Exhibit 10-d
KLT INC.
INCENTIVE COMPENSATION PLAN
This Incentive Compensation Plan (the "Plan") of KLT Inc. (the
"Corporation") is established and adopted by the Board of
Directors of the Corporation (the "Board") as of March 14, 2000.
1. Purpose. The purpose of the Plan is to provide certain
benefits in the form of additional compensation for designated
employees and directors (the "Participants") of the Corporation
for services rendered or hereafter rendered, to induce
Participants to remain as employees.
2. Eligibility. Employees and directors of the Corporation are
eligible to participate in the Plan if and as approved by the
disinterested members of the Compensation Committee of the Board
(the "Compensation Committee"). Notwithstanding any other
provision of this Plan, any provisions in a separate employment
contract or other contract between the Corporation and a
Participant (a "Participant Contract") relating to participation
in, or rights or obligations under, this Plan shall supersede the
terms contained in this Plan.
3. Computation of Pool.
a. The Plan is designed to provide incentive compensation
to Participants only with respect to the increase in value of the
Corporation's investments in direct and indirect affiliates, as
that term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934 (each an "Affiliate" and collectively the
"Affiliates") in which the Corporation's employees have a
management or director role. The Affiliates as of the adoption
of the Plan are listed on Exhibit A. The disinterested members
of the Board shall have the discretion of amending Exhibit A from
time to time to reflect additions and deletions of the
Corporation's Affiliates included in the Plan.
b. The disinterested members of the Board, after taking
into account the recommendations of the Compensation Committee,
shall establish a baseline value (the "Baseline") for the equity
ownership by the Corporation with respect to each Affiliate
included in the Plan. The Baseline for Affiliates existing at
the time of initial adoption of the Plan shall be based on the
current fair market value, on a pre-tax basis, established by the
Compensation Committee in its sole good faith opinion, and is set
forth opposite each Affiliate's name on Exhibit A. The Baseline
for Affiliates included subsequent to the Plan's initial adoption
shall be the amount of the Corporation's capital investment in
such Affiliates (for purposes of this Plan, capital investment
means and shall be limited to equity investment). The Baseline
of each Affiliate shall be increased by the amount of additional
capital investments to such Affiliate and decreased by the amount
of distributions from such Affiliate to the Corporation.
c. The aggregate amount available to be distributed to
Participants (the "Pool") shall be twenty percent of the
difference between (i) the Amount Realized (as defined below) on
each Affiliate or Corporation, as the case may be, and (ii) the
sum of the Baseline for such Affiliate or
Corporation, as the
case may be, and an amount equal to a 10% annual pre-tax return
on such Baseline (such Baseline shall be computed, as to
Affiliates existing as of the date of initial adoption of the
Plan, from the date of such adoption, and, as to Affiliates
included subsequent to the Plan's initial adoption, from the date
of such subsequent inclusion. The Baseline for the Corporation
shall be the sum of the Baselines of its Affiliates). If the
amount calculated pursuant to clause 3.c.(i) is less than the
amount calculated pursuant to clause 3.c.(ii), then the Pool
shall be reduced by an amount equal to twenty percent of such
difference and the amounts in the Participant's Incentive
Accounts shall be accordingly adjusted to reflect this reduction
in the Pool. If the annual return on investment from an
Affiliate or Corporation, as the case may be, exceeds 100%, the
Pool shall be increased by an amount equal to 10% of the
difference between the annual return and 100%.
d. Except as otherwise provided herein or in any
Participant Contract, no distributions shall be due or payable
under the Plan until and unless the aggregate Amount Realized on
the Affiliates or Corporation is, at the time of such
distributions, at least $200 million (the "Threshold"). The
Threshold only determines when and if distributions are payable;
distributions shall be otherwise payable on all Amounts Realized.
e. The Amount Realized for each Affiliate or Corporation
will be determined upon the occurrence of a Realization Event. A
Realization Event shall be deemed to occur upon the earliest to
occur of the following events:
(i) an initial public offering (an "IPO") of common
stock of the Corporation or an Affiliate;
(ii) the sale of twenty percent (20%) or more of the
fully diluted capital stock or other equity
securities in the Corporation or an Affiliate;
(iii) a merger or consolidation of the Corporation an
Affiliate in which the Corporation is not the
survivor or the controlling shareholder of the
resulting entity;
(iv) a sale, disposition or other transfer of all
or substantially all of the assets of the
Corporation or an Affiliate;
(v) a liquidation or dissolution of the Corporation or
an Affiliate; and
(vi) the expiration of three years after
implementation of the Plan, in the case of
Affiliates initially included in Exhibit A, and
three years after the Corporation's initial
capital investment in an Affiliate which is
subsequently included in Exhibit A.
f. The Amount Realized in events (i) through (v), above,
shall be the fair market value on a pre-tax basis (the "FMV") of
the Corporation's investment in the affected Affiliate, based
upon the IPO price or the consideration received in the
Realization Event. Except as otherwise provided herein or in any
Participant Contract, the Amount Realized in event (vi) above
shall be based upon an appropriate methodology that has been
established by the Board, after taking into account the
recommendations of the Compensation Committee and the
Corporation's President, which (i) with respect to the Affiliates
initially listed in Exhibit A, is listed in Exhibit B as to
each such Affiliate; and (ii) with respect to the Affiliates
subsequently listed in Exhibit A, will be listed in Exhibit B as
to each such Affiliate prior to the time the initial capital
investment is made in such Affiliate.
g. If, after a Realization Event occurs with respect to a
particular Affiliate, the Corporation retains a direct or
indirect ownership interest in such Affiliate and all
distributions relating to the Realization Event have not been
paid due to distribution payment limitations set forth below,
then the Amount Realized with respect to such Realization Event
shall be annually adjusted to reflect any further accretion or
dilution to the FMV realized by the Corporation in such
Affiliate. Nothing in paragraphs 3.c. or 3.g. shall be deemed to
require Participants to repay to the Corporation any
distributions previously received on account of such Realization
Event.
4. Allocation of the Pool.
a. The Board, acting through its disinterested members and
in its sole discretion after taking into account the
recommendations of the Compensation Committee and the
Corporation's President and obligations of the Corporation, if
any, under Participant Contracts, shall determine the allocation
of the Pool (including but not limited to specific allocations of
Amounts Realized) among the Participants (the "Awards") and any
reallocation of any amounts in any Participant's Incentive
Account that are not paid as a result of the termination of such
Participant's employment with the Corporation (or other
applicable events) pursuant to the provisions hereof or a
separate written employment agreement or other arrangement
between such Participant and the Corporation. An Award shall be
subject to all terms and conditions of this Plan, and shall, if
the Participant is not a party to a separate written employment
agreement or other agreement containing a noncompetition or
nondisclosure covenant, be conditioned upon the Participant
executing and delivering a noncompetition or nondisclosure
agreement, at the Board's option, in substantially the form
attached hereto as Exhibit C.
b. A notional account ("Incentive Account") shall be
established and maintained for each Participant receiving Awards
under the Plan, showing the Awards granted, the portion of the
value or Amounts Realized as allocated to the Participant
(whether specified as a specific determinable dollar amount or as
a percentage of the Pool), any adjustments thereto pursuant to
the terms of the Plan, and the payments made under the Plan to
such Participant. It is specifically contemplated that
adjustments to the Pool, and the corresponding amounts allocated
to Participants' Incentive Accounts, may be either positive or
negative, as calculated pursuant to Section 3.c. for each
Realization Event, and that as a result the Pool and the
Participants' Incentive Accounts may be either positive or
negative.
c. Except as otherwise provided herein, payments shall be
made to each Participant so long as the Participant has a
positive amount in his or her respective Incentive Account and
the Threshold has been satisfied, both as of the end of a
calendar year. In such event, a sum equal to 50% of the positive
year-end amount in each Participant's Incentive Account shall be
paid within 15 days of the end of such year, net of all
applicable withholding taxes.
d. Allocations and payments under the Plan and related
determinations shall be made in the same manner as contemplated
in the examples set forth in Exhibit D attached hereto.
5. Effect of Termination of Employment.
a. Nothing in this Plan shall be construed to:
(i) Give any employee of the Corporation or any
Participant any right to be awarded an Award,
other than in the sole discretion of the
Compensation Committee or as otherwise set forth
in a separate written employment agreement between
the Participant and the Corporation;
(ii) Give a Participant any right whatsoever with
respect to any equity interest in the Corporation
or any of its Affiliates (subject, however, to any
separate written employment agreement between the
Participant and the Corporation);
(iii) Limit in any way the right of the Corporation
to terminate a Participant's employment with the
Corporation at any time (subject, however, to any
separate written employment agreement between the
Participant and the Corporation); or
(iv) Be evidence of any agreement or
understanding, express or implied, that the
Corporation will employ a Participant in any
particular position or at any particular rate of
remuneration or for any particular period of time
(subject, however, to any separate written
employment agreement between the Participant and
the Corporation).
b. Except as may otherwise be provided in a Participant
Contract, termination of a Participant's employment with the
Corporation shall have the following effect on the Participant's
Award:
(i) If the Participant terminates employment, or
if the Corporation terminates the Participant's
employment for any reason (including but not
limited to death or disability) other than Cause
(as defined below), the Participant will be
entitled to receive, within 30 days of termination
of employment, a lump sum equal to 50% of the
Award remaining in the Participant's Incentive
Account at the time of such termination, net of
all applicable withholding taxes. The Participant
shall not be entitled to any other portion of the
Award remaining in the Participant's Incentive
Account.
(ii) If the Participant is terminated for Cause,
the Participant shall forfeit all of the Award
remaining in the Participant's Incentive Account
at the time of such termination.
(iii) "Cause" is defined as:
(a) Dishonesty of the Participant with
respect to the Corporation;
(b) Willful misfeasance or nonfeasance of
duty intended to injure or having the effect
of injuring the reputation, business or
business relationships of the Corporation or
its respective officers, directors or
employees;
(c) Upon a charge by a governmental entity
against the Participant of any crime
involving moral turpitude or which could
reflect unfavorably upon the Corporation or
upon the filing of any civil action involving
a charge of embezzlement, theft, fraud, or
other similar act;
(d) Willful or prolonged absence from work
by the Participant (other than by reason of
disability due to physical or mental illness)
or failure, neglect or refusal by the
Participant to perform his duties and
responsibilities without the same being
corrected upon ten (10) days prior written
notice;
(e) Breach by the Participant of any of the
covenants contained in Exhibit C, or
termination by the Corporation of the
Participant for "cause" under an applicable
separate written employment agreement; or
(f) Failure by the Participant to materially
meet agreed-upon performance standards.
6. General Terms and Conditions
a. Non-alienation. No Award or any other rights under this
Plan shall be subject to alienation, sale, assignment, pledge,
encumbrance, or charge, and any attempt to alienate, sell,
assign, pledge, encumber, or charge the same shall be void. No
Award hereunder shall in any manner be liable for or subject to
the debts, contracts, liabilities, or torts of the person awarded
such Award. If any Participant hereunder should become bankrupt
or attempt to alienate, sell, assign, pledge, encumber, or charge
any Award hereunder, then such Award shall, in the discretion of
the Compensation Committee, cease.
b. Termination or Amendment of Plan. Unless otherwise
amended or terminated as provided in this paragraph, this Plan
shall terminate as of December 31, 2004, and all amounts then
remaining in Incentive Accounts shall be paid within 15 days of
such termination, net of all applicable withholding taxes. The
Board may not otherwise terminate or amend this Plan, in whole or
in part, without first obtaining the written consent of the
Participants holding, in aggregate, a majority of the percentage
of the Pool then allocated under this Plan. In the event of a
Change of Control, as defined below, only those Participants
holding percentages of the Pool
allocated as of the Change of
Control shall be deemed to have the power to consent to any
termination or amendment of the Plan occurring on or after the
Change of Control. Notwithstanding the above, (i) any Award
which is payable (that is, the Threshold had been reached) upon
the termination of the Plan shall nevertheless be paid in
accordance with the terms of this Plan (however, no Realization
Events occurring after such termination shall be recognized for
determining the amount of such Award), (ii) any Awards payable
(that is, the Threshold had been reached) at the time the
Compensation Committee amends the Plan shall nevertheless be
payable accordance with the terms of this Plan in effect prior to
such amendment, and (iii) the Plan shall not be amended or
terminated with respect to any Participant except in accordance
with any applicable Participant Contract. A Change of Control is
a change of control of the Corporation (for purposes of this
definition, the term "Corporation" shall be deemed to include any
Affiliate(s) in direct or indirect control of the Corporation as
of the date hereof or at any time during the Employment Period)
of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A (as in effect on the
date hereof) promulgated under the Securities Exchange Act of
1934, as in effect on the date hereof (the "Exchange Act")
assuming that the Corporation were then subject to Regulation
14A; provided, however, that, without limitation, such a change
of control shall be deemed to have occurred if (A) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange
Act; other than any underwriter or member of an underwriting
syndicate or group with respect to a public offering of
securities of the Corporation registered under the Securities Act
of 1933, the Corporation or any "person" who on the date hereof
is a director or officer of the Corporation or whose shares of
Corporation stock are treated as "beneficially owned" (as defined
in Rule 13d-3 under the Exchange Act, as in effect on the date
hereof) by any such director or officer) is or becomes the
beneficial owner, directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power
of the Corporation's then-outstanding securities, (B) less than a
majority of the members of the Board are persons who were either
nominated for election by the current directors of the Board or
successors to such directors selected by current directors of the
Board, (C) the stockholders of the Corporation approve a merger
or consolidation of the Corporation with any other entity, other
than a merger or consolidation which would result in the Voting
Securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of the Corporation
or such surviving entity) at least 80 percent of the total voting
power represented by the Voting Securities of the Corporation or
such surviving entity outstanding immediately after such merger
or consolidation, or (D) the stockholders of the Corporation
approve a plan of complete liquidation of the Corporation or an
agreement for the sale or disposition by the Corporation of all
or substantially all of the Corporation's assets. For purposes
hereof, a Change of Control shall not be deemed to have occurred
as a result of the consummation of any reorganization of Kansas
City Power & Light Company ("KCPL") solely for purposes of
establishing a holding company structure wherein the stockholders
of the entity owning all or substantially all of the assets of
KCPL immediately following such reorganization are predominantly
the same as the stockholders of KCPL immediately prior to such
reorganization. As used in this Agreement, "Voting Securities"
shall mean any securities of the Corporation which vote generally
in the election of directors.
c. Captions. The captions of any section or subsection of
this Plan have been inserted for convenience and reference only
and are to be ignored in the construction of the provisions
hereof.
d. Execution of Necessary Documents. All persons claiming
any interest whatsoever under this Plan agree to perform any and
all acts and execute any and all documents and papers which may
be necessary or desirable for the carrying out of this Plan or
any of its provisions.
e. Notice. Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given
upon personal delivery or upon deposit in the United States Post
Office, by registered or certified mail with postage and fees
prepaid, addressed to Participant at his address shown on the
Corporation's employment records and to the Corporation at the
address of its principal corporate offices (attention: President)
or at such other address as such party may designate by ten days'
advance written notice to the other party hereto.
f. Choice of Law. This Plan and all documents associated
therewith shall be construed, interpreted and enforced in
accordance with the laws of the State of Missouri, without giving
effect to that State's conflict of laws provisions.
g. Venue. All actions or proceedings with respect to this
Plan or any documents associated therewith shall be instituted
only in any state or federal court sitting in Jackson County,
Missouri, and by execution of this Plan and the acceptance of
Awards, the Corporation and the Participants irrevocably and
unconditionally subject to the jurisdiction (both subject matter
and personal) of each such court and irrevocably and
unconditionally waive: (a) any objection that the parties might
now or hereafter have to the venue of any of such court; and (b)
any claim that any action or proceeding brought in any such court
has been brought in an inconvenient forum.
h. No Waiver. No delay or omission by the Corporation in
exercising any right under this Pan shall operate as a waiver of
that or any other right. A waiver or consent given by the
Corporation on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any
right on any other occasion.
i. Captions. The captions of the sections of this
Agreement are for convenience of reference only and in no way
define, limit or affect the scope or substance of any section of
this Agreement.
j. Effect of Invalidity. In case any provision of this
Plan shall be invalid, illegal or otherwise unenforceable, the
validity, legality and enforceability of the remaining provisions
shall in no way be affected or impaired thereby.
In witness whereof, the Corporation has executed this Plan
as of the date first above written.
KLT INC., a Missouri corporation
By: /s/Gregory J. Orman
Attest:
/s/Mark G. English
Secretary