facility and pursuant to your instruction. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Old Bonds held by us for your account. We request instruction as to whether you wish to tender any or all of the Old Bonds held by us for your account pursuant to the terms and conditions of the Exchange Offer. PLEASE COMPLETE THE INSTRUCTION AND RETURN IT TO US IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. If you request that we tender your Old Bonds, the Instruction includes your confirmation that we may on your behalf make the representations contained in the Letter of Transmittal. Pursuant to the Letter of Transmittal, each holder of Old Bonds will represent to the Company that (i) the holder is not an "affiliate" of the Company, (ii) any New Bonds to be received by the holder are being acquired in the ordinary course of its business and (iii) the holder has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of such New Bonds. If the tendering holder is a broker-dealer that will receive New Bonds for its own account in exchange for Old Bonds, we will represent on behalf of such broker-dealer that the Old Bonds to be exchanged for the New Bonds were acquired by it as a result of market-making activities or other trading activities, and acknowledge on behalf of such broker-dealer that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Bonds. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Bonds, such broker-dealer is not deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Very truly yours, EX-99.4 13 a2054103zex-99_4.txt REGISTERED HOLDER LETTER OFFER TO EXCHANGE FIRST MORTGAGE BONDS, SERIES EEE, 6.65%, DUE JUNE 15, 2006 (REGISTERED UNDER THE SECURITIES ACT OF 1933) FOR ANY AND ALL OUTSTANDING FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 OF PSI ENERGY, INC. To Registered Holders and The Depository Trust Company Participants: We are enclosing herewith the materials listed below relating to the offer by PSI Energy, Inc., an Indiana corporation (the "Company"), to exchange its First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006 (the "New Bonds"), pursuant to an offering registered under the Securities Act of 1933 (the "Securities Act"), for a like principal amount of its issued and outstanding First Mortgage Bonds, Series EEE, 6.65%, Due June 15, 2006 (the "Old Bonds") upon the terms and subject to the conditions set forth in the Company's Prospectus, dated October , 2001, and the related Letter of Transmittal (which together constitute the "Exchange Offer"). Enclosed herewith are copies of the following documents: 1. Prospectus dated October , 2001; 2. Letter of Transmittal; 3. Notice of Guaranteed Delivery; 4. Instruction to Registered Holder and/or Book-Entry Transfer Participant from Owner; and 5. Letter which may be sent to your clients for whose account you hold Old Bonds in your name or in the name of your nominee, to accompany the instruction form referred to above, for obtaining such client's instruction with regard to the Exchange Offer. WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER , 2001, UNLESS EXTENDED. The Exchange Offer is not conditioned upon any minimum number of Old Bonds being tendered. Pursuant to the Letter of Transmittal, each holder of Old Bonds will represent to the Company that (i) the holder is not an "affiliate" of the Company, (ii) any New Bonds to be received by it are being acquired in the ordinary course of its business and (iii) the holder has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of such New Bonds. If the tendering holder is a broker-dealer that will receive New Bonds for its own account in exchange for Old Bonds, you will represent on behalf of such broker-dealer that the Old Bonds to be exchanged for the New Bonds were acquired by it as a result of market-making activities or other trading activities, and acknowledge on behalf of such broker-dealer that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Bonds. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Bonds, such broker-dealer is not deemed to admit that it is an 'underwriter' within the meaning of the Securities Act. The enclosed Instruction to Registered Holder and/or Book-Entry Transfer Participant from Owner contains an authorization by the beneficial owner(s) of the Old Bonds for you to make the foregoing representations. The Company will not pay any fee or commission to any broker or dealer or to any other persons (other than the Exchange Agent) in connection with the solicitation of tenders of Old Bonds pursuant to the Exchange Offer. The Company will pay or cause to be paid any transfer taxes payable on the transfer of Old Bonds to it, except as otherwise provided in Instruction 10 of the enclosed Letter of Transmittal. Additional copies of the enclosed material may be obtained from the undersigned. Very truly yours, LASALLE BANK NATIONAL ASSOCIATION NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF PSI ENERGY, INC. OR LASALLE BANK NATIONAL ASSOCIATION OR AUTHORIZE YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. 2 EX-99.5 14 a2054103zex-99_5.txt INSTRUCTION LETTER INSTRUCTION TO REGISTERED HOLDER AND/OR BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM OWNER OF PSI ENERGY, INC. FIRST MORTGAGE BONDS SERIES EEE, 6.65%, DUE JUNE 15, 2006 To Registered Holder and/or Participant of The Book-Entry Transfer Facility: The undersigned hereby acknowledges receipt of the Prospectus dated October , 2001 (the "Prospectus") of PSI Energy, Inc., an Indiana corporation (the "Company"), and the accompanying Letter of Transmittal (the "Letter of Transmittal"), that together constitute the Company's offer (the "Exchange Offer"). Capitalized terms used but not defined herein have the meaning as ascribed to them in the Prospectus. This will instruct you, the registered holder and/or book-entry transfer facility participant, as to the action to be taken by you relating to the Exchange Offer with respect to the Old Bonds held by you for the account of the undersigned. The aggregate face amount of the Old Bonds held by you for the account of the undersigned is (fill in amount): $ of the First Mortgage Bonds Series EEE, 6.65%, Due June 15, 2006. With respect to the Exchange Offer, the undersigned hereby instructs you (check appropriate box): / / To TENDER the following Old Bonds held by you for the account of the undersigned (insert principal amount of Old Bonds to be tendered, if any): $ of the First Mortgage Bonds Series EEE, 6.65%, Due June 15, 2006. / / NOT to TENDER any Old Bonds held by you for the account of the undersigned. If the undersigned instructs you to tender the Old Bonds held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations and warranties contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner, including but not limited to the representations, that (i) the holder is not an "affiliate" of the Company, (ii) any New Bonds to be received by the holder are being acquired in the ordinary course of its business and (iii) the holder has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act of 1933) of such New Bonds. If the undersigned is a broker-dealer that will receive New Bonds for its own account in exchange for Old Bonds, it represents that such Old Bonds were acquired as a result of market-making activities or other trading activities, and it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Bonds. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Bonds, such broker-dealer is not deemed to admit that it is an "underwriter" within the meaning of the Securities Act of 1933. / / Check here if the beneficial owner of the Old Bonds is a participating broker-dealer and such participating broker-dealer acquired the Old Bonds for its own account as a result of market-making activities or other trading activities. SIGN HERE Name of beneficial owner(s): ___________________________________________________ Signature(s): __________________________________________________________________ Name(s) (please print): ________________________________________________________ Address: _______________________________________________________________________ ________________________________________________________________________________ Telephone Number: ______________________________________________________________ Taxpayer Identification or Social Security Number: _____________________________ ________________________________________________________________________________ Date: __________________________________________________________________________ 2