EXHIBIT 2
EXECUTION COPY
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WESTERN RESOURCES, INC.,
KANSAS GAS AND ELECTRIC COMPANY,
NKC, INC.,
AND
KANSAS CITY POWER & LIGHT COMPANY
Dated as of March 18, 1998
AMENDED AND RESTATED AGREEMENT AND PLAN OF
MERGER (this "Agreement"), dated as of March 18, 1998, by
and among Western Resources, Inc., a Kansas corporation
("Western Resources"), Kansas Gas and Electric Company, a
Kansas corporation and wholly owned subsidiary of Western
Resources ("KGE"), and NKC, Inc., a newly formed Kansas
corporation and wholly owned subsidiary of Western
Resources ("New KC"), on the one hand, and Kansas City
Power & Light Company, a Missouri corporation ("KCPL"),
on the other hand.
WHEREAS, Western Resources and KCPL entered
into an agreement and plan of merger (the "Original
Agreement"), dated as of February 7, 1997 (the "Original
Execution Date"), and wish to amend and restate the
Original Agreement as specified herein;
WHEREAS, Western Resources' rate-regulated
electric division ("KPL") is engaged in the production,
purchase, transmission, distribution and sale of
electricity (the "KPL Business");
WHEREAS, immediately prior to the KCPL
Effective Time (as defined in Section 3.3), Western
Resources will contribute to KGE all of the KPL Assets
(as defined in Section 1.1) and KGE will assume all of
the Assumed Liabilities (as defined in Section 1.2, such
contribution and assumption, the "Asset Contribution")),
upon the terms and subject to the conditions set forth in
this Agreement;
WHEREAS, immediately prior to the KGE Effective
Time, Western Resources will contribute to KGE shares of
Western Resources Common Stock (as defined in Section 1.6
(the "Stock Contribution")), upon the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, the boards of directors of each of
Western Resources and KGE have approved the Asset
Contribution and the Stock Contribution, upon the terms
and subject to the conditions set forth in this
Agreement;
WHEREAS, the respective boards of directors of
each of KCPL and New KC have approved the merger of KCPL
with and into New KC with New KC being the surviving
corporation (the "KCPL Merger"), upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the respective boards of directors of
each of New KC, Western Resources and KGE have approved
the merger of KGE with and into New KC with New KC being
the surviving corporation (the "KGE Merger"), upon the
terms and subject to the conditions set forth in this
Agreement;
WHEREAS, it is intended that, for federal
income tax purposes the KGE Merger and the KCPL Merger
shall qualify as a reorganization under the provisions of
Section 368(a) of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated
thereunder (the "Code");
WHEREAS, for purposes of Section 354(a) of the
Code, the Western Resources Common Stock distributed
pursuant to the Western Resources Stock Distribution (as
defined in Section 4.1 hereof) shall be treated as stock
of Western Resources, a party to the reorganization,
distributed in pursuance of the plan of reorganization;
WHEREAS, Western Resources, KGE, KCPL and New
KC desire to make certain representations, warranties,
covenants and agreements in connection with this
Agreement; and
WHEREAS, KCPL and UtiliCorp United, Inc., a
Delaware corporation ("UtiliCorp"), were parties to that
certain Amended and Restated Agreement and Plan of Merger
among KCPL, KC Merger Sub, Inc., a Delaware corporation,
UtiliCorp and KC United Corp., a Delaware corporation,
dated as of January 19, 1996, as amended and restated as
of May 20, 1996 (the "UtiliCorp Agreement"), which KCPL
has terminated in accordance with the terms thereof.
NOW, THEREFORE, in consideration of the
premises and the representations, warranties, covenants
and agreements contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I.
THE CONTRIBUTIONS
Section 1.1 The Asset Contribution.
(a) Contribution. Immediately prior to the KCPL
Effective Time and as a condition precedent to the KGE
Merger, Western Resources shall contribute, or cause to
be contributed, to KGE, and KGE shall acquire, all of the
right, title and interest of Western Resources in, to and
under the assets, property and interests owned by Western
Resources that are used in, or related to or generated
by, the KPL Business, of every type, character and
description, tangible and intangible, real, personal and
mixed, accrued, contingent or otherwise, wherever located
and whether or not reflected on the books and records of
Western Resources as of the Closing Date (as defined in
Section 5.1) (the "KPL Assets"), other than securities,
the corporate headquarters of Western Resources and those
assets necessary for the operation of Western Resources
as a holding company after the Closing Date, the
categories of which are described in Section 1.1(b) of
the Western Resources Disclosure Schedule (as defined in
Section 7.2 hereof) (the "Non-KPL Assets").
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(b) KPL Balance Sheet; Non-KPL Assets. Section
1.1(b) of the Western Resources Disclosure Schedule sets
forth (i) an unaudited pro forma balance sheet that
represents in all material respects, as of December 31,
1997, the assets and liabilities of KPL, as though the
Asset Contribution had been made on such date (the "KPL
Balance Sheet"), and (ii) a list, as of the date hereof,
of the Non-KPL Assets which are not reflected in such
balance sheet. The KPL Assets shall include such assets,
properties and interests as are necessary to enable New
KC to operate the KPL Business in accordance with past
practice. The Non-KPL Assets shall not include any
asset, property or interest as is necessary to operate
the KPL Business in accordance with past practice.
(c) KPL Business and KGE at Closing. At the
Closing, the KPL Business and KGE will contain
substantially the same assets and liabilities as they did
as of December 31, 1997, subject to modifications that
reflect ordinary course operation of the KPL Business and
KGE in accordance with past practice prior to the date
hereof. Western Resources shall not make or permit to
be made any changes in the accounting methods used with
respect to the KPL Business or KGE, except as required by
applicable law, rule, regulation or GAAP.
Section 1.2 Liabilities Assumed. Concurrently
with the Asset Contribution contemplated in Section 1.1,
KGE shall assume and agree to pay, perform and discharge
when due all debts, claims, losses, liabilities, leases
and obligations whatsoever, including, without
limitation, debts, indebtedness for borrowed money,
guaranties, liabilities, obligations, and claims with
respect to any contracts included in the KPL Business,
that arise out of, or relate to or are generated by, the
KPL Assets or the operations of the KPL Business, whether
arising before or after the Asset Contribution and
whether known or unknown, fixed or contingent (the
"Assumed Liabilities"). The Assumed Liabilities shall
also include an aggregate principal amount of
indebtedness for borrowed money of Western Resources so
that aggregate total indebtedness for borrowed money
(including preferred stock) of KGE equals $1.9 billion
immediately prior to the KGE Effective Time; provided,
however, that the Assumed Liabilities shall not include
indebtedness for borrowed money of Western Resources if
KGE immediately prior to the KGE Effective Time already
has indebtedness for borrowed money (including preferred
stock) of $1.9 billion, it being understood that in no
case shall the indebtedness for borrowed money (including
preferred stock) of KGE exceed $1.9 billion immediately
prior to the KGE Effective Time.
Section 1.3 Retained Liabilities. Except for the
Assumed Liabilities, Western Resources shall retain and
have full responsibility for and obligation with respect
to all debts, claims, losses, indebtedness for borrowed
money, guaranties, liabilities, leases and obligations
whatsoever of Western Resources and its Affiliates (as
defined in Section 6.17 hereof) and Subsidiaries (as
defined in Section 6.1 hereof) (other than New KC after
the KGE Effective Time (as defined herein)).
Section 1.4 Instruments of Transfer. The
conveyance, transfer, assignment and delivery of the KPL
Assets to KGE and the assumption of the Assumed
Liabilities by KGE shall be effected by one or more
assignments, assumption agreements, regulatory orders and
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any other transfer documents, as may be necessary, or as
KCPL may reasonably request. As to the real property
interests held in fee included in the KPL Assets, the
conveyances shall be by special warranty deed, subject to
Permitted Liens (as defined in Section 7.20).
Section 1.5 Assignment or Assumption of Contract
Rights. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an
agreement to assign or assume any claim, contract, lease,
commitment or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted
assignment or assumption thereof, without the consent of
a third party thereto, would constitute a breach thereof.
If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would affect
the rights of Western Resources thereunder so that KGE or
New KC would not in fact receive all such rights, Western
Resources will cooperate with New KC in arrangements
reasonably designed to provide for New KC, at the expense
of New KC, the benefits under any such claims, contracts,
licenses, leases or commitments including, without
limitation, enforcement for the benefit of New KC of any
and all rights of Western Resources against a third party
thereto arising out of the breach or cancellation by such
third party or otherwise; and any transfer or assignment
to New KC by Western Resources of any property or
property rights or any contract or agreement which shall
require the consent or approval of any third party shall
be made subject to such consent or approval being
obtained; provided, however, that any third party
consents to the assignment of such contracts shall
provide that Western Resources shall be released in full
from its obligations under such contracts.
Section 1.6 The Stock Contribution.
Immediately prior to the KGE Effective Time and as
a condition precedent to the KGE Merger, Western
Resources shall contribute, or cause to be contributed,
to KGE, shares of partly paid Western Resources Common
Stock, par value $5.00 per share (the "Western Resources
Common Stock"). The amount of Western Resources Common
Stock to be contributed to KGE pursuant to this Section
shall be equal to the product of (x) the number of shares
of Common Stock, without par value, of KCPL ("KCPL Common
Stock") (other than shares of KCPL Common Stock
beneficially owned by Western Resources or KCPL,
Dissenting Shares (as defined in Section 2.4(a)) and
shares (or any portion thereof) of KCPL Common Stock in
respect of which cash is to be paid in lieu of fractional
shares pursuant to Section 4.1) issued and outstanding
immediately prior to the Stock Contribution times (y) the
Conversion Ratio. The term "Conversion Ratio" means the
quotient (rounded to the nearest 1/100,000) determined by
dividing $23.50 by the Western Resources Index Price (as
defined below); provided, however, that if the Western
Resources Index Price (i) is greater than $58.46, the
Conversion Ratio shall be fixed at 0.449, provided that
if 0.449 multiplied by the Western Resources Index Price
exceeds $30.00, the Conversion Ratio shall mean the
quotient (rounded to the nearest 1/100,000) obtained by
dividing $30.00 by the Western Resources Index Price,
(ii) is greater than $55.03 but less than or equal to
$58.46, the Conversion Ratio shall mean the quotient
(rounded to the nearest 1/100,000) obtained by dividing
$26.25 by the Western Resources Index Price, (iii) is
greater than $52.41 but less
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than or equal to $55.03, the
Conversion Ratio shall be fixed at 0.477, (iv) is greater
than $50.00 but less than or equal to $52.41, the
Conversion Ratio shall mean the quotient (rounded to the
nearest 1/100,000) determined by dividing $25.00 by the
Western Resources Index Price, (v) is greater than $47.00
but less than or equal to $50.00, the Conversion Ratio
shall be fixed at 0.500, (vi) is greater than $35.01 but
less than or equal to $38.27, the Conversion Ratio shall
be fixed at 0.614, (vii) is greater than $29.78 but less
than or equal to $35.01, the Conversion Ratio shall mean
the quotient (rounded to the nearest 1/100,000 obtained
by dividing $21.50 by the Western Resources Index Price
or (viii) is less than or equal to $29.78, the Conversion
Ratio shall be fixed at 0.722. The term "Western
Resources Index Price" means the aggregate of the average
of the high and low sales prices of Western Resources
Common Stock (as reported on the New York Stock Exchange
(the "NYSE") Composite Transactions reporting system as
published in The Wall Street Journal or, if not published
therein, in another authoritative source) on each of the
twenty consecutive NYSE trading days ending the tenth
NYSE trading day immediately preceding the KGE Effective
Time, divided by 20. Notwithstanding the foregoing, no
certificates or scrip representing fractional shares of
Western Resources Common Stock shall be contributed to
KGE in the Stock Contribution.
Section 1.7 Certain Taxes. Each of New KC (after
the KGE Merger) and Western Resources shall pay one half
of the total of (i) all transfer, stamp, sales or use
Taxes (as defined in Section 6.9) and any filing,
recording, regulatory or similar fees or assessments
payable or determined to be payable in connection with
the execution, delivery or performance of this Agreement
or the transactions contemplated hereby and (ii) all
costs and expenses incurred by Western Resources or KGE
arising out of or relating to obtaining any third party
consents and approvals in connection with the Asset
Contribution and the KGE Merger.
ARTICLE II
MERGER OF KCPL WITH AND INTO NEW KC
Section 2.1 The KCPL Merger. Upon the terms and
subject to the conditions of this Agreement, at the KCPL
Effective Time (as defined in Section 2.3), KCPL shall be
merged with and into New KC in accordance with the laws
of the States of Missouri and Kansas. New KC shall be
the surviving corporation in the KCPL Merger and shall
continue its corporate existence under the laws of the
State of Kansas. The effects and the consequences of the
KCPL Merger shall be as set forth in Section 2.2.
Section 2.2 Effects of the KCPL Merger. At the
KCPL Effective Time, (i) the Articles of Incorporation of
New KC, as in effect immediately prior to the KCPL
Effective Time, shall be the articles of incorporation of
New KC (the "New KC Articles") until thereafter amended
as provided by law and the New KC Articles, and (ii) the
by-laws of New KC, as in effect immediately prior to the
KCPL Effective Time, shall be the by-laws
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of New KC (the
"New KC By-Laws") until thereafter amended as provided by
law, the New KC Articles, and such by-laws. Subject to
the foregoing, the additional effects of the KCPL Merger
shall be as provided in the applicable provisions of the
General and Business Corporation Law of Missouri (the
"MGBCL") and the General Corporation Code of the State of
Kansas (the "KGCC").
Section 2.3 Effective Time of the KCPL Merger.
On the Closing Date, a certificate of merger shall be
executed and filed by New KC and KCPL with the Secretary
of State of the State of Kansas pursuant to the KGCC and
articles of merger shall be executed and filed with the
Secretary of State of the State of Missouri pursuant to
the MGBCL. The KCPL Merger shall become effective upon
the certification by the Secretary of State of the State
of Kansas that the certificate of merger relating to the
KCPL Merger has been duly filed (the "KCPL Effective
Time").
Section 2.4 Effect of the KCPL Merger on KCPL and
New KC Capital Stock.
(a) Capital Stock of KCPL. As of the KCPL
Effective Time, by virtue of the KCPL Merger and upon
surrender by any holder of shares of KCPL Common Stock of
such shares, subject to Section 2.4(b) and
Section 2.4(d), each issued and outstanding share of KCPL
Common Stock (other than shares of KCPL Common Stock
beneficially owned by KCPL either directly or through a
wholly owned Subsidiary and shares of KCPL Common Stock
("Dissenting Shares") that are owned by shareholders
("Dissenting Shareholders") exercising appraisal rights
pursuant to Section 351.455 of the MGBCL), shall
represent one fully paid and nonassessable share of
Series A Common Stock, without par value, of New KC ("New
KC Series A Common Stock"). As of the KCPL Effective
Time, by virtue of the KCPL Merger and without any action
on the part of Western Resources, each share of New KC
Series A Common Stock previously owned by Western
Resources shall be cancelled.
(b) Cancellation of Certain KCPL Common Stock and
New KC Common Stock. As of the KCPL Effective Time, by
virtue of the KCPL Merger and without any action on the
part of any holder of any capital stock of KCPL or New
KC, any shares of KCPL Common Stock or New KC Common
Stock that are owned by KCPL as treasury stock or
otherwise or by New KC or by any wholly owned Subsidiary
of New KC or KCPL shall be canceled and retired and shall
cease to exist and no stock of New KC or other
consideration shall be issued or delivered in exchange
therefor.
(c) Redemption of KCPL Preferred Stock. Prior to
the KCPL Effective Time, the Board of Directors of KCPL
shall call for redemption all outstanding shares of KCPL
Preferred Stock (as defined in Section 6.3) at a
redemption price equal to the amount set forth in the
Restated Articles of Consolidation of KCPL, together with
all dividends accrued and unpaid to the date of such
redemption and take all other required actions so that
all shares of KCPL Preferred Stock shall be redeemed and
no such shares shall be deemed to be outstanding at the
KCPL Effective Time or entitled to vote on the approval
of this Agreement and the transactions contemplated
hereby.
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(d) Dissenters' Rights. No Dissenting Shareholder
shall be entitled to shares of New KC Series A Common
Stock or cash in lieu of fractional shares
thereof or any distributions pursuant to this Article II
or Section 4.1 unless and until the holder thereof shall
have failed to perfect or shall have effectively
withdrawn or lost such holder's right to dissent from the
KCPL Merger under the MGBCL, and any Dissenting
Shareholder shall be entitled to receive only the payment
provided by Section 351.455 of the MGBCL with respect to
shares of KCPL Common Stock owned by such Dissenting
Shareholder. If any Person who otherwise would be deemed
a Dissenting Shareholder shall have failed to perfect
properly or shall have effectively withdrawn or lost the
right to dissent with respect to any shares of KCPL
Common Stock, such shares of KCPL Common Stock shall
thereupon be treated as though such shares of KCPL Common
Stock had been converted into shares of New KC Series A
Common Stock pursuant to Section 2.4(a) hereof, and, to
the extent such failure, withdrawal or loss occurs
subsequent to the Closing Date, Western Resources and New
KC shall issue shares of Western Resources Common Stock
and New KC Series A Common Stock in accordance with
Sections 1.6 and 2.4(a), respectively, of this Agreement.
KCPL shall give Western Resources and New KC (i) prompt
notice of any written demands for appraisal, attempted
withdrawals of such demands, and any other instruments
served pursuant to applicable law received by KCPL
relating to shareholders' rights of appraisal and (ii)
the opportunity to direct all negotiations and
proceedings with respect to demand for appraisal under
the MGBCL. KCPL shall not, except with the prior written
consent of Western Resources and New KC, voluntarily make
any payment with respect to any demands for appraisals of
Dissenting Shares, offer to settle or settle any such
demands or approve any withdrawal of any such demands.
Section 2.5 Debt of New KC. Immediately after
the KCPL Effective Time but prior to the KGE Effective
Time (as defined in Section 3.3), New KC shall cause KLT,
Inc., a wholly owned subsidiary of New KC as a result of
the KCPL Merger ("KLT"), to assume any indebtedness for
borrowed money of New KC in excess of $800 million
aggregate principal amount (including preferred stock).
Section 2.6 Name of New KC. Prior to the KCPL
Effective Time, Western Resources and KCPL shall agree as
to a new name for New KC and shall take all actions
necessary to change its name.
ARTICLE III
MERGER OF KGE WITH AND INTO NEW KC
Section 3.1 The KGE Merger. Upon the terms and
subject to the conditions of this Agreement, at the KGE
Effective Time, KGE shall be merged with and into
New KC in accordance with the laws of the State of
Kansas. New KC shall be the surviving corporation in the
KGE Merger and shall continue its corporate existence
under the laws of the State of Kansas. New KC after the
KGE Effective Time is sometimes referred to herein
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as the "Surviving Corporation." The effects and the
consequences of the KGE Merger shall be as set forth in
Section 3.2.
Section 3.2 Effects of the KGE Merger.
(a) New KC Articles and By-Laws. At the KGE
Effective Time, (i) the articles of incorporation of New
KC, as in effect immediately prior to the KGE Effective
Time, shall be the articles of incorporation of the
Surviving Corporation, until thereafter amended as
provided by law and the New KC Articles, and (ii) the by-
laws of New KC as in effect immediately prior to the KGE
Effective Time, shall be the by-laws of the Surviving
Corporation, until thereafter amended as provided by law,
the New KC Articles, and such by-laws. Subject to the
foregoing, the additional effects of the KGE Merger shall
be as provided in the applicable provisions of the KGCC.
(b) Dissenters' Rights. Western Resources shall
not exercise dissenters' rights under the KGCC with
respect to the KGE Merger.
Section 3.3 Effective Time of the KGE
Merger. On the Closing Date, a certificate of merger
shall be executed and filed by New KC and KGE with the
Secretary of State of the State of Kansas pursuant to the
KGCC. The KGE Merger shall become effective upon the
certification by the Secretary of State of the State of
Kansas that the certificate of merger relating to the KGE
Merger has been duly filed (the "KGE Effective Time"),
provided, that, the KGE Effective Time shall occur after
the KCPL Effective Time.
Section 3.4 Effect of the KGE Merger on
KGE Capital Stock. As of the KGE Effective Time, by
virtue of the KGE Merger and without any action on the
part of Western Resources all of the issued and
outstanding shares of Common Stock, without par value, of
KGE ("KGE Common Stock"), shall be converted into and
become such number of shares of Series B Common Stock,
without par value, of New KC ("New KC Series B Common
Stock"), representing, assuming there are no Dissenting
Shares, 80.1% of the fully diluted outstanding shares of
New KC. Immediately after consummation of the KCPL
Merger and the KGE Merger, assuming there are no
Dissenting Shares, the outstanding shares of New KC
Series A Common Stock to be issued pursuant to Section
2.4(a) shall constitute 19.9% of the fully diluted
outstanding shares of New KC.
Section 3.5 Effect of the KGE Merger on
Certain Western Resources Common Stock. As of the KGE
Effective Time, by virtue of the KGE Merger the Western
Resources Common Stock contributed to KGE pursuant to
Section 1.6 hereof shall become fully paid and
nonassessable.
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ARTICLE IV
ADDITIONAL TRANSACTIONS
Section 4.1 Distribution of Western
Resources Common Stock. Immediately after the KGE
Effective Time, New KC shall, in connection with the KGE
Merger, distribute to holders of New KC Series A Common
Stock the Western Resources Common Stock contributed to
KGE pursuant to the Stock Contribution to each holder of
New KC Series A Common Stock (including any shares of
Western Resources Common Stock issued pursuant to Section
2.4(d), the "Western Resources Stock Distribution").
Each share of New KC Series A Common Stock shall be
entitled to receive a distribution of that number of
shares of Western Resources Common Stock equal to the
product of (a) the number of shares of Western Resources
Common Stock contributed to KGE pursuant to the Stock
Contribution times (b) a quotient, the numerator of which
is 1 and the denominator of which is the total number of
shares of New KC Series A Common Stock issued and
outstanding immediately after the KCPL Effective Time.
The number of shares of New KC Series A Common Stock and
the number of shares of Western Resources Common Stock,
respectively, to be issued in the KCPL Merger to holders
of KCPL Common Stock and distributed in the Western
Resources Stock Distribution to holders (other than
Western Resources) of New KC Series A Common Stock are
together sometimes referred to herein as the "Aggregate
Consideration." Notwithstanding the foregoing, no
certificates or scrip representing fractional shares of
Western Resources Common Stock shall be distributed
pursuant to this Section 4.1. A holder of New KC Series
A Common Stock who would otherwise have been entitled to
a fractional share of Western Resources Common Stock
shall be entitled to receive a cash payment in lieu of
such fractional share in an amount equal to the product
of such fraction multiplied by the Western Resources
Index Price, without any interest thereon.
Section 4.2 Distribution of KLT Capital
Stock to Western Resources. Immediately after the KGE
Effective Time, New KC shall distribute to Western
Resources all of the outstanding shares of capital stock
of KLT (the "KLT Stock Distribution").
Section 4.3 Conversion of New KC Series B
Common Stock Owned by Western Resources. Immediately
after the Western Resources Stock Distribution, without
any action on the part of Western Resources, each share
of New KC Series B Common Stock owned by Western
Resources shall automatically represent one fully paid
and nonassessable share of New KC Series A Common Stock
(the "Series B Conversion").
ARTICLE V
THE CLOSING
Section 5.1 Closing. The closing of the
transactions contemplated hereby (the "Closing") shall
take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇
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▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M.,
local time, on the tenth NYSE trading day immediately
following the date on which the last of the conditions
set forth in Article X hereof is fulfilled or has been
waived or at such other time, date and place as Western
Resources and KCPL shall mutually agree (the "Closing
Date").
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF KCPL
KCPL makes the following representations and
warranties to Western Resources, KGE and New KC:
Section 6.1 Organization and Qualification.
KCPL and each of the KCPL Subsidiaries (as defined
below) is a corporation or other entity duly
organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority, and
has been duly authorized by all necessary approvals and
orders to own, lease and operate its assets and
properties to the extent owned, leased and operated and
to carry on its business as it is now being conducted and
is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or
the ownership or leasing of its assets and properties
makes such qualification necessary other than in such
jurisdictions where the failure so to qualify would not
have a KCPL Material Adverse Effect (as defined in
Section 6.6). As used in this Agreement, the term
"Subsidiary" of a person shall mean any corporation or
other entity (including partnerships and other business
associations) of which at least a majority of the voting
power represented by the outstanding capital stock or
other voting securities or interests having voting power
under ordinary circumstances to elect a majority of the
directors or similar members of the governing body of
such corporation or entity shall at the time be held,
directly or indirectly, by such person. The term "KCPL
Subsidiary" shall mean a Subsidiary of KCPL in which
KCPL's equity investment exceeds $25 million.
Section 6.2 Subsidiaries. Section 6.2 of the
schedule delivered by KCPL to Western Resources on
the date hereof (the "KCPL Disclosure
Schedule") sets forth a list as of the date hereof of all
the KCPL Subsidiaries. Neither KCPL nor any of the KCPL
Subsidiaries is a "holding company," a "subsidiary
company" or an "affiliate" of any public utility company
within the meaning of Section 2(a)(7), 2(a)(8) or
2(a)(11) of the Public Utility Holding Company Act of
1935, as amended (the "1935 Act"), respectively, and none
of the KCPL Subsidiaries is a "public utility company"
within the meaning of Section 2(a)(5) of the 1935 Act.
Except as set forth in Section 6.2 of the KCPL Disclosure
Schedule all of the issued and outstanding shares of
capital stock of each KCPL Subsidiary are validly issued,
fully paid, nonassessable and free of preemptive rights,
and are owned, directly or indirectly, by KCPL free and
clear of any liens, claims, encumbrances, security
interests, charges and options of any nature whatsoever
and there are no outstanding subscriptions, options,
calls, contracts, voting trusts, proxies or other
commitments, understandings,
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restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any
outstanding security, instrument or other agreement,
obligating any such KCPL Subsidiary to issue, deliver
or sell, or cause to be issued, delivered or sold,
additional shares of its capital stock or
obligating it to grant, extend or enter into any such
agreement or commitment.
Section 6.3 Capitalization. As of the date
hereof, the authorized capital stock of KCPL consists of
150,000,000 shares of KCPL Common Stock, without par
value, 401,157 shares of Cumulative Preferred Stock, par
value $100.00 per share ("KCPL Cumulative Preferred"),
1,572,000 shares of Cumulative No Par Preferred Stock,
without par value ("KCPL No Par Preferred"), and
11,000,000 shares of Preference Stock, without par value
("KCPL Preference Stock") (KCPL Cumulative Preferred,
KCPL No Par Preferred and KCPL Preference Stock
hereinafter collectively referred to as the "KCPL
Preferred Stock"). At the close of business on
March 17, 1998, (i) 61,908,726 shares of KCPL Common
Stock were issued, not more than 10,000,000 shares of
KCPL Common Stock were reserved for issuance pursuant to
KCPL's Long Term Incentive Plan and Employee Savings Plus
Plan (401(k) Plan) and Dividend Reinvestment Plan (such
Plans, collectively, the "KCPL Stock Plans"), (ii) 35,811
shares of KCPL Common Stock were held by KCPL in its
treasury or by its wholly owned Subsidiaries, (iii)
399,557 shares of KCPL Cumulative Preferred were issued
and of such issued shares, 8,934 were held by KCPL in its
treasury or by its wholly owned Subsidiaries, (iv)
500,000 shares of KCPL No Par Preferred were outstanding
and none were held by KCPL or its Subsidiaries in its
treasury, (v) no shares of KCPL Preference Stock were
outstanding, (vi) $150,000,000 of Company-Obligated
Mandatorily Redeemable Preferred Securities of a
subsidiary trust holding solely KCPL Subordinated
Debentures, and (vii) no bonds, debentures, notes or
other indebtedness having the right to vote (or
convertible into securities having the right to vote) on
any matters on which shareholders may vote ("Voting
Debt"), were issued or outstanding. All outstanding
shares of KCPL Common Stock and KCPL Preferred Stock are
validly issued, fully paid and nonassessable and are not
subject to preemptive rights. As of the date hereof,
except as set forth in Section 6.3 of the KCPL Disclosure
Schedule or pursuant to this Agreement and the KCPL Stock
Plans, there are no options, warrants, calls, rights,
commitments or agreements of any character to which KCPL
or any Subsidiary of KCPL is a party or by which any of
them are bound obligating KCPL or any Subsidiary of KCPL
to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or
any Voting Debt securities of KCPL or any Subsidiary of
KCPL or obligating KCPL or any Subsidiary of KCPL to
grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. Except as set
forth in Section 6.3 of the KCPL Disclosure Schedule, or
other than in connection with the KCPL Stock Plans, after
the KGE Effective Time, there will be no option, warrant,
call, right, commitment or agreement obligating KCPL or
any Subsidiary of KCPL to issue, deliver or sell, or
cause to be issued, delivered or sold, any shares of
capital stock or any Voting Debt of KCPL or any
Subsidiary of KCPL or obligating KCPL or any Subsidiary
of KCPL to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement.
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Section 6.4 Authority; Non-Contravention;
Statutory Approvals; Compliance.
(a) Authority. KCPL has all requisite power
and authority to enter into this Agreement and, subject
to the receipt of the applicable KCPL Shareholders'
Approval (as defined in Section 6.13) and the applicable
KCPL Required Statutory Approvals (as defined in
Section 6.4(c)), to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation by KCPL of the
transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part
of KCPL, subject to obtaining the applicable KCPL
Shareholders' Approval. This Agreement has been duly and
validly executed and delivered by KCPL and, assuming the
due authorization, execution and delivery hereof by
Western Resources and KGE, constitutes the valid and
binding obligation of KCPL enforceable against it in
accordance with the terms of this Agreement.
(b) Non-Contravention. Except as set forth in
Section 6.4(b) of the KCPL Disclosure Schedule, the
execution and delivery of this Agreement by KCPL does
not, and the consummation of the transactions
contemplated hereby will not, in any respect, violate,
conflict with or result in a material breach of any
provision of, or constitute a material default (with or
without notice or lapse of time or both) under, or result
in the termination or modification of, or accelerate the
performance required by, or result in a right of
termination, cancellation or acceleration of any
obligation or the loss of a material benefit under, or
result in the creation of any material lien, security
interest, charge or encumbrance upon any of the
properties or assets of KCPL or any of the KCPL
Subsidiaries (any such violation, conflict, breach,
default, right of termination, modification, cancellation
or acceleration, loss or creation, is referred to herein
as a "Violation" with respect to KCPL and such term when
used in Article VII having a correlative meaning with
respect to Western Resources and KGE) pursuant to any
provisions of (i) the Restated Articles of Consolidation,
by-laws or similar governing documents of KCPL or any of
the KCPL Subsidiaries, (ii) subject to obtaining the KCPL
Required Statutory Approvals and the receipt of the KCPL
Shareholders' Approval, any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any Governmental Authority (as
defined in Section 6.4(c)) applicable to KCPL or any of
the KCPL Subsidiaries or any of their respective
properties or assets or (iii) subject to obtaining the
third-party consents set forth in Section 6.4(b) of the
KCPL Disclosure Schedule (the "KCPL Required Consents"),
any material note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any
kind to which KCPL or any of the KCPL Subsidiaries is a
party or by which it or any of its properties or assets
may be bound or affected, except in the case of clause
(ii) or (iii) for any such Violation which would not have
a KCPL Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing
or registration with, or notice to or
authorization, consent or approval of, any court,
federal, state, local or foreign governmental or
regulatory body (including a stock exchange or other
self-regulatory body) or authority
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(each, a "Governmental Authority") is necessary for the
execution and delivery of this Agreement by KCPL or the
consummation by KCPL of the transactions contemplated
hereby except as described in Section 6.4(c) of the KCPL
Disclosure Schedule or the failure of which to obtain
would not result in a KCPL Material Adverse Effect
(the "KCPL Required Statutory Approvals," it being
understood that references in this Agreement to
"obtaining" such KCPL Required Statutory Approvals shall
mean making such declarations, filings or registrations;
giving such notices; obtaining such authorizations,
consents or approvals; and having such waiting periods
expire as are necessary to avoid a violation of law).
(d) Compliance. Except as set forth in
Section 6.7, Section 6.10, or Section 6.11 of the KCPL
Disclosure Schedule, or as disclosed in the KCPL SEC
Reports (as defined in Section 6.5) filed prior to the
date hereof, neither KCPL nor any of the KCPL
Subsidiaries is in violation of, is, to the knowledge of
KCPL, under investigation with respect to any violation
of, or has been given notice or been charged with any
violation of, any law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, any
applicable environmental law, ordinance or regulation) of
any Governmental Authority, except for possible
violations which individually or in the aggregate would
not have a KCPL Material Adverse Effect. Except as set
forth in Sections 6.7, 6.10 and 6.11 of the KCPL
Disclosure Schedule or as disclosed in the KCPL SEC
Reports filed prior to the date hereof, KCPL and the KCPL
Subsidiaries have all permits, licenses, franchises and
other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently
conducted which are material to the operation of the
businesses of KCPL and the KCPL Subsidiaries. Neither
KCPL nor any of the KCPL Subsidiaries is in breach or
violation of or in default in the performance or
observance of any term or provision of, and no event has
occurred which, with lapse of time or action by a third
party, could result in a default by KCPL or any KCPL
Subsidiary under (i) its articles of incorporation or
by-laws or (ii) any contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond,
license, approval or other instrument to which it is a
party or by which KCPL or any KCPL Subsidiary is bound or
to which any of its property is subject, except for
possible violations, breaches or defaults which
individually or in the aggregate would not have a KCPL
Material Adverse Effect.
Section 6.5 Reports and Financial Statements.
The filings required to be made by KCPL and the KCPL
Subsidiaries since January 1, 1994 under the Securities
Act of 1933, as amended (the "Securities Act"); the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"); the 1935 Act; the Federal Power Act (the
"Power Act"); the Atomic Energy Act of 1954, as amended
(the "Atomic Energy Act") and applicable state public
utility laws and regulations have been filed with the
Securities and Exchange Commission (the "SEC"), the
Federal Energy Regulatory Commission (the "FERC"), the
Nuclear Regulatory Commission ("NRC") or the appropriate
state public utilities commission, as the case may be,
including all forms, statements, reports, agreements
(oral or written) and all documents, exhibits, amendments
and supplements appertaining thereto, and complied, as of
their respective dates, in all material respects with all
applicable requirements of the appropriate statutes and
the rules and regulations thereunder, except for such
filings the
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failure of which to have been made or to so
comply would not result in a KCPL Material Adverse
Effect. "KCPL SEC Reports" shall mean each report,
schedule, registration statement and definitive proxy
statement filed with the SEC by KCPL pursuant to the
requirements of the Securities Act or Exchange Act since
January 1, 1994 (as such documents have since the time of
their filing been amended). As of their respective
dates, the KCPL SEC Reports did not contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances
under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim
financial statements of KCPL included in the KCPL SEC
Reports (collectively, the "KCPL Financial Statements")
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis
("GAAP") (except as may be indicated therein or in the
notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and
fairly present the financial position of KCPL as of the
dates thereof and the results of its operations and cash
flows for the periods then ended, subject, in the case of
the unaudited interim financial statements, to normal,
recurring audit adjustments. True, accurate and complete
copies of the Restated Articles of Consolidation and
by-laws of KCPL, as in effect on the date hereof, are
included (or incorporated by reference) in the KCPL SEC
Reports.
Section 6.6 Absence of Certain Changes or
Events. Except as disclosed in Section 6.6 of the KCPL
Disclosure Schedule and in the KCPL SEC Reports filed
prior to the date hereof, since December 31, 1996, KCPL
and each of the KCPL Subsidiaries have conducted their
business only in the ordinary course of business
consistent with past practice (except that the operations
of KLT and KCPL's marketing business have been conducted
in the ordinary course of business consistent with the
KCPL Business Plan (as defined in Section 8.1)) and there
has not been any KCPL Material Adverse Effect. For
purposes of this Agreement, a "KCPL Material Adverse
Effect" shall mean the existence of any fact or condition
which has or is reasonably likely to have a material
adverse effect on the business, assets, financial
condition, results of operations or prospects of KCPL and
the KCPL Subsidiaries taken as a whole.
Section 6.7 Litigation. Except as disclosed in
the KCPL SEC Reports filed prior to the date hereof or as
set forth in Sections 6.7, 6.9, 6.10 or 6.11 of the KCPL
Disclosure Schedule, (a) there are no claims, suits,
actions or proceedings by any court, governmental
department, commission, agency, instrumentality or
authority or any arbitrator, pending or, to the knowledge
of KCPL, threatened, nor are there, to the knowledge of
KCPL, any investigations or reviews by any court,
governmental department, commission, agency,
instrumentality or authority or any arbitrator pending or
threatened against, relating to or affecting KCPL or any
of the KCPL Subsidiaries which would have a KCPL Material
Adverse Effect, (b) there have not been any significant
developments since December 31, 1996 with respect to such
disclosed claims, suits, actions, proceedings,
investigations or reviews that would have a KCPL Material
Adverse Effect and (c) there are no judgments, decrees,
injunctions, rules or orders of any court, governmental
department, commission,
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agency, instrumentality or authority or any arbitrator
applicable to KCPL or any of the KCPL Subsidiaries,
except for such that would not have a KCPL Material
Adverse Effect.
Section 6.8 Registration Statement and Proxy
Statement. None of the information supplied or to be
supplied by or on behalf of KCPL for inclusion or
incorporation by reference in (a) the registration
statement on Form S-4 or any post-effective amendment to
a registration statement on Form S-4 to be filed with the
SEC by Western Resources and New KC in connection with
the issuance of shares of Western Resources Common Stock
and New KC Common Stock (as defined in Section 7.3)
pursuant to the transactions contemplated hereby (the
"Registration Statement") will, at the time the
Registration Statement is filed with the SEC and at the
time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein
or necessary to make the statements therein not
misleading and (b) the joint proxy statement, in
definitive form, relating to the meetings of KCPL and
Western Resources shareholders to be held in connection
with the KCPL Merger and KGE Merger and the transactions
related thereto (the "Proxy Statement") will, at the
dates mailed to shareholders and at the times of the
meetings of shareholders to be held in connection with
the KCPL Merger and KGE Merger, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
The Registration Statement and the Proxy Statement will
comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act and
the rules and regulations thereunder.
Section 6.9 Tax Matters. "Taxes," as used in
this Agreement, means any federal, state, county, local
or foreign taxes, charges, fees, levies or other
assessments, including all net income, gross income,
sales and use, ad valorem, transfer, gains, profits,
excise, franchise, real and personal property, gross
receipt, capital stock, production, business and
occupation, disability, employment, payroll, license,
estimated, stamp, custom duties, severance or withholding
taxes or charges imposed by any governmental entity, and
includes any interest and penalties (civil or criminal)
on or additions to any such taxes. "Tax Return," as used
in this Agreement, means a report, return or other
information required to be supplied to a governmental
entity with respect to Taxes including, where permitted
or required, combined or consolidated returns for any
group of entities that includes KCPL or any KCPL
Subsidiary or Western Resources, KGE or any Western
Resources Subsidiary, as the case may be.
Except as set forth in Section 6.9 of the KCPL
Disclosure Schedule and except as would not result in a
KCPL Material Adverse Effect:
(a) Filing of Timely Tax Returns. KCPL and each
of the KCPL Subsidiaries have filed (or there has been
filed on its behalf) all Tax Returns required to be filed
by each of them under applicable law. All such Tax
Returns were and are in all material respects true,
complete and correct and filed on a timely basis.
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(b) Payment of Taxes. KCPL and each of the
KCPL Subsidiaries have, within the time and in the manner
prescribed by law, paid all Taxes that are currently due
and payable, except for those contested in good faith and
for which adequate reserves have been taken.
(c) Tax Reserves. KCPL and each of the KCPL
Subsidiaries have established on their books and records
reserves adequate to pay all Taxes and reserves for
deferred income taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the
assets of KCPL or any of the KCPL Subsidiaries except
liens for Taxes not yet due.
(e) Withholding Taxes. KCPL and each of the KCPL
Subsidiaries have complied in all material respects with
the provisions of the Code relating to the withholding of
Taxes, as well as similar provisions under any other
laws, and have, within the time and in the manner
prescribed by law, withheld and paid over to the proper
governmental authorities all amounts required.
(f) Audit, Administrative and Court Proceedings.
No audits or other administrative proceedings or court
proceedings are presently pending with regard to any
Taxes or Tax Returns of KCPL or any of the KCPL
Subsidiaries.
(g) Tax Rulings. Neither KCPL nor any of the KCPL
Subsidiaries has received a Tax Ruling (as defined below)
or entered into a Closing Agreement (as defined below)
with any taxing authority. "Tax Ruling," as used in this
Agreement, shall mean a written ruling of a taxing
authority relating to Taxes. "Closing Agreement," as used
in this Agreement, shall mean a written and legally
binding agreement with a taxing authority relating to
Taxes.
(h) Tax Sharing Agreements. Except as between
affiliates of KCPL as set forth in Sections 6.1 and 6.2
of the KCPL Disclosure Schedule, neither KCPL nor any
KCPL Subsidiary is a party to any agreement relating to
allocating or sharing of Taxes.
(i) Code Section 280G. Except for the KCPL
Benefit Plans, neither KCPL, nor any of the KCPL
Subsidiaries is a party to any agreement, contract or
arrangement that could result in the payment of any
"excess parachute payments" within the meaning of
Section 280G of the Code or any amount that would be
non-deductible pursuant to Section 162(m) of the Code.
(j) Liability For Others. Neither KCPL nor any of
the KCPL Subsidiaries has any liability for Taxes of any
person other than KCPL and the KCPL Subsidiaries (i)
under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local or foreign law), (ii)
by contract, or (iii) otherwise.
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(k) Section 341(f). Neither KCPL nor any of the
KCPL Subsidiaries has, with regard to any assets or
property held or acquired by any of them, filed a consent
to the application of Section 341(f)(2) of the Code, or
agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by KCPL
or any of the KCPL Subsidiaries.
Section 6.10 Employee Matters; ERISA. Except as
set forth in Section 6.10 of the KCPL Disclosure
Schedule:
(a) Benefit Plans. As of the date
hereof, Section 6.10(a) of the KCPL Disclosure Schedule
contains a true and complete list of each written or oral
material employee benefit plan, policy or agreement
covering employees, former employees or directors of KCPL
and each of the KCPL Subsidiaries or their beneficiaries,
or providing benefits to such persons in respect of
services provided to any such entity, including, but not
limited to, any employee benefit plans within the meaning
of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and any
severance or change in control agreement (collectively,
the "KCPL Benefit Plans"). Since January 1, 1996, there
have been no new plans adopted nor changes, additions or
modification to any existing plan.
(b) Contributions. All material
contributions and other payments required to be made by
KCPL or any of the KCPL Subsidiaries to any KCPL Benefit
Plan (or to any person pursuant to the terms thereof)
have been made or the amount of such payment or
contribution obligation has been reflected in the KCPL
Financial Statements.
(c) Qualification; Compliance. Each of
the KCPL Benefit Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code has been
determined by the Internal Revenue Service (the "IRS") to
be so qualified, and, to the knowledge of KCPL, no
circumstances exist that are reasonably expected by KCPL
to result in the revocation of any such determination.
KCPL is in compliance in all material respects with, and
each of the KCPL Benefit Plans is and has been operated
in all material respects in compliance with, all
applicable laws, rules and regulations governing such
plan, including, without limitation, ERISA and the Code.
Each KCPL Benefit Plan intended to provide for the
deferral of income, the reduction of salary or other
compensation, or to afford other income tax benefits,
complies with the requirements of the applicable
provisions of the Code or other laws, rules and
regulations required to provide such income tax benefits.
No prohibited transactions (as defined in Section 406 or
407 of ERISA or Section 4975 of the Code) have occurred
for which a statutory exemption is not available with
respect to any KCPL Benefit Plan, and which could give
rise to liability on the part of KCPL, any KCPL Benefit
Plan, or any fiduciary, party in interest or disqualified
person with respect thereto that would be material to
KCPL or would be material to KCPL if it were KCPL's
liability.
(d) Liabilities. With respect to the
KCPL Benefit Plans, individually and in the aggregate, no
event has occurred, and, to the knowledge of KCPL, there
does not now
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exist any condition or set of circumstances,
that could subject KCPL or any of the KCPL Subsidiaries
to any material liability arising under the Code, ERISA
or any other applicable law (including, without
limitation, any liability to any such plan or the Pension
Benefit Guaranty Corporation (the "PBGC")), or under any
indemnity agreement to which KCPL or any of the KCPL
Subsidiaries is a party, excluding liability for benefit
claims and funding obligations payable in the ordinary
course.
(e) Welfare Plans. None of the KCPL
Benefit Plans that are "welfare plans," within the
meaning of Section 3(1) of ERISA, provide for any
benefits with respect to current or former employees for
periods extending beyond their retirement or other
termination of service, other than continuation coverage
required to be provided under Section 4980B of the Code
or Part 6 of Title I of ERISA.
(f) Payments Resulting from the KCPL
Merger or KGE Merger. The consummation or announcement
of any transaction contemplated by this Agreement will
not (either alone or upon the occurrence of any
additional or further acts or events, including, without
limitation, the termination of employment of any
officers, directors, employees or agents of KCPL or any
of the KCPL Subsidiaries) result in any (i) payment
(whether of severance pay or otherwise) becoming due from
KCPL or any of the KCPL Subsidiaries to any officer,
employee, former employee or director thereof or to the
trustee under any "rabbi trust" or similar arrangement,
or (ii) benefit under any KCPL Benefit Plan becoming
accelerated, vested or payable.
(g) Labor Agreements. As of the date
hereof, neither KCPL nor any of the KCPL Subsidiaries is
a party to any collective bargaining agreement or other
labor agreement with any union or labor organization. To
the knowledge of KCPL, as of the date hereof, there is no
current union representation question involving employees
of KCPL or any of the KCPL Subsidiaries, nor does KCPL
know of any activity or proceeding of any labor
organization (or representative thereof) or employee
group to organize any such employees. Except as disclosed
in the KCPL SEC Reports filed prior to the date hereof or
except to the extent such would not have a KCPL Material
Adverse Effect, (i) there is no unfair labor practice,
employment discrimination or other material complaint
against KCPL, or any of the KCPL Subsidiaries pending, or
to the knowledge of KCPL, threatened, (ii) there is no
strike, lockout or material dispute, slowdown or work
stoppage pending or, to the knowledge of KCPL, threatened
against or involving KCPL, and (iii) there is no
proceeding, claim, suit, action or governmental
investigation pending or, to the knowledge of KCPL,
threatened in respect of which any director, officer,
employee or agent of KCPL or any of the KCPL Subsidiaries
is or may be entitled to claim indemnification from KCPL,
or such KCPL Subsidiary pursuant to their respective
articles of incorporation or by-laws or as provided in
any indemnification agreements between such persons and
KCPL or any KCPL Subsidiary.
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Section 6.11 Environmental Protection.
(a) Except as set forth in Section 6.11 of the
KCPL Disclosure Schedule or in the KCPL SEC Reports filed
prior to the date hereof:
(i) Compliance. KCPL and each of the KCPL
Subsidiaries are in compliance with all applicable
Environmental Laws (as defined in Section 6.11(b)(ii))
and neither KCPL nor any of the KCPL Subsidiaries has
received any communication (written or oral), from any
person or Governmental Authority that alleges that KCPL
or any of the KCPL Subsidiaries is not in such compliance
with applicable Environmental Laws except in each
foregoing case where the failure to so comply would not
have a KCPL Material Adverse Effect. To the knowledge of
KCPL, compliance with all applicable Environmental Laws,
will not require KCPL or any KCPL Subsidiary to incur
costs that will be reasonably likely to result in a KCPL
Material Adverse Effect.
(ii) Environmental Permits. KCPL and each of the
KCPL Subsidiaries has obtained or has applied for all
environmental, health and safety permits and governmental
authorizations (collectively, the "Environmental
Permits") necessary for the construction of their
facilities or the conduct of their operations except
where the failure to so obtain would not have a KCPL
Material Adverse Effect, and all such Environmental
Permits are in good standing or, where applicable, a
renewal application has been timely filed and is pending
agency approval, and KCPL and each of the KCPL
Subsidiaries is in material compliance with all terms and
conditions of the Environmental Permits.
(iii) Environmental Claims. There is no
Environmental Claim (as defined in Section 6.11(b)(i))
which would have a KCPL Material Adverse Effect pending
(A) against KCPL or any of the KCPL Subsidiaries, (B) to
the knowledge of KCPL, against any person or entity whose
liability for any Environmental Claim KCPL or any of the
KCPL Subsidiaries has or may have retained or assumed
either contractually or by operation of law, or (C)
against any real or personal property or operations which
KCPL or any of the KCPL Subsidiaries owns, leases or
manages, in whole or in part.
(iv) Releases. KCPL has no knowledge of any
Releases (as defined in Section 6.11(b)(iv)) of any
Hazardous Material (as defined in Section 6.11(b)(iii))
that would be reasonably likely to form the basis of any
Environmental Claim against KCPL or any of the KCPL
Subsidiaries or against any person or entity whose
liability for any Environmental Claim KCPL or any of the
KCPL Subsidiaries has or may have retained or assumed
either contractually or by operation of law except for
any Environmental Claim which would not have a KCPL
Material Adverse Effect.
(v) Predecessors. KCPL has no knowledge, with
respect to any predecessor of KCPL or any of the KCPL
Subsidiaries of any Environmental Claim which would have
a KCPL Material Adverse Effect pending or threatened, or
of any Release of
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Hazardous Materials that would be reasonably likely to
form the basis of any Environmental Claim which would
have a KCPL Material Adverse Effect.
(b) Definitions. As used in this Agreement:
(i) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits,
demands, demand letters, directives, claims, liens,
investigations, proceedings or notices of noncompliance
or violation (written or oral) by any person or entity
(including any Governmental Authority) alleging potential
liability (including, without limitation, potential
responsibility for or liability for enforcement,
investigatory costs, cleanup costs, governmental response
costs, removal costs, remedial costs, natural resources
damages, property damages, personal injuries or
penalties) arising out of, based on or resulting from (A)
the presence, Release or threatened Release into the
environment of any Hazardous Materials at any location,
whether or not owned, operated, leased or managed by KCPL
or any of the KCPL Subsidiaries (for purposes of this
Section 6.11) or by Western Resources, KGE or any of the
Western Resources Subsidiaries (for purposes of
Section 7.11); or (B) circumstances forming the basis of
any violation or alleged violation of any Environmental
Law or (C) any and all claims by any third party seeking
damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the
presence or Release of any Hazardous Materials.
(ii) "Environmental Laws" means all federal, state
and local laws, rules and regulations relating to
pollution, the environment (including, without
limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or protection of human
health as it relates to the environment including,
without limitation, laws and regulations relating to
Releases or threatened Releases of Hazardous Materials,
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in
any form that is or could become friable, urea
formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing
polychlorinated biphenyls ("PCBs"); (B) any chemicals,
materials or substances which are now defined as or
included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," or words of similar
import under any Environmental Law and (C) any other
chemical, material, substance or waste, exposure to which
is now prohibited, limited or regulated under any
Environmental Law in a jurisdiction in which KCPL or any
of the KCPL Subsidiaries operates (for purposes of this
Section 6.11) or in which Western Resources, KGE or any
of the Western Resources Subsidiaries operates (for
purposes of Section 7.11).
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(iv) "Release" means any release, spill, emission,
leaking, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the atmosphere,
soil, surface water, groundwater or property.
Section 6.12 Regulation as a Utility. KCPL is
regulated as a public utility in the States of Kansas and
Missouri and in no other state. Except as set forth in
Section 6.12 of the KCPL Disclosure Schedule, neither
KCPL nor any "subsidiary company" or "affiliate" (as each
such term is defined in the ▇▇▇▇ ▇▇▇) 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 ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), 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.
-21-
Section 6.17 KCPL not a Related Person. As of
the date hereof, none of KCPL or, to KCPL's reasonable
knowledge, any of its Affiliates (as defined below), is
an "Interested Shareholder" as such term is defined in
Article XI of the Restated Articles of Incorporation of
Western Resources (the "Western Resources Articles"). As
used in this Agreement, the term "Affiliate," except
where otherwise defined herein, shall mean, as to any
person, any other person which directly or indirectly
controls, or is under common control with, or is
controlled by, such person. As used in this definition,
"Control" (including, with its correlative meanings,
"Controlled By" and "Under Common Control With") shall
mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies
(whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise).
Section 6.18 Takeover Statutes. No "fair price,"
"moratorium," "control share acquisition" or other
similar anti-takeover statute or regulation (including
Sections 351.407 and 351.459 of the MGBCL or Article
Twelfth of KCPL's Restated Articles of Consolidation) is,
or at the KCPL Effective Time or the KGE Effective Time
will be, applicable to KCPL, Western Resources, KGE, New
KC, the KCPL Common Stock, the Asset Contribution, the
Stock Contribution, the KCPL Merger, the KGE Merger or
the other transactions contemplated by this Agreement.
Section 6.19 Termination of UtiliCorp Agreement.
KCPL (i) has taken all corporate action necessary to
terminate the UtiliCorp Agreement pursuant to the
provisions of Section 9.1(d) thereof and except for
provisions which survived the termination thereof,
including the payment of any fees due to UtiliCorp
thereunder, (ii) has no further obligation under the
UtiliCorp Agreement or any other agreements executed in
connection with any proposed transaction involving KCPL
and UtiliCorp, other than continuing obligations under
the Confidentiality Agreement, dated as of November 28,
1995 (the "UtiliCorp Confidentiality Agreement"), between
KCPL and UtiliCorp. The aggregate amount of all fees and
expenses paid or payable by KCPL to UtiliCorp as a result
of such termination, whether pursuant to Section 9.2 of
the UtiliCorp Agreement or otherwise, shall not exceed
$58 million. At all times KCPL has fully complied in all
respects with each of its obligations under the UtiliCorp
Agreement, including without limitation Sections 7.11 and
9.1 thereof. Until the KGE Effective Time, Western
Resources shall not be bound by or subject to, in any
respect, directly or indirectly, any agreement between
KCPL and UtiliCorp, including without limitation the
UtiliCorp Agreement and the UtiliCorp Confidentiality
Agreement.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF
WESTERN RESOURCES, KGE AND NEW KC
Each of Western Resources, KGE and New KC makes
the following representations and warranties to KCPL:
Section 7.1 Organization and Qualification.
Each of Western Resources, KGE and New KC and each of the
Western Resources Subsidiaries (as defined below) is a
corporation or other entity duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation or organization, and except
for New KC which has not engaged in any business or
activity other than as contemplated by this Agreement to
effect the transactions contemplated hereby, each has all
requisite power and authority, and has been duly
authorized by all necessary approvals and orders to own,
lease and operate its assets and properties to the extent
owned, leased and operated and to carry on its business
as it is now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in
which the nature of its business or the ownership or
leasing of its assets and properties makes such
qualification necessary other than in such jurisdictions
where the failure so to qualify would not have a Western
Resources Material Adverse Effect (as defined in
Section 7.6). As used in this Agreement, the term
"Western Resources Subsidiary" shall mean a Subsidiary of
Western Resources in which Western Resources' equity
investment exceeds $25 million.
Section 7.2 Subsidiaries. Section 7.2 of the
schedule delivered by Western Resources to KCPL on the
date hereof (the "Western Resources Disclosure Schedule")
sets forth a list as of the date hereof of all the
Western Resources Subsidiaries. KGE is a Western
Resources Subsidiary. Except as set forth in Section 7.2
of the Western Resources Disclosure Schedule, all of the
issued and outstanding shares of capital stock of each
Western Resources Subsidiary and New KC are validly
issued, fully paid, nonassessable and free of preemptive
rights, and are owned, directly or indirectly, by Western
Resources free and clear of any liens, claims,
encumbrances, security interests, charges and options of
any nature whatsoever, and there are no outstanding
subscriptions, options, calls, contracts, voting trusts,
proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating any
such Western Resources Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold,
additional shares of its capital stock or obligating it
to grant, extend or enter into any such agreement or
commitment.
Section 7.3 Capitalization. As of the date
hereof, the authorized capital stock of Western Resources
consists of (i) 85,000,000 shares of Western Resources
Common Stock, par value $5.00 per share, (ii) 600,000
shares of Preferred Stock par value $100.00 per share
(the "Western Resources $100 Preferred" and 6,000,000
shares of Preferred Stock without par value (the "Western
Resources No-Par Preferred"), and (iii) 4,000,000 shares
of
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Preference Stock, without par value (the "Western
Resources Preference Stock" and, together with the
Western Resources $100 Preferred and the Western
Resources No-Par Preferred, the "Western Resources
Preferred Stock"). At the close of business on
March 17, 1998, (i) 64,773,828 shares of Western
Resources Common Stock were issued and outstanding, (ii)
no shares of Western Resources Common Stock were held by
Western Resources in its treasury or by its wholly owned
Subsidiaries, (iii) 138,576 shares of 4 1/2% Series
Preferred Stock, par value $100 per share (the "4 1/2%
Western Resources $100 Preferred"), 60,000 shares of 4
1/4% Series Preferred Stock, par value $100 per share
(the "4 1/4% Western Resources $100 Preferred"), 50,000
shares of 5% Series Preferred Stock, par value $100 per
share (the "5% Western Resources $100 Preferred"), and no
shares of Western Resources No-Par Preferred Stock were
issued and outstanding, and of such issued shares, none
were held by Western Resources in its treasury or by its
wholly owned Subsidiaries, (iv) 500,000 shares of 7.58%
Series Preference Stock were issued and outstanding, and
of such issued shares, none were held by Western
Resources in its treasury or by its wholly owned
Subsidiaries, (v) $220,000,000 of Company-Obligated
Manditorily Redeemable Preferred Securities of a
subsidiary trust holding solely Western Resources
Subordinated Debentures and (vi) no Voting Debt was
issued or outstanding. As of the date hereof, the
authorized capital stock of KGE consists of 1,000 shares
of KGE Common Stock. As of the date hereof, 1,000 shares
of KGE Common Stock were issued or outstanding, all of
which were owned by Western Resources. As of the date
hereof, the authorized capital stock of New KC consists
of 500,000,000 shares of New KC Series A Common Stock,
300,000,000 shares of New KC Series B Common Stock, in
each case without par value (collectively, the "New KC
Common Stock"), and 50,000,000 shares of Preferred Stock,
without par value. As of the date hereof and immediately
prior to the KCPL Effective Time, 100 shares of New KC
Series A Common Stock were issued and outstanding, all of
which were owned by Western Resources. All outstanding
shares of Western Resources Common Stock, New KC Common
Stock, Western Resources Preferred Stock and KGE Common
Stock are validly issued, fully paid and nonassessable
and are not subject to preemptive rights and at the
Closing, upon consummation of the KGE Merger and the KCPL
Merger, all outstanding shares of New KC Common Stock and
the Western Resources Common Stock to be included in the
Western Resources Stock Distribution will be validly
issued, fully paid and nonassessable and not subject to
any preemptive rights. As of the date hereof, except as
disclosed in the Western Resources SEC Reports filed
prior to the date hereof or as set forth in Section 7.3
of the Western Resources Disclosure Schedule or pursuant
to this Agreement and the Western Resources Benefit
Plans, there are no options, warrants, calls, rights,
commitments or agreements of any character to which
Western Resources, KGE, New KC or any Subsidiary of
Western Resources or KGE is a party or by which any of
them are bound obligating Western Resources, KGE, New KC
or any Subsidiary of Western Resources or KGE to issue,
deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or any Voting
Debt securities of Western Resources, KGE, New KC or any
Subsidiary of Western Resources or KGE or obligating
Western Resources, KGE, New KC or any Subsidiary of
Western Resources or KGE to grant, extend or enter into
any such option, warrant, call, right, commitment or
agreement.
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Section 7.4 Authority; Non-Contravention;
Statutory Approvals; Compliance.
(a) Authority. Each of Western
Resources, New KC and KGE has all requisite power and
authority to enter into this Agreement and, subject to
the receipt of the applicable Western Resources
Shareholders' Approval (as defined in Section 7.13) and
the applicable Western Resources Required Statutory
Approvals (as defined in Section 7.4(c)), to consummate
the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation by
Western Resources, New KC and KGE of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of Western
Resources, KGE and New KC, subject to obtaining the
applicable Western Resources Shareholders' Approval. This
Agreement has been duly and validly executed and
delivered by Western Resources, New KC and KGE and,
assuming the due authorization, execution and delivery
hereof by KCPL, constitutes the valid and binding
obligation of Western Resources, New KC and KGE
enforceable against each of them in accordance with the
terms of this Agreement.
(b) Non-Contravention. Except as set
forth in Section 7.4(b) of the Western Resources
Disclosure Schedule, the execution and delivery of this
Agreement by Western Resources, KGE and New KC do not,
and the consummation of the transactions contemplated
hereby will not, result in a Violation with respect to
Western Resources, New KC, KGE or any of the Western
Resources Subsidiaries pursuant to any provisions of (i)
the certificate of incorporation, by-laws or similar
governing documents of Western Resources, New KC, KGE or
any of the Western Resources Subsidiaries, (ii) subject
to obtaining the Western Resources Required Statutory
Approvals and the receipt of the Western Resources
Shareholders' Approval, any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any Governmental Authority
applicable to Western Resources, New KC, KGE or any of
the Western Resources Subsidiaries or any of their
respective properties or assets or (iii) subject to
obtaining the third-party consents set forth in
Section 7.4(b) of the Western Resources Disclosure
Schedule (the "Western Resources Required Consents"), any
material note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease
or other instrument, obligation or agreement of any kind
to which Western Resources, KGE, New KC or any of the
Western Resources Subsidiaries is a party or by which it
or any of its properties or assets may be bound or
affected, except in the case of clause (ii) or (iii) for
any such Violation which would not have a Western
Resources Material Adverse Effect.
(c) Statutory Approvals. No
declaration, filing or registration with, or notice to or
authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of
this Agreement by Western Resources, New KC, KGE or the
consummation by Western Resources, KGE and New KC of the
transactions contemplated hereby except as described in
Section 7.4(c) of the Western Resources Disclosure
Schedule or the failure of which to obtain would not
result in a Western Resources Material Adverse Effect
(the "Western Resources Required Statutory Approvals," it
being understood that
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references in this Agreement to "obtaining" such
Western Resources Required Statutory Approvals shall
mean making such declarations, filings or registrations;
giving such notices; obtaining such authorizations,
consents or approvals; and having such waiting periods
expire as are necessary to avoid a violation of law).
(d) Compliance. Except as set forth in
Sections 7.4(d), 7.5, 7.9 and 7.11 of the Western
Resources Disclosure Schedule or as disclosed in the
Western Resources SEC Reports (as defined in Section 7.5)
filed prior to the date hereof, none of Western
Resources, KGE or any of the Western Resources
Subsidiaries is in violation of, is, to the knowledge of
Western Resources, under investigation with respect to
any violation of, or has been given notice or been
charged with any violation of, any law, statute, order,
rule, regulation, ordinance or judgment (including,
without limitation, any applicable environmental law,
ordinance or regulation) of any Governmental Authority,
except for possible violations which individually or in
the aggregate would not have a Western Resources Material
Adverse Effect. Except as disclosed in the Western
Resources SEC Reports filed prior to the date hereof, or
in Sections 7.7, 7.10 or 7.11 of the Western Resources
Disclosure Schedule, Western Resources, KGE and the
Western Resources Subsidiaries have all permits,
licenses, franchises and other governmental
authorizations, consents and approvals necessary to
conduct their businesses as presently conducted which are
material to the operation of the businesses of Western
Resources and the Western Resources Subsidiaries. None
of Western Resources, KGE or any of the Western Resources
Subsidiaries is in breach or violation of or in default
in the performance or observance of any term or provision
of, and no event has occurred which, with lapse of time
or action by a third party, could result in a default by
Western Resources, KGE or any Western Resources
Subsidiary under (i) its certificate of incorporation or
by-laws or (ii) any contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond,
license, approval or other instrument to which it is a
party or by which Western Resources or any Western
Resources Subsidiary is bound or to which any of its
property is subject, except for possible violations,
breaches or defaults which individually or in the
aggregate would not have a Western Resources Material
Adverse Effect.
Section 7.5 Reports and Financial Statements.
Except as set forth in Section 7.5 of the Western
Resources Disclosure Schedule, the filings required to be
made by Western Resources, KGE and the Western Resources
Subsidiaries since January 1, 1994 under the Securities
Act, the Exchange Act, the 1935 Act, the Power Act, the
Atomic Energy Act, and applicable state public utility
laws and regulations have been filed with the SEC, the
FERC, the NRC or the appropriate state public utilities
commission, as the case may be, including all forms,
statements, reports, agreements (oral or written) and all
documents, exhibits, amendments and supplements
appertaining thereto, and complied, as of their
respective dates, in all material respects with all
applicable requirements of the appropriate statutes and
the rules and regulations thereunder, except for such
filings the failure of which to have been made or to so
comply would not result in a Western Resources Material
Adverse Effect. "Western Resources SEC Reports" shall
mean each report, schedule, registration statement and
definitive proxy statement filed with the SEC by Western
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Resources and KGE pursuant to the requirements of the
Securities Act or Exchange Act since January 1, 1994, as
such documents have since the time of their filing been
amended. As of their respective dates, the Western
Resources SEC Reports did not contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances
under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim
financial statements of Western Resources included in the
Western Resources SEC Reports (collectively, the "Western
Resources Financial Statements") have been prepared in
accordance with GAAP (except as may be indicated therein
or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q of the
SEC) and fairly present the financial position of Western
Resources and KGE as of the dates thereof and the
results of operations and cash flows for the periods then
ended, subject, in the case of the unaudited interim
financial statements, to normal, recurring audit
adjustments. True, accurate and complete copies of the
Western Resources Articles, Western Resources' By-Laws,
the articles of incorporation of KGE and the by-laws of
KGE, as in effect on the date hereof, are included (or
incorporated by reference) in the Western Resources SEC
Reports.
Section 7.6 Absence of Certain Changes or
Events. Except as disclosed in Section 7.6 of the
Western Resources Disclosure Schedule and in the Western
Resources SEC Reports filed prior to the date hereof,
since December 31, 1996, Western Resources, KGE and each
of the Western Resources Subsidiaries have conducted
their business only in the ordinary course of business
(except for acquisitions and dispositions) and there has
not been any Western Resources Material Adverse Effect.
For purposes of this Agreement, a "Western Resources
Material Adverse Effect" shall mean the existence of any
fact or condition which has or is reasonably likely to
have a material adverse effect on the business, assets,
financial condition, results of operations or prospects
of Western Resources, KGE and the Western Resources
Subsidiaries taken as a whole.
Section 7.7 Litigation. Except as disclosed in
the Western Resources SEC Reports filed prior to the date
hereof or as disclosed in Section 7.7, 7.9, 7.10 or 7.11
of the Western Resources Disclosure Schedule, (a) there
are no claims, suits, actions or proceedings by any
court, governmental department, commission, agency,
instrumentality or authority or any arbitrator, pending
or, to the knowledge of Western Resources, threatened,
nor are there, to the knowledge of Western Resources, any
investigations or reviews by any court, governmental
department, commission, agency, instrumentality or
authority or any arbitrator pending or threatened
against, relating to or affecting Western Resources, KGE,
New KC or any of the Western Resources Subsidiaries which
would have a Western Resources Material Adverse Effect,
(b) there have not been any significant developments
since December 31, 1996 with respect to such disclosed
claims, suits, actions, proceedings, investigations or
reviews that would have a Western Resources Material
Adverse Effect and (c) there are no judgments, decrees,
injunctions, rules or orders of any court, governmental
department, commission, agency, instrumentality or
authority or any arbitrator applicable to Western
Resources, KGE, New KC or any of the Western Resources
Subsidiaries, except for such that would not have a
Western Resources Material Adverse Effect.
-27-
Section 7.8 Registration Statement and Proxy
Statement. None of the information supplied or to be
supplied by or on behalf of Western Resources, New KC or
KGE for inclusion or incorporation by reference in (a)
the Registration Statement will, at the time the
Registration Statement is filed by Western Resources and
New KC with the SEC and at the time it becomes effective
under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading and (b) the Proxy
Statement will, at the dates mailed to shareholders and
at the times of the meetings of shareholders to be held
in connection with the KCPL Merger and the KGE Merger,
contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein
or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading. The Registration Statement and the Proxy
Statement will comply as to form in all material respects
with the provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder.
Section 7.9 Tax Matters. Except as set forth in
Section 7.9 of the Western Resources Disclosure Schedule
and except as would not result in a Western Resources
Material Adverse Effect:
(a) Filing of Timely Tax Returns. Western
Resources, KGE and each of the Western Resources
Subsidiaries have filed (or there has been filed on its
behalf) all Tax Returns required to be filed by each of
them under applicable law. All such Tax Returns were and
are in all material respects true, complete and correct
and filed on a timely basis.
(b) Payment of Taxes. Western Resources, KGE and
each of the Western Resources Subsidiaries have, within
the time and in the manner prescribed by law, paid all
Taxes that are currently due and payable, except for
those contested in good faith and for which adequate
reserves have been taken.
(c) Tax Reserves. Western Resources, KGE and each
of the Western Resources Subsidiaries have established on
their books and records reserves adequate to pay all
Taxes and reserves for deferred income taxes in
accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the
assets of Western Resources, KGE or any of the Western
Resources Subsidiaries except liens for Taxes not yet
due.
(e) Withholding Taxes. Western Resources, KGE and
each of the Western Resources Subsidiaries have complied
in all material respects with the provisions of the Code
relating to the withholding of Taxes, as well as similar
provisions under any other laws, and have, within the
time and in the manner prescribed by law, withheld and
paid over to the proper governmental authorities all
amounts required.
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(f) Audit, Administrative and Court Proceedings.
No audits or other administrative proceedings or court
proceedings are presently pending with regard to any
Taxes or Tax Returns of Western Resources, KGE or any of
the Western Resources Subsidiaries.
(g) Tax Rulings. None of Western Resources, KGE
or any of the Western Resources Subsidiaries has received
a Tax Ruling or entered into a Closing Agreement with any
taxing authority.
(h) Tax Sharing Agreements. Except as between
affiliates of Western Resources as set forth in
Sections 7.1 and 7.2 of the Western Resources Disclosure
Schedule, none of Western Resources, KGE or any Western
Resources Subsidiary is a party to any agreement relating
to allocating or sharing of Taxes.
(i) Code Section 280G. Except for the Western
Resources Benefit Plans, none of Western Resources, KGE
or any of the Western Resources Subsidiaries is a party
to any agreement, contract or arrangement that could
result in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code or any
amount that would be non-deductible pursuant to
Section 162(m) of the Code.
(j) Liability for Others. None of Western
Resources, KGE or any of the Western Resources
Subsidiaries has any liability for Taxes of any person
other than Western Resources, KGE and the Western
Resources Subsidiaries (i) under Treasury Regulations
Section 1.1502-6 (or any similar provision of state,
local or foreign law), (ii) by contract, or (iii)
otherwise.
(k) Section 341(f). None of Western Resources,
KGE or any of the Western Resources Subsidiaries has,
with regard to any assets or property held or acquired by
any of them, filed a consent to the application of
Section 341(f)(2) of the Code, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by Western
Resources, KGE or any of the Western Resources
Subsidiaries.
Section 7.10 Employee Matters; ERISA. Except as
set forth in Section 7.10 of the Western Resources
Disclosure Schedule:
(a) Benefit Plans. Section 7.10(a) of the Western
Resources Disclosure Schedule contains a true and
complete list as of the date hereof of each written or
oral material employee benefit plan, policy or agreement
covering employees, former employees or directors of
Western Resources, KGE and each of the Western Resources
Subsidiaries or their beneficiaries, or providing
benefits to such persons in respect of services provided
to any such entity, including, but not limited to, any
employee benefit plans within the meaning of Section 3(3)
of ERISA and any severance or change in control agreement
(collectively, the "Western Resources Benefit Plans").
-29-
(b) Contributions. All material contributions
and other payments required to be made by Western
Resources, KGE or any of the Western Resources
Subsidiaries to any Western Resources Benefit Plan (or to
any person pursuant to the terms thereof) have been made
or the amount of such payment or contribution obligation
has been reflected in the Western Resources Financial
Statements (other than those related to Protection One,
Inc.).
(c) Qualification; Compliance. Each of the
Western Resources Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the
Code has been determined by the IRS to be so qualified,
or to the knowledge of Western Resources, no
circumstances exist that are reasonably expected by
Western Resources to result in the revocation of any such
determination or prevent any such plans from being
qualified. Western Resources is in compliance in all
material respects with, and each of the Western Resources
Benefit Plans is and has been operated in all material
respects in compliance with, all applicable laws, rules
and regulations governing such plan, including, without
limitation, ERISA and the Code. Each Western Resources
Benefit Plan intended to provide for the deferral of
income, the reduction of salary or other compensation, or
to afford other income tax benefits, complies with the
requirements of the applicable provisions of the Code or
other laws, rules and regulations required to provide
such income tax benefits. No prohibited transactions (as
defined in Section 406 or 407 of ERISA or Section 4975 of
the Code) have occurred for which a statutory exemption
is not available with respect to any Western Resources
Benefit Plan, and which could give rise to liability on
the part of Western Resources, KGE, any Western Resources
Benefit Plan, or any fiduciary, party in interest or
disqualified person with respect thereto that would be
material to Western Resources, KGE or would be material
to Western Resources or KGE if it were Western Resources'
or KGE's liability.
(d) Liabilities. With respect to the Western
Resources Benefit Plans, individually and in the
aggregate, no event has occurred, and, to the knowledge
of Western Resources, there does not now exist any
condition or set of circumstances, that could subject
Western Resources, KGE or any of the Western Resources
Subsidiaries to any material liability arising under the
Code, ERISA or any other applicable law (including,
without limitation, any liability to any such plan or the
PBGC), or under any indemnity agreement to which Western
Resources, KGE or any of the Western Resources
Subsidiaries is a party, excluding liability for benefit
claims and funding obligations payable in the ordinary
course.
(e) Payments Resulting from the KCPL Merger or KGE
Merger. Except as disclosed in the Western Resources SEC
Reports filed prior to the date hereof, the consummation
or announcement of any transaction contemplated by this
Agreement will not (either alone or upon the occurrence
of any additional or further acts or events, including,
without limitation, the termination of employment of
officers, directors, employees or agents of Western
Resources, KGE or any of the Western Resources
Subsidiaries) result in any (i) payment (whether of
severance pay or otherwise) becoming
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due from Western Resources, KGE or any of the Western
Resources Subsidiaries to any officer, employee, former
employee or director thereof or to the trustee under
any "rabbi trust" or similar arrangement, or (ii) benefit
under any Western Resources Benefit Plan becoming
accelerated, vested or payable.
(f) Labor Agreements. As of the date hereof, (i)
none of Western Resources, KGE or any of the Western
Resources Subsidiaries is a party to any collective
bargaining agreement or other labor agreement with any
union or labor organization and (ii) to the knowledge of
Western Resources, there is no current union
representation question involving employees of Western
Resources, KGE or any of the Western Resources
Subsidiaries, nor does Western Resources know of any
activity or proceeding of any labor organization (or
representative thereof) or employee group to organize any
such employees. Except as disclosed in the Western
Resources SEC Reports filed prior to the date hereof or
except to the extent such would not have a Western
Resources Material Adverse Effect, (i) there is no unfair
labor practice, employment discrimination or other
material complaint against Western Resources, KGE or any
of the Western Resources Subsidiaries pending, or to the
knowledge of Western Resources, threatened, (ii) there is
no strike, lockout or material dispute, slowdown or work
stoppage pending or, to the knowledge of Western
Resources, threatened against or involving Western
Resources or KGE, and (iii) there is no proceeding,
claim, suit, action or governmental investigation pending
or, to the knowledge of Western Resources, threatened in
respect of which any director, officer, employee or agent
of Western Resources, KGE or any of the Western Resources
Subsidiaries is or may be entitled to claim
indemnification from Western Resources or such Western
Resources Subsidiary pursuant to their respective
articles of incorporation or by-laws or as provided in
any indemnification agreements between such persons and
Western Resources, KGE or any Western Resources
Subsidiary.
Section 7.11 Environmental Protection.
(a) Except as set forth in the Western
Resources SEC Reports filed prior to the date hereof or
in Section 7.11 of the Western Resources Disclosure
Schedule:
(i) Compliance. Western Resources, KGE and each of
the Western Resources Subsidiaries is in compliance with
all applicable Environmental Laws and none of Western
Resources, KGE or any of the Western Resources
Subsidiaries has received any communication (written or
oral) from any person or Governmental Authority that
alleges that Western Resources, KGE or any of the Western
Resources Subsidiaries is not in such compliance with
applicable Environmental Laws, except in each foregoing
case where the failure to so comply would not have a
Western Resources Material Adverse Effect. To the
knowledge of Western Resources, compliance with all
applicable Environmental Laws will not require Western
Resources, KGE or any Western Resources Subsidiary to
incur costs that will be reasonably likely to result in a
Western Resources Material Adverse Effect.
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(ii) Environmental Permits. Western Resources,
KGE and each of the Western Resources Subsidiaries has
obtained or has applied for all the Environmental Permits
necessary for the construction of their facilities or the
conduct of their operations, except where the failure to
so obtain would not have a Western Resources Material
Adverse Effect, and all such Environmental Permits are in
good standing or, where applicable, a renewal application
has been timely filed and is pending agency approval, and
Western Resources, KGE and each of the Western Resources
Subsidiaries are in material compliance with all terms
and conditions of the Environmental Permits.
(iii) Environmental Claims. There is no Environmental
Claim which would have a Western Resources Material
Adverse Effect pending (A) against Western Resources, KGE
or any of the Western Resources Subsidiaries (B) to the
knowledge of Western Resources, against any person or
entity whose liability for any Environmental Claim
Western Resources, KGE or any of the Western Resources
Subsidiaries has or may have retained or assumed either
contractually or by operation of law, or (C) against any
real or personal property or operations which Western
Resources, KGE or any of the Western Resources
Subsidiaries owns, leases or manages, in whole or in
part.
(iv) Releases. Western Resources has no knowledge of
any Releases of any Hazardous Material that would be
reasonably likely to form the basis of any Environmental
Claim against Western Resources, KGE or any of the
Western Resources Subsidiaries or against any person or
entity whose liability for any Environmental Claim
Western Resources, KGE or any of the Western Resources
Subsidiaries has or may have retained or assumed either
contractually or by operation of law except for any
Environmental Claim which would not have a Western
Resources Material Adverse Effect.
(v) Predecessors. Western Resources has no
knowledge, with respect to any predecessor of Western
Resources, KGE or any of the Western Resources
Subsidiaries, of any Environmental Claim which would have
a Western Resources Material Adverse Effect pending or
threatened, or of any Release of Hazardous Materials that
would be reasonably likely to form the basis of any
Environmental Claim which would have a Western Resources
Material Adverse Effect.
Section 7.12 Regulation as a Utility. As of the
date hereof, (1) Western Resources and KGE are each
regulated as a public utility in the State of Kansas and
in no other state, and (2) Western Resources is an exempt
Holding Company under the 1935 Act. Section 7.12 of the
Western Resources Disclosure Schedule sets forth certain
entities in which Western Resources has an ownership
interest that may be subject to regulation as a public
utility or public service company (or similar
designation) in certain foreign countries.
Section 7.13 Vote Required. (i) Provided that
the Western Resources $100 Preferred has been redeemed
pursuant to Section 9.19, the approval of this Agreement,
the Asset Contribution, the Stock Contribution, and
amendments to the Western Resources
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Articles, including, without limitation, increasing the
number of shares of Western Resources Common Stock
authorized, by a majority of the shares of Western
Resources Common Stock outstanding on the record date for
such vote is the only vote of the holders of any class or
series of the capital stock of Western Resources or any
of its Subsidiaries (other than KGE and New KC) required
to approve this Agreement, the Asset Contribution, the
Stock Contribution and the issuance of shares of Western
Resources Common Stock to be contributed to KGE pursuant
to the Stock Contribution and (ii) Western Resources, in
its capacity as sole stockholder of New KC and KGE, has
approved this Agreement, the Asset Contribution, the Stock
Contribution and the KCPL Merger and KGE Merger,
respectively, and the other transactions contemplated
hereby (collectively, the "Western Resources Shareholders'
Approval").
Section 7.14 Article XI (Business Combination
with Interested Shareholder) of Western Resources'
Articles of Incorporation. The provisions of Article XI
(business combination with interested shareholder) of the
Western Resources Articles will not, prior to the
termination of this Agreement, assuming the accuracy of
the representation contained in Section 6.17 (without
giving effect to the knowledge qualification thereof),
apply to this Agreement, the Asset Contribution, the
Stock Contribution, the KCPL Merger, the KGE Merger or to
the transactions contemplated hereby.
Section 7.15 Opinion of Financial Advisor.
Western Resources has received the opinion of ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ("Salomon"), dated as of the date hereof, to
the effect that, as of such date, the Aggregate
Consideration is fair from a financial point of view to
Western Resources.
Section 7.16 Insurance. Except as set forth in
Section 7.16 of the Western Resources Disclosure
Schedule, Western Resources, KGE and each of the Western
Resources Subsidiaries is, and has been continuously
since January 1, 1994 (and, with respect to any Western
Resources Subsidiary, if later than January 1, 1994, its
date of acquisition by Western Resources), and New KC at
the Closing will be, insured with financially responsible
insurers in such amounts and against such risks and
losses as are customary in all material respects for
companies conducting the business as conducted by Western
Resources, KGE and the Western Resources Subsidiaries
during such time period and, as contemplated by this
Agreement, the business to be conducted by New KC after
the Closing. None of Western Resources, KGE or any of
the Western Resources Subsidiaries has received any
notice of cancellation or termination with respect to any
material insurance policy of Western Resources, KGE or
any of the Western Resources Subsidiaries or New KC. The
insurance policies of Western Resources, KGE and each of
the Western Resources Subsidiaries are, and the insurance
policies of New KC at the Closing will be, valid and
enforceable policies in all material respects.
Section 7.17 Western Resources not an Interested
Shareholder. As of the date hereof, none of Western
Resources, KGE or, to its reasonable knowledge, any of its
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Affiliates is an "Interested Shareholder" as such
term is defined in Article Twelfth of KCPL's Restated
Articles of Consolidation.
Section 7.18 Takeover Statutes. No "fair price,"
"moratorium," "control share acquisition" or other
similar anti-takeover statute or regulation (including
Sections 17-1286 et seq. and 17-12,100, et seq. of the
KGCC or Article XVII of the Western Resources Articles)
is, or at the KCPL Effective Time or the KGE Effective
Time will be, applicable to KCPL, New KC, Western
Resources, KGE, the New KC Common Stock, the KCPL Common
Stock, the Asset Contribution, the Stock Contribution,
the KCPL Merger, the KGE Merger or the other transactions
contemplated by this Agreement.
Section 7.19 No Prior Operations of New KC. New
KC is a corporation formed solely for the purpose of
effecting the transactions contemplated by this Agreement
and prior to the date hereof New KC has not and prior to
the Closing will not have engaged in any business or
other activity other than as contemplated by this
Agreement.
Section 7.20 Title to Properties. (a) Title.
Western Resources has good and sufficient title to all of
the KPL Assets, including all of the properties and
assets reflected in the KPL Balance Sheet and all
properties and assets purchased or otherwise acquired
since December 31, 1997. Such assets are sufficient to
enable Western Resources to conduct the KPL Business as
currently conducted without material interference, and,
as of the date hereof, are free and clear of Liens other
than Permitted Liens (in each case as defined below).
Western Resources holds under valid lease agreements
certain real and personal properties which constitute
part of the KPL Assets or are reflected in the KPL
Balance Sheet, and enjoys peaceful and undisturbed
possession of such properties under such leases, other
than any properties as to which such leases will have
terminated in the ordinary course of business since the
date of such filing. As of the date hereof, with respect
to the KPL Business, neither Western Resources nor any of
its predecessors has received any written notice of any
adverse claim to the title to any properties owned by
them or with respect to any lease under which any
properties are held by them, other than any claims that,
individually or in the aggregate, would not have a
material adverse effect on the KPL Business. For the
purposes of this Section 7.20, the term "Lien" shall mean
any mortgage, pledge, security interest, encumbrance,
lien, claim, condition, equity interest, option, right of
first refusal, charge or restriction of any kind
(including any agreement to give any of the foregoing),
any conditional sale or other title retention agreement,
any lease in the nature thereof or the filing of or
agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction. For
purposes of this Section 7.20, the term "Permitted Liens"
shall mean (i) Liens for taxes and assessments, general
and special, not yet due and payable, and (ii) Liens,
encumbrances and other defects existing on the properties
on the date hereof or which arise in the ordinary course
of the KPL Business or which, individually or in the
aggregate, do not and will not materially interfere with
or impair the continued ownership, possession, use or
operation of the KPL Assets.
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(b) Easements. With respect to the KPL Business,
Western Resources is not in violation of the terms of any
Easement (as defined below) except any such violations
that individually or in the aggregate, would not have a
material adverse effect on the KPL Business. Except as
would not have a material adverse effect on the KPL
Business, all Easements in favor of the KPL Business are
valid and enforceable and grant the rights purported to
be granted thereby and all rights necessary thereunder
for the operation of the KPL Business. For purposes of
this Section 7.20, "Easements" shall mean all easements,
rights-of-way, permits, licenses, franchises, leases,
surface leases, prescriptive rights and ways of
necessity, whether or not of record.
Section 7.21 Condition of Assets. To the
knowledge of Western Resources, except as would not have
a material adverse effect on the KPL Business, the
buildings, plants, structures, and equipment of Western
Resources relating to the KPL Business are structurally
sound, are in good operating condition and repair, and
are adequate for the uses to which they are being put,
and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not
material in nature or cost.
Section 7.22 Accounts Receivable. All Accounts
Receivable (as defined below) with respect to the KPL
Business, represent or will represent, as of the Closing,
obligations arising from sales actually made or services
actually performed in the ordinary course of business of
Western Resources with respect to the KPL Business,
subject to customary provisions for uncollectible
accounts. To the knowledge of Western Resources, there
is no contest, claim or right of set-off, under any
contract or with any obligor of an Account Receivable
relating to the KPL Business relating to the amount or
validity of such Account Receivable which would have a
material adverse effect on the KPL Business. For
purposes of this Section 7.22, "Accounts Receivable"
shall mean the accounts and other receivables, including
unbilled revenues, of Western Resources to the extent
arising primarily out of the KPL Business.
ARTICLE VIII
CONDUCT OF BUSINESS PENDING THE KGE MERGER
Section 8.1 Covenants of KCPL. KCPL agrees, as
to itself and as to each of its Subsidiaries, that after
the date hereof and prior to the KGE Effective Time or
earlier termination of this Agreement, (i) except as
expressly contemplated or permitted in this Agreement,
(ii) except as Western Resources may otherwise agree in
writing (which decision regarding agreement shall be made
as soon as reasonably practicable), (iii) except as
otherwise provided in the business plan of KCPL in the
form previously disclosed to Western Resources and
attached hereto as Section 8.1 of the KCPL Disclosure
Schedule (the "KCPL Business Plan"); provided, however,
that for purposes of the preceding clause (iii) KCPL
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shall obtain Western Resources' written agreement (which
decision regarding agreement shall be made as soon as
reasonably practicable) prior to making or committing to
make any acquisitions or capital expenditures or
incurring or committing to incur any indebtedness,
including guarantees but not including the cost of
routine regulated utility capital expenditures (such
acquisitions, capital expenditures and indebtedness,
collectively, "Investments") subsequent to the time when
the aggregate value of the Investments made or committed
to be made by KCPL as permitted by this Section 8.1
exceeds in the aggregate $150,000,000 during the period
January 1, 1997 through December 31, 1997 and which
aggregate limits for each subsequent six-month period
commencing January 1, 1998 through the Closing shall be
$75,000,000 ($25,000,000 of which during each such six-
month period may be expended or committed on items not
included in the KCPL Business Plan), it being agreed that
to the extent any such $150,000,000 or $75,000,000
aggregate amount is not made, committed or incurred
during such one-year or any such six-month period, as the
case may be, such amount or amounts shall be added to,
and cumulated with, the amount or amounts available
during subsequent time periods until the Closing (such
aggregate limits to exclude the cost of routine regulated
utility capital expenditures); and provided further that,
KCPL shall be permitted to use the proceeds obtained from
any disposition of assets for Investments in accordance
with the KCPL Business Plan; provided, further, however,
that KCPL shall confer on a regular and frequent basis
with representatives of Western Resources in the course
of KCPL's implementation of the KCPL Business Plan and
any expenditures referred to in this Section 8.1:
(a) Ordinary Course of Business. KCPL shall, and
shall cause its respective Subsidiaries to, carry on
their respective businesses in the usual, regular and
ordinary course in substantially the same manner as
heretofore conducted and use all commercially reasonable
efforts to preserve intact their present business
organizations and goodwill, preserve the goodwill and
relationships with customers, suppliers and others having
business dealings with them and, subject to prudent
management of work force needs and ongoing programs
currently in force, keep available the services of their
present officers and employees, provided, however, that
nothing shall prohibit KCPL or any of its Subsidiaries
from transferring operations to KCPL or any of its wholly
owned Subsidiaries. KCPL shall not, nor shall KCPL
permit any of its Subsidiaries to, enter into a new line
of business involving any material investment of assets
or resources or any material exposure to liability or
loss to KCPL and the KCPL Subsidiaries taken as a whole.
(b) Dividends. KCPL shall not, nor shall it
permit any of its Subsidiaries to, (i) declare or pay any
dividends on or make other distributions in respect of
any of their capital stock other than to KCPL or KCPL
Subsidiaries and other than (A) dividends required to be
paid on any KCPL Preferred Stock in accordance with the
terms thereof and (B) regular quarterly dividends on KCPL
Common Stock with usual record and payment dates not,
during any period of any fiscal year, in excess (except
to the extent consistent with good business judgment and
KCPL's past dividend practice) of the quarterly dividend
most recently declared on such stock as of the date
hereof, (ii) split,
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combine or reclassify any of their capital stock or
issue or authorize or propose the issuance of any
other securities in respect of, in lieu of, or in
substitution for, shares of their capital stock or (iii)
except as set forth in Section 8.1(b) of the KCPL
Disclosure Schedule, redeem, repurchase or otherwise acquire
any shares of their capital stock, other than (A) redemptions,
purchases or acquisitions required by the terms of any
series of KCPL Preferred Stock or (B) for the purpose of
funding employee stock ownership plans in accordance with
past practice. Notwithstanding the foregoing, KCPL may
redeem the KCPL Preferred Stock pursuant to the
provisions of Section 2.4(c).
(c) Issuance of Securities. Except as set forth
in Section 8.1(c) of the KCPL Disclosure Schedule, since
the Original Execution Date KCPL shall not, nor shall it
permit any of its Subsidiaries to, issue, agree to issue,
deliver, sell, award, pledge, dispose of or otherwise
encumber or authorize or propose the issuance, delivery,
sale, award, pledge, disposal or other encumbrance of,
any shares of their capital stock of any class or any
securities convertible into or exchangeable for, or any
rights, warrants or options to acquire, any such shares
or convertible or exchangeable securities, other than (i)
intercompany issuances of capital stock and (ii)
issuances in the ordinary course of business consistent
with past practice of up to 2,000,000 shares of KCPL
Common Stock during any fiscal year to be issued pursuant
to employee benefit plans, stock option and other
incentive compensation plans, director plans and stock
purchase plans and dividend reinvestment plans existing
prior to the date hereof and heretofore disclosed to
Western Resources or pursuant to plans adopted after the
date hereof which shall be reasonably acceptable to
Western Resources. The parties shall promptly furnish to
each other such information as may be reasonably
requested including financial information and take such
action as may be reasonably necessary and otherwise fully
cooperate with each other in the preparation of any
registration statement under the Securities Act and other
documents necessary in connection with the issuance of
securities as contemplated by this Section 8.1(c),
subject to obtaining customary indemnities.
(d) Charter Documents. KCPL shall not amend or
propose to amend its charter, by-laws or regulations, or
similar organic documents, except as contemplated herein.
(e) No Acquisitions. KCPL shall not, nor shall it
permit any of its Subsidiaries to, acquire, or publicly
propose to acquire, or agree to acquire, by merger or
consolidation with, or by purchase or otherwise, an
equity interest in or a substantial portion of the assets
of, any business or any corporation, partnership,
association or other business organization or division
thereof, nor shall KCPL acquire or agree to acquire a
material amount of assets other than in the ordinary
course of business consistent with past practice.
(f) Capital Expenditures. KCPL shall not, nor
shall it permit any of its Subsidiaries to, make capital
expenditures during any fiscal year in excess of the
amount budgeted for capital expenditures for such fiscal
year in the KCPL Business Plan.
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(g) No Dispositions. Except as set forth in
Section 8.1(g) of the KCPL Disclosure Schedule, KCPL
shall not, nor shall it permit any of its Subsidiaries
to, sell or dispose of any of their assets other than
dispositions in the ordinary course of business
consistent with past practice.
(h) Indebtedness. KCPL shall not, nor shall it
permit any of its Subsidiaries to, incur or guarantee any
indebtedness (including any debt borrowed or guaranteed
or otherwise assumed including, without limitation, the
issuance of debt securities or warrants or rights to
acquire debt) or enter into any "keep well" or other
agreement to maintain any financial statement condition
of another person or entity or enter into any arrangement
having the economic effect of any of the foregoing other
than (i) indebtedness or guarantees or "keep well" or
other agreements in the ordinary course of business
consistent with past practice (such as the issuance of
commercial paper, the use of existing credit facilities
or hedging activities), (ii) other indebtedness or "keep
well" or other agreements not aggregating more than $250
million, (iii) arrangements between KCPL and its
Subsidiaries or among its Subsidiaries, (iv) except as
set forth in Section 8.1(h) of the KCPL Disclosure
Schedule, (v) in connection with the refunding of
existing indebtedness, (vi) in connection with the
redemption of the KCPL Preferred Stock as set forth in
Section 2.4(c), or (vii) as may be necessary in
connection with acquisitions or capital expenditures
provided for in the KCPL Business Plan. Notwithstanding
anything contained herein to the contrary, the aggregate
total indebtedness for borrowed money (including
preferred stock) of KCPL and its Subsidiaries shall not
exceed $1.4 billion at the KCPL Effective Time.
(i) Compensation, Benefits. Except as may be
required by applicable law or as set forth in
Section 8.1(i) of the KCPL Disclosure Schedule, KCPL
shall not, nor shall it permit any of its Subsidiaries
to, (i) enter into, adopt or amend or increase the amount
or accelerate the payment or vesting of any benefit or
amount payable under, any employee benefit plan or other
contract, agreement, commitment, arrangement, plan,
trust, fund or policy maintained by, contributed to or
entered into by KCPL or any of its Subsidiaries or
increase, or enter into any contract, agreement,
commitment or arrangement to increase in any manner, the
compensation or fringe benefits, or otherwise to extend,
expand or enhance the engagement, employment or any
related rights, of any director, officer or other
employee of KCPL or any of its Subsidiaries, except for
normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do
not result in a material increase in benefits or
compensation expense to KCPL or any of its Subsidiaries;
(ii) enter into or amend any employment, severance or
special pay arrangement with respect to the termination
of employment or other similar contract, agreement or
arrangement with any director or officer or other
employee other than in the ordinary course of business
consistent with past practice; or (iii) deposit into any
trust (including any "rabbi trust") amounts in respect of
any employee benefit obligations or obligations to
directors; provided that transfers into any trust, other
than a rabbi or other trust with respect to any
non-qualified deferred compensation, may be made in
accordance with past practice.
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(j) 1935 Act. KCPL shall not, nor shall KCPL
permit any of its Subsidiaries to, except as required or
contemplated by this Agreement, engage in any activities
which would cause a change in KCPL's status, or that of
its Subsidiaries, under the 1935 Act.
(k) Accounting. KCPL shall not, nor shall it
permit any of its Subsidiaries to, make any changes in
its accounting methods, except as required by law, rule,
regulation or GAAP.
(l) Affiliate Transactions. Except as set forth
in Section 8.1(l) of the KCPL Disclosure Schedule, KCPL
shall not, nor shall it permit any of its Subsidiaries
to, enter into any material agreement or arrangement with
any of their Affiliates (other than wholly owned
Subsidiaries) on terms materially less favorable to such
party than could be reasonably expected to have been
obtained with an unaffiliated third-party on an arm's
length basis.
(m) Cooperation, Notification. KCPL shall (i)
confer on a regular and frequent basis with one or more
representatives of Western Resources to discuss, subject
to applicable law, material operational matters and the
general status of its ongoing operations, (ii) promptly
notify Western Resources of any significant changes in
its business, properties, assets, condition (financial or
other), results of operations or prospects, and (iii)
promptly provide Western Resources with copies of all
filings made by KCPL or any of its Subsidiaries with any
state or federal court, administrative agency, commission
or other Governmental Authority in connection with this
Agreement and the transactions contemplated hereby.
(n) Rate Matters. Subject to applicable law, KCPL
shall, and shall cause its Subsidiaries to, discuss with
Western Resources any changes in its or its Subsidiaries'
rates or the services it provides or charges (other than
pass-through fuel and gas rates or charges), standards of
service or accounting from those in effect on the date
hereof and consult with Western Resources prior to making
any filing (or any amendment thereto), or effecting any
agreement, commitment, arrangement or consent with
governmental regulators, whether written or oral, formal
or informal, with respect thereto, and KCPL will not make
any filing to change its rates or the services it
provides on file with the FERC that would have a material
adverse effect on the benefits associated with the
business combination provided for herein.
(o) Third-Party Consents. KCPL shall, and shall
cause its Subsidiaries to, use all commercially
reasonable efforts to obtain all KCPL Required Consents.
KCPL shall promptly notify Western Resources of any
failure or prospective failure to obtain any such
consents and, if requested by Western Resources, shall
provide copies of all KCPL Required Consents obtained by
KCPL to Western Resources.
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(p) No Breach, Etc. KCPL shall not, nor shall it
permit any of its Subsidiaries to, willfully take any
action that would or is reasonably likely to result in a
material breach of any provision of this Agreement or in
any of its representations and warranties set forth in
this Agreement being untrue on and as of the Closing
Date.
(q) Tax-Exempt Status. KCPL shall not, nor shall
it permit any of its Subsidiaries to, take any action
that would likely jeopardize the qualification of KCPL's
or Western Resources' outstanding revenue bonds which
qualify on the date hereof under Section 142(a) of the
Code as "exempt facility bonds" or as tax-exempt
industrial development bonds under Section 103(b)(4) of
the Internal Revenue Code of 1954, as amended, prior to
the Tax Reform Act of 1986.
(r) Contracts. KCPL shall not, nor shall KCPL
permit any Subsidiary of KCPL to, except in the ordinary
course of business consistent with past practice, modify,
amend, terminate, renew or fail to use reasonable
business efforts to renew any material contract or
agreement to which KCPL or any Subsidiary of KCPL is a
party or waive, release or assign any material rights or
claims.
(s) Insurance. KCPL shall, and shall cause its
Subsidiaries to, maintain with financially responsible
insurance companies insurance in such amounts and against
such risks and losses as are customary for companies
engaged in the electric utility industry and employing
methods of generating electric power and fuel sources
similar to those methods employed and fuels used by KCPL
or its Subsidiaries.
(t) Permits. KCPL shall, and shall cause its
Subsidiaries to, use reasonable efforts to maintain in
effect all existing governmental permits which are
material to the operations of KCPL or its Subsidiaries.
(u) Tax Matters. KCPL shall not (i) make or
rescind any material express or deemed election relating
to taxes unless such election will have the effect of
minimizing the tax liabilities of KCPL or any of its
Subsidiaries, including elections for any and all joint
ventures, partnerships, limited liability companies,
working interests or other investments where KCPL has the
capacity to make such binding elections, (ii) without the
written consent of Western Resources, which consent will
not be unreasonably withheld, settle or compromise any
material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating
to taxes unless such settlement or compromise results in
(A) a change in taxable income or tax liability that will
reverse in future periods and is therefore, by its
nature, a timing difference or (B) a change in taxable
income or tax liability that will not reverse in future
periods and is therefore, by its nature, a permanent
difference unless the tax liability resulting from the
increase is less than $5 million, or (iii) change in any
material respect any of its methods of reporting income
or deductions for federal income tax purposes from those
employed in the preparation of its federal income tax
return for the taxable year ending December 31,
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1996, except as may be required by applicable law or except for
such changes that would reduce consolidated federal
taxable income or alternative minimum taxable income.
(v) Discharge of Liabilities. KCPL shall not, nor
shall KCPL permit any of its Subsidiaries to, pay,
discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of
business consistent with past practice (which includes
the payment of final and unappealable judgments) or in
accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto)
of KCPL included in KCPL's reports filed with the SEC, or
incurred in the ordinary course of business consistent
with past practice.
Section 8.2 Covenants of Western Resources, New
KC and KGE. Western Resources agrees, as to itself, New
KC and to each of its Subsidiaries, that after the date
hereof and prior to the KGE Effective Time or earlier
termination of this Agreement:
(a) Cooperation, Notification. Western Resources
shall (i) confer on a regular and frequent basis with
one or more representatives of KCPL to discuss,
subject to applicable law, material operational
matters and the general status of its ongoing
operations, (ii) promptly notify KCPL of any
significant changes in its business, properties,
assets, condition (financial or other), results of
operations or prospects, and (iii) promptly provide
KCPL with copies of all filings made by Western
Resources or any of its Subsidiaries with any state or
federal court, administrative agency, commission or
other Governmental Authority in connection with this
Agreement and the transactions contemplated hereby.
(b) Third-Party Consents. Western Resources
shall, and shall cause its Subsidiaries and New KC to,
use all commercially reasonable efforts to obtain all
Western Resources Required Consents. Western
Resources shall promptly notify KCPL of any failure or
prospective failure to obtain any such consents and,
if requested by KCPL, shall provide copies of all
Western Resources Required Consents obtained by
Western Resources to KCPL.
(c) No Breach, Etc. Each of Western Resources,
KGE and New KC shall not, nor shall they permit any of
their respective Subsidiaries to, willfully take any
action that would or is reasonably likely to result in
a material breach of any provision of this Agreement
or in any of its representations and warranties set
forth in this Agreement being untrue on and as of the
Closing Date.
(d) New KC Not to Engage in Operations. Prior to
the KCPL and KGE Effective Times, Western Resources
shall not permit New KC to engage in any business or
incur any liabilities or be a party to any contract or
agreement, other than as contemplated by this
Agreement or as specifically agreed to in writing by
KCPL.
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(e) Cash for Payment in Lieu of Fractional Shares.
New KC as of the KGE Effective Time will have
sufficient cash available to pay for all fractional
share interests of New KC Common Stock which would
otherwise be issued pursuant to the KCPL Merger.
(f) Insurance. Western Resources shall use
reasonable efforts to obtain for New KC with
financially responsible insurance companies insurance
effective as of the Closing Date in such amounts and
against such risks and losses as are customary for
companies engaged in the electric utility industry and
employing methods of generating electric power and
fuel sources similar to those methods to be employed
and fuels to be used by New KC.
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1 Access to Information. Upon
reasonable notice, each party shall, and shall cause its
Subsidiaries to, afford to the officers, directors,
employees, accountants, counsel, investment bankers,
financial advisors and other representatives of the other
parties (collectively, "Representatives") reasonable
access, during normal business hours throughout the
period prior to the KGE Effective Time, to all of its
properties, books, contracts, commitments and records
(including, but not limited to, Tax Returns) and, during
such period, each party shall, and shall cause its
Subsidiaries to, furnish promptly to the other (i) access
to each report, schedule and other document filed or
received by it or any of its Subsidiaries pursuant to the
requirements of federal or state securities laws or filed
with or sent to the SEC, the FERC, the NRC, the
Department of Justice, the Federal Trade Commission, or
any other federal or state regulatory agency or
commission and (ii) access to all information concerning
themselves, their Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably
requested by the other party in connection with any
filings, applications or approvals required or
contemplated by this Agreement or for any other reason
related to the transactions contemplated by this
Agreement. All documents and information supplied by one
party to the other pursuant to this Section 9.1 shall be
deemed to be "Evaluation Material" as defined in the
Confidentiality Agreement, dated December 20, 1996,
between KCPL and Western Resources, as it may be amended
from time to time (the "Confidentiality Agreement"), and
shall be kept confidential in accordance with the terms
of such Agreement.
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Section 9.2 Joint Proxy Statement and
Registration Statement.
(a) Preparation and Filing. The
parties will prepare and file with the SEC as soon as
reasonably practicable after the date hereof the
Registration Statement and the Proxy Statement (together,
the "Joint Proxy/Registration Statement"). The parties
hereto shall each use reasonable efforts to (i) cause the
Registration Statement to be declared effective under the
Securities Act as promptly as practicable after such
filing and (ii) respond as promptly as practicable to any
comments made by the SEC. Each party hereto shall also
take such action as may be reasonably required to cause
the shares of (i) Western Resources Common Stock issuable
in connection with the Stock Contribution and the Western
Resources Stock Distribution to be registered or to
obtain an exemption from registration under applicable
state "blue sky" or securities laws and (ii) New KC
Common Stock issuable in connection with the KGE Merger
and the KCPL Merger to be registered or to obtain an
exemption from registration under applicable state blue
sky" or securities laws; provided, however, that no party
shall be required to register or qualify as a foreign
corporation or to take other action which would subject
it to service of process in any jurisdiction where the
Surviving Corporation will not be, following the KGE
Merger, so subject. Each of the parties hereto shall
furnish all information concerning itself which is
required or customary for inclusion in the Joint
Proxy/Registration Statement. The parties shall use
reasonable efforts to cause the shares of (i) Western
Resources Common Stock issuable in the Stock Contribution
and the Western Resources Stock Distribution and (ii) New
KC Common Stock issuable in the KCPL Merger and the KGE
Merger, to be approved for listing on the NYSE upon
official notice of issuance. The information provided by
any party hereto for use in the Joint Proxy/Registration
Statement shall be true and correct in all material
respects without omission of any material fact which is
required to make such information not false or
misleading. No representation, covenant or agreement is
made by any party hereto with respect to information
supplied by any other party for inclusion in the Joint
Proxy Statement/Registration Statement.
(b) Letter of KCPL's Accountants. KCPL
shall use its best efforts to cause to be delivered to
Western Resources letters of Coopers & ▇▇▇▇▇▇▇, 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
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, dated a date within two business
days before the date of the Joint Proxy/Registration
Statement, and addressed to KCPL, in form and substance
reasonably satisfactory to KCPL and customary in scope
and substance for "cold comfort" letters delivered by
independent public accountants in connection with
registration statements on Form S-4.
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(d) Fairness Opinions. It shall be a
condition to the mailing of the Joint Proxy/Registration
Statement to the shareholders of KCPL and Western
Resources that (i) KCPL shall have received an opinion
from ▇▇▇▇▇▇▇ ▇▇▇▇▇, 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the rules and regulations promulgated
thereunder with respect to the transactions contemplated
hereby. Such parties will use all commercially reasonable
efforts to make such filings in a timely manner and to
respond on a timely basis to any requests for additional
information made by either of such agencies.
(b) Other Regulatory Approvals. Each
party hereto shall cooperate and use its best efforts to
promptly prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions,
filings and other documents, and to use all commercially
reasonable efforts to obtain all necessary permits,
consents, approvals and authorizations of all
Governmental Authorities necessary or advisable to obtain
the KCPL Required Statutory Approvals and the Western
Resources Required Statutory Approvals.
Section 9.4 Shareholder Approval.
(a) Approval of KCPL Shareholders.
Subject to the provisions of Section 9.4(c) and
Section 9.4(d), KCPL shall, as soon as reasonably
practicable after the date hereof (i) take all steps
necessary to duly call, give notice of, convene and hold
a meeting of its shareholders (the "KCPL Meeting") for
the purpose of securing the KCPL Shareholders' Approval,
(ii) distribute to its shareholders the Proxy Statement
in accordance with applicable federal and state law and
with its Restated Articles of Consolidation and by-laws,
(iii) subject to the fiduciary duties of its Board of
Directors, recommend to its shareholders the approval of
the KCPL Merger, this Agreement and the transactions
contemplated hereby, and (iv) cooperate and consult with
Western Resources with respect to each of the foregoing
matters.
(b) Approval of Western Resources
Shareholders. Subject to the provisions of
Section 9.4(c) and Section 9.4(d), Western Resources
shall, as soon as reasonably
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practicable after the date hereof (i) take all steps
necessary to duly call, give notice of, convene and hold
a meeting of its shareholders (the "Western Resources
Meeting") for the purpose of securing the Western
Resources Shareholders' Approval, (ii) distribute to its
shareholders the Proxy Statement in accordance with
applicable federal and state law and with the Western
Resources Articles and the by-laws of Western Resources
(the "Western Resources By-Laws"), (iii) subject to
the fiduciary duties of its Board of Directors, recommend
to its shareholders the approval of this Agreement and the
transactions contemplated hereby, including without limitation
the Asset Contribution, the Stock Contribution and the
issuance of shares of Western Resources Common Stock to be
contributed to KGE pursuant to the Stock Contribution, and
(iv) cooperate and consult with KCPL with respect to each of
the foregoing matters.
(c) Meeting Date. The Western
Resources Meeting for the purpose of securing the Western
Resources Shareholders' Approval and the KCPL Meeting for
the purpose of securing the KCPL Shareholders' Approval
shall be held as soon as practicable, or at such other
time as KCPL and Western Resources shall mutually
determine in writing.
(d) Fairness Opinions Not Withdrawn.
It shall be a condition to the obligation of KCPL to hold
the KCPL Meeting that the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇,
referred to in Section 9.2(d), shall not have been
withdrawn, and it shall be a condition to the obligation
of Western Resources to hold the Western Resources
Meeting that the opinion of Salomon, referred to in
Section 9.2(d), shall not have been withdrawn.
Section 9.5 Directors' and Officers' Indemnification.
(a) Indemnification. To the extent, if
any, not provided by an existing right of indemnification
or other agreement or policy, from and after the KGE
Effective Time, the Surviving Corporation shall, to the
fullest extent permitted by applicable law, indemnify,
defend and hold harmless each person who is now, or has
been at any time prior to the date hereof, or who becomes
prior to the KGE Effective Time, an officer, director or
employee of any of the parties hereto or their respective
Subsidiaries (each an "Indemnified Party" and
collectively, the "Indemnified Parties") against (i) all
losses, expenses (including reasonable attorney's fees
and expenses), claims, damages or liabilities or, subject
to the proviso of the next succeeding sentence, amounts
paid in settlement, arising out of actions or omissions
occurring at or prior to the KGE Effective Time (and
whether asserted or claimed prior to, at or after the KGE
Effective Time) that are, in whole or in part, based on
or arising out of the fact that such person is or was a
director, officer or employee of such party (the
"Indemnified Liabilities"), and (ii) all Indemnified
Liabilities to the extent they are based on or arise out
of or pertain to the transactions contemplated by this
Agreement. In the event of any such loss, expense, claim,
damage or liability (whether or not arising before the
KGE Effective Time), (i) the Surviving Corporation shall
pay the reasonable fees and expenses of counsel selected
by the Indemnified Parties, which counsel shall be
reasonably satisfactory to the Surviving Corporation,
promptly after statements therefor are received and
otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses
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reasonably incurred, in either case to the extent not
prohibited by the KGCC, (ii) the Surviving Corporation
will cooperate in the defense of any such matter and
(iii) any determination required to be made with respect
to whether an Indemnified Party's conduct complies with
the standards set forth under the KGCC and the
certificate of incorporation or by-laws of the
Surviving Corporation shall be made by independent counsel
mutually acceptable to the Surviving Corporation and the
Indemnified Party; provided, however, that the Surviving
Corporation shall not be liable for any settlement effected
without its written consent (which consent shall not be
unreasonably withheld). The Indemnified Parties as a group may
retain only one law firm with respect to each related matter
except to the extent there is, in the opinion of counsel
to an Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue
between positions of such Indemnified Party and any other
Indemnified Party or Indemnified Parties.
(b) Insurance. For a period of six
years after the KGE Effective Time, the Surviving
Corporation shall cause to be maintained in effect
policies of directors and officers' liability insurance
maintained by KCPL and Western Resources for the benefit
of those persons who are currently covered by such
policies on terms no less favorable than the terms of
such current insurance coverage; provided, however, that
the Surviving Corporation shall not be required to expend
in any year an amount in excess of 150% of the annual
aggregate premiums currently paid by KCPL and Western
Resources for such insurance; and provided, further, that
if the annual premiums of such insurance coverage exceed
such amount, the Surviving Corporation shall be obligated
to obtain a policy with the best coverage available, in
the reasonable judgment of the Board of Directors of the
Surviving Corporation, for a cost not exceeding such
amount.
(c) Successors. In the event the
Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person or
entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties
and assets to any person or entity, then and in either
such case, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation shall
assume the obligations set forth in this Section 9.5.
(d) Survival of Indemnification. To
the fullest extent permitted by law, from and after the
KGE Effective Time, all rights to indemnification as of
the date hereof in favor of the employees, agents,
directors and officers of KCPL, New KC, Western Resources
and KGE and their respective Subsidiaries with respect to
their activities as such prior to the KGE Effective Time,
as provided in their respective articles of incorporation
and by-laws in effect on the date thereof, or otherwise
in effect on the date hereof, shall survive the KGE
Merger and shall continue in full force and effect for a
period of not less than six years from the KGE Effective
Time.
(e) Benefit. The provisions of this
Section 9.5 are intended to be for the benefit of, and
shall be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives.
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Section 9.6 Public Announcements. Subject to
each party's disclosure obligations imposed by law, KCPL,
New KC, Western Resources and KGE will cooperate with
each other in the development and distribution of all
news releases and other public information disclosures
with respect to this Agreement or any of the transactions
contemplated hereby and shall not issue any public
announcement or statement with respect hereto or thereto
without the consent of the other party (which consent
shall not be unreasonably withheld).
Section 9.7 Rule 145 Affiliates. KCPL shall
identify in a letter to Western Resources all persons who
are, and to KCPL's knowledge who will be at the Closing
Date, "affiliates" of KCPL as such term is used in Rule
145 under the Securities Act. KCPL shall use all
reasonable efforts to cause its affiliates (including any
person who may be deemed to have become such an affiliate
after the date of the letter referred to in the prior
sentence) to deliver to Western Resources on or prior to
the Closing Date a written agreement substantially in the
form attached as Exhibit 9.7 (each an "Affiliate
Agreement").
Section 9.8 Employee Agreements and Workforce
Matters.
(a) Certain Employee Agreements.
Subject to Section 9.9 and Section 9.10, the Surviving
Corporation and its Subsidiaries shall honor, without
modification, all contracts, agreements, collective
bargaining agreements, severance agreements between KCPL
and certain of its officers and commitments of the
parties prior to the date hereof that have previously
been provided to Western Resources and that are disclosed
in Section 6.10 of the KCPL Disclosure Schedule and that
apply to any current or former employee or current or
former director of the parties hereto; provided, however,
that this undertaking is not intended to prevent the
Surviving Corporation from enforcing such contracts,
agreements, collective bargaining agreements and
commitments in accordance with their terms, including,
without limitation, any reserved right to amend, modify,
suspend, revoke or terminate any such contract,
agreement, collective bargaining agreement or commitment.
(b) Workforce Matters. Subject to
applicable bargaining agreements, Western Resources shall
treat the employees of the Surviving Corporation as a
single workforce, and shall use its best effort to
conduct its employee management practices on a fair and
equitable basis, without regard to any employee's place
of employment prior to the KGE Effective Time.
Section 9.9 Employee Benefit Plans.
(a) Company Plans. (i) From the KGE
Effective Time until the first anniversary of the KGE
Effective Time, New KC shall provide to employees of the
Surviving Corporation who were employees of KCPL prior to
the KGE Effective Time ("KCPL Employees") benefits which
are no less favorable in the aggregate than the benefits
provided to employees of KCPL as of the date hereof, (ii)
between the first and second anniversaries of the KGE
Effective Time, New KC may either provide KCPL Employees
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benefits which are no less favorable in the aggregate
than the benefits provided to employees of KCPL as of the
date hereof or provide to KCPL Employees benefits on the
same terms as those applicable to other similarly
situated former KGE employees, and (iii) after the second
anniversary of the KGE Effective Time, New KC shall
provide to KCPL Employees benefits on the same terms as
those applicable to other similarly situated former KGE
employees. In the event New KC is unable to provide
benefits to KCPL Employees on the same terms applicable
to other similarly situated former KGE employees after
the second anniversary of the KGE Effective Time, it
shall continue to provide benefits which are no less
favorable in the aggregate than the benefits provided to
KCPL Employees as of the date hereof until such other
benefits can be provided. For purposes of this
Section 9.9(a), the term "benefits" shall not include the
following plans of KCPL: the Long Term Incentive Plan for
Executives, the Auto Allowance, the Financial/Tax
Allowance, the Incentive Compensation Plan, the Executive
Long-Term and Short-Term Incentive Plan, the RESULTS
Incentive Compensation Plan, the KLT, Inc. Annual
Incentive Pay Plan and Long Term Incentive Plan, the Ad
Hoc Bonus Program, the Retention/Hiring Bonus Program,
the Sales and Marketing Incentive Plans, and the Bulk
Power Sales Incentive Plan.
(b) Effect of the KCPL Merger and the
KGE Merger. The consummation of the KCPL Merger or the
KGE Merger shall not be treated as a termination of
employment for purposes of any Western Resources Benefit
Plan or KCPL Benefit Plan.
(c) Credit for Past Service. Without
limitation of the foregoing provisions of this
Section 9.9, each participant in any benefit plan of the
Surviving Corporation shall receive credit for service
with KCPL, Western Resources or KGE, as the case may be,
for purposes of (i) eligibility to participate, vesting
and eligibility to receive benefits under any benefit
plan of the Surviving Corporation or any of its
Subsidiaries or affiliates and (ii) benefit accrual under
any severance or vacation pay plan; provided, however,
that such crediting of service shall not operate to
duplicate any benefit to any such participant or the
funding for any such benefit.
Section 9.10 Stock Options. Prior to the KCPL
Effective Time, KCPL shall take such actions as may be
necessary such that immediately prior to the KCPL
Effective Time, each option to purchase shares of KCPL
Common Stock and any accrued dividend rights granted on
such KCPL Common Stock (collectively, the "KCPL Stock
Options") which is outstanding, whether or not then
exercisable, shall be canceled and entitle the holder of
any then exercisable KCPL Stock Options, upon surrender
of all outstanding KCPL Stock Options, to receive in
consideration of such cancellation an amount in cash from
KCPL equal to the result of multiplying the number of
shares of KCPL Common Stock previously subject to such
KCPL Stock Option by the difference between (i) the sum
of (x) the fair market value of the number of shares of
Western Resources Common Stock (as determined by the
average closing price of the Western Resources Common
Stock for the five (5) consecutive trading day period
occurring immediately following the distribution
contemplated by Section 4.1) that such optionee would
have received pursuant to Section 4.1 if such optionee
had exercised a KCPL Stock Option to purchase one (1)
share of KCPL Common Stock
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immediately prior to the KCPL Effective Time and
(y) the fair market value of the number of shares
of New KC Series A Common Stock (as determined by the
average closing price of the New KC Series A Common
Stock for the five (5) consecutive trading day period
occurring immediately following the distribution
contemplated by Section 4.1) that such optionee would
have received pursuant to Section 2.4(a) if such optionee
had exercised a KCPL Stock Option to purchase one (1)
share of KCPL Common Stock immediately prior to the KCPL
Effective Time and (ii) the per share exercise price of such
KCPL Stock Options.
Section 9.11 No Solicitations. From and after
the date hereof, KCPL will not, and will not authorize or
permit any of its Representatives to, directly or
indirectly, solicit, initiate or encourage (including by
way of furnishing information) or take any other action
to facilitate knowingly any inquiries or the making of
any proposal which constitutes or may reasonably be
expected to lead to an Acquisition Proposal (as defined
herein) from any person, or engage in any discussion or
negotiations relating thereto or accept any Acquisition
Proposal; provided, however, that notwithstanding any
other provision hereof, KCPL may (i) at any time prior to
the time KCPL's shareholders shall have voted to approve
this Agreement, engage in discussions or negotiations
with a third party who (without any solicitation,
initiation, encouragement, discussion or negotiation,
directly or indirectly, by or with KCPL or its
Representatives after the date hereof) seeks to initiate
such discussions or negotiations and may furnish such
third party information concerning KCPL and its business,
properties and assets if, and only to the extent that,
(A) (x) the third party has first made an Acquisition
Proposal that is financially superior to the transactions
contemplated herein and has demonstrated that financing
for the Acquisition Proposal is reasonably likely to be
obtained (as determined in good faith by KCPL's Board of
Directors after consultation with its financial advisors)
and (y) KCPL's Board of Directors shall conclude in good
faith, after considering applicable provisions of state
law, on the basis of oral or written advice of outside
counsel that such action is necessary for the KCPL Board
of Directors to act in a manner consistent with its
fiduciary duties under applicable law and (B) prior to
furnishing such information to or entering into
discussions or negotiations with such person or entity,
KCPL (x) provides prompt notice to Western Resources to
the effect that it is planning to furnish information to
or enter into discussions or negotiations with such
person or entity and (y) receives from such person or
entity an executed confidentiality agreement in
reasonably customary form on terms not in the aggregate
materially more favorable to such person or entity than
the terms contained in the Confidentiality Agreement,
(ii) comply with Rule 14e-2 promulgated under the
Exchange Act with regard to a tender or exchange offer,
and/or (iii) accept an Acquisition Proposal from a third
party, provided KCPL first terminates this Agreement
pursuant to Section 11.1(e). KCPL shall immediately
cease and terminate any existing solicitation,
initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by KCPL
or its Representatives with respect to the foregoing.
KCPL shall notify Western Resources orally and in writing
of any such inquiries, offers or proposals (including,
without limitation, the terms and conditions of any such
proposal and the identity of the person making it),
within 24 hours of the receipt thereof, shall keep
Western Resources informed of the status and details of
any such inquiry, offer or proposal,
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and shall give Western Resources five days' advance
notice of any agreement to be entered into with or any
information to be supplied to any person making such
inquiry, offer or proposal. As used herein, "Acquisition
Proposal" shall mean a proposal or offer (other
than by Western Resources, KGE or New KC) for a tender or
exchange offer, merger, consolidation or other business
combination involving KCPL or any KCPL Subsidiary or any
proposal to acquire in any manner a substantial equity
interest in or a substantial portion of the assets of KCPL
or any KCPL Subsidiary.
Section 9.12 Board of Directors of New KC. At
the KGE Effective Time, Western Resources shall cause the
initial Board of Directors of New KC to be comprised of
six persons designated by Western Resources, and four
persons selected from the Board of Directors of KCPL, in
office as of the date hereof, designated by KCPL.
Thereafter, directors of New KC shall be nominated and
elected in accordance with the procedures set forth in
the New KC Articles and New KC By-Laws.
Section 9.13 Post-Merger Operations.
(a) Principal Corporate Offices. At
the KGE Effective Time, (i) the executive headquarters of
New KC shall be in Kansas City, Missouri, (ii) the
customer service headquarters of New KC shall be in
Wichita, Kansas, and (iii) the field operation
headquarters of New KC shall be in Topeka, Kansas.
(b) Charities. After the KGE Effective
Time, the Surviving Corporation currently intends to
provide charitable contributions and community support
within the service areas of KCPL and Western Resources
and each of their respective Subsidiaries at annual
levels substantially comparable to the annual levels of
charitable contributions and community support provided
by KCPL and Western Resources and their respective
Subsidiaries within their service areas during 1994 and
1995.
(c) Board of Directors of Western
Resources. At the KGE Effective Time, Western Resources
shall cause to be nominated to the Board of Directors of
Western Resources (to such class of directors as Western
Resources shall determine in its sole discretion) the
following persons: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇. No persons shall be substituted for the
foregoing persons if any such person is not qualified or
declines to serve as a director of Western Resources
pursuant to the Western Resources Articles or the Western
Resources By-Laws.
(d) Termination of Litigation. The
parties hereto shall immediately dismiss, with each party
bearing its own costs and litigation expenses, all
proceedings pending between themselves and their
affiliates, including without limitation KCPL v. Western
Resources, Inc. et al., Civ. Action No. 96-552-CV-W-5
(W.D. Mo.), and each shall thereafter sign and deliver
such further instruments as may be necessary in
connection with such dismissals.
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(e) Dividends. Upon the KGE Effective
Time, the dividend policy of New KC shall be set by the
Board of Directors of New KC so as to achieve a payout
ratio that is consistent with comparable electric utility
companies.
Section 9.14 Expenses. Subject to Section 11.3,
all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, except that
those expenses incurred in connection with printing the
Joint Proxy/Registration Statement, as well as the filing
fee relating thereto, shall be shared equally by KCPL and
Western Resources.
Section 9.15 Transition Management. The parties
shall create a special transition management task force
(the "Task Force") which shall be jointly headed by
representatives appointed by and reasonably acceptable to
the Chief Executive Officers of Western Resources and
KCPL. The Task Force shall examine various alternatives
regarding the manner in which to best organize and manage
the business of the Surviving Corporation after the KGE
Effective Time, subject to applicable law.
Section 9.16 Purchase Accounting and Tax-Free
Status. Each party hereto agrees, as to itself and to
each of its Subsidiaries, that after the date hereof and
prior to the KGE Effective Time or earlier termination of
this Agreement, except as expressly contemplated or
permitted in this Agreement:
(a) Purchase Accounting. Western Resources and
New KC shall account for the KGE Merger and the KCPL
Merger under the purchase method of accounting in
accordance with the provisions of Accounting Principles
Board Opinion No. 16, "Business Combinations."
(b) Tax-Free Status. None of the parties hereto
shall, nor shall any party hereto permit any of its
Subsidiaries or any employees, officers or directors of
such party or of any of its Subsidiaries to, take any
actions which would, or would be reasonably likely to,
adversely affect the ability of the KCPL Merger or the
KGE Merger to qualify for tax-free treatment under the
Code, both to the parties and their respective
shareholders (except for any cash received in lieu of
fractional shares), and each party hereto shall use all
reasonable efforts to achieve such result.
Section 9.17 Further Assurances. Each party
will, and will cause its Subsidiaries to, execute such
further documents and instruments and take such further
actions, including the application for any necessary
regulatory approvals or exemptions, as may reasonably be
requested by any other party in order to consummate the
transactions contemplated hereby in accordance with the
terms hereof.
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Section 9.18 Interim Dividends. The last record
date of each of KCPL and Western Resources on or prior to
the KGE Effective Time which relates to a regular
quarterly dividend on KCPL Common Stock or Western
Resources Common Stock, as the case may be, shall be the
same date and shall be prior to the KGE Effective Time.
Section 9.19 Redemption of Certain Western
Resources $100 Preferred. Prior to the KGE Effective
Time, the Board of Directors of Western Resources shall
call for redemption all outstanding shares of 4 1/2%
Western Resources $100 Preferred Stock, 4 1/4% Western
Resources $100 Preferred Stock and 5% Western Resources
$100 Preferred Stock at a redemption price equal to the
amount set forth in the Western Resources Articles,
together with all dividends accrued and unpaid to the
date of such redemption and take all other required
actions so that all shares of 4 1/2% Western Resources
$100 Preferred Stock, 4 1/4% Western Resources $100
Preferred Stock and 5% Western Resources $100 Preferred
Stock shall be redeemed and no such shares shall be
deemed to be outstanding at the KGE Effective Time or
entitled to vote on the approval of this Agreement and
the transactions contemplated hereby.
ARTICLE X
CONDITIONS
Section 10.1 Conditions to Each Party's
Obligation to Effect the KGE Merger and the KCPL Merger.
The respective obligations of each party to effect the
KGE Merger or the KCPL Merger, as the case may be, shall
be subject to the satisfaction on or prior to the Closing
Date of the following conditions, except, to the extent
permitted by applicable law, that such conditions may be
waived in writing pursuant to Section 11.5 by the joint
action of the parties hereto:
(a) Shareholder Approvals. The Western Resources
Shareholders' Approval and the KCPL Shareholders'
Approval shall have been obtained.
(b) No Injunction. No temporary restraining order
or preliminary or permanent injunction or other order by
any federal or state court preventing consummation of the
KGE Merger or the KCPL Merger shall have been issued and
be continuing in effect, and the KGE Merger, the KCPL
Merger and the other transactions contemplated hereby
shall not have been prohibited under any applicable
federal or state law or regulation.
(c) Registration Statement. The Registration
Statement shall have become effective in accordance with
the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and
remain in effect.
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(d) Listing of Shares. The shares of Western
Resources Common Stock issuable in the Stock Contribution
and the Western Resources Stock Distribution and the
shares of New KC Common Stock issuable in the KCPL Merger
and the KGE Merger shall have been approved for listing
on the NYSE upon official notice of issuance.
(e) Required Statutory Approvals. The KCPL
Required Statutory Approvals and the Western Resources
Required Statutory Approvals shall have been obtained at
or prior to the KCPL Effective Time and such approvals
shall have become Final Orders (as defined below). A
"Final Order" means action by the relevant regulatory
authority which has not been reversed, stayed, enjoined,
set aside, annulled or suspended, with respect to which
any waiting period prescribed by law before the
transactions contemplated hereby may be consummated has
expired, and as to which all conditions to the
consummation of such transactions prescribed by law,
regulation or order have been satisfied.
(f) Permits. To the extent that the continued
lawful operations of the business of KCPL or any of its
Subsidiaries after the KCPL Merger or to the extent that
the continued lawful operations of the business of
Western Resources, KGE, New KC, or any of their
respective Subsidiaries after the KGE Merger require that
any license, permit or other governmental approval be
transferred to the Surviving Corporation or issued to the
Surviving Corporation, such licenses, permits or other
authorizations shall have been transferred or reissued to
the Surviving Corporation at or before the Closing Date,
except where the failure to transfer or reissue such
licenses, permits or other authorizations would not have
a material adverse effect on the business, assets,
financial condition, results of operations or prospects
of the Surviving Corporation and its Subsidiaries taken
as a whole immediately after the KGE Effective Time.
(g) Tax Confirmation. Western Resources shall
have received confirmation in form and substance
reasonably satisfactory to Western Resources from the
Kansas tax authorities that no sales or use tax is
payable in connection with the Asset Contribution.
Section 10.2 Conditions to Obligation of Western
Resources, KGE and New KC to Effect the KGE Merger. The
obligation of Western Resources, KGE and New KC to effect
the KGE Merger shall be further subject to the
satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by Western
Resources, KGE and New KC in writing pursuant to
Section 11.5:
(a) Performance of Obligations of KCPL. KCPL
(and/or its appropriate Subsidiaries) will have performed
in all material respects their agreements and covenants
contained in or contemplated by this Agreement which are
required to be performed by them at or prior to the KGE
Effective Time including, without limitation, agreements
and covenants contained in Section 2.4(c) hereof.
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(b) Representations and Warranties. The
representations and warranties of KCPL set forth in this
Agreement shall be true and correct (i) on and as of the
date hereof and (ii) on and as of the Closing Date with
the same effect as though such representations and
warranties had been made on and as of the Closing Date
(except for representations and warranties that expressly
speak only as of a specific date or time which need only
be true and correct as of such date or time) except in
each of cases (i) and (ii) for such failures of
representations or warranties to be true and correct
(without giving effect to any materiality qualification
or standard contained in any such representations and
warranties) which, individually or in the aggregate,
would not result in a KCPL Material Adverse Effect.
(c) Closing Certificates. Western Resources shall
have received a certificate signed by the chief financial
officer of KCPL, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the
conditions set forth in Section 10.2(a) and
Section 10.2(b) have been satisfied.
(d) KCPL Material Adverse Effect. No KCPL
Material Adverse Effect shall have occurred.
(e) KCPL Required Consents. The KCPL Required
Consents the failure of which to obtain would have a KCPL
Material Adverse Effect, shall have been obtained.
(f) Affiliate Agreements. Western Resources shall
have received Affiliate Agreements, duly executed by each
"Affiliate" of KCPL, substantially in the form of Exhibit
9.7, as provided in Section 9.7.
(g) 1935 Act. Western Resources shall be
reasonably satisfied that, following the KGE Effective
Time, it shall be exempt from all provisions of the 1935
Act other than Section 9(a)(2) thereof.
(h) Statutory Approvals. Western Resources shall
be reasonably satisfied that the Final Orders, other than
any Final Order issued by FERC, with respect to the KCPL
Required Statutory Approvals and the Western Resources
Required Statutory Approvals shall not impose terms or
conditions which, individually or in the aggregate, would
have, or insofar as reasonably can be foreseen, are
likely to have a material adverse effect on the business,
assets, financial condition or results of operations of
the Surviving Corporation or a material adverse effect on
the benefits anticipated by Western Resources as a result
of the consummation of the transactions contemplated by
this Agreement.
(i) FERC Approval. Western Resources shall be
reasonably satisfied that any Final Order issued by FERC
with respect to the KCPL Required Statutory Approvals and
the Western Resources Required Statutory Approvals shall
not impose terms or conditions which, individually or in
the aggregate, would have, or insofar as reasonably
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can be foreseen, are likely to have a material adverse effect
on the business, assets, financial condition or results
of operations of the Surviving Corporation or a material
adverse effect on the benefits anticipated by Western
Resources as a result of the consummation of the
transactions contemplated by this Agreement.
(j) Tax Opinion. Western Resources shall have
received an opinion from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 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, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may require
and rely upon representations contained in certificates
of officers of KCPL, Western Resources and others.
(k) Maximum Number of Dissenting Shares. The
aggregate number of Dissenting Shares shall not be
greater than 5.5% of the outstanding shares of KCPL
Common Stock as of the KCPL Effective Time.
(l) KCPL Merger. The KCPL Merger shall have been
consummated in accordance with the terms of this
Agreement.
Section 10.3 Conditions to Obligation of KCPL to
Effect the KCPL Merger. The obligation of KCPL to effect
the KCPL Merger shall be further subject to the
satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by KCPL in
writing pursuant to Section 11.5:
(a) Performance of Obligations of Western
Resources, KGE and New KC. Western Resources, KGE and
New KC (and/or their appropriate Subsidiaries) will have
performed in all material respects their agreements and
covenants contained in or contemplated by this Agreement
which are required to be performed by them at or prior to
the KGE Effective Time.
(b) Representations and Warranties. The
representations and warranties of Western Resources, KGE
and New KC set forth in this Agreement shall be true and
correct (i) on and as of the date hereof and (ii) on and
as of the Closing Date with the same effect as though
such representations and warranties had been made on and
as of the Closing Date (except for representations and
warranties that expressly speak only as of a specific
date or time which need only be true and correct as of
such date or time) except in each of cases (i) and (ii)
for such failures of representations or warranties to be
true and correct (without giving effect to any
materiality qualification or standard contained in any
such representations and warranties) which, individually
or in the aggregate, would not result in a Western
Resources Material Adverse Effect.
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(c) Closing Certificates. KCPL shall have
received a certificate signed by the chief financial
officer of Western Resources, dated the Closing Date, to
the effect that, to the best of such officer's knowledge,
the conditions set forth in Section 10.3(a) and
Section 10.3(b) have been satisfied.
(d) Western Resources Material Adverse Effect. No
Western Resources Material Adverse Effect shall have
occurred.
(e) Western Resources Required Consents. The
Western Resources Required Consents the failure of which
to obtain would have a Western Resources Material Adverse
Effect shall have been obtained.
(f) Statutory Approvals. KCPL shall be reasonably
satisfied that the Final Orders, other than any Final
Order issued by FERC, with respect to the KCPL Required
Statutory Approvals and the Western Resources Required
Statutory Approvals shall not impose terms or conditions
which, individually or in the aggregate, would have, or
insofar as reasonably can be foreseen, are likely to have
a material adverse effect on the business, assets,
financial condition or results of operations of the
Surviving Corporation.
(g) FERC Approval. KCPL shall be reasonably
satisfied that any Final Order issued by FERC with
respect to the KCPL Required Statutory Approvals and the
Western Resources Required Statutory Approvals shall not
impose terms or conditions which, individually or in the
aggregate, would have, or insofar as reasonably can be
foreseen, are likely to have a material adverse effect on
the business, assets, financial condition or results of
operations of the Surviving Corporation.
(h) Tax Opinion. KCPL shall have received an
opinion from Skadden, Arps Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, 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, ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP may require and rely
upon representations contained in certificates of
officers of KCPL, Western Resources and others.
(i) Asset and Stock Contribution; KGE Merger. The
Asset Contribution and the Stock Contribution shall have
been consummated in accordance with the terms of this
Agreement and all conditions to Western Resources' and
New KC's obligations to effect the KGE Merger shall have
been satisfied or waived.
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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 Termination. For purposes of this
Article XI, only Western Resources and KCPL shall have
the right to terminate this Agreement. References to a
party under this Article XI shall mean Western Resources,
KGE and New KC, on the one hand, or KCPL, on the other
hand. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by
the shareholders of the respective parties hereto
contemplated by this Agreement:
(a) by mutual written consent of the Boards of
Directors of KCPL and Western Resources;
(b)(i) by either party if there has been any breach of
any representations, warranties, covenants or agreements
on the part of the other set forth in this Agreement,
which breaches individually or in the aggregate would
result in a Western Resources Material Adverse Effect or
a KCPL Material Adverse Effect, as the case may be, and,
which breaches have not been cured within 20 business
days following receipt by the breaching party of notice
of such breach or adequate assurance of such cure shall
not have been given by or on behalf of the breaching
party within such 20 business-day period, 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 by
either party, if any state or federal law, order, rule or
regulation is adopted or issued, which has the effect, as
supported by the written opinion of outside counsel for
such party, of prohibiting the transactions contemplated
hereby, or by any party hereto if any court of competent
jurisdiction in the United States or any state shall have
issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby, and such order,
judgment or decree shall have become final and
nonappealable;
(c) by either party hereto, by written notice to
the other party, if the KCPL Effective Time shall not
have occurred on or before December 31, 1999 (the
"Termination Date"); provided, however, that the right to
terminate the Agreement under this Section 11.1(c) shall
not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause
of, or resulted in, the failure of the KCPL Effective
Time to occur on or before this date;
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(d) by either party hereto, by written notice to
the other party, if (i) the Western Resources
Shareholders' Approval shall not have been obtained at a
duly held Western Resources Meeting, including any
adjournments thereof, or the KCPL Shareholders' Approval
shall not have been obtained at a duly held KCPL Meeting,
including any adjournments thereof or (ii) the Western
Resources Shareholders' Approval and the KCPL
Shareholders' Approval shall not have been obtained on or
before August 31, 1998;
(e) by KCPL, prior to the approval of this
Agreement by the shareholders of KCPL, upon five days'
prior notice to Western Resources, if, as a result of an
Acquisition Proposal by a party other than Western
Resources or any of its Affiliates, the Board of
Directors of KCPL determines in good faith, after
considering applicable provisions of state law, on the
basis of oral or written advice of outside counsel that
acceptance of the Acquisition Proposal is necessary for
the KCPL Board of Directors to act in a manner consistent
with its fiduciary duties under applicable law; provided,
however, that (i) the Board of Directors of KCPL shall
have concluded in good faith, after considering
applicable provisions of state law and after giving
effect to all concessions which may be offered by Western
Resources pursuant to clause (ii) below, on the basis of
oral or written advice of outside counsel that such
action is necessary for the Board of Directors to act in
a manner consistent with its fiduciary duties under
applicable law and (ii) prior to any such termination,
KCPL shall, and shall cause its respective financial and
legal advisors to, negotiate with Western Resources to
make such adjustments in the terms and conditions of this
Agreement as would enable KCPL to proceed with the
transactions contemplated herein; or
(f) by either party hereto, by the delivery of
written notice to the other party not later than 5:00
p.m., New York City time, on the fifth NYSE trading day
prior to the scheduled KGE Effective Time (the parties
agreeing that each party shall have at least ten NYSE
trading days' notice of the KGE Effective Time), if the
Western Resources Index Price is less than or equal to
$29.78.
Section 11.2 Effect of Termination. In the event
of termination of this Agreement by either KCPL or
Western Resources pursuant to Section 11.1 there shall be
no liability on the part of any party hereto or their
respective officers or directors hereunder, except that
Section 9.14 and Section 11.3, the agreement contained in
the last sentence of Section 9.1, Section 12.2 and
Section 12.8 shall survive the termination.
Section 11.3 Termination Fee; Expenses.
(a) KCPL Termination Fee. If (i) this
Agreement (A) is terminated by Western Resources pursuant
to Section 11.1(b)(i), (B) is terminated by KCPL pursuant
to Section 11.1(e), (C) is terminated as a result of
KCPL's breach of Section 9.4, or (D) is terminated
because the shareholders of KCPL do not approve the
transactions contemplated hereby, (ii) at the time of
such termination or prior to the meeting of KCPL's
shareholders
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there shall have been made an Acquisition
Proposal involving KCPL or any of its Affiliates (whether
or not such Acquisition Proposal shall have been rejected
or shall have been withdrawn prior to the time of such
termination or of such meeting) and (iii) within two and
one-half years of the termination of this Agreement KCPL
or any of its Affiliates becomes a Subsidiary of the
party which has made such Acquisition Proposal or a
Subsidiary of an Affiliate of such party or accepts a
written offer to consummate or consummates an Acquisition
Proposal with such party or an Affiliate thereof, then
KCPL (jointly and severally with its Affiliates), upon
the signing of a definitive agreement relating to such
Acquisition Proposal, or, if no such agreement is signed,
then at the closing (and as a condition to the closing)
of KCPL becoming such a Subsidiary or of such Acquisition
Proposal, KCPL shall pay to Western Resources a
termination fee equal to $50 million in cash. If on or
before the Termination Date all of the conditions to
Closing set forth in Sections 10.1, 10.2 and 10.3 hereof
other than the condition set forth in Section 10.3(h)
hereof shall have been fulfilled, and KCPL shall decline
to waive such condition, then immediately following the
Termination Date KCPL shall reimburse Western Resources
for any and all expenses of Western Resources with
respect to this Agreement and the transactions
contemplated hereby, up to a maximum reimbursement of
Western Resources by KCPL of $5 million.
(b) Western Resources Fees. If on or
before the Termination Date all of the conditions to the
Closing set forth in Sections 10.1, 10.2 and 10.3 hereof
other than any condition set forth in Sections 10.2(g),
10.2(h), 10.2(i) or 10.2(j) hereof shall have been
fulfilled, and Western Resources shall decline to waive
such condition, then immediately following the
Termination Date Western Resources shall reimburse KCPL
for any and all expenses of KCPL with respect to this
Agreement and the transactions contemplated hereby, up to
a maximum reimbursement of KCPL by Western Resources of
$5 million in the case of the conditions set forth in
Section 10.2(h) or 10.2(j), $25 million in the case of
the conditions set forth in Section 10.2(i), and $35
million in the case of Section 10.2(g); provided,
however, that Western Resources shall be required to
reimburse KCPL's expenses in respect of the failure of
only one of the foregoing closing conditions to be
satisfied.
(c) Expenses. The parties agree that
the agreements contained in this Section 11.3 are an
integral part of the transactions contemplated by this
Agreement and constitute liquidated damages and not a
penalty. Notwithstanding anything to the contrary
contained in this Section 11.3, if one party fails to
promptly pay to the other any fee due under Sections
11.3(a) or (b), in addition to any amounts paid or
payable pursuant to such sections, the defaulting party
shall pay the costs and expenses (including legal fees
and expenses) in connection with any action, including
the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of
any unpaid fee at the publicly announced prime rate of
Citibank, N.A. from the date such fee was required to be
paid.
Section 11.4 Amendment. This Agreement may be
amended by the Boards of Directors of the parties hereto,
at any time before or after approval hereof by the
shareholders
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of KCPL and Western Resources and prior to
the KGE Effective Time, but after such approvals, no such
amendment shall (a) alter or change the amount or kind of
shares, rights or any of the proceedings of the treatment
of shares under Article I, Article II, Article III and
Article IV or (b) alter or change any of the terms and
conditions of this Agreement if any of the alterations or
changes, alone or in the aggregate, would materially
adversely affect the rights of holders of KCPL Common
Stock or Western Resources Common Stock, except for
alterations or changes that could otherwise be adopted by
the Board of Directors of the Surviving Corporation,
without the further approval of such shareholders, as
applicable. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the
parties hereto.
Section 11.5 Waiver. At any time prior to the
KGE Effective Time, a party hereto may (a) extend the
time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the
agreements or conditions of the other party contained
herein, to the extent permitted by applicable law. Any
agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party.
Section 11.6 Standstill Agreements.
(a) Upon Termination. If this Agreement is
terminated pursuant to Section 11.1(a), 11.1(b), 11.1(c)
or 11.1(d) hereof, other than for a termination (i) by
Western Resources pursuant to Section 11.1(b)(i), (ii) by
either party pursuant to Section 11.1(b)(ii), (iii) by
either party pursuant to Section 11.1(d) as a result of
the failure to obtain the KCPL Shareholder's Approval,
and (iv) by either party pursuant to Section 11.1(c) if
one or more of the conditions set forth in
Section 10.2(a), 10.2(b), 10.2(c), 10.2(d), 10.2(e) and
10.2(f) shall not have been fulfilled or waived by
Western Resources, for a period of three years from and
after the date of such termination Western Resources
shall not, and shall not permit any of its Subsidiaries
to, unless permitted in writing by KCPL (a) in any manner
acquire, agree to acquire or make any proposal to
acquire, directly or indirectly, any securities or
property of KCPL or any of its Subsidiaries, (b) seek or
propose to enter into directly or indirectly, any merger,
business combination, tender offer, exchange offer, sale
or purchase of assets or securities, dissolution,
liquidation, recapitalization, restructuring or similar
transaction of or involving KCPL or any of its
Subsidiaries or to purchase, directly or indirectly, a
material portion of the assets of KCPL or any of its
Subsidiaries, (c) make, or in any way participate,
directly or indirectly, in any "solicitation" of
"proxies" (as such terms are used in the proxy rules of
the SEC) or consents to vote, or seek to advise or
influence any person with respect to the voting of, any
voting securities of KCPL or any of its Subsidiaries,
(d) form, join or in any way participate in a "group"
(within the meaning of Section 13(d)(3) of the Exchange
Act) with respect to any voting security of KCPL or any
of its Subsidiaries, (e) otherwise act, alone or in
concert with others, to seek to control or influence the
management, Board of Directors or policies of KCPL,
(f) have any discussions or enter into
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any arrangements, understandings or agreements (whether written
or oral) with, or advise, finance, assist or encourage, any other
persons in connection with any of the foregoing, or make
any investment in any other person that engages, or
offers or proposes to engage, in any of the foregoing (it
being understood that, without limiting the generality of
the foregoing, Western Resources shall not be permitted
to act as a joint bidder or co-bidder with any other
person with respect to KCPL or any of its Subsidiaries),
or (g) make any publicly disclosed proposal regarding any
of the foregoing. The provisions of this Section 11.6
shall cease to apply in the event that a third party, not
acting in concert or affiliated with Western Resources,
(i) makes a proposal to acquire or merge with KCPL or to
acquire all or substantially all of the assets of KCPL or
a KCPL Subsidiary or (ii) acquires 10% or more of the
KCPL Common Stock.
(b) New KC. (i) For the purposes of this
Section 11.6(b), each of the following terms shall have
the following meaning:
"Western Resources Group" shall mean Western
Resources, its Subsidiaries and Affiliates, and any
person acting on behalf of Western Resources or any of
such Subsidiaries or Affiliates.
"Voting Securities" shall mean the shares of New
KC Common Stock and any other issued and outstanding
securities of New KC generally entitled to vote for the
election of directors of New KC and other matters for
which the holders of New KC Common Stock are entitled to
vote.
"Independent Director" shall mean any New KC
director that is not an employee or director of Western
Resources or an employee of New KC. Western Resources
agrees that for so long as Western Resources shall own,
directly or indirectly, more than 50 percent of the
issued and outstanding Voting Securities of New KC, and
in any case for not more than ten years from the Closing
Date, Western Resources shall vote all shares of Voting
Securities beneficially owned by Western Resources to
elect, and New KC shall use its best efforts to cause to
be elected, at least three Independent Directors to the
board of directors of New KC.
(ii) Except as set forth in clauses
(iii) and (iv) below, during the period beginning on, and
ending on the tenth anniversary of, the Closing Date
(unless earlier terminated pursuant to the provisions of
this Agreement), Western Resources shall not, and shall
cause the other members of the Western Resources Group
not to, directly or indirectly, (A) in any manner
acquire, agree to acquire, make any proposal to acquire
or announce or disclose any intention to make a proposal
to acquire, directly or indirectly, any Voting
Securities, except pursuant to the KGE Merger in
accordance with the terms and conditions of this
Agreement or (B) propose to enter into, or announce or
disclose any intention to propose to enter into, directly
or indirectly, any merger or business combination
involving New KC or to purchase, directly or indirectly,
all or substantially all of the assets of New KC.
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(iii) Notwithstanding the provisions of
clause (ii) above, following the Closing Date Western
Resources may in any manner acquire Voting Securities
representing in the aggregate up to but not exceeding the
greater of 85% of the Voting Securities on a fully
diluted basis or 88.5% of the Voting Securities on a
primary basis.
(iv) Notwithstanding the provisions of
clause (ii) above, following the Closing Date, Western
Resources may make a tender offer or exchange offer for
all outstanding shares of New KC Common Stock or Voting
Securities or take any of the actions described in clause
(ii)(B) above; provided that any such action satisfies
the following additional requirements (x) if a tender
offer, the offer must be a "tender offer" for purposes
of, and must be made in compliance with, Rules 14d-1 and
13e-3 under the Exchange Act (or any successor provisions
thereto), and (y) any such action must be at a price and
on terms that are fair to the stockholders of New KC (as
determined by a majority of the Independent Directors
after the receipt of a fairness opinion with respect to
any such proposed transaction from a nationally
recognized investment banking firm selected by a majority
of the Independent Directors and reasonably acceptable to
Western Resources), and must be approved by a majority of
the Independent Directors.
ARTICLE II
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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ whose fees have
been disclosed to Western Resources prior to the date
hereof, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or
commission in connection with the KGE Merger, the KCPL
Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of KCPL.
Western Resources, New KC and KGE represent and warrant
that, except for Salomon, whose fees have been disclosed
to KCPL prior to the date hereof, and except for certain
soliciting dealer arrangements the material terms and
conditions of which have been publicly disclosed by
Western Resources, New KC or KGE prior to the date
hereof, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or
commission in connection with the KGE Merger or the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Western Resources,
New KC or KGE.
Section 12.3 Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed given (a) when delivered personally, (b) when sent
by reputable overnight courier service, or (c) when
telecopied (which is confirmed by copy sent
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within one business day by a reputable overnight courier service)
to the parties at the following addresses (or at such other
address for a party as shall be specified by like
notice):
(i) If to KCPL, to:
Kansas City Power & Light Company
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Western Resources, New KC or KGE, to:
Western Resources, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn. Chief Executive Officer
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President and General Counsel
▇▇▇ ▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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Section 12.4 Miscellaneous. This Agreement
(including the documents and instruments referred to
herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them,
with respect to the subject matter hereof other than the
Confidentiality Agreement, (b) shall not be assigned by
either party and (c) shall be governed by and construed
in accordance with the laws of the State of Kansas
applicable to contracts executed in and to be fully
performed in such State, without giving effect to its
conflicts of law rules or principles and except to the
extent the provisions of this Agreement (including the
documents or instruments referred to herein) are
expressly governed by or derive their authority from the
KGCC.
Section 12.5 Interpretation. When a reference is
made in this Agreement to Sections or Exhibits, such
reference shall be to a Section or Exhibit of this
Agreement, respectively, unless otherwise indicated. The
table of contents and headings contained in this
Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
When a reference is made in this Agreement to the
"knowledge" of Western Resources, such reference shall
also refer to the knowledge of New KC and KGE.
Section 12.6 Counterparts; Effect. This
Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
Section 12.7 Parties' Interest. This Agreement
shall be binding upon and inure solely to the benefit of
each party hereto, and, except for rights of Indemnified
Parties as set forth in Section 9.5, nothing in this
Agreement, express or implied, is intended to confer upon
any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 12.8 Waiver of Jury Trial and Certain
Damages. Each party to this Agreement waives, to the
fullest extent permitted by applicable law, (a) any right
it may have to a trial by jury in respect of any action,
suit or proceeding arising out of or relating to this
Agreement and (b) without limitation to Section 11.3, any
right it may have to receive damages from any other party
based on any theory of liability for any special,
indirect, consequential (including lost profits) or
punitive damages.
Section 12.9 Enforcement. The parties agree that
irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court
of the United States located in the State of Kansas or in
Kansas state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In
addition,
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each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any federal
court located in the State of Kansas or any Kansas state
court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny
such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court
other than a federal or state court sitting in the State
of Kansas.
Section 12.10 Severability. The provisions of
this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement,
or the application thereof to any person or entity or any
circumstance, is invalid or unenforceable, (a) a suitable
and equitable provision shall be substituted therefor in
order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this
Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected
by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or
enforceability of such provision, or the application
thereof, in any other jurisdiction.
Section 12.11 Anti-dilution. The Western
Resources Index Price and the Conversion Ratio and any
Western Resources share price referred to in this
Agreement shall be appropriately adjusted in the case of
any stock dividend, reclassification, recapitalization,
split-up, combination or subdivision with respect to the
common stock of Western Resources.
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written
above.
KANSAS CITY POWER & LIGHT
COMPANY
Attest: /s/ ▇▇▇▇▇▇ Sell ▇▇▇▇ By: /s/A. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Secretary A. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Chairman of the Board, President
and Chief Executive Officer
WESTERN RESOURCES, INC.
Attest: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Secretary ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Chairman of the Board and
Chief Executive Officer
KANSAS GAS AND ELECTRIC
COMPANY
Attest: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman of the Board and
President
NKC, INC.
Attest: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
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TABLE OF CONTENTS
Page
ARTICLE I
THE CONTRIBUTIONS
Section 1.1 The Asset Contribution 2
Section 1.2 Liabilities Assumed 3
Section 1.3 Retained Liabilities 3
Section 1.4 Instruments of Transfer 3
Section 1.5 Assignment or Assumption of Contract Rights 4
Section 1.6 The Stock Contribution 4
Section 1.7 Certain Taxes 5
ARTICLE II
MERGER OF KCPL WITH AND INTO NEW KC
Section 2.1 The KCPL Merger 5
Section 2.2 Effects of the KCPL Merger 5
Section 2.3 Effective Time of the KCPL Merger 6
Section 2.4 Effect of the KCPL Merger on KCPL and New KC
Capital Stock 6
Section 2.5 Debt of New KC 7
Section 2.6 Name of New KC 7
ARTICLE III
MERGER OF KGE WITH AND INTO NEW KC
Section 3.1 The KGE Merger 7
Section 3.2 Effects of the KGE Merger 8
Section 3.3 Effective Time of the KGE Merger 8
Section 3.4 Effect of the KGE Merger on KGE Capital Stock 8
Section 3.5 Effect of the KGE Merger on Certain Western
Resources Common Stock 8
-i-
ARTICLE IV
ADDITIONAL TRANSACTIONS
Section 4.1 Distribution of Western Resources Common Stock 9
Section 4.2 Distribution of KLT Capital Stock to Western
Resources 9
Section 4.3 Conversion of New KC Series B Common Stock
Owned by Western Resources 9
ARTICLE V
THE CLOSING
Section 5.1 Closing 9
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF KCPL
Section 6.1 Organization and Qualification 10
Section 6.2 Subsidiaries 10
Section 6.3 Capitalization 11
Section 6.4 Authority; Non-Contravention; Statutory
Approvals; Compliance 12
Section 6.5 Reports and Financial Statements 13
Section 6.6 Absence of Certain Changes or Events 14
Section 6.7 Litigation 14
Section 6.8 Registration Statement and Proxy Statement 15
Section 6.9 Tax Matters 15
Section 6.10 Employee Matters; ERISA 17
Section 6.11 Environmental Protection 19
Section 6.12 Regulation as a Utility 21
Section 6.13 Vote Required 21
Section 6.14 Article Twelfth of KCPL's Restated Articles
of Consolidation 21
Section 6.15 Opinion of Financial Advisor 21
Section 6.16 Insurance 21
Section 6.17 KCPL not a Related Person 22
Section 6.18 Takeover Statutes 22
Section 6.19 Termination of UtiliCorp Agreement 22
-ii-
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF
WESTERN RESOURCES, KGE AND NEW KC
Section 7.1 Organization and Qualification 23
Section 7.2 Subsidiaries 23
Section 7.3 Capitalization 23
Section 7.4 Authority; Non-Contravention; Statutory
Approvals; Compliance 25
Section 7.5 Reports and Financial Statements 26
Section 7.6 Absence of Certain Changes or Events 27
Section 7.7 Litigation 27
Section 7.8 Registration Statement and Proxy Statement 28
Section 7.9 Tax Matters 28
Section 7.10 Employee Matters; ERISA 29
Section 7.11 Environmental Protection 31
Section 7.12 Regulation as a Utility 32
Section 7.13 Vote Required 32
Section 7.14 Article XI (Business Combination with
Interested Shareholder) of Western
Resources' Articles of Incorporation 33
Section 7.15 Opinion of Financial Advisor 33
Section 7.16 Insurance 33
Section 7.17 Western Resources not an Interested
Shareholder 33
Section 7.18 Takeover Statutes 34
Section 7.19 No Prior Operations of New KC 34
Section 7.20 Title to Properties 34
Section 7.21 Condition of Assets 35
Section 7.22 Accounts Receivable 35
ARTICLE VIII
CONDUCT OF BUSINESS PENDING THE KGE MERGER
Section 8.1 Covenants of KCPL 35
Section 8.2 Covenants of Western Resources, New KC and
KGE 41
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1 Access to Information 42
Section 9.2 Joint Proxy Statement and Registration
Statement 43
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Section 9.3 Regulatory Matters 44
Section 9.4 Shareholder Approval 44
Section 9.5 Directors' and Officers' Indemnification 45
Section 9.6 Public Announcements 47
Section 9.7 Rule 145 Affiliates 47
Section 9.8 Employee Agreements and Workforce Matters 47
Section 9.9 Employee Benefit Plans 47
Section 9.10 Stock Options 48
Section 9.11 No Solicitations 49
Section 9.12 Board of Directors of New KC 50
Section 9.13 Post-Merger Operations 50
Section 9.14 Expenses 51
Section 9.15 Transition Management 51
Section 9.16 Purchase Accounting and Tax-Free Status 51
Section 9.17 Further Assurances 51
Section 9.18 Interim Dividends 52
Section 9.19 Redemption of Certain Western Resources
$100 Preferred 52
ARTICLE X
CONDITIONS
Section 10.1 Conditions to Each Party's Obligation to
Effect the KGE Merger and the KCPL Merger 52
Section 10.2 Conditions to Obligation of Western
Resources, KGE and New KC to Effect the
KGE Merger 53
Section 10.3 Conditions to Obligation of KCPL to Effect
the KCPL Merger 55
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 Termination 57
Section 11.2 Effect of Termination 58
Section 11.3 Termination Fee; Expenses 58
Section 11.4 Amendment 59
Section 11.5 Waiver 60
Section 11.6 Standstill Agreements 60
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ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Non-Survival; Effect of Representations and
Warranties 62
Section 12.2 Brokers 62
Section 12.3 Notices 62
Section 12.4 Miscellaneous 64
Section 12.5 Interpretation 64
Section 12.6 Counterparts; Effect 64
Section 12.7 Parties' Interest 64
Section 12.8 Waiver of Jury Trial and Certain Damages 64
Section 12.9 Enforcement 64
Section 12.10 Severability 65
Section 12.11 Anti-dilution 65
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INDEX OF PRINCIPAL TERMS
Page
1935 Act 10
4 1/2% Western Resources $100 Preferred 24
4 1/4% Western Resources $100 Preferred 24
5% Western Resources $100 Preferred 24
Accounts Receivable 35
Acquisition Proposal 50
Affiliate 22
Affiliate Agreement 47
Aggregate Consideration 9
Agreement 1
Asset Contribution 1
Assumed Liabilities 3
Atomic Energy Act 13
Closing 9
Closing Agreement 16
Closing Date 10
Code 2
Confidentiality Agreement 42
Control 22
Controlled By 22
Conversion Ratio 4
Dissenting Shares 6
Dissenting Shareholders 6
Easements 35
Environmental Claim 20
Environmental Laws 20
Environmental Permits 19
ERISA 17
Exchange Act 13
FERC 13
Final Order 53
GAAP 14
Governmental Authority 13
Hazardous Materials 20
HSR Act 44
Indemnified Liabilities 45
Indemnified Parties 45
Indemnified Party 45
Investments 36
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IRS 17
Joint Proxy/Registration Statement 43
KCPL 1
KCPL Benefit Plans 17
KCPL Business Plan 35
KCPL Common Stock 4
KCPL Cumulative Preferred 11
KCPL Disclosure Schedule 10
KCPL Effective Time 6
KCPL Employees 47
KCPL Financial Statements 14
KCPL Material Adverse Effect 14
KCPL Meeting 44
KCPL Merger 1
KCPL No Par Preferred 11
KCPL Preference Stock 11
KCPL Preferred Stock 11
KCPL Required Consents 12
KCPL Required Statutory Approvals 13
KCPL SEC Reports 14
KCPL Shareholders' Approval 21
KCPL Stock Options 48
KCPL Stock Plans 11
KCPL Subsidiary 10
KGCC 6
KGE 1
KGE Common Stock 8
KGE Effective Time 8
KGE Merger 1
KLT 7
KLT Stock Distribution 9
KPL 1
KPL Assets 2
KPL Balance Sheet 3
KPL Business 1
Lien 34
▇▇▇▇▇▇▇ ▇▇▇▇▇ 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
-vii-
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
-viii-
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
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