EXHIBIT 99.A
DESCRIPTION OF COMMON STOCK
General. The authorized capital stock of KU consists of 5,300,000 shares
of Preferred Stock, cumulative, without par value, issuable in series, of
which 37,817,878 shares were outstanding at December 31, 1995, 2,000,000
shares of Preference Stock, cumulative, without par value, issuable in
series, and 80,000,000 shares of Common Stock, without par value of which
37,817,878 shares were outstanding (all of which were held by KU Energy)
at December 31, 1995. No shares of Preference Stock are issued or
outstanding.
The following statements, unless the context otherwise indicates, are
brief summaries of the substance or general effect of certain provisions
of KU's Restated Articles of Incorporation and resolutions and amendments
establishing series of Preferred Stock (collectively, the Articles) and of
KU's Mortgage Indenture, as amended, securing its first mortgage bonds
(Indenture). The statements make use of defined terms, are not complete
and do not give effect to statutory or common law.
Dividend Rights. The Board of Directors of KU may declare dividends on
the Common Stock out of any surplus or net profits of KU legally available
for the purpose, provided full cumulative dividends on the Preferred Stock
and the Preference Stock for the current and all past quarterly dividend
periods shall have been paid or declared and set apart for payment and KU
is not in arrears in its sinking fund obligations in respect of any shares
of Preferred Stock or Preference Stock.
Limitations on Dividends on Common Stock. The Indenture provides that, so
long as certain currently outstanding series of First Mortgage Bonds are
outstanding, KU will not declare or pay any dividends on its Common Stock
or make any other distribution on or purchase any of its Common Stock
unless the amounts expended by KU for maintenance and repairs and provided
for depreciation subsequent to April 30, 1947, plus KU's earned surplus
(retained earnings) for such period and remaining after any such payment,
distribution or purchase, shall aggregate not less than 15% of the gross
operating revenues of KU for the period. The Articles provide, in effect,
that, so long as any of the Preferred Stock is outstanding, the total
amount of all dividends or other distributions on Common Stock and
purchases of such stock that may be paid or made during any 12-month
period shall not exceed (a) 75% of the "net income available for dividends
on common stock" if the ratio of "common stock equity" to "total capital"
(each as defined) of KU shall be 20% to 25%, or (b) 50% of such net income
if such ratio shall be less than 20%. When such ratio is 25% or more, no
such dividends, distributions or purchases may be paid or made which would
reduce such ratio to less than 25% except to the extent permitted by
clauses (a) and (b) above. As of December 31, 1995, no amount of retained
earnings was restricted under the Indenture or Articles.
Voting Rights. Each share of Common Stock is entitled to one vote on each
matter voted on at stockholders' meetings, except as otherwise provided in
the Articles, and to cumulative voting rights in the election of
directors. Shares of Preferred Stock and Preference Stock are not
entitled to vote for the election of directors or in respect of any other
matters, except as expressly provided in the Articles or as may be
required by law. The Articles give to holders of Preferred Stock and
Preference Stock certain special voting rights designed to protect their
interest with respect to specified corporate action. In addition, in
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certain events relating to dividends in default on Preferred Stock,
holders of Preferred Stock as a class are entitled to elect a majority of
the full Board of Directors; and in certain events relating to dividends
in default on the Preference Stock, holders of Preference Stock as a class
are entitled to elect two directors.
Liquidation Rights. Upon the liquidation or dissolution of KU, the
holders of Preferred Stock and the Preference Stock are entitled to be
paid designated amounts out of the net assets of KU in preference to the
Common Stock. After such payment to holders of Preferred Stock and
Preference Stock, the remaining assets and profits shall be distributed to
the holders of Common Stock.
Board of Directors. KU's Bylaws provide for a Board of Directors
comprised of from nine to eleven members as determined from time to time
by the Board. The Board currently has eleven members. KU's Articles
provide for the classification of the Board of Directors into groups with
directors being elected for three-year terms subject to certain rights of
holders of Preferred Stock and Preference Stock to elect directors.
Preemptive Rights. Holders of KU's Stock have no preemptive right to
subscribe for stock or securities of KU.
Call of Special Meetings. KU's Articles provide that no meeting of
shareholders (except for certain meetings called by holders of Preferred
Stock or Preference Stock) may be called by shareholders unless called by
the holders of at least 51 percent of all the votes entitled to be cast on
each issue proposed to be considered at the special meeting.
Miscellaneous. The outstanding shares of Common Stock of KU are fully
paid and non-assessable.
Under Kentucky and Virginia law, KU may amend the Articles to increase,
decrease or adjust its capital stock or any class thereof or otherwise
amend any provision of the Articles or any amendment thereto, in the
manner permitted by law, subject, however, to the limitations prescribed
in the Articles; and all rights conferred on stockholders in the Articles
or any amendment thereto are subject to the foregoing.
The Transfer Agents of the Common Stock are Illinois Stock Transfer
Company, Chicago, Illinois, and Harris Trust and Savings Bank, Chicago,
Illinois; and the Registrar is Harris Trust and Savings Bank, Chicago,
Illinois.
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