Exhibit No. 99.2
EXECUTION COPY
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WESTERN RESOURCES, INC.,
KANSAS GAS AND ELECTRIC COMPANY,
NKC, INC.,
AND
KANSAS CITY POWER & LIGHT COMPANY
Dated as of March 18, 1998
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement"),
dated as of March 18, 1998, by and among Western Resources, Inc., a Kansas
corporation ("Western Resources"), Kansas Gas and Electric Company, a Kansas
corporation and wholly owned subsidiary of Western Resources ("KGE"), and NKC,
Inc., a newly formed Kansas corporation and wholly owned subsidiary of Western
Resources ("New KC"), on the one hand, and Kansas City Power & Light Company, a
Missouri corporation ("KCPL"), on the other hand.
WHEREAS, Western Resources and KCPL entered into an agreement and plan
of merger (the "Original Agreement"), dated as of February 7, 1997 (the
"Original Execution Date"), and wish to amend and restate the Original Agreement
as specified herein;
WHEREAS, Western Resources' rate-regulated electric division ("KPL") is
engaged in the production, purchase, transmission, distribution and sale of
electricity (the "KPL Business");
WHEREAS, immediately prior to the KCPL Effective Time (as defined in
Section 3.3), Western Resources will contribute to KGE all of the KPL Assets (as
defined in Section 1.1) and KGE will assume all of the Assumed Liabilities (as
defined in Section 1.2, such contribution and assumption, the "Asset
Contribution")), upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, immediately prior to the KGE Effective Time, Western Resources
will contribute to KGE shares of Western Resources Common Stock (as defined in
Section 1.6 (the "Stock Contribution")), upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the boards of directors of each of Western Resources and KGE
have approved the Asset Contribution and the Stock Contribution, upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, the respective boards of directors of each of KCPL and New KC
have approved the merger of KCPL with and into New KC with New KC being the
surviving corporation (the "KCPL Merger"), upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the respective boards of directors of each of New KC, Western
Resources and KGE have approved the merger of KGE with and into New KC with New
KC being the surviving corporation (the "KGE Merger"), upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, it is intended that, for federal income tax purposes the KGE
Merger and the KCPL Merger shall qualify as a reorganization under the
provisions of
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Section 368(a) of the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder (the "Code");
WHEREAS, for purposes of Section 354(a) of the Code, the Western
Resources Common Stock distributed pursuant to the Western Resources Stock
Distribution (as defined in Section 4.1 hereof) shall be treated as stock of
Western Resources, a party to the reorganization, distributed in pursuance of
the plan of reorganization;
WHEREAS, Western Resources, KGE, KCPL and New KC desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement; and
WHEREAS, KCPL and UtiliCorp United, Inc., a Delaware corporation
("UtiliCorp"), were parties to that certain Amended and Restated Agreement and
Plan of Merger among KCPL, KC Merger Sub, Inc., a Delaware corporation,
UtiliCorp and KC United Corp., a Delaware corporation, dated as of January 19,
1996, as amended and restated as of May 20, 1996 (the "UtiliCorp Agreement"),
which KCPL has terminated in accordance with the terms thereof.
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 CONTRIBUTIONS
Section 1.1 THE ASSET CONTRIBUTION.
(a) CONTRIBUTION. Immediately prior to the KCPL Effective Time and as a
condition precedent to the KGE Merger, Western Resources shall contribute, or
cause to be contributed, to KGE, and KGE shall acquire, all of the right, title
and interest of Western Resources in, to and under the assets, property and
interests owned by Western Resources that are used in, or related to or
generated by, the KPL Business, of every type, character and description,
tangible and intangible, real, personal and mixed, accrued, contingent or
otherwise, wherever located and whether or not reflected on the books and
records of Western Resources as of the Closing Date (as defined in Section 5.1)
(the "KPL Assets"), other than securities, the corporate headquarters of Western
Resources and those assets necessary for the operation of Western Resources as a
holding company after the Closing Date, the categories of which are described in
Section 1.1(b) of the Western Resources Disclosure Schedule (as defined in
Section 7.2 hereof) (the "Non-KPL Assets").
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(b) KPL BALANCE SHEET; NON-KPL ASSETS. Section 1.1(b) of the Western
Resources Disclosure Schedule sets forth (i) an unaudited pro forma balance
sheet that represents in all material respects, as of December 31, 1997, the
assets and liabilities of KPL, as though the Asset Contribution had been made on
such date (the "KPL Balance Sheet"), and (ii) a list, as of the date hereof, of
the Non-KPL Assets which are not reflected in such balance sheet. The KPL Assets
shall include such assets, properties and interests as are necessary to enable
New KC to operate the KPL Business in accordance with past practice. The Non-KPL
Assets shall not include any asset, property or interest as is necessary to
operate the KPL Business in accordance with past practice.
(c) KPL BUSINESS AND KGE AT CLOSING. At the Closing, the KPL Business
and KGE will contain substantially the same assets and liabilities as they did
as of December 31, 1997, subject to modifications that reflect ordinary course
operation of the KPL Business and KGE in accordance with past practice prior to
the date hereof. Western Resources shall not make or permit to be made any
changes in the accounting methods used with respect to the KPL Business or KGE,
except as required by applicable law, rule, regulation or GAAP.
Section 1.2 LIABILITIES ASSUMED. Concurrently with the Asset
Contribution contemplated in Section 1.1, KGE shall assume and agree to pay,
perform and discharge when due all debts, claims, losses, liabilities, leases
and obligations whatsoever, including, without limitation, debts, indebtedness
for borrowed money, guaranties, liabilities, obligations, and claims with
respect to any contracts included in the KPL Business, that arise out of, or
relate to or are generated by, the KPL Assets or the operations of the KPL
Business, whether arising before or after the Asset Contribution and whether
known or unknown, fixed or contingent (the "Assumed Liabilities"). The Assumed
Liabilities shall also include an aggregate principal amount of indebtedness for
borrowed money of Western Resources so that aggregate total indebtedness for
borrowed money (including preferred stock) of KGE equals $1.9 billion
immediately prior to the KGE Effective Time; provided, however, that the Assumed
Liabilities shall not include indebtedness for borrowed money of Western
Resources if KGE immediately prior to the KGE Effective Time already has
indebtedness for borrowed money (including preferred stock) of $1.9 billion, it
being understood that in no case shall the indebtedness for borrowed money
(including preferred stock) of KGE exceed $1.9 billion immediately prior to the
KGE Effective Time.
Section 1.3 RETAINED LIABILITIES. Except for the Assumed Liabilities,
Western Resources shall retain and have full responsibility for and obligation
with respect to all debts, claims, losses, indebtedness for borrowed money,
guaranties, liabilities, leases and obligations whatsoever of Western Resources
and its Affiliates (as defined in Section 6.17 hereof) and Subsidiaries (as
defined in Section 6.1 hereof) (other than New KC after the KGE Effective Time
(as defined herein)).
Section 1.4 INSTRUMENTS OF TRANSFER. The conveyance, transfer,
assignment and delivery of the KPL Assets to KGE and the assumption of the
Assumed Liabilities by KGE shall be effected by one or more assignments,
assumption agreements, regulatory orders and
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any other transfer documents, as may be necessary, or as KCPL may reasonably
request. As to the real property interests held in fee included in the KPL
Assets, the conveyances shall be by special warranty deed, subject to Permitted
Liens (as defined in Section 7.20).
Section 1.5 ASSIGNMENT OR ASSUMPTION OF CONTRACT RIGHTS. Anything in
this Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign or assume any claim, contract, lease,
commitment or any claim or right or any benefit arising thereunder or resulting
therefrom if an attempted assignment or assumption thereof, without the consent
of a third party thereto, would constitute a breach thereof. If such consent is
not obtained, or if an attempted assignment thereof would be ineffective or
would affect the rights of Western Resources thereunder so that KGE or New KC
would not in fact receive all such rights, Western Resources will cooperate with
New KC in arrangements reasonably designed to provide for New KC, at the expense
of New KC, the benefits under any such claims, contracts, licenses, leases or
commitments including, without limitation, enforcement for the benefit of New KC
of any and all rights of Western Resources against a third party thereto arising
out of the breach or cancellation by such third party or otherwise; and any
transfer or assignment to New KC by Western Resources of any property or
property rights or any contract or agreement which shall require the consent or
approval of any third party shall be made subject to such consent or approval
being obtained; provided, however, that any third party consents to the
assignment of such contracts shall provide that Western Resources shall be
released in full from its obligations under such contracts.
Section 1.6 THE STOCK CONTRIBUTION.
Immediately prior to the KGE Effective Time and as a condition
precedent to the KGE Merger, Western Resources shall contribute, or cause to be
contributed, to KGE, shares of partly paid Western Resources Common Stock, par
value $5.00 per share (the "Western Resources Common Stock"). The amount of
Western Resources Common Stock to be contributed to KGE pursuant to this Section
shall be equal to the product of (x) the number of shares of Common Stock,
without par value, of KCPL ("KCPL Common Stock") (other than shares of KCPL
Common Stock beneficially owned by Western Resources or KCPL, Dissenting Shares
(as defined in Section 2.4(a)) and shares (or any portion thereof) of KCPL
Common Stock in respect of which cash is to be paid in lieu of fractional shares
pursuant to Section 4.1) issued and outstanding immediately prior to the Stock
Contribution times (y) the Conversion Ratio. The term "Conversion Ratio" means
the quotient (rounded to the nearest 1/100,000) determined by dividing $23.50 by
the Western Resources Index Price (as defined below); provided, however, that if
the Western Resources Index Price (i) is greater than $58.46, the Conversion
Ratio shall be fixed at 0.449, provided that if 0.449 multiplied by the Western
Resources Index Price exceeds $30.00, the Conversion Ratio shall mean the
quotient (rounded to the nearest 1/100,000) obtained by dividing $30.00 by the
Western Resources Index Price, (ii) is greater than $55.03 but less than or
equal to $58.46, the Conversion Ratio shall mean the quotient (rounded to the
nearest 1/100,000) obtained by dividing $26.25 by the Western Resources Index
Price, (iii) is greater than $52.41 but less
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than or equal to $55.03, the Conversion Ratio shall be fixed at 0.477, (iv) is
greater than $50.00 but less than or equal to $52.41, the Conversion Ratio shall
mean the quotient (rounded to the nearest 1/100,000) determined by dividing
$25.00 by the Western Resources Index Price, (v) is greater than $47.00 but less
than or equal to $50.00, the Conversion Ratio shall be fixed at 0.500, (vi) is
greater than $35.01 but less than or equal to $38.27, the Conversion Ratio shall
be fixed at 0.614, (vii) is greater than $29.78 but less than or equal to
$35.01, the Conversion Ratio shall mean the quotient (rounded to the nearest
1/100,000 obtained by dividing $21.50 by the Western Resources Index Price or
(viii) is less than or equal to $29.78, the Conversion Ratio shall be fixed at
0.722. The term "Western Resources Index Price" means the aggregate of the
average of the high and low sales prices of Western Resources Common Stock (as
reported on the New York Stock Exchange (the "NYSE") Composite Transactions
reporting system as published in The Wall Street Journal or, if not published
therein, in another authoritative source) on each of the twenty consecutive NYSE
trading days ending the tenth NYSE trading day immediately preceding the KGE
Effective Time, divided by 20. Notwithstanding the foregoing, no certificates or
scrip representing fractional shares of Western Resources Common Stock shall be
contributed to KGE in the Stock Contribution.
Section 1.7 CERTAIN TAXES. Each of New KC (after the KGE Merger) and
Western Resources shall pay one half of the total of (i) all transfer, stamp,
sales or use Taxes (as defined in Section 6.9) and any filing, recording,
regulatory or similar fees or assessments payable or determined to be payable in
connection with the execution, delivery or performance of this Agreement or the
transactions contemplated hereby and (ii) all costs and expenses incurred by
Western Resources or KGE arising out of or relating to obtaining any third party
consents and approvals in connection with the Asset Contribution and the KGE
Merger.
ARTICLE II
MERGER OF KCPL WITH AND INTO NEW KC
Section 2.1 THE KCPL MERGER. Upon the terms and subject to the
conditions of this Agreement, at the KCPL Effective Time (as defined in Section
2.3), KCPL shall be merged with and into New KC in accordance with the laws of
the States of Missouri and Kansas. New KC shall be the surviving corporation in
the KCPL Merger and shall continue its corporate existence under the laws of the
State of Kansas. The effects and the consequences of the KCPL Merger shall be as
set forth in Section 2.2.
Section 2.2 EFFECTS OF THE KCPL MERGER. At the KCPL Effective Time, (i)
the Articles of Incorporation of New KC, as in effect immediately prior to the
KCPL Effective Time, shall be the articles of incorporation of New KC (the "New
KC Articles") until thereafter amended as provided by law and the New KC
Articles, and (ii) the by-laws of New KC, as in effect immediately prior to the
KCPL Effective Time, shall be the by-laws
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of New KC (the "New KC By-Laws") until thereafter amended as provided by law,
the New KC Articles, and such by-laws. Subject to the foregoing, the additional
effects of the KCPL Merger shall be as provided in the applicable provisions of
the General and Business Corporation Law of Missouri (the "MGBCL") and the
General Corporation Code of the State of Kansas (the "KGCC").
Section 2.3 EFFECTIVE TIME OF THE KCPL MERGER. On the Closing Date, a
certificate of merger shall be executed and filed by New KC and KCPL with the
Secretary of State of the State of Kansas pursuant to the KGCC and articles of
merger shall be executed and filed with the Secretary of State of the State of
Missouri pursuant to the MGBCL. The KCPL Merger shall become effective upon the
certification by the Secretary of State of the State of Kansas that the
certificate of merger relating to the KCPL Merger has been duly filed (the "KCPL
Effective Time").
Section 2.4 EFFECT OF THE KCPL MERGER ON KCPL AND NEW KC CAPITAL STOCK.
(a) CAPITAL STOCK OF KCPL. As of the KCPL Effective Time, by virtue of
the KCPL Merger and upon surrender by any holder of shares of KCPL Common Stock
of such shares, subject to Section 2.4(b) and Section 2.4(d), each issued and
outstanding share of KCPL Common Stock (other than shares of KCPL Common Stock
beneficially owned by KCPL either directly or through a wholly owned Subsidiary
and shares of KCPL Common Stock ("Dissenting Shares") that are owned by
shareholders ("Dissenting Shareholders") exercising appraisal rights pursuant to
Section 351.455 of the MGBCL), shall represent one fully paid and nonassessable
share of Series A Common Stock, without par value, of New KC ("New KC Series A
Common Stock"). As of the KCPL Effective Time, by virtue of the KCPL Merger and
without any action on the part of Western Resources, each share of New KC Series
A Common Stock previously owned by Western Resources shall be cancelled.
(b) CANCELLATION OF CERTAIN KCPL COMMON STOCK AND NEW KC COMMON STOCK.
As of the KCPL Effective Time, by virtue of the KCPL Merger and without any
action on the part of any holder of any capital stock of KCPL or New KC, any
shares of KCPL Common Stock or New KC Common Stock that are owned by KCPL as
treasury stock or otherwise or by New KC or by any wholly owned Subsidiary of
New KC or KCPL shall be canceled and retired and shall cease to exist and no
stock of New KC or other consideration shall be issued or delivered in exchange
therefor.
(c) REDEMPTION OF KCPL PREFERRED STOCK. Prior to the KCPL Effective
Time, the Board of Directors of KCPL shall call for redemption all outstanding
shares of KCPL Preferred Stock (as defined in Section 6.3) 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
and take all other required actions so that all shares of KCPL Preferred Stock
shall be redeemed and no such shares shall be deemed to be outstanding at the
KCPL Effective Time or entitled to vote on the approval of this Agreement and
the transactions contemplated hereby.
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(d) DISSENTERS' RIGHTS. No Dissenting Shareholder shall be entitled to
shares of New KC Series A Common Stock or cash in lieu of fractional shares
thereof or any distributions pursuant to this Article II or Section 4.1 unless
and until the holder thereof shall have failed to perfect or shall have
effectively withdrawn or lost such holder's right to dissent from the KCPL
Merger under the MGBCL, and any Dissenting Shareholder shall be entitled to
receive only the payment provided by Section 351.455 of the MGBCL with respect
to shares of KCPL Common Stock owned by such Dissenting Shareholder. If any
Person who otherwise would be deemed a Dissenting Shareholder shall have failed
to perfect properly or shall have effectively withdrawn or lost the right to
dissent with respect to any shares of KCPL Common Stock, such shares of KCPL
Common Stock shall thereupon be treated as though such shares of KCPL Common
Stock had been converted into shares of New KC Series A Common Stock pursuant to
Section 2.4(a) hereof, and, to the extent such failure, withdrawal or loss
occurs subsequent to the Closing Date, Western Resources and New KC shall issue
shares of Western Resources Common Stock and New KC Series A Common Stock in
accordance with Sections 1.6 and 2.4(a), respectively, of this Agreement. KCPL
shall give Western Resources and New KC (i) prompt notice of any written demands
for appraisal, attempted withdrawals of such demands, and any other instruments
served pursuant to applicable law received by KCPL relating to shareholders'
rights of appraisal and (ii) the opportunity to direct all negotiations and
proceedings with respect to demand for appraisal under the MGBCL. KCPL shall
not, except with the prior written consent of Western Resources and New KC,
voluntarily make any payment with respect to any demands for appraisals of
Dissenting Shares, offer to settle or settle any such demands or approve any
withdrawal of any such demands.
Section 2.5 DEBT OF NEW KC. Immediately after the KCPL Effective Time
but prior to the KGE Effective Time (as defined in Section 3.3), New KC shall
cause KLT, Inc., a wholly owned subsidiary of New KC as a result of the KCPL
Merger ("KLT"), to assume any indebtedness for borrowed money of New KC in
excess of $800 million aggregate principal amount (including preferred stock).
Section 2.6 NAME OF NEW KC. Prior to the KCPL Effective Time, Western
Resources and KCPL shall agree as to a new name for New KC and shall take all
actions necessary to change its name.
ARTICLE III
MERGER OF KGE WITH AND INTO NEW KC
Section 3.1 THE KGE MERGER. Upon the terms and subject to the
conditions of this Agreement, at the KGE Effective Time, KGE shall be merged
with and into New KC in accordance with the laws of the State of Kansas. New KC
shall be the surviving corporation in the KGE Merger and shall continue its
corporate existence under the laws of the State of Kansas. New KC after the KGE
Effective Time is sometimes referred to herein
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as the "Surviving Corporation." The effects and the consequences of the KGE
Merger shall be as set forth in Section 3.2.
Section 3.2 EFFECTS OF THE KGE MERGER.
(a) NEW KC ARTICLES AND BY-LAWS. At the KGE Effective Time, (i) the
articles of incorporation of New KC, as in effect immediately prior to the KGE
Effective Time, shall be the articles of incorporation of the Surviving
Corporation, until thereafter amended as provided by law and the New KC
Articles, and (ii) the by-laws of New KC as in effect immediately prior to the
KGE Effective Time, shall be the by-laws of the Surviving Corporation, until
thereafter amended as provided by law, the New KC Articles, and such by-laws.
Subject to the foregoing, the additional effects of the KGE Merger shall be as
provided in the applicable provisions of the KGCC.
(b) DISSENTERS' RIGHTS. Western Resources shall not exercise
dissenters' rights under the KGCC with respect to the KGE Merger.
Section 3.3 EFFECTIVE TIME OF THE KGE MERGER. On the Closing Date, a
certificate of merger shall be executed and filed by New KC and KGE with the
Secretary of State of the State of Kansas pursuant to the KGCC. The KGE Merger
shall become effective upon the certification by the Secretary of State of the
State of Kansas that the certificate of merger relating to the KGE Merger has
been duly filed (the "KGE Effective Time"), provided, that, the KGE Effective
Time shall occur after the KCPL Effective Time.
Section 3.4 EFFECT OF THE KGE MERGER ON KGE CAPITAL STOCK. As of the
KGE Effective Time, by virtue of the KGE Merger and without any action on the
part of Western Resources all of the issued and outstanding shares of Common
Stock, without par value, of KGE ("KGE Common Stock"), shall be converted into
and become such number of shares of Series B Common Stock, without par value, of
New KC ("New KC Series B Common Stock"), representing, assuming there are no
Dissenting Shares, 80.1% of the fully diluted outstanding shares of New KC.
Immediately after consummation of the KCPL Merger and the KGE Merger, assuming
there are no Dissenting Shares, the outstanding shares of New KC Series A Common
Stock to be issued pursuant to Section 2.4(a) shall constitute 19.9% of the
fully diluted outstanding shares of New KC.
Section 3.5 EFFECT OF THE KGE MERGER ON CERTAIN WESTERN RESOURCES
COMMON STOCK. As of the KGE Effective Time, by virtue of the KGE Merger the
Western Resources Common Stock contributed to KGE pursuant to Section 1.6 hereof
shall become fully paid and nonassessable.
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ARTICLE IV
ADDITIONAL TRANSACTIONS
Section 4.1 DISTRIBUTION OF WESTERN RESOURCES COMMON STOCK. Immediately
after the KGE Effective Time, New KC shall, in connection with the KGE Merger,
distribute to holders of New KC Series A Common Stock the Western Resources
Common Stock contributed to KGE pursuant to the Stock Contribution to each
holder of New KC Series A Common Stock (including any shares of Western
Resources Common Stock issued pursuant to Section 2.4(d), the "Western Resources
Stock Distribution"). Each share of New KC Series A Common Stock shall be
entitled to receive a distribution of that number of shares of Western Resources
Common Stock equal to the product of (a) the number of shares of Western
Resources Common Stock contributed to KGE pursuant to the Stock Contribution
times (b) a quotient, the numerator of which is 1 and the denominator of which
is the total number of shares of New KC Series A Common Stock issued and
outstanding immediately after the KCPL Effective Time. The number of shares of
New KC Series A Common Stock and the number of shares of Western Resources
Common Stock, respectively, to be issued in the KCPL Merger to holders of KCPL
Common Stock and distributed in the Western Resources Stock Distribution to
holders (other than Western Resources) of New KC Series A Common Stock are
together sometimes referred to herein as the "Aggregate Consideration."
Notwithstanding the foregoing, no certificates or scrip representing fractional
shares of Western Resources Common Stock shall be distributed pursuant to this
Section 4.1. A holder of New KC Series A Common Stock who would otherwise have
been entitled to a fractional share of Western Resources 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 Western Resources Index
Price, without any interest thereon.
Section 4.2 DISTRIBUTION OF KLT CAPITAL STOCK TO WESTERN RESOURCES.
Immediately after the KGE Effective Time, New KC shall distribute to Western
Resources all of the outstanding shares of capital stock of KLT (the "KLT Stock
Distribution").
Section 4.3 CONVERSION OF NEW KC SERIES B COMMON STOCK OWNED BY WESTERN
RESOURCES. Immediately after the Western Resources Stock Distribution, without
any action on the part of Western Resources, each share of New KC Series B
Common Stock owned by Western Resources shall automatically represent one fully
paid and nonassessable share of New KC Series A Common Stock (the "Series B
Conversion").
ARTICLE V
THE CLOSING
Section 5.1 CLOSING. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxxxxx,
000 Xxxxx Xxxxxx, Xxx
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Xxxx, Xxx Xxxx 00000 at 10:00 A.M., local time, on the tenth NYSE trading day
immediately following the date on which the last of the conditions set forth in
Article X hereof is fulfilled or has been waived or at such other time, date and
place as Western Resources and KCPL shall mutually agree (the "Closing Date").
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF KCPL
KCPL makes the following representations and warranties to Western
Resources, KGE and New KC:
Section 6.1 ORGANIZATION AND QUALIFICATION. KCPL and each of the KCPL
Subsidiaries (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 KCPL Material Adverse Effect (as defined in Section
6.6). As used in this Agreement, 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 a majority of the directors
or similar members of the governing body of such corporation or entity shall at
the time be held, directly or indirectly, by such person. The term "KCPL
Subsidiary" shall mean a Subsidiary of KCPL in which KCPL's equity investment
exceeds $25 million.
Section 6.2 SUBSIDIARIES. Section 6.2 of the schedule delivered by KCPL
to Western Resources on the date hereof (the "KCPL Disclosure Schedule") sets
forth a list as of the date hereof of all the KCPL Subsidiaries. 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 6.2 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,
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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 6.3 CAPITALIZATION. As of the date hereof, the authorized
capital stock of KCPL consists of 150,000,000 shares of KCPL Common Stock,
without par value, 401,157 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 March 17, 1998, (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) 35,811 shares of KCPL Common Stock
were held by KCPL in its treasury or by its wholly owned Subsidiaries, (iii)
399,557 shares of KCPL Cumulative Preferred were issued and of such issued
shares, 8,934 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, (vi) $150,000,000 of Company-Obligated
Mandatorily Redeemable Preferred Securities of a subsidiary trust holding solely
KCPL Subordinated Debentures, and (vii) no bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into securities having the
right to vote) on any matters on which shareholders 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 date hereof, except as set forth in
Section 6.3 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 Subsidiary of KCPL is a
party or by which any of them are bound obligating KCPL or any Subsidiary of
KCPL 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
Subsidiary of KCPL or obligating KCPL or any Subsidiary of KCPL to grant, extend
or enter into any such option, warrant, call, right, commitment or agreement.
Except as set forth in Section 6.3 of the KCPL Disclosure Schedule, or other
than in connection with the KCPL Stock Plans, after the KGE Effective Time,
there will be no option, warrant, call, right, commitment or agreement
obligating KCPL or any Subsidiary of KCPL 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 Subsidiary of KCPL or obligating KCPL or any Subsidiary of KCPL to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement.
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Section 6.4 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 6.13) and the applicable KCPL Required Statutory
Approvals (as defined in Section 6.4(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 Western Resources and KGE,
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 6.4(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 (any such violation, conflict, breach, default, right of
termination, modification, cancellation or acceleration, loss or creation, is
referred to herein as a "Violation" with respect to KCPL and such term when used
in Article VII having a correlative meaning with respect to Western Resources
and KGE) 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, (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 6.4(c)) applicable to KCPL
or any of the KCPL Subsidiaries or any of their respective properties or assets
or (iii) subject to obtaining the third-party consents set forth in Section
6.4(b) of the KCPL Disclosure Schedule (the "KCPL 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 KCPL or any of the KCPL Subsidiaries 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.
(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
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(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 6.4(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 6.7, Section 6.10, or
Section 6.11 of the KCPL Disclosure Schedule, or as disclosed in the KCPL SEC
Reports (as defined in Section 6.5) filed prior to the date hereof, neither KCPL
nor any of the KCPL Subsidiaries 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 Sections 6.7, 6.10
and 6.11 of the KCPL Disclosure Schedule or as disclosed in the KCPL SEC Reports
filed prior to the date hereof, KCPL and the KCPL Subsidiaries 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.
Neither KCPL nor any of the KCPL Subsidiaries is 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 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 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 6.5 REPORTS AND FINANCIAL STATEMENTS. The filings required to
be made by KCPL and the KCPL Subsidiaries since January 1, 1994 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
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failure of which to have been made or to so comply would not result in a KCPL
Material Adverse Effect. "KCPL SEC Reports" shall mean 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, 1994 (as such documents have since the time of their filing been amended). 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 date hereof, are included (or incorporated by reference) in
the KCPL SEC Reports.
Section 6.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Section 6.6 of the KCPL Disclosure Schedule and in the KCPL SEC Reports filed
prior to the date hereof, since December 31, 1996, KCPL and each of the KCPL
Subsidiaries have conducted their business only in the ordinary course of
business consistent with past practice (except that the operations of KLT and
KCPL's marketing business have been conducted in the ordinary course of business
consistent with the KCPL Business Plan (as defined in Section 8.1)) and there
has not been any KCPL Material Adverse Effect. For purposes of this Agreement, a
"KCPL Material Adverse Effect" shall mean the existence of any fact or condition
which has or is reasonably likely to 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.
Section 6.7 LITIGATION. Except as disclosed in the KCPL SEC Reports
filed prior to the date hereof or as set forth in Sections 6.7, 6.9, 6.10 or
6.11 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 which would have a
KCPL Material Adverse Effect, (b) there have not been any significant
developments since December 31, 1996 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,
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agency, instrumentality or authority or any arbitrator applicable to KCPL or any
of the KCPL Subsidiaries, except for such that would not have a KCPL Material
Adverse Effect.
Section 6.8 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 Western Resources and New KC in connection with the issuance of
shares of Western Resources Common Stock and New KC Common Stock (as defined in
Section 7.3) pursuant to the transactions contemplated hereby (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 Western Resources shareholders to be held in connection with the
KCPL Merger and KGE Merger 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 KCPL Merger and KGE
Merger, 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 6.9 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 Western
Resources, KGE or any Western Resources Subsidiary, as the case may be.
Except as set forth in Section 6.9 of the KCPL Disclosure Schedule and
except as would not result in a KCPL Material Adverse Effect:
(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. All such
Tax Returns were and are in all material respects true, complete and correct
and filed on a timely basis.
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(b) PAYMENT OF TAXES. KCPL and each of the KCPL Subsidiaries have,
within the time and in the manner prescribed by law, paid all 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 each of the KCPL Subsidiaries have
established on their books and records reserves adequate to pay all 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) 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.
(g) 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. "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.
(h) TAX SHARING AGREEMENTS. Except as between affiliates of KCPL as set
forth in Sections 6.1 and 6.2 of the KCPL Disclosure Schedule, neither KCPL
nor any KCPL Subsidiary is a party to any agreement relating to allocating
or sharing of Taxes.
(i) CODE SECTION 280G. Except for the KCPL Benefit Plans, 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.
(j) LIABILITY FOR OTHERS. Neither KCPL nor 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.
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(k) 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.
Section 6.10 EMPLOYEE MATTERS; ERISA. Except as set forth in Section
6.10 of the KCPL Disclosure Schedule:
(a) BENEFIT PLANS. As of the date hereof, Section 6.10(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"). Since January 1,
1996, there have been no new plans adopted nor changes, additions or
modification to any existing plan.
(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 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 knowledge of KCPL,
there does not now
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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.
(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) PAYMENTS RESULTING FROM THE KCPL MERGER OR KGE MERGER. 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 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 becoming
accelerated, vested or payable.
(g) LABOR AGREEMENTS. As of the date hereof, 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 knowledge of KCPL,
as of the date hereof, 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 date hereof 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 knowledge of KCPL, threatened,
(ii) there is no strike, lockout or material dispute, slowdown or work stoppage
pending or, to the knowledge of KCPL, threatened against or involving KCPL, and
(iii) there is no proceeding, claim, suit, action or governmental investigation
pending or, to the 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 any indemnification agreements between such persons and KCPL or any KCPL
Subsidiary.
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Section 6.11 ENVIRONMENTAL PROTECTION.
(a) Except as set forth in Section 6.11 of the KCPL Disclosure Schedule
or in the KCPL SEC Reports filed prior to the date hereof:
(i) COMPLIANCE. KCPL and each of the KCPL Subsidiaries are in
compliance with all applicable Environmental Laws (as defined in Section
6.11(b)(ii)) 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 is not in
such compliance with applicable Environmental Laws except in each foregoing
case where the failure to so comply would not have a KCPL Material Adverse
Effect. To the knowledge of KCPL, compliance with all applicable
Environmental Laws, will not require KCPL or any KCPL Subsidiary to incur
costs that will be reasonably likely to result in a KCPL Material Adverse
Effect.
(ii) ENVIRONMENTAL PERMITS. KCPL and each of the KCPL Subsidiaries 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 each of the KCPL Subsidiaries
is in material compliance with all terms and conditions of the Environmental
Permits.
(iii) ENVIRONMENTAL CLAIMS. There is no Environmental Claim (as defined
in Section 6.11(b)(i)) which would have a KCPL Material Adverse Effect
pending (A) against KCPL or any of the KCPL Subsidiaries, (B) to the
knowledge of KCPL, against any person or entity whose liability for any
Environmental Claim KCPL or any of the KCPL Subsidiaries 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 owns, leases or manages, in whole or in part.
(iv) RELEASES. KCPL has no knowledge of any Releases (as defined in
Section 6.11(b)(iv)) of any Hazardous Material (as defined in Section
6.11(b)(iii)) that would be reasonably likely to form the basis of any
Environmental Claim against KCPL or any of the KCPL Subsidiaries or against
any person or entity whose liability for any Environmental Claim KCPL or any
of the KCPL Subsidiaries 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 of any Environmental
Claim which would have a KCPL Material Adverse Effect pending or threatened,
or of any Release of
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Hazardous Materials that would be reasonably likely to form the basis of
any Environmental Claim which would have a KCPL Material Adverse Effect.
(b) 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 (for purposes of this Section 6.11)
or by Western Resources, KGE or any of the Western Resources Subsidiaries
(for purposes of Section 7.11); 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 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 6.11) or
in which Western Resources, KGE or any of the Western Resources Subsidiaries
operates (for purposes of Section 7.11).
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(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 6.12 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 6.12 of the KCPL Disclosure Schedule, neither KCPL nor any
"subsidiary company" or "affiliate" (as each such term is defined in the 0000
Xxx) 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 6.13 VOTE REQUIRED. Provided that the KCPL Preferred Stock has
been redeemed pursuant to Section 2.4(c), the affirmative vote of two-thirds of
the shares of KCPL Common Stock outstanding on the record date for the meeting
at which such vote is taken 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 KCPL Merger, and (except for the KGE Merger, the
Asset Contribution and the Stock Contribution) the other transactions
contemplated hereby ("KCPL Shareholders' Approval").
Section 6.14 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 7.17 (without giving effect
to the knowledge qualification thereof), apply to this Agreement, the Asset
Contribution, the Stock Contribution, the KCPL Merger, the KGE Merger or to the
other transactions contemplated hereby.
Section 6.15 OPINION OF FINANCIAL ADVISOR. KCPL has received the
opinion of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"),
dated as of the date hereof, to the effect that, as of the date thereof, the
consideration to be received by the holders of KCPL Common Stock (other than
Western Resources and its Affiliates (as defined in Section 6.17)) in the KCPL
Merger and the Western Resources Stock Distribution, taken as a whole, is fair
to such holders from a financial point of view to the holders of KCPL Common
Stock.
Section 6.16 INSURANCE. KCPL and each of the KCPL Subsidiaries is, and
has been continuously since January 1, 1994, 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 6.16 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.
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Section 6.17 KCPL NOT A RELATED PERSON. As of the date hereof, none of
KCPL or, to KCPL's reasonable knowledge, any of its Affiliates (as defined
below), is an "Interested Shareholder" as such term is defined in Article XI of
the Restated Articles of Incorporation of Western Resources (the "Western
Resources Articles"). 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 6.18 TAKEOVER STATUTES. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation
(including Sections 351.407 and 351.459 of the MGBCL or Article Twelfth of
KCPL's Restated Articles of Consolidation) is, or at the KCPL Effective Time or
the KGE Effective Time will be, applicable to KCPL, Western Resources, KGE, New
KC, the KCPL Common Stock, the Asset Contribution, the Stock Contribution, the
KCPL Merger, the KGE Merger or the other transactions contemplated by this
Agreement.
Section 6.19 TERMINATION OF UTILICORP AGREEMENT. KCPL (i) has taken all
corporate action necessary to terminate the UtiliCorp Agreement pursuant to the
provisions of Section 9.1(d) thereof and except for provisions which survived
the termination thereof, including the payment of any fees due to UtiliCorp
thereunder, (ii) has no further obligation under the UtiliCorp Agreement or any
other agreements executed in connection with any proposed transaction involving
KCPL and UtiliCorp, other than continuing obligations under the Confidentiality
Agreement, dated as of November 28, 1995 (the "UtiliCorp Confidentiality
Agreement"), between KCPL and UtiliCorp. The aggregate amount of all fees and
expenses paid or payable by KCPL to UtiliCorp as a result of such termination,
whether pursuant to Section 9.2 of the UtiliCorp Agreement or otherwise, shall
not exceed $58 million. At all times KCPL has fully complied in all respects
with each of its obligations under the UtiliCorp Agreement, including without
limitation Sections 7.11 and 9.1 thereof. Until the KGE Effective Time, Western
Resources shall not be bound by or subject to, in any respect, directly or
indirectly, any agreement between KCPL and UtiliCorp, including without
limitation the UtiliCorp Agreement and the UtiliCorp Confidentiality Agreement.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF
WESTERN RESOURCES, KGE AND NEW KC
Each of Western Resources, KGE and New KC makes the following
representations and warranties to KCPL:
Section 7.1 ORGANIZATION AND QUALIFICATION. Each of Western Resources,
KGE and New KC and each of the Western Resources Subsidiaries (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,
and except for New KC which has not engaged in any business or activity other
than as contemplated by this Agreement to effect the transactions contemplated
hereby, each 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 Western Resources Material Adverse Effect (as defined in Section
7.6). As used in this Agreement, the term "Western Resources Subsidiary" shall
mean a Subsidiary of Western Resources in which Western Resources' equity
investment exceeds $25 million.
Section 7.2 SUBSIDIARIES. Section 7.2 of the schedule delivered by
Western Resources to KCPL on the date hereof (the "Western Resources Disclosure
Schedule") sets forth a list as of the date hereof of all the Western Resources
Subsidiaries. KGE is a Western Resources Subsidiary. Except as set forth in
Section 7.2 of the Western Resources Disclosure Schedule, all of the issued and
outstanding shares of capital stock of each Western Resources Subsidiary and New
KC are validly issued, fully paid, nonassessable and free of preemptive rights,
and are owned, directly or indirectly, by Western Resources 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 Western Resources 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 7.3 CAPITALIZATION. As of the date hereof, the authorized
capital stock of Western Resources consists of (i) 85,000,000 shares of Western
Resources Common Stock, par value $5.00 per share, (ii) 600,000 shares of
Preferred Stock par value $100.00 per share (the "Western Resources $100
Preferred" and 6,000,000 shares of Preferred Stock without par value (the
"Western Resources No-Par Preferred"), and (iii) 4,000,000 shares of
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Preference Stock, without par value (the "Western Resources Preference Stock"
and, together with the Western Resources $100 Preferred and the Western
Resources No-Par Preferred, the "Western Resources Preferred Stock"). At the
close of business on March 17, 1998, (i) 64,773,828 shares of Western
Resources Common Stock were issued and outstanding, (ii) no shares of Western
Resources Common Stock were held by Western Resources in its treasury or by its
wholly owned Subsidiaries, (iii) 138,576 shares of 4 1/2% Series Preferred
Stock, par value $100 per share (the "4 1/2% Western Resources $100 Preferred"),
60,000 shares of 4 1/4% Series Preferred Stock, par value $100 per share (the "4
1/4% Western Resources $100 Preferred"), 50,000 shares of 5% Series Preferred
Stock, par value $100 per share (the "5% Western Resources $100 Preferred"), and
no shares of Western Resources No-Par Preferred Stock were issued and
outstanding, and of such issued shares, none were held by Western Resources in
its treasury or by its wholly owned Subsidiaries, (iv) 500,000 shares of 7.58%
Series Preference Stock were issued and outstanding, and of such issued shares,
none were held by Western Resources in its treasury or by its wholly owned
Subsidiaries, (v) $220,000,000 of Company-Obligated Manditorily Redeemable
Preferred Securities of a subsidiary trust holding solely Western Resources
Subordinated Debentures and (vi) no Voting Debt was issued or outstanding. As of
the date hereof, the authorized capital stock of KGE consists of 1,000 shares of
KGE Common Stock. As of the date hereof, 1,000 shares of KGE Common Stock were
issued or outstanding, all of which were owned by Western Resources. As of the
date hereof, the authorized capital stock of New KC consists of 500,000,000
shares of New KC Series A Common Stock, 300,000,000 shares of New KC Series B
Common Stock, in each case without par value (collectively, the "New KC Common
Stock"), and 50,000,000 shares of Preferred Stock, without par value. As of the
date hereof and immediately prior to the KCPL Effective Time, 100 shares of New
KC Series A Common Stock were issued and outstanding, all of which were owned by
Western Resources. All outstanding shares of Western Resources Common Stock, New
KC Common Stock, Western Resources Preferred Stock and KGE Common Stock are
validly issued, fully paid and nonassessable and are not subject to preemptive
rights and at the Closing, upon consummation of the KGE Merger and the KCPL
Merger, all outstanding shares of New KC Common Stock and the Western Resources
Common Stock to be included in the Western Resources Stock Distribution will be
validly issued, fully paid and nonassessable and not subject to any preemptive
rights. As of the date hereof, except as disclosed in the Western Resources SEC
Reports filed prior to the date hereof or as set forth in Section 7.3 of the
Western Resources Disclosure Schedule or pursuant to this Agreement and the
Western Resources Benefit Plans, there are no options, warrants, calls, rights,
commitments or agreements of any character to which Western Resources, KGE, New
KC or any Subsidiary of Western Resources or KGE is a party or by which any of
them are bound obligating Western Resources, KGE, New KC or any Subsidiary of
Western Resources or KGE to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or any Voting Debt
securities of Western Resources, KGE, New KC or any Subsidiary of Western
Resources or KGE or obligating Western Resources, KGE, New KC or any Subsidiary
of Western Resources or KGE to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement.
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Section 7.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. Each of Western Resources, New KC and KGE has all
requisite power and authority to enter into this Agreement and, subject to the
receipt of the applicable Western Resources Shareholders' Approval (as defined
in Section 7.13) and the applicable Western Resources Required Statutory
Approvals (as defined in Section 7.4(c)), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation by Western Resources, New KC and KGE of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Western Resources, KGE and New KC, subject to obtaining the
applicable Western Resources Shareholders' Approval. This Agreement has been
duly and validly executed and delivered by Western Resources, New KC and KGE
and, assuming the due authorization, execution and delivery hereof by KCPL,
constitutes the valid and binding obligation of Western Resources, New KC and
KGE enforceable against each of them in accordance with the terms of this
Agreement.
(b) NON-CONTRAVENTION. Except as set forth in Section 7.4(b) of the
Western Resources Disclosure Schedule, the execution and delivery of this
Agreement by Western Resources, KGE and New KC do not, and the consummation of
the transactions contemplated hereby will not, result in a Violation with
respect to Western Resources, New KC, KGE or any of the Western Resources
Subsidiaries pursuant to any provisions of (i) the certificate of incorporation,
by-laws or similar governing documents of Western Resources, New KC, KGE or any
of the Western Resources Subsidiaries, (ii) subject to obtaining the Western
Resources Required Statutory Approvals and the receipt of the Western Resources
Shareholders' Approval, any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any Governmental Authority
applicable to Western Resources, New KC, KGE or any of the Western Resources
Subsidiaries or any of their respective properties or assets or (iii) subject to
obtaining the third-party consents set forth in Section 7.4(b) of the Western
Resources Disclosure Schedule (the "Western Resources 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 Western Resources, KGE, New KC or any of the Western
Resources Subsidiaries 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 Western Resources Material Adverse
Effect.
(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
Western Resources, New KC, KGE or the consummation by Western Resources, KGE and
New KC of the transactions contemplated hereby except as described in Section
7.4(c) of the Western Resources Disclosure Schedule or the failure of which to
obtain would not result in a Western Resources Material Adverse Effect (the
"Western Resources Required Statutory Approvals," it being understood that
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references in this Agreement to "obtaining" such Western Resources 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 Sections 7.4(d), 7.5, 7.9 and
7.11 of the Western Resources Disclosure Schedule or as disclosed in the Western
Resources SEC Reports (as defined in Section 7.5) filed prior to the date
hereof, none of Western Resources, KGE or any of the Western Resources
Subsidiaries is in violation of, is, to the knowledge of Western Resources,
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 Western Resources Material Adverse Effect. Except as disclosed in the
Western Resources SEC Reports filed prior to the date hereof, or in Sections
7.7, 7.10 or 7.11 of the Western Resources Disclosure Schedule, Western
Resources, KGE and the Western Resources Subsidiaries 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 Western Resources and the Western
Resources Subsidiaries. None of Western Resources, KGE or any of the Western
Resources Subsidiaries is 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 Western Resources, KGE or any Western Resources Subsidiary 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 Western
Resources or any Western Resources Subsidiary 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 Western Resources Material
Adverse Effect.
Section 7.5 REPORTS AND FINANCIAL STATEMENTS. Except as set forth in
Section 7.5 of the Western Resources Disclosure Schedule, the filings required
to be made by Western Resources, KGE and the Western Resources Subsidiaries
since January 1, 1994 under the Securities Act, the Exchange Act, the 1935 Act,
the Power Act, the Atomic Energy Act, and applicable state public utility laws
and regulations have been filed with the SEC, the FERC, the 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 or to
so comply would not result in a Western Resources Material Adverse Effect.
"Western Resources SEC Reports" shall mean each report, schedule, registration
statement and definitive proxy statement filed with the SEC by Western
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Resources and KGE pursuant to the requirements of the Securities Act or Exchange
Act since January 1, 1994, as such documents have since the time of their filing
been amended. As of their respective dates, the Western Resources 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 Western Resources included in the Western Resources SEC
Reports (collectively, the "Western Resources 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 Western
Resources and KGE as of the dates thereof and the results of 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 Western Resources Articles, Western Resources' By-Laws,
the articles of incorporation of KGE and the by-laws of KGE, as in effect on the
date hereof, are included (or incorporated by reference) in the Western
Resources SEC Reports.
Section 7.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Section 7.6 of the Western Resources Disclosure Schedule and in the Western
Resources SEC Reports filed prior to the date hereof, since December 31, 1996,
Western Resources, KGE and each of the Western Resources Subsidiaries have
conducted their business only in the ordinary course of business (except for
acquisitions and dispositions) and there has not been any Western Resources
Material Adverse Effect. For purposes of this Agreement, a "Western Resources
Material Adverse Effect" shall mean the existence of any fact or condition which
has or is reasonably likely to have a material adverse effect on the business,
assets, financial condition, results of operations or prospects of Western
Resources, KGE and the Western Resources Subsidiaries taken as a whole.
Section 7.7 LITIGATION. Except as disclosed in the Western Resources
SEC Reports filed prior to the date hereof or as disclosed in Section 7.7, 7.9,
7.10 or 7.11 of the Western Resources 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 Western Resources, threatened, nor are there, to the
knowledge of Western Resources, 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 Western
Resources, KGE, New KC or any of the Western Resources Subsidiaries which would
have a Western Resources Material Adverse Effect, (b) there have not been any
significant developments since December 31, 1996 with respect to such disclosed
claims, suits, actions, proceedings, investigations or reviews that would have a
Western Resources 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
Western Resources, KGE, New KC or any of the Western Resources Subsidiaries,
except for such that would not have a Western Resources Material Adverse Effect.
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Section 7.8 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information supplied or to be supplied by or on behalf of Western Resources, New
KC or KGE for inclusion or incorporation by reference in (a) the Registration
Statement will, at the time the Registration Statement is filed by Western
Resources and New KC 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 Statement will, at the dates
mailed to shareholders and at the times of the meetings of shareholders to be
held in connection with the KCPL Merger and the KGE Merger, 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 7.9 TAX MATTERS. Except as set forth in Section 7.9 of the
Western Resources Disclosure Schedule and except as would not result in a
Western Resources Material Adverse Effect:
(a) FILING OF TIMELY TAX RETURNS. Western Resources, KGE and each of
the Western Resources 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. 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. Western Resources, KGE and each of the Western
Resources Subsidiaries have, within the time and in the manner prescribed by
law, paid all 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. Western Resources, KGE and each of the Western
Resources Subsidiaries have established on their books and records reserves
adequate to pay all Taxes and reserves for deferred income taxes in
accordance with GAAP.
(d) TAX LIENS. There are no Tax liens upon the assets of Western
Resources, KGE or any of the Western Resources Subsidiaries except liens for
Taxes not yet due.
(e) WITHHOLDING TAXES. Western Resources, KGE and each of the Western
Resources 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.
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(f) 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 Western Resources, KGE or any of the
Western Resources Subsidiaries.
(g) TAX RULINGS. None of Western Resources, KGE or any of the Western
Resources Subsidiaries has received a Tax Ruling or entered into a Closing
Agreement with any taxing authority.
(h) TAX SHARING AGREEMENTS. Except as between affiliates of Western
Resources as set forth in Sections 7.1 and 7.2 of the Western Resources
Disclosure Schedule, none of Western Resources, KGE or any Western Resources
Subsidiary is a party to any agreement relating to allocating or sharing of
Taxes.
(i) CODE SECTION 280G. Except for the Western Resources Benefit Plans,
none of Western Resources, KGE or any of the Western Resources 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.
(j) LIABILITY FOR OTHERS. None of Western Resources, KGE or any of the
Western Resources Subsidiaries has any liability for Taxes of any person
other than Western Resources, KGE and the Western Resources 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.
(k) SECTION 341(F). None of Western Resources, KGE or any of the
Western Resources 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 Western Resources, KGE or
any of the Western Resources Subsidiaries.
Section 7.10 EMPLOYEE MATTERS; ERISA. Except as set forth in Section
7.10 of the Western Resources Disclosure Schedule:
(a) BENEFIT PLANS. Section 7.10(a) of the Western Resources Disclosure
Schedule contains a true and complete list as of the date hereof of each
written or oral material employee benefit plan, policy or agreement covering
employees, former employees or directors of Western Resources, KGE and each
of the Western Resources 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 "Western Resources Benefit Plans").
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(b) CONTRIBUTIONS. All material contributions and other payments
required to be made by Western Resources, KGE or any of the Western
Resources Subsidiaries to any Western Resources 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 Western
Resources Financial Statements (other than those related to Protection One,
Inc.).
(c) QUALIFICATION; COMPLIANCE. Each of the Western Resources 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, or to the knowledge
of Western Resources, no circumstances exist that are reasonably expected by
Western Resources to result in the revocation of any such determination or
prevent any such plans from being qualified. Western Resources is in
compliance in all material respects with, and each of the Western Resources
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 Western
Resources 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 Western Resources Benefit
Plan, and which could give rise to liability on the part of Western
Resources, KGE, any Western Resources Benefit Plan, or any fiduciary, party
in interest or disqualified person with respect thereto that would be
material to Western Resources, KGE or would be material to Western Resources
or KGE if it were Western Resources' or KGE's liability.
(d) LIABILITIES. With respect to the Western Resources Benefit Plans,
individually and in the aggregate, no event has occurred, and, to the
knowledge of Western Resources, there does not now exist any condition or
set of circumstances, that could subject Western Resources, KGE or any of
the Western Resources 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 Western Resources, KGE or any of the Western Resources
Subsidiaries is a party, excluding liability for benefit claims and funding
obligations payable in the ordinary course.
(e) PAYMENTS RESULTING FROM THE KCPL MERGER OR KGE MERGER. Except as
disclosed in the Western Resources SEC Reports filed prior to the date
hereof, 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 officers, directors, employees or agents of
Western Resources, KGE or any of the Western Resources Subsidiaries) result
in any (i) payment (whether of severance pay or otherwise) becoming
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due from Western Resources, KGE or any of the Western Resources Subsidiaries
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 Western Resources Benefit Plan becoming accelerated, vested or
payable.
(f) LABOR AGREEMENTS. As of the date hereof, (i) none of Western
Resources, KGE or any of the Western Resources Subsidiaries is a party to
any collective bargaining agreement or other labor agreement with any union
or labor organization and (ii) to the knowledge of Western Resources, there
is no current union representation question involving employees of Western
Resources, KGE or any of the Western Resources Subsidiaries, nor does
Western Resources 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 Western Resources SEC Reports
filed prior to the date hereof or except to the extent such would not have a
Western Resources Material Adverse Effect, (i) there is no unfair labor
practice, employment discrimination or other material complaint against
Western Resources, KGE or any of the Western Resources Subsidiaries pending,
or to the knowledge of Western Resources, threatened, (ii) there is no
strike, lockout or material dispute, slowdown or work stoppage pending or,
to the knowledge of Western Resources, threatened against or involving
Western Resources or KGE, and (iii) there is no proceeding, claim, suit,
action or governmental investigation pending or, to the knowledge of Western
Resources, threatened in respect of which any director, officer, employee or
agent of Western Resources, KGE or any of the Western Resources Subsidiaries
is or may be entitled to claim indemnification from Western Resources or
such Western Resources Subsidiary pursuant to their respective articles of
incorporation or by-laws or as provided in any indemnification agreements
between such persons and Western Resources, KGE or any Western Resources
Subsidiary.
Section 7.11 ENVIRONMENTAL PROTECTION.
(a) Except as set forth in the Western Resources SEC Reports filed
prior to the date hereof or in Section 7.11 of the Western Resources Disclosure
Schedule:
(i) COMPLIANCE. Western Resources, KGE and each of the Western
Resources Subsidiaries is in compliance with all applicable Environmental
Laws and none of Western Resources, KGE or any of the Western Resources
Subsidiaries has received any communication (written or oral) from any
person or Governmental Authority that alleges that Western Resources, KGE or
any of the Western Resources Subsidiaries is not in such compliance with
applicable Environmental Laws, except in each foregoing case where the
failure to so comply would not have a Western Resources Material Adverse
Effect. To the knowledge of Western Resources, compliance with all
applicable Environmental Laws will not require Western Resources, KGE or any
Western Resources Subsidiary to incur costs that will be reasonably likely
to result in a Western Resources Material Adverse Effect.
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(ii) ENVIRONMENTAL PERMITS. Western Resources, KGE and each of the
Western Resources Subsidiaries 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 Western Resources 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
Western Resources, KGE and each of the Western Resources Subsidiaries 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 Western Resources Material Adverse Effect pending (A) against Western
Resources, KGE or any of the Western Resources Subsidiaries (B) to the
knowledge of Western Resources, against any person or entity whose liability
for any Environmental Claim Western Resources, KGE or any of the Western
Resources Subsidiaries 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 Western Resources, KGE or any of the Western
Resources Subsidiaries owns, leases or manages, in whole or in part.
(iv) RELEASES. Western Resources has no knowledge of any Releases of
any Hazardous Material that would be reasonably likely to form the basis of
any Environmental Claim against Western Resources, KGE or any of the Western
Resources Subsidiaries or against any person or entity whose liability for
any Environmental Claim Western Resources, KGE or any of the Western
Resources Subsidiaries has or may have retained or assumed either
contractually or by operation of law except for any Environmental Claim
which would not have a Western Resources Material Adverse Effect.
(v) PREDECESSORS. Western Resources has no knowledge, with respect to
any predecessor of Western Resources, KGE or any of the Western Resources
Subsidiaries, of any Environmental Claim which would have a Western
Resources 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 Western Resources Material
Adverse Effect.
Section 7.12 REGULATION AS A UTILITY. As of the date hereof, (1)
Western Resources and KGE are each regulated as a public utility in the State of
Kansas and in no other state, and (2) Western Resources is an exempt Holding
Company under the 1935 Act. Section 7.12 of the Western Resources Disclosure
Schedule sets forth certain entities in which Western Resources has an ownership
interest that may be subject to regulation as a public utility or public service
company (or similar designation) in certain foreign countries.
Section 7.13 VOTE REQUIRED. (i) Provided that the Western Resources
$100 Preferred has been redeemed pursuant to Section 9.19, the approval of this
Agreement, the Asset Contribution, the Stock Contribution, and amendments to the
Western Resources
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Articles, including, without limitation, increasing the number of shares of
Western Resources Common Stock authorized, by a majority of the shares of
Western Resources Common Stock outstanding on the record date for such vote is
the only vote of the holders of any class or series of the capital stock of
Western Resources or any of its Subsidiaries (other than KGE and New KC)
required to approve this Agreement, the Asset Contribution, the Stock
Contribution and the issuance of shares of Western Resources Common Stock to be
contributed to KGE pursuant to the Stock Contribution and (ii) Western
Resources, in its capacity as sole stockholder of New KC and KGE, has approved
this Agreement, the Asset Contribution, the Stock Contribution and the KCPL
Merger and KGE Merger, respectively, and the other transactions contemplated
hereby (collectively, the "Western Resources Shareholders' Approval").
Section 7.14 ARTICLE XI (BUSINESS COMBINATION WITH INTERESTED
SHAREHOLDER) OF WESTERN RESOURCES' ARTICLES OF INCORPORATION. The provisions of
Article XI (business combination with interested shareholder) of the Western
Resources Articles will not, prior to the termination of this Agreement,
assuming the accuracy of the representation contained in Section 6.17 (without
giving effect to the knowledge qualification thereof), apply to this Agreement,
the Asset Contribution, the Stock Contribution, the KCPL Merger, the KGE Merger
or to the transactions contemplated hereby.
Section 7.15 OPINION OF FINANCIAL ADVISOR. Western Resources has
received the opinion of Xxxxxxx Xxxxx Xxxxxx ("Salomon"), dated as of the date
hereof, to the effect that, as of such date, the Aggregate Consideration is fair
from a financial point of view to Western Resources.
Section 7.16 INSURANCE. Except as set forth in Section 7.16 of the
Western Resources Disclosure Schedule, Western Resources, KGE and each of the
Western Resources Subsidiaries is, and has been continuously since January 1,
1994 (and, with respect to any Western Resources Subsidiary, if later than
January 1, 1994, its date of acquisition by Western Resources), and New KC at
the Closing will be, 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 Western
Resources, KGE and the Western Resources Subsidiaries during such time period
and, as contemplated by this Agreement, the business to be conducted by New KC
after the Closing. None of Western Resources, KGE or any of the Western
Resources Subsidiaries has received any notice of cancellation or termination
with respect to any material insurance policy of Western Resources, KGE or any
of the Western Resources Subsidiaries or New KC. The insurance policies of
Western Resources, KGE and each of the Western Resources Subsidiaries are, and
the insurance policies of New KC at the Closing will be, valid and enforceable
policies in all material respects.
Section 7.17 WESTERN RESOURCES NOT AN INTERESTED SHAREHOLDER. As of the
date hereof, none of Western Resources, KGE or, to its reasonable knowledge, any
of its
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Affiliates is an "Interested Shareholder" as such term is defined in Article
Twelfth of KCPL's Restated Articles of Consolidation.
Section 7.18 TAKEOVER STATUTES. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation
(including Sections 17-1286 et seq. and 17-12,100, et seq. of the KGCC or
Article XVII of the Western Resources Articles) is, or at the KCPL Effective
Time or the KGE Effective Time will be, applicable to KCPL, New KC, Western
Resources, KGE, the New KC Common Stock, the KCPL Common Stock, the Asset
Contribution, the Stock Contribution, the KCPL Merger, the KGE Merger or the
other transactions contemplated by this Agreement.
Section 7.19 NO PRIOR OPERATIONS OF NEW KC. New KC is a corporation
formed solely for the purpose of effecting the transactions contemplated by this
Agreement and prior to the date hereof New KC has not and prior to the Closing
will not have engaged in any business or other activity other than as
contemplated by this Agreement.
Section 7.20 TITLE TO PROPERTIES. (a) TITLE. Western Resources has good
and sufficient title to all of the KPL Assets, including all of the properties
and assets reflected in the KPL Balance Sheet and all properties and assets
purchased or otherwise acquired since December 31, 1997. Such assets are
sufficient to enable Western Resources to conduct the KPL Business as currently
conducted without material interference, and, as of the date hereof, are free
and clear of Liens other than Permitted Liens (in each case as defined below).
Western Resources holds under valid lease agreements certain real and personal
properties which constitute part of the KPL Assets or are reflected in the KPL
Balance Sheet, and enjoys peaceful and undisturbed possession of such properties
under such leases, other than any properties as to which such leases will have
terminated in the ordinary course of business since the date of such filing. As
of the date hereof, with respect to the KPL Business, neither Western Resources
nor any of its predecessors has received any written notice of any adverse claim
to the title to any properties owned by them or with respect to any lease under
which any properties are held by them, other than any claims that, individually
or in the aggregate, would not have a material adverse effect on the KPL
Business. For the purposes of this Section 7.20, the term "Lien" shall mean any
mortgage, pledge, security interest, encumbrance, lien, claim, condition, equity
interest, option, right of first refusal, charge or restriction of any kind
(including any agreement to give any of the foregoing), any conditional sale or
other title retention agreement, any lease in the nature thereof or the filing
of or agreement to give any financing statement under the Uniform Commercial
Code of any jurisdiction. For purposes of this Section 7.20, the term "Permitted
Liens" shall mean (i) Liens for taxes and assessments, general and special, not
yet due and payable, and (ii) Liens, encumbrances and other defects existing on
the properties on the date hereof or which arise in the ordinary course of the
KPL Business or which, individually or in the aggregate, do not and will not
materially interfere with or impair the continued ownership, possession, use or
operation of the KPL Assets.
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(b) EASEMENTS. With respect to the KPL Business, Western Resources is
not in violation of the terms of any Easement (as defined below) except any such
violations that individually or in the aggregate, would not have a material
adverse effect on the KPL Business. Except as would not have a material adverse
effect on the KPL Business, all Easements in favor of the KPL Business are valid
and enforceable and grant the rights purported to be granted thereby and all
rights necessary thereunder for the operation of the KPL Business. For purposes
of this Section 7.20, "Easements" shall mean all easements, rights-of-way,
permits, licenses, franchises, leases, surface leases, prescriptive rights and
ways of necessity, whether or not of record.
Section 7.21 CONDITION OF ASSETS. To the knowledge of Western
Resources, except as would not have a material adverse effect on the KPL
Business, the buildings, plants, structures, and equipment of Western Resources
relating to the KPL Business are structurally sound, are in good operating
condition and repair, and are adequate for the uses to which they are being put,
and none of such buildings, plants, structures, or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost.
Section 7.22 ACCOUNTS RECEIVABLE. All Accounts Receivable (as defined
below) with respect to the KPL Business, represent or will represent, as of the
Closing, obligations arising from sales actually made or services actually
performed in the ordinary course of business of Western Resources with respect
to the KPL Business, subject to customary provisions for uncollectible accounts.
To the knowledge of Western Resources, there is no contest, claim or right of
set-off, under any contract or with any obligor of an Account Receivable
relating to the KPL Business relating to the amount or validity of such Account
Receivable which would have a material adverse effect on the KPL Business. For
purposes of this Section 7.22, "Accounts Receivable" shall mean the accounts and
other receivables, including unbilled revenues, of Western Resources to the
extent arising primarily out of the KPL Business.
ARTICLE VIII
CONDUCT OF BUSINESS PENDING THE KGE MERGER
Section 8.1 COVENANTS OF KCPL. KCPL agrees, as to itself and as to each
of its Subsidiaries, that after the date hereof and prior to the KGE Effective
Time or earlier termination of this Agreement, (i) except as expressly
contemplated or permitted in this Agreement, (ii) except as Western Resources
may otherwise agree in writing (which decision regarding agreement shall be made
as soon as reasonably practicable), (iii) except as otherwise provided in the
business plan of KCPL in the form previously disclosed to Western Resources and
attached hereto as Section 8.1 of the KCPL Disclosure Schedule (the "KCPL
Business Plan"); provided, however, that for purposes of the preceding clause
(iii) KCPL
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shall obtain Western Resources' written agreement (which decision regarding
agreement shall be made as soon as reasonably practicable) prior to making or
committing to make any acquisitions or capital expenditures or incurring or
committing to incur any indebtedness, including guarantees but not including the
cost of routine regulated utility capital expenditures (such acquisitions,
capital expenditures and indebtedness, collectively, "Investments") subsequent
to the time when the aggregate value of the Investments made or committed to be
made by KCPL as permitted by this Section 8.1 exceeds in the aggregate
$150,000,000 during the period January 1, 1997 through December 31, 1997 and
which aggregate limits for each subsequent six-month period commencing January
1, 1998 through the Closing shall be $75,000,000 ($25,000,000 of which during
each such six-month period may be expended or committed on items not included in
the KCPL Business Plan), it being agreed that to the extent any such
$150,000,000 or $75,000,000 aggregate amount is not made, committed or incurred
during such one-year or any such six-month period, as the case may be, such
amount or amounts shall be added to, and cumulated with, the amount or amounts
available during subsequent time periods until the Closing (such aggregate
limits to exclude the cost of routine regulated utility capital expenditures);
and provided further that, KCPL shall be permitted to use the proceeds obtained
from any disposition of assets for Investments in accordance with the KCPL
Business Plan; provided, further, however, that KCPL shall confer on a regular
and frequent basis with representatives of Western Resources in the course of
KCPL's implementation of the KCPL Business Plan and any expenditures referred to
in this Section 8.1:
(a) ORDINARY COURSE OF BUSINESS. KCPL 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 KCPL or any of its Subsidiaries from transferring operations
to KCPL or any of its wholly owned Subsidiaries. KCPL shall not, nor shall
KCPL permit any of its 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 to KCPL and the KCPL Subsidiaries taken as a
whole.
(b) DIVIDENDS. KCPL shall not, nor shall it permit any of its
Subsidiaries to, (i) declare or pay any dividends on or make other
distributions in respect of any of their capital stock other than to KCPL or
KCPL Subsidiaries and other than (A) dividends required to be paid on any
KCPL Preferred Stock in accordance with the terms thereof and (B) regular
quarterly dividends on KCPL Common Stock with usual record and payment dates
not, during any period of any fiscal year, in excess (except to the extent
consistent with good business judgment and KCPL's past dividend practice) of
the quarterly dividend most recently declared on such stock as of the date
hereof, (ii) split,
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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) except as set
forth in Section 8.1(b) of the KCPL Disclosure Schedule, redeem, repurchase
or otherwise acquire any shares of their capital stock, other than (A)
redemptions, purchases or acquisitions required by the 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 2.4(c).
(c) ISSUANCE OF SECURITIES. Except as set forth in Section 8.1(c) of
the KCPL Disclosure Schedule, since the Original Execution Date KCPL shall
not, nor shall it 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 in the ordinary course of business consistent with past practice
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, director plans and stock purchase plans and dividend
reinvestment plans existing prior to the date hereof and heretofore
disclosed to Western Resources or pursuant to plans adopted after the date
hereof which shall be reasonably acceptable to Western Resources. 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 the issuance of securities as
contemplated by this Section 8.1(c), subject to obtaining customary
indemnities.
(d) CHARTER DOCUMENTS. KCPL shall not amend or propose to amend its
charter, by-laws or regulations, or similar organic documents, except as
contemplated herein.
(e) NO ACQUISITIONS. KCPL shall not, nor shall it 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 KCPL 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. KCPL shall not, nor shall it permit any of
its Subsidiaries to, make capital expenditures during any fiscal year in
excess of the amount budgeted for capital expenditures for such fiscal year
in the KCPL Business Plan.
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(g) NO DISPOSITIONS. Except as set forth in Section 8.1(g) of the KCPL
Disclosure Schedule, KCPL shall not, nor shall it permit any of its
Subsidiaries to, sell or dispose of any of their assets other than
dispositions in the ordinary course of business consistent with past
practice.
(h) INDEBTEDNESS. KCPL shall not, nor shall it permit any of its
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 KCPL and its Subsidiaries or among its Subsidiaries, (iv) except as
set forth in Section 8.1(h) of the KCPL 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
2.4(c), or (vii) as may be necessary in connection with acquisitions or
capital expenditures provided for in the KCPL Business Plan. Notwithstanding
anything contained herein to the contrary, the aggregate total indebtedness
for borrowed money (including preferred stock) of KCPL and its Subsidiaries
shall not exceed $1.4 billion at the KCPL Effective Time.
(i) COMPENSATION, BENEFITS. Except as may be required by applicable law
or as set forth in Section 8.1(i) of the KCPL Disclosure Schedule, KCPL
shall not, nor shall it 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 KCPL 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 KCPL 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 KCPL 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.
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(j) 1935 ACT. KCPL shall not, nor shall KCPL permit any of its
Subsidiaries to, except as required or contemplated by this Agreement,
engage in any activities which would cause a change in KCPL's status, or
that of its Subsidiaries, under the 1935 Act.
(k) ACCOUNTING. KCPL shall not, nor shall it permit any of its
Subsidiaries to, make any changes in its accounting methods, except as
required by law, rule, regulation or GAAP.
(l) AFFILIATE TRANSACTIONS. Except as set forth in Section 8.1(l) of
the KCPL Disclosure Schedule, KCPL shall not, nor shall it permit any of its
Subsidiaries to, enter into any material agreement or arrangement with any
of their Affiliates (other than wholly owned Subsidiaries) 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.
(m) COOPERATION, NOTIFICATION. KCPL shall (i) confer on a regular and
frequent basis with one or more representatives of Western Resources to
discuss, subject to applicable law, material operational matters and the
general status of its ongoing operations, (ii) promptly notify Western
Resources of any significant changes in its business, properties, assets,
condition (financial or other), results of operations or prospects, and
(iii) promptly provide Western Resources with copies of all filings made by
KCPL or any of its Subsidiaries with any state or federal court,
administrative agency, commission or other Governmental Authority in
connection with this Agreement and the transactions contemplated hereby.
(n) RATE MATTERS. Subject to applicable law, KCPL shall, and shall
cause its Subsidiaries to, discuss with Western Resources 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 date hereof and consult with Western
Resources 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 KCPL will not 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.
(o) 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 Western Resources of any failure or
prospective failure to obtain any such consents and, if requested by Western
Resources, shall provide copies of all KCPL Required Consents obtained by
KCPL to Western Resources.
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(p) NO BREACH, ETC. KCPL shall not, nor shall it 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.
(q) TAX-EXEMPT STATUS. KCPL shall not, nor shall it permit any of its
Subsidiaries to, take any action that would likely jeopardize the
qualification of KCPL's or Western Resources' outstanding revenue bonds
which qualify on the date hereof 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.
(r) CONTRACTS. KCPL shall not, nor shall KCPL permit any Subsidiary of
KCPL 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 KCPL or any
Subsidiary of KCPL is a party or waive, release or assign any material
rights or claims.
(s) INSURANCE. KCPL 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 utility industry and employing methods of generating
electric power and fuel sources similar to those methods employed and fuels
used by KCPL or its Subsidiaries.
(t) PERMITS. KCPL 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 KCPL or its Subsidiaries.
(u) TAX MATTERS. KCPL shall not (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 any of its
Subsidiaries, including elections for any and all joint ventures,
partnerships, limited liability companies, working interests or other
investments where KCPL has the capacity to make such binding elections, (ii)
without the written consent of Western Resources, which consent will not be
unreasonably withheld, 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 $5 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,
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1996, 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.
(v) DISCHARGE OF LIABILITIES. KCPL shall not, nor shall KCPL permit any
of its 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 KCPL included in KCPL's reports filed with the SEC, or
incurred in the ordinary course of business consistent with past practice.
Section 8.2 COVENANTS OF WESTERN RESOURCES, NEW KC AND KGE. Western
Resources agrees, as to itself, New KC and to each of its Subsidiaries, that
after the date hereof and prior to the KGE Effective Time or earlier termination
of this Agreement:
(a) COOPERATION, NOTIFICATION. Western Resources shall (i) confer on a
regular and frequent basis with one or more representatives of KCPL to
discuss, subject to applicable law, material operational matters and the
general status of its ongoing operations, (ii) promptly notify KCPL of any
significant changes in its business, properties, assets, condition
(financial or other), results of operations or prospects, and (iii) promptly
provide KCPL with copies of all filings made by Western Resources or any of
its Subsidiaries with any state or federal court, administrative agency,
commission or other Governmental Authority in connection with this Agreement
and the transactions contemplated hereby.
(b) THIRD-PARTY CONSENTS. Western Resources shall, and shall cause its
Subsidiaries and New KC to, use all commercially reasonable efforts to
obtain all Western Resources Required Consents. Western Resources 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 Western
Resources Required Consents obtained by Western Resources to KCPL.
(c) NO BREACH, ETC. Each of Western Resources, KGE and New KC shall
not, nor shall they permit any of their respective 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.
(d) NEW KC NOT TO ENGAGE IN OPERATIONS. Prior to the KCPL and KGE
Effective Times, Western Resources shall not permit New KC to engage in any
business or incur any liabilities or be a party to any contract or
agreement, other than as contemplated by this Agreement or as specifically
agreed to in writing by KCPL.
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(e) CASH FOR PAYMENT IN LIEU OF FRACTIONAL SHARES. New KC as of the KGE
Effective Time will have sufficient cash available to pay for all fractional
share interests of New KC Common Stock which would otherwise be issued
pursuant to the KCPL Merger.
(f) INSURANCE. Western Resources shall use reasonable efforts to obtain
for New KC with financially responsible insurance companies insurance
effective as of the Closing Date in such amounts and against such risks and
losses as are customary for companies engaged in the electric utility
industry and employing methods of generating electric power and fuel sources
similar to those methods to be employed and fuels to be used by New KC.
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1 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 parties (collectively, "Representatives")
reasonable access, during normal business hours throughout the period prior to
the KGE 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. All documents and information
supplied by one party to the other pursuant to this Section 9.1 shall be deemed
to be "Evaluation Material" as defined in the Confidentiality Agreement, dated
December 20, 1996, between KCPL and Western Resources, as it may be amended from
time to time (the "Confidentiality Agreement"), and shall be kept confidential
in accordance with the terms of such Agreement.
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Section 9.2 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 date hereof the Registration
Statement and the Proxy Statement (together, the "Joint Proxy/Registration
Statement"). The parties hereto shall each use reasonable efforts to (i) cause
the Registration Statement to be declared effective under the Securities Act as
promptly as practicable after such filing and (ii) respond as promptly as
practicable to any comments made by the SEC. Each party hereto shall also take
such action as may be reasonably required to cause the shares of (i) Western
Resources Common Stock issuable in connection with the Stock Contribution and
the Western Resources Stock Distribution to be registered or to obtain an
exemption from registration under applicable state "blue sky" or securities laws
and (ii) New KC Common Stock issuable in connection with the KGE Merger and the
KCPL 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 KGE Merger, 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 (i) Western Resources Common Stock issuable in the Stock
Contribution and the Western Resources Stock Distribution and (ii) New KC Common
Stock issuable in the KCPL Merger and the KGE Merger, to be approved for listing
on the NYSE upon official notice of issuance. The information provided by any
party hereto 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 Western Resources letters of Coopers & Xxxxxxx, dated a
date within two business days before the date of the Joint Proxy/Registration
Statement, and addressed to Western Resources, in form and substance reasonably
satisfactory to Western Resources 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 WESTERN RESOURCES' ACCOUNTANTS. Western Resources shall
use its best efforts to cause to be delivered to KCPL a letter of Xxxxxx
Xxxxxxxx LLP, 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.
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(d) FAIRNESS OPINIONS. It shall be a condition to the mailing of the
Joint Proxy/Registration Statement to the shareholders of KCPL and Western
Resources that (i) KCPL shall have received an opinion from Xxxxxxx Xxxxx, dated
the date of the Joint Proxy/ Registration Statement, to the effect that, as of
the date thereof, the consideration to be received by the holders of KCPL Common
Stock (other than Western Resources and its Affiliates) in the KCPL Merger and
the Western Resources Stock Distribution, taken as a whole, is fair to such
holders from a financial point of view and (ii) Western Resources shall have
received an opinion from Salomon, dated the date of the Joint Proxy/Registration
Statement, to the effect that, as of the date thereof the Aggregate
Consideration is fair from a financial point of view to Western Resources.
Section 9.3 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 its respective "ultimate parent" company under the
Xxxx-Xxxxx-Xxxxxx 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 in a timely manner 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 authorizations of all Governmental
Authorities necessary or advisable to obtain the KCPL Required Statutory
Approvals and the Western Resources Required Statutory Approvals.
Section 9.4 SHAREHOLDER APPROVAL.
(a) APPROVAL OF KCPL SHAREHOLDERS. Subject to the provisions of Section
9.4(c) and Section 9.4(d), KCPL shall, as soon as reasonably practicable after
the date hereof (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 KCPL Merger, this Agreement and the transactions
contemplated hereby, and (iv) cooperate and consult with Western Resources with
respect to each of the foregoing matters.
(b) APPROVAL OF WESTERN RESOURCES SHAREHOLDERS. Subject to the
provisions of Section 9.4(c) and Section 9.4(d), Western Resources shall, as
soon as reasonably
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practicable after the date hereof (i) take all steps necessary to duly call,
give notice of, convene and hold a meeting of its shareholders (the "Western
Resources Meeting") for the purpose of securing the Western Resources
Shareholders' Approval, (ii) distribute to its shareholders the Proxy Statement
in accordance with applicable federal and state law and with the Western
Resources Articles and the by-laws of Western Resources (the "Western Resources
By-Laws"), (iii) subject to the fiduciary duties of its Board of Directors,
recommend to its shareholders the approval of this Agreement and the
transactions contemplated hereby, including without limitation the Asset
Contribution, the Stock Contribution and the issuance of shares of Western
Resources Common Stock to be contributed to KGE pursuant to the Stock
Contribution, and (iv) cooperate and consult with KCPL with respect to each of
the foregoing matters.
(c) MEETING DATE. The Western Resources Meeting for the purpose of
securing the Western Resources Shareholders' Approval and the KCPL Meeting for
the purpose of securing the KCPL Shareholders' Approval shall be held as soon as
practicable, or at such other time as KCPL and Western Resources shall mutually
determine in writing.
(d) FAIRNESS OPINIONS NOT WITHDRAWN. It shall be a condition to the
obligation of KCPL to hold the KCPL Meeting that the opinion of Xxxxxxx Xxxxx,
referred to in Section 9.2(d), shall not have been withdrawn, and it shall be a
condition to the obligation of Western Resources to hold the Western Resources
Meeting that the opinion of Salomon, referred to in Section 9.2(d), shall not
have been withdrawn.
Section 9.5 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 KGE
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
KGE Effective Time, an officer, director or employee of any of the parties
hereto or their respective Subsidiaries (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 KGE Effective Time (and whether asserted or claimed prior to, at or after
the KGE 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 KGE 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
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reasonably incurred, in either case to the extent not prohibited by the KGCC,
(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 KGCC
and the certificate of incorporation 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 KGE Effective Time,
the Surviving Corporation shall cause to be maintained in effect policies of
directors and officers' liability insurance maintained by KCPL and Western
Resources 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 150% of the annual
aggregate premiums currently paid by KCPL and Western Resources 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 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
9.5.
(d) SURVIVAL OF INDEMNIFICATION. To the fullest extent permitted by
law, from and after the KGE Effective Time, all rights to indemnification as of
the date hereof in favor of the employees, agents, directors and officers of
KCPL, New KC, Western Resources and KGE and their respective Subsidiaries with
respect to their activities as such prior to the KGE 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 KGE Merger
and shall continue in full force and effect for a period of not less than six
years from the KGE Effective Time.
(e) BENEFIT. The provisions of this Section 9.5 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.
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Section 9.6 PUBLIC ANNOUNCEMENTS. Subject to each party's disclosure
obligations imposed by law, KCPL, New KC, Western Resources and KGE 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 9.7 RULE 145 AFFILIATES. KCPL shall identify in a letter to
Western Resources all persons who are, and to KCPL's knowledge who will be at
the Closing Date, "affiliates" of KCPL as such term is used in Rule 145 under
the Securities Act. KCPL 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 Western Resources on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit 9.7 (each an "Affiliate
Agreement").
Section 9.8 EMPLOYEE AGREEMENTS AND WORKFORCE MATTERS.
(a) CERTAIN EMPLOYEE AGREEMENTS. Subject to Section 9.9 and Section
9.10, the Surviving Corporation and its Subsidiaries shall honor, without
modification, all contracts, agreements, collective bargaining agreements,
severance agreements between KCPL and certain of its officers and commitments of
the parties prior to the date hereof that have previously been provided to
Western Resources and that are disclosed in Section 6.10 of the KCPL Disclosure
Schedule and 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.
(b) WORKFORCE MATTERS. Subject to applicable bargaining agreements,
Western Resources shall treat the employees of the Surviving Corporation as a
single workforce, and shall use its best effort to conduct its employee
management practices on a fair and equitable basis, without regard to any
employee's place of employment prior to the KGE Effective Time.
Section 9.9 EMPLOYEE BENEFIT PLANS.
(a) COMPANY PLANS. (i) From the KGE Effective Time until the first
anniversary of the KGE Effective Time, New KC shall provide to employees of the
Surviving Corporation who were employees of KCPL prior to the KGE Effective Time
("KCPL Employees") benefits which are no less favorable in the aggregate than
the benefits provided to employees of KCPL as of the date hereof, (ii) between
the first and second anniversaries of the KGE Effective Time, New KC may either
provide KCPL Employees
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benefits which are no less favorable in the aggregate than the benefits provided
to employees of KCPL as of the date hereof or provide to KCPL Employees benefits
on the same terms as those applicable to other similarly situated former KGE
employees, and (iii) after the second anniversary of the KGE Effective Time, New
KC shall provide to KCPL Employees benefits on the same terms as those
applicable to other similarly situated former KGE employees. In the event New KC
is unable to provide benefits to KCPL Employees on the same terms applicable to
other similarly situated former KGE employees after the second anniversary of
the KGE Effective Time, it shall continue to provide benefits which are no less
favorable in the aggregate than the benefits provided to KCPL Employees as of
the date hereof until such other benefits can be provided. For purposes of this
Section 9.9(a), the term "benefits" shall not include the following plans of
KCPL: the Long Term Incentive Plan for Executives, the Auto Allowance, the
Financial/Tax Allowance, the Incentive Compensation Plan, the Executive
Long-Term and Short-Term Incentive Plan, the RESULTS Incentive Compensation
Plan, the KLT, Inc. Annual Incentive Pay Plan and Long Term Incentive Plan, the
Ad Hoc Bonus Program, the Retention/Hiring Bonus Program, the Sales and
Marketing Incentive Plans, and the Bulk Power Sales Incentive Plan.
(b) EFFECT OF THE KCPL MERGER AND THE KGE MERGER. The consummation of
the KCPL Merger or the KGE Merger shall not be treated as a termination of
employment for purposes of any Western Resources Benefit Plan or KCPL Benefit
Plan.
(c) CREDIT FOR PAST SERVICE. Without limitation of the foregoing
provisions of this Section 9.9, each participant in any benefit plan of the
Surviving Corporation shall receive credit for service with KCPL, Western
Resources or KGE, as the case may be, 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 and (ii)
benefit accrual under any severance or vacation pay 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.
Section 9.10 STOCK OPTIONS. Prior to the KCPL Effective Time, KCPL
shall take such actions as may be necessary such that immediately prior to the
KCPL Effective Time, each option to purchase shares of KCPL Common Stock and any
accrued dividend rights granted on such KCPL Common Stock (collectively, the
"KCPL Stock Options") which is outstanding, whether or not then exercisable,
shall be canceled and entitle the holder of any then exercisable KCPL Stock
Options, upon surrender of all outstanding KCPL Stock Options, to receive in
consideration of such cancellation an amount in cash from KCPL equal to the
result of multiplying the number of shares of KCPL Common Stock previously
subject to such KCPL Stock Option by the difference between (i) the sum of (x)
the fair market value of the number of shares of Western Resources Common Stock
(as determined by the average closing price of the Western Resources Common
Stock for the five (5) consecutive trading day period occurring immediately
following the distribution contemplated by Section 4.1) that such optionee would
have received pursuant to Section 4.1 if such optionee had exercised a KCPL
Stock Option to purchase one (1) share of KCPL Common Stock
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immediately prior to the KCPL Effective Time and (y) the fair market value of
the number of shares of New KC Series A Common Stock (as determined by the
average closing price of the New KC Series A Common Stock for the five (5)
consecutive trading day period occurring immediately following the distribution
contemplated by Section 4.1) that such optionee would have received pursuant to
Section 2.4(a) if such optionee had exercised a KCPL Stock Option to purchase
one (1) share of KCPL Common Stock immediately prior to the KCPL Effective Time
and (ii) the per share exercise price of such KCPL Stock Options.
Section 9.11 NO SOLICITATIONS. From and after the date hereof, KCPL
will not, and will not authorize or permit any of its 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, KCPL may (i) at any time prior to the time KCPL's shareholders
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
KCPL or its Representatives after the date hereof) seeks to initiate such
discussions or negotiations and may furnish such third party information
concerning KCPL 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 transactions contemplated herein and has
demonstrated that financing for the Acquisition Proposal is reasonably likely to
be obtained (as determined in good faith by KCPL's Board of Directors after
consultation with its financial advisors) and (y) KCPL'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 KCPL 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, KCPL (x) provides prompt notice to Western Resources to the effect that
it is planning to furnish information to or enter 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
KCPL first terminates this Agreement pursuant to Section 11.1(e). KCPL shall
immediately cease and terminate any existing solicitation, initiation,
encouragement, activity, discussion or negotiation with any parties conducted
heretofore by KCPL or its Representatives with respect to the foregoing. KCPL
shall notify Western Resources orally and in writing of any such inquiries,
offers or proposals (including, without limitation, the terms and conditions of
any such proposal and the identity of the person making it), within 24 hours of
the receipt thereof, shall keep Western Resources informed of the status and
details of any such inquiry, offer or proposal,
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and shall give Western Resources 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 Western Resources, KGE or New KC) for a tender
or exchange offer, merger, consolidation or other business combination involving
KCPL or any KCPL Subsidiary or any proposal to acquire in any manner a
substantial equity interest in or a substantial portion of the assets of KCPL or
any KCPL Subsidiary.
Section 9.12 BOARD OF DIRECTORS OF NEW KC. At the KGE Effective Time,
Western Resources shall cause the initial Board of Directors of New KC to be
comprised of six persons designated by Western Resources, and four persons
selected from the Board of Directors of KCPL, in office as of the date hereof,
designated by KCPL. Thereafter, directors of New KC shall be nominated and
elected in accordance with the procedures set forth in the New KC Articles and
New KC By-Laws.
Section 9.13 POST-MERGER OPERATIONS.
(a) PRINCIPAL CORPORATE OFFICES. At the KGE Effective Time, (i) the
executive headquarters of New KC shall be in Kansas City, Missouri, (ii) the
customer service headquarters of New KC shall be in Wichita, Kansas, and (iii)
the field operation headquarters of New KC shall be in Topeka, Kansas.
(b) CHARITIES. After the KGE Effective Time, the Surviving Corporation
currently intends to provide charitable contributions and community support
within the service areas of KCPL and Western Resources and each of their
respective Subsidiaries at annual levels substantially comparable to the annual
levels of charitable contributions and community support provided by KCPL and
Western Resources and their respective Subsidiaries within their service areas
during 1994 and 1995.
(c) BOARD OF DIRECTORS OF WESTERN RESOURCES. At the KGE Effective Time,
Western Resources shall cause to be nominated to the Board of Directors of
Western Resources (to such class of directors as Western Resources shall
determine in its sole discretion) the following persons: Xxxxxxx X. Xxxxx,
Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxx. No persons shall be substituted for the
foregoing persons if any such person is not qualified or declines to serve as a
director of Western Resources pursuant to the Western Resources Articles or the
Western Resources By-Laws.
(d) TERMINATION OF LITIGATION. The parties hereto shall immediately
dismiss, with each party bearing its own costs and litigation expenses, all
proceedings pending between themselves and their affiliates, including without
limitation KCPL v. Western Resources, Inc. et al., Civ. Action No. 96-552-CV-W-5
(W.D. Mo.), and each shall thereafter sign and deliver such further instruments
as may be necessary in connection with such dismissals.
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(e) DIVIDENDS. Upon the KGE Effective Time, the dividend policy of New
KC shall be set by the Board of Directors of New KC so as to achieve a payout
ratio that is consistent with comparable electric utility companies.
Section 9.14 EXPENSES. Subject to Section 11.3, 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 Western Resources.
Section 9.15 TRANSITION MANAGEMENT. The parties shall create a special
transition management task force (the "Task Force") which shall be jointly
headed by representatives appointed by and reasonably acceptable to the Chief
Executive Officers of Western Resources and KCPL. 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 KGE Effective Time, subject
to applicable law.
Section 9.16 PURCHASE ACCOUNTING AND TAX-FREE STATUS. Each party hereto
agrees, as to itself and to each of its Subsidiaries, that after the date hereof
and prior to the KGE Effective Time or earlier termination of this Agreement,
except as expressly contemplated or permitted in this Agreement:
(a) PURCHASE ACCOUNTING. Western Resources and New KC shall account for
the KGE Merger and the KCPL Merger under the purchase method of accounting
in accordance with the provisions of Accounting Principles Board Opinion No.
16, "Business Combinations."
(b) TAX-FREE STATUS. None of the parties hereto shall, nor shall any
party hereto permit any of its Subsidiaries or any employees, officers or
directors of such party or of any of its Subsidiaries to, take any actions
which would, or would be reasonably likely to, adversely affect the ability
of the KCPL Merger or the KGE Merger 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.
Section 9.17 FURTHER ASSURANCES. Each party will, and will cause its
Subsidiaries to, execute such further documents and instruments and take such
further actions, including the application for any necessary regulatory
approvals or exemptions, as may reasonably be requested by any other party in
order to consummate the transactions contemplated hereby in accordance with the
terms hereof.
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Section 9.18 INTERIM DIVIDENDS. The last record date of each of KCPL
and Western Resources on or prior to the KGE Effective Time which relates to a
regular quarterly dividend on KCPL Common Stock or Western Resources Common
Stock, as the case may be, shall be the same date and shall be prior to the KGE
Effective Time.
Section 9.19 REDEMPTION OF CERTAIN WESTERN RESOURCES $100 PREFERRED.
Prior to the KGE Effective Time, the Board of Directors of Western Resources
shall call for redemption all outstanding shares of 4 1/2% Western Resources
$100 Preferred Stock, 4 1/4% Western Resources $100 Preferred Stock and 5%
Western Resources $100 Preferred Stock at a redemption price equal to the amount
set forth in the Western Resources Articles, together with all dividends accrued
and unpaid to the date of such redemption and take all other required actions so
that all shares of 4 1/2% Western Resources $100 Preferred Stock, 4 1/4% Western
Resources $100 Preferred Stock and 5% Western Resources $100 Preferred Stock
shall be redeemed and no such shares shall be deemed to be outstanding at the
KGE Effective Time or entitled to vote on the approval of this Agreement and the
transactions contemplated hereby.
ARTICLE X
CONDITIONS
Section 10.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE KGE
MERGER AND THE KCPL MERGER. The respective obligations of each party to effect
the KGE Merger or the KCPL Merger, as the case may be, 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 11.5 by the joint action of the parties
hereto:
(a) SHAREHOLDER APPROVALS. The Western Resources 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 the KGE Merger or the KCPL Merger shall have been issued and
be continuing in effect, and the KGE Merger, the KCPL Merger 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.
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(d) LISTING OF SHARES. The shares of Western Resources Common Stock
issuable in the Stock Contribution and the Western Resources Stock
Distribution and the shares of New KC Common Stock issuable in the KCPL
Merger and the KGE Merger shall have been approved for listing on the NYSE
upon official notice of issuance.
(e) REQUIRED STATUTORY APPROVALS. The KCPL Required Statutory Approvals
and the Western Resources Required Statutory Approvals shall have been
obtained at or prior to the KCPL Effective Time and such approvals shall
have become Final Orders (as defined below). 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) PERMITS. To the extent that the continued lawful operations of the
business of KCPL or any of its Subsidiaries after the KCPL Merger or to the
extent that the continued lawful operations of the business of Western
Resources, KGE, New KC, or any of their respective Subsidiaries after the
KGE Merger 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 KGE Effective Time.
(g) TAX CONFIRMATION. Western Resources shall have received
confirmation in form and substance reasonably satisfactory to Western
Resources from the Kansas tax authorities that no sales or use tax is
payable in connection with the Asset Contribution.
Section 10.2 CONDITIONS TO OBLIGATION OF WESTERN RESOURCES, KGE AND NEW
KC TO EFFECT THE KGE MERGER. The obligation of Western Resources, KGE and New KC
to effect the KGE Merger shall be further subject to the satisfaction, on or
prior to the Closing Date, of the following conditions, except as may be waived
by Western Resources, KGE and New KC in writing pursuant to Section 11.5:
(a) PERFORMANCE OF OBLIGATIONS OF KCPL. KCPL (and/or its appropriate
Subsidiaries) will have performed in all material respects their agreements
and covenants contained in or contemplated by this Agreement which are
required to be performed by them at or prior to the KGE Effective Time
including, without limitation, agreements and covenants contained in Section
2.4(c) hereof.
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(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of KCPL set forth in this Agreement shall be true and correct (i) on and as
of the date hereof 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 result in a KCPL Material Adverse Effect.
(c) CLOSING CERTIFICATES. Western Resources 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 10.2(a) and Section 10.2(b) have been
satisfied.
(d) KCPL MATERIAL ADVERSE EFFECT. No KCPL Material Adverse Effect shall
have occurred.
(e) KCPL REQUIRED CONSENTS. The KCPL Required Consents the failure of
which to obtain would have a KCPL Material Adverse Effect, shall have been
obtained.
(f) AFFILIATE AGREEMENTS. Western Resources shall have received
Affiliate Agreements, duly executed by each "Affiliate" of KCPL,
substantially in the form of Exhibit 9.7, as provided in Section 9.7.
(g) 1935 ACT. Western Resources shall be reasonably satisfied that,
following the KGE Effective Time, it shall be exempt from all provisions of
the 1935 Act other than Section 9(a)(2) thereof.
(h) STATUTORY APPROVALS. Western Resources shall be reasonably
satisfied that the Final Orders, other than any Final Order issued by FERC,
with respect to the KCPL Required Statutory Approvals and the Western
Resources Required Statutory Approvals shall not impose terms or conditions
which, individually or in the aggregate, would have, or insofar as
reasonably can be foreseen, are likely to have a material adverse effect on
the business, assets, financial condition or results of operations of the
Surviving Corporation or a material adverse effect on the benefits
anticipated by Western Resources as a result of the consummation of the
transactions contemplated by this Agreement.
(i) FERC APPROVAL. Western Resources shall be reasonably satisfied that
any Final Order issued by FERC with respect to the KCPL Required Statutory
Approvals and the Western Resources Required Statutory Approvals shall not
impose terms or conditions which, individually or in the aggregate, would
have, or insofar as reasonably
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can be foreseen, are likely to have a material adverse effect on the
business, assets, financial condition or results of operations of the
Surviving Corporation or a material adverse effect on the benefits
anticipated by Western Resources as a result of the consummation of the
transactions contemplated by this Agreement.
(j) TAX OPINION. Western Resources shall have received an opinion from
Xxxxxxxx & Xxxxxxxx, counsel to Western Resources, in form and substance
reasonably satisfactory to Western Resources, dated as of the Closing,
substantially to the effect that (i) the KCPL Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code and (ii) the
KGE Merger will qualify as a reorganization within the meaning of Section
368(a) of the Code and (iii) no gain or loss will be recognized by the
shareholders of KGE or Western Resources as a result of the KGE Merger. In
rendering such opinion, Xxxxxxxx & Xxxxxxxx may require and rely upon
representations contained in certificates of officers of KCPL, Western
Resources and others.
(k) MAXIMUM NUMBER OF DISSENTING SHARES. The aggregate number of
Dissenting Shares shall not be greater than 5.5% of the outstanding shares
of KCPL Common Stock as of the KCPL Effective Time.
(l) KCPL MERGER. The KCPL Merger shall have been consummated in
accordance with the terms of this Agreement.
Section 10.3 CONDITIONS TO OBLIGATION OF KCPL TO EFFECT THE KCPL
MERGER. The obligation of KCPL to effect the KCPL Merger 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 in writing pursuant to Section 11.5:
(a) PERFORMANCE OF OBLIGATIONS OF WESTERN RESOURCES, KGE AND NEW KC.
Western Resources, KGE and New KC (and/or their appropriate Subsidiaries)
will have performed in all material respects their agreements and covenants
contained in or contemplated by this Agreement which are required to be
performed by them at or prior to the KGE Effective Time.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Western Resources, KGE and New KC set forth in this Agreement shall be
true and correct (i) on and as of the date hereof 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 result in a
Western Resources Material Adverse Effect.
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(c) CLOSING CERTIFICATES. KCPL shall have received a certificate signed
by the chief financial officer of Western Resources, dated the Closing Date,
to the effect that, to the best of such officer's knowledge, the conditions
set forth in Section 10.3(a) and Section 10.3(b) have been satisfied.
(d) WESTERN RESOURCES MATERIAL ADVERSE EFFECT. No Western Resources
Material Adverse Effect shall have occurred.
(e) WESTERN RESOURCES REQUIRED CONSENTS. The Western Resources Required
Consents the failure of which to obtain would have a Western Resources
Material Adverse Effect shall have been obtained.
(f) STATUTORY APPROVALS. KCPL shall be reasonably satisfied that the
Final Orders, other than any Final Order issued by FERC, with respect to the
KCPL Required Statutory Approvals and the Western Resources Required
Statutory Approvals shall not impose terms or conditions which, individually
or in the aggregate, would have, or insofar as reasonably can be foreseen,
are likely to have a material adverse effect on the business, assets,
financial condition or results of operations of the Surviving Corporation.
(g) FERC APPROVAL. KCPL shall be reasonably satisfied that any Final
Order issued by FERC with respect to the KCPL Required Statutory Approvals
and the Western Resources Required Statutory Approvals shall not impose
terms or conditions which, individually or in the aggregate, would have, or
insofar as reasonably can be foreseen, are likely to have a material adverse
effect on the business, assets, financial condition or results of operations
of the Surviving Corporation.
(h) TAX OPINION. KCPL shall have received an opinion from Skadden, Arps
Slate, Xxxxxxx & Xxxx, LLP, counsel to KCPL, in form and substance
reasonably satisfactory to KCPL, dated as of the Closing, substantially to
the effect that (i) the KCPL Merger will qualify as a reorganization within
the meaning of Section 368(a) of the Code, (ii) the KGE Merger will qualify
as a reorganization within the meaning of Section 368(a) of the Code, and
(iii) other than in respect of cash paid in lieu of fractional shares, no
gain or loss will be recognized by the shareholders of New KC or KCPL as a
result of either the KCPL Merger or the KGE Merger. In rendering such
opinion, Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP may require and rely upon
representations contained in certificates of officers of KCPL, Western
Resources and others.
(i) ASSET AND STOCK CONTRIBUTION; KGE MERGER. The Asset Contribution
and the Stock Contribution shall have been consummated in accordance with
the terms of this Agreement and all conditions to Western Resources' and New
KC's obligations to effect the KGE Merger shall have been satisfied or
waived.
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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 TERMINATION. For purposes of this Article XI, only Western
Resources and KCPL shall have the right to terminate this Agreement. References
to a party under this Article XI shall mean Western Resources, KGE and New KC,
on the one hand, or KCPL, on the other hand. 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
Western Resources;
(b)(i) by either party if there has been 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 Western Resources Material Adverse Effect or a
KCPL Material Adverse Effect, as the case may be, and, 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) by either party, if the KCPL Board of Directors or
any committee thereof (A) shall withdraw or modify in any adverse manner its
approval or recommendation of this Agreement or the transactions
contemplated hereby, (B) shall fail to reaffirm such approval or
recommendation upon Western Resources' request, (C) shall approve or
recommend any acquisition of KCPL or a material portion of its assets or any
tender offer for shares of capital stock of KCPL, in each case, other than
by Western Resources or an Affiliate thereof or (D) shall resolve to take
any of the actions specified in clause (A), (B) or (C), or (iii) by either
party, if any state or federal law, order, rule or regulation is adopted or
issued, which has the effect, as supported by the written opinion of outside
counsel for such party, of prohibiting the transactions contemplated hereby,
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 transactions
contemplated hereby, and such order, judgment or decree shall have become
final and nonappealable;
(c) by either party hereto, by written notice to the other party, if
the KCPL Effective Time shall not have occurred on or before December 31,
1999 (the "Termination Date"); provided, however, that the right to
terminate the Agreement under this Section 11.1(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 KCPL Effective Time to
occur on or before this date;
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(d) by either party hereto, by written notice to the other party, if
(i) the Western Resources Shareholders' Approval shall not have been
obtained at a duly held Western Resources 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 or
(ii) the Western Resources Shareholders' Approval and the KCPL Shareholders'
Approval shall not have been obtained on or before August 31, 1998;
(e) by KCPL, prior to the approval of this Agreement by the
shareholders of KCPL, upon five days' prior notice to Western Resources, if,
as a result of an Acquisition Proposal by a party other than Western
Resources 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 KCPL 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 Western Resources 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
Western Resources 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 either party hereto, by the delivery of written notice to the
other party not later than 5:00 p.m., New York City time, on the fifth NYSE
trading day prior to the scheduled KGE Effective Time (the parties agreeing
that each party shall have at least ten NYSE trading days' notice of the KGE
Effective Time), if the Western Resources Index Price is less than or equal
to $29.78.
Section 11.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either KCPL or Western Resources pursuant to Section 11.1 there
shall be no liability on the part of any party hereto or their respective
officers or directors hereunder, except that Section 9.14 and Section 11.3, the
agreement contained in the last sentence of Section 9.1, Section 12.2 and
Section 12.8 shall survive the termination.
Section 11.3 TERMINATION FEE; EXPENSES.
(a) KCPL TERMINATION FEE. If (i) this Agreement (A) is terminated by
Western Resources pursuant to Section 11.1(b)(i), (B) is terminated by KCPL
pursuant to Section 11.1(e), (C) is terminated as a result of KCPL's breach of
Section 9.4, or (D) is terminated because the shareholders of KCPL do not
approve the transactions contemplated hereby, (ii) at the time of such
termination or prior to the meeting of KCPL's shareholders
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there shall have been made an Acquisition Proposal involving KCPL 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 such termination or of such
meeting) and (iii) within two and one-half years of the termination of this
Agreement KCPL or any of its Affiliates becomes a Subsidiary of the party which
has made such Acquisition Proposal or a Subsidiary of an Affiliate of such party
or accepts a written offer to consummate or consummates an Acquisition Proposal
with such party or an Affiliate thereof, then KCPL (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 KCPL becoming such a Subsidiary or of
such Acquisition Proposal, KCPL shall pay to Western Resources a termination fee
equal to $50 million in cash. If on or before the Termination Date all of the
conditions to Closing set forth in Sections 10.1, 10.2 and 10.3 hereof other
than the condition set forth in Section 10.3(h) hereof shall have been
fulfilled, and KCPL shall decline to waive such condition, then immediately
following the Termination Date KCPL shall reimburse Western Resources for any
and all expenses of Western Resources with respect to this Agreement and the
transactions contemplated hereby, up to a maximum reimbursement of Western
Resources by KCPL of $5 million.
(b) WESTERN RESOURCES FEES. If on or before the Termination Date all of
the conditions to the Closing set forth in Sections 10.1, 10.2 and 10.3 hereof
other than any condition set forth in Sections 10.2(g), 10.2(h), 10.2(i) or
10.2(j) hereof shall have been fulfilled, and Western Resources shall decline to
waive such condition, then immediately following the Termination Date Western
Resources shall reimburse KCPL for any and all expenses of KCPL with respect to
this Agreement and the transactions contemplated hereby, up to a maximum
reimbursement of KCPL by Western Resources of $5 million in the case of the
conditions set forth in Section 10.2(h) or 10.2(j), $25 million in the case of
the conditions set forth in Section 10.2(i), and $35 million in the case of
Section 10.2(g); provided, however, that Western Resources shall be required to
reimburse KCPL's expenses in respect of the failure of only one of the foregoing
closing conditions to be satisfied.
(c) EXPENSES. The parties agree that the agreements contained in this
Section 11.3 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 11.3, if one party fails to
promptly pay to the other any fee due under Sections 11.3(a) or (b), 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 11.4 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
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of KCPL and Western Resources and prior to the KGE 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 I, Article II, Article III and Article IV 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 Western Resources 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.
Section 11.5 WAIVER. At any time prior to the KGE Effective Time, a
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions of the other party 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.
Section 11.6 STANDSTILL AGREEMENTS.
(a) UPON TERMINATION. If this Agreement is terminated pursuant to
Section 11.1(a), 11.1(b), 11.1(c) or 11.1(d) hereof, other than for a
termination (i) by Western Resources pursuant to Section 11.1(b)(i), (ii) by
either party pursuant to Section 11.1(b)(ii), (iii) by either party pursuant to
Section 11.1(d) as a result of the failure to obtain the KCPL Shareholder's
Approval, and (iv) by either party pursuant to Section 11.1(c) if one or more of
the conditions set forth in Section 10.2(a), 10.2(b), 10.2(c), 10.2(d), 10.2(e)
and 10.2(f) shall not have been fulfilled or waived by Western Resources, for a
period of three years from and after the date of such termination Western
Resources shall not, and shall not permit any of its Subsidiaries to, unless
permitted in writing by KCPL (a) in any manner acquire, agree to acquire or make
any proposal to acquire, directly or indirectly, any securities or property of
KCPL or any of its Subsidiaries, (b) seek or propose to enter into directly or
indirectly, any merger, business combination, tender offer, exchange offer, sale
or purchase of assets or securities, dissolution, liquidation, recapitalization,
restructuring or similar transaction of or involving KCPL or any of its
Subsidiaries or to purchase, directly or indirectly, a material portion of the
assets of KCPL or any of its Subsidiaries, (c) make, or in any way participate,
directly or indirectly, in any "solicitation" of "proxies" (as such terms are
used in the proxy rules of the SEC) or consents to vote, or seek to advise or
influence any person with respect to the voting of, any voting securities of
KCPL or any of its Subsidiaries, (d) form, join or in any way participate in a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any voting security of KCPL or any of its Subsidiaries, (e) otherwise
act, alone or in concert with others, to seek to control or influence the
management, Board of Directors or policies of KCPL, (f) have any discussions or
enter into
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any arrangements, understandings or agreements (whether written or oral) with,
or advise, finance, assist or encourage, any other persons in connection with
any of the foregoing, or make any investment in any other person that engages,
or offers or proposes to engage, in any of the foregoing (it being understood
that, without limiting the generality of the foregoing, Western Resources shall
not be permitted to act as a joint bidder or co-bidder with any other person
with respect to KCPL or any of its Subsidiaries), or (g) make any publicly
disclosed proposal regarding any of the foregoing. The provisions of this
Section 11.6 shall cease to apply in the event that a third party, not acting in
concert or affiliated with Western Resources, (i) makes a proposal to acquire or
merge with KCPL or to acquire all or substantially all of the assets of KCPL or
a KCPL Subsidiary or (ii) acquires 10% or more of the KCPL Common Stock.
(b) NEW KC. (i) For the purposes of this Section 11.6(b), each of
the following terms shall have the following meaning:
"Western Resources Group" shall mean Western Resources, its
Subsidiaries and Affiliates, and any person acting on behalf of Western
Resources or any of such Subsidiaries or Affiliates.
"Voting Securities" shall mean the shares of New KC Common Stock and
any other issued and outstanding securities of New KC generally entitled to vote
for the election of directors of New KC and other matters for which the holders
of New KC Common Stock are entitled to vote.
"Independent Director" shall mean any New KC director that is not an
employee or director of Western Resources or an employee of New KC. Western
Resources agrees that for so long as Western Resources shall own, directly or
indirectly, more than 50 percent of the issued and outstanding Voting Securities
of New KC, and in any case for not more than ten years from the Closing Date,
Western Resources shall vote all shares of Voting Securities beneficially owned
by Western Resources to elect, and New KC shall use its best efforts to cause to
be elected, at least three Independent Directors to the board of directors of
New KC.
(ii) Except as set forth in clauses (iii) and (iv) below, during the
period beginning on, and ending on the tenth anniversary of, the Closing Date
(unless earlier terminated pursuant to the provisions of this Agreement),
Western Resources shall not, and shall cause the other members of the Western
Resources Group not to, directly or indirectly, (A) in any manner acquire, agree
to acquire, make any proposal to acquire or announce or disclose any intention
to make a proposal to acquire, directly or indirectly, any Voting Securities,
except pursuant to the KGE Merger in accordance with the terms and conditions of
this Agreement or (B) propose to enter into, or announce or disclose any
intention to propose to enter into, directly or indirectly, any merger or
business combination involving New KC or to purchase, directly or indirectly,
all or substantially all of the assets of New KC.
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(iii) Notwithstanding the provisions of clause (ii) above, following
the Closing Date Western Resources may in any manner acquire Voting Securities
representing in the aggregate up to but not exceeding the greater of 85% of the
Voting Securities on a fully diluted basis or 88.5% of the Voting Securities on
a primary basis.
(iv) Notwithstanding the provisions of clause (ii) above, following the
Closing Date, Western Resources may make a tender offer or exchange offer for
all outstanding shares of New KC Common Stock or Voting Securities or take any
of the actions described in clause (ii)(B) above; provided that any such action
satisfies the following additional requirements (x) if a tender offer, the offer
must be a "tender offer" for purposes of, and must be made in compliance with,
Rules 14d-1 and 13e-3 under the Exchange Act (or any successor provisions
thereto), and (y) any such action must be at a price and on terms that are fair
to the stockholders of New KC (as determined by a majority of the Independent
Directors after the receipt of a fairness opinion with respect to any such
proposed transaction from a nationally recognized investment banking firm
selected by a majority of the Independent Directors and reasonably acceptable to
Western Resources), and must be approved by a majority of the Independent
Directors.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 NON-SURVIVAL; EFFECT OF REPRESENTATIONS AND WARRANTIES. No
representations or warranties in this Agreement shall survive the KGE Effective
Time, except as otherwise provided in this Agreement.
Section 12.2 BROKERS. KCPL represents and warrants that, except for
Xxxxxxx Xxxxx whose fees have been disclosed to Western Resources prior to the
date hereof, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the KGE
Merger, the KCPL Merger or the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of KCPL. Western Resources, New KC and
KGE represent and warrant that, except for Salomon, whose fees have been
disclosed to KCPL prior to the date hereof, and except for certain soliciting
dealer arrangements the material terms and conditions of which have been
publicly disclosed by Western Resources, New KC or KGE prior to the date hereof,
no broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the KGE Merger or the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Western Resources, New KC or KGE.
Section 12.3 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
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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, to:
Kansas City Power & Light Company
0000 Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(ii) If to Western Resources, New KC or KGE, to:
Western Resources, Inc.
000 Xxxxxx Xxx.
Xxxxxx, Xxxxxx 00000
Attn. Chief Executive Officer
with a copy to:
Xxxx X. Xxxxxxxxx
Executive Vice President and General Counsel
000 Xxxxxx Xxx.
Xxxxxx, Xxxxxx 00000
and
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
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Section 12.4 MISCELLANEOUS. This Agreement (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 either
party and (c) shall be governed by and construed in accordance with the laws of
the State of Kansas 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 KGCC.
Section 12.5 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." When a
reference is made in this Agreement to the "knowledge" of Western Resources,
such reference shall also refer to the knowledge of New KC and KGE.
Section 12.6 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 12.7 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 9.5, 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.
Section 12.8 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 11.3, 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 12.9 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 Kansas or in Kansas state court, this being in addition
to any other remedy to which they are entitled at law or in equity. In addition,
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each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of Kansas or any Kansas
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 Kansas.
Section 12.10 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 12.11 ANTI-DILUTION. The Western Resources Index Price and the
Conversion Ratio and any Western Resources share price referred to in this
Agreement shall be appropriately adjusted in the case of any stock dividend,
reclassification, recapitalization, split-up, combination or subdivision with
respect to the common stock of Western Resources.
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IN WITNESS WHEREOF, the parties hereto 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: /s/ Xxxxxx Sell Xxxx By: /s/ A. Xxxx Xxxxxxxx
Secretary A. Xxxx Xxxxxxxx
Chairman of the Board, President
and Chief Executive Officer
WESTERN RESOURCES, INC.
Attest: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxx, Xx.
Secretary Xxxx X. Xxxxx, Xx.
Chairman of the Board and
Chief Executive Officer
KANSAS GAS AND ELECTRIC
COMPANY
Attest: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
Secretary Xxxxxxx X. Xxxxx
Chairman of the Board and
President
NKC, INC.
Attest: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxxxx
Secretary Xxxx X. Xxxxxxxxx
President
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE CONTRIBUTIONS
Section 1.1 THE ASSET CONTRIBUTION...........................................2
Section 1.2 LIABILITIES ASSUMED..............................................3
Section 1.3 RETAINED LIABILITIES.............................................3
Section 1.4 INSTRUMENTS OF TRANSFER..........................................3
Section 1.5 ASSIGNMENT OR ASSUMPTION OF CONTRACT RIGHTS......................4
Section 1.6 THE STOCK CONTRIBUTION...........................................4
Section 1.7 CERTAIN TAXES....................................................5
ARTICLE II
MERGER OF KCPL WITH AND INTO NEW KC
Section 2.1 THE KCPL MERGER..................................................5
Section 2.2 EFFECTS OF THE KCPL MERGER.......................................5
Section 2.3 EFFECTIVE TIME OF THE KCPL MERGER................................6
Section 2.4 EFFECT OF THE KCPL MERGER ON KCPL AND NEW KC CAPITAL STOCK.......6
Section 2.5 DEBT OF NEW KC...................................................7
Section 2.6 NAME OF NEW KC...................................................7
ARTICLE III
MERGER OF KGE WITH AND INTO NEW KC
Section 3.1 THE KGE MERGER...................................................7
Section 3.2 EFFECTS OF THE KGE MERGER........................................8
Section 3.3 EFFECTIVE TIME OF THE KGE MERGER.................................8
Section 3.4 EFFECT OF THE KGE MERGER ON KGE CAPITAL STOCK....................8
Section 3.5 EFFECT OF THE KGE MERGER ON CERTAIN WESTERN RESOURCES
COMMON STOCK.....................................................8
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PAGE
ARTICLE IV
ADDITIONAL TRANSACTIONS
Section 4.1 DISTRIBUTION OF WESTERN RESOURCES COMMON STOCK...................9
Section 4.2 DISTRIBUTION OF KLT CAPITAL STOCK TO WESTERN RESOURCES...........9
Section 4.3 CONVERSION OF NEW KC SERIES B COMMON STOCK OWNED BY
WESTERN RESOURCES................................................9
ARTICLE V
THE CLOSING
Section 5.1 CLOSING..........................................................9
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF KCPL
Section 6.1 ORGANIZATION AND QUALIFICATION..................................10
Section 6.2 SUBSIDIARIES....................................................10
Section 6.3 CAPITALIZATION..................................................11
Section 6.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE...12
Section 6.5 REPORTS AND FINANCIAL STATEMENTS................................13
Section 6.6 ABSENCE OF CERTAIN CHANGES OR EVENTS............................14
Section 6.7 LITIGATION......................................................14
Section 6.8 REGISTRATION STATEMENT AND PROXY STATEMENT......................15
Section 6.9 TAX MATTERS.....................................................15
Section 6.10 EMPLOYEE MATTERS; ERISA........................................17
Section 6.11 ENVIRONMENTAL PROTECTION.......................................19
Section 6.12 REGULATION AS A UTILITY........................................21
Section 6.13 VOTE REQUIRED..................................................21
Section 6.14 ARTICLE TWELFTH OF KCPL'S RESTATED ARTICLES OF CONSOLIDATION...21
Section 6.15 OPINION OF FINANCIAL ADVISOR...................................21
Section 6.16 INSURANCE......................................................21
Section 6.17 KCPL NOT A RELATED PERSON......................................22
Section 6.18 TAKEOVER STATUTES..............................................22
Section 6.19 TERMINATION OF UTILICORP AGREEMENT.............................22
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PAGE
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF
WESTERN RESOURCES, KGE AND NEW KC
Section 7.1 ORGANIZATION AND QUALIFICATION..................................23
Section 7.2 SUBSIDIARIES....................................................23
Section 7.3 CAPITALIZATION..................................................23
Section 7.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE...25
Section 7.5 REPORTS AND FINANCIAL STATEMENTS................................26
Section 7.6 ABSENCE OF CERTAIN CHANGES OR EVENTS............................27
Section 7.7 LITIGATION......................................................27
Section 7.8 REGISTRATION STATEMENT AND PROXY STATEMENT......................28
Section 7.9 TAX MATTERS.....................................................28
Section 7.10 EMPLOYEE MATTERS; ERISA........................................29
Section 7.11 ENVIRONMENTAL PROTECTION.......................................31
Section 7.12 REGULATION AS A UTILITY........................................32
Section 7.13 VOTE REQUIRED..................................................32
Section 7.14 ARTICLE XI (BUSINESS COMBINATION WITH INTERESTED SHAREHOLDER)
OF WESTERN RESOURCES' ARTICLES OF INCORPORATION................33
Section 7.15 OPINION OF FINANCIAL ADVISOR...................................33
Section 7.16 INSURANCE......................................................33
Section 7.17 WESTERN RESOURCES NOT AN INTERESTED SHAREHOLDER................33
Section 7.18 TAKEOVER STATUTES..............................................34
Section 7.19 NO PRIOR OPERATIONS OF NEW KC...................................34
Section 7.20 TITLE TO PROPERTIES.............................................34
Section 7.21 CONDITION OF ASSETS.............................................35
Section 7.22 ACCOUNTS RECEIVABLE.............................................35
ARTICLE VIII
CONDUCT OF BUSINESS PENDING THE KGE MERGER
Section 8.1 COVENANTS OF KCPL...............................................35
Section 8.2 COVENANTS OF WESTERN RESOURCES, NEW KC AND KGE..................41
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1 ACCESS TO INFORMATION...........................................42
Section 9.2 JOINT PROXY STATEMENT AND REGISTRATION STATEMENT................43
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PAGE
Section 9.3 REGULATORY MATTERS..............................................44
Section 9.4 SHAREHOLDER APPROVAL............................................44
Section 9.5 DIRECTORS' AND OFFICERS' INDEMNIFICATION........................45
Section 9.6 PUBLIC ANNOUNCEMENTS............................................47
Section 9.7 RULE 145 AFFILIATES.............................................47
Section 9.8 EMPLOYEE AGREEMENTS AND WORKFORCE MATTERS.......................47
Section 9.9 EMPLOYEE BENEFIT PLANS..........................................47
Section 9.10 STOCK OPTIONS..................................................48
Section 9.11 NO SOLICITATIONS...............................................49
Section 9.12 BOARD OF DIRECTORS OF NEW KC...................................50
Section 9.13 POST-MERGER OPERATIONS.........................................50
Section 9.14 EXPENSES.......................................................51
Section 9.15 TRANSITION MANAGEMENT..........................................51
Section 9.16 PURCHASE ACCOUNTING AND TAX-FREE STATUS........................51
Section 9.17 FURTHER ASSURANCES.............................................51
Section 9.18 INTERIM DIVIDENDS..............................................52
Section 9.19 REDEMPTION OF CERTAIN WESTERN RESOURCES $100 PREFERRED.........52
ARTICLE X
CONDITIONS
Section 10.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE KGE MERGER
AND THE KCPL MERGER............................................52
Section 10.2 CONDITIONS TO OBLIGATION OF WESTERN RESOURCES, KGE AND NEW KC
TO EFFECT THE KGE MERGER.......................................53
Section 10.3 CONDITIONS TO OBLIGATION OF KCPL TO EFFECT THE KCPL MERGER.....55
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 TERMINATION....................................................57
Section 11.2 EFFECT OF TERMINATION..........................................58
Section 11.3 TERMINATION FEE; EXPENSES......................................58
Section 11.4 AMENDMENT......................................................59
Section 11.5 WAIVER.........................................................60
Section 11.6 STANDSTILL AGREEMENTS..........................................60
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PAGE
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 NON-SURVIVAL; EFFECT OF REPRESENTATIONS AND WARRANTIES.........62
Section 12.2 BROKERS........................................................62
Section 12.3 NOTICES........................................................62
Section 12.4 MISCELLANEOUS..................................................64
Section 12.5 INTERPRETATION.................................................64
Section 12.6 COUNTERPARTS; EFFECT...........................................64
Section 12.7 PARTIES' INTEREST..............................................64
Section 12.8 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES.......................64
Section 12.9 ENFORCEMENT....................................................64
Section 12.10 SEVERABILITY..................................................65
Section 12.11 ANTI-DILUTION.................................................65
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INDEX OF PRINCIPAL TERMS
PAGE
1935 Act.....................................................................10
4 1/2% Western Resources $100 Preferred......................................24
4 1/4% Western Resources $100 Preferred......................................24
5% Western Resources $100 Preferred..........................................24
Accounts Receivable..........................................................35
Acquisition Proposal.........................................................50
Affiliate....................................................................22
Affiliate Agreement..........................................................47
Aggregate Consideration.......................................................9
Agreement.....................................................................1
Asset Contribution............................................................1
Assumed Liabilities...........................................................3
Atomic Energy Act............................................................13
Closing.......................................................................9
Closing Agreement............................................................16
Closing Date.................................................................10
Code..........................................................................2
Confidentiality Agreement....................................................42
Control......................................................................22
Controlled By................................................................22
Conversion Ratio..............................................................4
Dissenting Shares.............................................................6
Dissenting Shareholders.......................................................6
Easements....................................................................35
Environmental Claim..........................................................20
Environmental Laws...........................................................20
Environmental Permits........................................................19
ERISA........................................................................17
Exchange Act.................................................................13
FERC.........................................................................13
Final Order..................................................................53
GAAP.........................................................................14
Governmental Authority.......................................................13
Hazardous Materials..........................................................20
HSR Act......................................................................44
Indemnified Liabilities......................................................45
Indemnified Parties..........................................................45
Indemnified Party............................................................45
Investments..................................................................36
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IRS..........................................................................17
Joint Proxy/Registration Statement...........................................43
KCPL..........................................................................1
KCPL Benefit Plans...........................................................17
KCPL Business Plan...........................................................35
KCPL Common Stock.............................................................4
KCPL Cumulative Preferred....................................................11
KCPL Disclosure Schedule.....................................................10
KCPL Effective Time...........................................................6
KCPL Employees...............................................................47
KCPL Financial Statements....................................................14
KCPL Material Adverse Effect.................................................14
KCPL Meeting.................................................................44
KCPL Merger...................................................................1
KCPL No Par Preferred........................................................11
KCPL Preference Stock........................................................11
KCPL Preferred Stock.........................................................11
KCPL Required Consents.......................................................12
KCPL Required Statutory Approvals............................................13
KCPL SEC Reports.............................................................14
KCPL Shareholders' Approval..................................................21
KCPL Stock Options...........................................................48
KCPL Stock Plans.............................................................11
KCPL Subsidiary..............................................................10
KGCC..........................................................................6
KGE...........................................................................1
KGE Common Stock..............................................................8
KGE Effective Time............................................................8
KGE Merger....................................................................1
KLT...........................................................................7
KLT Stock Distribution........................................................9
KPL...........................................................................1
KPL Assets....................................................................2
KPL Balance Sheet.............................................................3
KPL Business..................................................................1
Lien.........................................................................34
Xxxxxxx Xxxxx................................................................21
MGBCL.........................................................................6
New KC........................................................................1
New KC Articles...............................................................5
New KC By-Laws................................................................6
New KC Common Stock..........................................................24
New KC Series A Common Stock..................................................6
New KC Series B Common Stock..................................................8
Non-KPL Assets................................................................2
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NRC..........................................................................13
NYSE..........................................................................5
Original Agreement............................................................1
Original Execution Date.......................................................1
PBGC.........................................................................18
PCBs.........................................................................20
Permitted Liens..............................................................34
Power Act....................................................................13
Proxy Statement..............................................................15
Registration Statement.......................................................15
Release......................................................................21
Representatives..............................................................42
Salomon......................................................................33
SEC..........................................................................13
Securities Act...............................................................13
Series B Conversion...........................................................9
Stock Contribution............................................................1
Subsidiary...................................................................10
Surviving Corporation.........................................................8
Task Force...................................................................51
Tax Return...................................................................15
Tax Ruling...................................................................16
Taxes........................................................................15
Termination Date.............................................................57
Under Common Control With....................................................22
UtiliCorp.....................................................................2
Utilicorp Agreement...........................................................2
UtiliCorp Confidentiality Agreement..........................................22
Violation....................................................................12
Voting Debt..................................................................11
Western Resources.............................................................1
Western Resources $100 Preferred.............................................23
Western Resources Articles...................................................22
Western Resources Benefit Plans..............................................29
Western Resources By-Laws....................................................45
Western Resources Common Stock................................................4
Western Resources Disclosure Schedule........................................23
Western Resources Financial Statements.......................................27
Western Resources Index Price.................................................5
Western Resources Material Adverse Effect....................................27
Western Resources Meeting....................................................45
Western Resources No-Par Preferred...........................................23
Western Resources Preference Stock...........................................24
Western Resources Preferred Stock............................................24
-viii-
Western Resources Required Consents..........................................25
Western Resources Required Statutory Approvals...............................25
Western Resources SEC Reports................................................26
Western Resources Shareholders' Approval.....................................33
Western Resources Stock Distribution..........................................9
Western Resources Subsidiary.................................................23
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