Exhibit 99
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 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").
(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 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 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 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.
(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 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.
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 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, 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.
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
(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
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, 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.
(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.
(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 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.
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 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).
(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.
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.
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 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.
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 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 Resources and KGE pursuant to the require-
ments 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.
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.
(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").
(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 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.
(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 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 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.
(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
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, 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.
(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.
(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.
(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, 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.
(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.
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.
(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 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
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.
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 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 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, 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.
(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.
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.
(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.
(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 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.
(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.
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;
(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 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 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 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.
(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 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
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, 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.
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
TABLE OF CONTENTS
Page
ARTICLE ITHE 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 IIMERGER 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 IIIMERGER 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
ARTICLE IVADDITIONAL 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 VTHE CLOSING
Section 5.1 Closing. . . . . . . . . . . . . . . . . 9
ARTICLE VIREPRESENTATIONS 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
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 Statement28
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 Incorporation33
Section 7.15 Opinion of Financial Advisor. . . . . .33
Section 7.16 Insurance . . . . . . . . . . . . . . .33
Section 7.17 Western Resources not an Interested Shareholder33
Section 7.18 Takeover Statutes . . . . . . . . . . .34
Xxxxxxx 0.00 Xx Xxxxx Xxxxxxxxxx xx Xxx XX. . . . . .34
Section 7.20 Title to Properties. . . . . . . . . . .34
Section 7.21 Condition of Assets. . . . . . . . . . .35
Section 7.22 Accounts Receivable. . . . . . . . . . .35
ARTICLE VIIICONDUCT OF BUSINESS PENDING THE KGE MERGER
Section 8.1 Covenants of KCPL. . . . . . . . . . . .35
Section 8.2 Covenants of Western Resources, New KC and KGE41
ARTICLE IXADDITIONAL AGREEMENTS
Section 9.1 Access to Information. . . . . . . . . .42
Section 9.2 Joint Proxy Statement and Registration Statement43
Section 9.3 Regulatory Matters . . . . . . . . . . .44
Section 9.4 Shareholder Approval . . . . . . . . . .44
Section 9.5 Directors' and Officers' Indemnification45
Section 9.6 Public Announcements . . . . . . . . . .47
Section 9.7 Rule 145 Affiliates. . . . . . . . . . .47
Section 9.8 Employee Agreements and Workforce Matters47
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 Status51
Section 9.17 Further Assurances. . . . . . . . . . .51
Section 9.18 Interim Dividends . . . . . . . . . . .52
Section 9.19 Redemption of Certain Western Resources $100 Preferred52
ARTICLE XCONDITIONS
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 Merger55
ARTICLE XITERMINATION, 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
ARTICLE XIIGENERAL PROVISIONS
Section 12.1 Non-Survival; Effect of Representations and Warranties62
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 Damages64
Section 12.9 Enforcement . . . . . . . . . . . . . .64
Section 12.10 Severability . . . . . . . . . . . . .65
Section 12.11 Anti-dilution. . . . . . . . . . . . .65
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 Shareholders . . . . . . . . . . . . . . . 6
Dissenting Shares . . . . . . . . . . . . . . . . . . 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
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
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
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
