AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
among
KANSAS CITY POWER & LIGHT COMPANY
KC MERGER SUB, INC.,
UTILICORP UNITED INC.,
and
KC UNITED CORP.
Dated as of January 19, 1996
As amended and restated as of May 20, 1996
TABLE OF CONTENTS
ARTICLE I THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 The Mergers. . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Effects of the Mergers . . . . . . . . . . . . . . . . . 2
Section 1.3 Effective Time of the Mergers. . . . . . . . . . . . . . 3
ARTICLE II TREATMENT OF SHARES . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1 Effect of the Mergers on Capital Stock . . . . . . . . . 3
Section 2.2 Issuance of New Certificates . . . . . . . . . . . . . . 4
ARTICLE III THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF KCPL AND SUB. . . . . . . . 7
Section 4.1 Organization and Qualification . . . . . . . . . . . . . 7
Section 4.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . 8
Section 4.4 Authority; Non-Contravention; Statutory Approvals;
Compliance. . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.5 Reports and Financial Statements . . . . . . . . . . . . 11
Section 4.6 Absence of Certain Changes or Events . . . . . . . . . . 12
Section 4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.8 Registration Statement and Proxy Statement . . . . . . . 12
Section 4.9 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.10 Employee Matters; ERISA. . . . . . . . . . . . . . . . . 15
Section 4.11 Environmental Protection . . . . . . . . . . . . . . . . 17
Section 4.12 Regulation as a Utility. . . . . . . . . . . . . . . . . 19
Section 4.13 Vote Required. . . . . . . . . . . . . . . . . . . . . . 19
Section 4.14 Accounting Matters . . . . . . . . . . . . . . . . . . . 19
Section 4.15 Article Twelfth of KCPL's Restated Articles of
Consolidation . . . . . . . . . . . . . . . . . . . . . 20
Section 4.16 Opinion of Financial Advisor . . . . . . . . . . . . . . 20
Section 4.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.18 KCPL Not a Related Person. . . . . . . . . . . . . . . . 20
Section 4.19 Representations With Respect to Sub. . . . . . . . . . . 20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF UCU . . . . . . . . . . . . 21
Section 5.1 Organization and Qualification . . . . . . . . . . . . . 21
Section 5.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.3 Capitalization . . . . . . . . . . . . . . . . . . . . . 22
Section 5.4 Authority; Non-Contravention; Statutory Approvals;
Compliance. . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.5 Reports and Financial Statements . . . . . . . . . . . . 24
Section 5.6 Absence of Certain Changes or Events . . . . . . . . . . 25
i
Section 5.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.8 Registration Statement and Proxy Statement . . . . . . . 25
Section 5.9 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.10 Employee Matters; ERISA. . . . . . . . . . . . . . . . . 27
Section 5.11 Environmental Protection . . . . . . . . . . . . . . . . 29
Section 5.12 Regulation as a Utility. . . . . . . . . . . . . . . . . 31
Section 5.13 Vote Required. . . . . . . . . . . . . . . . . . . . . . 31
Section 5.14 Accounting Matters . . . . . . . . . . . . . . . . . . . 31
Section 5.15 Article Eight of UCU's Certificate of Incorporation. . . 31
Section 5.16 Opinion of Financial Advisor . . . . . . . . . . . . . . 31
Section 5.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.18 UCU Not an Interested Shareholder. . . . . . . . . . . . 32
Section 5.19 Cash Resources for Redemption of UCU Preferred Stock . . 32
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGERS . . . . . . . . . . . 32
Section 6.1 Covenants of the Parties . . . . . . . . . . . . . . . . 32
ARTICLE VII ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . 39
Section 7.1 Access to Information. . . . . . . . . . . . . . . . . . 39
Section 7.2 Joint Proxy Statement and Registration Statement . . . . 39
Section 7.3 Regulatory Matters . . . . . . . . . . . . . . . . . . . 40
Section 7.4 Shareholder Approval . . . . . . . . . . . . . . . . . . 41
Section 7.5 Directors' and Officers' Indemnification . . . . . . . . 41
Section 7.6 Public Announcements . . . . . . . . . . . . . . . . . . 43
Section 7.7 Rule 145 Affiliates. . . . . . . . . . . . . . . . . . . 43
Section 7.8 Employee Agreements and Workforce Matters. . . . . . . . 43
Section 7.9 Employee Benefit Plans . . . . . . . . . . . . . . . . . 44
Section 7.10 Stock Option and Other Stock Plans . . . . . . . . . . . 45
Section 7.11 No Solicitations . . . . . . . . . . . . . . . . . . . . 47
Section 7.12 Surviving Corporation Board of Directors . . . . . . . . 48
Section 7.13 Surviving Corporation Officers . . . . . . . . . . . . . 48
Section 7.14 Employment Contracts . . . . . . . . . . . . . . . . . . 49
Section 7.15 Post-Merger Operations . . . . . . . . . . . . . . . . . 49
Section 7.16 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.17 Further Assurances . . . . . . . . . . . . . . . . . . . 49
Section 7.18 Termination of Company's Obligations . . . . . . . . . . 49
ARTICLE VIII CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.1 Conditions to Each Party's Obligation to Effect the
Mergers . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.2 Conditions to Obligation of UCU to Effect the Mergers. . 51
Section 8.3 Conditions to Obligation of KCPL and Sub to Effect the
Mergers . . . . . . . . . . . . . . . . . . . . . . . . 52
ii
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . 53
Section 9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.2 Effect of Termination. . . . . . . . . . . . . . . . . . 55
Section 9.3 Termination Fee; Expenses. . . . . . . . . . . . . . . . 55
Section 9.4 Amendment. . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE X GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . 57
Section 10.1 Non-Survival; Effect of Representations and Warranties . 57
Section 10.2 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.4 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 59
Section 10.5 Interpretation . . . . . . . . . . . . . . . . . . . . . 59
Section 10.6 Counterparts; Effect . . . . . . . . . . . . . . . . . . 59
Section 10.7 Parties' Interest. . . . . . . . . . . . . . . . . . . . 59
Section 10.8 Waiver of Jury Trial and Certain Damages . . . . . . . . 60
Section 10.9 Enforcement. . . . . . . . . . . . . . . . . . . . . . . 60
iii
INDEX OF PRINCIPAL TERMS
Term Page
- ---- ----
1935 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Affiliate Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Amendment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Atomic Energy Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Cancelled Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Closing Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .39
Consolidating Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidating Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DLJ. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Environmental Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Environmental Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Final Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Indemnified Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Indemnified Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Initial Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . .54
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
iv
Term Page
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Joint Proxy/Registration Statement . . . . . . . . . . . . . . . . . . . . . .39
KCPL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
KCPL Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
KCPL Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
KCPL Cumulative Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . 8
KCPL Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
KCPL Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . .11
KCPL Incentive Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
KCPL Incentive Stock Plan. . . . . . . . . . . . . . . . . . . . . . . . . . .44
KCPL Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
KCPL Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . .12
KCPL Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
KCPL No Par Preferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
KCPL Preference Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
KCPL Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
KCPL Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
KCPL Required Statutory Approvals. . . . . . . . . . . . . . . . . . . . . . .10
KCPL SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
KCPL Shareholders' Approval. . . . . . . . . . . . . . . . . . . . . . . . . .19
KCPL Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
KCPL Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
KCPL Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merrill Lynch. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
MGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
NRC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Original Merger Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
PCBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Power Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Representatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Sub. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sub Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
v
Term Page
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Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Surviving Corporation Incentive Plan . . . . . . . . . . . . . . . . . . . . .45
Surviving Corporation Replacement Plans. . . . . . . . . . . . . . . . . . . .45
Surviving Corporation Stock Awards . . . . . . . . . . . . . . . . . . . . . .46
Surviving Corporation Stock Benefits . . . . . . . . . . . . . . . . . . . . .46
Surviving Corporation Stock Plan . . . . . . . . . . . . . . . . . . . . . . .45
Target Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Task Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Tax Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Three Year Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
UCU. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
UCU Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
UCU Class A Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . .22
UCU Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
UCU Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
UCU Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
UCU Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .25
UCU Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
UCU Incentive Stock Plan . . . . . . . . . . . . . . . . . . . . . . . . . . .44
UCU Joint Venture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
UCU Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . .25
UCU Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
UCU Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
UCU Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
UCU Required Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
UCU Required Statutory Approvals . . . . . . . . . . . . . . . . . . . . . . .23
UCU SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
UCU Shareholders' Approval . . . . . . . . . . . . . . . . . . . . . . . . . .31
UCU Stock Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
UCU Stock Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
UCU Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Voting Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
vi
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"),
dated as of January 19, 1996 (the "ORIGINAL EXECUTION DATE"), as amended and
restated as of May 20, 1996 (the "AMENDMENT DATE"), by and among Kansas City
Power & Light Company, a Missouri corporation ("KCPL"), KC Merger Sub, Inc.
("SUB"), UtiliCorp United Inc., a Delaware corporation ("UCU"), and KC United
Corp., a Delaware corporation (the "COMPANY").
WHEREAS, KCPL, UCU and the Company have entered into an Agreement and
Plan of Merger, dated as of January 19, 1996 (the "Original Merger Agreement"),
and the parties to the Original Merger Agreement wish to amend and restate such
Original Merger Agreement in its entirety, add Sub as a party thereto and
eliminate the Company as a party thereto;
WHEREAS, KCPL and UCU have determined to engage in a business
combination as peer firms;
WHEREAS, in furtherance thereof, the respective Boards of Directors of
KCPL, Sub, UCU and the Company have approved this Agreement and the merger of
Sub with and into UCU, with UCU being the surviving corporation (the "UCU
MERGER"), and the Board of Directors of KCPL has approved the further merger of
UCU (as the surviving corporation in the UCU Merger) with and into KCPL, with
KCPL being the surviving corporation (the "CONSOLIDATING MERGER," and together
with the UCU Merger, the "MERGERS");
WHEREAS, it is intended that the Mergers shall be recorded for
accounting purposes as a pooling-of-interests; and
WHEREAS, for United States federal income tax purposes, it is intended
that the Mergers together shall constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"),
and this Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368(b) of the Code.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGERS
Section 1.1 THE MERGERS. Upon the terms and subject to the
conditions of this Agreement:
(i) THE UCU MERGER. At the UCU Effective Time (as defined in
SECTION 1.3), Sub shall be merged with and into UCU in accordance with the
laws of the State of Delaware. UCU shall be the surviving corporation in
the UCU Merger and shall continue its corporate existence under the laws of
the State of Delaware. The effects and the consequences of the UCU Merger
shall be as set forth in Section 1.2(a). The surviving corporation after
the UCU Merger is sometimes referred to herein as the "UCU Surviving
Corporation."
(ii) THE CONSOLIDATING MERGER. At the Consolidating Effective
Time (as defined in SECTION 1.3), UCU shall be merged with and into KCPL in
accordance with the laws of the States of Missouri and Delaware. KCPL
shall be the surviving corporation in the Consolidating Merger and shall
continue its corporate existence under the laws of the State of Missouri.
KCPL after the Consolidating Effective Time is sometimes referred to herein
as the "Surviving Corporation." The effects and the consequences of the
Consolidating Merger shall be as set forth in Section 1.2(b).
Section 1.2 EFFECTS OF THE MERGERS. (a) At the UCU Effective
Time, (i) the Certificate of Incorporation of UCU, as in effect immediately
prior to the UCU Effective Time, shall be the Certificate of Incorporation of
the UCU Surviving Corporation until thereafter amended as provided by law and
such Certificate of Incorporation, and (ii) the by-laws of UCU, as in effect
immediately prior to the UCU Effective Time, shall be the by-laws of the UCU
Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the UCU Surviving Corporation and such by-laws.
Subject to the foregoing, the additional effects of the UCU Merger shall be as
provided in the applicable provisions of the Delaware General Corporation Law
(the "DGCL").
(b) At the Consolidating Effective Time, (i) the Restated Articles of
Consolidation of KCPL, as in effect immediately prior to the Consolidating
Effective Time and as amended in respect of clause (iii) of this Section 1.2(b),
shall be the Restated Articles of Consolidation of the Surviving Corporation
until thereafter amended as provided by law and such Restated Articles of
Consolidation, (ii) the by-laws of KCPL, as in effect immediately prior to the
Consolidating Effective Time, shall be the by-laws of the Surviving Corporation
until thereafter amended as provided by law, the Restated Articles of
Consolidation of the Surviving Corporation and such by-laws, and (iii) the name
of the Surviving Corporation shall be such name as KCPL and UCU shall mutually
agree. Subject to the foregoing, the additional effects of the Consolidating
Merger shall be as provided in the applicable provisions of the DGCL and the
Missouri General and Business Corporation Law (the "MGCL").
2
Section 1.3 EFFECTIVE TIME OF THE MERGERS. On the Closing Date (as
defined in SECTION 3.1), (a) with respect to the UCU Merger, a certificate of
merger complying with the requirements of the DGCL shall be executed and filed
by UCU and Sub with the Secretary of State of the State of Delaware, and (b)
with respect to the Consolidating Merger, articles of merger shall be executed
and filed by KCPL and the UCU Surviving Corporation with the Secretary of State
of the State of Missouri pursuant to the MGCL and a certificate of merger shall
be executed and filed by KCPL and the UCU Surviving Corporation with the
Secretary of State of the State of Delaware pursuant to the DGCL. The UCU
Merger shall become effective at the time specified in the certificate of merger
filed with respect to the UCU Merger (the "UCU EFFECTIVE TIME"). The
Consolidating Merger shall become effective at the later of (i) the time of the
issuance of the certificate of merger with respect to the Consolidating Merger
by the Secretary of State of the State of Missouri and (ii) the time that the
certificate of merger filed with respect to the Consolidating Merger shall be
duly filed with the Secretary of State of the State of Delaware (the
"CONSOLIDATING EFFECTIVE TIME" or the "EFFECTIVE TIME"). The effective time
specified in the certificate of merger to be filed with respect to the UCU
Merger shall be prior to the effective time specified in the articles of merger
and certificate of merger filed with respect to the Consolidating Merger.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 EFFECT OF THE MERGERS ON CAPITAL STOCK. (a) As of the
UCU Effective Time, by virtue of the UCU Merger and without any action on the
part of any holder of any capital stock of UCU or Sub:
(i) CAPITAL STOCK OF UCU AND SUB. Subject to Section 2.1(a)(ii) and
Section 2.2, (x) each issued and outstanding share of Common Stock, $0.01
par value per share, of Sub ("SUB COMMON STOCK") will be converted into and
become one fully paid and nonassessable share of Common Stock, $1.00 par
value per share, of the UCU Surviving Corporation and (y) each issued and
outstanding share of Common Stock, $1.00 par value per share, of UCU ("UCU
COMMON STOCK"), (other than shares of UCU Common Stock owned by KCPL or UCU
either directly or through a wholly owned Subsidiary (as defined in SECTION
4.1)), shall be converted into and become 1.0 (the "CONVERSION RATIO")
fully paid and nonassessable shares of Common Stock, no par value, of KCPL
("KCPL COMMON STOCK"). All such shares of UCU Common Stock shall no longer
be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a Certificate (as defined in SECTION
2.2(B)), formerly representing any such shares shall cease to have any
rights with respect to such shares, except the right to receive shares of
KCPL Common Stock to be issued in consideration therefor upon the surrender
of such Certificate in accordance with Section 2.2.
3
(ii) CANCELLATION OF CERTAIN UCU COMMON STOCK. Any shares of UCU
Common Stock that are owned by UCU as treasury stock or by KCPL or by any
wholly owned Subsidiary of UCU or KCPL shall be cancelled and retired and
shall cease to exist and no stock of KCPL or other consideration shall be
issued or delivered in exchange therefor.
(iii) REDEMPTION OF KCPL PREFERRED STOCK. Prior to the UCU
Effective Time, the Board of Directors of KCPL shall call for redemption
all outstanding shares of KCPL Preferred Stock (as defined in SECTION 4.3),
at a redemption price equal to the amount set forth in the Restated
Articles of Consolidation of KCPL, together with all dividends accrued and
unpaid to the date of such redemption. All shares of KCPL Preferred Stock
shall be redeemed so that no such shares shall be deemed to be outstanding
at the UCU Effective Time or entitled to vote on the approval of this
Agreement and the transactions contemplated hereby.
(iv) REDEMPTION OF UCU PREFERRED STOCK. The Board of Directors of UCU
shall take all action necessary to cause all outstanding shares of UCU
Preferred Stock (as defined in SECTION 5.3) to be redeemed on March 3, 1997
or on such later date as KCPL and UCU shall mutually agree, at a redemption
price equal to the amount set forth in the Certificate of Incorporation of
UCU, together with all dividends accrued and unpaid to the date of such
redemption. All shares of UCU Preferred Stock shall be redeemed so that no
such shares shall be deemed to be outstanding at the UCU Effective Time or
entitled to vote on the approval of this Agreement and the transactions
contemplated hereby. The redemption price shall be paid in cash by UCU
from its own cash resources or its own line of credit. UCU and KCPL agree
that under no circumstances shall the payment of the redemption price be
financed, guaranteed, secured, loaned, reimbursed or otherwise facilitated
or provided directly or indirectly by KCPL or any of the KCPL Subsidiaries.
(b) As of the Consolidating Effective Time, by virtue of the
Consolidating Merger and without any action on the part of any holder of any
capital stock of KCPL or the UCU Surviving Corporation, each issued and
outstanding share of capital stock of the UCU Surviving Corporation shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist.
Section 2.2 ISSUANCE OF NEW CERTIFICATES.
(a) DEPOSIT WITH EXCHANGE AGENT. As soon as practicable after the
UCU Effective Time, KCPL shall deposit, in trust for the benefit of holders of
Certificates, with such bank or trust company mutually agreeable to UCU and KCPL
(the "EXCHANGE AGENT"), certificates representing shares of KCPL Common Stock
required to effect the issuance referred to in Section 2.1(a)(i), together with
cash payable in respect of fractional shares pursuant to Section 2.2(d).
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(b) ISSUANCE PROCEDURES. As soon as practicable after the UCU
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates (the "CERTIFICATES") which immediately prior to the
UCU Effective Time represented outstanding shares of UCU Common Stock (the
"CANCELLED SHARES") that were cancelled and became instead the right to receive
shares of KCPL Common Stock (the "KCPL SHARES") pursuant to Section 2.1(a)(i):
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
actual delivery of the Certificates to the Exchange Agent) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing KCPL Shares. Upon surrender of a Certificate to the
Exchange Agent for cancellation (or to such other agent or agents as may be
appointed by agreement of KCPL and UCU), together with a duly executed letter of
transmittal and such other documents as the Exchange Agent shall require, the
holder of such Certificate shall be entitled to receive a certificate or
certificates representing that number of whole KCPL Shares which such holder has
the right to receive pursuant to the provisions of this Article II. In the
event of a transfer of ownership of Cancelled Shares which is not registered in
the transfer records of UCU, a certificate representing the proper number of
KCPL Shares may be issued to a transferee if the Certificate representing such
Cancelled Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence
satisfactory to the Exchange Agent that any applicable stock transfer taxes have
been paid. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the UCU Effective Time to
represent only the right to receive upon such surrender the certificate
representing KCPL Shares and cash in lieu of any fractional shares of KCPL
Common Stock as contemplated by this Section 2.2.
(c) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED SHARES. No dividends
or other distributions declared or made after the UCU Effective Time with
respect to KCPL Shares with a record date after the UCU Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the KCPL
Shares represented thereby and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.2(d) until the holder of
record of such Certificate shall surrender such Certificate. Subject to the
effect of unclaimed property, escheat and other applicable laws, following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole KCPL Shares issued in consideration
therefor, without interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional share of KCPL Common Stock to which such
holder is entitled pursuant to Section 2.2(d) and the amount of dividends or
other distributions with a record date after the UCU Effective Time theretofore
paid with respect to such whole KCPL Shares and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the UCU Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole KCPL Shares.
(d) NO FRACTIONAL SECURITIES. No certificates or scrip representing
fractional shares of KCPL Common Stock shall be issued upon the surrender for
exchange of
5
Certificates and such fractional shares shall not entitle the owner
thereof to vote or to any other rights of a holder of KCPL Common Stock. A
holder of UCU Common Stock who would otherwise have been entitled to a
fractional share of KCPL Common Stock shall be entitled to receive a cash
payment in lieu of such fractional share in an amount equal to the product of
such fraction multiplied by the average of the last reported sales price,
regular way, per share of KCPL Common Stock on the New York Stock Exchange
("NYSE") Composite Tape for the five business days prior to and including the
last business day on which KCPL Common Stock was traded on the NYSE, without any
interest thereon.
(e) BOOK ENTRY. Notwithstanding any other provision of this
Agreement, the letter of transmittal referred to in Section 2.2(b) may, at the
option of KCPL, provide for the ability of a holder of one or more Certificates
to elect that KCPL Shares to be received in exchange for the Cancelled Shares
formerly represented by such surrendered Certificates be issued in
uncertificated form or to elect that such KCPL Shares be credited to an account
established for the holder under the dividend reinvestment and stock purchase
plan of KCPL.
(f) CLOSING OF TRANSFER BOOKS. From and after the UCU Effective
Time, the stock transfer books of UCU shall be closed and no registration of any
transfer of any capital stock of UCU shall thereafter be made on the records of
UCU. If, after the UCU Effective Time, Certificates are presented to KCPL, they
shall be cancelled and exchanged for certificates representing the appropriate
number of KCPL Shares, as provided in this Section 2.2.
(g) TERMINATION OF EXCHANGE AGENT. Any certificates representing
KCPL Shares deposited with the Exchange Agent pursuant to Section 2.2(a) and not
exchanged within one year after the UCU Effective Time pursuant to this Section
2.2 shall be returned by the Exchange Agent to KCPL, which shall thereafter act
as Exchange Agent. All funds held by the Exchange Agent for payment to the
holders of unsurrendered Certificates and unclaimed at the end of one year from
the UCU Effective Time shall be returned to KCPL; after which time any holder of
unsurrendered Certificates shall look as a general creditor only to KCPL for
payment of such funds to which such holder may be due, subject to applicable
law. KCPL shall not be liable to any person for such shares or funds delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law. As used in this Agreement, the term "PERSON" shall mean any
natural person, corporation, general or limited partnership, limited liability
company, joint venture, trust, association or entity of any kind.
6
ARTICLE III
THE CLOSING
Section 3.1 CLOSING. The closing of the Mergers (the "CLOSING")
shall take place at the offices of Blackwell Sanders Matheny Weary & Lombardi
L.C., 2300 Main, Suite 1100, Kansas City, Missouri 64108 at 10:00 A.M., local
time, on the second business day immediately following the date on which the
last of the conditions set forth in Article VIII hereof is fulfilled or waived,
or at such other time, date and place as KCPL and UCU shall mutually agree (the
"CLOSING DATE"); PROVIDED, HOWEVER, that the Closing Date shall not occur before
March 3, 1997.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF KCPL AND SUB
KCPL makes the representations and warranties to UCU contained in
Sections 4.1 to 4.18 hereof. KCPL and Sub make the representations and
warranties to UCU contained in Section 4.19 hereof. Notwithstanding anything in
this Agreement to the contrary, any representation or warranty which is
qualified by reference to the KCPL Disclosure Schedule (as defined in SECTION
4.1 hereof) shall be deemed to be made as of the Original Execution Date. To
the extent that the KCPL Disclosure Schedule would be incomplete or inaccurate
as of the Original Execution Date by virtue of the change in structure of the
Mergers reflected in this Agreement as compared to the Original Merger
Agreement, KCPL shall deliver a revised or updated KCPL Disclosure Schedule not
later than 30 days after the Amendment Date and any changes reflected in such
revised or updated KCPL Disclosure Schedule shall be deemed to be made as of the
Original Execution Date. KCPL shall have no obligation to update the KCPL
Disclosure Schedule for any changes of facts or circumstances other than those
resulting from a change in the structure of the Mergers as set forth above.
Section 4.1 ORGANIZATION AND QUALIFICATION. Except as set forth in
Section 4.1 of the schedule delivered by KCPL on the Original Execution Date
(the "KCPL DISCLOSURE SCHEDULE"), KCPL and each of the other KCPL Subsidiaries
(as defined below) and, to the knowledge of KCPL, each of the KCPL Joint
Ventures (as defined below) is a corporation or other entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority, and has
been duly authorized by all necessary approvals and orders to own, lease and
operate its assets and properties to the extent owned, leased and operated and
to carry on its business as it is now being conducted and is duly qualified and
in good standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and properties makes such
qualification necessary other than in such jurisdictions where the failure so to
qualify would not have a material adverse effect on KCPL and the KCPL
Subsidiaries taken as a whole. As used in this Agreement, (a) the term
"SUBSIDIARY" of a person shall mean any corporation or other entity (including
partnerships and other business associations) of which at least a majority of
the voting power represented by the outstanding capital stock or other voting
securities or interests having voting power under ordinary circumstances to
elect directors or similar members of the governing body of such corpora-
7
tion or entity shall at the time be held, directly or indirectly, by such
person, (b) the term "KCPL SUBSIDIARY" shall mean a Subsidiary of KCPL
including Sub (it being understood that references to "Subsidiary" or "KCPL
Subsidiary" made with respect to a date when Sub was not in existence shall
not be deemed to include Sub), and (c) the term "KCPL JOINT VENTURE" shall
mean each entity identified as such on Section 4.1 of the KCPL Disclosure
Schedule.
Section 4.2 SUBSIDIARIES. Section 4.2 of the KCPL Disclosure
Schedule sets forth a list as of the Original Execution Date of (a) all the KCPL
Subsidiaries and (b) all other entities in which KCPL has an aggregate equity
investment in excess of $25 million. Except as set forth in Section 4.2 of the
KCPL Disclosure Schedule, neither KCPL nor any of the KCPL Subsidiaries is a
"holding company," a "subsidiary company" or an "affiliate" of any public
utility company within the meaning of Section 2(a)(7), 2(a)(8) or 2(a)(11) of
the Public Utility Holding Company Act of 1935, as amended (the "1935 ACT"),
respectively and none of the KCPL Subsidiaries is a "public utility company"
within the meaning of Section 2(a)(5) of the 1935 Act. Except as set forth in
Section 4.2 of the KCPL Disclosure Schedule, all of the issued and outstanding
shares of capital stock of each KCPL Subsidiary are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned, directly or
indirectly, by KCPL free and clear of any liens, claims, encumbrances, security
interests, charges and options of any nature whatsoever and there are no
outstanding subscriptions, options, calls, contracts, voting trusts, proxies or
other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating any such KCPL Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating it to grant, extend or enter into any
such agreement or commitment.
Section 4.3 CAPITALIZATION. As of the Original Execution Date, the
authorized capital stock of KCPL consists of 150,000,000 shares of KCPL Common
Stock, without par value, 404,357 shares of Cumulative Preferred Stock, par
value $100.00 per share ("KCPL CUMULATIVE PREFERRED"), 1,572,000 shares of
Cumulative No Par Preferred Stock, without par value ("KCPL NO PAR PREFERRED"),
and 11,000,000 shares of Preference Stock, without par value ("KCPL PREFERENCE
STOCK") (KCPL Cumulative Preferred, KCPL No Par Preferred and KCPL Preference
Stock hereinafter collectively referred to as the "KCPL PREFERRED STOCK"). At
the close of business on December 31, 1995, (i) 61,908,726 shares of KCPL Common
Stock were issued, not more than 10,000,000 shares of KCPL Common Stock were
reserved for issuance pursuant to KCPL's Long Term Incentive Plan and Employee
Savings Plus Plan (401(k) Plan) and Dividend Reinvestment Plan (such Plans,
collectively, the "KCPL STOCK PLANS"), (ii) 6,643 shares of KCPL Common Stock
were held by KCPL in its treasury or by its wholly owned Subsidiaries,
(iii) 404,357 shares of KCPL Cumulative Preferred were issued and of such issued
shares, 3,192 were held by KCPL in its treasury or by its wholly owned
Subsidiaries, (iv) 500,000 shares of KCPL No Par Preferred were outstanding and
none were held by KCPL or its Subsidiaries in its treasury, (v) no shares of
KCPL Preference Stock were outstanding and (vi) no bonds, debentures, notes or
other indebtedness having the right to vote (or convertible into securities
having the right to
8
vote) on any matters on which stockholders may vote ("VOTING DEBT"), were
issued or outstanding. All outstanding shares of KCPL Common Stock and KCPL
Preferred Stock are validly issued, fully paid and nonassessable and are not
subject to preemptive rights. As of the Original Execution Date, except as
set forth in Section 4.3 of the KCPL Disclosure Schedule or pursuant to this
Agreement and the KCPL Stock Plans, there are no options, warrants, calls,
rights, commitments or agreements of any character to which KCPL or any
material KCPL Subsidiary is a party or by which it is bound obligating KCPL
or any material KCPL Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or any Voting
Debt securities of KCPL or any material KCPL Subsidiary or obligating KCPL or
any material KCPL Subsidiary to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Except as set forth in
Section 4.3 of the KCPL Disclosure Schedule, or other than in connection with
the KCPL Stock Plans, after the UCU Effective Time, there will be no option,
warrant, call, right, commitment or agreement obligating KCPL or any material
KCPL Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, any shares of capital stock or any Voting Debt of KCPL or any
material KCPL Subsidiary, or obligating KCPL or any material KCPL Subsidiary
to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement.
Section 4.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. KCPL has all requisite power and authority to enter
into this Agreement and, subject to the receipt of the applicable KCPL
Shareholders' Approval (as defined in SECTION 4.13) and the applicable KCPL
Required Statutory Approvals (as defined in SECTION 4.4(C)), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation by KCPL of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of KCPL, subject
to obtaining the applicable KCPL Shareholders' Approval. This Agreement has
been duly and validly executed and delivered by KCPL and, assuming the due
authorization, execution and delivery hereof by the other signatories hereto,
constitutes the valid and binding obligation of KCPL enforceable against it in
accordance with the terms of this Agreement.
(b) NON-CONTRAVENTION. Except as set forth in Section 4.4(b) of the
KCPL Disclosure Schedule, the execution and delivery of this Agreement by KCPL
does not, and the consummation of the transactions contemplated hereby will not,
in any respect, violate, conflict with or result in a material breach of any
provision of, or constitute a material default (with or without notice or lapse
of time or both) under, or result in the termination or modification of, or
accelerate the performance required by, or result in a right of termination,
cancellation or acceleration of any obligation or the loss of a material benefit
under, or result in the creation of any material lien, security interest, charge
or encumbrance upon any of the properties or assets of KCPL or any of the KCPL
Subsidiaries or the KCPL Joint Ventures (any such violation, conflict, breach,
default, right of termination, modification, cancellation or acceleration, loss
or creation, is referred to herein as a "VIOLATION" with
9
respect to KCPL and such term when used in Article V having a correlative
meaning with respect to UCU) pursuant to any provisions of (i) the Restated
Articles of Consolidation, by-laws or similar governing documents of KCPL or
any of the KCPL Subsidiaries or the KCPL Joint Ventures, (ii) subject to
obtaining the KCPL Required Statutory Approvals and the receipt of the KCPL
Shareholders' Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any
Governmental Authority (as defined in SECTION 4.4(C)) applicable to KCPL or
any of the KCPL Subsidiaries or the KCPL Joint Ventures or any of their
respective properties or assets or (iii) subject to obtaining the third-party
consents set forth in Section 4.4(b) of the KCPL Disclosure Schedule (the
"KCPL REQUIRED CONSENTS"), any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which KCPL or any of the
KCPL Subsidiaries or the KCPL Joint Ventures is a party or by which it or any
of its properties or assets may be bound or affected, except in the case of
clause (ii) or (iii) for any such Violation which would not have a KCPL
Material Adverse Effect (as defined in SECTION 4.6).
(c) STATUTORY APPROVALS. No declaration, filing or registration
with, or notice to or authorization, consent or approval of, any court, federal,
state, local or foreign governmental or regulatory body (including a stock
exchange or other self-regulatory body) or authority (each, a "GOVERNMENTAL
AUTHORITY") is necessary for the execution and delivery of this Agreement by
KCPL or the consummation by KCPL of the transactions contemplated hereby except
as described in Section 4.4(c) of the KCPL Disclosure Schedule or the failure of
which to obtain would not result in a KCPL Material Adverse Effect (the "KCPL
REQUIRED STATUTORY APPROVALS," it being understood that references in this
Agreement to "obtaining" such KCPL Required Statutory Approvals shall mean
making such declarations, filings or registrations; giving such notices;
obtaining such authorizations, consents or approvals; and having such waiting
periods expire as are necessary to avoid a violation of law).
(d) COMPLIANCE. Except as set forth in Section 4.4(d), Section 4.7,
Section 4.10 or Section 4.11 of the KCPL Disclosure Schedule, or as disclosed in
the KCPL SEC Reports (as defined in SECTION 4.5) filed prior to the Original
Execution Date, neither KCPL nor any of the KCPL Subsidiaries nor, to the
knowledge of KCPL, any KCPL Joint Venture is in violation of, is, to the
knowledge of KCPL, under investigation with respect to any violation of, or has
been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any Governmental
Authority, except for possible violations which individually or in the aggregate
would not have a KCPL Material Adverse Effect. Except as set forth in Section
4.4(d) of the KCPL Disclosure Schedule or in Section 4.11 of the KCPL Disclosure
Schedule, or as expressly disclosed in the KCPL SEC Reports, KCPL and the KCPL
Subsidiaries and, to the knowledge of KCPL, the KCPL Joint Ventures have all
permits, licenses, franchises and other governmental authorizations, consents
and approvals necessary to conduct their businesses as presently conducted which
are material to the operation of the businesses of KCPL and the KCPL
Subsidiaries. Except as set forth in Section 4.4(d) of the KCPL Disclosure
Schedule, KCPL and each of the
10
KCPL Subsidiaries and, to the knowledge of KCPL, the KCPL Joint Ventures is
not in breach or violation of or in default in the performance or observance
of any term or provision of, and no event has occurred which, with lapse of
time or action by a third party, could result in a default by KCPL or any
KCPL Subsidiary or, to the knowledge of KCPL, KCPL Joint Venture under (i)
its articles of incorporation or by-laws or (ii) any contract, commitment,
agreement, indenture, mortgage, loan agreement, note, lease, bond, license,
approval or other instrument to which it is a party or by which KCPL or any
KCPL Subsidiary or KCPL Joint Venture is bound or to which any of its
property is subject, except for possible violations, breaches or defaults
which individually or in the aggregate would not have a KCPL Material Adverse
Effect.
Section 4.5 REPORTS AND FINANCIAL STATEMENTS. The filings required
to be made by KCPL and the KCPL Subsidiaries and KCPL Joint Ventures since
January 1, 1991 under the Securities Act of 1933, as amended (the "SECURITIES
ACT"); the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"); the
1935 Act; the Federal Power Act (the "POWER ACT"); the Atomic Energy Act of
1954, as amended (the "ATOMIC ENERGY ACT") and applicable state public utility
laws and regulations have been filed with the Securities and Exchange Commission
(the "SEC"), the Federal Energy Regulatory Commission (the "FERC"), the Nuclear
Regulatory Commission ("NRC") or the appropriate state public utilities
commission, as the case may be, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, and complied, as of their respective dates, in
all material respects with all applicable requirements of the appropriate
statutes and the rules and regulations thereunder, except for such filings the
failure of which to have been made would not result in a KCPL Material Adverse
Effect. KCPL has made available to UCU a true and complete copy of each report,
schedule, registration statement and definitive proxy statement filed with the
SEC by KCPL pursuant to the requirements of the Securities Act or Exchange Act
since January 1, 1991 (as such documents have since the time of their filing
been amended, the "KCPL SEC REPORTS"). As of their respective dates, the KCPL
SEC Reports did not contain any 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, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and unaudited
interim financial statements of KCPL included in the KCPL SEC Reports
(collectively, the "KCPL FINANCIAL STATEMENTS") have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
("GAAP") (except as may be indicated therein or in the notes thereto and except
with respect to unaudited statements as permitted by Form 10-Q of the SEC) and
fairly present the financial position of KCPL as of the dates thereof and the
results of its operations and cash flows for the periods then ended, subject, in
the case of the unaudited interim financial statements, to normal, recurring
audit adjustments. True, accurate and complete copies of the Restated Articles
of Consolidation and by-laws of KCPL, as in effect on the Original Execution
Date, are included (or incorporated by reference) in the KCPL SEC Reports.
11
Section 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the KCPL SEC Reports filed prior to the Original Execution Date or
as set forth in Section 4.6 of the KCPL Disclosure Schedule, since December 31,
1994, KCPL and each of the KCPL Subsidiaries have conducted their business only
in the ordinary course of business consistent with past practice and there has
not been, and no fact or condition exists which would have or, insofar as
reasonably can be foreseen, could have, a material adverse effect on the
business, assets, financial condition, results of operations or prospects of
KCPL and the KCPL Subsidiaries taken as a whole (a "KCPL MATERIAL ADVERSE
EFFECT").
Section 4.7 LITIGATION. Except as disclosed in the KCPL SEC
Reports filed prior to the Original Execution Date or as set forth in Section
4.7, Section 4.9 or Section 4.11 of the KCPL Disclosure Schedule, (a) there are
no claims, suits, actions or proceedings by any court, governmental department,
commission, agency, instrumentality or authority or any arbitrator, pending or,
to the knowledge of KCPL, threatened, nor are there, to the knowledge of KCPL,
any investigations or reviews by any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator pending or threatened
against, relating to or affecting KCPL or any of the KCPL Subsidiaries or, to
the knowledge of KCPL, the KCPL Joint Ventures which would have a KCPL Material
Adverse Effect, (b) there have not been any significant developments since
December 31, 1994 with respect to such disclosed claims, suits, actions,
proceedings, investigations or reviews that would have a KCPL Material Adverse
Effect and (c) there are no judgments, decrees, injunctions, rules or orders of
any court, governmental department, commission, agency, instrumentality or
authority or any arbitrator applicable to KCPL or any of the KCPL Subsidiaries
or, to the knowledge of KCPL, applicable to any of the KCPL Joint Ventures,
except for such that would not have a KCPL Material Adverse Effect.
Section 4.8 REGISTRATION STATEMENT AND PROXY STATEMENT. None of
the information supplied or to be supplied by or on behalf of KCPL for inclusion
or incorporation by reference in (a) the registration statement on Form S-4 or
any post-effective amendment to a registration statement on Form S-4 to be filed
with the SEC by KCPL in connection with the issuance of shares of KCPL Common
Stock in the UCU Merger (the "REGISTRATION STATEMENT") will, at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (b) the joint proxy
statement, in definitive form, relating to the meetings of KCPL and UCU
shareholders to be held in connection with the Mergers and the transactions
related thereto (the "PROXY STATEMENT") will, at the dates mailed to
shareholders and at the times of the meetings of shareholders to be held in
connection with the Mergers, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Registration Statement and the Proxy
Statement will comply as to form in all material respects with the provisions of
the Securities Act and the Exchange Act and the rules and regulations
thereunder.
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Section 4.9 TAX MATTERS. "TAXES," as used in this Agreement, means
any federal, state, county, local or foreign taxes, charges, fees, levies or
other assessments, including all net income, gross income, sales and use, AD
VALOREM, transfer, gains, profits, excise, franchise, real and personal
property, gross receipt, capital stock, production, business and occupation,
disability, employment, payroll, license, estimated, stamp, custom duties,
severance or withholding taxes or charges imposed by any governmental entity,
and includes any interest and penalties (civil or criminal) on or additions to
any such taxes. "TAX RETURN," as used in this Agreement, means a report, return
or other information required to be supplied to a governmental entity with
respect to Taxes including, where permitted or required, combined or
consolidated returns for any group of entities that includes KCPL or any KCPL
Subsidiary or UCU or any UCU Subsidiary, as the case may be.
Except as set forth in Section 4.9 of the KCPL Disclosure Schedule:
(a) FILING OF TIMELY TAX RETURNS. KCPL and each of the KCPL
Subsidiaries have filed (or there has been filed on its behalf) all Tax Returns
required to be filed by each of them under applicable law, except for those the
failure of which to file would not have a KCPL Material Adverse Effect. All
such Tax Returns were and are in all material respects true, complete and
correct and filed on a timely basis.
(b) PAYMENT OF TAXES. KCPL and each of the KCPL Subsidiaries have,
within the time and in the manner prescribed by law, paid all material Taxes
that are currently due and payable, except for those contested in good faith and
for which adequate reserves have been taken.
(c) TAX RESERVES. KCPL and the KCPL Subsidiaries have established on
their books and records reserves adequate to pay all material Taxes and reserves
for deferred income taxes in accordance with GAAP.
(d) TAX LIENS. There are no Tax liens upon the assets of KCPL or any
of the KCPL Subsidiaries except liens for Taxes not yet due.
(e) WITHHOLDING TAXES. KCPL and each of the KCPL Subsidiaries have
complied in all material respects with the provisions of the Code relating to
the withholding of Taxes, as well as similar provisions under any other laws,
and have, within the time and in the manner prescribed by law, withheld and paid
over to the proper governmental authorities all amounts required.
(f) EXTENSIONS OF TIME FOR FILING TAX RETURNS. Neither KCPL nor any
of the KCPL Subsidiaries has requested any extension of time within which to
file any Tax Return, which Tax Return has not since been filed.
13
(g) WAIVERS OF STATUTE OF LIMITATIONS. Neither KCPL nor any of the
KCPL Subsidiaries has executed any outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns.
(h) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. No audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of KCPL or any of the KCPL Subsidiaries.
(i) POWERS OF ATTORNEY. No power of attorney currently in force has
been granted by KCPL or any of the KCPL Subsidiaries concerning any Tax matter.
(j) TAX RULINGS. Neither KCPL nor any of the KCPL Subsidiaries has
received a Tax Ruling (as defined below) or entered into a Closing Agreement (as
defined below) with any taxing authority that would have a continuing adverse
effect after the Closing Date. "TAX RULING," as used in this Agreement, shall
mean a written ruling of a taxing authority relating to Taxes. "CLOSING
AGREEMENT," as used in this Agreement, shall mean a written and legally binding
agreement with a taxing authority relating to Taxes.
(k) AVAILABILITY OF TAX RETURNS. KCPL has made available to UCU
complete and accurate copies of (i) all federal and state income Tax Returns for
open years, and any amendments thereto, filed by KCPL or any of the KCPL
Subsidiaries, (ii) all audit reports or written proposed adjustments (whether
formal or informal) received from any taxing authority relating to any Tax
Return filed by KCPL or any of the KCPL Subsidiaries and (iii) any Closing
Agreements entered into by KCPL or any of the KCPL Subsidiaries with any taxing
authority.
(l) TAX SHARING AGREEMENTS. Neither KCPL nor any KCPL Subsidiary is
a party to any agreement relating to allocating or sharing of Taxes.
(m) CODE SECTION 280G. Neither KCPL nor any of the KCPL Subsidiaries
is a party to any agreement, contract or arrangement that could result in the
payment of any "excess parachute payments" within the meaning of Section 280G of
the Code or any amount that would be non-deductible pursuant to Section 162(m)
of the Code.
(n) LIABILITY FOR OTHERS. None of KCPL or any of the KCPL
Subsidiaries has any liability for Taxes of any person other than KCPL and the
KCPL Subsidiaries (i) under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local or foreign law), (ii) by contract, or (iii)
otherwise.
(o) SECTION 341(f). Neither KCPL nor any of the KCPL Subsidiaries
has, with regard to any assets or property held or acquired by any of them,
filed a consent to the application of Section 341(f)(2) of the Code, or agreed
to have Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as such term is defined in Section 341(f)(4) of the Code) owned by
KCPL or any of the KCPL Subsidiaries.
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Section 4.10 EMPLOYEE MATTERS; ERISA. Except as set forth in
Section 4.10 of the KCPL Disclosure Schedule:
(a) BENEFIT PLANS. Section 4.10(a) of the KCPL Disclosure Schedule
contains a true and complete list of each written or oral material employee
benefit plan, policy or agreement covering employees, former employees or
directors of KCPL and each of the KCPL Subsidiaries or their beneficiaries, or
providing benefits to such persons in respect of services provided to any such
entity, including, but not limited to, any employee benefit plans within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") and any severance or change in control agreement
(collectively, the "KCPL BENEFIT PLANS").
(b) CONTRIBUTIONS. All material contributions and other payments
required to be made by KCPL or any of the KCPL Subsidiaries to any KCPL Benefit
Plan (or to any person pursuant to the terms thereof) have been made or the
amount of such payment or contribution obligation has been reflected in the KCPL
Financial Statements.
(c) QUALIFICATION; COMPLIANCE. Each of the KCPL Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the Internal Revenue Service (the "IRS") to be so qualified,
and, to the best knowledge of KCPL, no circumstances exist that are reasonably
expected by KCPL to result in the revocation of any such determination. KCPL is
in compliance in all material respects with, and each of the KCPL Benefit Plans
is and has been operated in all material respects in compliance with, all
applicable laws, rules and regulations governing such plan, including, without
limitation, ERISA and the Code. Each KCPL Benefit Plan intended to provide for
the deferral of income, the reduction of salary or other compensation, or to
afford other income tax benefits, complies with the requirements of the
applicable provisions of the Code or other laws, rules and regulations required
to provide such income tax benefits. No prohibited transactions (as defined in
Section 406 or 407 of ERISA or Section 4975 of the Code) have occurred for which
a statutory exemption is not available with respect to any KCPL Benefit Plan,
and which could give rise to liability on the part of KCPL, any KCPL Benefit
Plan, or any fiduciary, party in interest or disqualified person with respect
thereto that would be material to KCPL or would be material to KCPL if it were
KCPL's liability.
(d) LIABILITIES. With respect to the KCPL Benefit Plans,
individually and in the aggregate, no event has occurred, and, to the best
knowledge of KCPL, there does not now exist any condition or set of
circumstances, that could subject KCPL or any of the KCPL Subsidiaries to any
material liability arising under the Code, ERISA or any other applicable law
(including, without limitation, any liability to any such plan or the Pension
Benefit Guaranty Corporation (the "PBGC")), or under any indemnity agreement to
which KCPL or any of the KCPL Subsidiaries is a party, excluding liability for
benefit claims and funding obligations payable in the ordinary course.
15
(e) WELFARE PLANS. None of the KCPL Benefit Plans that are "welfare
plans," within the meaning of Section 3(1) of ERISA, provide for any benefits
with respect to current or former employees for periods extending beyond their
retirement or other termination of service, other than continuation coverage
required to be provided under Section 4980B of the Code or Part 6 of Title I of
ERISA.
(f) DOCUMENTS MADE AVAILABLE. KCPL has made available to UCU a true
and correct copy of each collective bargaining agreement to which KCPL or any of
the KCPL Subsidiaries is a party or under which KCPL or any of the KCPL
Subsidiaries has obligations and, with respect to each KCPL Benefit Plan, where
applicable, (i) such plan and summary plan description, (ii) the most recent
annual report filed with the IRS, (iii) each related trust agreement, insurance
contract, service provider or investment management agreement (including all
amendments to each such document), (iv) the most recent determination of the IRS
with respect to the qualified status of such KCPL Benefit Plan, and (v) the most
recent actuarial report or valuation.
(g) PAYMENTS RESULTING FROM THE MERGERS. The consummation or
announcement of any transaction contemplated by this Agreement will not (either
alone or upon the occurrence of any additional or further acts or events,
including, without limitation, the termination of employment of any officers,
directors, employees or agents of KCPL or any of the KCPL Subsidiaries) result
in any (i) payment (whether of severance pay or otherwise) becoming due from
KCPL or any of the KCPL Subsidiaries or, to the knowledge of KCPL, any of the
KCPL Joint Ventures, to any officer, employee, former employee or director
thereof or to the trustee under any "rabbi trust" or similar arrangement, or
(ii) benefit under any KCPL Benefit Plan being established or becoming
accelerated, vested or payable.
(h) LABOR AGREEMENTS. As of the Original Execution Date, neither
KCPL nor any of the KCPL Subsidiaries is a party to any collective bargaining
agreement or other labor agreement with any union or labor organization. To the
best knowledge of KCPL, as of the Original Execution Date, there is no current
union representation question involving employees of KCPL or any of the KCPL
Subsidiaries, nor does KCPL know of any activity or proceeding of any labor
organization (or representative thereof) or employee group to organize any such
employees. Except as disclosed in the KCPL SEC Reports filed prior to the
Original Execution Date or except to the extent such would not have a KCPL
Material Adverse Effect, (i) there is no unfair labor practice, employment
discrimination or other material complaint against KCPL or any of the KCPL
Subsidiaries pending, or to the best knowledge of KCPL, threatened, (ii) there
is no strike, lockout or material dispute, slowdown or work stoppage pending or,
to the best knowledge of KCPL, threatened against or involving KCPL, and
(iii) there is no proceeding, claim, suit, action or governmental investigation
pending or, to the best knowledge of KCPL, threatened in respect of which any
director, officer, employee or agent of KCPL or any of the KCPL Subsidiaries is
or may be entitled to claim indemnification from KCPL or such KCPL Subsidiary
pursuant to their respective articles of incorporation or by-laws or as provided
in the indemnification agreements listed in Section 4.10(h) of the KCPL
Disclosure Schedule.
16
Section 4.11 ENVIRONMENTAL PROTECTION.
(a) Except as set forth in Section 4.11 of the KCPL Disclosure
Schedule or in the KCPL SEC Reports filed prior to the Original Execution Date:
(i) COMPLIANCE. KCPL and each of the KCPL Subsidiaries and, to
the knowledge of KCPL, the KCPL Joint Ventures is in compliance with all
applicable Environmental Laws (as defined in Section 4.11(c)(ii)) except
where the failure to so comply would not have a KCPL Material Adverse
Effect, and neither KCPL nor any of the KCPL Subsidiaries has received any
communication (written or oral), from any person or Governmental Authority
that alleges that KCPL or any of the KCPL Subsidiaries or the KCPL Joint
Ventures is not in such compliance with applicable Environmental Laws. To
the best knowledge of KCPL, compliance with all applicable Environmental
Laws including, without limitation, all laws relating to the storage,
handling, use and disposal of nuclear fuel or wastes, will not require KCPL
or any KCPL Subsidiary or, to the knowledge of KCPL, any KCPL Joint Venture
to incur costs beyond that currently budgeted in the five KCPL fiscal years
beginning with January 1, 1996 that will be reasonably likely to result in
a KCPL Material Adverse Effect, including but not limited to the costs of
KCPL and KCPL Subsidiary and KCPL Joint Venture pollution control equipment
or equipment for the storage, handling, use or disposal of nuclear fuel or
wastes, required or known to be required in the future.
(ii) ENVIRONMENTAL PERMITS. KCPL and each of the KCPL
Subsidiaries and, to the knowledge of KCPL, the KCPL Joint Ventures has
obtained or has applied for all environmental, health and safety permits
and governmental authorizations (collectively, the "ENVIRONMENTAL PERMITS")
necessary for the construction of their facilities or the conduct of their
operations except where the failure to so obtain would not have a KCPL
Material Adverse Effect, and all such Environmental Permits are in good
standing or, where applicable, a renewal application has been timely filed
and is pending agency approval, and KCPL and the KCPL Subsidiaries and, to
the knowledge of KCPL, the KCPL Joint Ventures are in material compliance
with all terms and conditions of the Environmental Permits.
(iii) ENVIRONMENTAL CLAIMS. There is no Environmental Claim
(as defined in SECTION 4.11(C)(I)) which would have a KCPL Material Adverse
Effect pending (A) against KCPL or any of the KCPL Subsidiaries or, to the
knowledge of KCPL, any of the KCPL Joint Ventures, (B) to the best
knowledge of KCPL, against any person or entity whose liability for any
Environmental Claim KCPL or any of the KCPL Subsidiaries or, to the
knowledge of KCPL, any of the KCPL Joint Ventures has or may have retained
or assumed either contractually or by operation of law, or (C) against any
real or personal property or operations which KCPL or any of the KCPL
Subsidiaries or, to the knowledge of KCPL, any of the KCPL Joint Ventures
owns, leases or manages, in whole or in part.
17
(iv) RELEASES. KCPL has no knowledge of any Releases (as defined
in SECTION 4.11(C)(IV)) of any Hazardous Material (as defined in SECTION
4.11(C)(III)) that would be reasonably likely to form the basis of any
Environmental Claim against KCPL or any of the KCPL Subsidiaries or the
KCPL Joint Ventures, or against any person or entity whose liability for
any Environmental Claim KCPL or any of the KCPL Subsidiaries or the KCPL
Joint Ventures has or may have retained or assumed either contractually or
by operation of law except for any Environmental Claim which would not have
a KCPL Material Adverse Effect.
(v) PREDECESSORS. KCPL has no knowledge, with respect to any
predecessor of KCPL or any of the KCPL Subsidiaries or the KCPL Joint
Ventures, of any Environmental Claim which would have a KCPL Material
Adverse Effect pending or threatened, or of any Release of Hazardous
Materials that would be reasonably likely to form the basis of any
Environmental Claim which would have a KCPL Material Adverse Effect.
(b) DISCLOSURE. To KCPL's best knowledge, KCPL has disclosed in
writing to UCU all facts which KCPL reasonably believes form the basis of an
Environmental Claim which would have a KCPL Material Adverse Effect arising from
(i) the cost of KCPL pollution control equipment currently required or known to
be required in the future, (ii) current KCPL remediation costs or KCPL
remediation costs known to be required in the future or (iii) any other
environmental matter affecting KCPL.
(c) DEFINITIONS. As used in this Agreement:
(i) "ENVIRONMENTAL CLAIM" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (written or oral) by any person or entity (including any
Governmental Authority) alleging potential liability (including, without
limitation, potential responsibility for or liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, removal
costs, remedial costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on or resulting from
(A) the presence, Release or threatened Release into the environment of any
Hazardous Materials at any location, whether or not owned, operated, leased
or managed by KCPL or any of the KCPL Subsidiaries or KCPL Joint Ventures
(for purposes of this Section 4.11) or by UCU or any of the UCU
Subsidiaries or UCU Joint Ventures (for purposes of Section 5.11); or (B)
circumstances forming the basis of any violation or alleged violation of
any Environmental Law or (C) any and all claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any Hazardous
Materials.
(ii) "ENVIRONMENTAL LAWS" means all federal, state and local
laws, rules and regulations relating to pollution, the environment
(including, without
18
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or protection of human health as it relates to the
environment including, without limitation, laws and regulations relating
to Releases or threatened Releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
(iii) "HAZARDOUS MATERIALS" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing polychlorinated
biphenyls ("PCBS"); (B) any chemicals, materials or substances which are
now defined as or included in the definition of "HAZARDOUS SUBSTANCES,"
"HAZARDOUS WASTES," "HAZARDOUS MATERIALS," "EXTREMELY HAZARDOUS WASTES,"
"RESTRICTED HAZARDOUS WASTES," "TOXIC SUBSTANCES," "TOXIC POLLUTANTS," or
words of similar import under any Environmental Law and (C) any other
chemical, material, substance or waste, exposure to which is now
prohibited, limited or regulated under any Environmental Law in a
jurisdiction in which KCPL or any of the KCPL Subsidiaries operates (for
purposes of this Section 4.11) or in which UCU or any of the UCU
Subsidiaries operates (for purposes of Section 5.11).
(iv) "RELEASE" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the atmosphere, soil, surface water, groundwater or property.
Section 4.12 REGULATION AS A UTILITY. KCPL is regulated as a public
utility in the States of Kansas and Missouri and in no other state. Except as
set forth in Section 4.12 of the KCPL Disclosure Schedule, neither KCPL nor any
"subsidiary company" or "affiliate" (as each such term is defined in the 1935
Act) of KCPL is subject to regulation as a public utility or public service
company (or similar designation) by any other state in the United States or any
foreign country.
Section 4.13 VOTE REQUIRED. Provided that the KCPL Preferred Stock
has been redeemed pursuant to Section 2.1, the approval of the issuance of the
shares of KCPL Common Stock to be issued in the UCU Merger by a majority of the
shares of KCPL Common Stock voting on such approval where the total number of
votes cast represents over 50 percent of all shares of KCPL Common Stock
outstanding on the record date for the meeting at which such vote is taken (the
"KCPL SHAREHOLDERS' APPROVAL") is the only vote of the holders of any class or
series of the capital stock of KCPL or any of its Subsidiaries that is required
to approve this Agreement, the Mergers and the other transactions contemplated
hereby.
Section 4.14 ACCOUNTING MATTERS. Neither KCPL, nor, to KCPL's best
knowledge, any of its Affiliates have taken or agreed to take any action that
would prevent Surviving Corporation from accounting for the transactions to be
effected pursuant to this Agreement as a pooling of interests in accordance with
GAAP and applicable SEC regula-
19
tions. As used in this Agreement, the term "AFFILIATE," except where
otherwise defined herein, shall mean, as to any person, any other person
which directly or indirectly controls, or is under common control with, or is
controlled by, such person. As used in this definition, "CONTROL"
(including, with its correlative meanings, "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise).
Section 4.15 ARTICLE TWELFTH OF KCPL'S RESTATED ARTICLES OF
CONSOLIDATION. The provisions of Article Twelfth of KCPL's Restated Articles of
Consolidation will not, prior to the termination of this Agreement, assuming the
accuracy of the representation contained in Section 5.18 (without giving effect
to the knowledge qualification thereof), apply to this Agreement, the Mergers or
to the transactions contemplated hereby.
Section 4.16 OPINION OF FINANCIAL ADVISOR. KCPL has received the
opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MERRILL LYNCH"),
dated as of the Amendment Date, to the effect that, as of the date thereof, the
Conversion Ratio is fair from a financial point of view to the holders of KCPL
Common Stock.
Section 4.17 INSURANCE. Except as set forth in Section 4.17 of the
KCPL Disclosure Schedule, KCPL and each of the KCPL Subsidiaries is, and has
been continuously since January 1, 1991, insured with financially responsible
insurers in such amounts and against such risks and losses as are customary in
all material respects for companies conducting the business as conducted by KCPL
and the KCPL Subsidiaries during such time period. Except as set forth in
Section 4.17 of the KCPL Disclosure Schedule, neither KCPL nor any of the KCPL
Subsidiaries has received any notice of cancellation or termination with respect
to any material insurance policy of KCPL or any of the KCPL Subsidiaries. The
insurance policies of KCPL and each of the KCPL Subsidiaries are valid and
enforceable policies in all material respects.
Section 4.18 KCPL NOT A RELATED PERSON. As of the Original
Execution Date, neither KCPL nor, to KCPL's reasonable knowledge, any of its
Affiliates, is a "Related Person" as such term is defined in Article Eight of
UCU's Certificate of Incorporation.
Section 4.19 REPRESENTATIONS WITH RESPECT TO SUB. KCPL and Sub
represent and warrant to UCU as follows:
(a) Sub is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities, has conducted its operations only as contemplated hereby
and has no Subsidiaries.
20
(b) As of the Amendment Date, the authorized capital stock of Sub
consists of 1000 shares of Sub Common Stock, all of which are validly issued,
fully paid and nonassessable and are owned by KCPL.
(c) Sub has all requisite power and authority to enter into this
Agreement and, subject to the receipt of the applicable KCPL Required Statutory
Approvals, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation by Sub of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Sub. This Agreement has been duly and validly executed and
delivered by Sub and, assuming the due authorization, execution and delivery
hereof by the other signatories hereto, constitutes the valid and binding
obligation of Sub enforceable against it in accordance with the terms of this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF UCU
UCU makes the following representations and warranties to KCPL.
Notwithstanding anything in this Agreement to the contrary, any representation
or warranty which is qualified by reference to the UCU Disclosure Schedule (as
defined in SECTION 5.1 hereof) shall be deemed to be made as of the Original
Execution Date. To the extent that the UCU Disclosure Schedule would be
incomplete or inaccurate as of the Original Execution Date by virtue of the
change in structure of the Mergers reflected in this Agreement as compared to
the Original Merger Agreement, UCU shall deliver a revised or updated UCU
Disclosure Schedule not later than 30 days after the Amendment Date and any
changes reflected in such revised or updated UCU Disclosure Schedule shall be
deemed to be made as of the Original Execution Date. UCU shall have no
obligation to update the UCU Disclosure Schedule for any changes of facts or
circumstances other than those resulting from a change in the structure of the
Mergers as set forth above.
Section 5.1 ORGANIZATION AND QUALIFICATION. Except as set forth in
Section 5.1 of the schedule delivered by UCU on the Original Execution Date (the
"UCU DISCLOSURE SCHEDULE"), UCU and each of the UCU Subsidiaries (as defined
below) and, to the knowledge of UCU, each of the UCU Joint Ventures (as defined
below) is a corporation or other entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority, and has been duly
authorized by all necessary approvals and orders to own, lease and operate its
assets and properties to the extent owned, leased and operated and to carry on
its business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its assets and properties makes such
qualification necessary other than in such jurisdictions where the failure so to
qualify would not have a material adverse effect on UCU and the UCU
Subsidiaries taken as a whole. As used in this Agreement, (a) the term "UCU
SUBSIDIARY" shall mean a Subsidiary of UCU, and (b) the term "UCU JOINT VENTURE"
shall mean each entity identified as such on Section 5.1 of the UCU Disclosure
Schedule.
Section 5.2 SUBSIDIARIES. Section 5.2 of the UCU Disclosure
Schedule sets forth a list as of the Original Execution Date of (a) all the UCU
Subsidiaries and (b) all other entities in which UCU has an aggregate equity
investment in excess of $25 million. Except as set forth in Section 5.2 of the
UCU Disclosure Schedule, neither UCU nor any of the UCU Subsidiaries is a
"holding company," a "subsidiary company" or an "affiliate" of any
21
public utility company within the meaning of Section 2(a)(7), 2(a)(8) or
2(a)(11) of the 1935 Act, respectively, and none of the UCU Subsidiaries is a
"public utility company" within the meaning of Section 2(a)(5) of the 1935
Act. Except as set forth in Section 5.2 of the UCU Disclosure Schedule, all
of the issued and outstanding shares of capital stock of each UCU Subsidiary
are validly issued, fully paid, nonassessable and free of preemptive rights,
and are owned, directly or indirectly, by UCU free and clear of any liens,
claims, encumbrances, security interests, charges and options of any nature
whatsoever and there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating any such UCU Subsidiary to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of its capital stock
or obligating it to grant, extend or enter into any such agreement or
commitment.
Section 5.3 CAPITALIZATION. As of the Original Execution Date, the
authorized capital stock of UCU consists of 100,000,000 shares of UCU Common
Stock, par value $1.00 per share, 20,000,000 shares of Class A Common Stock, par
value $1.00 per share ("UCU CLASS A COMMON STOCK"), and 10,000,000 shares of
Preference Stock, without par value ("UCU PREFERRED STOCK"). At the close of
business on December 31, 1995, (i) 45,980,814 shares of UCU Common Stock were
issued, not more than 10,000,000 shares of UCU Common Stock were reserved for
issuance pursuant to UCU's Employee Stock Purchase Plan, 1986 Stock Incentive
Plan, 1992 Employee Non-Qualified Stock Option Plan, Bond Dividend Reinvestment
Plan, Non-Employee Director Plan, Dividend Reinvestment and Common Stock
Purchase Plan and 401(k) and Employee Stock Contribution Plan (such Plans,
collectively, the "UCU STOCK PLANS") and conversion of UCU's Convertible
Subordinated Debentures, (ii) 4252 shares of UCU Common Stock were held by UCU
in its treasury or by its wholly owned Subsidiaries, (iii) no shares of UCU
Class A Common Stock were issued or held by UCU or its Subsidiaries in its
treasury, (iv) 1,000,000 shares of UCU Preferred Stock were issued and of such
issued shares, none were held by UCU in its treasury or by its wholly owned
Subsidiaries and (v) except for UCU's Convertible Subordinated Debentures, due
July 1, 2011, no Voting Debt is issued or outstanding. All outstanding shares
of UCU Common Stock and UCU Preferred Stock are validly issued, fully paid and
nonassessable and are not subject to preemptive rights. As of the Original
Execution Date, except as set forth in Section 5.3 of the UCU Disclosure
Schedule or pursuant to this Agreement and the UCU Stock Plans, there are no
options, warrants, calls, rights, commitments or agreements of any character to
which UCU or any material UCU Subsidiary is a party or by which it is bound
obligating UCU or any material UCU Subsidiary to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or any
Voting Debt securities of UCU or any material UCU Subsidiary or obligating UCU
or any material UCU Subsidiary to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Except as set forth in Section
5.3 of the UCU Disclosure Schedule, or other than in connection with the UCU
Stock Plans, after the UCU Effective Time, there will be no option, warrant,
call, right, commitment or agreement obligating UCU or any material UCU
Subsidiary to issue, deliver or sell, or cause to be issued,
22
delivered or sold, any shares of capital stock or any Voting Debt of UCU or
any material UCU Subsidiary, or obligating UCU or any material UCU Subsidiary
to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement.
Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. UCU has all requisite power and authority to enter
into this Agreement and, subject to the receipt of the applicable UCU
Shareholders' Approval (as defined in SECTION 5.13) and the applicable UCU
Required Statutory Approvals (as defined in SECTION 5.4(C)), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation by UCU of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of UCU, subject to
obtaining the applicable UCU Shareholders' Approval. This Agreement has been
duly and validly executed and delivered by UCU and, assuming the due
authorization, execution and delivery hereof by the other signatories hereto,
constitutes the valid and binding obligation of UCU enforceable against it in
accordance with its terms.
(b) NON-CONTRAVENTION. Except as set forth in Section 5.4(b) of the
UCU Disclosure Schedule, the execution and delivery of this Agreement by UCU
does not, and the consummation of the transactions contemplated hereby will not,
result in a Violation pursuant to any provisions of (i) the certificate of
incorporation, by-laws or similar governing documents of UCU or any of the UCU
Subsidiaries or the UCU Joint Ventures, (ii) subject to obtaining the UCU
Required Statutory Approvals and the receipt of the UCU Shareholders' Approval,
any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority applicable to
UCU or any of the UCU Subsidiaries or the UCU Joint Ventures or any of their
respective properties or assets or (iii) subject to obtaining the third-party
consents set forth in Section 5.4(b) of the UCU Disclosure Schedule (the "UCU
REQUIRED CONSENTS"), any material note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which UCU or any of the UCU
Subsidiaries or the UCU Joint Ventures is a party or by which it or any of its
properties or assets may be bound or affected, except in the case of clause (ii)
or (iii) for any such Violation which would not have a UCU Material Adverse
Effect (as defined in SECTION 5.6 ).
(c) STATUTORY APPROVALS. No declaration, filing or registration
with, or notice to or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by UCU
or the consummation by UCU of the transactions contemplated hereby except as
described in Section 5.4(c) of the UCU Disclosure Schedule or the failure of
which to obtain would not result in a UCU Material Adverse Effect (the "UCU
REQUIRED STATUTORY APPROVALS," it being understood that references in this
Agreement to "obtaining" such UCU Required Statutory Approvals shall mean making
such declarations, filings or registrations; giving such notices; obtaining such
authorizations, consents or approvals; and having such waiting periods expire as
are necessary to avoid a violation of law).
23
(d) COMPLIANCE. Except as set forth in Section 5.4(d), Section 5.7,
Section 5.10 or Section 5.11 of the UCU Disclosure Schedule, or as disclosed in
the UCU SEC Reports (as defined in SECTION 5.5) filed prior to the Original
Execution Date, neither UCU nor any of the UCU Subsidiaries nor, to the
knowledge of UCU, any UCU Joint Venture is in violation of, is, to the knowledge
of UCU, under investigation with respect to any violation of, or has been given
notice or been charged with any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any Governmental Authority,
except for possible violations which individually or in the aggregate would not
have a UCU Material Adverse Effect. Except as set forth in Section 5.4(d) of
the UCU Disclosure Schedule or in Section 5.11 of the UCU Disclosure Schedule,
or as expressly disclosed in the UCU SEC Reports, UCU and the UCU Subsidiaries
and, to the knowledge of UCU, the UCU Joint Ventures have all permits, licenses,
franchises and other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently conducted which are material
to the operation of the businesses of UCU and the UCU Subsidiaries. Except as
set forth in Section 5.4(d) of the UCU Disclosure Schedule, UCU and each of the
UCU Subsidiaries and, to the knowledge of UCU, UCU Joint Ventures is not in
breach or violation of or in default in the performance or observance of any
term or provision of, and no event has occurred which, with lapse of time or
action by a third party, could result in a default by UCU or any UCU Subsidiary
or, to the knowledge of UCU, UCU Joint Venture under (i) its certificate of
incorporation or by-laws or (ii) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which it is a party or by which UCU or any UCU Subsidiary or UCU
Joint Venture is bound or to which any of its property is subject, except for
possible violations, breaches or defaults which individually or in the aggregate
would not have a UCU Material Adverse Effect.
Section 5.5 REPORTS AND FINANCIAL STATEMENTS. The filings required
to be made by UCU and the UCU Subsidiaries and UCU Joint Ventures since January
1, 1991 under the Securities Act, the Exchange Act, the 1935 Act, the Power Act
and applicable state public utility laws and regulations have been filed with
the SEC, the FERC or the appropriate state public utilities commission, as the
case may be, including all forms, statements, reports, agreements (oral or
written) and all documents, exhibits, amendments and supplements appertaining
thereto, and complied, as of their respective dates, in all material respects
with all applicable requirements of the appropriate statutes and the rules and
regulations thereunder, except for such filings the failure of which to have
been made would not result in a UCU Material Adverse Effect. UCU has made
available to KCPL a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed with the SEC by UCU
and by Aquila Gas Pipeline Corporation pursuant to the requirements of the
Securities Act or Exchange Act since January 1, 1991 (as such documents have
since the time of their filing been amended, the "UCU SEC REPORTS"). As of
their respective dates, the UCU SEC Reports did not contain any 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, in light of the
circumstances under which they were made, not misleading. The audited
24
consolidated financial statements and unaudited interim financial statements of
UCU and Aquila Gas Pipeline Corporation included in the UCU SEC Reports
(collectively, the "UCU FINANCIAL STATEMENTS") have been prepared in accordance
with GAAP (except as may be indicated therein or in the notes thereto and except
with respect to unaudited statements as permitted by Form 10-Q of the SEC) and
fairly present the financial position of UCU and Aquila Gas Pipeline Corporation
as of the dates thereof and the results of their respective operations and cash
flows for the periods then ended, subject, in the case of the unaudited interim
financial statements, to normal, recurring audit adjustments. True, accurate
and complete copies of the Certificate of Incorporation and by-laws of UCU and
Aquila Gas Pipeline Corporation, as in effect on the Original Execution Date,
are included (or incorporated by reference) in the UCU SEC Reports.
Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the UCU SEC Reports filed prior to the Original Execution Date or
as set forth in Section 5.6 of the UCU Disclosure Schedule, since December 31,
1994, UCU and each of the UCU Subsidiaries have conducted their business only in
the ordinary course of business consistent with past practice and there has not
been, and no fact or condition exists which would have or, insofar as reasonably
can be foreseen, could have, a material adverse effect on the business, assets,
financial condition, results of operations or prospects of UCU and the UCU
Subsidiaries taken as a whole (a "UCU MATERIAL ADVERSE EFFECT").
Section 5.7 LITIGATION. Except as disclosed in the UCU SEC Reports
filed prior to the Original Execution Date or as set forth in Section 5.7,
Section 5.9 or Section 5.11 of the UCU Disclosure Schedule, (a) there are no
claims, suits, actions or proceedings by any court, governmental department,
commission, agency, instrumentality or authority or any arbitrator, pending or,
to the knowledge of UCU, threatened, nor are there, to the knowledge of UCU, any
investigations or reviews by any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator pending or threatened
against, relating to or affecting UCU or any of the UCU Subsidiaries or, to the
knowledge of UCU, the UCU Joint Ventures which would have a UCU Material Adverse
Effect, (b) there have not been any significant developments since December 31,
1994 with respect to such disclosed claims, suits, actions, proceedings,
investigations or reviews that would have a UCU Material Adverse Effect and (c)
there are no judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority or any
arbitrator applicable to UCU or any of the UCU Subsidiaries or, to the knowledge
of UCU, applicable to any of the UCU Joint Ventures, except for such that would
not have a UCU Material Adverse Effect.
Section 5.8 REGISTRATION STATEMENT AND PROXY STATEMENT. None of
the information supplied or to be supplied by or on behalf of UCU for inclusion
or incorporation by reference in (a) the Registration Statement will, at the
time the Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (b) the Proxy
25
Statement will, at the dates mailed to shareholders and at the times of the
meetings of shareholders to be held in connection with the Mergers, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Registration Statement and the Proxy Statement will comply as to form in all
material respects with the provisions of the Securities Act and the Exchange Act
and the rules and regulations thereunder.
Section 5.9 TAX MATTERS. Except as set forth in Section 5.9 of the
UCU Disclosure Schedule:
(a) FILING OF TIMELY TAX RETURNS. UCU and each of the UCU
Subsidiaries have filed (or there has been filed on its behalf) all Tax Returns
required to be filed by each of them under applicable law, except for those the
failure of which to file would not have a UCU Material Adverse Effect. All such
Tax Returns were and are in all material respects true, complete and correct and
filed on a timely basis.
(b) PAYMENT OF TAXES. UCU and each of the UCU Subsidiaries have,
within the time and in the manner prescribed by law, paid all material Taxes
that are currently due and payable, except for those contested in good faith and
for which adequate reserves have been taken.
(c) TAX RESERVES. UCU and the UCU Subsidiaries have established on
their books and records reserves adequate to pay all material Taxes and reserves
for deferred income taxes in accordance with GAAP.
(d) TAX LIENS. There are no Tax liens upon the assets of UCU or any
of the UCU Subsidiaries except liens for Taxes not yet due.
(e) WITHHOLDING TAXES. UCU and each of the UCU Subsidiaries have
complied in all material respects with the provisions of the Code relating to
the withholding of Taxes, as well as similar provisions under any other laws,
and have, within the time and in the manner prescribed by law, withheld and paid
over to the proper governmental authorities all amounts required.
(f) EXTENSIONS OF TIME FOR FILING TAX RETURNS. Neither UCU nor any
of the UCU Subsidiaries has requested any extension of time within which to file
any Tax Return, which Tax Return has not since been filed.
(g) WAIVERS OF STATUTE OF LIMITATIONS. Neither UCU nor any of the
UCU Subsidiaries has executed any outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns.
26
(h) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. No audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of UCU or any of the UCU Subsidiaries.
(i) POWERS OF ATTORNEY. No power of attorney currently in force has
been granted by UCU or any of the UCU Subsidiaries concerning any Tax matter.
(j) TAX RULINGS. Neither UCU nor any of the UCU Subsidiaries has
received a Tax Ruling or entered into a Closing Agreement with any taxing
authority that would have a continuing adverse effect after the Closing Date.
(k) AVAILABILITY OF TAX RETURNS. UCU has made available to KCPL
complete and accurate copies of (i) all federal and state income Tax Returns for
open years, and any amendments thereto, filed by UCU or any of the UCU
Subsidiaries, (ii) all audit reports or written proposed adjustments (whether
formal or informal) received from any taxing authority relating to any Tax
Return filed by UCU or any of the UCU Subsidiaries and (iii) any Closing
Agreements entered into by UCU or any of the UCU Subsidiaries with any taxing
authority.
(l) TAX SHARING AGREEMENTS. Neither UCU nor any UCU Subsidiary is a
party to any agreement relating to allocating or sharing of Taxes.
(m) CODE SECTION 280G. Neither UCU nor any of the UCU Subsidiaries
is a party to any agreement, contract or arrangement that could result in the
payment of any "excess parachute payments" within the meaning of Section 280G of
the Code or any amount that would be non-deductible pursuant to Section 162(m)
of the Code.
(n) LIABILITY FOR OTHERS. None of UCU or any of the UCU Subsidiaries
has any liability for Taxes of any person other than UCU and the UCU
Subsidiaries (i) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law), (ii) by contract, or (iii) otherwise.
(o) SECTION 341(f). Neither UCU nor any of the UCU Subsidiaries has,
with regard to any assets or property held or acquired by any of them, filed a
consent to the application of Section 341(f)(2) of the Code, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by UCU or any
of the UCU Subsidiaries.
Section 5.10 EMPLOYEE MATTERS; ERISA. Except as set forth in
Section 5.10 of the UCU Disclosure Schedule:
(a) BENEFIT PLANS. Section 5.10(a) of the UCU Disclosure Schedule
contains a true and complete list of each written or oral material employee
benefit plan, policy or agreement covering employees, former employees or
directors of UCU and each of
27
the UCU Subsidiaries or their beneficiaries, or providing benefits to such
persons in respect of services provided to any such entity, including, but
not limited to, any employee benefit plans within the meaning of Section 3(3)
of ERISA and any severance or change in control agreement (collectively, the
"UCU BENEFIT PLANS").
(b) CONTRIBUTIONS. All material contributions and other payments
required to be made by UCU or any of the UCU Subsidiaries to any UCU Benefit
Plan (or to any person pursuant to the terms thereof) have been made or the
amount of such payment or contribution obligation has been reflected in the UCU
Financial Statements.
(c) QUALIFICATION; COMPLIANCE. Each of the UCU Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the IRS to be so qualified, and, to the best knowledge of
UCU, no circumstances exist that are reasonably expected by UCU to result in the
revocation of any such determination. UCU is in compliance in all material
respects with, and each of the UCU Benefit Plans is and has been operated in all
material respects in compliance with, all applicable laws, rules and regulations
governing such plan, including, without limitation, ERISA and the Code. Each
UCU Benefit Plan intended to provide for the deferral of income, the reduction
of salary or other compensation, or to afford other income tax benefits,
complies with the requirements of the applicable provisions of the Code or other
laws, rules and regulations required to provide such income tax benefits. No
prohibited transactions (as defined in Section 406 or 407 of ERISA or Section
4975 of the Code) have occurred for which a statutory exemption is not available
with respect to any UCU Benefit Plan, and which could give rise to liability on
the part of UCU, any UCU Benefit Plan, or any fiduciary, party in interest or
disqualified person with respect thereto that would be material to UCU or would
be material to UCU if it were UCU's liability.
(d) LIABILITIES. With respect to the UCU Benefit Plans, individually
and in the aggregate, no event has occurred, and, to the best knowledge of UCU,
there does not now exist any condition or set of circumstances, that could
subject UCU or any of the UCU Subsidiaries to any material liability arising
under the Code, ERISA or any other applicable law (including, without
limitation, any liability to any such plan or the PBGC), or under any indemnity
agreement to which UCU or any of the UCU Subsidiaries is a party, excluding
liability for benefit claims and funding obligations payable in the ordinary
course.
(e) WELFARE PLANS. None of the UCU Benefit Plans that are "welfare
plans," within the meaning of Section 3(1) of ERISA, provides for any benefits
with respect to current or former employees for periods extending beyond their
retirement or other termination of service, other than continuation coverage
required to be provided under Section 4980B of the Code or Part 6 of Title I of
ERISA.
(f) DOCUMENTS MADE AVAILABLE. UCU has made available to KCPL a true
and correct copy of each collective bargaining agreement to which UCU or any of
the UCU Subsidiaries is a party or under which UCU or any of the UCU
Subsidiaries has obligations
28
and, with respect to each UCU Benefit Plan, where applicable, (i) such plan
and summary plan description, (ii) the most recent annual report filed with
the IRS, (iii) each related trust agreement, insurance contract, service
provider or investment management agreement (including all amendments to each
such document), (iv) the most recent determination of the IRS with respect to
the qualified status of such UCU Benefit Plan, and (v) the most recent
actuarial report or valuation.
(g) PAYMENTS RESULTING FROM THE MERGERS. The consummation or
announcement of any transaction contemplated by this Agreement will not (either
alone or upon the occurrence of any additional or further acts or events,
including, without limitation, the termination of employment of any officers,
directors, employees or agents of UCU or any of the UCU Subsidiaries) result in
any (i) payment (whether of severance pay or otherwise) becoming due from UCU or
any of the UCU Subsidiaries or, to the knowledge of UCU, any of the UCU Joint
Ventures, to any officer, employee, former employee or director thereof or to
the trustee under any "rabbi trust" or similar arrangement, or (ii) benefit
under any UCU Benefit Plan being established or becoming accelerated, vested or
payable.
(h) LABOR AGREEMENTS. As of the Original Execution Date, neither UCU
nor any of the UCU Subsidiaries is a party to any collective bargaining
agreement or other labor agreement with any union or labor organization. To the
best knowledge of UCU, as of the Original Execution Date, there is no current
union representation question involving employees of UCU or any of the UCU
Subsidiaries, nor does UCU know of any activity or proceeding of any labor
organization (or representative thereof) or employee group to organize any such
employees. Except as disclosed in the UCU SEC Reports filed prior to the
Original Execution Date or except to the extent such would not have a UCU
Material Adverse Effect, (i) there is no unfair labor practice, employment
discrimination or other material complaint against UCU or any of the UCU
Subsidiaries pending, or to the best knowledge of UCU, threatened, (ii) there is
no strike, lockout or material dispute, slowdown or work stoppage pending or, to
the best knowledge of UCU, threatened against or involving UCU, and (iii) there
is no proceeding, claim, suit, action or governmental investigation pending or,
to the best knowledge of UCU, threatened in respect of which any director,
officer, employee or agent of UCU or any of the UCU Subsidiaries is or may be
entitled to claim indemnification from UCU or such UCU Subsidiary pursuant to
their respective articles of incorporation or by-laws or as provided in the
indemnification agreements listed in Section 5.10(h) of the UCU Disclosure
Schedule.
Section 5.11 ENVIRONMENTAL PROTECTION.
(a) Except as set forth in Section 5.11 of the UCU Disclosure Schedule
or in the UCU SEC Reports filed prior to the Original Execution Date:
(i) COMPLIANCE. UCU and each of the UCU Subsidiaries and, to
the knowledge of UCU, the UCU Joint Ventures is in compliance with all
applicable Environmental Laws except where the failure to so comply would
not have a UCU
29
Material Adverse Effect, and neither UCU nor any of the UCU Subsidiaries
has received any communication (written or oral), from any person or
Governmental Authority that alleges that UCU or any of the UCU
Subsidiaries or the UCU Joint Ventures is not in such compliance with
applicable Environmental Laws. To the best knowledge of UCU, compliance
with all applicable Environmental Laws will not require UCU or any UCU
Subsidiary or, to the knowledge of UCU, any UCU Joint Venture to incur
costs beyond that currently budgeted in the five UCU fiscal years beginning
with January 1, 1996 that will be reasonably likely to result in a UCU
Material Adverse Effect, including but not limited to the costs of UCU and
UCU Subsidiary and UCU Joint Venture pollution control equipment required
or known to be required in the future.
(ii) ENVIRONMENTAL PERMITS. UCU and each of the UCU Subsidiaries
and, to the knowledge of UCU, the UCU Joint Ventures has obtained or has
applied for all the Environmental Permits necessary for the construction of
their facilities or the conduct of their operations except where the
failure to so obtain would not have a UCU Material Adverse Effect, and all
such Environmental Permits are in good standing or, where applicable, a
renewal application has been timely filed and is pending agency approval,
and UCU and the UCU Subsidiaries and, to the knowledge of UCU, the UCU
Joint Ventures are in material compliance with all terms and conditions of
the Environmental Permits.
(iii) ENVIRONMENTAL CLAIMS. There is no Environmental Claim
which would have a UCU Material Adverse Effect pending (A) against UCU or
any of the UCU Subsidiaries or, to the knowledge of UCU, any of the UCU
Joint Ventures, (B) to the best knowledge of UCU, against any person or
entity whose liability for any Environmental Claim UCU or any of the UCU
Subsidiaries or, to the knowledge of UCU, any of the UCU Joint Ventures has
or may have retained or assumed either contractually or by operation of
law, or (C) against any real or personal property or operations which UCU
or any of the UCU Subsidiaries or, to the knowledge of UCU, any of the UCU
Joint Ventures owns, leases or manages, in whole or in part.
(iv) RELEASES. UCU has no knowledge of any Releases of any
Hazardous Material that would be reasonably likely to form the basis of any
Environmental Claim against UCU or any of the UCU Subsidiaries or the UCU
Joint Ventures, or against any person or entity whose liability for any
Environmental Claim UCU or any of the UCU Subsidiaries or the UCU Joint
Ventures has or may have retained or assumed either contractually or by
operation of law except for any Environmental Claim which would not have a
UCU Material Adverse Effect.
(v) PREDECESSORS. UCU has no knowledge, with respect to any
predecessor of UCU or any of the UCU Subsidiaries or the UCU Joint
Ventures, of any Environmental Claim which would have a UCU Material
Adverse Effect pending or threatened, or of any Release of Hazardous
Materials that would be reasonably
30
likely to form the basis of any Environmental Claim which would have a UCU
Material Adverse Effect.
(b) DISCLOSURE. To UCU's best knowledge, UCU has disclosed in
writing to KCPL all facts which UCU reasonably believes form the basis of an
Environmental Claim which would have a UCU Material Adverse Effect arising from
(i) the cost of UCU pollution control equipment currently required or known to
be required in the future, (ii) current UCU remediation costs or UCU remediation
costs known to be required in the future or (iii) any other environmental matter
affecting UCU.
Section 5.12 REGULATION AS A UTILITY. UCU is regulated as a public
utility in the States of Colorado, Iowa, Kansas, Michigan, Missouri, Minnesota,
Nebraska, South Dakota and West Virginia and in no other state. Except as set
forth in Section 5.12 of the UCU Disclosure Schedule, neither UCU nor any
"subsidiary company" or "affiliate" (as each such term is defined in the 1935
Act) of UCU is subject to regulation as a public utility or public service
company (or similar designation) by any other state in the United States or any
foreign country.
Section 5.13 VOTE REQUIRED. Provided that the UCU Preferred Stock
has been redeemed pursuant to Section 2.1, the approval of the UCU Merger by the
holders of a majority of the voting power entitled to be cast by all holders of
UCU Common Stock (the "UCU SHAREHOLDERS' APPROVAL") is the only vote of the
holders of any class or series of the capital stock of UCU or any of its
Subsidiaries required to approve this Agreement, the Mergers and the other
transactions contemplated hereby.
Section 5.14 ACCOUNTING MATTERS. Neither UCU nor, to UCU's best
knowledge, any of its Affiliates has taken or agreed to take any action that
would prevent the Surviving Corporation from accounting for the transactions to
be effected pursuant to this Agreement as a pooling of interests in accordance
with GAAP and applicable SEC regulations.
Section 5.15 ARTICLE EIGHT OF UCU'S CERTIFICATE OF INCORPORATION.
The provisions of Article Eight of UCU's Certificate of Incorporation will not,
prior to the termination of this Agreement, assuming the accuracy of the
representation contained in Section 4.18 (without giving effect to the knowledge
qualification thereof), apply to this Agreement, the Mergers or to the
transactions contemplated hereby.
Section 5.16 OPINION OF FINANCIAL ADVISOR. UCU has received the
opinion of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), dated
the Amendment Date, to the effect that, as of the date thereof, the Conversion
Ratio is fair from a financial point of view to the holders of UCU Common Stock.
Section 5.17 INSURANCE. Except as set forth in Section 5.17 of the
UCU Disclosure Schedule, UCU and each of the UCU Subsidiaries is, and has been
continuously
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since January 1, 1991, insured with financially responsible insurers in such
amounts and against such risks and losses as are customary in all material
respects for companies conducting the business as conducted by UCU and the
UCU Subsidiaries during such time period. Except as set forth in Section
5.17 of the UCU Disclosure Schedule, neither UCU nor any of the UCU
Subsidiaries has received any notice of cancellation or termination with
respect to any material insurance policy of UCU or any of the UCU
Subsidiaries. The insurance policies of UCU and each of the UCU Subsidiaries
are valid and enforceable policies in all material respects.
Section 5.18 UCU NOT AN INTERESTED SHAREHOLDER. As of the Original
Execution Date, neither UCU nor, to its reasonable knowledge, any of its
Affiliates, is an "Interested Shareholder" as such term is defined in Article
Twelfth of KCPL's Restated Articles of Consolidation.
Section 5.19 CASH RESOURCES FOR REDEMPTION OF UCU PREFERRED STOCK.
UCU has and will continue to have sufficient cash resources or a sufficient line
of credit to enable UCU to redeem all the outstanding shares of UCU Preferred
Stock in the manner prescribed in Section 2.1(a)(iv) hereof.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGERS
Section 6.1 COVENANTS OF THE PARTIES. KCPL and UCU each agree,
each as to itself and to each of the KCPL Subsidiaries and the UCU Subsidiaries,
as the case may be, that after the Original Execution Date and prior to the UCU
Effective Time or earlier termination of this Agreement, except as expressly
contemplated or permitted in this Agreement or to the extent the other parties
hereto shall otherwise consent in writing, which decision regarding consent
shall be made as soon as reasonably practicable:
(a) ORDINARY COURSE OF BUSINESS. Each party hereto shall, and shall
cause its respective Subsidiaries to, carry on their respective businesses in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted and use all commercially reasonable efforts to preserve
intact their present business organizations and goodwill, preserve the goodwill
and relationships with customers, suppliers and others having business dealings
with them and, subject to prudent management of work force needs and ongoing
programs currently in force, keep available the services of their present
officers and employees, provided, however, that nothing shall prohibit either
party or any of its Subsidiaries from transferring operations to such party or
any of its wholly owned Subsidiaries. Except as set forth in Section 6.1(a) of
the KCPL Disclosure Schedule or Section 6.1(a) of the UCU Disclosure Schedule,
respectively, no party shall, nor shall any party permit any of its respective
Subsidiaries to, enter into a new line of business involving any material
investment of assets or resources or any material exposure to liability or loss,
in the case of
32
KCPL, to KCPL and the KCPL Subsidiaries taken as a whole, and in the case of
UCU, to UCU and the UCU Subsidiaries taken as a whole; provided, however,
that notwithstanding the above, a party or any of its respective Subsidiaries
may enter into a new line of business to the extent the investment (which
shall include the amount of equity invested plus the amount of indebtedness
incurred, assumed, or otherwise owed by or with recourse to UCU or KCPL, as
the case may be) in a new line of business does not exceed $10 million,
individually, and $25 million, in the aggregate, for all such investments
during any fiscal year;
(b) DIVIDENDS. No party shall, nor shall any party permit any of its
respective Subsidiaries to, (i) declare or pay any dividends on or make other
distributions in respect of any of their capital stock other than to such party
or its wholly owned Subsidiaries and other than (A) dividends required to be
paid on any UCU Preferred Stock or KCPL Preferred Stock in accordance with the
respective terms thereof, (B) regular quarterly dividends on KCPL Common Stock
with usual record and payment dates not, during any period of any fiscal year,
in excess of 105% of the dividends for the comparable period of the prior fiscal
year, (C) regular quarterly dividends on UCU Common Stock with usual record and
payment dates not, during any period of any fiscal year, in excess of 105% of
the dividends for the comparable period of the prior fiscal year and (D)
dividends by Aquila Gas Pipeline Corporation, UtiliCorp U.K., Inc., UtiliCorp
U.K. Limited, West Kootenay Power Ltd., UtiliCorp N.Z., Inc. and any
Subsidiaries of such entities, (ii) split, combine or reclassify any of their
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of their
capital stock or (iii) redeem, repurchase or otherwise acquire any shares of
their capital stock, other than (A) redemptions, purchases or acquisitions
required by the respective terms of any series of KCPL Preferred Stock or
(B) for the purpose of funding employee stock ownership plans in accordance with
past practice. Notwithstanding the foregoing, KCPL may redeem the KCPL
Preferred Stock pursuant to the provisions of Section 2.1, and UCU may redeem
the UCU Preferred Stock pursuant to the provisions of Section 2.1. The last
record date of each of KCPL and UCU on or prior to the UCU Effective Time which
relates to a regular quarterly dividend on KCPL Common Stock or UCU Common
Stock, as the case may be, shall be the same date and shall be prior to the UCU
Effective Time.
(c) ISSUANCE OF SECURITIES. Except as set forth in Section 6.1(c) of
the KCPL Disclosure Schedule or Section 6.1(c) of the UCU Disclosure Schedule,
no party shall, nor shall any party permit any of its Subsidiaries to, issue,
agree to issue, deliver, sell, award, pledge, dispose of or otherwise encumber
or authorize or propose the issuance, delivery, sale, award, pledge, disposal or
other encumbrance of, any shares of their capital stock of any class or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares or convertible or exchangeable securities,
other than (i) intercompany issuances of capital stock and (ii) issuances (A) in
the case of UCU and the UCU Subsidiaries, of up to 2,000,000 shares of UCU
Common Stock during any fiscal year to be issued pursuant to employee benefit
plans, stock option and other incentive compensation plans, directors plans and
stock purchase and dividend reinvestment
33
plans and (B) in the case of KCPL and the KCPL Subsidiaries, of up to
2,000,000 shares of KCPL Common Stock during any fiscal year to be issued
pursuant to employee benefit plans, stock option and other incentive
compensation plans, directors plans and stock purchase and dividend
reinvestment plans. The parties shall promptly furnish to each other such
information as may be reasonably requested including financial information
and take such action as may be reasonably necessary and otherwise fully
cooperate with each other in the preparation of any registration statement
under the Securities Act and other documents necessary in connection with
issuance of securities as contemplated by this Section 6.1(c), subject to
obtaining customary indemnities.
(d) CHARTER DOCUMENTS. No party shall amend or propose to amend its
respective charter, by-laws or regulations, or similar organic documents, except
as contemplated herein.
(e) NO ACQUISITIONS. Except as set forth in Section 6.1(e) of the
KCPL Disclosure Schedule or Section 6.1(e) the UCU Disclosure Schedule, other
than individual acquisitions by (i) KCPL and the KCPL Subsidiaries the
consummation of which would not exceed $25 million of equity invested nor
require the approval of the Board of Directors of KCPL, provided, that the
aggregate equity invested in all such acquisitions pursuant to this clause (e)
shall not exceed $150 million of equity invested during any fiscal year, or (ii)
UCU and the UCU Subsidiaries the consummation of which would not exceed $25
million of equity invested nor require the approval of the Board of Directors of
UCU, provided, that the aggregate equity invested in all such acquisitions
pursuant to this clause (e) shall not exceed $150 million of equity invested
during any fiscal year, no party shall, nor shall any party permit any of its
Subsidiaries to, acquire, or publicly propose to acquire, or agree to acquire,
by merger or consolidation with, or by purchase or otherwise, an equity interest
in or a substantial portion of the assets of, any business or any corporation,
partnership, association or other business organization or division thereof, nor
shall any party acquire or agree to acquire a material amount of assets other
than in the ordinary course of business consistent with past practice.
(f) CAPITAL EXPENDITURES. Except as set forth in Section 6.1(f) of
the KCPL Disclosure Schedule or Section 6.1(f) of the UCU Disclosure Schedule or
as required by law, no party shall, nor shall any party permit any of its
Subsidiaries to, make capital expenditures during any fiscal year in excess of
125% of the amount budgeted for such fiscal year by such party for capital
expenditures as set forth in Section 6.1(f) of the KCPL Disclosure Schedule or
Section 6.1(f) of the UCU Disclosure Schedule.
(g) NO DISPOSITIONS. Except as set forth in Section 6.1(g) of the
KCPL Disclosure Schedule or 6.1(g) of the UCU Disclosure Schedule, other than
dispositions by a party or its Subsidiaries of less than $25 million in sales
price and indebtedness assumed by the acquiring party and its Affiliates,
singularly or in the aggregate during any fiscal year, no party shall, nor shall
any party permit any of its Subsidiaries to, sell or dispose of any of its
34
assets other than dispositions in the ordinary course of its business
consistent with past practice.
(h) INDEBTEDNESS. Except as contemplated by this Agreement, no party
shall, nor shall any party permit any of its respective Subsidiaries to, incur
or guarantee any indebtedness (including any debt borrowed or guaranteed or
otherwise assumed including, without limitation, the issuance of debt securities
or warrants or rights to acquire debt) or enter into any "keep well" or other
agreement to maintain any financial statement condition of another person or
entity or enter into any arrangement having the economic effect of any of the
foregoing other than (i) indebtedness or guarantees or "keep well" or other
agreements in the ordinary course of business consistent with past practice
(such as the issuance of commercial paper, the use of existing credit facilities
or hedging activities), (ii) other indebtedness or "keep well" or other
agreements not aggregating more than $250 million, (iii) arrangements between
such party and its Subsidiaries or among its Subsidiaries, (iv) as set forth in
Section 6.1(h) of the KCPL Disclosure Schedule or Section 6.1(h) of the UCU
Disclosure Schedule, (v) in connection with the refunding of existing
indebtedness, (vi) in connection with the redemption of the KCPL Preferred Stock
as set forth in Section 2.1, (vii) in connection with the redemption of the UCU
Preferred Stock as set forth in Section 2.1 or (viii) as may be necessary in
connection with acquisitions permitted by Section 6.1(e) or capital expenditures
permitted by Section 6.1(f).
(i) COMPENSATION, BENEFITS. Except as set forth in Section 6.1(i) of
the KCPL Disclosure Schedule or Section 6.1(i) of the UCU Disclosure Schedule,
as may be required by applicable law or as contemplated by this Agreement, no
party shall, nor shall any party permit any of its Subsidiaries to, (i) enter
into, adopt or amend or increase the amount or accelerate the payment or vesting
of any benefit or amount payable under, any employee benefit plan or other
contract, agreement, commitment, arrangement, plan, trust, fund or policy
maintained by, contributed to or entered into by such party or any of its
Subsidiaries or increase, or enter into any contract, agreement, commitment or
arrangement to increase in any manner, the compensation or fringe benefits, or
otherwise to extend, expand or enhance the engagement, employment or any related
rights, of any director, officer or other employee of such party or any of its
Subsidiaries, except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to such party or any of
its Subsidiaries; (ii) enter into or amend any employment, severance or special
pay arrangement with respect to the termination of employment or other similar
contract, agreement or arrangement with any director or officer or other
employee other than in the ordinary course of business consistent with past
practice; or (iii) deposit into any trust (including any "rabbi trust") amounts
in respect of any employee benefit obligations or obligations to directors;
provided that transfers into any trust, other than a rabbi or other trust with
respect to any non-qualified deferred compensation, may be made in accordance
with past practice.
35
(j) 1935 ACT. Except as set forth in Section 6.1(j) of the KCPL
Disclosure Schedule or Section 6.1(j) of the UCU Disclosure Schedule, no party
shall, nor shall any party permit any of its Subsidiaries to, except as required
or contemplated by this Agreement, engage in any activities which would cause a
change in its status, or that of its Subsidiaries, under the 1935 Act.
(k) ACCOUNTING. Except as set forth in Section 6.1(k) of the KCPL
Disclosure Schedule or Section 6.1(k) of the UCU Disclosure Schedule, no party
shall, nor shall any party permit any of its Subsidiaries to, make any changes
in their accounting methods, except as required by law, rule, regulation or
GAAP.
(l) POOLING. No party shall, nor shall any party permit any of its
Subsidiaries to, take any action which would, or would be reasonably likely to,
prevent the Surviving Corporation from accounting for the transactions to be
effected pursuant to this Agreement as a pooling-of-interests in accordance with
GAAP and applicable SEC regulations, and each party hereto shall use all
reasonable efforts to achieve such result (including taking such commercially
reasonable actions as may be necessary to cure any facts or circumstances that
could prevent such transactions from qualifying for pooling-of-interests
accounting treatment).
(m) TAX-FREE STATUS. No party shall, nor shall any party permit any
of its Subsidiaries to, take any actions which would, or would be reasonably
likely to, adversely affect the ability of the Mergers to qualify for tax-free
treatment under the Code, both to the parties and their respective shareholders
(except for any cash received in lieu of fractional shares), and each party
hereto shall use all reasonable efforts to achieve such result.
(n) AFFILIATE TRANSACTIONS. Except as set forth in Section 6.1(n) of
the KCPL Disclosure Schedule or Section 6.1(n) of the UCU Disclosure Schedule,
no party shall, nor shall any party permit any of its Subsidiaries to, enter
into any material agreement or arrangement with any of their respective
Affiliates (other than wholly owned Subsidiaries) or, in the case of UCU, the
UCU Joint Ventures, or, in the case of KCPL, the KCPL Joint Ventures, on terms
materially less favorable to such party than could be reasonably expected to
have been obtained with an unaffiliated third-party on an arm's length basis.
(o) COOPERATION, NOTIFICATION. Each party shall (i) confer on a
regular and frequent basis with one or more representatives of the other party
to discuss, subject to applicable law, material operational matters and the
general status of its ongoing operations, (ii) promptly notify the other party
of any significant changes in its business, properties, assets, condition
(financial or other), results of operations or prospects, (iii) promptly advise
the other party of any change or event which has had or, insofar as reasonably
can be foreseen, is reasonably likely to result in, in the case of KCPL, a KCPL
Material Adverse Effect or, in the case of UCU, a UCU Material Adverse Effect
and (iv) promptly provide the other party with copies of all filings made by
such party or any of its Subsidiaries with any
36
state or federal court, administrative agency, commission or other
Governmental Authority in connection with this Agreement and the transactions
contemplated hereby.
(p) RATE MATTERS. Subject to applicable law, each of KCPL and UCU
shall, and shall cause its respective Subsidiaries to, discuss with the other
any changes in its or its Subsidiaries' rates or the services it provides or
charges (other than pass-through fuel and gas rates or charges), standards of
service or accounting from those in effect on the Original Execution Date and
consult with the other prior to making any filing (or any amendment thereto), or
effecting any agreement, commitment, arrangement or consent with governmental
regulators, whether written or oral, formal or informal, with respect thereto,
and no party will make any filing to change its rates or the services it
provides on file with the FERC that would have a material adverse effect on the
benefits associated with the business combination provided for herein.
(q) THIRD-PARTY CONSENTS. KCPL shall, and shall cause its
Subsidiaries to, use all commercially reasonable efforts to obtain all KCPL
Required Consents. KCPL shall promptly notify UCU of any failure or prospective
failure to obtain any such consents and, if requested by UCU, shall provide
copies of all KCPL Required Consents obtained by KCPL to UCU. UCU shall, and
shall cause its Subsidiaries to, use all commercially reasonable efforts to
obtain all UCU Required Consents. UCU shall promptly notify KCPL of any failure
or prospective failure to obtain any such consents and, if requested by KCPL,
shall provide copies of all UCU Required Consents obtained by UCU to KCPL.
(r) NO BREACH, ETC. No party shall, nor shall any party permit any
of its Subsidiaries to, willfully take any action that would or is reasonably
likely to result in a material breach of any provision of this Agreement or in
any of its representations and warranties set forth in this Agreement being
untrue on and as of the Closing Date.
(s) TAX-EXEMPT STATUS. No party shall, nor shall any party permit
any Subsidiary to, take any action that would likely jeopardize the
qualification of KCPL's or UCU's outstanding revenue bonds which qualify on the
Original Execution Date under Section 142(a) of the Code as "exempt facility
bonds" or as tax-exempt industrial development bonds under Section 103(b) (4) of
the Internal Revenue Code of 1954, as amended, prior to the Tax Reform Act of
1986.
(t) TRANSITION MANAGEMENT. As soon as practicable after the Original
Execution Date, the parties shall create a special transition management task
force (the "TASK FORCE"), which shall be jointly headed by Turner White and
Michael D. Bruhn. The Task Force shall examine various alternatives regarding
the manner in which to best organize and manage the business of the Surviving
Corporation after the Effective Time, subject to applicable law. Turner White
and Michael D. Bruhn will have joint decision-making authority regarding the
Task Force.
37
(u) CONTRACTS. No party shall, nor shall any party permit any of its
respective Subsidiaries to, except in the ordinary course of business consistent
with past practice, modify, amend, terminate, renew or fail to use reasonable
business efforts to renew any material contract or agreement to which such party
or any Subsidiary of such party is a party or waive, release or assign any
material rights or claims.
(v) INSURANCE. Each party shall, and shall cause its Subsidiaries
to, maintain with financially responsible insurance companies insurance in such
amounts and against such risks and losses as are customary for companies engaged
in the electric and gas utility industry and employing methods of generating
electric power and fuel sources similar to those methods employed and fuels used
by such party or its Subsidiaries.
(w) PERMITS. Each party shall, and shall cause its Subsidiaries to,
use reasonable efforts to maintain in effect all existing governmental permits
which are material to the operations of such party or its Subsidiaries.
(x) TAX MATTERS. Except as set forth in Section 6.1(x) of the KCPL
Disclosure Schedule or Section 6.1(x) of the UCU Disclosure Schedule, neither
party shall (i) make or rescind any material express or deemed election relating
to taxes unless such election will have the effect of minimizing the tax
liabilities of KCPL or UCU or any of their respective Subsidiaries, including
elections for any and all joint ventures, partnerships, limited liability
companies, working interests or other investments where KCPL or UCU has the
capacity to make such binding elections, (ii) settle or compromise any material
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to taxes unless such settlement or compromise results in
(A) a change in taxable income or tax liability that will reverse in future
periods and is therefore, by its nature, a timing difference or (B) a change in
taxable income or tax liability that will not reverse in future periods and is
therefore, by its nature, a permanent difference unless the tax liability
resulting from the increase is less than $1 million, or (iii) change in any
material respect any of its methods of reporting income or deductions for
federal income tax purposes from those employed in the preparation of its
federal income tax return for the taxable year ending December 31, 1994, except
as may be required by applicable law or except for such changes that would
reduce consolidated federal taxable income or alternative minimum taxable
income.
(y) DISCHARGE OF LIABILITIES. No party shall, nor shall any party
permit any of its respective Subsidiaries to, pay, discharge or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past practice
(which includes the payment of final and unappealable judgments) or in
accordance with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) of such party included in such party's reports filed with the SEC, or
incurred in the ordinary course of business consistent with past practice.
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ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 ACCESS TO INFORMATION. Upon reasonable notice, each
party shall, and shall cause its Subsidiaries to, afford to the officers,
directors, employees, accountants, counsel, investment bankers, financial
advisors and other representatives of the other (collectively,
"REPRESENTATIVES") reasonable access, during normal business hours throughout
the period prior to the Effective Time, to all of its properties, books,
contracts, commitments and records (including, but not limited to, Tax Returns)
and, during such period, each party shall, and shall cause its Subsidiaries to,
furnish promptly to the other (i) access to each report, schedule and other
document filed or received by it or any of its Subsidiaries pursuant to the
requirements of federal or state securities laws or filed with or sent to the
SEC, the FERC, the NRC, the Department of Justice, the Federal Trade Commission,
or any other federal or state regulatory agency or commission and (ii) access to
all information concerning themselves, their Subsidiaries, directors, officers
and shareholders and such other matters as may be reasonably requested by the
other party in connection with any filings, applications or approvals required
or contemplated by this Agreement or for any other reason related to the
transactions contemplated by this Agreement. Each party shall provide access to
those premises, documents, reports and information described above of
Subsidiaries of such party that are not Subsidiaries to the extent such party
has or is able to obtain such access. Each party shall, and shall cause its
Subsidiaries and Representatives to, hold in strict confidence all documents and
information concerning the other furnished to it in connection with the
transactions contemplated by this Agreement in accordance with the
Confidentiality Agreement, dated November 28, 1995, between KCPL and UCU, as it
may be amended from time to time (the "CONFIDENTIALITY AGREEMENT").
Section 7.2 JOINT PROXY STATEMENT AND REGISTRATION STATEMENT.
(a) PREPARATION AND FILING. The parties will prepare and file with
the SEC as soon as reasonably practicable after the Amendment Date the
Registration Statement and the Proxy Statement (together, the "JOINT
PROXY/REGISTRATION STATEMENT"). The parties hereto shall each use reasonable
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as practicable after such filing. Each party hereto
shall also take such action as may be reasonably required to cause the shares of
KCPL Common Stock issuable in connection with the UCU Merger to be registered or
to obtain an exemption from registration under applicable state "blue sky" or
securities laws; PROVIDED, HOWEVER, that no party shall be required to register
or qualify as a foreign corporation or to take other action which would subject
it to service of process in any jurisdiction where the Surviving Corporation
will not be, following the Mergers, so subject. Each of the parties hereto
shall furnish all information concerning itself which is required or customary
for inclusion in the Joint Proxy/Registration Statement. The parties shall use
reasonable efforts to cause the shares of KCPL Common Stock issuable in the UCU
Merger to be approved for listing on the NYSE upon official notice of issuance.
The information provided by any party hereto
39
for use in the Joint Proxy/Registration Statement shall be true and correct
in all material respects without omission of any material fact which is
required to make such information not false or misleading. No
representation, covenant or agreement is made by any party hereto with
respect to information supplied by any other party for inclusion in the Joint
Proxy Statement/Registration Statement.
(b) LETTER OF KCPL'S ACCOUNTANTS. KCPL shall use its best efforts to
cause to be delivered to UCU letters of Coopers & Lybrand, dated a date within
two business days before the date of the Joint Proxy/Registration Statement, and
addressed to UCU, in form and substance reasonably satisfactory to UCU and
customary in scope and substance for "cold comfort" letters delivered by
independent public accountants in connection with registration statements on
Form S-4.
(c) LETTER OF UCU'S ACCOUNTANTS. UCU shall use its best efforts to
cause to be delivered to KCPL a letter of Arthur Andersen & Co., dated a date
within two business days before the date of the Joint Proxy/Registration
Statement, and addressed to KCPL, in form and substance reasonably satisfactory
to KCPL and customary in scope and substance for "cold comfort" letters
delivered by independent public accountants in connection with registration
statements on Form S-4.
(d) FAIRNESS OPINIONS. It shall be a condition to the mailing of the
Joint Proxy/Registration Statement to the shareholders of KCPL and UCU that (i)
KCPL shall have received an opinion from Merrill Lynch, dated the date of the
Joint Proxy/Registration Statement, to the effect that, as of the date thereof,
the Conversion Ratio is fair from a financial point of view to the holders of
KCPL Common Stock and (ii) UCU shall have received an opinion from DLJ, dated
the date of the Joint Proxy/Registration Statement, to the effect that, as of
the date thereof, the Conversion Ratio is fair from a financial point of view to
the holders of UCU Common Stock.
Section 7.3 REGULATORY MATTERS.
(a) HSR FILINGS. Each party hereto shall file or cause to be filed
with the Federal Trade Commission and the Department of Justice any
notifications required to be filed by their respective "ultimate parent"
companies under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), and the rules and regulations promulgated thereunder
with respect to the transactions contemplated hereby. Such parties will use all
commercially reasonable efforts to make such filings promptly and to respond on
a timely basis to any requests for additional information made by either of such
agencies.
(b) OTHER REGULATORY APPROVALS. Each party hereto shall cooperate
and use its best efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to use all commercially reasonable efforts to obtain
all necessary permits, consents, approvals and
40
authorizations of all Governmental Authorities necessary or advisable to
obtain the KCPL Required Statutory Approvals and the UCU Required Statutory
Approvals.
Section 7.4 SHAREHOLDER APPROVAL.
(a) APPROVAL OF UCU SHAREHOLDERS. Subject to the provisions of
Section 7.4(c) and Section 7.4(d), UCU shall, as soon as reasonably practicable
after the Amendment Date (i) take all steps necessary to duly call, give notice
of, convene and hold a meeting of its shareholders (the "UCU MEETING") for the
purpose of securing the UCU Shareholders' Approval, (ii) distribute to its
shareholders the Proxy Statement in accordance with applicable federal and state
law and with its Certificate of Incorporation and by-laws, (iii) subject to the
fiduciary duties of its Board of Directors, recommend to its shareholders the
approval of the Mergers, this Agreement and the transactions contemplated hereby
and (iv) cooperate and consult with KCPL with respect to each of the foregoing
matters.
(b) APPROVAL OF KCPL SHAREHOLDERS. Subject to the provisions of
Section 7.4(c) and Section 7.4(d), KCPL shall, as soon as reasonably practicable
after the Amendment Date (i) take all steps necessary to duly call, give notice
of, convene and hold a meeting of its shareholders (the "KCPL MEETING") for the
purpose of securing the KCPL Shareholders' Approval, (ii) distribute to its
shareholders the Proxy Statement in accordance with applicable federal and state
law and with its Restated Articles of Consolidation and by-laws, (iii) subject
to the fiduciary duties of its Board of Directors, recommend to its shareholders
the approval of the issuance of the KCPL Common Stock to be issued pursuant to
the UCU Merger, and (iv) cooperate and consult with UCU with respect to each of
the foregoing matters.
(c) MEETING DATE. The UCU Meeting for the purpose of securing the
UCU Shareholders' Approval and the KCPL Meeting for the purpose of securing the
KCPL Shareholders' Approval shall be held on such date as KCPL and UCU shall
mutually determine.
(d) FAIRNESS OPINIONS NOT WITHDRAWN. It shall be a condition to the
obligation of KCPL to hold the KCPL Meeting that the opinion of Merrill Lynch,
referred to in Section 7.2(d), shall not have been withdrawn, and it shall be a
condition to the obligation of UCU to hold the UCU Meeting that the opinion of
DLJ, referred to in Section 7.2(d), shall not have been withdrawn.
Section 7.5 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) INDEMNIFICATION. To the extent, if any, not provided by an
existing right of indemnification or other agreement or policy, from and after
the Effective Time, the Surviving Corporation shall, to the fullest extent
permitted by applicable law, indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date hereof, or who becomes prior
to the Effective Time, an officer, director or employee of any
41
of the parties hereto or any Subsidiary (each an "INDEMNIFIED PARTY" and
collectively, the "INDEMNIFIED PARTIES") against (i) all losses, expenses
(including reasonable attorney's fees and expenses), claims, damages or
liabilities or, subject to the proviso of the next succeeding sentence,
amounts paid in settlement, arising out of actions or omissions occurring at
or prior to the Effective Time (and whether asserted or claimed prior to, at
or after the Effective Time) that are, in whole or in part, based on or
arising out of the fact that such person is or was a director, officer or
employee of such party (the "INDEMNIFIED LIABILITIES"), and (ii) all
Indemnified Liabilities to the extent they are based on or arise out of or
pertain to the transactions contemplated by this Agreement. In the event of
any such loss, expense, claim, damage or liability (whether or not arising
before the Effective Time), (i) the Surviving Corporation shall pay the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to the Surviving Corporation,
promptly after statements therefor are received and otherwise advance to such
Indemnified Party upon request reimbursement of documented expenses
reasonably incurred, in either case to the extent not prohibited by the MGCL,
(ii) the Surviving Corporation will cooperate in the defense of any such
matter and (iii) any determination required to be made with respect to
whether an Indemnified Party's conduct complies with the standards set forth
under the MGCL and the Restated Articles of Consolidation or by-laws of the
Surviving Corporation shall be made by independent counsel mutually
acceptable to the Surviving Corporation and the Indemnified Party; PROVIDED,
HOWEVER, that the Surviving Corporation shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld). The Indemnified Parties as a group may retain only
one law firm with respect to each related matter except to the extent there
is, in the opinion of counsel to an Indemnified Party, under applicable
standards of professional conduct, a conflict on any significant issue
between positions of such Indemnified Party and any other Indemnified Party
or Indemnified Parties.
(b) INSURANCE. For a period of six years after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect policies of
directors and officers' liability insurance maintained by KCPL and UCU for the
benefit of those persons who are currently covered by such policies on terms no
less favorable than the terms of such current insurance coverage; PROVIDED,
HOWEVER, that the Surviving Corporation shall not be required to expend in any
year an amount in excess of 200% of the annual aggregate premiums currently paid
by KCPL and UCU for such insurance; and PROVIDED, FURTHER, that if the annual
premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the best coverage
available, in the reasonable judgment of the Board of Directors of the Surviving
Corporation, for a cost not exceeding such amount.
(c) SUCCESSORS. In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person or entity, then
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and in either such case, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation shall assume the
obligations set forth in this Section 7.5.
(d) SURVIVAL OF INDEMNIFICATION. To the fullest extent permitted by
law, from and after the Effective Time, all rights to indemnification as of the
date hereof in favor of the employees, agents, directors and officers of KCPL,
UCU and their respective Subsidiaries with respect to their activities as such
prior to the Effective Time, as provided in their respective articles of
incorporation and by-laws in effect on the date thereof, or otherwise in effect
on the date hereof, shall survive the Mergers and shall continue in full force
and effect for a period of not less than six years from the Effective Time.
(e) BENEFIT. The provisions of this Section 7.5 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives.
Section 7.6 PUBLIC ANNOUNCEMENTS. Subject to each party's
disclosure obligations imposed by law, KCPL and UCU will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and shall not issue any public announcement or
statement with respect hereto or thereto without the consent of the other party
(which consent shall not be unreasonably withheld).
Section 7.7 RULE 145 AFFILIATES. UCU shall identify in a letter to
KCPL all persons who are, and to UCU's best knowledge who will be at the Closing
Date, "affiliates" of UCU as such term is used in Rule 145 under the Securities
Act (or otherwise under applicable SEC accounting releases with respect to
pooling-of-interests accounting treatment). UCU shall use all reasonable
efforts to cause its affiliates (including any person who may be deemed to have
become such an affiliate after the date of the letter referred to in the prior
sentence) to deliver to KCPL on or prior to the Closing Date a written agreement
substantially in the form attached as EXHIBIT 7.7 (each, an "AFFILIATE
AGREEMENT").
Section 7.8 EMPLOYEE AGREEMENTS AND WORKFORCE MATTERS.
(a) CERTAIN EMPLOYEE AGREEMENTS. Subject to Section 7.9, Section
7.10, Section 7.13 and Section 7.14, the Surviving Corporation and its
Subsidiaries shall honor, without modification, all contracts, agreements,
collective bargaining agreements and commitments of the parties prior to the
date hereof that apply to any current or former employee or current or former
director of the parties hereto; PROVIDED, HOWEVER, that this undertaking is not
intended to prevent the Surviving Corporation from enforcing such contracts,
agreements, collective bargaining agreements and commitments in accordance with
their terms, including, without limitation, any reserved right to amend, modify,
suspend, revoke or terminate any such contract, agreement, collective bargaining
agreement or commitment.
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(b) WORKFORCE MATTERS. Subject to applicable collective bargaining
agreements, for a period of 3 years following the Effective Time, any reductions
in workforce in respect of employees of the Surviving Corporation shall be made
on a fair and equitable basis, without regard to whether employment was with
KCPL or the KCPL Subsidiaries or UCU or the UCU Subsidiaries, and any employee
whose employment is terminated or job is eliminated by the Surviving Corporation
or any of its Subsidiaries during such period shall be entitled to participate
on a fair and equitable basis in the job opportunity and employment placement
programs offered by the Surviving Corporation or any of its Subsidiaries. Any
workforce reductions carried out following the Effective Time by the Surviving
Corporation and its Subsidiaries shall be done in accordance with all applicable
collective bargaining agreements and all laws and regulations governing the
employment relationship and termination thereof including, without limitation,
the Worker Adjustment and Retraining Notification Act and regulations
promulgated thereunder, and any comparable state or local law.
Section 7.9 EMPLOYEE BENEFIT PLANS.
(a) COMPANY PLANS. KCPL and UCU agree to cooperate and agree upon
the employee benefits plans and programs to be provided by the Surviving
Corporation.
(b) EFFECT OF THE MERGERS. The consummation of the Mergers shall not
be treated as a termination of employment for purposes of any UCU Benefit Plan
or KCPL Benefit Plan.
(c) UCU SUPPLEMENTAL CONTRIBUTORY PLAN. The UCU Supplemental
Contributory Retirement Plan shall be revised to provide that, from and after
the Effective Time, the reference to "UCU Common Shares" shall instead refer to
"KCPL Common Stock."
(d) CREDIT FOR PAST SERVICE. Without limitation of the foregoing
provisions of this Section 7.9, each participant of any KCPL Benefit Plan or UCU
Benefit Plan shall receive credit for purposes of (i) eligibility to
participate, vesting and eligibility to receive benefits under any benefit plan
of the Surviving Corporation or any of its subsidiaries or affiliates that
replaces a KCPL Benefit Plan or a UCU Benefit Plan, and (ii) benefit accrual
under any severance or vacation pay plan, for service credited for the
corresponding purpose under such KCPL Benefit Plan or UCU Benefit Plan;
provided, however, that such crediting of service shall not operate to duplicate
any benefit to any such participant or the funding for any such benefit.
(e) ADOPTION OF SURVIVING CORPORATION REPLACEMENT PLANS. With
respect to the KCPL annual incentive plan (the "KCPL INCENTIVE PLAN"), the UCU
annual and long-term incentive plan (the "UCU INCENTIVE PLAN"), the KCPL long-
term incentive plan (the "KCPL INCENTIVE STOCK PLAN") and the UCU stock
incentive plan (the "UCU INCENTIVE STOCK PLAN"), the Surviving Corporation and
its subsidiaries shall adopt replacement plans as set forth in
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this Section 7.9(e) (collectively, the "SURVIVING CORPORATION REPLACEMENT
PLANS"). Subject to shareholder approval thereof by the KCPL shareholders
and the UCU shareholders, the Surviving Corporation Replacement Plans shall
go into effect at the Effective Time. Upon the consummation of the Mergers,
no additional obligations shall be incurred under the KCPL Incentive Plan,
the UCU Incentive Plan, the KCPL Stock Incentive Plan or the UCU Incentive
Stock Plan, except to the extent such obligations are attributable to
employment prior to the Effective Time and are consistent with past practice
under the applicable plan. The KCPL Incentive Plan and the UCU Incentive Plan
shall be replaced (except with respect to obligations incurred or
attributable to employment prior to the Effective Time) by a new annual bonus
plan (the "SURVIVING CORPORATION INCENTIVE PLAN") under which bonuses, based
on percentages of base salaries and payable in cash, shares of KCPL Common
Stock or such form as shall be determined by the Compensation Committee of
the Board of Directors of the Surviving Corporation (the "COMMITTEE"), are
awarded based upon the achievement of performance goals determined in advance
by the Committee. With respect to those participants in the Surviving
Corporation Incentive Plan who are, or who the Committee determines are
likely to be, "covered employees" within the meaning of Section 162(m) of the
Code, whose compensation is likely to exceed the amount specified in Code
Section 162(m)(1), the performance goals shall be objective standards that
are approved by shareholders in accordance with the requirements for
exclusion from the limitations of Section 162(m) of the Code as
performance-based compensation. The KCPL Incentive Stock Plan and the UCU
Incentive Stock Plan shall be replaced (except with respect to obligations
incurred or attributable to employment prior to the Effective Time) by a
stock compensation plan (the "SURVIVING CORPORATION STOCK PLAN"). The
Surviving Corporation Stock Plan shall provide for the grant of stock
options, stock appreciation rights, restricted stock and such other awards
based upon the KCPL Common Stock as the Committee may determine, subject to
shareholder approval of the Surviving Corporation Stock Plan. The Surviving
Corporation shall reserve an appropriate number of shares for issuance under
the Surviving Corporation Stock Plan.
(f) KCPL AND UCU ACTION. With respect to each of the Surviving
Corporation Replacement Plans, each of KCPL and UCU shall take all corporate
action necessary or appropriate to obtain the approval of their respective
shareholders with respect to such plan prior to the Effective Time.
Section 7.10 STOCK OPTION AND OTHER STOCK PLANS.
(a) UCU STOCK OPTIONS. As of the Effective Time, each of the UCU
Stock Options which is outstanding as of the UCU Effective Time shall be assumed
by the Surviving Corporation and converted into an option (or a new substitute
option shall be granted) to purchase the number of shares of KCPL Common Stock
(rounded up to the nearest whole share) equal to the number of shares of UCU
Common Stock subject to such option multiplied by the Conversion Ratio, at an
exercise price per share of KCPL Common Stock (rounded down to the nearest
penny) equal to the former exercise price per share of UCU Common Stock under
such option immediately prior to the UCU Effective Time divided by
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the Conversion Ratio; PROVIDED, HOWEVER, that in the case of any UCU Stock
Option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code, the conversion formula shall be
adjusted, if necessary, to comply with Section 424(a) of the Code. Except as
provided above, the converted or substituted UCU Stock Options shall be
subject to the same terms and conditions (including, without limitation,
expiration date, vesting and exercise provisions) as were applicable to UCU
Stock Options immediately prior to the UCU Effective Time, except that the
acceleration of vesting and exercisability as a result of the Mergers shall
not be given effect. For purposes of such terms and conditions, the Mergers
shall not be treated as an event which shall affect the period for exercising
UCU Stock Options. UCU Stock Options shall not be treated as expiring as of
the UCU Effective Time solely due to the fact that UCU shall cease to exist
as of the Effective Time.
(b) KCPL STOCK OPTIONS. The Mergers shall not be treated as an event
which shall cause the acceleration of vesting and exercisability of KCPL Stock
Options or affect the period for exercising KCPL Stock Options.
(c) OTHER UCU STOCK AWARDS. Each outstanding award under the UCU
Incentive Stock Plan other than the UCU Stock Options (the "UCU STOCK AWARDS")
shall constitute an award based upon the same number of shares of KCPL Common
Stock as the holder of such UCU Stock Award would have been entitled to receive
pursuant to the Mergers in accordance with Article II hereof had such holder
been the absolute owner, immediately before the UCU Effective Time, of the
shares of UCU Common Stock on which such UCU Stock Award is based, and otherwise
on the same terms and conditions as governed such UCU Stock Award immediately
before the UCU Effective Time (the "SURVIVING CORPORATION STOCK AWARDS"). At
the UCU Effective Time, the Surviving Corporation shall assume each agreement
relating to the UCU Stock Awards. Notwithstanding the foregoing, this paragraph
shall not be construed, interpreted or applied so as to cause a duplication of
any benefit to any individual.
(d) SURVIVING CORPORATION ACTION. As soon as practicable after the
Effective Time, the Surviving Corporation shall deliver to the holders of UCU
Stock Options and UCU Stock Awards appropriate notices setting forth such
holders' rights pursuant to the Surviving Corporation Stock Plan and Surviving
Corporation Stock Awards (the "SURVIVING CORPORATION STOCK BENEFITS") and each
underlying stock award agreement, each as assumed by the Surviving Corporation.
As soon as practicable after the Effective Time the Surviving Corporation will
cause to be filed one or more registration statements on Form S-3 or Form S-8
under the Securities Act (or any successor or other appropriate forms), in order
to register the shares of KCPL Common Stock issuable in connection with the
Surviving Corporation Stock Benefits, and the Surviving Corporation shall use
its best efforts to maintain the effectiveness of such registration statements
(and maintain the current status of the prospectuses contained therein) for so
long as such benefits and grants remain payable and such options remain
outstanding. At or prior to the UCU Effective Time, the Surviving Corporation
shall take all corporate action necessary to reserve for issuance a sufficient
number of shares of KCPL Common Stock for delivery in connection with the
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Surviving Corporation Stock Benefits. The Surviving Corporation shall take
all corporate action necessary or appropriate to (i) obtain shareholder
approval with respect to the Surviving Corporation Stock Benefits to the
extent such approval is required for purposes of the Code or other applicable
law, or (ii) enable any plan pursuant to which such benefits are issued to
comply with Rule 16b-3 promulgated under the Exchange Act. With respect to
those individuals who subsequent to the Mergers will be subject to the
reporting requirements under Section 16(a) of the Exchange Act with respect
to equity securities of the Surviving Corporation, the Surviving Corporation
shall administer such Surviving Corporation Stock Benefits, where applicable,
in a manner that complies with Rule 16b-3 promulgated under the Exchange Act.
Section 7.11 NO SOLICITATIONS. From and after the date hereof, KCPL
and UCU will not, and will not authorize or permit any of their respective
Representatives to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing information) or take any other action to
facilitate knowingly any inquiries or the making of any proposal which
constitutes or may reasonably be expected to lead to an Acquisition Proposal (as
defined herein) from any person, or engage in any discussion or negotiations
relating thereto or accept any Acquisition Proposal; PROVIDED, HOWEVER, that
notwithstanding any other provision hereof, the respective party may (i) at any
time prior to the time the respective party's stockholders shall have voted to
approve this Agreement engage in discussions or negotiations with a third party
who (without any solicitation, initiation, encouragement, discussion or
negotiation, directly or indirectly, by or with the party or its Representatives
after the date hereof) seeks to initiate such discussions or negotiations and
may furnish such third party information concerning the party and its business,
properties and assets if, and only to the extent that, (A) (x) the third party
has first made an Acquisition Proposal that is financially superior to the
Mergers and has demonstrated that financing for the Acquisition Proposal is
reasonably likely to be obtained (as determined in good faith in each case by
the party's Board of Directors after consultation with its financial advisors)
and (y) the party's Board of Directors shall conclude in good faith, after
considering applicable provisions of state law, on the basis of oral or written
advice of outside counsel that such action is necessary for the Board of
Directors to act in a manner consistent with its fiduciary duties under
applicable law and (B) prior to furnishing such information to or entering into
discussions or negotiations with such person or entity, such party (x) provides
prompt notice to the other party to the effect that it is furnishing information
to or entering into discussions or negotiations with such person or entity and
(y) receives from such person or entity an executed confidentiality agreement in
reasonably customary form on terms not in the aggregate materially more
favorable to such person or entity than the terms contained in the
Confidentiality Agreement, (ii) comply with Rule 14e-2 promulgated under the
Exchange Act with regard to a tender or exchange offer, and/or (iii) accept an
Acquisition Proposal from a third party, provided such respective party
terminates this Agreement pursuant to Section 9.1(e) or 9.1(f), as applicable.
Each party shall immediately cease and terminate any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any parties
conducted heretofore by the party or its Representatives with respect to the
foregoing. Each party hereto shall notify the other party orally and in writing
of any such inquiries,
47
offers or proposals (including, without limitation, the terms and conditions
of any such proposal and the identify of the person making it), within 24
hours of the receipt thereof, shall keep the other party informed of the
status and details of any such inquiry, offer or proposal, and shall give the
other party five days' advance notice of any agreement to be entered into
with or any information to be supplied to any person making such inquiry,
offer or proposal. As used herein, "ACQUISITION PROPOSAL" shall mean a
proposal or offer (other than by another party hereto) for a tender or
exchange offer, merger, consolidation or other business combination involving
the party or any material Subsidiary of the party or any proposal to acquire
in any manner a substantial equity interest in or a substantial portion of
the assets of the party or any material Subsidiary.
Section 7.12 SURVIVING CORPORATION BOARD OF DIRECTORS. The Board of
Directors of KCPL will take such action as may be necessary (including the
amendment of the KCPL by-laws) to cause the number of directors comprising the
full Board of Directors of KCPL immediately prior to or at the Effective Time to
be 18 persons, 9 of whom shall be the then existing directors of KCPL prior to
the Effective Time and 9 of whom shall be designated by UCU prior to the
Effective Time. If, prior to the Effective Time, any of such designees shall
decline or be unable to serve, the party which designated such person shall
designate another person to serve in such person's stead.
Section 7.13 SURVIVING CORPORATION OFFICERS. At the Effective Time,
pursuant to the terms hereof and of the employment contracts referred to in
Section 7.14 (a) A. Drue Jennings shall hold the position of Chairman of the
Board of the Surviving Corporation and shall be entitled to serve in such
capacity until the annual meeting of stockholders of the Surviving Corporation
that occurs in 2002, at which time he shall be entitled to serve in the position
of Vice Chairman of the Board of the Surviving Corporation until the end of his
employment contract entered into pursuant to Section 7.14 and (b) Richard C.
Green, Jr. shall hold the positions of Vice Chairman of the Board and Chief
Executive Officer of the Surviving Corporation and shall be entitled to serve in
such capacities until the earlier of (i) the date of the annual meeting of
stockholders of the Surviving Corporation that occurs in 2002, and (ii) the date
on which A. Drue Jennings shall no longer serve as Chairman of the Board, at
which time he shall be entitled to serve in the positions of Chairman of the
Board and Chief Executive Officer of the Surviving Corporation and to serve in
all such capacities until his successor is elected or appointed and shall have
qualified in accordance with the Restated Articles of Consolidation and By-laws
of the Surviving Corporation . If either of such persons is unable or unwilling
to hold such offices as set forth above his successor shall be selected by the
Board of Directors of the Surviving Corporation in accordance with its By-laws.
The authority, duties and responsibilities of the Chairman of the Board, Vice
Chairman of the Board and Chief Executive Officer of the Surviving Corporation
shall be as set forth in Annex A to A. Drue Jennings and Richard C. Green, Jr.'s
employment contracts entered into pursuant to Section 7.14.
Section 7.14 EMPLOYMENT CONTRACTS. The Surviving Corporation shall,
as of or prior to the Effective Time, enter into employment contracts with A.
Drue Jennings and
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Richard C. Green, Jr. in the forms set forth in EXHIBIT 7.14.1 and EXHIBIT
7.14.2, respectively.
Section 7.15 POST-MERGER OPERATIONS.
(a) PRINCIPAL CORPORATE OFFICES. At the Effective Time, the
Surviving Corporation's principal corporate offices shall be in Kansas City,
Missouri.
(b) CHARITIES. After the Effective Time, the Surviving Corporation
shall provide charitable contributions and community support within the service
areas of the parties and each of their respective Subsidiaries at levels
substantially comparable to the levels of charitable contributions and community
support provided by the parties and their respective Subsidiaries within their
service areas within the two-year period immediately prior to the Effective
Time.
Section 7.16 EXPENSES. Subject to Section 9.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that those expenses incurred in connection with printing the Joint
Proxy/Registration Statement, as well as the filing fee relating thereto, shall
be shared equally by KCPL and UCU.
Section 7.17 FURTHER ASSURANCES. Each party will, and will cause
its Subsidiaries to, execute such further documents and instruments and take
such further actions as may reasonably be requested by any other party in order
to consummate the Mergers in accordance with the terms hereof.
Section 7.18 TERMINATION OF COMPANY'S OBLIGATIONS. All of the
rights and obligations of the Company under the Original Merger Agreement are
hereby terminated.
ARTICLE VIII
CONDITIONS
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGERS. The respective obligations of each party to effect the Mergers shall
be subject to the satisfaction on or prior to the Closing Date of the following
conditions, except, to the extent permitted by applicable law, that such
conditions may be waived in writing pursuant to Section 9.5 by the joint action
of the parties hereto:
(a) SHAREHOLDER APPROVALS. The UCU Shareholders' Approval and the
KCPL Shareholders' Approval shall have been obtained.
(b) NO INJUNCTION. No temporary restraining order or preliminary or
permanent injunction or other order by any federal or state court preventing
consummation of
49
the Mergers shall have been issued and be continuing in effect, and the
Mergers and the other transactions contemplated hereby shall not have been
prohibited under any applicable federal or state law or regulation.
(c) REGISTRATION STATEMENT. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act, and no
stop order suspending such effectiveness shall have been issued and remain in
effect.
(d) LISTING OF SHARES. The shares of KCPL Common Stock issuable in
the UCU Merger pursuant to Article II shall have been approved for listing on
the NYSE upon official notice of issuance.
(e) STATUTORY APPROVALS. The KCPL Required Statutory Approvals and
the UCU Required Statutory Approvals shall have been obtained at or prior to the
UCU Effective Time, such approvals shall have become Final Orders (as defined
below) and such Final Orders shall not impose terms or conditions which, in the
aggregate, would have, or insofar as reasonably can be foreseen, could have, a
material adverse effect on the business, assets, financial condition or results
of operations of the Surviving Corporation and its prospective Subsidiaries
taken as a whole or which would be materially inconsistent with the agreements
of the parties contained herein. A "FINAL ORDER" means action by the relevant
regulatory authority which has not been reversed, stayed, enjoined, set aside,
annulled or suspended, with respect to which any waiting period prescribed by
law before the transactions contemplated hereby may be consummated has expired,
and as to which all conditions to the consummation of such transactions
prescribed by law, regulation or order have been satisfied.
(f) POOLING. Each of KCPL and UCU shall have received a letter of
its independent public accountants, dated the Closing Date, in form and
substance reasonably satisfactory, in each case, to KCPL and UCU, stating that
the transactions to be effected pursuant to this Agreement will qualify as a
pooling of interests transaction under GAAP and applicable SEC regulations.
(g) PERMITS. To the extent that the continued lawful operations of
the business of KCPL or any KCPL Subsidiary or UCU or any UCU Subsidiary after
the Mergers require that any license, permit or other governmental approval be
transferred to the Surviving Corporation or issued to the Surviving Corporation,
such licenses, permits or other authorizations shall have been transferred or
reissued to the Surviving Corporation at or before the Closing Date, except
where the failure to transfer or reissue such licenses, permits or other
authorizations would not have a material adverse effect on the business, assets,
financial condition, results of operations or prospects of the Surviving
Corporation and its Subsidiaries taken as a whole immediately after the UCU
Effective Time.
Section 8.2 CONDITIONS TO OBLIGATION OF UCU TO EFFECT THE MERGERS.
The obligation of UCU to effect the Mergers shall be further subject to the
satisfaction, on or
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prior to the Closing Date, of the following conditions, except as may be
waived by UCU in writing pursuant to Section 9.5:
(a) PERFORMANCE OF OBLIGATIONS OF KCPL. KCPL and Sub (and/or KCPL's
appropriate Subsidiaries) will have performed in all material respects its
agreements and covenants contained in or contemplated by this Agreement which
are required to be performed by it at or prior to the UCU Effective Time
including, without limitation, agreements and covenants contained in Section
2.1(a)(iii) hereof.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of KCPL set forth in Sections 4.1 through 4.18 of this Agreement
shall be true and correct (i) on and as of the Original Execution Date (except
with respect to representations and warranties made as of the Amendment Date
which shall be true and correct as of the Amendment Date) and (ii) on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except for
representations and warranties that expressly speak only as of a specific date
or time which need only be true and correct as of such date or time) except in
each of cases (i) and (ii) for such failures of representations or warranties to
be true and correct (without giving effect to any materiality qualification or
standard contained in any such representations and warranties) which,
individually or in the aggregate, would not be reasonably likely to result in a
KCPL Material Adverse Effect. The representations and warranties of KCPL and
Sub set forth in Section 4.19 of this Agreement shall be true and correct (i) on
and as of the Amendment Date and (ii) on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date (except for representations and warranties that expressly
speak only as of a specific date or time which need only be true and correct as
of such date or time) except in each of cases (i) and (ii) for such failures of
representations or warranties to be true and correct (without giving effect to
any materiality qualification or standard contained in any such representations
and warranties) which, individually or in the aggregate, would not be reasonably
likely to result in a KCPL Material Adverse Effect.
(c) CLOSING CERTIFICATES. UCU shall have received a certificate
signed by the chief financial officer of KCPL, dated the Closing Date, to the
effect that, to the best of such officer's knowledge, the conditions set forth
in Section 8.2(a) and Section 8.2(b) have been satisfied.
(d) KCPL MATERIAL ADVERSE EFFECT. No KCPL Material Adverse Effect
shall have occurred and there shall exist no fact or circumstance which is
reasonably likely to have a KCPL Material Adverse Effect.
(e) TAX OPINION. UCU shall have received an opinion from Blackwell
Sanders Matheny Weary & Lombardi L.C., counsel to UCU, in form and substance
reasonably satisfactory to UCU, dated as of the Effective Time, substantially to
the effect that (i) no gain or loss will be recognized by KCPL, UCU or the
Surviving Corporation
51
pursuant to the Mergers, and (ii) no gain or loss will be recognized by
stockholders of UCU who exchange their shares of UCU Common Stock for shares
of KCPL Common Stock as a result of the Merger (except to the extent that
cash is received in lieu of fractional share interests). In rendering such
opinion, Blackwell, Sanders Matheny Weary and Lombardi L.C., may require and
rely upon representations contained in certificates of officers of KCPL, UCU
and others.
(f) KCPL REQUIRED CONSENTS. The KCPL Required Consents the failure
of which to obtain would have a KCPL Material Adverse Effect shall have been
obtained.
Section 8.3 CONDITIONS TO OBLIGATION OF KCPL AND SUB TO EFFECT THE
MERGERS. The obligation of KCPL and Sub to effect the Mergers shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by KCPL and Sub in writing pursuant to
Section 9.5:
(a) PERFORMANCE OF OBLIGATIONS OF UCU. UCU (and/or its appropriate
Subsidiaries) will have performed in all material respects its agreements and
covenants contained in or contemplated by this Agreement which are required to
be performed by it at or prior to the UCU Effective Time including, without
limitation, agreements and covenants contained in Section 2.1(a)(iv) hereof.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of UCU set forth in this Agreement shall be true and correct (i) on
and as of the Original Execution Date (except with respect to representations
and warranties made as of the Amendment Date which shall be true and correct as
of the Amendment Date) and (ii) on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date (except for representations and warranties that expressly speak
only as of a specific date or time which need only be true and correct as of
such date or time) except in each of cases (i) and (ii) for such failures of
representations or warranties to be true and correct (without giving effect to
any materiality qualification or standard contained in any such representations
and warranties) which, individually or in the aggregate, would not be reasonably
likely to result in a UCU Material Adverse Effect.
(c) CLOSING CERTIFICATES. KCPL shall have received a certificate
signed by the chief financial officer of UCU, dated the Closing Date, to the
effect that, to the best of such officer's knowledge, the conditions set forth
in Section 8.3(a) and Section 8.3(b) have been satisfied.
(d) UCU MATERIAL ADVERSE EFFECT. No UCU Material Adverse Effect
shall have occurred and there shall exist no fact or circumstance which is
reasonably likely to have a UCU Material Adverse Effect.
(e) TAX OPINION. KCPL shall have received an opinion from Skadden,
Arps, Slate, Meagher & Flom, counsel to KCPL, in form and substance reasonably
satisfac-
52
tory to KCPL, dated as of the Effective Time, substantially to the effect
that (i) no gain or loss will be recognized by KCPL, UCU or the Surviving
Corporation pursuant to the Mergers, and (ii) no gain or loss will be
recognized by stockholders of KCPL as a result of the Mergers. In rendering
such opinion, Skadden, Arps, Slate, Meagher & Flom, may require and rely upon
representations contained in certificates of officers of KCPL, UCU and others.
(f) UCU REQUIRED CONSENTS. The UCU Required Consents the failure of
which to obtain would have a UCU Material Adverse Effect shall have been
obtained.
(g) AFFILIATE AGREEMENTS. KCPL shall have received Affiliate
Agreements, duly executed by each "Affiliate" of UCU, substantially in the form
of EXHIBIT 7.7, as provided in Section 7.7.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval by the
shareholders of the respective parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of KCPL and
UCU;
(b) by either UCU or KCPL (i) if there has been (x) any breach of the
covenants and agreements contained in Section 6.1(b) to the extent such applies
to UCU or KCPL but not to their respective Subsidiaries or Section 6.1(c) of
this Agreement to the extent such applies to UCU or KCPL but not to their
respective Subsidiaries or (y) any breach of any representations, warranties,
covenants or agreements on the part of the other set forth in this Agreement,
which breaches individually or in the aggregate would result in a UCU Material
Adverse Effect or a KCPL Material Adverse Effect, as the case may be, and, in
the case of (x) or (y), which breaches have not been cured within 20 business
days following receipt by the breaching party of notice of such breach or
adequate assurance of such cure shall not have been given by or on behalf of the
breaching party within such 20 business-day period, (ii) if the Board of
Directors of the other or any committee of the Board of Directors of the other
(A) shall withdraw or modify in any adverse manner its approval or
recommendation of this Agreement or the Mergers, (B) shall fail to reaffirm such
approval or recommendation upon the other's request, (C) shall approve or
recommend any acquisition of such party or a material portion of its assets or
any tender offer for shares of capital stock of such party, in each case, other
than by a party hereto or an Affiliate thereof or (D) shall resolve to take any
of the actions specified in clause (A), (B) or (C), or (iii) if any state or
federal law, order, rule or regulation is adopted or issued, which has the
effect, as supported
53
by the written opinion of outside counsel for such party, of prohibiting the
Mergers, or by any party hereto if any court of competent jurisdiction in the
United States or any state shall have issued an order, judgment or decree
permanently restraining, enjoining or otherwise prohibiting the Mergers, and
such order, judgment or decree shall have become final and nonappealable;
(c) by any party hereto, by written notice to the other parties, if
the Effective Time shall not have occurred on or before December 31, 1997 (the
"INITIAL TERMINATION DATE"); PROVIDED, HOWEVER, that the right to terminate the
Agreement under this Section 9.1(c) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before this date;
and PROVIDED, FURTHER, that if on the Initial Termination Date the conditions to
the Closing set forth in Sections 8.1(e), 8.2(f) and/or 8.3(f) shall not have
been fulfilled but all other conditions to the Closing shall be fulfilled or
shall be capable of being fulfilled, then the Initial Termination Date shall be
extended to December 31, 1998;
(d) by any party hereto, by written notice to the other parties, if
the UCU Shareholders' Approval shall not have been obtained at a duly held UCU
Meeting, including any adjournments thereof, or the KCPL Shareholders' Approval
shall not have been obtained at a duly held KCPL Meeting, including any
adjournments thereof;
(e) by KCPL, prior to the approval of this Agreement by the
shareholders of KCPL, upon five days' prior notice to UCU, if, as a result of an
Acquisition Proposal by a party other than UCU or any of its Affiliates, the
Board of Directors of KCPL determines in good faith, after considering
applicable provisions of state law, on the basis of oral or written advice of
outside counsel that acceptance of the Acquisition Proposal is necessary for the
Board of Directors to act in a manner consistent with its fiduciary duties under
applicable law; PROVIDED, HOWEVER, that (i) the Board of Directors of KCPL shall
have concluded in good faith, after considering applicable provisions of state
law and after giving effect to all concessions which may be offered by the other
party pursuant to clause (ii) below, on the basis of oral or written advice of
outside counsel that such action is necessary for the Board of Directors to act
in a manner consistent with its fiduciary duties under applicable law and (ii)
prior to any such termination, KCPL shall, and shall cause its respective
financial and legal advisors to, negotiate with UCU to make such adjustments in
the terms and conditions of this Agreement as would enable KCPL to proceed with
the transactions contemplated herein; or
(f) by UCU, prior to the approval of this Agreement by the
shareholders of UCU, upon five days' prior notice to KCPL, if, as a result of an
Acquisition Proposal by a party other than KCPL or any of its Affiliates, the
Board of Directors of UCU determines in good faith, after considering applicable
provisions of state law, on the basis of oral or written advice of outside
counsel that acceptance of the Acquisition Proposal is necessary for the Board
of Directors to act in a manner consistent with its fiduciary duties under
applicable law; PROVIDED, HOWEVER, that (i) the Board of Directors of UCU shall
have concluded in good
54
faith, after considering applicable provisions of state law and after giving
effect to all concessions which may be offered by the other party pursuant to
clause (ii) below, on the basis of oral or written advice of outside counsel
that such action is necessary for the Board of Directors to act in a manner
consistent with its fiduciary duties under applicable law; and (ii) prior to
any such termination, UCU shall, and shall cause its respective financial and
legal advisors to, negotiate with KCPL to make such adjustments in the terms
and conditions of this Agreement as would enable UCU to proceed with the
transactions contemplated herein.
Section 9.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either KCPL or UCU pursuant to Section 9.1 there shall be no
liability on the part of either KCPL or UCU or their respective officers or
directors hereunder, except that Section 7.16 and Section 9.3, the agreement
contained in the last sentence of Section 7.1, Section 10.2 and Section 10.8
shall survive the termination.
Section 9.3 TERMINATION FEE; EXPENSES.
(a) TERMINATION FEE UPON BREACH OR WITHDRAWAL OF APPROVAL. If this
Agreement is terminated at such time that this Agreement is terminable pursuant
to Section 9.1(b)(i), then: (i) the breaching party shall promptly (but not
later than five business days after receipt of notice from the non-breaching
party) pay to the non-breaching party in cash an amount equal to $10 million in
cash, minus any such amounts as may have been previously paid by such breaching
party pursuant to this Section 9.3; PROVIDED, HOWEVER, that, if this Agreement
is terminated by a party as a result of a willful breach by the other party, the
breaching party shall pay to the non-breaching party a fee equal to $35 million
in cash, minus any such amounts as may have been previously paid by such
breaching party pursuant to this Section 9.3, and (ii) if (A) at the time of the
breaching party's willful breach of this Agreement, there shall have been
previously made an Acquisition Proposal involving such party or any of its
Affiliates (whether or not such Acquisition Proposal shall have been rejected or
shall have been withdrawn prior to the time of termination) and (B) within two
and one-half years of any termination by the non-breaching party, the breaching
party or an Affiliate thereof becomes a Subsidiary of such offeror or a
Subsidiary of an Affiliate of such offeror or accepts a written offer to
consummate or consummates an Acquisition Proposal with such offeror or an
Affiliate thereof, then such breaching party (jointly and severally with its
Affiliates), upon the signing of a definitive agreement relating to such
Acquisition Proposal, or, if no such agreement is signed then at the closing
(and as a condition to the closing) of such breaching party becoming such a
Subsidiary or of such Acquisition Proposal, shall pay to the non-breaching party
an additional fee equal to $58 million in cash minus any such amount as may have
been previously paid by such breaching party pursuant to this Section 9.3.
(b) TERMINATION FEE UPON FAILURE TO OBTAIN SHAREHOLDER APPROVAL. If
this Agreement is terminated following a failure of the shareholders of any one
of the parties to grant the necessary approval described in Section 4.13 or
5.13, the party not receiving
55
shareholder approval shall pay to the other a fee equal to $5 million;
provided that if any fee is otherwise payable or has been paid under Section
9.3(a) or Section 9.3(c), any amounts (x) paid pursuant to this Section
9.3(b) shall be deducted from such amounts, or (y) otherwise payable pursuant
to this Section 9.3(b) shall not be paid.
(c) ADDITIONAL TERMINATION FEES. If (i) this Agreement (A) is
terminated by any party pursuant to Section 9.1(e) or Section 9.1(f), (B) is
terminated in the circumstances described in Section 9.3(b) above, or (C) is
terminated as a result of such party's breach of Section 7.4, (ii) at the time
of such termination or prior to the meeting of such party's shareholders there
shall have been an Acquisition Proposal involving, such party or any of its
Affiliates (whether or not such offer shall have been rejected or shall have
been withdrawn prior to the time of such termination or of the meeting) and
(iii) within two and one-half years of any such termination described in clause
(i) above, the party or its Affiliate which is the subject of the Acquisition
Proposal (the "TARGET PARTY") becomes a Subsidiary of such offeror or accepts a
written offer to consummate or consummates an Acquisition Proposal with such
offeror or Affiliate thereof, then such Target Party (jointly and severally with
its Affiliates), upon the signing of a definitive agreement relating to such an
Acquisition Proposal, or, if no such agreement is signed then at the closing
(and as a condition to the closing) of such Target Party becoming such a
Subsidiary or of such Acquisition Proposal, shall pay to the other party a
termination fee equal to $58 million in cash minus any amounts as may have been
previously paid by the Target Party pursuant to this Section 9.3.
(d) EXPENSES. The parties agree that the agreements contained in
this Section 9.3 are an integral part of the transactions contemplated by this
Agreement and constitute liquidated damages and not a penalty. Notwithstanding
anything to the contrary contained in this Section 9.3, if one party fails to
promptly pay to the other any fee due under Sections 9.3(a), (b) or (c), in
addition to any amounts paid or payable pursuant to such sections, the
defaulting party shall pay the costs and expenses (including legal fees and
expenses) in connection with any action, including the filing of any lawsuit or
other legal action, taken to collect payment, together with interest on the
amount of any unpaid fee at the publicly announced prime rate of Citibank, N.A.
from the date such fee was required to be paid.
Section 9.4 AMENDMENT. This Agreement may be amended by the Boards
of Directors of the parties hereto, at any time before or after approval hereof
by the shareholders of KCPL and UCU and prior to the Effective Time, but after
such approvals, no such amendment shall (a) alter or change the amount or kind
of shares, rights or any of the proceedings of the treatment of shares under
Article II or (b) alter or change any of the terms and conditions of this
Agreement if any of the alterations or changes, alone or in the aggregate, would
materially adversely affect the rights of holders of KCPL Common Stock or UCU
Common Stock, except for alterations or changes that could otherwise be adopted
by the Board of Directors of the Surviving Corporation, without the further
approval of such shareholders, as applicable. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
56
Section 9.5 WAIVER. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein, to the extent permitted by applicable
law. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 NON-SURVIVAL; EFFECT OF REPRESENTATIONS AND WARRANTIES.
No representations or warranties in this Agreement shall survive the Effective
Time, except as otherwise provided in this Agreement.
Section 10.2 BROKERS. KCPL represents and warrants that, except for
Merrill Lynch whose fees have been disclosed to UCU prior to the Original
Execution Date, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Mergers or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of KCPL. UCU represents and warrants that, except for DLJ, whose
fees have been disclosed to KCPL prior to the Original Execution Date, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Mergers or the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
UCU.
Section 10.3 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given (a) when delivered
personally, (b) when sent by reputable overnight courier service, or (c) when
telecopied (which is confirmed by copy sent within one business day by a
reputable overnight courier service) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(i) If to KCPL or Sub, to:
Kansas City Power & Light Company
1201 Walnut
Kansas City, Missouri 64106
Attn: Chief Executive Officer
Telecopy: (816) 556-2418
Telephone: (816) 556-2200
57
with a copy to
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: Nancy A. Lieberman, Esq.
Telecopy: (212) 735-2000
Telephone: (212) 735-3000
and
(ii) if to UCU, to:
UtiliCorp United Inc.
911 Main Street
Suite 3000
Kansas City, Missouri 64105
Attn: Chief Executive Officer
Telecopy: (816) 467-3595
Telephone: (816) 421-6600
with a copy to
Blackwell Sanders Matheny Weary & Lombardi L.C.
2300 Main Street, Suite 1100
Kansas City, Missouri 64108
Attn: Ralph G. Wrobley, Esq.
Telecopy: (816) 274-6914
Telephone: (816) 274-6800
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Stephen E. Jacobs, Esq.
Telecopy: (212) 310-8007
Telephone: (212) 310-8000
58
(iii) if to the Company, to:
c/o Chief Executive Officer of KCPL at
the address set forth above
and
c/o Chief Executive Officer of UCU at
the address set forth above.
Section 10.4 MISCELLANEOUS. This Agreement as amended as of the
Amendment Date (including the documents and instruments referred to herein) (a)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof other than the Confidentiality Agreement,
(b) shall not be assigned by operation of law or otherwise and (c) shall be
governed by and construed in accordance with the laws of the State of Missouri
applicable to contracts executed in and to be fully performed in such State,
without giving effect to its conflicts of law rules or principles and except to
the extent the provisions of this Agreement (including the documents or
instruments referred to herein) are expressly governed by or derive their
authority from the MGCL.
Section 10.5 INTERPRETATION. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement, respectively, unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "INCLUDE," "INCLUDES" or "INCLUDING" are used in
this Agreement, they shall be deemed to be followed by the words "WITHOUT
LIMITATION."
Section 10.6 COUNTERPARTS; EFFECT. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
Section 10.7 PARTIES' INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except for
rights of Indemnified Parties as set forth in Section 7.5, nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement. Notwithstanding the foregoing and any other provision of this
Agreement, and in addition to any other required action of the Board of
Directors of the Surviving Corporation (a) a majority of the directors (or their
successors) serving on the Board of Directors of the Surviving Corporation who
are designated by KCPL pursuant to Section 7.12 shall be entitled during the
three year period commencing at the Effective Time (the "THREE YEAR PERIOD") to
enforce the provisions of Section 7.8, Section 7.9, Section 7.10 and Section
7.13 on behalf of the KCPL officers, directors and employees, as the case may
59
be, and (b) a majority of the directors (or their successors) serving on the
Board of Directors of the Surviving Corporation who are designated by UCU
pursuant to Section 7.12 shall be entitled during the Three Year Period to
enforce the provisions of, Sections 7.8, Section 7.9, Section 7.10 and
Section 7.13 on behalf of the UCU officers, directors and employees, as the
case may be. Such directors' rights and remedies under the preceding sentence
are cumulative and are in addition to any other rights and remedies they may
have at law or in equity, but in no event shall this Section 10.7 be deemed
to impose any additional duties on any such directors. The Surviving
Corporation shall pay, at the time they are incurred, all costs, fees and
expenses of such directors incurred in connection with the assertion of any
rights on behalf of the persons set forth above pursuant to this Section 10.7.
Section 10.8 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. Each party
to this Agreement waives, to the fullest extent permitted by applicable law, (a)
any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement and (b) without
limitation to Section 9.3, any right it may have to receive damages from any
other party based on any theory of liability for any special, indirect,
consequential (including lost profits) or punitive damages.
Section 10.9 ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Missouri or in Missouri state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any federal court located in the State of
Missouri or any Missouri state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal or state court sitting in the
State of Missouri.
60
IN WITNESS WHEREOF, KCPL, Sub, UCU and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
KANSAS CITY POWER & LIGHT COMPANY
Attest: illegible By: /s/ A. Drue Jennings
--------------- -------------------------
Secretary Name: A. Drue Jennings
Title: Chairman of the Board, President
and Chief Executive Officer
KC MERGER SUB, INC.
Attest: illegible By: /s/ A. Drue Jennings
--------------- -------------------------
Secretary Name: A. Drue Jennings
Title: President
UTILICORP UNITED INC.
Attest: illegible By: /s/ Richard C. Green, Jr.
--------------- -------------------------
Secretary Name: Richard C. Green, Jr.
Title: Chairman of the Board, President
and Chief Executive Officer
KC UNITED CORP.
Attest: illegible By: /s/ A. Drue Jennings
--------------- -------------------------
Secretary Name: A. Drue Jennings
Title: President
61