EXHIBIT 99.A
DESCRIPTION OF COMMON STOCK
General. The authorized capital stock of KU Energy consists of
20,000,000 shares of preferred stock, without par value, issuable
in series of which none is outstanding, and 160,000,000 shares of
common stock, without par value, of which 37,817,878 were
outstanding at December 31, 1993. Kentucky Utilities, KU Energy's
subsidiary, has authorized capital stock of 5,300,000 shares of
Cumulative Preferred Stock, without par value, issuable in
series, of which 600,000 shares, $100 per share stated value,
were outstanding at December 31, 1993; 2,000,000 shares of
Preference Stock, without par value, issuable in series, of which
no shares are outstanding; and 80,000,000 shares of common stock,
of which 37,817,878 shares, all owned by KU Energy, were
outstanding at December 31, 1993. Kentucky Utilities has issued
and outstanding $441,830,000 in aggregate principal amount of
First Mortgage Bonds of various series under its First Mortgage
Indenture ("Kentucky Utilities' Mortgage Indenture").
The following statements, unless the context otherwise indicates,
are brief summaries of the substance or general effect of certain
provisions of KU Energy's Amended and Restated Articles of
Incorporation, as amended, ("KU Energy's Articles") or the
Amended and Restated Articles of Incorporation, as amended, of
Kentucky Utilities' and the resolutions or amendments
establishing series of Kentucky Utilities Preferred Stock and
Preference Stock (collectively, "Kentucky Utilities' Articles"),
and of Kentucky Utilities' Mortgage Indenture securing its
outstanding First Mortgage Bonds. Such statements make use of
defined terms and are not complete; they are subject to all the
provisions of KU Energy's Articles, Kentucky Utilities' Articles
or Kentucky Utilities' Mortgage Indenture, as the case may be.
Dividend Rights. Dividends on Common Stock of KU Energy will
depend in the foreseeable future primarily upon the earnings,
financial condition and capital requirements of Kentucky
Utilities. The ability of KU Energy to pay dividends on its
Common Stock would be limited to the extent Kentucky Utilities is
limited in its right to pay dividends on or acquire Kentucky
Utilities Common Stock.
Whenever dividends on all outstanding shares of Kentucky
Utilities Preferred and Preference Stock of all series for all
previous quarter-yearly dividend periods and the current quarter-
yearly dividend period shall have been paid or declared and set
apart for payment, and whenever all amounts required to be set
aside for any sinking fund for the redemption or purchase of
shares of the Kentucky Utilities Preferred or Preference Stock
for all previous periods or dates shall have been paid or set
aside, and subject to the limitations summarized below, the
Kentucky Utilities Board of Directors may declare dividends on
Kentucky Utilities Common Stock out of any surplus or net profits
of Kentucky Utilities legally available for that purpose.
Kentucky Utilities' Mortgage Indenture provides, in effect, that,
so long as certain currently outstanding series of First Mortgage
Bonds are outstanding, Kentucky Utilities will not declare or pay
any dividends (other than in stock) on Kentucky Utilities Common
Stock, or make any other distribution on or purchase any Kentucky
Utilities Common Stock, unless the total amount charged or
-113-
provided for maintenance, repairs and depreciation of the
mortgaged properties subsequent to May 1, 1947, plus the surplus
earned during the period and remaining after any such dividend,
distribution or purchase, shall equal at least 15% of Kentucky
Utilities' total utility operating revenues for the period, after
deducting from such revenues the cost of electricity purchased
for resale. Kentucky Utilities' Articles provide in effect that,
so long as any Kentucky Utilities Preferred Stock is outstanding,
the total amount of all dividends or other distributions on
Kentucky Utilities Common Stock (other than in stock) that may be
paid, and purchases of Kentucky Utilities Common Stock that may
be made, during any 12-month period shall not exceed (a) 75% of
Kentucky Utilities' net income (as defined) for the 12-month
period next preceding each such dividend, distribution or
purchase, if the ratio of "common stock equity" to "total
capital" (as defined) is 20% to 25%, or (b) 50% of such net
income if such ratio is less than 20%. If such ratio is in
excess of 25% , no such dividends may be paid or distributions or
purchases made that would reduce such ratio to less than 25%
except to the extent permitted by clauses (a) and (b). At
December 31, 1993, no amount of retained earnings was restricted
as to the payment of dividends on Kentucky Utilities Common Stock
under the foregoing provisions of Kentucky Utilities' Mortgage
Indenture or Kentucky Utilities' Articles.
Voting Rights. The shares of KU Energy's Common Stock entitle
the holders thereof to one vote for each share upon all matters
upon which shareholders have the right to vote, subject to any
special voting rights, if any, which may vest in the holders of
KU Energy's preferred stock. KU Energy's preferred stock may be
issued in series, each of which will be identical except for such
relative rights and preferences with respect to the matters
listed in the next sentence as may be determined by the Board of
Directors of KU Energy. The Board of Directors of KU Energy may
determine, for each series of preferred stock, the number of
shares and the rate of dividend (or method of determining
dividends) to be borne by the shares of each such series, the
voting rights, if any, the stated value, if any, and the
preferences with respect to distributions including dividends and
distributions upon dissolution of shares of such series, the
price or prices at which, and other terms and conditions on
which, shares of each series may be redeemed, and the sinking
fund provisions, if any, for the redemption or purchase of shares
of each such series, the conversion privileges, if any, and may
change redeemed or re-acquired shares of any such series into
shares of another series, subject, however, to such restrictions
and limitations as are or may be, from time to time provided
by law or contained in KU Energy's Articles. If a quorum
consisting of a majority of the shares outstanding and entitled
to vote on the matter is present (either in person or by proxy)
at a shareholders' meeting, action on a matter (other than the
election of directors) by a voting group shall be approved if the
votes cast within the voting group favoring the action exceed the
votes cast opposing the action, (i) except as described under
"Board of Directors" below, (ii) except that directors are
elected by cumulative voting and (iii) unless a greater vote is
required by law.
Shareholder Rights. KU Energy has a shareholder rights plan
designed to provide protection to shareholders in the event of an
unsolicited attempt to acquire KU Energy. Under the shareholder
-114-
rights plan, KU Energy shareholders will receive as a dividend
one right for each share of KU Energy common stock. Should
certain events occur - for instance, an acquirer becomes the
beneficial owner of 20 percent or more of KU Energy's outstanding
voting stock without approval by KU Energy or certain
transactions occur following an acquirer becoming the beneficial
owner of 10 percent or more of such voting stock without KU
Energy approval, each right would entitle the holder, other than
the acquirer, to purchase common shares of KU Energy or shares of
any company that acquires KU Energy at a discount from the market
value. In certain circumstances, KU Energy may redeem the rights
at a price of $.01 per right. The rights expire in February
2002.
Preemptive Rights. Holders of KU Energy's securities have no
preemptive subscription rights.
Liquidation Rights. In the event of any liquidation or
dissolution of KU Energy, holders of Common Stock are entitled to
receive the net assets of KU Energy except to the extent of the
preferential rights, if any, of the holders of KU Energy's
preferred stock as may be established from time to time in
accordance with KU Energy's Articles.
Board of Directors. KU Energy'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 ten
members. KU Energy's Articles provide for the classification of
the Board of Directors into groups with directors being elected
for three-year terms. Under KU Energy's Articles, the article
providing for the classification of the Board of Directors may
not be altered, amended or repealed and no provision inconsistent
with such article may be adopted without the vote of 80 percent
of the shares entitled to vote generally, voting as a class.
Cumulative Voting. KU Energy's Articles provide for the election
of directors by cumulative voting.
Amendments to the Registrant's Articles. Except as set forth
under "Board of Directors" above, KU Energy's Articles may be
amended or repealed, if the number of shares voted in favor of
such amendment exceeded the number of shares voted against such
amendment by each voting group or, if such amendment would give
rise to dissenters' rights, by the affirmative vote of the
holders of a majority of the outstanding shares of KU Energy
entitled to vote on such amendment (which would include the
Common Stock and any series of preferred stock which, by its
terms or applicable law, was so entitled to vote), unless any
class or series of shares is entitled to vote as a class in
respect thereof, in which event the proposed amendment must be
approved in addition by the required vote of each class or series
of shares entitled to vote as a class in respect thereof.
Call of Special Meetings. KU Energy's Articles provide that no
meeting of shareholders 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 Transfer Agents for 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.
The outstanding shares of Common Stock of KU Energy are fully
paid and nonassessable.
KU Energy reserves the right to increase, decrease or reclassify
its authorized capital stock or any class or series thereof, and
to amend or repeal any provisions of KU Energy's Articles, in the
manner prescribed by law, subject to the limitations described in
KU Energy's Articles; and all rights conferred on shareholders in
KU Energy's Articles are subject to this reservation.
-115-